IMPINJ INC

Previous wording

Endpoint ICs: NXP, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien.

Current wording

Endpoint ICs: NXP, Kiloway, Quanray, Shanghai Fudan Microelectronics Group and Alien.

Previous wording

The RAIN opportunity is still developing. RAIN adoption, as well as adoption of our platform and products, including our Gen2X features, depends on many factors, including the extent to which end users understand and embrace the benefits that RAIN and our platforms and products offer; whether their benefits outweigh the cost and time to replace or modify end users’ existing systems and processes; and whether they meet end users’ current or anticipated needs.

Current wording

Going forward, RAIN adoption, including adoption of our platform, products and innovations like Gen2X, will depend on many factors, such as the extent to which end users understand and embrace the benefits that RAIN and our platforms, products and features offer; whether their benefits outweigh the cost and time to replace or modify end users’ existing systems and processes; and whether they meet end users’ current or anticipated needs.

Previous wording

We must introduce new products, services and solutions to compete effectively.

Current wording

We must continue to introduce new products, services and solutions to foster growth and RAIN adoption.

Previous wording

We introduce new products and services to advance our business, satisfy increasingly demanding end-user requirements and grow RAIN market adoption. We commit significant resources developing and introducing these new products and services, and to improving the performance and reliability of, and reducing the costs of, our existing products and services. We are also increasingly focused on providing enterprise solutions to partners and end users.

Current wording

We strive to regularly introduce new products and services to advance our business, satisfy increasingly demanding end-user requirements and grow the RAIN market by committing significant resources developing and introducing new or enhanced products, services and solutions.

Previous wording

Whether our new or enhanced products, services and solutions will succeed is uncertain. For example, our software and cloud services offerings have not yet grown into a material source of revenue, and whether or when our investment in these areas will be successful is uncertain. Our success developing the technologies, processes or capabilities necessary or desired for new or enhanced products, services and solutions, or licensing or otherwise acquiring them from third parties, and our ability to introduce new or enhanced products, services and solutions before our competition, depends on many factors, including:

Current wording

Whether our new or enhanced products, services and solutions will succeed in continuing to grow RAIN adoption is uncertain. For example, our software and cloud services offerings have not yet grown into a material source of revenue, and whether or when our investment in these areas will be successful is uncertain. Our success in developing the technologies, processes or capabilities necessary or desired for new or enhanced products, services and solutions, or licensing or otherwise acquiring them from third parties, and our ability to introduce new or enhanced products, services and solutions before our competition, depends on many factors, including:

Previous wording

our ability to identify new product capabilities, services or solutions that end users will widely adopt;

Current wording

our ability to identify new use cases for our products, services and solutions that end users will widely and readily adopt;

Previous wording

timely and efficiently implementing manufacturing, assembly and testing procedures;

Current wording

timely and efficiently implementing production and testing procedures;

Previous wording

When we introduce new products, services and solutions, our success in ramping adoption depends, in part, on us making those products, services and solutions easy for our partners and end users to deploy and use. For example, when we launched our M800-family endpoint ICs, we supported our inlay partners in producing high-performing, high-quality M800-based inlays. Without this support, M800 adoption would have been delayed and our operating results would have suffered. We cannot guarantee we will be able to provide sufficient support for future products, in which case our operating results could suffer.

Current wording

When we introduce new or enhanced products, services and solutions, our success in ramping adoption depends, in part, on us making those products, services and solutions easy for our partners and end users to deploy and use. For example, when we launched our M800-family endpoint ICs, we supported our inlay partners in producing high-performing, high-quality M800-based inlays. Without this support, M800 adoption would have been delayed and our operating results would have suffered. We cannot guarantee we will be able to provide sufficient support for future products, in which case our operating results could suffer.

Previous wording

We have developed, and continue developing, solutions for retail self-checkout and loss prevention and SC&L package routing that have been, or that we expect to be, deployed by industry-leading enterprise end users. We have also launched features in Gen2X that we believe will improve our ability to deliver cost-effective enterprise solutions. If we do not make our offerings repeatable across multiple enterprises and in various market segments, we may fail to capitalize on our platform’s potential. We may not gain access to and address challenging new use cases, such as health and beauty, cosmetics, pharmaceuticals and food if we do not succeed in developing relationships with top-tier solution partners who know about and believe in our solutions.

