Broadcom 10-Q 2025-05-04

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

For the quarterly period ended May 4, 2025

OR

For the transition period from to

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of May 30, 2025, there were 4,703,470,979 shares of our common stock outstanding.

BROADCOM INC.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended May 4, 2025

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

BROADCOM INC.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

BROADCOM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BROADCOM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

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This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended November 3, 2024 (“fiscal year 2024”) included in our Annual Report on Form 10-K for fiscal year 2024 (“2024 Annual Report on Form 10-K”). This Form 10-Q contains forward-looking statements within the meaning of federal securities laws. These statements are indicated by words or phrases such as “anticipate,” “expect,” “estimate,” “seek,” “plan,” “believe,” “could,” “intend,” “will,” and similar words or phrases. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These forward-looking statements may include our projected financial results or expectations regarding acquisitions, developments in technology, products and seasonality of our business. Such statements are based on current expectations, estimates, forecasts and projections of our industry performance and macroeconomic conditions, based on management’s judgment, beliefs, current trends and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Accordingly, we caution you not to place undue reliance on these statements. Material factors that could cause actual results to differ materially from our expectations include, but are not limited to, those disclosed under “Risk Factors” in Part II, Item 1A of this Form 10-Q, and in other documents we file from time to time with the Securities and Exchange Commission (the “SEC”). We undertake no intent or obligation to publicly update or revise any forward-looking statements for any reason, except as required by law.

Unless stated otherwise or the context otherwise requires, references to “Broadcom,” “we,” “our,” and “us” mean Broadcom Inc. and its consolidated subsidiaries.

Overview

We are a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. We develop semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products. We offer thousands of products that are used in end products such as enterprise and data center networking, including artificial intelligence (“AI”) networking and connectivity, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Our infrastructure software solutions help enterprises simplify their information technology environments so they can increase business velocity and flexibility, and enable customers to plan, develop, deliver, automate, manage and secure applications across mainframe, distributed, edge, mobile, and private and hybrid cloud platforms. Our portfolio of infrastructure and security software is designed to modernize, optimize, and secure the most complex private and hybrid cloud environments, enabling scalability, agility, automation, insights, resiliency and security making it easy for customers to run their mission-critical workloads. We also offer mission-critical fibre channel storage area networking (“FC SAN”) products and related software in the form of modules, switches and subsystems incorporating multiple semiconductor products.

We have two reportable segments: semiconductor solutions and infrastructure software. Our semiconductor solutions segment includes all of our product lines and intellectual property (“IP”) licensing. Our infrastructure software segment includes our private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and our FC SAN business.

Our fiscal year ending November 2, 2025 (“fiscal year 2025”), is a 52-week fiscal year, with our first fiscal quarter containing 13 weeks compared to 14 weeks in the prior year fiscal period. The additional week resulted in higher net revenue, gross margin dollars, research and development expense, and selling, general and administrative expense in the first two fiscal quarters of fiscal year 2024, compared to the corresponding current year fiscal period.

We acquired VMware, Inc. (“VMware”) on November 22, 2023, resulting in a partial quarter of operations from activities related to VMware in the first quarter of fiscal year 2024 compared to a full quarter of operations in the first quarter of fiscal year 2025.

Quarterly Highlights

Highlights during the fiscal quarter ended May 4, 2025 include the following:

• We generated $6,555 million of cash from operations.

• We paid $2,785 million in cash dividends.

• We repurchased $2,450 million of common stock.

Critical Accounting Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Our actual financial results may differ materially and adversely from our estimates. Our critical accounting policies are those that affect our historical financial statements materially and involve difficult, subjective or complex judgments by management. Those policies include revenue recognition, business combinations, valuation of goodwill and long-lived assets, and income taxes.

There were no significant changes in our critical accounting estimates during the two fiscal quarters ended May 4, 2025 compared to those previously disclosed in “Critical Accounting Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2024 Annual Report on Form 10-K.

Macroeconomic Factors

We are subject to risks and exposures from the evolving macroeconomic environment, including uncertainty and volatility in financial markets, efforts of governments to stimulate or stabilize the economy and other unfavorable changes in economic conditions, as well as an increase in trade tensions and related tariffs with U.S. trading partners. While difficult to isolate and quantify, these risks and exposures may cause our net revenue to fluctuate significantly and disrupt supply chain operations, and we continuously monitor the broader impacts of these circumstances on our business, our supply chain and our results of operations.

