None

2

For additional information on our segments, see Note 20 of Notes to Consolidated Financial Statements under Item 8.

4

Recent Developments

Business Strategies

Cypress is committed to growing revenue in profitable and attractive markets, managing its expenses and to maintaining a strong balance sheet. We maintain many of our business operations in low-cost centers, including Malaysia, Thailand, India, the Philippines and China. In addition, we are using foundry partners to supplement our manufacturing needs.

In 2013, Cypress introduced the PSoC 4 programmable system-on-chip architecture and with a sophisticated 32-bit ARM^® Cortex™-M0 processor and the high-performance analog and digital circuitry of PSoC 3 and PSoC 5LP, all in a small-footprint, low-power single-chip solution.

In 2014, Cypress introduced the CapSense MBR3 mechanical button replacement family and the industry’s most integrated one-chip Bluetooth Low Energy solutions for the IoT. The low-cost CapSense MBR3 capacitive touch-sensing controllers do not require coding, enabling designers to quickly implement sleek, reliable user interfaces for a broad range of markets. They offer leading noise immunity, proximity sensing and water tolerance. The new PSoC 4 BLE offers unprecedented ease-of-use and integration in a customizable solution for IoT applications, home automation, healthcare equipment, sports and fitness monitors, and other wearable devices. The PRoC™ BLE programmable radio-on-chip provides a cost-effective, turnkey solution for wireless human interface devices, remote controls and toys.

Traveo™ MCUs and Flexible Microcontrollers. Our Traveo™ automotive MCU family offers high-performance Human Machine Interfaces for automotive dashboards. The microcontrollers integrate 2-D and 3-D graphic engines. This is a development where we are integrating our flash memory technologies with our microcontrollers and analog IP. This family also features our HyperBus memory interface. The combination of our HyperFlash memory with the HyperBus interface eliminates memory bottlenecks, increases performance, and extends the memory space for MCU and graphic engines without increasing the package pin count. Our Flexible Microcontroller (FM) portfolio, which is based on the ARM^® Cortex^®-M4, Cortex^®-M3, Cortex^®-M0+ CPUs, is a scalable platform for industrial and consumer applications.

PSoC Programmable System-on-Chip products. Our PSoC products are highly integrated, high-performance mixed-signal devices with an on-board microcontroller, programmable analog and digital blocks, SRAM and flash memory. They provide a low-cost, single-chip solution for a variety of consumer, industrial, medical, and system management applications. A single PSoC device can potentially integrate as many as 100 peripheral functions, saving customers design time, board space, power consumption and system costs. Because of its programmability, PSoC allows customers to make modifications at any point during the design cycle, providing unmatched flexibility.

Cypress’s PSoC 1 device offers performance, programmability and flexibility with a cost-optimized 8-bit M8 CPU subsystem. PSoC 3 uses an 8-bit, Intel^® 8051-based microcontroller with 7.5 times more computing power than PSoC 1. The 32-bit, ARM^® -Cortex™ M3-based PSoC 5LP has 25 times more computing power than PSoC 1. The analog-to-digital converters on PSoC 3 and PSoC 5LP are 256 times more accurate and 10 to 30 times faster than PSoC 1, and there are 10 times more programmable logic gates available. PSoC 4 is based on a 32-bit ARM Cortex-M0 processor combined with precision analog circuitry, high-performance digital blocks, fully-routable I/Os and our leading CapSense capacitive touch technology. Platform PSoC is supported by the unique PSoC Creator™ design tool that allows engineers to use intuitive schematic-based capture and dozens of PSoC Components™, free embedded ICs represented by icons that can be dragged and dropped into a design to integrate multiple ICs and system interfaces into one PSoC. PSoC 4 BLE, a Bluetooth Low Energy solution that integrates a Bluetooth Smart radio and balun into the PSoC 4 architecture, offers unprecedented ease-of-use and integration for IoT applications, home automation, healthcare equipment, sports and fitness monitors, and other wearable smart devices. Cypress has shipped more than two billion PSoC devices.

TrueTouch® Touchscreen solutions. TrueTouch® provides capacitive touchscreen solutions for automotive infotainment systems, industrial equipment and home appliances. The TrueTouch® family includes devices that perform traditional touchscreen functions including interpreting multitouch operation, single touches, and gestures such as tap, double-tap, pan, pinch, scroll and rotate. In 2015, Cypress introduced the Automotive TrueTouch® CYAT8168X controller family, which enables screen sizes up to 15-inches with industry-leading performance in harsh automotive environments. The controller uses Cypress’s proprietary AutoArmor™ technology for robust immunity to the strong electromagnetic interference (EMI) emissions found in cars, buses and trucks, and it provides liquid tolerance and tracking of fingers in gloves.

7

CapSense^® solutions. Our CapSense capacitive touch-sensing solutions replace mechanical switches and buttons with simple, touch-sensitive controls by detecting the presence or absence of a conductive object (such as a finger) and measuring changes in capacitance. This technology lends itself equally well to buttons, sliders, touchpads, touchscreens and proximity sensors, taking industrial design possibilities to a much higher level. The CapSense portfolio supports all different ranges of general purpose inputs/outputs, buttons and slider devices. Cypress’s CapSense devices feature SmartSense™ technology, an automatic tuning solution that dynamically detects and adjusts a system’s capacitive-sensing parameters, eliminating the need for manual tuning. The low-cost CapSense MBR3 mechanical button replacement solution that does not require coding, enabling designers to quickly implement reliable user interfaces for a broad range of markets. MBR3 devices offer leading noise immunity, proximity sensing and water tolerance. CapSense has replaced more than 5 billion buttons, making Cypress the worldwide capacitive sensing market share leader.

Analog Semiconductors. Analog semiconductors measure, condition and regulate “real world” functions such as temperature, speed, sound and electrical current. Our lineup of power management integrated circuits (PMICs) includes DC/DC converters, voltage regulators and supervisors, and power monitoring and reset ICs. In addition, we offer a family of LED lighting driver ICs and energy harvesting solutions. These solutions target automotive and industrial applications, and our energy harvesting solutions are ideal for eliminating the need to replace batteries in IoT applications.

Memory Products Division (MPD):

Our Memory Products Division designs and manufactures the broadest portfolio of high-performance memories for embedded systems. Cypress has established itself as the marketshare leader in NOR Flash and SRAM memories that form the brains of today's most advanced embedded systems. The memory product portfolio includes the world's highest throughput QDR®-IV SRAMs, low-power MoBL® SRAMs, high-performance serial and parallel NOR Flash memories and high-reliability F-RAM™ ferroelectric memory devices that capture and protect the world's most-critical data. Cypress's industry-leading HyperFlash™ memories deliver 333 megabytes per second read throughput-more than five times faster than traditional Quad SPI flash, and one-third the number of pins of parallel NOR flash.

8

Our MPD Division also includes timing technology products and specialty memory offerings. The following table summarizes the markets and applications related to our products in this segment:

NOR Flash memories and HyperFlash™. Cypress offers the broadest portfolio of NOR flash memories for embedded systems. The portfolio features the highest-performance HyperFlash™ and Quad SPI NOR flash memories delivering up to 333MB/s read bandwidth, with the industry leading program and erase, and extended automotive temperature ranges (-40°C to 125°C). Our HyperBus™ interface is being implemented broadly by many of our partners. It is being designed across our industrial, automotive, and communication segments.

NAND Flash memories. Our NAND products add reliable, high-density data storage to our flash product line. Cypress applies its stringent process for qualification, testing, extended temperature support and packaging to its line of SLC NAND products. Our high-performance and high-reliability SLC NAND product portfolio is available in 1Gb - 16 Gb densities. There are two standard product families offering 1bit and 4bit ECC SLC NAND. We also offer SecureNAND™, which is an SLC NAND with enhanced security features.

9

HyperRAM™. Our HyperRAM™ memory is the first companion device to our HyperFlash™ memory and the second device to operate on our 12-pin HyperBus interface. With a read throughput up to 333 megabytes-per-second, the HyperRAM devices are ideal for SoCs with limited RAM providing a scalable solution for extending fast read and write operations externally, allowing fast delivery of high-resolution graphics in the early part of the boot process for automotive, industrial and IoT applications.

Asynchronous SRAMs. We manufacture a wide selection of fast asynchronous and micropower SRAMs with densities ranging from 16 Kbits to 64 Mbits. These memories are available in many combinations of bus widths, packages and temperature ranges, and include offering for the automotive market. They are ideal for use in point-of-sale terminals, gaming machines, network switches and routers, IP phones, IC testers, DSLAM Cards and various automotive applications.

Synchronous SRAMs. Our high-speed synchronous SRAMs include standard synchronous pipelined, No Bus Latency (NoBL), Quad Data Rate (QDR^®), and Double Data Rate (DDR) SRAMs, and are typically used in networking applications. NoBL synchronous SRAMs are optimized for high-speed applications that require maximum bus bandwidth up to 250 MHz, including those in the networking, instrumentation, video and simulation businesses. Double Data Rate SRAMs target network applications and servers that operate at data rates up to 633 MHz. Quad Data Rate products are targeted toward next-generation networking applications, particularly switches and routers that operate at data rates beyond 633 MHz, and offer twice the bus bandwidth of DDR SRAMs. Cypress introduced the industry’s first 65-nm QDR and DDR SRAMs. The 144-Mbit and 72-Mbit devices, developed with foundry partner UMC, feature the industry’s fastest clock speeds and operate at half the power of their 90-nm predecessors. They are ideal for networking, medical imaging and military signal processing. In 2014, Cypress introduced the industry’s first QDR-IV SRAM, which enables 100-400 Gigabit line card rates for next-generation routers and switches.

nvSRAMs. nvSRAMs are products that operate similar to standard asynchronous SRAM and reliably store data into an internal nonvolatile array during unanticipated power outages. The competitive advantage of an nvSRAM is infinite endurance and much faster read/write speed than a serial flash or EEPROM. Additionally, these high-speed nonvolatile SRAM devices can store data for more than 20 years without battery backup. These memories are ideal for redundant array of independent disks (“RAID”) storage arrays, metering applications, multifunction printers and other industrial applications, such as PLCs. Cypress offers parallel nvSRAMs with an integrated real-time clock, providing failsafe battery-free data backup in mission-critical applications.

F-RAMs. Cypress’s F-RAM memories offer extremely low power with the same non-volatility as nvSRAM products. F-RAM memory cells are immune to gamma radiation and EMI, making them well-suited to certain aerospace and medical systems. Other applications include automotive, smart electric meters, industrial controls, electronic point-of-sale terminals, printers and wireless (RFID) memory.

Dual-Port Memories. Dual ports, which can be accessed by two different processors or buses simultaneously, target shared-memory and switching applications, including networking switches and routers, cellular base stations, mass-storage devices and telecommunications equipment. We offer a portfolio of more than 250 synchronous and asynchronous dual-port interconnects ranging in densities from 8 Kbits to 36 Mbits with speeds of up to 250 MHz. Our dual ports are compelling solutions for interprocessor communication in a broad range of applications. For high-volume multiprocessor applications (wireless handsets, PDAs, consumer, etc.) we offer the MoBL™ (More Battery-Life™) dual port, providing a low cost, quick time-to-market interconnect solution with the industry’s lowest power-consumption.

FIFO Memories. FIFOs are used as a buffer between systems operating at different frequencies. Our high-performance FIFO products provide the ideal solution to interconnect problems such as flow control, rate matching, and bus matching. Our FIFO portfolio is comprised of more than 100 synchronous and asynchronous memories in a variety of speeds, bus widths, densities and packages. Using industry-standard pinouts, these products are easily integrated into new and existing designs. Unidirectional, bidirectional, tri-bus and double sync configurations are available with built-in expansion logic and message-passing capabilities for various markets including video, data communications, telecommunications and network switching/routing.

Programmable Clocks. Programmable timing solutions such as our InstaClock device combine high performance with the flexibility and fast time to market of field-programmable devices at a cost that is competitive against custom clocks at equivalent volumes. Working with our easy-to-use CyberClocks™ software, designers can optimize device parameters such as drive strength, phased-lock loop bandwidth and crystal input capacitive loading. Our programmable clocks are ideal for devices requiring multiple frequencies including Ethernet, PCI, USB, HDTV, and audio applications. Additionally, the FleXO™ family of high-performance clock generators can be instantly programmed in the factory or field to any frequency up to 650 MHz, accelerating time to market and improving manufacturing quality.

10

RoboClock™ Clock Buffers. Our RoboClock family of clock buffers features programmable output skew, programmable multiply/divide factor, and fault-tolerant, user-selectable, redundant reference clocks. Designers can control output skew and multiply and divide factors to help accommodate last-minute design changes. RoboClock offers a high-performance timing solution for designers of communications, computation and storage networking applications.