Current wording

We have developed, and continue developing, solutions for retail point of sale and loss prevention and SC&L package routing that have been, or that we expect to be, deployed by industry-leading enterprise end users. We have also launched features in Gen2X that we believe will improve our ability to deliver cost-effective enterprise solutions. If we do not make our offerings repeatable across multiple enterprises and in various market segments, we may fail to capitalize on our platform’s potential. We may not have the opportunity to address challenging new use cases across new market segments, such as, health and beauty, cosmetics, pharmaceuticals and food, if we do not succeed in developing relationships with top-tier solution partners who know about and believe in our solutions.

Previous wording

We and our partners may be unable to successfully acquire customers for our enterprise solutions, or to successfully address our market opportunity. Delivering enterprise solutions requires a partner products and services network that complements our own and that together addresses enterprise needs. Convincing enterprises to partner with us to solve their business problems—including evaluation, design, deployment, operations and services, as well as integrating RAIN data into the enterprise’s information systems—requires tight coordination among our and our partners’ sales, marketing, operations and engineering teams. If we do not build our enterprise solutions platform and our partner network to deliver these solutions effectively, our business prospects will suffer.

Current wording

We and our partners may be unable to successfully address our market opportunity for enterprise solutions. Delivering enterprise solutions requires a partner products and services network that complements our own and that together addresses enterprise needs. Convincing enterprises to partner with us to solve their business problems—including evaluation, design, deployment, operations and services, as well as integrating data from our platform into the enterprise’s information systems—requires tight coordination among our and our partners’ sales, marketing, operations and engineering teams. If we do not build our enterprise solutions platform and our partner network to deliver the expected benefits effectively, our business prospects will suffer.

Previous wording

We derive, and expect to continue to derive for some time, most of our revenue from our endpoint ICs. If demand declines, or if we are unable to procure enough wafers to meet the demand we have, or if we are unable to raise prices to offset cost increases, then our business and operating results will suffer. In addition, the continued adoption of, and demand for, our endpoint ICs derives in part from us demonstrating their benefits using our platform. If we fail to establish those benefits then we may be unsuccessful in countering competitive endpoint IC price pressures and our business and operating results could be adversely affected.

Current wording

We derive, and expect to continue to derive for some time, most of our revenue from our endpoint ICs. If endpoint IC demand declines, if we are unable to meet the demand we have, or if we are unable to raise prices to offset cost increases, then our business and operating results will suffer. In addition, the continued adoption of, and demand for, our endpoint ICs derives in part from us demonstrating their benefits using our platform. If we fail to establish those benefits then we may be unsuccessful in countering competitive endpoint IC price pressures and our business and operating results could be adversely affected.

Previous wording

Though less common, we have also increased prices from time to time, especially during times of increasing wafer and/or post-processing costs. For example, we raised prices in 2021, 2022 and 2023 to accommodate higher costs. We may be required to raise prices again if macroeconomic conditions, including inflation, or other causes, such as geopolitical instability, create upward pressure on our product costs. Higher prices could reduce our market share and/or dampen adoption and market growth.

Current wording

Though less common, we have also increased prices from time to time, especially during times of increasing wafer and/or post-processing costs. Recently, and significantly due to increasing worldwide semiconductor demand, many of our vendors and subcontractors have either increased prices, signaled future price increases or both. In response, we have notified our customers of modest, impending product price increases. We may be required to raise prices again if economic conditions, including inflation, or other causes, such as geopolitical instability, create additional upward pressure on our product costs. Higher prices could reduce our market share and/or dampen adoption and market growth.

Previous wording

Our products must meet increasingly demanding specifications for quality, reliability and performance. Our products are both highly technical and deployed in large, complex systems in which errors, defects or incompatibilities can be problematic for our partners and end users.

Current wording

Our products are both highly technical and deployed in large, complex systems in which errors, defects or incompatibilities can be problematic for our partners and end users.

Previous wording

Moreover, if we encounter product quality issues, then we may be required to incur significant time and costs to diagnose, test and fix the issues. There can be no assurance that such remediation efforts would be successful. Even if successful, these efforts could further constrain our ability to supply our partners and end users with new products until we have resolved the issues.

Current wording

Moreover, if we encounter product quality issues, then we may incur significant time and costs to diagnose, test and fix the issues. These efforts may not succeed and could further constrain our ability to supply our partners and end users with new products until we resolve the issues.