Results of Operations

Fiscal Quarter and Two Fiscal Quarters Ended May 4, 2025 Compared to Fiscal Quarter and Two Fiscal Quarters Ended May 5, 2024

The following tables set forth our results of operations for the periods presented:

Net Revenue

A relatively small number of customers account for a significant portion of our net revenue. Direct sales to one customer, which is a distributor, accounted for 29% of our net revenue for each of the fiscal quarter and two fiscal quarters ended May 4, 2025, and 29% and 28% of our net revenue for the fiscal quarter and two fiscal quarters ended May 5, 2024, respectively.

We believe aggregate sales to our top five end customers, through all channels, accounted for approximately 40% of our net revenue for each of the fiscal quarters and two fiscal quarters ended May 4, 2025 and May 5, 2024. We expect to continue to experience significant customer concentration in future periods. The loss of, or significant decrease in demand from, any of our top five end customers could have a material adverse effect on our business, results of operations and financial condition.

From time to time, some of our key semiconductor customers place large orders or delay orders, causing our quarterly net revenue to fluctuate significantly. This is particularly true of our products used in AI and wireless applications as fluctuations may be magnified by the timing of customer deployments, as well as product launches and seasonal variations for wireless applications. For infrastructure software, the transition to subscription licenses, as well as whether or not a customer has the right to terminate, could cause variations in revenue recognized in each period.

The following tables set forth net revenue by segment for the periods presented:

Net revenue from our semiconductor solutions segment increased in the fiscal quarter and two fiscal quarters ended May 4, 2025 compared to the prior year fiscal periods due to strong demand for our networking products, primarily AI networking solutions. The increase in the two fiscal quarters ended May 4, 2025 was partially offset by lower demand for our non-AI solutions, primarily broadband products.

Net revenue from our infrastructure software segment increased in the fiscal quarter and two fiscal quarters ended May 4, 2025 compared to the prior year fiscal periods primarily due to strong demand for our VMware Cloud Foundation (“VCF”) product, including additional license revenue recognized on contracts where customers do not have the right to terminate and the transition to a subscription license model.

Gross Margin

Gross margin was $10,197 million for the fiscal quarter ended May 4, 2025 compared to $7,776 million for the fiscal quarter ended May 5, 2024, and $20,342 million for the two fiscal quarters ended May 4, 2025 compared to $15,151 million for the two fiscal quarters ended May 5, 2024. The increases were primarily due to higher software revenue and strong product demand for our AI-related semiconductor solutions.

As a percentage of net revenue, gross margin was 68% of net revenue for each of the fiscal quarter and two fiscal quarters ended May 4, 2025 and 62% for each of the fiscal quarter and two fiscal quarters ended May 5, 2024. The increases were primarily due to higher software revenue mix and lower amortization of acquisition-related intangible assets as a percentage of revenue.

Research and Development Expense

Research and development expense increased $278 million, or 12%, and $223 million, or 5%, for the fiscal quarter and two fiscal quarters ended May 4, 2025, respectively, compared to the prior year fiscal periods. The increases were primarily due to higher stock-based compensation.

Selling, General and Administrative Expense

Selling, general and administrative expense decreased $194 million, or 15%, for the fiscal quarter ended May 4, 2025 compared to the prior year fiscal period. The decrease was primarily due to lower compensation resulting from a decrease in headcount, partially offset by higher stock-based compensation.

Selling, general and administrative expense decreased $817 million, or 29%, for the two fiscal quarters ended May 4, 2025 compared to the prior year fiscal period. The decrease was primarily due to lower compensation resulting from a decrease in headcount and lower stock-based compensation. In addition, in the two fiscal quarters ended May 5, 2024, we incurred higher VMware acquisition-related costs.

Amortization of Acquisition-Related Intangible Assets

Amortization of acquisition-related intangible assets recognized in operating expenses decreased $321 million, or 39%, and $602 million, or 37%, for the fiscal quarter and two fiscal quarters ended May 4, 2025, respectively, compared to the prior year fiscal periods primarily due to full amortization of customer-related intangible assets from previous software acquisitions other than VMware.

Restructuring and Other Charges

Restructuring and other charges recognized in operating expenses decreased $206 million, or 71%, and $654 million, or 72%, for the fiscal quarter and two fiscal quarters ended May 4, 2025, respectively, compared to the prior year fiscal periods primarily due to lower employee termination costs associated with the integration of the VMware business.