Data Communications Division (DCD):

The Data Communications Division delivers flexible connectivity solutions that form the nervous system within the most-advanced embedded systems. Today Cypress is enabling the world to migrate to SuperSpeed USB 3.0 with the flexible EZ-USB® FX3™ peripheral controller and SuperSpeed USB 3.0 hubs. Cypress is leading the industry with the world's first programmable USB Type-C and USB Power Delivery solutions, including the EZ-PD™ Type-C controllers. Cypress's PRoC™ BLE Bluetooth® Low-Energy wireless devices are enabling PC peripherals and smart remote control OEMs to upgrade to BLE. Additionally, Cypress offers certified BLE modules that streamline the design of IoT products and other wireless applications.

The following table summarizes the markets and applications related to our products in this segment:

11

USB controllers. Cypress is a market leader in USB with more than one billion devices shipped. USB provides the primary connection between a PC and peripherals, including keyboards, mice, printers, joysticks, scanners and modems. It is also used to connect non-PC systems, such as smartphones, handheld games, digital still cameras and portable media players. The USB standard facilitates a “plug-and-play” architecture that enables instant recognition and interoperability when a USB-compatible peripheral is connected to a system. We offer a full range of USB solutions, including low-speed (1.5 Mbps), full-speed (12 Mbps), high-speed (480 Mbps) and now “SuperSpeed” (up to 5 Gbps) USB products. We also offer a variety of USB hubs, transceivers, serial interface engines and embedded-host products for a broad range of applications.

Bluetooth Low Energy and Wireless USB solutions. Designed for short-range wireless connectivity, WirelessUSB enables personal computer peripherals, gaming controllers, remote controls, toys, and other point-to-point or multipoint-to-point applications to “cut the cord” with a low-cost, 2.4-GHz wireless solution. The WirelessUSB system acts as a USB human interface device, so the connectivity is transparent to the designer at the operating system level. WirelessUSB also operates as a simple, cost-effective wireless link in a host of other applications including industrial, consumer, and medical markets.

The semiconductor industry is intensely competitive and continually evolving. This intense competition results in a challenging operating environment for most companies in this industry. This environment is characterized by the potential erosion of product sale prices over the life of each product, rapid technological change, limited product life cycles, greater brand recognition and strong domestic and foreign competition in many markets. Our ability to compete successfully depends on many factors, including:

·

our success in developing new products and manufacturing technologies;

·

delivery, performance, quality and price of our products;

•our success in developing new products and manufacturing technologies;

·

diversity of our products and timeliness of new product introductions;

•delivery, performance, quality and price of our products;

·

cost effectiveness of our design, development, manufacturing and marketing efforts;

•diversity of our products and timeliness of new product introductions;

·

quality of our customer service, relationships and reputation;

•cost effectiveness of our design, development, manufacturing and marketing efforts;

·

overall success with which our customers market their products and solutions that incorporate our products; and

•quality of our customer service, relationships and reputation;

·

numberoverall success with which our customers market and sell their products and solutions that incorporate our products; and nature of our competitors and general economic conditions.

•number and nature of our competitors and general economic conditions.

We face competition from domestic and foreign semiconductor manufacturers, many of which have advanced technological capabilities and have increased their participation in the markets in which we operate. We compete with a large number of companies primarily in the automotive, industrial, communications, consumer, computation, data communications mobile handsets and militarymobile markets. Companies that compete directly with our semiconductor businesses include, but are not limited to, Intel, Analog Devices, Atmel, NXP Semiconductors NV,Adesto, Everspin Technologies, Fujitsu, GigaDevice Semiconductor, GSI Technology, Hynix, Integrated Device Technology, Integrated Silicon Solution, Lattice Semiconductor, Linear Technology, Maxim Integrated Products,Macronix, Marvell, MediaTek, Microchip Technology, Micron Technology, Nordic Semiconductor, NXP Semiconductors NV, Qualcomm, Realtek, Renesas, Richtek, Semtech, Silicon Laboratories, ST Microelectronics, Synaptics, Texas Instruments, Toshiba, VIA Labs, and Xilinx.

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Winbond.

Environmental Regulations

We use, generate and discharge hazardous chemicals and waste in our research and development and manufacturing activities. United States federal, state and local regulations, in addition to those of other foreign countries in which we operate, impose various environmental rules and obligations, which are becoming increasingly stringent over time, intended to protect the environment and in particular to regulate the management and disposal of hazardous substances. We also face increasing complexity in our product design as we adjust to new and future requirements relating to the materials composition of our products, including the restrictions on lead and other hazardous substances that apply to specified electronic products put on the market in the European Union (Restriction on the Use of Hazardous Substances Directive 2002/95/EC, also known as the “RoHS Directive”) and similar legislation in China and California. We are committed to the continual improvement of our environmental systems and controls. However, we cannot provide assurance that we have been, or will at all times be, in complete compliance with all environmental laws and regulations. Other laws impose liability on owners and operators of real property for any contamination of the property even if they did not cause or know of the contamination. While to date we have not experienced any material adverse impact on our business from environmental regulations, we cannot provide assurance that environmental regulations will not impose expensive obligations on us in the future, or otherwise result in the incurrence of liabilityliabilities such as the following:

·

a requirement to increase capital or other costs to comply with such regulations or to restrict discharges;

·

liabilities to our employees and/or third parties; and

•a requirement to increase capital or other costs to comply with such regulations or to restrict discharges;

·

business interruptions as a consequence of permit suspensions or revocations or as a consequence of the granting of injunctions requested by governmental agencies or private parties.

•liabilities to our employees and/or third parties; and

•business interruptions as a consequence of permit suspensions or revocations, or as a consequence of the granting of injunctions requested by governmental agencies or private parties.

Intellectual Property

We have an active program to obtain patent and other intellectual property protection for our proprietary technologies, products and other inventions that are aligned with our strategic initiatives. We rely on a combination of patents, copyrights, trade secrets, trademarks and proprietary information to maintain and enhance our competitive position in the domestic and international markets we serve. As of the end of fiscal 20152017, we had approximately 7,0003,600 issued patents and approximately 1,200700 additional patent applications on file domestically and internationally. In addition, in fiscal 20162018 we are preparing to file up to 9040 new patent applications in the United States and up to 70approximately 50 foreign applicationsapplication predominantly in countries such as China, Taiwan, Korea, Europe and India.Asia. The average remaining life of our domestic patent portfolio is approximately 108.5 years.

In addition to factors such as innovation, technological expertise and experienced personnel, we believe that patents are increasingly important to remain competitive in our industry, defend our position in existing markets and to facilitate the entry of our proprietary products such as PSoC ®, into new markets. As our technologies are deployed in new applications and we face new competitors, we will likely subject ourselves to new potential infringement claims and discover third partythird-party infringement of our intellectual property. Patent litigation, if and when instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. We are committed to vigorously defending and protecting our investment in our intellectual property. Therefore, the strength of our intellectual property program, including the breadth and depth of our portfolio, will be critical to our success in the new markets we intend to pursue.

We perform an analysis of our intellectual property portfolio on an on-going basis to ensure we are deriving the full value of our assets. Accordingly, we continue to evaluate certain unaligned patents as well as other monetization models for our patent portfolio.

Financial Information about Segments In August 2016, we entered into a series of agreements to divest a large number of older, legacy patents that were not relevant to our current business. Divestiture of these patents will reduce our operating expenses (associated with our patent portfolio) and Geographic Areas

Financial information about segments and geographic area is incorporated herein by referencemay lead to Note 20 of Notes to Consolidated Financial Statements under Item 8.

International revenues have historically accounted for a significant portion of our total revenues. Our manufacturing and certain finance operations in the Philippines and Malaysia, as well as our sales and support offices and design centers in other parts of the world, face risks frequently associated with foreign operations, including, but not limited to:

·

currency exchange fluctuations, including the weakening of the U.S. dollar;

future contingent revenue.

·

the devaluation of local currencies;

·

political instability;

Employees

·

labor issues;

·

changes in local economic conditions;

·

import and export controls;

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·

potential shortage of electric power supply; and

·

changes in tax laws, tariffs and freight rates.

·

potential violations by our international employees or third party agents of international or U.S. laws relevant to foreign operations (such as FCPA) and.

·

access to capital or credit at competitive rates

To the extent any such risks materialize, our business, financial condition or results of operations could be seriously harmed.

Employees

As of January 3, 2016December 31, 2017, we had 6,2796,099 employees. Geographically, 2,1001,946 employees were located in the United States, 1,0411,025 employees were located in the Philippines, 989 in Thailand, 757 in Japan, 257910 employees were located in Malaysia, 472Philippines, 567 employees were located in India, 532 employees were located in Japan, 447 employees were located in Greater China, 244 employees were located in Europe, and 663428 employees were located in other countries. Of the total employees, 3,7153,405 employees were associated with manufacturing, 1,1491,537 employees were associated with research and development, and 1,157 employees were associated with selling, general and administrative functions and 1,415 employees were associated with research and development.

Approximately 475 employees are represented by a collective bargaining agreement. We have never experienced organized work stoppages.

functions.

Executive Officers of the Registrant as of March 1, 2016

December 31, 2017

Certain information regarding each of our executive officers is set forth below:

Name						Age		Position
T. J. Rodgers		67
Name		Age		Position
Hassane El-Khoury		38		President, Chief Executive Officer and Director
Thad Trent		48 50		Executive Vice President, Finance and Administration, and Chief Financial Officer
Dana C. Nazarian Sudhir Gopalswamy		47 48		Executive Vice President, Microcontroller and Connectivity Division
Sam Geha		52		Executive Vice President, Memory Products Division
Hassane El-Khoury Pamela Tondreau		35 58		Executive Vice President, Programmable Systems Division Chief Legal and Human Resource Officer, Corporate Secretary

T.J. Rodgers

Hassane El-Khourywas named President, Chief Executive Officer and Director at the Company in August 2016. Mr. El-Khoury served as Executive Vice President, Programmable Systems Division, which is a foundernow part of Cypress and has been a Director and itsthe Microcontroller & Connectivity Division (MCD), from 2012 until his appointment as President and Chief Executive Officer since 1982.Officer. From 2010 to 2012, Mr. Rodgers sits on the board of directors of Cypress’s internal subsidiariesEl-Khoury served as well as Bloom Energy, a privately held fuel cell company. Mr. Rodgers was also a memberSenior Director of the BoardCompany’s Automotive Business Unit. Prior to joining the Company, from 1999 to 2007, Mr. El-Khoury served as Senior Design Engineer at Continental Automotive Designs, a German automotive manufacturing company specializing in tires, brake systems, interior electronics, automotive safety, powertrain and chassis components, tachographs, and other parts for the automotive and transportation industry. Mr. El-Khoury holds a Bachelor of TrusteesScience degree in Electrical Engineering

from Lawrence Technological University and a Master of Dartmouth College until June 2012.

Sciences degree in Engineering Management from Oakland University.

Thad Trenthas been the Chief Financial Officer and Executive Vice President of Finance & Administration at Cypress Semiconductor Corporationthe Company since June 2014. Prior to his current position, Mr. Trent served as Cypress’sjoined Cypress in 2005 and had been Vice President of Finance.Finance since 2010. Prior to serving as the Chief Financial Officer at the Company, he led the strategic planning functions for the Company’s business units and worldwide operations and he managed the financial reporting, accounting, and planning and analysis functions for the Company. Before joining the Company, Mr. Trent is a 22-year veteran of the technology industry. He, held finance managementleadership roles at publicly traded companies Wind River Systems and Wyle Electronics, as well as two technology startups. He also serves as a director on AgigA Tech, Inc., a Company subsidiary, and Deca Technologies, Inc., a majority-owned Company subsidiary. Mr. Trent joined Cypressearned his Bachelor of Science in 2005Business Administration and served as Vice President of Finance since 2010. Most recently, he has led the finance activities for business units, sales and marketing, and distribution groups, and he has supervised financial reporting, accounting, and planning and analysis.  Mr. Trent sits on the board of directors of Cypress’s internal subsidiaries.at San Diego State University.

Dana C. Nazarian

Sudhir Gopalswamy was named Executive Vice President of Memory Productsthe Microcontroller and Connectivity Division (MCD) at the Company in February 2009. Mr. Nazarian started his career with Cypress in 1988. Prior to his current position, Mr. Nazarian held various management positions, which included oversight of significant operations in our former Round Rock, Texas facility and2018, having previously been named as the Senior Vice President of ourMCD in September 2016, for which he is responsible for all aspects of the MCD business. Mr. Gopalswamy joined the Company in 2008 and has managed a variety of business units, including the Timing Solutions Business Unit, the Synchronous SRAM business unit.Business Unit and most recently the MCU Business Unit, where he also served as a Senior Vice President. Prior to joining the Company, Mr. Gopalswamy worked at Conexant, where he was responsible for the cable set-top box product line. Before Conexant, he spent nine years at Intel Corporation, during which he held management and leadership roles of increasing responsibility, spanning the computing, communications/networking and consumer electronics segments. Mr. Gopalswamy holds a BSEE in Electrical Engineering from Purdue University and an MBA from Duke University.

