ADI

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How ADI rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

65%

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+356

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New in FY2025

As a result of our international operations, our business, financial condition and results of operations could be negatively impacted by, among others, the following factors: • political, legal and economic changes, crises or instability and civil unrest that may impact markets in which we do business, such as macroeconomic weakness related to trade and political disputes between the United States and Europe or China, tensions across the Taiwan Strait that may adversely affect our operations in Taiwan, our customers and the technology industry supply chain, and the ongoing conflict between Russia and Ukraine and tensions in Israel and the Middle East; • trade policy, commercial, travel, export or taxation disputes or restrictions, import, export or sector-based tariffs, changes to export classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which we do business, particularly with respect to China; • compliance requirements of customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations; • currency conversion risks and exchange rate and interest rate fluctuations and uncertainty; • instability of global credit and financial markets due to uncertainty and adverse macroeconomic conditions such as inflation, tariffs and trade restrictions, high interest rates, bank failures and slower economic growth or recession that could, among other impacts, affect our ability to timely access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges; • sanctions imposed by the U.S. government or by the governments in countries in which we do business, which could adversely impact our business by preventing us from performing existing contracts, recognizing revenue, pursuing new business opportunities or receiving payment for products already supplied to customers; • complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax, price protection, competition practices, export control, customs, immigration, anti-boycott, AI, data privacy, cyber and product security, sustainability, climate and other ESG matters, intellectual property, anti-corruption, including the Foreign Corrupt Practices Act, and environmental compliance; • economic disruption from terrorism and threats of terrorism and the response to them by the United States and its allies; • increased managerial complexities, including different employment practices and labor issues; • changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; • greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; • natural disasters, public health emergencies or other catastrophic events; • transportation disruptions and delays and increases in labor and transportation costs; • fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflationary pressures and supply chain constraints; • greater difficulty in accounts receivable collections and longer collection periods; and • increased costs associated with our foreign defined benefit pension plans.
For example, changes in U.S.-China relations, the political environment or international trade policies could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of additional import or export duties and tariffs, restrictions on imports or exports, currency revaluations or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results.
In addition, export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.
These restrictions, which have continued to expand over the past several years, have impacted our revenues and results of operations in China and elsewhere.
These and similar restrictions have created, and may continue to create, uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions or focus on building indigenous semiconductor capacity to reduce reliance on U.S. suppliers.
We continue to evaluate the impact of these restrictions on our business as they are updated and expanded, and we expect that they may continue to have direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere.
In addition, our success may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to imports and exports, rare earth materials, antitrust, AI, cybersecurity, data protection and data privacy, the environment, indigenous innovation, the promotion of a domestic semiconductor industry, intellectual property rights and enforcement and protection of those rights.
Recently announced and future tariffs and other trade restrictions could materially and adversely affect our business, financial condition and results of operations.
In 2025, the U.S. government announced a series of tariffs, including tariffs targeting a broad range of imports and targeted tariffs on goods from specific countries and industries.
In response, many countries imposed reciprocal tariffs and other trade restrictions on the United States.
Although many of these tariffs, countermeasures and other trade restrictions have since been eased or paused, their initial announcements triggered considerable volatility in global markets and heightened economic uncertainty, and the global trade situation, particularly between the United States and China, continues to be highly dynamic.
Further, throughout 2025 the U.S. government has initiated numerous investigations into products and industries under Section 232 of the Trade Expansion Act of 1962.
For example, in April 2025, the Department of Commerce launched an investigation into the national security impacts of imported semiconductors and semiconductor manufacturing equipment.
While the results of this investigation remain unknown, it is expected to result in additional tariffs and trade restrictions that may adversely impact our business.
Similar investigations on other industries or products, including automotive, copper, steel, aluminum, critical minerals and aircraft, may also adversely impact the semiconductor industry and our business.
These changes have, and similar changes in the future may continue to, increase the cost or reduce the availability of raw materials and supplies we need to operate, cause customers to advance, delay, reduce, or cancel orders, shift buying patterns, impact demand in our end markets, complicate demand forecasting for us and our customers, increase supply chain complexity and contribute to volatility, a broader economic slowdown or recession.
Any of these impacts or changes could materially and adversely affect our business, financial condition and results of operations.
Demand in these end markets can fluctuate significantly based upon, for example, consumer spending, consumer preferences, the development of new technologies and macroeconomic conditions, including impacts related to tariffs and other trade restrictions.
Sales to third-party distributors accounted for approximately 56% of our revenue in the year ended November 1, 2025.
Further, our distributors could terminate their representation of us with little advance notice or their representation of us could be negatively affected for other reasons.