Previous wording

Persuading end users or partners to design our products into their business processes or products requires educating them about RAIN’s and our products’ value. They may use other technologies or products and may not be receptive to introducing RAIN into their business processes or products. Even when convinced, they often undertake long pilot programs and qualifications prior to placing orders. These pilot programs and qualifications can be time-consuming and expensive, and there is no assurance they will result in an order for our products. If we fail to develop new products that adequately or competitively address end users’ or our partners’ needs, then we may not receive product orders, which could adversely affect our business, prospects and operating results.

Current wording

Persuading end users or partners to design our products into their business processes or products requires educating them about RAIN’s and our products’ value. They may use other technologies or products and may not be receptive to introducing RAIN into their business processes or products. Even when convinced, they often undertake pilot programs and qualifications prior to placing orders. Those pilot programs and qualifications can be time-consuming and expensive and that may not result in orders for our products, which could adversely affect our business prospects and operating results.

Previous wording

Our visibility into the length of the sales and deployment cycles for our products is limited.

Current wording

Our visibility into the procurement and deployment cycles for our products, while improving, is still limited.

Previous wording

We have limited visibility into end-user sales and deployment cycles, and these cycles are often longer than we anticipate. Many factors contribute to our limited visibility, including the time our partners and end users spend evaluating our products, the time educating them on RAIN’s benefits and the time integrating our products with end users’ systems. The length and uncertain timing of the sales and deployment cycles can lead to delayed product orders. In anticipation of those orders, we may incur substantial costs before the sales cycle is complete and before we receive any customer orders or payments, if we receive them at all.

Current wording

We have limited visibility into end-user procurement and deployment cycles, and these cycles often take longer than we anticipate. Many factors contribute to our limited visibility, including but not limited to the fact that we sell most of our products through partners rather than directly to the end user. We also have limited visibility into the time end users spend evaluating our products, services and solutions; the time partners spend educating end users on the benefits of using our products, services and solutions; and the time to integrate our products, services and solutions with end users’ systems. The length and uncertain timing of the procurement and deployment cycles can delay product orders. In anticipation of those orders, we may incur substantial costs before the sales cycle is complete and before we receive any customer orders or payments, if we receive them at all.

Previous wording

An inability or limited ability of end user systems to exploit RAIN information may adversely affect the market for our products.

Current wording

An inability or limited ability of end user systems to exploit RAIN data may adversely affect the market for our products, services and solutions.

Previous wording

A successful end-user deployment requires not only tags, readers or gateways and operating software, but RAIN integration with information systems and applications that create business value from the RAIN data. Unless end users have access to effective analytical tools that extract business value, and enable their information systems to use these tools, RAIN deployments could stall. Our efforts to foster development and deployment of these tools could fail. In addition, our guidance to business-analytics providers for integrating our products with their tools could prove ineffective.

Current wording

A successful end-user deployment requires not only tags, readers or gateways and operating software, but RAIN integration with information systems and applications that create business value from the RAIN data. Unless end users have access to effective analytical tools that extract business value, and enable their information systems to use these tools, RAIN deployments could stall, our efforts to foster development and deployment of these tools could fail, and our guidance to business-analytics providers for integrating our products with their tools could prove ineffective.

Previous wording

Solution providers and SIs are essential to the RAIN market. They provide deployment know-how to enable end users to successfully deploy RAIN solutions. Integrating our products with end-user information systems could prove more difficult or time-consuming than we or they anticipate, which could delay deployments.

Current wording

Solution providers and SIs are essential to the RAIN market. They provide deployment know-how to enable end users to successfully deploy RAIN solutions. Integrating our products with end-user information systems could prove more difficult or time-consuming than we or they anticipate, which could jeopardize deployments.

Previous wording

Significant changes in RAIN standards bodies, standards or qualification processes, or their failure to meet or to keep up with RAIN market needs, could impede our ability to sell our products and services.

Current wording

Significant changes in RAIN standards bodies, standards or qualification processes, or their failure to meet or to keep up with RAIN market needs, could impede our ability to sell our products, services and solutions.

Previous wording

If industry standards were to diverge from, or fail to meet or keep up with, our or the RAIN market’s needs, then our products and services could fail in the market. End users could delay their deployments and slow sales of our existing products or services, or limit our ability to implement new features. The lost opportunities as well as time and expense to develop new products or change our existing products could be substantial, and we may not ultimately succeed.