Hassane El-Khoury

Sam Geha, Ph.D., was named Executive Vice presidentPresident of the Programmable SystemsMemory Product Division at the Company in February 2018, having previously been named as the Senior Vice President of the Memory Product Division in 2012.September 2016. Previously, he was named as the Senior Vice President of the Intellectual Property (IP) Business Unit in June 2015, having managed the IP Business Unit since June 2013, where he oversaw licensing of the Company’s various embedded nonvolatile memory technologies (SONOS and eCT) to foundries, including UMC, HLMC and HH-Grace, as well as licensing the Company’s 3D NAND technology to XMC. Prior to his current position,that, he was the Vice President of the Technology R&D organization since May 2007. He also serves as a board member of Enovix, a Silicon-based Lithium Ion battery start-up. Mr. El-KhouryGeha joined the Company in 1995 and has served as Cypress’s Automotive Business Unitthe senior director of technology development for SONOS and the director of technology development for MRAM and SRAM technologies. Prior to joining the Company, he worked in various technology development functions at Motorola and National Semiconductor. Mr. Geha holds a bachelor of science degree in electrical engineering (BSEE), a master of science in electrical engineering (MSEE) and a philosophical doctorate in electrical engineering (Ph.D.) from the University of Arizona.

Pamela L. Tondreau was named Executive Vice President, Chief Legal and Human Resources Officer, and Corporate Secretary at the Company in February 2018, having previously been named as the Chief Legal and Human Resources Officer in November 2017. Ms. Tondreau has continued to serve as the Corporate Secretary, having previously been named as the Chief Legal Officer and Corporate Secretary in September 2016. She joined the Company in 2014, and began serving as the Senior Director since 2010. After workingVice President, General Counsel and Corporate Secretary in January 2015. Prior to joining the Company, Ms. Tondreau spent 13 years at Hewlett-Packard Company (now HP Inc.) in various roles, including Chief Intellectual Property Counsel and Deputy General Counsel to the Chief Technology Officer, HP Labs, HP Networking, IP Licensing, Strategic Initiatives and Global Alliances. In addition, she supported the Chief Marketing Officer, the Chief Information Officer and the Executive Vice President of Personal Systems, as well as serving as Corporate Secretary to the Technology Committee of Hewlett-Packard’s board of directors. Prior to her time at Hewlett-Packard, Ms. Tondreau was an engineerassociate at Continental Automotive Systems, he joined Cypress’s automotive business unitthe law firm of Thelen, Marrin, Johnson & Bridges (now Thelen LLP), serving as both a litigation and expanded the Company’s presence in the Human-Machine Interfacecorporate attorney. Ms. Tondreau holds a bachelor’s degree from U.C. Berkeley and Body Electronics segmentsa J.D. from McGeorge School of the automotive marketplace.Law.

Available Information

We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, free of charge on our website at www.cypress.com, as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). By referring to our website, we do not incorporate such website or its contents into this Annual Report on Form 10-K.

Additionally, copies of materials filed by us with the SEC may be accessed at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or at www.sec.gov. For information about the SEC’s Public Reference Room, contact 1-800-SEC-0330.

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ITEM 1A.	RISKRISK FACTORS

Unfavorable economic and market conditions, domestically and internationally, may adversely affect our business, financial condition, results of operations and cash flows.

We have significant customer sales both in the U.S. and internationally. We are also reliant upon U.S. and international suppliers, manufacturing partners and distributors. We are therefore susceptible to adverse U.S. and international economic and market conditions. If any of our manufacturing partners, customers, distributors or suppliers experience serious financial difficulties or cease operations, our business will be adversely affected. In addition, the adverse impact of an unfavorable economy on consumers, including high unemployment rates, may adversely impact consumer spending, which will adversely impact demand for consumer products such as certain end products in which our products are embedded. In addition, prices of certain commodities, including oil, metals, grains and other food products, are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations and periodic delays in delivery. High or volatile commodity prices increase the cost of doing business and adversely affect consumers’ discretionary spending. As a result of the difficulty that businesses (including our customers) may have in obtaining credit, the increasing and/or volatile costs of commodities and the decreased consumer spending that may result from weakness in the general global economy, global economic and market turmoil are likely to have an adverse impact on our business, financial condition, results of operations and cash flows.

The trading price of our common stock has been and will likely continue to be volatile due to various factors, some of which are beyond our control, and each of which could adversely affect our stockholders’ value.

The trading price of our common stock has been and will likely continue to be volatile due to various factors, some of which are beyond our control, including, but not limited to:

·

Revenue fluctuations due to unexpected shifts in customer orders;

·

Announcements about our earnings or the earnings of our competitors that are not in line with analyst expectations;

Revenue fluctuations due to unexpected shifts in customer demand;

·

Our ability to achieve the planned synergies in the recent merger with Spansion;

Announcements about our earnings or the earnings of our competitors that are not in line with analyst expectations;

·

Credit conditions and our ability to refinance our existing debt at commercially reasonable terms, which may limit the Company’s working capital;

Our ability to execute on our long term strategic corporate transformation initiatives, collectively known as our Cypress 3.0 initiatives, and our gross margin improvement plan;

·

Quarterly variations in our results of operations or those of our competitors;

Credit conditions and our ability to refinance our existing debt at commercially reasonable terms, which may limit the Company’s working capital;

·

Announcements by us or our competitors of acquisitions, new products, significant contracts, design wins, commercial relationships or capital commitments;

Quarterly variations in our results of operations or those of our competitors;

·

The perceptions of general market conditions in the semiconductor industry and global market conditions;

Announcements by us or our competitors of acquisitions, new products, significant contracts, design wins, commercial relationships or capital commitments;

·

Our ability to develop and market new and enhanced products on a timely basis;

The perceptions of general market conditions in the semiconductor industry (including recent trends toward consolidation in the semiconductor industry) and global market conditions;

·

Any major change in our board or senior management;

Our ability to develop and market new and enhanced products on a timely basis;

·

Changes in governmental regulations or in the status of our regulatory compliance that impact our business;

Any major change in our board or senior management;

·

Recommendations by securities analysts or changes in earnings estimates concerning us or our customers or competitors;

Changes in governmental regulations or in the status of our regulatory compliance that impact our business;

·

The volume of short sales, hedging and other derivative transactions on shares of our common stock;

Recommendations by securities analysts or changes in earnings estimates concerning us or our customers or competitors;

·

Economic conditions and growth expectations in the markets we serve;

The volume of short sales, hedging and other derivative transactions on shares of our common stock;

·

Changes in our policy regarding dividends or our ability to declare a dividend; and

Economic conditions and growth expectations in the markets we serve;

·

Our ability to execute our lean inventory initiative to reduce excess inventory, which could lead to a disruption in the supply of our products and adversely affect our business.

Changes in our policy regarding dividends or our ability to declare a dividend;

Changes in our policy regarding stock repurchases or our ability to repurchase shares of our common stock;

Supply disruption or price increases from third-party manufacturing partners;

Our ability to generate sufficient cash flow to repay debt and

Litigation, including any disputes or legal proceedings associated with activist investors.

Further, the stock market in general, and the market for technology companies in particular, have experienced extreme price and volume fluctuations. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Finally, our executive officers, who may hold a substantial number of shares of our common stock, may from time to time pledge all or a portion of their holdings as collateral or include such holdings in margin accounts. If our stock price were to drop suddenly, such margin accounts could be called and the shares in such accounts may be automatically sold by a third party in the open market, even during a blackout period.

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We may in the future incur impairments in the value of our goodwill, intangibles and property, plant and equipment.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.  We test goodwill for impairment annually, and more frequently when events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Additionally, our other long-lived assets which include intangibles and property, plant and equipment are evaluated for impairments whenever events or changes in circumstances indicate the carrying value may not be recoverable.  Either of these situations may occur for various reasons, including changes in actual or expected income or cash.  We continue to evaluate current conditions to assess whether any impairment exists.   Impairments could occur in the future if any of the following occur: market or interest rate environments deteriorate, significant adverse changes in business climate, unanticipated competition, loss of key customers, changes in technology, expected future cash flows of our reporting units decline, or reporting unit carrying values change materially compared with changes in respective fair values.

We utilize debt financing and such indebtedness could adversely affect our business, financial condition, results of operations and earnings per share and our abilityshare. We may be unable to meet our payment obligations.

We routinely incur indebtedness to finance our operations and from time to time we have significantsubstantial amounts of outstanding indebtedness and substantial debt service requirements. Our amended and restated senior secured credit facility with a group of lenders led by Morgan Stanley Senior Funding, Inc., provides for a $540 million revolving credit facility and a $100 million term loan. The credit facility contains customary affirmative, negative and financial covenants, including a maximum total leverage ratio and a minimum fixed charge coverage ratio. Our ability to meet our payment and other obligations and covenants under our indebtedness depends on our ability to generate significant cash flow. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. There is no assurance that our business will generate cash flow from operations, or that future borrowings will be available to us under our existing or(or any amendedamended) credit facilities or otherwise, in an amount sufficient to enable us to meet payment obligations under any indebtedness we may under takeincur from time to time. If we are not able to generate sufficient cash flow to service our debt obligations or meet required debt covenants, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. There is no assurance that we will be able to implement any of these alternatives on commercially reasonable terms, if at all. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under any indebtedness we owe. In addition, an inability to meet our payment obligations under any indebtedness may trigger a default, and possible acceleration of payment terms, under the applicable debt financing agreements.

Furthermore, the interest rate on certain of these instruments is tied to short term interest rate benchmarks including the Prime Rate and LIBOR.  Interest rates have remained at historically low levels for a prolonged period of time and we expect interest rates to rise in the future. If the rate of interest we pay on our borrowings increases it would increase our debt-related expenditures.  There is no assurance that our business will generate cash flow from operations, or that future borrowings will be available to us under our existing (or any amended) credit facilities or otherwise, in an amount sufficient to enable us to meet payment obligations (including any increased interest payment obligations) under any indebtedness we may incur from time to time.

As of January 3, 2016,December 31, 2017, our outstanding debt, included $449.0net of cost, primarily included:

$90.0 million related to our Senior Secured Revolving Credit Facility $150 million of 2% Senior Exchange notes assumed from Spansion, $97.2

$495.4 million Term Loan A, net of costs, $7.2B

$131.4 million of capital leasesour 2% 2023 Exchangeable Notes

$246.6 million of our 4.5% 2022 Senior Exchangeable Notes and $3.0

$20.4 million of equipment loans.  our 2% 2020 Spansion Exchangeable Notes

See Note 14 of the Notes to the Consolidated Financial Statements for more information onregarding our Senior Secured Revolving Credit Facility, 2.0% Senior Exchange notes assumed from Spansion and our Term Loan A and Note 19 on our capital leases.

debt obligations.

If we fail to compete successfully in our highly competitive industry and markets, our business, financial condition and results of operations will be seriously harmed.

The semiconductor industry is intensely competitive. This intense competition results in a difficult operating environment that is marked by erosion of average selling prices over the life of each product and rapid technological change resulting in limited product life cycles. In order to offset selling price decreases, we attempt to decrease the manufacturing costs of our products and to introduce new, higher priced products that incorporate advanced features. If these efforts are not successful or do not occur in a timely manner, or if our newly introduced products do not gain market acceptance, our business, financial condition and results of operations could be seriously harmed.

Our ability to compete successfully in the rapidly evolving semiconductor industry depends on many factors, including:

·

our success in developing and marketing new products, software platforms and manufacturing technologies and bringing them to market on a timely basis;

·

the quality and price of our products;

our ability to successfully execute on our long term strategic corporate transformation initiatives, collectively known as our Cypress 3.0 initiatives;

·

the pace at which customers incorporate our products into their systems, as is sometimes evidenced by design wins;

·

the diversity of our product lines;

·

the cost effectiveness of our design, development, manufacturing, support and marketing efforts, especially as compared to our competitors;

our success in developing and marketing new products, software platforms and manufacturing technologies and bringing them to market on a timely basis;

·

our success in developing and introducing firmware in a timely manner;

the quality and price of our products, and our ability to meet the specification requirements of our customers;

·

our customer service and customer satisfaction;

the willingness of our customer base to absorb any increase in the price that we sell our products;

·

our ability to successfully execute our flexible manufacturing strategy;

the pace at which customers incorporate our products into their systems, as is sometimes evidenced by design wins;

·

the number, strength and nature of our competitors, the markets they target and the rate and success of their technological advances;

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the success of certain of our development activity which is a part of our Emerging Technologies business segment;

the diversity of our product lines;

·

our ability to get competitive terms with our vendors, manufacturing partners and suppliers;

the cost effectiveness of our design, development, manufacturing, support and marketing efforts, especially as compared to our competitors;

·

general economic conditions; and

our success in developing and introducing firmware in a timely manner;

·

our access to and the availability of working capital.

our customer service and customer satisfaction;

our ability to successfully execute our flexible manufacturing strategy;

the number, strength and nature of our competitors, the markets they target and the rate and success of their technological advances;

the success of certain of our development activity including our investments in internal and external development stage startups;

our ability to get competitive terms with our vendors, manufacturing partners and suppliers;

general economic conditions;

the cyclical nature of the semiconductor industry;

our ability to maintain supply of products from third party manufacturers; and

our access to and the availability of working capital.