Stock-Based Compensation Expense

During the fiscal quarter ended May 4, 2025, we granted two-year time- and market-based restricted stock unit awards (the “Two-Year Equity Awards”), in lieu of our annual employee equity awards historically granted in the second quarter of each fiscal year. Each Two-Year Equity Award vests on the same basis as two annual grants with staggered vesting start dates of March 15, 2025 and March 15, 2026 and successive four-year vesting periods. We recognize stock-based compensation expense related to these awards from the grant date through their respective vesting date, ranging from four to five years.

Total stock-based compensation expense was $1,771 million and $1,403 million for the fiscal quarters ended May 4, 2025 and May 5, 2024, respectively. The increase was due to the Two-Year Equity Awards granted at higher grant-date fair values and a full quarter of expense for the annual employee equity awards granted on March 15, 2024.

Total stock-based compensation expense was $3,051 million and $2,975 million for the two fiscal quarters ended May 4, 2025 and May 5, 2024, respectively. The increase was due to the Two-Year Equity Awards granted at higher grant-date fair values and a full quarter of expense for the annual employee equity awards granted on March 15, 2024. The increase was substantially offset by a one-time impact from aligning the vesting dates of certain equity awards assumed from the acquisition of VMware with our equity award vesting dates and the accelerated vesting of certain equity awards held by employees terminated in connection with the acquisition of VMware in the prior year fiscal periods.

The following table sets forth the total unrecognized compensation cost related to unvested stock-based awards outstanding and expected to vest as of May 4, 2025. The remaining weighted-average service period was 3.8 years.

Segment Operating Results

Operating income from our semiconductor solutions segment increased for the fiscal quarter and two fiscal quarters ended May 4, 2025 compared to the prior year fiscal periods due to strong demand for our networking products, primarily AI networking solutions. The increase in the two fiscal quarters ended May 4, 2025 was partially offset by lower demand for our non-AI solutions, primarily broadband products.

Higher operating income from our infrastructure software segment in the fiscal quarter and two fiscal quarters ended May 4, 2025 compared to the prior year fiscal periods was primarily due to strong demand for our VCF product, including additional license revenue recognized on contracts where customers do not have the right to terminate and the transition to a subscription license model.

Unallocated expenses include amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring and other charges, acquisition-related costs, and other costs, which are not used in evaluating the results of, or in allocating resources to, our segments. Unallocated expenses decreased 5% for the fiscal quarter ended May 4, 2025 compared to the prior year fiscal period due to lower amortization of acquisition-related intangible assets and restructuring and other charges, partially offset by higher stock-based compensation expense. Unallocated expenses decreased 16% for the two fiscal quarters ended May 4, 2025 compared to the prior year fiscal period due to lower restructuring and other charges, amortization of acquisition-related intangible assets, and acquisition-related costs.

Non-Operating Income and Expenses

Interest expense. Interest expense was $769 million and $1,642 million for the fiscal quarter and two fiscal quarters ended May 4, 2025, respectively, and $1,047 million and $1,973 million for the fiscal quarter and two fiscal quarters ended May 5, 2024, respectively. The decreases were primarily from an overall reduction in outstanding debt balances and debt refinancing activities that drove lower effective interest rates compared to the prior year fiscal periods.

Other income, net. Other income, net includes interest income, gains and losses on investments, foreign currency remeasurement and other miscellaneous items. Other income, net, was $25 million and $128 million for the fiscal quarter and two fiscal quarters ended May 4, 2025, respectively, and $87 million and $272 million for the fiscal quarter and two fiscal quarters ended May 5, 2024, respectively. The decreases were primarily due to lower interest income as a result of lower interest rates on lower invested balances.

Provision for (benefit from) income taxes. The provision for income taxes was $120 million and $107 million for the fiscal quarter and two fiscal quarters ended May 4, 2025, respectively. The provision for income taxes was primarily due to income before income taxes and the jurisdictional mix of income, partially offset by excess tax benefits from stock-based awards. The benefit from income taxes was $116 million and $48 million for the fiscal quarter and two fiscal quarters ended May 5, 2024, respectively. The benefit from income taxes was primarily due to excess tax benefits from stock-based awards and the jurisdictional mix of income, partially offset by income tax expense on operations.

