CIRRUS LOGIC, INC.

Cirrus Logic, Inc. is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world’s top mobile and consumer applications. The Company targets growing markets where it can leverage its expertise in low-power, high-precision mixed-signal processing to solve complex problems that span the analog-to-digital divide. The Company’s product lines are categorized into Audio and High-Performance Mixed-Signal (HPMS), and while it continues to see new opportunities with audio products, management believes that the HPMS product line presents the largest opportunity to drive application diversification and fuel exciting avenues of growth in the coming years.

The markets for Cirrus Logic’s products are highly competitive, and the Company expects competition to continue to increase. Its primary competitors include, but are not limited to, AKM Semiconductor Inc., Analog Devices Inc., QUALCOMM Incorporated, Realtek Semiconductor Corporation, Renesas Electronics Corporation, Shanghai Awinic Technology Co., Ltd., Shenzhen Goodix Technology Co, Ltd., Skyworks Solutions Inc., ST Microelectronics N.V., Synaptics Incorporated and Texas Instruments, Inc. The principal competitive factors include time to market; quality of hardware/software design and end-market systems expertise; price; product performance, features, quality and compatibility with standards; access to advanced process and packaging technologies at competitive prices; and sales and technical support. For fiscal year 2026, the Company’s ten largest end customers represented approximately 96 percent ¹ of net sales, and one end customer, Apple Inc., represented approximately 91 percent ² of total net sales.

As a fabless semiconductor company, Cirrus Logic contracts with third parties for wafer fabrication and product assembly and test, using a variety of foundries primarily supplied by GLOBALFOUNDRIES Inc. and Taiwan Semiconductor Manufacturing Company, Limited. The Company generates revenue by selling its proprietary components, which are largely proprietary and generally not available from secondary sources, to end customers who specify the use of its components in their designs. Revenue is recognized upon the transfer of promised goods to customers, with payments typically due within 30 to 60 days of invoicing. The Company’s single performance obligation is the delivery of promised goods, and the vast majority of its contracts have an original expected term of one year or less.

The Company’s Audio product line includes amplifiers, codecs, smart codecs, analog-to-digital converters, digital-to-analog converters and standalone digital signal processors used in a variety of applications including smartphones, PCs, tablets, AR/VR headsets, wearables, home theater systems, automotive entertainment systems and professional audio systems. The Company’s SoundClear® technology consists of a broad portfolio of tools, software and algorithms that help differentiate customers’ products by improving the user experience with features such as louder, high-fidelity sound, high-quality audio playback, voice capture, and hearing augmentation. Audio product line sales were $1,159,933 ³ in fiscal year 2026, compared to $1,137,157 ⁴ in fiscal year 2025.

The Company’s HPMS product line includes camera controllers for automatic focus and optical image stabilization; haptic and sensing solutions to deliver highly responsive and consistent tactile feedback; and battery and power ICs for improving battery health and performance, primarily used in smartphones. This product line also services automotive, industrial, and imaging applications. HPMS product line sales were $837,446 ⁵ in fiscal year 2026, compared to $758,920 ⁶ in fiscal year 2025. The Company advanced its HPMS strategy by beginning the development of next-generation camera controller components and technologies and made excellent progress in advanced battery and power applications, validating multiple new technologies and intellectual property in silicon.

In fiscal year 2026, the Company repurchased 2.5 million ⁷ shares of its common stock under combined share authorizations for $280.0 million ⁸, at an average cost of $113.91 ⁹ per share. As of March 28, 2026, $274.1 million ¹⁰ remains available for repurchase under the 2025 authorization. The Company also entered into the Third Amended Credit Agreement on May 4, 2026, which provides for a $350 million ¹¹ senior secured revolving credit facility maturing on May 4, 2031. Additionally, the Company joined its largest customer’s American Manufacturing Program and is working with both the customer and GlobalFoundries to develop new process technologies, including efforts to manufacture for the first time at the Malta, New York facility.

Fiscal year 2026 net sales of $1,997,379 ¹² represented an increase over fiscal year 2025 net sales of $1,896,077 ¹³. Audio product line sales of $1,159,933 ¹⁴ increased 2 percent from fiscal year 2025 sales of $1,137,157 ¹⁵, driven by demand for components shipping into smartphones and higher PC sales. HPMS product line sales of $837,446 ¹⁶ represented a 10 percent increase from fiscal year 2025 sales of $758,920 ¹⁷, largely attributable to demand for components shipping into smartphones. Overall gross margin for fiscal year 2026 was 52.8 percent ¹⁸, reflecting a more favorable product mix. The Company achieved net income of $414,408 ¹⁹ in fiscal year 2026, which included an income tax provision of $82,326 ²⁰.

The Company’s three-pronged strategy for growing the business includes: first, maintaining its leadership position in smartphone audio; second, increasing high-performance mixed-signal (HPMS) content in smartphones; and third, leveraging its strength and intellectual property in audio and HPMS to expand into additional applications and markets with both new and existing components. Beyond smartphones, the Company made considerable progress in fiscal year 2026 implementing its strategy to expand into new applications and markets, achieving strong year-over-year revenue growth in PCs as it gained share across all PC segments. The introduction of new amplifiers and codecs that target a wider range of platforms and AI-enabled PCs has positioned the Company well for continued growth in fiscal year 2027. In its general market business, the Company developed multiple new product families that broaden its presence in the professional audio, automotive, industrial, and imaging end markets.