Current wording

If industry standards were to diverge from, or fail to meet or keep up with, our or the RAIN market’s needs, then RAIN products, including ours, could fail in the market. End users could delay their deployments and slow sales of our existing products, or limit our ability to implement new features. The lost opportunities as well as time and expense to develop new products or change our existing products could be substantial, and we may not ultimately succeed.

Previous wording

Our products operate in spectrum bands where they are certified to transmit. If the spectrum regulations were to change, or if our products were found to be noncompliant despite being certified to operate, then we would need to redesign our products, potentially resulting in significant costs, including costs associated with obsolete inventory. Regulatory changes may also cause us to forego opportunities, adversely affecting our business.

Current wording

Our products operate in spectrum bands where they are certified to transmit. If the spectrum regulations were to change, or if our products were found to be noncompliant despite being certified to operate, or if the spectrum regulation themselves were to be found deficient, then we would need to redesign our products, potentially resulting in significant costs, including costs associated with obsolete inventory. Regulatory changes may also cause us to forego opportunities, adversely affecting our business.

Previous wording

In April 2024, NextNav, Inc. asked the Federal Communications Commission, or FCC, to initiate a proceeding to reconfigure the 902–928 MHz ISM band, or Lower 900 MHz Band, in which we and other unlicensed services operate, to create a terrestrial backup to the U.S. Global Positioning System to provide positing, navigation and timing, or PNT, data. To pay for their proposed system, NextNav also asked to be able to license certain spectral bands, including parts of the Lower 900 MHz Band, to others to deliver 5G broadband services.

Current wording

In April 2024, NextNav, Inc. asked the Federal Communications Commission, or FCC, to initiate a proceeding to reconfigure the 902–928 MHz ISM band, or Lower 900 MHz Band, in which we and other unlicensed services operate in North America, to create a terrestrial backup to the U.S. Global Positioning System, or GPS, to provide positing, navigation and timing, or PNT, data. To pay for their proposed system, NextNav also asked to be able to license certain spectral bands, including parts of the Lower 900 MHz Band, to others to deliver 5G broadband services.

Previous wording

We and other RAIN providers and end users, as well as other Lower 900 MHz Band users, registered opposition to NextNav’s petition and asked the FCC to reject it. In early 2025, the FCC launched a Notice of Inquiry to explore ways in which the FCC could support alternative PNT technologies and solutions. Comments and reply comments were due in April and May 2025, respectively.

Current wording

A wide range of Lower 900 MHz Band users, industry groups and companies, including us and other RAIN providers registered opposition to NextNav’s petition and asked the FCC to reject it. In early 2025, the FCC launched a Notice of Inquiry to explore ways in which the FCC could support alternative PNT technologies and solutions. Comments and reply comments were due in April and May 2025, respectively.

Previous wording

The FCC has not yet acted on NextNav’s petition or on the PNT Notice of Inquiry and the fate of NextNav’s petition is uncertain. If NextNav’s petition is approved as proposed, the consequent ISM band reconfiguration could negatively impact us and our industry. If the FCC were to take material steps toward considering, or ultimately adopting, NextNav’s proposal, our business could be negatively affected.

Current wording

NextNav has actively lobbied various federal government branches and units to support its proposal but the FCC has not yet acted on NextNav’s petition or on the PNT Notice of Inquiry and the fate of NextNav’s petition remains uncertain. If NextNav’s petition is approved as proposed, the consequent ISM band reconfiguration could negatively impact us and our industry. If the FCC were to take material steps toward considering, or ultimately adopting, NextNav’s proposal, our business could be negatively affected.

Previous wording

While we believe we have valuable RAIN intellectual property and aspire to monetize that intellectual property by licensing it to third parties, including third parties who compete with us to some extent, our experience in doing so is nascent, and our ability to grow licensing revenue remains subject to numerous risks and uncertainties. These risks and uncertainties include our ability to maintain and grow our intellectual property portfolio and to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features, and our ability to monitor infringement of our intellectual property rights by others and possibly seek enforcement action against those who attempt to infringe our intellectual property rights.

