SOLAREDGE TECHNOLOGIES, INC.

Current report

. Risk Factors

Current report

We depend on the ongoing availability of certain raw materials and components to assemble our products. Since 2025, the United States has imposed significant new tariffs on a broad range of imported products and components and may adopt additional tariffs, trade restrictions or other measures in the future. Although certain tariffs previously imposed under the International Emergency Economic Powers Act were invalidated by the Supreme Court of the United States (the “U.S. Supreme Court”) in February 2026 and subsequently rescinded, other trade measures remain in effect or have been implemented as replacements.

Current report

In addition, following the U.S. Supreme Court's ruling, the U.S. Administration imposed a temporary import surcharge under Section 122 of the Trade Act of 1974 (“Section 122”). The surcharge was initially set at 10% ad valorem on substantially all imports, with a statutory ceiling of 15%, subject to carve-outs for certain goods (e.g., electronics and critical minerals) and products qualifying under the United States-Mexico-Canada Agreement. The surcharge took effect on February 24, 2026, for a maximum period of 150 days. On May 7, 2026, the U.S. Court of International Trade held that the Section 122 proclamation was invalid. This ruling has been appealed, and the U.S. Court of Appeals for the Federal Circuit issued a temporary stay of the ruling pending resolution of the appeal. The evolving legal status and expiration of the Section 122 tariffs create additional uncertainty regarding our tariff exposure and any potential recovery of Section 122 duties paid during the quarter. If the Section 122 proclamation is ultimately held invalid and refund mechanisms are established, we may be eligible to recover some or all the Section 122 that we have paid. However, the outcome of the appeal and the availability, timing and amount of any potential refunds remain uncertain and are subject to further judicial and administrative proceedings.

Current report

Most recently, with the expiration of Section 122 tariffs, in July 2026, the U.S. Administration imposed additional tariffs under Section 301 of the Trade Act of 1974 (“Section 301”) on imports from numerous trading partners, with rates generally ranging from 10% to 12.5%, subject to specified exemptions and exceptions. These tariffs are in addition to existing duties and may apply alongside other trade measures, including Section 301 tariffs applicable to imports from China, tariffs under Section 232 of the Trade Expansion Act of 1962, antidumping and countervailing duties, and any future tariffs or trade restrictions that may be adopted. As with the Section 122 surcharge discussed above, these Section 301 tariffs may also be subject to legal challenge, and we cannot predict the outcome of any such challenge or its effect on our tariff exposure.

Current report

In addition, on July 28, 2026, the Federal Communications Commission (the “FCC”) updated its “Covered List,” maintained under the Secure and Trusted Communications Networks Act, to include power inverters produced in foreign countries, effective immediately and prospectively for new product authorizations. Under this action, new inverter models that do not qualify as “domestic end products” (as defined under the Buy American Act, 48 C.F.R. § 25.101(a)) are generally prohibited from receiving the FCC equipment authorizations required to import, market, or sell such products in the United States. The FCC’s order applies to new inverter models and certain equipment modifications requiring FCC equipment authorization in the future and generally does not impact products that were authorized by the FCC prior to this order. We believe that SolarEdge inverter products continue to be eligible for sale and installation under the new order. We continuously evaluate the impact of this and other trade restrictions on our business. Inability to comply with such trade restrictions would have a material adverse effect on our business, financial condition, results of operations and cash flows.

Current report

The scope, duration and impact of current and future tariffs and trade measures remain uncertain and may increase our cost of revenue, disrupt supply chains, create cost volatility, reduce demand for our products, adversely affect our customers, suppliers, contract manufacturers and other business partners, or impair our ability to compete effectively. Continuing uncertainty regarding trade policy may also cause customers to accelerate, delay or cancel purchases, resulting in sales volatility and fluctuations in operating results.

Current report

In particular, if tariffs increase the cost of components imported into the United States, increase the cost of manufacturing our products, or increase the cost of solar power systems generally, solar power systems may become less economically attractive, which could reduce demand for our products and adversely affect our gross margins. It is difficult to predict what additional trade-related actions may be taken by the United States or other governments, including further tariff increases, new trade restrictions, or retaliatory measures. Any such actions could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Previous report

ITEM 1A. Risk Factors

Previous report

Since 2025. the United States has imposed significant new tariffs on nearly all products and components imported into the United States and could propose additional tariffs or increases to those already in place.

