Cirrus Logic (CRUS) risk factors, FY2025 10-K

Business and Operational Risks

1. 01We depend on a limited number of customers and distributors for a substantial portion of our sales, and the loss of, or a significant reduction in orders from, or pricing on products sold to, any key customer or distributor could significantly reduce our sales and our profitability
2. 02Changes in government trade policies, including the imposition of tariffs and export restrictions, could have an adverse impact on our business operations and sales
3. 03We may not be able to increase the geographic diversity and regional resilience of our supply chain, which could have an adverse impact on our financial results and potential business opportunities
4. 04We are dependent on third-party manufacturing and supply chain relationships for all of our products. Our reliance on third-party foundries and suppliers involves certain risks that may result in increased costs, delays in meeting our customers’ demand, and loss of revenue
5. 05Manufacturing defects that we do not discover during the manufacturing or testing process may lead to costly product recalls. These risks may lead to increased costs or delayed product delivery, which would harm our profitability and customer relationships
6. 06Our results may be affected by fluctuation in sales in the consumer electronics and smartphone markets
7. 07Additionally, the agreement sets forth pricing for wafer purchases pursuant to the agreement through 2026. If market conditions change and wafer prices in the market decrease significantly below what is contemplated in the agreement, the agreement may put us at a competitive disadvantage relative to our competitors
8. 08The lack of diversification in our revenue and customer base increases the risk of an investment in our company, and our consolidated financial condition, results of operations, and stock price may deteriorate if we fail to diversify
9. 09We may be adversely impacted by global economic conditions. As a result, our financial results and the market price of our common shares may decline
10. 10Strong competition in the semiconductor market may harm our business
11. 11Our sales could be materially impacted by the failure of other component suppliers to deliver required parts needed in the final assembly of our customers’ end products
12. 12Because we operate a fabless business model, we may not be eligible for certain U.S. government incentives and tax credits offered to promote domestic semiconductor production
13. 13If we fail to attract, hire and retain qualified personnel, we may not be able to develop, market, or sell our products or successfully manage our business
14. 14Because we depend on subcontractors internationally to perform key manufacturing functions for us, we are subject to political, economic, climate and natural disaster risks that could disrupt the fabrication, assembly, packaging, or testing of our products
15. 15parties to whom we outsource these functions could reduce our sales, damage our customer relationships, and damage our reputation in the marketplace, any of which could harm our business, results of operations, and financial condition
16. 16Risks relating to the adoption, use or application of emerging technologies, including artificial intelligence may impact financial results and could result in reputational and financial harm and liability
17. 17In general, our customers may cancel or reschedule orders on short notice without incurring significant penalties; therefore, our sales and operating results in any quarter are difficult to forecast
18. 18Our international operations subject our business to additional political and economic risks that could have an adverse impact on our business
19. 19If we are unable to successfully manage the demands of our international operations, it may have an adverse effect on our business, financial condition, or results of operations
20. 20We are subject to risks relating to product concentration
21. 21International sales represented 99 percent, 99 percent, and 97 percent of our net sales in fiscal year 2025, 2024 and 2023, respectively
22. 22We may acquire other companies or technologies, which may create additional risks, including risks associated with our ability to successfully integrate these acquisitions into our business
23. 23We depend on the use of information technology systems; disruptions to these systems could impact our ability to perform necessary business operations and have an adverse impact on our financial condition

Strategic and Industry Risks

1. 24Our failure to develop and ramp new products into production in a timely manner could harm our operating results
2. 25Both sales and/or margins may be materially affected if new product introductions are delayed, or if our products are not designed into successive generations of new or existing customers’ products. Our failure to develop and introduce new products successfully could harm our business and operating results
3. 26Our products are increasingly complex and could contain defects, which could result in material costs to us
4. 27Security vulnerabilities may exist in our products, which could expose us to significant costs and damage our business
5. 28We continue to invest in research and development efforts for several new markets. If we are unable to commercialize these technologies, our future results and profits could be negatively affected
6. 29New and/or more stringent environmental laws, rules, regulations, and/or customer expectations may impact our product design and manufacturing processes, which could increase our costs and adversely impact our future operating results
7. 30We may be unable to protect our intellectual property rights

Financial Risks

1. 31We have historically experienced fluctuations in our operating results and expect these fluctuations to continue
2. 32We could be subject to changes in tax laws, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities
3. 33If certain tax credits or incentives we receive change or cease to be in effect or applicable for any reason, or if our assumptions and interpretations regarding tax laws and incentives prove to be incorrect, our financial results could be adversely impacted
4. 34Shifts in industry-wide capacity and our practice of ordering and purchasing our products based on sales forecasts may result in significant fluctuations in inventory and our quarterly and annual operating results
5. 35Our stock price has been and is likely to continue to be volatile
6. 36Our foreign currency exposures may change over time as the level of activity in foreign markets grows and could have an adverse impact upon financial results
7. 37Our debt obligations may be a burden on our future cash flows and cash resources
8. 38Our Second Amended Credit Agreement contains restrictions that could limit our flexibility in operating our business

Legal and Regulatory Risks

1. 39Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights
2. 40We have provisions in our Certificate of Incorporation and Bylaws, and are subject to certain provisions of Delaware law, which could prevent, delay, or impede a change of control of our company. These provisions could affect the market price of our stock
3. 41We are also subject to the anti-takeover laws of Delaware that may prevent, delay, or impede a third party from acquiring or merging with us, which may adversely affect the market price of our common stock

General Risks

1. 42Corporate social responsibility initiatives, specifically related to environmental, social and governance ("ESG") matters, may impose additional costs and expose us to emerging areas of risk
2. 43governance expectations. If we do not meet these goals, we could incur adverse publicity and reaction or the loss of business from certain of our customers, which could adversely impact our reputation, and in turn adversely impact our results of operations
3. 44As we carry only limited insurance coverage, uninsured or under-insured losses could adversely affect our financial condition and results of operations
4. 45We are subject to the risks of owning real property