For example, our distributors could be adversely impacted by additional tariffs or export controls, which could limit our ability to conduct business with such distributors, increase our costs and adversely affect our reputation and operating results.
Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or through consolidation in the distribution industry, or the inability of a distributor to perform its obligations, could divert management’s attention and resources, result in disputes, litigation and settlement costs, increase risk that our products may be diverted from authorized distribution channels and sold on the “gray market” and disrupt our business.
Further, if we are unable to find suitable replacements with the appropriate scale and resources, our operating results could be adversely affected.
We are required to estimate the effects of variable consideration including price protection and stock rotation provided to distributors and record revenue at the time of sale to the distributor.
If our estimates of such liabilities are materially understated, it could cause subsequent adjustments that negatively impact our revenues and gross profits in a future period.
This reliance involves several risks, including reduced control over availability, pricing, capacity utilization, delivery schedules, manufacturing yields, costs and supply chain allocations.
Further, the imposition of tariffs or other trade restrictions may significantly increase the costs, and otherwise adversely impact the availability, of certain raw materials and supplies that we need to operate.
A prolonged disruption, shut-down or inability to utilize one or more of our or our third parties’ manufacturing facilities due to natural or man-made disasters, cybersecurity incidents, civil unrest or other events outside of our control, such as loss of raw materials or damage to our or our third parties’ manufacturing equipment, widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer demand.
As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, reputation, financial condition and results of operations.
Government incentives, including any that may be offered in connection with the CHIPS Act, may not be available to us on acceptable terms or at all.
Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may be materially affected by a number of factors, including: • the effects of adverse economic or geopolitical conditions in the markets in which we sell our products, including inflationary pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages and other costs; • changes in customer demand or order patterns for our products or for end products that incorporate our products; • the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; • our ability to accurately forecast distributor demand for our products; • future distributor pricing credits or stock rotation rights; • our ability to effectively manage our cost structure in both the short term and over a longer duration; • changes in geographic, product or customer mix; • changes in our effective tax rates, adverse tax decisions or new or revised tax legislation in the United States, Ireland or worldwide, including changes related to the One Big Beautiful Bill Act; • the effects of issued, threatened or retaliatory government sanctions or economic restrictions; changes in law, regulations or other restrictions, including executive orders; and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, tariffs, duties or trade barriers, including with respect to China; • the timing of new product announcements or introductions, including products that may incorporate, or are based upon, software or AI technology, by us, our customers or our competitors and the market acceptance of such products; • pricing decisions and competitive pricing pressures; • fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity; • the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw materials, products and components; • a decline in infrastructure spending by foreign governments, including China; • political changes in the United States, including those related to the current U.S. administration and executive offices of the U.S. government, a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. government shutdown or delays in contract awards; • a decline in our backlog; • our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers; • our ability to generate new design opportunities and win competitive bid selection processes; • the increasing costs of providing employee benefits worldwide, including health insurance, retirement and pension plan contributions and other retirement benefits; • our ability to utilize our manufacturing facilities at efficient levels; • fluctuations in foreign currency exchange rates; • litigation-related costs or product liability, warranty and indemnity claims, including those not covered by our suppliers or insurers; • the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials; • the costs related to compliance with increasing worldwide complex government regulations and legal standards and requirements, including those related to ESG matters; • new accounting pronouncements or changes in existing accounting standards and practices; and • the effects of public health emergencies, civil unrest, natural disasters or other severe weather events, widespread travel disruptions, security risks, terrorist activities, international conflicts and other events beyond our control.
The competition for these employees is intense and the labor market is tight, which may be exacerbated by changes to U.S. immigration policies.
The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, could cause business disruptions, increased expenses to comply with such policies and address any disruptions and could have a material adverse effect on our business.
The loss of members of our leadership team, and failure to successfully execute succession plans for our leadership team, could also harm our business and results of operations.
In other instances, we manufacture products based on non-binding forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be inaccurate.
As a result of these and other factors, we often incur inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower-than-expected orders or cancellations of orders, leading to a sharp reduction in sales and backlog.
The foregoing risks may be exacerbated in times of macroeconomic uncertainty, including as a result of tariffs, elevated inflation, high interest rates, bank failures and slower economic growth or recession.
Our products are complex and we may be subject to warranty, indemnity or product liability claims, which could result in significant costs and damage to our reputation and adversely affect customer relationships, the market acceptance of our products and our operating results.
Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense, healthcare and industrial, where failure of the systems in which our products are integrated could cause damage to property or persons.
In addition, investments in companies are subject to risk of a partial or total loss of our investment.