Although we believe we currently compete effectively in the above areas to the extent they are within our control, given the pace of change in our industry (including recent trends toward consolidation in the industry), our current abilities are not guarantees of future success. If we are unable to compete successfully in this environment, our business, financial condition and results of operations will be seriously harmed.

We may fail to realize all of the anticipated benefits of our acquisition of Spansion

On March 12, 2015, we completed our acquisition of Spansion. The success of the transaction will depend, in part, on our ability to achieve the anticipated cost synergies and other strategic benefits from combining the businesses of Cypress and Spansion. We expect to benefit from operational synergies resulting from the consolidation of capabilities and elimination of redundancies as well as greater efficiencies from increased scale, market integration and more automation. However, to realize these anticipated benefits, we must successfully combine the businesses of Cypress and Spansion. If we are not able to achieve these objectives, the anticipated cost synergies and other strategic benefits of the transaction may not be realized fully or at all or may take longer to realize than expected. We may fail to realize some or all of the anticipated benefits of the transaction in the amounts and times projected for a number of reasons, including that the integration may take longer than anticipated or be more costly than anticipated.

The failure to integrate successfully the businesses and operations of Cypress and Spansion in the expected time frame may adversely affect our future results.

Prior to the completion of the transaction, Cypress and Spansion historically operated as independent companies. Our management may face significant challenges in consolidating the functions of Cypress and Spansion and their subsidiaries, integrating their technologies, organizations, ERP systems, procedures, policies and operations, as well as addressing differences in the business cultures of the two companies and retaining key personnel. In connection with the acquisition, we are integrating certain operations of Cypress and Spansion, including, among other things, back-office operations, information technology and regulatory compliance. The integration of the two companies will be complex and time consuming, and require substantial resources and effort. The integration process and other disruptions resulting from the transaction may disrupt each company’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with our members and other market participants, employees, regulators and others with whom we have business or other dealings. If we fail to manage the integration of these businesses effectively, our growth strategy and future profitability could be negatively affected, and we may fail to achieve the intended benefits of the transaction.

We have incurred costs in connection with our acquisition of Spansion and will continue to incur costs in connection with the transaction.

We have incurred significant costs associated with transaction fees, professional services and other costs related to the transaction and we will continue to incur additional costs, including restructuring costs, in connection with the integration of the business. Specifically, through January 3, 2016, we have incurred $84.6 million for costs in addition to restructuring and other items associated with the merger and integration. Although we expect that the realization of efficiencies related to the integration of the businesses will offset merger-related and restructuring costs over time, this net benefit may not be achieved in the near term, or at all.

We face significant volatility in supply and demand conditions for our products, and this volatility, as well as any failure by us to accurately forecast future supply and demand conditions, could materially and negatively impact our business.

The semiconductor industry has historically been characterized by wide fluctuations in the demand for, and supply of, semiconductors. Demand for our products depends in large part on the continued growth of various electronics industries that use our products, including, but not limited to:

·

automotive applications including advanced driver assistance systems (ADAS), instrument clusters, infotainment systems, body electronics, HVAC controls, event data recorders, powertrains and electric vehicle/hybrid-electric vehicle systems;

·

industrial systems including factory automation equipment, smart electric meters, aerospace, industrial controls, point-of-sale terminals and test equipment

automotive applications including advanced driver assistance systems (ADAS), instrument clusters, infotainment systems, body electronics, connectivity, HVAC controls, event data recorders;

·

consumer electronics including wearable electronics, smartphones, gaming consoles, gamepads, remote controls, toys, presenter tools, TVs, set-top boxes and fitnessindustrial systems including factory automation equipment, smart electric meters, aerospace, industrial controls, point-of-sale terminals and test equipment;

·

wireless telecommunications equipment;

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·

computers and computer-related peripherals;

Wireless products including smart home applications, health and fitness, audio, automotive, medical device and industrial devices;

·

medicalconsumer electronics including wearable electronics, smartphones and other mobile devices, gaming consoles, game-pads, remote controls, toys, presenter tools, TVs, set-top boxes and fitness equipment; and

·

networking equipment.

wireless telecommunications equipment;

computers and computer-related peripherals;

medical equipment; and

networking equipment.

Any downturn, shift in product launch schedule or reduction in the growth of these industries could seriously harm our business, financial condition and results of operations. In particular, our TrueTouch family of products is highly concentrated in consumer handset markets which are susceptible to changesFurther, pricing in the general economy, consumer acceptance, design wins, competitionsemiconductor industry is subject to significant volatility. As an example, pricing of memory products during fiscal 2017 was significantly impacted by industry conditions. We may be unable to anticipate or manage price volatility which may adversely impact our margins, market share, financial condition and price.

results of our operations.

We order materials and build our products based primarily on our internal forecasts, customer and distributor forecasts and secondarily on existing orders, which may be cancelledcanceled under many circumstances. Because our markets can be volatile, are based on consumer demand and subject to rapid technological and price changes, our forecasts may be inaccurate, causing us to make too many or too few of certain products.

Also, our

Our customers frequently place orders requesting product delivery almost immediately after the order is made, which makes forecasting customer demand even more difficult, particularly when supply is abundant. In addition, demand for our products could be materially different from our expectations due to changes in customer order patterns, including order deferrals or cancellations. If we experience inadequate demand, order cancellations, or a significant shift in the mix of product orders that makes our existing capacity and capability inadequate, our fixed costs per semiconductor produced will increase, which will harm our financial condition and results of operations.

Alternatively, if we should experience a sudden increase in demand, we will need to quickly ramp our inventory and/or manufacturing capacity to adequately respond to our customers. If we or our manufacturing partners are unable to ramp our inventory or manufacturing capacity in a timely manner or at all, we risk losing our customers’ business, which could have a negative impact on our financial performance and reputation.

If we fail to develop, introduce and sell new products or fail to develop and implement new technologies, our ability to compete in our end markets will suffer and our financial results could be adversely impacted.

Like many semiconductor companies, which operate in a highly competitive, quickly changing environment marked by rapid obsolescence of existing products, our future success depends on our ability to develop and introduce new products that customers choose to buy. Our new products, for example PSoC^®PSoC® products, BLE, USB-Type C, Traveoour wireless connectivity products, USB-C, and our ETD companiesTraveo™ microcontroller products, are an important strategic focus for us and therefore, they tend to consume a significant amount of our resources. The new products the market requires tend to be increasingly complex, incorporating more functions including software and security and operating at faster speeds than old products.

Increasing complexity generally requires smalleradditional features on a smaller chip. This makes manufacturing new generations of products substantially more difficult, more costly and more time consuming than prior generations.

Despite the significant amount of resources, we commit to new products, there can be no guarantee that such products will perform as expected or at all, be introduced on time to meet customer schedules or gain market acceptance. If we fail to introduce new product designs or technologies in a timely manner, or are unable to manufacture products according to thethese design requirements, of these designs, or if our customers do not successfully introduce new systems or products incorporating our products or if market demand for our new products does not materialize as anticipated, our business, financial condition and results of operations could be materially harmed.

The complex nature of our manufacturing activities, our broad product portfolio, and our increasing reliance on third-party manufacturers makes us highly susceptible to manufacturing problems and these problems can have a substantial negative impact on us if they occur.

Making

Manufacturing semiconductors is a highly complex and precise process, requiring production in a tightly controlled, clean environment.clean-room environments. Even very small impurities in our manufacturing materials, defects in the masks used to print circuits on a wafer or other problems in the wafer fabrication process can cause a substantial percentage of wafersproducts to be rejected or numerous chips on each wafer toand be non-functional. We and, similarly, our third partythird-party foundry partners, may experience problems in achieving an acceptable success rate in the manufacture of wafers and the likelihood of facing such difficulties is higher in connection with the transition to new manufacturing methods. The interruption of wafer fabrication, ora reduction in available wafer supply, the failure to achieve acceptable manufacturing yields, or the inability to achieve acceptable levels of quality and security in our products as expected by our customers, including our customers in the automotive industry, at any of our facilities, or the facilities of our third-party foundry partners, would seriously harm our business, financial condition and results of operations. This risk may be exacerbated by our recent divestiture and future divestitures of any of our manufacturing facilities, as we would be increasing our reliance on third-party partners in that situation.

In March 2017, we completed the sale of our semiconductor wafer fabrication facility in Bloomington, Minnesota.

The purchaser intends to operate the fabrication facility as a stand-alone business that will manufacture wafers for Cypress and for other semiconductor manufacturers. Although this transaction allows us to reduce our manufacturing footprint, it will increase our reliance on third-party suppliers. Accordingly, if the new owner of our Bloomington fabrication facility is unable to effectively operate the facility, faces financial difficulty, or is otherwise unable to meet our product demands, our supply of components may be adversely affected. Such events could lead to difficulties in delivering products to our customers on time and have a negative impact on our revenue and financial results.

We may also experience manufacturing problems in our assembly and test operations (or the assembly and test operations of third-party partners) and in the introduction of new packaging materials.

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We are increasingly dependent uponon third parties to manufacture products, distribute products, generate a significant portion of our product sales, fulfill our customer orders and transport our product.products. Problems in the performance or availability of these companies could seriously harm our financial performance.

Although many of our products are fabricated in our manufacturing facilities located in Minnesota, Austin, Malaysia and the Philippines, we

We rely to a significant extentsignificantly on independent contractors to manufacture, and assemblewhich includes assembly of, our products. In addition, ifin March 2017, we divested our manufacturing facility located in Minnesota, which reduces our internal manufacturing capacity.

If market demand for our products exceeds our internal manufacturing capacity and available capacity from our foundry partners, we may seek additional foundry manufacturing arrangements.

A shortage in foundry manufacturing capacity, which is more likely to occur at times of increasing demand, could hinder our ability to meet demand for our products and therefore adversely affect our operating results. Suppliers may extend lead times, limit supplies or increase prices due to commodity price increases, capacity constraints or other factors, which may lead to interruption of supply which could materially harm our results of operations. In addition, greater demand for wafers produced by any such foundries without an offsetting increase in foundry capacity raises the likelihood of potential wafer price increases. Our operations would be disrupted if any of our foundry partners terminates its relationship with us or hasexperiences financial issuesdifficulty and we are unable to arrange a satisfactory alternative to fulfill customer orders on a timely basis and in a cost-effective manner. There are also only a few foundry vendors that have the capabilities to manufacture our most advanced products. If we engage alternative sources of supply, we may encounter start-up difficulties, yield issues or incur additional costs. Shipments could be delayed significantly while these sources are qualified for volume production.

While a high percentagemany of our products are assembled, packaged and tested at our manufacturing facilities located in the Philippines and Malaysia,Thailand, we rely on independent subcontractors to assemble, package and test the balance of our products. We cannot be certain that these subcontractors will continue to assemble, package and test products for us on acceptable economic and quality terms or at all and it might be difficult for us to find alternatives if they do not do so.

Our foundry partners and assembly and test subcontractors have operations in locations that may suffer the impact of certain natural disasters and political risk, which could impact their ability to provide us with our products. We monitor these events closely, but if one of our third partythird-party manufacturing partners were to suffer significant damage to its operations as a result of a natural disaster or other catastrophic events, our ability to timely meet consumer demand would suffer which would materially harm our results of operations.