Previous report

On February 20, 2026, the Supreme Court of the United States (the "U.S. Supreme Court") issued a decision invalidating certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). The U.S. Supreme Court did not address refunds or remedies but instead remanded the matter to the Court of International Trade to address remedies. In response, the President issued an executive order rescinding the IEEPA tariffs and directing agencies to take measures to cease collection of the tariffs. However, a presidential proclamation was issued imposing a tariff surcharge of at least 10% under the balance of payments provision in Section 122 of the Trade Act of 1974 on all imports with certain exceptions. The tariffs under this statute went into effect on February 24, 2026, and will remain in effect for 150 days. The ultimate impact of these newly enacted and potential future tariffs or other restrictions on international trade will depend on various factors, including the ultimate level of tariffs, the duration such tariffs remain in place, and how other countries respond to U.S. tariffs. Due to broad uncertainty regarding the timing, content and extent of any regulatory changes in the United States or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition and results of operations. Moreover, the elimination of IEEPA tariffs does not eliminate our tariff exposure, as tariffs imposed under Section 122 of the Trade Act of 1974, existing tariffs under other statutory authorities, and potential new or expanded tariffs may continue to increase our cost of revenue and contribute to supply chain challenges, cost volatility, and broader economic uncertainty.

Previous report

In particular, it is unknown what effect any such new tariffs or retaliatory actions will have on the solar industry and our customers. The resulting environment of escalating trade tension, retaliatory trade tension, or other trade actions, restrictive measures, additional trade restrictions, or barriers, if implemented on a broader range of products or components from outside the United States, or with respect to products shipped from the United States, could harm our ability to obtain necessary product components or to sell our products at prices customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations and cash flows.

Previous report

Furthermore, if the price of solar power systems in the United States increases, as well as the cost of manufacturing our products in the United States, the use of solar power systems could become less economically feasible and could reduce our gross margins or reduce the demand of solar power systems manufactured and sold, which in turn may decrease demand for our products. Additionally, existing or future tariffs could negatively affect key partners, suppliers and manufacturers. Such outcomes could adversely affect the amount or timing of our revenue, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products. It is difficult to predict what further trade-related actions the U.S. and other governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions. As additional new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or if affected countries take retaliatory trade actions, such changes could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Previous report

In addition, from November 2023 until October 2025, the Houthis, a rebel Shi’a group in Yemen, attacked international shipping lanes in the Red Sea, forcing commercial vessels to redirect freight traffic away from the Bab al‑Mandab Strait and the Suez Canal and take longer and costlier routes. If these attacks resume, continue, or intensify, shipping costs and energy prices may increase, which could have an adverse impact on our business as well as on the global economy.

Previous report

We rely on distributors and large installers to assist in selling our products, and the failure of these customers to perform as expected could reduce our future revenues.

Previous report

Our customers’ decisions to purchase our products are influenced by several factors outside of our control. The agreements we have with some of our largest customers do not have long-term purchase commitments and are generally cancellable by either party after a relatively short notice period. The loss of, or events affecting, one or more of these customers could have a material adverse effect on our business, financial condition, and results of operations.

Previous report

In addition, we do not have exclusive arrangements with our third-party distributors and large installers, many of which also market and sell products from our competitors. These distributors and large installers may terminate their relationships with us at any time and with little or no notice. Further, these distributors and large installers may fail to devote resources necessary to sell our products at the prices, in the volumes, and within the timeframes that we expect, or may focus their marketing and sales efforts on products of our competitors. Termination of agreements with current distributors or large installers, failure by these distributors or large installers to perform as expected, or failure by us to cultivate new distributor or large installer relationships, could hinder our ability to expand our operations and could negatively impact our revenue and results of operations.

Previous report

In recent years, with a downturn of the renewable energy demand, some players in the market have announced exiting the solar market and others have shown signs of financial distress. For example, in November 2025, Posigen, Inc., a customer of ours, announced that it filed for Chapter 11 bankruptcy in the Southern District of Texas, and, in April 2026, Freedom Forever LLC, another customer of ours, announced that it filed for Chapter 11 bankruptcy in Delaware. Some of our customers and some installers who purchase our products from distributors have shown signs of financial distress and some have requested and received extended payment terms or loans from us. Certain receivables related to previously identified customer defaults, have been written off in 2025, and others, such as receivables from Freedom Forever, have not been recognized, and therefore, are not expected to materially affect our current financial results. However, an additional doubtful debt was recognized by the Company in the first quarter of 2026, and there can be no assurance that additional customer failures or payment defaults will not occur. If additional customers, installers and distributors become insolvent or financially distressed, or if some of their customers fail to pay our distributors for products sold by such distributors, we may need to write off additional amounts, which may cause a material adverse effect to our business, financial condition, results of operations and cash flows.