CRDO

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How CRDO rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

Text kept

77%

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new sentences

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Length

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words, now 26,258

New in FY2026

In fiscal 2026, we had two customers that accounted for 10% or more of our total revenue.
In addition, in fiscal 2026, sales to our top 10 customers accounted for approximately 90% of our total revenue.
Customer demand for our products may be impacted by weak macroeconomic conditions, inflation, stagflation, recessionary or lower-growth environments, high or rising interest rates, equity market volatility or other negative economic factors in the U.S. or other nations.
For example, under these conditions or expectation of such conditions, our customers may cancel orders, delay purchasing decisions or reduce their use of our services.
In addition to the above risks related to economic conditions, the U.S. has implemented a series of tariffs targeting various nations and industries.
These announcements have triggered global reactions, affecting markets, slowing global economic growth, and heightening concerns about broader financial instability.
Tariffs and escalations of trade tensions between the U.S. and its trading partners, especially China, and the decoupling of global economies could result in a global economic slowdown and long-term changes to global trade.
We are also subject to risk from inflation and increasing market prices of certain components, supplies and commodity raw materials, which are incorporated into our end products or used by our manufacturing partners or suppliers to manufacture our end products.
These components, supplies, and commodities have from time to time become restricted, or general market factors and conditions have in the past and may in the future affect the pricing of such components, supplies and commodities (such as inflation or supply chain constraints).
As trade tensions escalate, our and our customers’ global supply chains may face disruptions, reducing international trade efficiency.
Changes in global trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospects.
Substantial new tariffs and other restrictive trade policies have created a dynamic and unpredictable trade landscape, which may adversely impact our business.
Laws and regulations regarding tariffs and trade policies are continuously and rapidly evolving, and the scope and interpretation of the laws and regulations that are or may be applicable to us are often uncertain and may be conflicting.
As a result, these laws and regulations may be interpreted and applied in a manner inconsistent with our practices or policies and we could face fines, lawsuits, regulatory investigations, and other claims and penalties, and we could be required to fundamentally change our practices, which could adversely affect our business and operating results.
Complying with such laws and regulations may be time-consuming and require additional resources, and could therefore adversely affect our business and results of operations.
Current or future tariffs or other restrictive trade measures may significantly raise the costs of raw materials, components or finished goods, which may adversely impact both our product offerings and our operational expenses.
Such cost increases may reduce our margins and require us to increase prices, which could harm our competitive position, reduce customer demand and damage customer relationships.
Our manufacturers, suppliers and distribution channels are also affected by the current trade environment, and we may experience supply chain disruptions as a result of increased costs and uncertainty.
While we generated net income of $472.3 million and $52.2 million in fiscal 2026 and fiscal 2025, respectively, we incurred net losses of $28.4 million in fiscal 2024 primarily attributable to increased operating expenses, such as investments in research and development, including share-based compensation.
The risk of obsolescence and/or excess inventory is heightened for semiconductor solutions due to the rapidly changing market for these types of products.
Our principal competitors with respect to our products include Broadcom Ltd., Marvell Technology, Inc.
(Astera), as well as various cable and optical transceiver suppliers.
Some of our competitors may be better situated to meet changing customer needs and secure design wins.
Increasing competition in the markets in which we operate may negatively impact our revenue and gross margins.
For example, competitors with greater financial resources may be able to offer lower prices than us, or they may offer additional products, services or other incentives that we may not be able to match.
Many of our competitors are substantially larger, have greater financial, technical, marketing, distribution, customer support, government support, and other resources; are more established than we are; and have significantly better brand recognition and broader product offerings.
This may enable them to better withstand downturns in the timing market in which we compete, as well as adverse economic or market conditions.
Our ability to compete successfully will depend on a number of factors, including: • our ability to define, design and regularly introduce new products and solutions that anticipate the functionality and integration needs of our customers’ next-generation products and applications; • our ability to build strong and long-lasting relationships with our customers and other industry participants; • our ability to capitalize on, and prevent losses due to, vertical integration by significant customers; • our products’ performance, power efficiency and cost-effectiveness relative to those of competing products; • our ability to achieve design wins; • the effectiveness and success of our customers’ products utilizing our products or solutions within their competitive end markets; • our research and development capabilities to provide innovative products and solutions and maintain our product roadmap; • the strength of our sales and marketing efforts and our brand awareness and reputation; • our ability to secure capacity with our foundry and assembly partners to manufacture and assemble our products; • our ability to deliver products in volume on a timely basis at competitive prices; • our ability to withstand or respond to significant price competition; • our ability to build and expand international operations in a cost-effective manner; • our ability to obtain, maintain, protect and enforce our intellectual property rights, including obtaining intellectual property rights from third parties that may be necessary to meet the evolving demands of the market; • our ability to defend against potential patent infringement claims from third parties; • our ability to promote and support our customers’ incorporation of our products or solutions into their products; and • our ability to retain high-level talent, including our management team and engineers.
Any of these factors, alone or in combination with others, could harm our business, financial condition, and results of operations and result in a loss of market share and an increase in pricing pressure.
We also use third-party contract manufacturers for a significant majority of our assembly and test operations, including Amkor, ASE, KYEC and Sigurd for our IC products, and BizLink for our AEC products.
Additionally, the supply of these materials may be negatively impacted by an unfavorable macroeconomic environment, including as a result of increased trade tensions between the U.S. and its trading partners, particularly the People’s Republic of China (PRC).
Based on our review of our customers, we had no reserve for credit losses as of May 2, 2026 and May 3, 2025.
Changes in environmental laws or regulations, as well as sustainability initiatives, could impose substantial costs and may adversely affect our business.
Our product or manufacturing standards could be impacted by new or revised environmental rules and regulations or other social initiatives.
For example, a significant portion of our revenue comes from international sales.
Environmental laws or regulations in those countries or in the countries of our end customers may increase our cost of doing business and adversely affect our business and results of operations.
Many customers, regulators, investors, employees, and other stakeholders are focusing on sustainability matters.
While we have certain sustainability initiatives, there is no assurance that customers, regulators, investors, and employees will determine that these programs are sufficient.
Any actual or perceived shortcomings with respect to our sustainability initiatives and reporting can impact our ability to retain certain customers or increase our customer base, reelect our board of directors, attract and retain certain types of investors, or hire and retain employees.
Collecting, measuring, and reporting sustainability information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal, and other risks, any of which could adversely affect our business as well as on our reputation and stock price.