Liquidity and Capital Resources

The following section discusses our principal liquidity and capital resources as well as our principal liquidity requirements and uses of cash. Our cash and cash equivalents are maintained in highly liquid investments with remaining maturities of 90 days or less at the time of purchase. We believe our cash equivalents are liquid and accessible.

Our primary sources of liquidity as of May 4, 2025 consisted of: (i) $9,472 million in cash and cash equivalents, (ii) cash we expect to generate from operations and (iii) available capacity under our $7.5 billion unsecured revolving credit facility. In addition, we may also generate cash from the sale of assets and debt or equity financings from time to time.

Our short-term and long-term liquidity requirements primarily arise from: (i) business acquisitions and investments we may make from time to time, (ii) working capital requirements, (iii) research and development and capital expenditure needs, (iv) cash dividend payments (if and when declared by our Board of Directors), (v) interest and principal payments related to our $69,407 million of outstanding indebtedness with $5,550 million principal amounts payable within 12 months, (vi) discretionary share repurchases, and (vii) payment of income taxes. Our ability to fund these requirements will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing global macroeconomic conditions and financial, business and other factors, some of which are beyond our control.

We believe that our cash and cash equivalents on hand, cash flows from operations and our revolving credit facility will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months. For additional information regarding our cash requirement from contractual obligations and indebtedness, see Note 11. “Commitments and Contingencies” and Note 7. “Borrowings” in Part I, Item 1 of this Form 10-Q.

From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and product lines. Any such transaction, or evaluation of potential transactions, could require significant use of our cash and cash equivalents, or require us to increase our borrowings to fund such transactions. If we do

not have sufficient cash to fund our operations or finance growth opportunities, including acquisitions, or unanticipated capital expenditures, our business and financial condition could suffer. In such circumstances, we may seek to obtain new debt or equity financing. However, we cannot assure you that such additional financing will be available on terms acceptable to us or at all. Our ability to service our outstanding indebtedness and any other indebtedness we may incur will depend on our ability to generate cash in the future. We may also elect to sell additional debt or equity securities for reasons other than those specified above.

In addition, we may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash tenders and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such tenders, exchanges or purchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We may also make additional prepayments of our outstanding term loans. The amounts involved may be material.

Working Capital

Working capital decreased to $1,584 million at May 4, 2025 from $2,898 million at November 3, 2024. The decrease was primarily attributable to the following:

• Short-term debt increased to $5,531 million at May 4, 2025 from $1,271 million at November 3, 2024 primarily due to the net issuance of $3,900 million of commercial paper and $900 million of senior notes becoming due within the next twelve months, offset in part by a $495 million repayment.

• Other current liabilities increased to $12,503 million at May 4, 2025 from $11,793 million at November 3, 2024 primarily from higher contract liabilities.

These decreases in working capital were offset in part by the following:

• Trade accounts receivable, net increased to $5,563 million at May 4, 2025 from $4,416 million at November 3, 2024 primarily due to higher software billings.

• Other current assets increased to $5,129 million at May 4, 2025 from $4,071 million at November 3, 2024 primarily from higher software contract assets, offset in part by lower prepaid taxes.

• Employee compensation and benefits decreased to $1,266 million at May 4, 2025 from $1,971 million at November 3, 2024 primarily due to the timing of annual employee bonus plan payments.

Capital Returns

In April 2025, our Board of Directors authorized a stock repurchase program to repurchase up to $10 billion of our common stock from time to time through December 31, 2025. During the fiscal quarter ended May 4, 2025, we repurchased and retired 16 million shares of our common stock for $2,450 million under this stock repurchase program. As of May 4, 2025, $7,550 million of the authorized amount remained available for repurchases.

Repurchases under this stock repurchase program may be effected through a variety of methods, including open market or privately negotiated purchases. The timing and amount of shares repurchased will depend on the stock price, business and market conditions, corporate and regulatory requirements, alternative investment opportunities, acquisition opportunities, and other factors. We are not obligated to repurchase any specific amount of shares of common stock, and the stock repurchase program may be suspended or terminated at any time.

In December 2021 and May 2022, our Board of Directors authorized stock repurchase programs to repurchase up to an aggregate of $20 billion of our common stock from time to time prior to December 31, 2023. During the fiscal quarter ended February 4, 2024, we repurchased and retired 67 million shares of our common stock for $7,176 million, and all $20 billion of the aggregate authorized amount was utilized prior to expiration on December 31, 2023.