Current wording

Our ability to grow licensing revenue remains subject to numerous risks and uncertainties. These risks and uncertainties include our ability to maintain and grow our intellectual property portfolio and to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features, our ability to monitor infringement of our intellectual property rights by others and possibly seek enforcement action against those who attempt to infringe our intellectual property rights, and the fact that our experience in licensing our intellectual property is limited.

Previous wording

Our licensing program is also not singly focused on generating licensing revenue. Our desire to maintain close, strategic relationships with important partners or end users and to encourage them to use innovations such as Gen2X may cause us to license our intellectual property for reasons that go beyond simply deriving licensing revenue.

Current wording

Our licensing efforts are also not singly focused on generating licensing revenue. Our desire to maintain close, strategic relationships with important partners or end users and to encourage them to use innovations such as Gen2X may cause us to license our intellectual property for reasons that go beyond simply deriving licensing revenue.

Previous wording

Wafer availability is cyclical and shortfalls can limit sales and cause market-share losses. Our wafer supply is not guaranteed, and we may not receive adequate supply from our foundry partners when industry demand for wafers is high, as it frequently is in the process nodes we use. Our IC supply can also be limited by post-processing constraints, such as in testing, thinning, bumping, dicing and packaging. We may also experience shortfalls and price increases for components we use in our readers and gateways.

Current wording

Wafer availability is cyclical and shortfalls can limit sales and cause market-share losses. Our wafer supply is not guaranteed, and we may not receive adequate supply from our foundry partners when industry demand for wafers is high, as it frequently is in the process nodes we use. Our IC supply can also be limited by post-processing constraints, such as in testing, sorting, thinning, bumping, dicing, packaging and quality assurance. We may also experience shortfalls and price increases for components we use in our readers and gateways.

Previous wording

Wafer shortfalls can also artificially increase bookings as customers over-order our products and then cause sales declines as those customers consume their accumulated inventory. Additionally, if our suppliers charge us more but we are unable to raise our prices to cover those higher costs, our gross margins and other financial results could suffer. Any product shortfalls or cost increases will negatively impact our product availability and our financial results will suffer.

Current wording

Wafer shortfalls can also artificially increase bookings as customers over-order our products and then cause subsequent sales declines as those customers consume their accumulated inventory. Additionally, if our suppliers charge us more but we are unable to raise our prices to cover those higher costs, our gross margins and other financial results could suffer. Any product shortfalls or cost increases will negatively impact our product availability and our financial results will suffer.

Previous wording

We typically order products from our suppliers based on sales forecasts before we receive purchase orders. Many of our partners have difficulty accurately forecasting the amount and timing of their sales, and sometimes cancel orders or reschedule product shipments with little or no advance notice to us. Partners will also sometimes give us soft commitments for large orders that do not materialize. Competition and unanticipated external events, such as macroeconomic or regulatory changes, can also adversely affect demand and consequently our inventory levels, sales and operating results.

Current wording

We typically order products from our suppliers based on sales forecasts and before we receive purchase orders. Many of our partners have difficulty accurately forecasting the amount and timing of their sales, and sometimes cancel orders or reschedule product shipments with little or no advance notice to us. Partners will also sometimes give us soft commitments for large orders that do not materialize. Competition and unanticipated external events, such as macroeconomic or regulatory changes, can also adversely affect demand and consequently our inventory levels, sales and operating results.

Previous wording

High inventory levels can increase expenses and expose us to a higher risk of product obsolescence especially when we introduce new products and technologies. If we are unable to sell our inventory as and when we expect to, we may have to discount or expense the excess inventory and our business and financial results will be negatively impacted as a result.

Current wording

High inventory levels can increase expenses and expose us to a heightened risk of product obsolescence, especially when we introduce new products and technologies. If we are unable to sell our inventory as and when we expect to, we may have to discount or expense the excess inventory, negatively impacting our business and financial results.

Previous wording

Hiring and retaining employees with RAIN technical and business knowledge and experience are critical to our success. We have been fortunate to have hired and retained many such employees in our history, but as employees depart or retire we must recruit and train their successors to remain competitive. We must also adapt to changes in our executive team from time to time. Our business could be significantly harmed if we were not able to attract and retain key talent, or if we were not able to effectively manage transitions in personnel and leadership as they arise.

Current wording

Hiring and retaining employees with RAIN technical and business knowledge and experience are critical to our success. We have been fortunate to have hired and retained many such employees in our history, but as employees depart or retire we must recruit and train their successors to remain competitive. We must also adapt to changes in our executive team from time to time. Our business could be significantly harmed if we are unable to attract and retain key talent, or if we are unable to effectively manage transitions in personnel and leadership as they arise.