and 33 more.

Gone since FY2024

As a result of our international operations, our business, financial condition and results of operations could be negatively impacted by, among others, the following factors: • political, legal and economic changes, crises or instability and civil unrest that may impact markets in which we do business, such as macroeconomic weakness related to trade and political disputes between the United States and Europe or China, tensions across the Taiwan Strait that may adversely affect our operations in Taiwan, our customers and the technology industry supply chain, and the ongoing conflicts between Russia and Ukraine and in Israel and the Middle East; • compliance requirements of customs and export regulations, including the Export Administration Regulations and the International Traffic and Arms Regulations; • currency conversion risks and exchange rate and interest rate fluctuations, including the potential impact of elevated interest rates; • instability of global credit and financial markets due to adverse macroeconomic conditions such as elevated inflation, high interest rates, bank failures and slower economic growth or recession that could, among other impacts, affect our ability to timely access external financing sources on acceptable terms or lead to financial difficulties or uncertainty of our customers, suppliers and distributors exposing us to late payments, cancelled orders and inventory challenges; • trade policy, commercial, travel, export or taxation disputes or restrictions, import or export tariffs, changes to export classifications or other restrictions imposed by the U.S. government or by the governments of the countries in which we do business, particularly with respect to China; • sanctions imposed by governments in countries in which we do business; • complex, varying and changing government regulations and legal standards and requirements, particularly with respect to tax, price protection, competition practices, export control, customs, immigration, anti-boycott, AI, data privacy, cyber and product security, sustainability, climate and other ESG matters, intellectual property, anti-corruption, including the Foreign Corrupt Practices Act, and environmental compliance; • economic disruption from terrorism and threats of terrorism and the response to them by the United States and its allies; • increased managerial complexities, including different employment practices and labor issues; • changes in immigration laws, regulations and procedures and enforcement practices of various government agencies; • greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; • natural disasters, public health emergencies, such as the COVID-19 pandemic, or other catastrophic events; • transportation disruptions and delays and increases in labor and transportation costs; • fluctuations in raw material costs and energy costs due to general market factors and conditions such as inflationary pressures and supply chain constraints; • greater difficulty in accounts receivable collections and longer collection periods; and • increased costs associated with our foreign defined benefit pension plans.
For example, changes in U.S.-China relations, the political environment or international trade policies could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties and tariffs, restrictions on imports or exports, currency revaluations or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results.
The incoming administration has indicated that it intends to impose or significantly increase tariffs on imports to the United States, which could exacerbate many of these issues.
In addition, expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.
These restrictions have created, and these and similar restrictions may continue to create, uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions or focus on building indigenous semiconductor capacity to reduce reliance on U.S. suppliers.
We are continuing to evaluate the impact of these restrictions on our business, but these actions may have direct and indirect adverse impacts on our revenues and results of operations in China and elsewhere.
In addition, our success may be adversely affected by China’s continuously evolving policies, laws and regulations, including those relating to imports and exports, antitrust, AI, cybersecurity, data protection and data privacy, the environment, indigenous innovation, the promotion of a domestic semiconductor industry, intellectual property rights and enforcement and protection of those rights.
Demand in these end markets can fluctuate significantly based upon, for example, consumer spending, consumer preferences, the development of new technologies and macroeconomic conditions.
This reliance involves several risks, including reduced control over availability, capacity utilization, delivery schedules, manufacturing yields, costs and supply chain allocations.
For example, during 2024, we participated in an inquiry from the U.S.
Senate Permanent Subcommittee on Investigations related to the unauthorized misuse of U.S. chips in Russian weapon systems.