During the two fiscal quarters ended May 4, 2025 and May 5, 2024, we paid $3,802 million and $2,662 million, respectively, in employee withholding taxes due upon the vesting of net settled equity awards. We withheld 17 million and 22 million shares of common stock from employees in connection with such net share settlements during the two fiscal quarters ended May 4, 2025 and May 5, 2024, respectively.

Cash Flows

Operating Activities

Cash flows from operating activities consist of net income adjusted for certain non-cash and other items and changes in assets and liabilities. The $3,273 million increase in cash provided by operations during the two fiscal quarters ended May 4, 2025 compared to the prior year fiscal period was primarily due to $7,022 million higher net income, offset in part by $2,750 million from changes in operating assets and liabilities and $999 million lower non-cash adjustments including amortization of intangible assets and deferred taxes and other non-cash taxes.

Investing Activities

Cash flows from investing activities primarily consist of cash related to acquisitions and divestitures, capital expenditures and proceeds and payments related to investments. The $25,876 million decrease in cash used in investing activities during the two fiscal quarters ended May 4, 2025 compared to the prior year fiscal period was primarily due to $25,416 million cash paid in connection with the acquisition of VMware, net of cash acquired, in the prior year fiscal period.

Financing Activities

Cash flows from financing activities primarily consist of proceeds and payments related to our borrowings, dividend payments, employee withholding tax payments related to net settled equity awards and authorized stock repurchases. Cash flows from financing activities during the two fiscal quarters ended May 4, 2025 compared to the prior year fiscal period decreased $24,645 million. The decrease was primarily from the $30,010 million of net proceeds from term loans issued in connection with the acquisition of VMware in the prior year fiscal period, increases in the current year fiscal period in employee withholding tax payments related to net settled equity awards and dividend payments, offset in part by a decrease in stock repurchases.

There have been no material changes in market risks from the information presented in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” in the 2024 Annual Report on Form 10-K, except as disclosed below.

Interest Rate Risk

Changes in interest rates affect the fair value of our outstanding fixed-rate borrowings. As of May 4, 2025 and November 3, 2024, we had $59.5 billion and $56.3 billion in principal amount of fixed-rate borrowings outstanding, and the estimated aggregate fair value of these borrowings was $55.0 billion and $51.4 billion, respectively. As of each of May 4, 2025 and November 3, 2024, a hypothetical 50 basis point change in market interest rates would change the fair value of our fixed-rate borrowings by approximately $1.7 billion. However, this hypothetical change in interest rates would not impact the interest expense on our fixed-rate borrowings outstanding.

As of May 4, 2025 and November 3, 2024, we had $6.0 billion and $13.6 billion of outstanding term loans, respectively, which are subject to floating interest rates. As of May 4, 2025 and November 3, 2024, a hypothetical 100 basis point change in the interest rate would change the interest expense on our floating-rate term loans for the next 12 months by approximately $61 million and $137 million, respectively. The carrying value of the floating-rate term loans approximates their fair value as the underlying interest rates are tied to the Secured Overnight Financing Rate.

(a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of May 4, 2025. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is properly and timely recorded, processed, summarized and reported. These disclosure controls and procedures are also intended to ensure that information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Based on this evaluation, our CEO and CFO concluded that, as of May 4, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under Note 11. “Commitments and Contingencies” included in Part I, Item 1 of this Form 10-Q, is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see “Risk Factors” immediately below.

Our business, operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. The following material factors, among others, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Additional risks, trends and uncertainties not presently known to us or that we currently believe are immaterial may also harm our business, financial condition, results of operations, cash flows, our reputation or the trading price of our common stock.

Risk Factors Summary

The following is a summary of the material risks that could adversely affect our business, operations and financial results.

Risks Related to Our Business

• Adverse global economic conditions could have a negative effect on us.

• Our business is subject to various governmental regulations and trade restrictions.

• Global political and economic conditions and other factors related to our international operations could adversely affect us.

• Failure to realize the benefits expected from the acquisition of VMware could adversely affect our business and the value of our common stock.

• We have pursued, and may in the future pursue, mergers, acquisitions, investments, joint ventures and dispositions, which could adversely affect our results of operations.

• We are subject to risks associated with our distributors and other channel partners.

• We are dependent on senior management and if we are unable to attract and retain qualified personnel, we may not be able to execute our business strategy effectively.