Previous wording

We regularly evaluate potential strategic transactions, and we may pursue them if complementary to our business. For example, in April 2023 we acquired Voyantic Oy, a global provider of RFID (primarily RAIN and NFC) inlay and label design, manufacturing and test systems. Strategic transactions could be material to our financial condition and operating results. We have limited experience executing acquisitions. Integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures. Acquisition-related risks include:

Current wording

We regularly evaluate potential strategic transactions, and we may pursue them if complementary or beneficial to our business. For example, in April 2023 we acquired Voyantic Oy, a global provider of RFID (primarily RAIN and NFC) label production systems. Future strategic transactions, if any, could be material to our financial condition and operating results. We have limited experience executing acquisitions. Integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures. Acquisition-related risks include:

Previous wording

Foreign acquisitions involve additional risks beyond those above, including those related to integrating operations across different cultures and languages, currency risks and the economic, political and regulatory risks associated with other countries. Also, the anticipated benefit of any acquisition, domestic or foreign, may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, debt incurrence, contingent liabilities or amortization expenses or goodwill write-offs, any of which could harm our financial condition. Future acquisitions may require us to obtain additional equity or debt financing, which may not be available on favorable terms or at all.

Current wording

Foreign acquisitions involve additional risks beyond those above, including those related to integrating operations across different cultures and languages, currency risks and the economic, political and regulatory risks associated with other countries. Also, the anticipated benefit of any acquisition, domestic or foreign, may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, increased debt, contingent liabilities or amortization expenses or goodwill write-offs, any of which could harm our financial condition. Future acquisitions may require us to obtain additional equity or debt financing, which may not be available on favorable terms or at all.

Previous wording

The state of tariffs and other trade measures worldwide remains very uncertain. Trade is a focus of the current U.S. administration, and the administration has been very active in this area. A full understanding of the amount, scope, and nature of any tariffs and other trade restrictions that the U.S. may implement as well as how other countries may respond is unclear.

Current wording

Trade policies, tariffs and other trade measures worldwide are, and are likely to remain, very uncertain. Trade is a focus of the current U.S. administration, as are tariffs, and U.S. policies have shifted rapidly as a result. A full understanding of the amount, scope, and nature of any tariffs and other trade measures that the U.S. may implement as well as how other countries may respond is unclear.

Previous wording

In February 2026, the U.S. Supreme Court invalidated the use of the International Emergency Economic Powers Act to impose significant tariffs the administration announced and implemented beginning in 2025. Following that decision, the administration replaced those tariffs with a 10% import surcharge on nearly all U.S. imports under a different legal authority, which is set to expire in July 2026 unless Congress extends it. Under separate authority, the U.S. also imposed tariffs on imports of steel, aluminum and copper; on certain semiconductor products including still-higher tariffs on Chinese-origin semiconductors; and on certain additional items. Based on trade actions undertaken and/or threatened by the U.S. since 2025, significant trade partners such as Mexico, Canada, China and the European Union have at times imposed, or announced plans to impose, retaliatory tariffs.

Current wording

In February 2026, the U.S. Supreme Court determined that the International Emergency Economic Powers Act, or IEEPA, did not authorize the tariffs the U.S. administration had implemented in 2025. Following that decision, the administration rescinded the tariffs imposed under IEEPA effective February 24, 2026, and in its place imposed a surcharge on U.S. imports under Section 122 of the Trade Act of 1974. The Section 122 surcharge expired effective July 24, 2026, after which the U.S. administration imposed tariffs of 10% or 12.5% on the largest U.S. trading partners under authorities provided in Section 301 of the Trade Act of 1974, following determinations that those U.S. trading partners insufficiently enforce forced labor laws. Under separate authority, the U.S. also imposed tariffs on imports of steel, aluminum and copper; on certain semiconductor products including higher tariffs on Chinese-origin semiconductors; and on certain additional items under Section 232 of the Trade Expansion Act of 1962. Based on trade actions undertaken and/or threatened by the U.S. since 2025, significant trade partners such as Mexico, Canada, China and the European Union have at times imposed, or announced plans to impose, retaliatory tariffs.