Our channel partners include distributors and resellers. We continue to expand and change our relationships with our distributors. Worldwide sales through our distributors accounted for approximately 71%73% of our net sales in fiscal year 2015.2017. We rely on many distributors to assist us in creating customer demand, providing technical support and other value-added services to our customers, filling customer orders and stocking our products. We face ongoing business risks due to our reliance on our channel partners to create and maintain customer relationships where we have a limited or no direct relationship. Should our relationships with our channel partners or their effectiveness decline, we face the risk of declining demand which could affect our revenue and results of operations. Our contracts with our distributors may be terminated by either party upon notice. The termination of a significant distributor or a reseller could (a) impact our revenue and limit our access to certain end-customers, (b) result in the return of a material amount of inventory held by the distributor or reseller that we may not be able to resell or have to resell at a loss, and (c) jeopardize our ability to collect accounts receivable originating through that distributor or reseller. In addition, our distributors are located all over the world and are of various sizes and financial conditions.strength. Any disruptions to our distributors’ operations such as lower sales, lower earnings, debt downgrades, the inability to access capital markets andand/or higher interest rates could have an adverse impact on our business.

We also rely on independent carriers and freight haulers to move our products between manufacturing plants and our customers’ facilities. Transport or delivery problems due to their error or because of unforeseen interruptions in their business due to factors such as strikes, political instability, terrorism, natural disasters or accidents could seriously harm our business, financial condition and results of operations and ultimately impact our relationship with our customers.

We may not be able to consume minimum commitments under our “take or pay” agreements, which may have a material adverse impact on our earnings.

We have entered into agreements with certain vendors that include "take or pay" terms. Take or pay terms obligate us to purchase a minimum required amount of services or make specified payments in lieu of such purchase. We may not be able to consume minimum commitments under these take or pay terms, requiring payments to vendors, which may have a material adverse impact on our earnings.

Failures in our products or in the products of our customers including those resulting from security vulnerabilities, defects or errors, could harm our business.

The use of devices containing our products to access untrusted content create a risk of exposing the products into viral or malicious risks. While we continue to focus on this issue and are taking measures to safeguard our products from cybersecurity threats, device capabilities continue to evolve, enabling more data and processes, such as computing, and increasing the risk of security failures. Further, our products are inherently complex and may contain defects or errors that are detected only when the products are in use. The design process interface in new domains of technology and the migration to integrated circuit technologies with smaller geometric feature sizes are complex and add risk to manufacturing yields and reliability. Further, manufacturing, testing, marketing and use of our products and those of our customers entail the risk of product liability. Because our products and services are responsible for critical functions in our customers’ products, security failures, defects or errors in our products or services could have an adverse impact on us, on our customers and/or on the end users of our customers’ products. Such adverse impact could include product liability claims or recalls, write-offs of our inventories, property, plant and equipment and/or intangible assets; unfavorable purchase commitments; a shift of business to our competitors; a decrease in demand for our products; damage to our reputation and to our customer relationships; and other financial liability or harm to our business. Further, security failures, defects or errors in the products of our customers could have an adverse impact on our results of operations and/or cash flows due to a delay or decrease in demand for our products generally.

System security risks, data protection or privacy breaches, cyber-attacks and systems integration issues could disrupt our internal operations and/or harm the reputation of the Company, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution or other critical functions.

We manage and store various proprietary information and sensitive or confidential data relating to our business on the cloud. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time consuming, disruptive and resource-intensive than originally anticipated. Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed sales, lower margins or lost customers resulting from these disruptions have adversely affected us in the past, and in the future, could adversely affect our financial results, stock price and reputation.

We are in the process of implementing our worldwide business application suite, and difficulties, distraction or disruption may interrupt our normal operations and adversely affect our business and operating results.

During fiscal year 2017, we devoted significant resources to the upgrade of our worldwide business application suite from Oracle's version 11i to Oracle's version R12. We plan to go live with the upgrade in Q1 fiscal 2018. As a result of our transition to the new business application suite, we may experience difficulties with our systems, lack of visibility into our business operations and results, and significant business disruptions. Difficulties with our systems may interrupt our normal operations, including our enterprise resource planning, forecasting, demand planning supply planning, inter-company processes, internal financial controls, pricing, and our ability to provide quotes, process orders, ship products, provide services and support to our customers, bill and track our customers, fulfill contractual obligations, and otherwise run and track our business. Any difficulty or disruption may adversely affect our business and operating results.

Changes in U.S. and international tax legislation and tax policy could materially impact our business.

A majority of our revenue is generated from customers located outside the U.S. and a substantial portion of our assets, including employees, are located outside the U.S. In the past, tax administrations globally have considered initiatives which could substantially eliminate utilization or reduce our ability to claim net operating losses and foreign tax credits, and eliminate various tax deductions. If any of these proposals are constituted into law, they could have a negative impact on our financial position and results of operations.

We are subject to income tax, and from time to time, examinations by the U.S. Internal Revenue Service, U.S. local tax administrations, and similar proceedings in foreign jurisdictions in which we do business. As a result, we may incur additional costs and expenses, and owe additional taxes, interest and penalties which will negatively impact our operating results and cash flows. The results of these U.S. and certain foreign jurisdiction examinations may also decrease our current estimate of unrecognized tax benefits.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. The U.S. recently enacted significant tax reform. We are still evaluating the impact, but certain provisions such as the base erosion anti-abuse tax provision of the new law may adversely affect us. The Organization for Economic Co-operation and Development, or OECD, also recently released guidance covering various topics, including country-by-country reporting, definitional changes to permanent establishment and Base Erosion and Profit Shifting, or BEPS, an initiative that aims to standardize and modernize global tax policy. Depending on the final guidance, if any, there may be significant consequences for the Company due to the large scale of our international business activities.

If the tax incentive or tax holiday arrangements we have negotiated in Malaysia, the Philippines and Thailand change or cease to be in effect or applicable, in part or in whole, for any reason, or if our assumptions and interpretations regarding tax laws and incentive or holiday arrangements prove to be incorrect, the amount of corporate income taxes we have to pay could significantly increase.

We have structured our operations to maximize the benefit from various tax incentives and tax holidays extended to the Company in various jurisdictions to encourage investment or employment. Each tax incentive is separate and distinct from the others, and may be granted, withheld, extended, modified, truncated, complied with or terminated independently without any effect on the other incentives. The tax incentives are presently scheduled to expire at various dates generally beginning in 2018, subject in certain cases to potential extensions, which we may or may not be able to obtain. Absent these tax incentives, the corporate income tax rate in these jurisdictions that would otherwise apply to us would be between 20% and 30%. The tax incentives that we have negotiated are also subject to our compliance with various operating and other conditions. If we cannot, or elect not to, comply with the operating conditions included in any particular tax incentive, we will lose the related tax benefits and we could be required to refund previously realized material tax benefits. Depending on the incentive at issue, we could also be required to modify our operational structure and tax strategy, which may not be as beneficial to us as the benefits provided under the present tax concession arrangements. Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded we could suffer material adverse tax and other financial consequences, which could adversely affect our cash flows.

We have identified a material weakness in our internal control over financial reporting that, if not remediated, could adversely affect investor confidence and our business, results of operations and stock price.

As disclosed in Item 9A of this report, we identified a material weakness in our internal control over financial reporting as of December 31, 2017 related to management’s controls over accounting for stock-based compensation, especially the controls over the accounting for our employee stock purchase plan (ESPP). A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of the material weakness identified, our management concluded that our internal control over financial reporting was not effective as of December 31, 2017. We are actively engaged in implementing a remediation plan designed to address this material weakness. However, we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. If our remediation measures are insufficient to address this material weakness, or if additional material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, which could require us to restate our consolidated financial statements. Any restatement of our consolidated financial statements could negatively impact investor confidence and could lead to litigation against us, which could be time-consuming, costly or divert significant operational resources, any of which could adversely affect our business, results of our operations and stock price.

We may dispose of certain businesses, product lines or assets, which could adversely affect our results of operations and liquidity.

From time to time, we may divest certain businesses, product lines or assets, both acquired or otherwise, that are no longer strategically important, or we may exit minority investments, which could materially affect our cash flows and results of operations. If we decide to divest a business, product line or assets, we may encounter difficulty in finding or completing such divestiture opportunity (or alternative exit strategy) on acceptable terms or in a timely manner. These circumstances could delay the achievement of our strategic objectives or cause us to incur additional expenses with respect to the business, product line or assets that we seek to dispose. In addition, any delay in the timing of a divestiture transaction may negatively impact our business operations or liquidity for a period of time. Alternatively, we may dispose of businesses, product lines or assets at prices or on terms that are less favorable than we had anticipated. Even following a divestiture, we may be contractually obligated with respect to certain continuing obligations to customers, vendors, landlords or other third parties. Accordingly, we may be dependent on the new owner (of such business, product line or manufacturing facility) to fulfill our continuing obligations to our customers. We may also have continuing obligations for pre-existing liabilities related to the divested assets or businesses. Such obligations may have a material adverse impact on our results of operations and financial condition. Any such dispositions could also result in disruption to other parts of our business, potential loss of employees or customers (especially if the new owner is unable or unwilling to assist us in fulfilling any continuing obligations to our customers), potential loss of revenue, negative impact on our margins, exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. We may also incur significant costs associated with exit or disposal activities, related impairment charges, or both.

We cannot be assured that our restructuring initiatives will be successful.

From time to time, we have implemented restructuring plans to reduce our operating costs and/or shift our expenditures to different areas of our business. However, if we have not sufficiently reduced operating expenses or if revenues are below our expectations, we may be required to engage in additional restructuring activities, which could result in additional restructuring charges. These restructuring charges could harm our results of operations. Further, our restructuring plans could result in potential adverse effects on employee capabilities, on our ability to achieve design wins, and our ability to maintain and enhance our customer base. Such events could harm our efficiency and our ability to act quickly and effectively in the rapidly changing technology markets in which we sell our products. In addition, we may be unsuccessful in our efforts to realign our organizational structure and shift our investments and focus to our high-growth businesses.

Our financial results could be adversely impacted if privately-held companies (that we have invested in) fail to develop and successfully bring to market new and proprietary products.

We have made a financial commitment to certain investments in privately-held companies. Despite the significant amount of resources, we commit to these companies, there can be no guarantee that such businesses will perform as expected or at all, launch new products and solutions as expected or gain market acceptance. If these privately-held companies fail to introduce new products and solutions or successfully develop new technologies, or if customers do not successfully introduce new systems or products incorporating the products or solutions offered by these businesses or if market demand for the products or solutions offered by these businesses do not materialize as anticipated or if these privately-held companies are not able to raise capital to fund their operations, our business, financial condition and results of operations could be materially harmed as a result of impairment of the carrying value of our investments in such privately-held companies.

During the fourth quarter of fiscal 2017, we incurred an other-than-temporary impairment charge for our investment in Enovix Corporation.

Acquisitions and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impact our business and results of operations.

Acquisitions are an important element of our overall corporate strategy and use of capital. These transactions could be material to our financial condition and results of operations. We expect to continue to evaluate and enter into discussions regarding a wide array of potential strategic transactions. The process of integrating an acquired company, business, or technology has created, and will continue to create, unforeseen operating difficulties and expenditures. The areas where we face risks include, but are not limited to:

Diversion of management time and focus from operating our business to integration challenges;

Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire;

Successfully transitioning the current customer, supplier, foundry and other partnering relationships of the acquired company;

•Implementation or remediation of controls, procedures, and policies at the acquired company;

Integration of the acquired company’s accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales and marketing functions;

In the case of acquired companies with global operations, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries;

•Failure to successfully further develop the acquired business or technology;

Liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and

Pending litigation or other known or unknown claims in connection with the acquired company, including claims by stockholders for breach of fiduciary duties, terminated employees, customers, former stockholders, or other third parties.

Our failure to address these and other risks or other problems encountered in connection with our past or current acquisitions and investments could cause us to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities, and harm our business generally. Current and future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, or write-offs of goodwill, any of which could harm our financial condition or results. As a result, the anticipated benefit of any of our acquisitions may not be realized.

In 2016, we incurred a material impairment charge with respect to our goodwill, and we may in the future incur impairments in the value of our goodwill, intangibles and property, plant and equipment.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. We test goodwill for impairment annually, and more frequently when events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. In 2016, we conducted impairment testing on the goodwill in our legacy Programmable Solutions Division ("PSD") and recorded an impairment charge of $488.5 million. In addition, our other long-lived assets which include intangibles and property, plant and equipment are evaluated for impairments whenever events or changes in circumstances indicate the carrying value may not be recoverable. Either of these situations may occur for various reasons, including changes in actual or expected income or cash flow. During the fourth quarter of fiscal 2016 we have reorganized our reportable segments as a result of which goodwill was reallocated to new segments. We continue to evaluate current conditions to assess whether any impairment exists. Additional impairments could occur in the future if any of the following occur: market or interest rate environments deteriorate, significant adverse changes in business climate, unanticipated competition, loss of key customers, changes in technology, expected future cash flows of our reporting units decline, or reporting unit carrying values change materially compared with changes in respective fair values.

We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel would harm us.