and 52 more.

Gone since FY2025

In fiscal 2025, we had one customer that accounted for 10% or more of our total revenue (such one customer accounting for 67% of total fiscal 2025 revenue).
In addition, in fiscal 2025, sales to our top 10 customers accounted for approximately 90% of our total revenue.
For example, in February 2023, we announced that our largest customer at the time reduced its demand forecast for certain of our products for reasons we understand were unrelated to our performance, which negatively impacted our fiscal 2023 fourth quarter revenue and our fiscal 2024 revenue expectations.
Further, the amount of revenue attributable to any single customer or our general customer concentration, may fluctuate in any given period.
For example, in February 2023, we announced that that our largest customer reduced its demand forecast for certain of our products for reasons we understand are unrelated to our performance, which negatively impacted our fiscal 2023 fourth quarter revenue and our fiscal 2024 revenue expectations.
Customer demand for our products may be impacted by weak economic conditions, inflation, stagflation, recessionary or lower-growth environments, rising interest rates, equity market volatility, geopolitical tensions, war, trade restrictions, tariffs and sanctions or other negative economic factors in the U.S. or other nations.
For example, under these conditions or as a result of expectation of such conditions, our customers may cancel orders, delay purchasing decisions or reduce their use of our services.
Recently, the president of the United States has imposed new tariffs and substantially increased other tariffs on a variety of products and countries that could materially affect macroeconomic conditions.
In particular, in April 2025 the United States announced an across-the-board 10% tariff on all countries and individualized higher tariffs on certain countries, including China.
If an environment of significantly increased U.S. tariffs and trade restrictions, together with reciprocal or retaliatory tariffs from other countries, continues or further escalates in a “trade war,” the global economy could be adversely affected, including through higher costs, higher interest rates or lower demand for our products, any of which could materially affect our business, financial condition, results of operations and prospects.
In addition, we are also subject to risk from inflation and increasing market prices of certain components, supplies and commodity raw materials, which are incorporated into our end products or used by our manufacturing partners or suppliers to manufacture our end products.
These components, supplies, and commodities have from time to time become restricted and general market factors and conditions (such as inflation or supply chain constraints) have in the past and may in the future affect the pricing of such components, supplies and commodities.
Changes in global trade policies could have a material adverse effect on our business.
Recently, the President of the United States has increased tariffs on a variety of products and countries that could materially affect our business.
A great deal of uncertainty surrounds the state of tariffs and other trade measures worldwide.
While the current U.S. administration has been actively focused on trade, the exact implementation, amount, scope and nature of these tariffs remains unclear.
It also remains unclear how other countries will respond to the United States’ trade proposals and actions.
As of now, high reciprocal tariffs are in effect between China and the United States and the United States has announced, but temporarily paused the effective date of, tariffs on goods imported from many other countries, including Mexico, Canada, Taiwan and the European Union.
Significant trade partners such as Mexico, Canada and the European Union have announced retaliatory tariffs.
Further, while the United States has exempted certain technology products such as semiconductors and electronics from the reciprocal tariffs announced on April 2, 2025 such that our products are not subject to the announced tariffs, it has also initiated Section 232 investigations on such products, possibly leading to the imposition of specific tariffs on these products or on products that incorporate them.
Although we continue to evaluate the impact of these tariffs on our business, these tariffs may result in significantly higher costs to acquire the materials and components used in our products.
These tariffs and other trade restrictions could also limit the availability of components and raw materials.
Given this dynamic and rapidly evolving environment, it is not possible to know with any degree of certainty what the negative direct and indirect consequences of tariffs could be on our business and financial results.