Previous wording

Given this dynamic environment, it is not possible to know with any degree of certainty what the negative direct and indirect consequences of tariffs and other trade restrictions could be on our business and financial results. We believe the direct impact of U.S. tariffs on our endpoint IC business is likely to be manageable because we import only a small portion of our wafers into the United States. However, the indirect effects of U.S. tariffs on products containing our endpoint ICs could be significant. China remains a key producer of the goods our endpoint ICs connect, and a key producer of readers using our reader ICs, so the imposition of high U.S. tariffs on imports from China could significantly and negatively affect our business and financial results.

Current wording

Given this dynamic environment, it is not possible to know with any degree of certainty what the negative direct and indirect consequences of tariffs and other trade restrictions could be on our business and financial results. We believe the direct impact of U.S. tariffs on our endpoint IC business is likely to be manageable because we import only a small portion of our wafers into the United States. However, the indirect impact of U.S. tariffs on products containing our endpoint ICs could be significant. China remains a key producer of the goods our endpoint ICs connect, and a key producer of readers using our reader ICs, so high U.S. tariffs on imports from China could significantly and negatively affect our business and financial results.

Previous wording

We must export and import our products and conduct our business activities in compliance with U.S. export controls and trade and economic sanctions, including the Commerce Department’s Export Administration Regulations and economic and trade sanctions established by the Treasury Department’s Office of Foreign Assets Controls, as well as similar controls established in the countries in which we do business. For example, the U.S. government has continued to expand controls restricting the ability to send certain products and technology related to semiconductors and semiconductor manufacturing to and within China and additional destinations. These expanded controls include imposing additional licensing requirements on exports, re-exports and transfers of certain ICs and products containing those ICs to and within China and additional destinations. In addition, the United States and other countries continue to expand the economic sanctions and export control restrictions imposed against Russia and Belarus and certain Russian nationals and entities after Russia invaded Ukraine. We must undertake additional diligence efforts to comply with these and other rules, which may be time-consuming and result in delayed or lost opportunities. We may not always be successful in obtaining necessary export or import licenses, and our failure to obtain required export or import approval for our products or limitations on our ability to export or sell our products may harm our domestic and international sales and negatively affect our revenue.

Current wording

We must export and import our products and conduct our business activities in compliance with U.S. export controls and trade and economic sanctions, including the Commerce Department’s Export Administration Regulations and economic and trade sanctions established by the Treasury Department’s Office of Foreign Assets Controls, as well as similar controls established in the countries in which we do business. For example, the U.S. government has continued restricting the ability to export, re-export and transfer (in country) certain products and technology related to semiconductors and semiconductor manufacturing and certain ICs and products containing those ICs to and within China and additional destinations. In addition, the United States and other countries continue to expand the economic sanctions and export control restrictions in response to global conflicts including in Russia and Ukraine and in the Middle East. We must undertake additional diligence efforts to comply with these and other rules, which may be time-consuming and result in delayed or lost opportunities. We may not always be successful in obtaining necessary export or import licenses, and our failure to obtain required export or import approval for our products or limitations on our ability to export or sell our products may harm our domestic and international sales and negatively affect our revenue.

Previous wording

Rapid advancements in AI and ML offer great potential for improving our solutions performance, operating efficiency and engineering development, but employing them can also increase our business, financial, legal and other risks. As we introduce more AI and ML tools into our products and operations, we must guard against risks in using them. These risks include improper product operation, potential security breaches or incidents, inadvertently disclosing confidential or sensitive data, inaccuracies or improper bias in our operations or in data derived from using our products or services, legal claims, noncompliance with industry standards, complications establishing or asserting intellectual property ownership and reputational harm. In addition, increased adoption of AI by us and third-party partners may also increase the risks of cybersecurity incidents.

Current wording

Rapid advancements in AI and ML offer great potential for improving our solutions performance, operating efficiency and engineering development, but using them can also increase our business, financial, legal and other risks. As we introduce more AI and ML tools into our products and operations, we must guard against risks in using them. These risks include improper product operation, potential security breaches or incidents, inadvertently disclosing confidential or sensitive data, inaccuracies or improper bias in our operations or in data derived from using our products or services, legal claims, noncompliance with industry standards, complications establishing or asserting intellectual property ownership and reputational harm. In addition, increased adoption of AI by us and third-party partners may also increase the risks of cybersecurity incidents.