• Cybersecurity threats or other security breaches, or any other impairment of the confidentiality, integrity or availability of our information technology (“IT”) systems, or those of one or more of our corporate infrastructure vendors, could have a material adverse effect on our business.

• A significant reduction in demand or loss of one or more of our significant customers may adversely affect our business.

• We operate in the highly cyclical semiconductor industry.

• We make investments in research and development and the slow or unsuccessful return of our investments in research and development could adversely affect us.

• Winning business in the semiconductor solutions industry is subject to a lengthy process that often requires us to incur significant expense, from which we may ultimately generate no revenue.

• Dependence on contract manufacturing and suppliers of critical components within our supply chain may adversely affect our ability to bring products to market.

• We purchase a significant amount of the materials used in our products from a limited number of suppliers.

• A prolonged disruption of our or our suppliers’ manufacturing facilities, research and development facilities, warehouses or other significant operations could have a material adverse effect on us.

• Failure to adjust our manufacturing and supply chain to accurately meet customer demand could adversely affect our results of operations.

• We may be unable to maintain appropriate manufacturing capacity or product yields at our own manufacturing facilities.

• We may be involved in legal proceedings that could materially adversely affect our business.

• Failure of our software products to manage and secure IT infrastructures and environments could have a material adverse effect on our business.

• The growth of our software business depends on demand for our data center virtualization products, as well as customer acceptance of our products, services and business strategy.

• Incompatibility of our software products with operating environments, platforms, or third-party products may adversely affect demand for our products and services.

• Failure to enter into software license agreements on a satisfactory basis could adversely affect us.

• Our use of open source software in certain products and services could materially adversely affect our business, financial condition and results of operations.

• Our sales to government customers subject us to uncertainties and additional governmental regulations.

• Failure to effectively manage our products and services lifecycles could harm our business.

• Our operating results are subject to substantial quarterly and annual fluctuations.

• Competition in our industries could prevent us from growing our revenue.

• Our ability to maintain or improve gross margin.

• If we are unable to protect the significant amount of IP we utilize in our business, our business could be adversely affected.

• We are subject to warranty claims, product recalls and product liability.

• The complexity of our products could result in unforeseen delays or expense or undetected defects or bugs.

• We are subject to privacy and data security laws and contractual commitments, and our actual or perceived failure to comply with such laws and commitments could harm our business.

• Corporate responsibility matters may adversely affect our relationships with customers and investors.

• We must comply with a variety of technical standards, domestic and international laws and regulations in the manufacture and distribution of our semiconductors.

Risks Relating to Our Taxes

• Our income taxes and overall cash tax costs are affected by a number of factors that could have a material, adverse effect on our financial results.

• If our tax incentives or tax holiday arrangements change or cease to be in effect or applicable, our corporate income taxes could significantly increase.

• We have potential tax liabilities as a result of VMware’s former controlling ownership by Dell, which could have an adverse effect on our financial condition and operating results.

Risks Relating to Our Indebtedness

• Our substantial indebtedness could adversely affect our financial health and our ability to execute our business strategy.

Risks Relating to Owning Our Common Stock

• Our stock price may be volatile and your investment could lose value.

• The amount and frequency of our stock repurchases may fluctuate.

• There can be no assurance that we will continue to declare cash dividends.

For a more complete discussion of the material risks facing our business, see below.

Risks Related to Our Business

Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity.

A general slowdown in the global economy or in a particular region or industry, uncertainty and volatility in financial markets, efforts of governments to stimulate or stabilize the economy and other unfavorable changes in economic conditions, such as inflation, higher interest rates, tightening of the credit markets, recession or slowing growth, as well as an increase in trade tensions and related tariffs with U.S. trading partners, could negatively impact our business, financial condition, cash flows and liquidity. Adverse global economic conditions have from time to time caused or exacerbated significant slowdowns in the industries and markets in which we operate, which have adversely affected our business and results of operations. Macroeconomic weakness and uncertainty may also make it more difficult to accurately forecast operating results and market volatility stemming from current macroeconomic events may materially impact our cash flow and our ability to raise or refinance debt at favorable rates. An escalation of trade tensions between the U.S. and its trading partners has resulted in trade restrictions and increased protectionism that harm our ability to participate in some markets or compete effectively.

Sustained uncertainty about, or worsening of, curre

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None.

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