The Company advanced its HPMS strategy by beginning the development of next-generation camera controller components and technologies and made excellent progress in advanced battery and power applications, where it validated multiple new technologies and intellectual property in silicon. The Company’s achievements were underscored by a recent announcement from its largest customer that highlights collaboration on a solution to support their FaceID implementation in future products, and the Company is designing its first product in this area, a smart power IC, which represents an exciting new application space. The Company recently joined its largest customer’s American Manufacturing Program and is working with both the customer and GlobalFoundries to develop new process technologies for its products, including efforts to manufacture for the first time at the Malta, New York facility.

Given the considerable range of opportunities across its custom silicon and general market businesses, the Company expects R&D investments to grow in fiscal year 2027, primarily due to planned headcount growth and product development expenses. Overall gross margin for fiscal year 2026 was 52.8 percent ²¹, and the increase from fiscal year 2025 gross margin of 52.5 percent ²² reflects a more favorable product mix. Changes in excess and obsolete inventory charges, including scrapped inventory, and sales of product written down in prior periods did not have a material impact on margin in fiscal year 2026.

The Company’s supply chain management organization is responsible for the management of all aspects of the fabrication, assembly, and testing of its products, including process and package development, test program development, and production testing of products in accordance with its ISO-certified quality management system. The Company uses a variety of foundries in the production of wafers, primarily supplied by GlobalFoundries and TSMC. In fiscal year 2022, the Company entered into a Capacity Reservation and Wafer Supply Commitment Agreement with GlobalFoundries to reserve capacity and set wafer pricing for products purchased pursuant to the agreement through calendar year 2026, and on February 18, 2025, the agreement was amended to define the quarterly spread of the remaining wafer quantities. As of March 28, 2026, the Company estimates its remaining purchase obligation to be approximately $180 million ²³ of wafers from GlobalFoundries under the Capacity Reservation Agreement.

Research and development expenses were $433,953 ²⁴ in fiscal year 2026, a decrease of $0.7 million from fiscal year 2025. Capital expenditures and technology investments were $14.8 million ²⁵ in fiscal year 2026. The Company repurchased 2.5 million ²⁶ shares of its common stock for $280.0 million ²⁷ during fiscal year 2026, and as of March 28, 2026, $274.1 million ²⁸ remains available for repurchase under the 2025 authorization. The Company has not paid any dividends on its capital stock and does not anticipate declaring or paying any dividends in the foreseeable future.

The Company faces structural headwinds including its dependence on a limited number of customers, with one end customer, Apple Inc., representing approximately 91 percent ²⁹ of total net sales in fiscal year 2026. The Company also faces risks related to changes in government trade policies, including the imposition of tariffs and export restrictions, which could adversely impact its ability to sell products in certain countries and increase prices associated with its customers’ products. Additionally, the Company is subject to risks from global economic conditions, including economic downturns or recessions and the effects of inflationary pressures, which could make it difficult for customers, suppliers, and the Company to accurately forecast and plan future business activities.

The Company faces execution risks related to its reliance on third-party manufacturing and supply chain relationships, including risks associated with insufficient capacity, inability of suppliers to obtain equipment or raw materials, inadequate manufacturing yields, and potential increases in prices. The Company also faces risks related to its long-term capacity reservation and wafer supply agreement with GlobalFoundries, which includes obligations to purchase wafers through calendar year 2026, and if its requirements differ from the number of wafers committed, it could result in excess inventory or higher inventory unit costs. Furthermore, the Company faces risks related to its international operations, including political and economic instability in regions such as Taiwan and China, where it has significant operations and subcontractors.

The Company is highly dependent on a limited number of customers, with one end customer, Apple Inc., representing approximately 91 percent ³⁰ of total net sales in fiscal year 2026, and the loss of or a significant reduction in orders from this customer would significantly reduce revenue and profitability. The Company faces significant risks from changes in government trade policies, including the imposition of tariffs and export restrictions, particularly with respect to China, which could materially adversely affect sales and operations. The Company is subject to a long-term capacity reservation and wafer supply agreement with GlobalFoundries with a remaining purchase obligation of approximately $180 million ³¹ of wafers, and if actual requirements differ from committed quantities, it could result in excess inventory or higher costs. The Company is under examination by the IRS for fiscal years 2017, 2018, and 2019, with the IRS asserting additional tax of approximately $168.3 million ³², excluding interest, and imposing penalties of approximately $63.7 million ³³, related to transfer pricing matters, and while the Company disputes these proposed adjustments, the ultimate resolution could be material. The Company’s reliance on third-party foundries, primarily TSMC in Taiwan and GlobalFoundries in Singapore and Germany, exposes it to geopolitical and armed-conflict risks that could disrupt manufacturing and supply.

Management’s message emphasizes the Company’s three-pronged strategy to grow Cirrus Logic by maintaining its leadership in smartphone audio, increasing high-performance mixed-signal (HPMS) content in smartphones, and leveraging its audio and HPMS expertise and intellectual property to expand into additional applications and markets. In fiscal year 2026, the Company experienced robust demand for its latest custom boosted amplifier and 22-nanometer smart codec, both of which deliver meaningful system-level improvements and exceptional audio performance. The Company advanced its HPMS strategy by beginning the development of next-generation camera controller components and technologies and made excellent progress in advanced battery and power applications, validating multiple new technologies and intellectual property in silicon. Management highlighted a recent announcement from its largest customer that underscores collaboration on a solution to support their FaceID implementation in future products, with the Company designing its first product in this area, a smart power IC. Beyond smartphones, the Company achieved strong year-over-year revenue growth in PCs as it gained share across all PC segments, and the introduction of new amplifiers and codecs targeting a wider range of platforms and AI-enabled PCs has positioned the Company well for continued growth in fiscal year 2027. Management noted that given the considerable range of opportunities across its custom silicon and general market businesses, it expects R&D investments to grow in fiscal year 2027, primarily due to planned headcount growth and product development expenses.