To a greater degree than most non-technology companies, we depend on the efforts and abilities of certain key members of management and technical personnel to execute on the strategic initiatives of our business. Our future success depends, in part, upon our ability to retain such personnel and to attract and retain other highly qualified personnel, particularly product and process engineers. We compete for these individuals with certain of our competitors, other companies, academic institutions, government entities and other organizations. Competition for such personnel, particularly in the Silicon Valley, is intense and we may not be successful in hiring or retaining new or existing qualified personnel. Furthermore, changes in immigration and work permit laws and regulations or the administration or enforcement of such laws or regulations can also impair our ability to attract and retain qualified personnel. Equity awards are critical to our ability to hire and retain such key personnel, and any reduction in the price of our common stock (and accordingly the value of such equity awards) may reduce the willingness of key personnel to remain employed by the Company. In addition, we may also need to significantly increase our cash-based compensation to retain such personnel.

Our business may also be impacted if we lose members of our senior management team. Any disruption in management continuity could impact our results of operations and stock price and may make recruiting for future management positions more difficult. In addition, changes in key management positions may temporarily affect our financial performance and results of operations as new management becomes familiar with our business. The loss of any of our key officers or other employees, or our inability to attract, integrate and retain qualified employees, could require us to dedicate significant financial and other resources to such personnel matters, disrupt our operations and seriously harm our operations and business.

If we are unable to obtain stockholder approval of additional shares for our share-based compensation award programs in the future, we could be at a competitive disadvantage in the marketplace for qualified personnel.

Our compensation program, which includes cash and share-based compensation award components, has been instrumental in attracting, hiring, motivating, and retaining qualified personnel. Competition for qualified personnel in our industry is extremely intense, particularly for engineering and other technical personnel. Our success depends on our continued ability to attract, hire, motivate, and retain qualified personnel and our share-based compensation award programs provide us with a competitive compensatory tool for this purpose. The continued use of our share-based compensation program is necessary for us to compete for engineering and other technical personnel and professional talent. In the future, if we are unable to obtain stockholder approval of additional shares for our share-based compensation award programs, we could be at a competitive disadvantage in the marketplace for qualified personnel.

There can be no assurance we will continue to declare dividends.

Our Board of Directors previously adopted a policy pursuant to which the Company would pay quarterly cash dividends on our common stock. The declaration and payment of any dividend or distribution is subject to the approval of our Board and our dividend may be discontinued or reduced at any time. There can be no assurance that we will declare dividends or distributions in the future in any particular amounts, or at all. Future dividends or distributions, if any, and their timing and amount, may be affected by, among other factors, management’s views on potential future capital requirements for strategic transactions, including acquisitions; earnings levels; contractual restrictions; our cash position and overall financial condition; debt related payments and commitments, including restrictive covenants which may limit our ability to pay a dividend or distribution; changes in tax or corporate laws; our ability to repatriate cash into the United States; stock repurchase programs; the need to invest in research and development or other parts of our business operations; and changes to our business model. Accordingly, our dividend or other distribution payments may change from time to time, and we cannot provide assurance that we will continue to declare dividends or other distributions in any particular amounts or at all. A reduction in our dividend payments or a change in the tax treatment of future dividends could have a negative effect on our stock price.

We may have fluctuations in the amount and frequency of our stock repurchases and there can be no assurance that we will continue to repurchase shares of our stock.

In October 2015, our Board of Directors approved a new share repurchase plan pursuant to which we are authorized to repurchase our common stock in an aggregate amount not to exceed $450 million. Although our Board of Directors has approved a share repurchase program, the share repurchase program does not obligate us to repurchase any specific dollar amount or number of shares. In addition, there can be no assurance that we will continue to repurchase shares of our stock in any particular amounts, or at all. The stock repurchase plan could affect the price of our stock and increase volatility and may be suspended or terminated at any time without prior notice and in compliance with legal and regulatory requirements, which may result in a decrease in the trading price of our common stock. Through the end the 2016 fiscal year, we repurchased a total of 29.5 million shares for a total cost of $239.2 million under the October 2015 stock repurchase plan. A substantial majority of these purchases were made prior to the start of our second quarter of 2016. In fiscal 2017, we did not repurchase any shares in open market under the stock repurchase plan.

Any guidance that we may provide about our business or expected future results may differ significantly from actual results.

From time to time we have shared our views in press releases or SEC filings, on public conference calls and in other contexts about current business conditions and our expectations as to our future results of operations. Correctly identifying the key factors affecting business conditions and predicting future events is inherently an uncertain process, especially in uncertain economic times. Given the complexity and volatility of our business, our analysis and forecasts have in the past and will likely in the future, prove to be incorrect. We offer no assurance that such predictions or analysis will ultimately be accurate, and investors should treat any such predictions or analysis with appropriate caution. Any analysis or forecast that we make which ultimately proves to be inaccurate may adversely affect our stock price.

Industry consolidation may lead to increased competition and may harm our operating results.

There has been a trend toward industry consolidation in our markets for several years. We expect this trend to continue as companies attempt to strengthen or hold their market positions in an evolving industry and as companies are acquired or are unable to continue operations. Industry consolidation may result in stronger companies that are better able to compete with us. This could have a material adverse effect on our business, operating results, and financial condition.

We may be unable to adequately protect our intellectual property rights adequately.

rights.

The protection of our intellectual property rights, as well as those of our subsidiaries, is essential to keeping others from copying the innovations that are critical to our existing and future products. It may be possible for an unauthorized third party to reverse-engineer or decompile our software products. The process of seeking patent protection can be long and expensive and we cannot be certain that any currently pending or future applications will actually result in issued patents, or that, even if patents are issued, they will be respected by third parties. Furthermore, our flexible fab initiative requires us to enter into technology transfer agreements with external partners, providing third party access to our intellectual property and resulting in additional risk. In some cases, these technology transfer and/or license agreements are with foreign companies and subject our intellectual property to regulation in foreign countries which may afford less protection and/or result in increased costs to enforce such agreements or intellectual property rights. We anticipate that we will continue to enter into these kinds of licensing arrangements in the future. Consequently, we may become involved in litigation, in the United States or abroad, to enforce our patents or other intellectual property rights, to protect our trade secrets and know-how, to determine the validity or scope of the proprietary rights of others or to defend against claims of invalidity. We aremay also from time to time be involved in litigation relating to alleged infringement by us of others’ patents or other intellectual property rights.

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Moreover, a key element of our strategy is to enter new markets with our products. If we are successful in entering these new markets, we will likely be subject to additional risks of potential infringement claims against us as our technologies are deployed in new applications and face new competitors. We may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights, particularly in certain international markets, making misappropriation of our intellectual property more likely. Patent litigation, if necessary or if and when instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

In addition, in August 2016, we entered into a series of agreements to divest a large number of older, legacy patents. The divestiture of these patents may limit our ability to make certain legal claims, and to be successful, in future patent litigation.

We also rely on trade secret protection for our technology, in part through confidentiality and other written agreements with our employees, consultants and third parties. Through these and other written agreements, we attempt to control access to and distribution of our intellectual property documentation and other proprietary technology information. Despite our efforts to protect our proprietary rights, former employees, consultants or third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property rights or technology or otherwise develop a product with the same functionality as our technology. Policing unauthorized use of our intellectual property rights is difficult, and nearly impossible on a worldwide basis. Therefore, we cannot be certain that the steps we have taken or will take in the future will prevent misappropriation of our technology or intellectual property rights, particularly in foreign countries where we do business or where our technology is sold or used, where the laws may not protect proprietary rights as fully as do the laws of the United States or where the enforcement of such laws is not common or effective.

We may be involved in intellectual property litigation and face significant expenses as a result of ongoing or future litigation.

Other companies or entities also have commenced, and may again commence, actions seeking to establish the invalidity of our patents. While we intend to defend these actions vigorously, there is no guarantee of success, and such effort takes significant financial and time resources from the Company. In the event that one or more of our patents are challenged, a court or the United States Patent and Trademark Office (USPTO) may invalidate the patent(s) or determine that the patent(s) is not enforceable, which could harm our competitive position. If our patents are invalidated, or if the scope of the claims in any of these patents is limited by a court or USPTO decision, we could be prevented from pursuing certain litigation matters or licensing the invalidated or limited portion of such patents. Such adverse decisions could negatively impact our future, expected revenue.

Intellectual property litigation is frequently expensive to both the winning party and the losing party and could take up significant amounts of management’s time and attention. In addition, if we lose such a lawsuit, a court could find that our intellectual property rights are invalid, enabling our competitors to use our technology, or require us to pay substantial damages and/or royalties or prohibit us from using essential technologies. In addition, in August 2016, we entered into a series of agreements to divest a large number of older, legacy patents. The divestiture of these patents may limit our ability to make certain legal claims, and to be successful, in future patent litigation. For these and other reasons, this type ofintellectual property litigation could seriously harm our business, financial condition and results

of operations. Also, although in certain instances we may seek to obtain a license under a third party’s intellectual property rights in order to bring an end to certain claims or actions asserted against us, we may not be ableunable to obtain such a license on reasonable terms or at all. We believe we have meritorious defenses and claims in our current litigation and we intend to defend and pursue such claims vigorously. Unfortunately, such litigation and other claims are subject to inherent uncertainties.

uncertainties and may negatively impact our business.

The accumulation of changes in our shares by “5-percent stockholders” could trigger an ownership change for U.S. income tax purposes, in which case our ability to utilize our net operating losses would be limited and therefore impact our future tax benefits. Our business could be negatively affected as a result of actions by activist stockholders.

We are a publicly traded company and our stockholders can change on a daily basis. These changes are beyond our control. The U.S. Internal Revenue Code (Section 382) restricts a company’s ability to benefit from net operating losses if a “Section 382 Ownership Change” occurs. An ownership change for purposes of U.S. tax law Section 382 may result from ownership changes that increase the aggregate ownership of “5-percent stockholders,” by more than 50 percentage points over a testing period, generally three years (“Section 382 Ownership Change”). We experienced a Section 382 Ownership Change upon the merge with Spansion. The resulting limitations accompanying the ownership change are reflected in our deferred tax assets with no permanent limitation in our ability to utilize our tax attributes.

The actions of activist stockholders, including any related legal proceedings, could adversely affect our business. Specifically:

responding to common actions of an activist stockholder, such as public proposals and requests for special meetings, nominations of candidates for election to our board of directors, requests that certain executive officers or directors depart the Company, requests to make changes to internal business operations, requests to pursue a strategic combination or other transaction or other special requests, could disrupt our operations, be costly and time-consuming or divert the attention of our management and employees; 

perceived uncertainties as to our future direction in relation to the actions of an activist stockholder, including any perceived changes at the board or management level, may result in the loss of potential business opportunities or the perception that we are unstable and need to make changes, which may be exploited by our competitors and make it more difficult to attract and retain key personnel as well as consumers and service providers;

actions of an activist stockholder, especially any legal proceedings, may divert management time and attention away from execution on the Company’s business operations and cause the Company to incur significant costs, including expenses related to legal, public relations, investment banking, and/or proxy advisory services - these expenses could have a material adverse impact on our financial results;

the election to our Board of Directors of director candidates who are not supported by the Company, may create unnecessary conflict and instability on our board of directors; and

actions of an activist stockholder may cause fluctuations in our stock price based on speculative market perceptions, unflattering media coverage, or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

We face additional problems and uncertainties associated with international operations that could seriously harm us.

International revenues historically accounted for a significant portion of our total revenues. Our manufacturing, assembly, and test operations and certain finance operations located in outside of the United States, as well as our international sales offices and design centers, face risks frequently associated with foreign operations including but not limited to:

·

currency exchange fluctuations;

·

the devaluation of local currencies;

•currency exchange fluctuations;

·

political instability;

•the devaluation of local currencies;

·

labor issues;

•political instability, and the possibility of a deteriorating relationship with the United States;

·

the impact of natural disasters on local infrastructures and economies;

•labor issues, including collective bargaining agreements;

·

changes in local economic conditions;

•the impact of natural disasters on local infrastructures and economies;

·

import and export controls;

•changes in local economic conditions;

·

potential shortage of electric power supply;

•import and export controls;

·

potential violations by our international employees or third party agents of international or U.S. laws relevant to foreign operations (such as FCPA) and

•potential shortage of power supply;

·

changes in tax laws, tariffspotential violations by our international employees or third party agents of international or U.S. laws relevant to foreign operations (such as FCPA); and freight rates.

•changes in tax laws, tariffs and freight rates.

To the extent any such risks materialize, our business, financial condition or results of operations could be seriously harmed.

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We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel would harm us.