A prolonged disruption at, or inability to utilize, one or more of our or our third parties’ manufacturing facilities, loss of raw materials or damage to our or our third parties’ manufacturing equipment for any reason, including due to natural or man-made disasters, civil unrest or other events outside of our control, such as widespread outbreaks of illness, or the failure to maintain our labor force at one or more of these facilities, may disrupt our operations, delay production, shipments and revenue and result in us being unable to timely satisfy customer demand.
As a result, we could forgo revenue opportunities, potentially lose market share and damage our customer relationships, all of which could materially and adversely affect our business, financial condition and results of operations.
Sales to third-party distributors accounted for approximately 58% of our revenue in the year ended November 2, 2024.
Further, our distributors could terminate their representation of us with little advance notice.
Termination of a significant distributor or a group of distributors, whether at our initiative or the distributor’s initiative or through consolidation in the distribution industry, could disrupt our business, and if we are unable to find suitable replacements with the appropriate scale and resources, our operating results could be adversely affected.
We are required to estimate the effects of returns and allowances provided to distributors and record revenue at the time of sale to the distributor.
If our estimates of such credits and rights are materially understated, it could cause subsequent adjustments that negatively impact our revenues and gross profits in a future period.
Our future revenue, gross margins, operating results, net income and earnings per share are difficult to predict and may be materially affected by a number of factors, including: • the effects of adverse economic or geopolitical conditions in the markets in which we sell our products, including inflationary pressures, which has resulted, and may continue to result, in increased interest rates, fuel prices, wages and other costs; • changes in customer demand or order patterns for our products or for end products that incorporate our products; • the timing, delay, reduction or cancellation of significant customer orders and our ability to manage inventory; • our ability to accurately forecast distributor demand for our products; • future distributor pricing credits or stock rotation rights; • our ability to effectively manage our cost structure in both the short term and over a longer duration; • changes in geographic, product or customer mix; • changes in our effective tax rates, adverse tax decisions or new or revised tax legislation in the United States, Ireland or worldwide; • the effects of issued, threatened or retaliatory government sanctions, trade barriers or economic restrictions; changes in law, regulations or other restrictions, including executive orders; and changes in import and export regulations, including restrictions on exports to certain companies or to third parties that do business with such companies, export classifications, or duties and tariffs, including with respect to China; • the timing of new product announcements or introductions, including products that may incorporate, or are based upon, software or AI technology, by us, our customers or our competitors and the market acceptance of such products; • pricing decisions and competitive pricing pressures; • fluctuations in manufacturing yields, adequate availability of wafers and other raw materials, and manufacturing, assembly and test capacity; • the ability of our third-party suppliers, subcontractors and manufacturers to supply us with sufficient quantities of raw materials, products and components; • a decline in infrastructure spending by foreign governments, including China; • political changes in the United States, including those related to the incoming administration and executive offices of the U.S. government, a decline in the U.S. government defense budget, changes in spending or budgetary priorities, a prolonged U.S. government shutdown or delays in contract awards; • a decline in our backlog; • our ability to recruit, hire, retain and motivate adequate numbers of engineers and other qualified employees to meet the demands of our customers; • our ability to generate new design opportunities and win competitive bid selection processes; • the increasing costs of providing employee benefits worldwide, including health insurance, retirement and pension plan contributions and other retirement benefits; • our ability to utilize our manufacturing facilities at efficient levels; • fluctuations in foreign currency exchange rates; • litigation-related costs or product liability, warranty and indemnity claims, including those not covered by our suppliers or insurers; • the difficulties inherent in forecasting future operating expense levels, including with respect to costs associated with labor, utilities, transportation and raw materials; • the costs related to compliance with increasing worldwide complex government regulations and legal standards and requirements, including those related to ESG matters; • new accounting pronouncements or changes in existing accounting standards and practices; and • the effects of public health emergencies, civil unrest, natural disasters or other severe weather events, widespread travel disruptions, security risks, terrorist activities, international conflicts and other events beyond our control.