While we generated net income of $52.2 million in fiscal 2025, we incurred net losses of $28.4 million in fiscal 2024 primarily attributable to increased operating expenses, such as investments in research and development, including share-based compensation.
In addition, the rapid pace of innovation in our industry could also render significant portions of our inventory obsolete.
Our principal competitors with respect to our products include Broadcom Ltd.
(Astera), as well as various cable suppliers.
Many of our competitors are substantially larger, have greater financial, technical, marketing, distribution, customer support, government support and other resources, are more established than we are and have better brand recognition and broader product offerings, and may be able to bundle their products to gain market share.
This may enable them to better withstand adverse economic or market conditions, such as those caused by uncertainty as a result of the recent macroeconomic environment, which has been characterized by rising interest rates and inflation, geopolitical instability, public health measures and supply chain uncertainty.
These factors cause companies across the semiconductor industry to reduce spending and tighten inventory controls, which could negatively impact our business, financial condition and results of operations.
Our ability to compete successfully will depend on a number of factors, including: • our ability to define, design and regularly introduce new products and solutions that anticipate the functionality and integration needs of our customers’ next-generation products and applications; • our ability to build strong and long-lasting relationships with our customers and other industry participants; • our ability to capitalize on, and prevent losses due to, vertical integration by significant customers; • our products’ performance, power efficiency and cost-effectiveness relative to those of competing products; • our ability to achieve design wins; • the effectiveness and success of our customers’ products utilizing our products or solutions within their competitive end markets; • our research and development capabilities to provide innovative products and solutions and maintain our product roadmap; • the strength of our sales and marketing efforts and our brand awareness and reputation; • our ability to secure capacity with our foundry and assembly partners to manufacture and assemble our products; • our ability to deliver products in large volume on a timely basis at competitive prices; • our ability to withstand or respond to significant price competition; • our ability to grow and maintain international operations in a cost-effective manner; • our ability to obtain, maintain, protect and enforce our intellectual property rights, including obtaining intellectual property rights from third parties that may be necessary to meet the evolving demands of the market; • our ability to defend against potential patent infringement claims from third parties; • our ability to promote and support our customers’ incorporation of our products or solutions into their products; and • our ability to retain high-level talent, including our management team and engineers.
There has been a trend toward industry consolidation in our markets for several years.
We expect this trend to continue as companies attempt to improve the leverage of growing research and development costs, strengthen or hold their market positions in an evolving industry or are unable to continue operations.
Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us.
Industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers.
Any of these factors, alone or in combination with others, could lead to an increase in pricing pressure, more variability in our operating results, a loss of market share and could harm our business, financial condition and results of operations.
We also use third-party contract manufacturers for a significant majority of our assembly and test operations, including Amkor, ASE, KYEC and TeraPower for our IC products, and BizLink for our AEC products.
Additionally, the supply of these materials may be negatively impacted by an unfavorable macroeconomic environment, including as a result of increased trade tensions between the U.S. and its trading partners, particularly the PRC.
Based on our review of our customers, we had no reserve for credit losses as of May 3, 2025 and April 27, 2024.
Our compliance with applicable environmental, health and safety laws, as well as sustainability initiatives and climate change regulations, could increase our costs, restrict our operations and require expenditures that could negatively affect our results of operations and financial condition.

and 67 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). 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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