To a greater degree than most non-technology companies, we depend on the efforts and abilities of certain key members of management and technical personnel to execute on the strategic initiatives of our business. Our future success depends, in part, upon our ability to retain such personnel and to attract and retain other highly qualified personnel, particularly product and process engineers. We compete for these individuals with certain of our competitors, other companies, academic institutions, government entities and other organizations. Competition for such personnel is intense and we may not be successful in hiring or retaining new or existing qualified personnel. Equity awards are critical to our ability to hire and retain such key personnel. In addition, we may also need to significantly increase our cash based compensation to retain such personnel.

Our financial results could be adversely impacted if our Emerging Technologies businesses fail to develop and successfully bring to market new and proprietary products.

We have made a financial and personnel commitment to our Emerging Technologies businesses. Despite the significant amount of resources we commit to our Emerging Technologies businesses, there can be no guarantee that such Emerging Technologies businesses will perform as expected or at all, launch new products and solutions as expected or gain market acceptance. If our Emerging Technologies businesses’ fail to introduce new product and solutions or successfully develop new technologies, or if our customers do not successfully introduce new systems or products incorporating the products or solutions offered by our Emerging Technologies businesses or market demand for the products or solutions offered by our Emerging Technologies businesses do not materialize as anticipated, our business, financial condition and results of operations could be materially harmed.

Any guidance that we may provide about our business or expected future results may differ significantly from actual results.

From time to time we have shared our views in press releases or SEC filings, on public conference calls and in other contexts about current business conditions and our expectations as to our future results of operations. Correctly identifying the key factors affecting business conditions and predicting future events is inherently an uncertain process, especially in uncertain economic times. Given the complexity and volatility of our business, our analyses and forecasts have in the past and will likely in the future, prove to be materially incorrect. We offer no assurance that such predictions or analyses will ultimately be accurate, and investors should treat any such predictions or analyses with appropriate caution. Any analysis or forecast that we make which ultimately proves to be inaccurate may adversely affect our stock price.

We are subject to many different environmental, data privacy, health and safety laws, regulations and directives, and compliance with them may be costly.

We are subject to many different international, federal, state and local governmental laws and regulations related to, among other things, the storage, use, discharge and disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing process, conflict mineral and data privacy legislation, as well as the health and safety regulations related to our employees. Compliance with these regulations can be costly. We cannot assure youThere can be no assurance that we have been, or will be at all times in complete compliance with such laws and regulations. If we violate or fail to comply with these laws and regulations, we could be fined or otherwise sanctioned by the regulators. Under certain environmental laws, we could be held responsible, without regard to fault, for all of the costs relating to any contamination at our or our predecessors’ past or present facilities and at third party waste disposal sites. We could also be held liable for any and all consequences arising out of human exposure to such substances or other environmental damage.

Proposed or new legislation and regulations could also significantly affect our business. There currently are a number of proposals pending before federal, state, and foreign legislative and regulatory bodies. In addition, the new European General Data Protection Regulation (GDPR) will take effect in May 2018 and will apply to many of our products and services that provide service in Europe. The GDPR will include operational requirements for companies that receive or process personal data of residents of the European Union that are different than those currently in place in the European Union. For example, we may be required to implement measures to change our service or limit access to our service for minors under the age of 16 for certain countries in Europe that maintain the minimum age of 16 under the GDPR. We may also be required to obtain consent and/or offer new controls to existing and new users in Europe before processing data for certain aspects of our service. In addition, the GDPR will include significant penalties for non-compliance. Similarly, there are a number of legislative proposals in the United States, at both the federal and state level, that could impose new obligations in areas affecting our business, such as liability for copyright infringement by third parties. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.

Over the last several years, there has been increased public awareness of the potentially negative environmental impact of semiconductor manufacturing operations. This attention and other factors may lead to changes in environmental regulations that could force us to purchase additional equipment or comply with other potentially costly requirements. If we fail to control the use of, or to adequately restrict the discharge of, hazardous substances under present or future regulations, we could face substantial liability or suspension of our manufacturing operations, which could seriously harm our business, financial condition and results of operations.

We face increasing complexity in our product design as we adjust to new and future requirements relating to the material composition of our products, including the restrictions on lead and other hazardous substances that apply to specified electronic products put on the market in the European Union, China and California. Other countries, including at the federal and state levels in the United States, are also considering similar laws and regulations. Certain electronic products that we maintain in inventory may be rendered obsolete if they are not in compliance with such laws and regulations, which could negatively impact our ability to generate revenue from those products. Although we cannot predict the ultimate impact of any such new laws and regulations, they will likely result in additional costs, or in the worst case decreased revenue, and could even require that we redesign or change how we manufacture our products. Such redesigns result in additional costs and possible delayed or lost revenue.

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Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our worldwide operations could be adversely affected if disrupted for any reason, including natural disasters such as earthquakes, tsunamis, floods, hurricanes, typhoons, telecommunication or information technology system failures, regulatory or political issues, power or water shortages, fires, extreme weather conditions, medical epidemics or pandemics or other man- made disasters or catastrophic events. While we maintain business interruption insurance for our primary foreign manufacturing operations, we are self-insured for any loss or damage to our primary manufacturing facility. As such, the occurrence of any of these business disruptions for us or our third party manufacturers, partners or customers could result in significant losses, seriously harm our revenue and financial condition, adversely affect our competitive position, increase our costs and expenses, and require substantial expenditures and recovery time in order to fully resume operations. Our corporate headquarters, and a portion of our research and development activities, are located in California, and other critical business operations and some of our suppliers are located in California and Asia, near major earthquake faults known for seismic activity. The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including the Philippines, Malaysia, China and India. We also rely on major logistics hubs primarily in Asia to manufacture and distribute our products. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults and being consolidated in certain geographical areas is unknown. However in the event of a major earthquake or other natural disaster or catastrophic event, our revenue, profitability and financial condition could suffer.

System security risks, data protection or privacy breaches, cyber-attacks and systems integration issues could disrupt our internal operations and/or harm the reputation of the Company, and any such disruption or harm could cause a reduction in our expected revenue, increase our expenses, negatively impact our results of operation or otherwise adversely affect our stock price.

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential and proprietary information, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions and delays that may impede our sales, manufacturing, distribution or other critical functions.

We manage and store various proprietary information and sensitive or confidential data relating to our business on the cloud. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time consuming, disruptive and resource-intensive. Such disruptions could adversely impact our ability to fulfill orders and interrupt other processes. Delayed sales, lower margins or lost customers resulting from these disruptions have adversely affected us in the past, and in the future could adversely affect our financial results, stock price and reputation.

We maintain self-insurance for certain indemnities we have made to our officers and directors, and if a significant payment were to arise out of such liabilities, it could harm our financial condition and results of operation.

Our certificate of incorporation, by-laws and indemnification agreements require us to indemnify our officers and directors for certain liabilities that may arise in the course of their service to us. We self-insure with respect to these indemnifiable claims. If we were required to pay a significant amount on account of these liabilities for which we self-insure, our business, financial condition and results of operations could be seriously harmed.

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New regulations

Regulations related to “conflict minerals” may force us to incur additional expenses, may make our supply chain more complex and may result in damage to our reputation with customers.

On August 22, 2012, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the SEC adopted new requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties. These requirements require companies to doperform diligence, disclose and report whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries. We have undertaken the necessary diligence to

determine whether such minerals are used in the manufacture of our products. However, the implementation of these new requirements could adversely affect the sourcing, availability and pricing of such minerals if they are found to be used in the manufacture of our products. In addition, regardless of our findings, we will incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the due diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in satisfying customers who require that all of the components of our products are certified as conflict mineral free. The next report is due on May 31, 2016

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our worldwide operations could be adversely affected if disrupted for any reason, including natural disasters such as earthquakes, tsunamis, floods, hurricanes, typhoons, telecommunication or information technology system failures, regulatory or political issues, power or water shortages, fires, extreme weather conditions, medical epidemics or pandemics or other man- made disasters or catastrophic events. While we maintain business interruption insurance for our primary foreign manufacturing operations, we are self-insured for any loss or damage to our primary manufacturing facility. As such, the 2015 calendar year.

Changesoccurrence of any of these business disruptions for us or our third-party manufacturers, partners or customers could result in U.S. and International tax legislation regarding our foreign earnings could materially impact our business.

A majority ofsignificant losses, seriously harm our revenue is generated from customers located outside the U.S.and financial condition, adversely affect our competitive position, increase our costs and expenses, and require substantial expenditures and recovery time in order to fully resume operations. Our corporate headquarters, and a substantial portion of our assets, including employees,research and development activities, are located outside the U.S. United States income tax has not been provided on a portion of earningsin California, and other critical business operations and some of our non-U.S. subsidiariessuppliers are located in California and Asia, near major earthquake faults known for seismic activity. The manufacture of product components, the final assembly of our products and other critical operations are concentrated in certain geographic locations, including the Philippines, Thailand, Malaysia, China and India. We also rely on major logistics hubs primarily in Asia to manufacture and distribute our products. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults and being consolidated in certain geographical areas is unknown. However, in the extent that such earnings are consideredevent of a major earthquake or other natural disaster or catastrophic event, our revenue, profitability and financial condition could suffer.

Changes to be indefinitely reinvested. In the past, the administration has considered initiatives which could substantially reduceBoard of Directors and senior management may disrupt our operations, our strategic focus or our ability to defer U.S. taxes including: limitations on deferral of U.S. taxation of foreign earnings eliminate utilization or substantially reducedrive stockholder value.

Our future success depends, in part, upon our ability to claim foreign tax credits, and eliminate various tax deductions until foreign earnings are repatriated to the U.S. If anyretain key members of these proposals are constituted into law, they could have a negative impact on our financial position and results of operations.

We are subject to examination by the U.S. Internal Revenue Service (the “IRS”), and from time to time we are subject to income tax audits or similar proceedings in other jurisdictions in which we do business, and as a result we may incur additional costs and expenses or owe additional taxes, interest and penalties which will negatively impact our operating results.

We are subject to income taxes in the U.S. and certain foreign jurisdictions,senior management team and our determinationBoard of Directors (the “Board”) and to attract and retain other highly qualified personnel for our tax liability is subject to review by applicable domesticBoard and foreign tax authorities. The results of these US and certain foreign jurisdiction examinationssenior management positions. Turnover may result in a decrease of our current estimate of unrecognized tax benefits or increase of actual tax liabilities which could negatively impact our financial position, results of operations and cash flows.

Tax bills are introduced from time to time to reform U.S. taxation of international business activities. The Organization for Economic Co-operation and Development, or OECD, also recently released guidance covering various topics, including country-by-country reporting, definitional changes to permanent establishment and Base Erosion and Profit Shifting, or BEPS, an initiative that aims to standardize and modernize global tax policy. Depending on the final guidance and legislation ultimately enacted, if any, there may be significant consequences for us due to the large scale of our international business activities.

In addition, policies regarding corporate income taxes in numerous jurisdictions are under heightened scrutiny. As a result, decisions by tax authorities regarding treatments and positions of corporate income taxes could be subject to legislative investigation and inquiry, which could result in changes in tax policies or prior tax rulings. There can be no assurance as to the outcome of these investigations and inquiries. As such, the taxes we previously paid may be subject to change and our taxes may increase in the future, which could have an adverse effect on our results of operations, financial condition and our corporate reputation.

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If the tax incentive or tax holiday arrangements we have negotiated in Malaysia, Philippines and Thailand change or cease to be in effect or applicable, in part or in whole, for any reason, or if our assumptions and interpretations regarding tax laws and incentive or holiday arrangements prove to be incorrect, the amount of corporate income taxes we have to pay could significantly increase.

We have structureddisrupt our operations, to maximize the benefit from various tax incentives and tax holidays extended to us in various jurisdictions to encourage investmentour strategic focus or employment. Each such tax incentive is separate and distinct from the others, and may be granted, withheld, extended, modified, truncated, complied with or terminated independently without any effect on the other incentives. The tax incentives are presently scheduled to expire at various dates generally beginning in 2018, subject in certain cases to potential extensions, which we may or may not be able to obtain. Absent these tax incentives, the corporate income tax rate in these jurisdictions that would otherwise apply to us would be between 20% to 30%. The tax incentives that we have negotiated are also subject to our compliance with various operating and other conditions. If we cannot, or elect not to, comply with the operating conditions included in any particular tax incentive, we will lose the related tax benefits and we could be required to refund previously realized material tax benefits. Depending on the incentive at issue, we could also be required to modify our operational structure and tax strategy, which may not be as beneficial to us as the benefits provided under the present tax concession arrangements. Our interpretations and conclusions regarding the tax incentives are not binding on any taxing authority, and if our assumptions about tax and other laws are incorrect or if these tax incentives are substantially modified or rescinded we could suffer material adverse tax and other financial consequences, which would increase our expenses, reduce our profitability and adversely affect our cash flows.