Government incentives, including any that may be offered in connection with the CHIPS Act, may not be available to us on acceptable terms or at all, and to the extent that the incoming administration modifies or repeals the CHIPS Act, the availability of any such incentives may be even less certain.
The competition for these employees is intense and the labor market is tight.
The loss of key personnel or the inability to attract, timely hire and retain key employees with critical technical skills to achieve our strategy, including as a result of changes to immigration policies, and the increased uncertainty surrounding such policies in light of the incoming administration’s expected immigration agenda, could cause business disruptions, increased expenses to address any disruptions and could have a material adverse effect on our business.
The loss of one or more of our key employees, and any failure to have in place and execute an effective succession plan for key executives, could seriously harm our business and results of operations.
In other instances, we manufacture product based on non-binding forecasts of customer demands, which may fluctuate significantly on a quarterly or annual basis and at times may prove to be inaccurate.
As a result, we may incur inventory and manufacturing costs in advance of anticipated sales, and we are subject to the risk of lower-than-expected orders or cancellations of orders, leading to a sharp reduction of sales and backlog.
The foregoing risks may be exacerbated in times of macroeconomic uncertainty, including as a result of elevated inflation, high interest rates, bank failures and slower economic growth or recession.
Our semiconductor products are complex and we may be subject to warranty, indemnity or product liability claims, which could result in significant costs and damage to our reputation and adversely affect customer relationships, the market acceptance of our products and our operating results.
Further, we sell to customers in industries such as automotive (including autonomous vehicles), aerospace, defense and healthcare, where failure of the systems in which our products are integrated could cause damage to property or persons.
In addition, investments in companies are subject to a risk of a partial or total loss of our investment.
We are increasingly incorporating AI capabilities into the development of technologies and our business operations and into our products and services.
AI technology may also give rise to significant legal and regulatory liability.
Governments around the world have adopted, and may continue to adopt, laws and regulations related to AI, including the European Union’s AI Act, and several U.S. government agencies have increased investigations and enforcement efforts related to the use of AI technology, which could increase our compliance costs and limit our ability to use AI in the development of our products and services.
While the incoming administration has signaled that AI policy will be a priority, the scope and impact of any such policies cannot yet be determined.
In addition, the use of AI in the development of our products and services, or by our customers in end products that incorporate our products, could cause loss of intellectual property, or subject us to risks related to intellectual property infringement or misappropriation, data privacy or cybersecurity.
We primarily rely on patent, mask work, copyright, trademark and trade secret laws, as well as nondisclosure agreements, information security practices and other methods, to protect our proprietary information, technologies and processes.
If our patents and mask works do not adequately protect our technology, or if our registrations expire prior to end of life of our products, our competitors may be able to offer products similar to ours.
Since the CCPA was enacted, other states, including Virginia and Colorado, have enacted or are in the process of enacting comprehensive privacy schemes.
From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, including inquiries from and discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations, which may result in claims, fines or penalties with respect to commercial, product liability, intellectual property, AI, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters.
Environmental, social and governance matters may have an adverse effect on our business, financial condition and results of operations, and damage our brand and reputation.
There is an increasing focus from regulators, investors, customers, employees and potential talent, as well as other stakeholders, concerning ESG matters, including climate change and sustainability, human rights, support for local communities, Board of Directors’ and employee diversity, human capital management, employee health and safety practices, product quality, worker rights, supply chain management and corporate governance and transparency.

and 23 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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