The accumulation of changes in our shares by “5-percent stockholders” could trigger an ownership change for U.S. income tax purposes, in which case our ability to utilizedrive stockholder value. If we fail to attract new skilled personnel for our net operating losses would be limitedBoard and therefore impact our future tax benefits.

Cypress is a publicly traded company whose stockholders can change on a daily basis. These changes are beyond our control. The U.S. Internal Revenue Code (Section 382) restricts a company’s ability to benefit from net operating losses if a “Section 382 Ownership Change” occurs. An ownership change for purposes of U.S. tax law Section 382 may result from ownership changes that increase the aggregate ownership of “5-percent stockholders,” by more than 50 percentage points over a testing period, generally three years (“Section 382 Ownership Change”). We experienced a Section 382 Ownership Change upon the acquisition of Spansion. The resulting limitations accompanying the ownership change are reflected in our deferred tax assets with no permanent limitation in our ability to utilize our tax attributes.

Acquisition and investments could result in operating difficulties, dilution, and other harmful consequences that may adversely impactsenior management positions, our business and results of operations.

Acquisitions are an important elementgrowth prospects could be adversely impacted.

We have made certain indemnities to our officers and directors for which we have purchased insurance. If material liabilities were to arise in excess of our overall corporate strategy and use of capital. These transactions could be material toinsurance coverage, our financial condition and results of operations. We expect to continue to evaluateoperations could be materially impacted.

Our certificate of incorporation, by-laws and enter into discussions regarding a wide array of potential strategic transactions. The process of integrating an acquired company, business, or technology has created, and will continue to create, unforeseen operating difficulties and expenditures. The areas where we face risks include, but are not limited to:

·

Diversion of management time and focus from operating our business to integration challenges;

·

Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire;

·

Successfully transitioning the current customer, supplier, foundry and other partnering relationships of the acquired company;

·

Implementation or remediation of controls, procedures, and policies at the acquired company;

·

Integration of the acquired company’s accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales and marketing functions;

·

In the case of acquired companies with global operations, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries;

·

Failure to successfully further develop the acquired business or technology;

·

Liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; and

·

Pending litigation or other known or unknown claims in connection with the acquired company, including claims by stockholders for breach of fiduciary duties, terminated employees, customers, former stockholders, or other third parties.

Our failure to address these and other risks or other problems encountered in connection with our past or current acquisitions and investments could causeindemnification agreements require us to failindemnify our officers and directors for certain liabilities that may arise in the course of their service to realize the anticipated benefitsus. If we were required to pay a significant amount on account of these liabilities, or such acquisitions or investments, incur unanticipated liabilities and harmwere not covered by insurance coverage, our business, generally. Current and future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, or amortization expenses, or write-offs of goodwill, any of which could harm our financial condition or results. As a result, the anticipated benefitand results of many of our acquisitions may not be realized.

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We invest in companies for strategic reasons and may not realize a return on our investments.

We make investments in companies to further our strategic objectives and support our key business initiatives. Such investments include equity instruments of private companies, and many of these instruments are non-marketable at the time of our initial investment. These companies range from early-stage companies that are often still defining their strategic direction to more mature companies with established revenue streams and business models. The success of these companies is dependent on product development, market acceptance, operational efficiency, and other key business factors as well as their ability to secure additional funding, obtain favorable investment terms for future financings, or participate in liquidity events such as public offerings, mergers, and private sales. If any of these companies fail, we could lose all or part of our investment in that company. If we determine that other-than-temporary decline in the fair value exists for an equity investment in a company in which we have invested, we write down the investment to its fair value and recognize the related write-down as an investment loss.

When the strategic objectives of an investment have been achieved, or if the investment or business diverges from our strategic objectives, we may decide to dispose of the investment. We may incur losses on the disposal of our investments. Additionally, for cases in which we are required under equity method accounting to recognize a proportionate share of another company's income or loss, such income or loss may impact our earnings. Gains or losses from equity securities could vary from expectations depending on gains or losses realized on the sale or exchange of securities, gains or losses from equity method investments, and impairment charges for equity and other investments.

We may have fluctuations in the amount and frequency of our stock repurchases.

On October 20, 2015, our Board of Directors approved a new share repurchase plan pursuant to which we are authorized to repurchase our common stock in an aggregate amount not to exceed $450 million. Although our Board of Directors has approved a share repurchase program, the share repurchase program does not obligate us to repurchase any specific dollar amount or number of shares.  The stock repurchase could affect the price of our stock and increase volatility and may be suspended or terminated at any time without prior notice and in compliance with legal and regulatory requirements, which may result in a decrease in the trading price of our common stock.  

There can be no assurance we will continue to declare dividends and that our cash distributions on common stock will continue to be considered a return of capital.

In the second quarter of fiscal 2011, our Board of Directors adopted a policy pursuant to which the Company would pay quarterly cash distributions on our common stock. We intend to continue to pay such distributions subject to capital availability and periodic determinations by our Board of Directors that cash distributions are in the best interest of our shareholders and are in compliance with all laws and agreements of Cypress applicable to the declaration and payment of cash distributions. Based upon our lack of current earnings and profits, in the United States, prior to 2016, these distributions have been treated for income tax purposes as a return of capital.

Future distributions may be affected by, among other factors:

·

our views on potential future capital requirements for investments in acquisitions and the funding of our research and development;

·

stock repurchase programs;

·

changes in federal and state income tax laws or corporate laws;

·

changes to our business model; and

·

debt payments.

Our distribution payments may change from time to time, and we cannot provide assurance that we will continue to declare distributions in any particular amounts or at all. In addition, we cannot provide assurance that the cash distributions will continue to be treated for income tax purposes as a return of capital. A reduction in our distribution payments or a change in the tax treatment of future distributions could have a negative effect on our stock price.

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If we are unable to obtain stockholder approval of additional shares for our share-based compensation award programs in the future, weoperations could be at a competitive disadvantage in the marketplace for qualified personnel.

Our compensation program, which includes cash and share-based compensation award components, has been instrumental in attracting, hiring, motivating, and retaining qualified personnel. Competition for qualified personnel in our industry is extremely intense, particularly for engineering and other technical personnel. Our success depends on our continued ability to attract, hire, motivate, and retain qualified personnel and our share-based compensation award programs provide us with a competitive compensatory tool for this purpose. The continued use of our share-based compensation program is necessary for us to compete for engineering and other technical personnel and professional talent. In the future, if we are unable to obtain stockholder approval of additional shares for our share-based compensation award programs, we could be at a competitive disadvantage in the marketplace for qualified personnel.

seriously harmed.

ITEM 1B.	UNRESOLVED STAFF COMMENTS

None.

None.

ITEM 2.	PROPERTIES

Our executive offices are located in San Jose, California. The following tables summarize our primary properties as of the end of fiscal 2015:

2017:

Location							Square Footage		Primary Use
Owned:
Location		Square Footage			Primary Use
Owned:
United States:
Bloomington, Minnesota		337,000		Manufacturing, research and development
San Jose, California		171,000 171,370			Administrative offices, research and development
Austin, Texas		1,514,000 1,294,000			Manufacturing, research and development and administrative offices
Colorado Springs, Colorado		70,400 72,000			Administrative offices, research and development
Lynnwood, Washington		67,000			Administrative offices, research and development
Asia:
Cavite, Philippines		253,000 221,000			Manufacturing, research and development
Bangkok, Thailand		253,000 253,300			Manufacturing, research and development
Penang, Malaysia		175,000 175,900			Manufacturing, research and development and administrative offices

We

In fiscal 2017, we have an additional 760,000added 105,300 square feet of leased space for research and development, administrative, sales offices and design centers located in the United States, Asia and Europe. We believe that our current properties are suitable and adequate for our foreseeable needs. We may need to exit facilities as we continue to evaluate our business model and cost structure.  

ITEM 3.	LEGAL PROCEEDINGS

Information with respect to this item may be found in Note 1920 of Notes to the Consolidated Financial Statements under Item 8, which is incorporated herein by reference.

ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

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PART II

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information, Holders of Common Equity, Dividends and Performance Graph

On November 12, 2009, our common stock was listed on the NASDAQ Global Select Market under the trading symbol “CY.” Prior to November 12, 2009, our common stock was listed on the New York Stock Exchange. The following table sets forth the high and low per share prices for our common stock:

		Low				High
Fiscal 2015:
Fourth quarter		$	8.11			$	10.96
Third quarter		$	8.55			$	12.46
Second quarter		$	11.65			$	14.46
First quarter		$	13.39			$	16.25
Fiscal 2014:
Fourth quarter		$	14.42			$	14.68
Third quarter		$	9.96			$	10.23
Second quarter		$	10.42			$	10.66
First quarter		$	10.00			$	10.27
Fiscal 2013:
Fourth quarter		$	8.97			$	10.34
Third quarter		$	9.05			$	13.10
Second quarter		$	9.60			$	11.55
First quarter		$	9.84			$	11.37

		Low				High
Fiscal 2017:
Fourth quarter		$	14.55			$	17.42
Third quarter		$	12.50			$	15.11
Second quarter		$	12.68			$	14.58
First quarter		$	10.99			$	14.98
Fiscal 2016:
Fourth quarter		$	9.63			$	12.22
Third quarter		$	9.79			$	12.48
Second quarter		$	8.02			$	11.22
First quarter		$	6.30			$	9.73
Fiscal 2015:
Fourth quarter		$	8.11			$	10.96
Third quarter		$	8.55			$	12.46
Second quarter		$	11.65			$	14.46
First quarter		$	13.39			$	16.25

As of February 26, 2016,15, 2018, there were approximately 1,5501,300 registered holders of record of our common stock.

Dividends

During fiscal 2017, 2016 and 2015, we paid dividends of $144.7 million, $141.4 million and $128.0 million, respectively, at a rate of $0.11 per share of common stock paid in each quarter of the fiscal year.

During fiscal 2014, we paid dividends of $69.2 million, at a rate of $0.11 per share of common stock paid in each quarter of the fiscal year.

During fiscal 2013, we paid dividends of $64.8 million, at a rate of $0.11 per share of common stock paid in each quarter of the fiscal year.

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The following line graph compares the yearly percentage change in the cumulative total stockholder return on our common stock against the cumulative total return of the Standard and Poor (“S&P”) 500 Index and the S&P Semiconductors Index for the last five fiscal years:

*$100 $100 invested on 1/2/1112/30/12 in stock or 12/31/1029/12 in index, including reinvestment of dividends.
Indexes calculated on month-end basis. Indexes calculated on month-end basis.

	January 1, 2012	December 30, 2012	December 29, 2013	December 28, 2014	January 3, 2016
Cypress**	91.88	59.52	60.86	89.78	62.70
S&P 500 Index	102.11	118.45	156.82	178.29	180.75
S&P Semiconductors Index	102.24	98.75	134.24	181.05	182.64
Peer Group	86.90	82.79	108.54	133.55	147.18

**	All closing prices underlying this table have been adjusted for cash dividends, stock splits and stock dividends.

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	December 30, 2012		December 29, 2013		December 28, 2014		January 3, 2016		January 1, 2017		December 31, 2017
Cypress**	100.00		97.00		132.00		90.00		106.00		141.00
S&P 500 Index	100.00		130.00		144.00		143.00		157.00		187.00
S&P Semiconductors Index	100.00		136.00		177.00		194.00		249.00		310.00

**    All closing prices underlying this table have been adjusted for cash dividends, stock splits and stock dividends.

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information:

The following table summarizes certain information with respect to our common stock that may be issued under the existing equity compensation plans as of January 3, 2016:

December 31, 2017:

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)					Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)					Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
	(In millions, except per-share amounts)
Equity compensation plans approved by shareholders		16.8		(1)		$	10.4		(3)			26.7		(6)
Equity compensation plans not approved by shareholders		11.1		(2)		$	5.6		(4)			10.1		(7)
Total		27.9				$	7.99		(5)			36.8

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)			Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)				Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
	(In millions, except per-share amounts)
Equity compensation plans approved by shareholders	9.8		(1)	$	12.8		(3)	46.5		(6)
Equity compensation plans not approved by shareholders	6.8		(2)	$	6.7		(4)	2.8		(7)
Total	16.6			$	11.6		(5)	49.3

(1)
(1)	Includes 8.36.1 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) granted.

(2)
(2)	Includes 2.75.9 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units) granted.

(3)
(3)	Excludes the impact of 8.36.1 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units), which have no exercise price.

(4)
(4)	Excludes the impact of 2.75.9 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units), which have no exercise price.

(5)
(5)	Excludes the impact of 11.112 million shares of full value awards (restricted stock units, restricted stock awards and performance stock units), which have no exercise price.

(6)
(6)	Includes 2544.3 million shares available for future issuance under Cypress’sCypress’ 2013 Stock Plan and 1.72.2 million shares available for future issuance under Cypress’sCypress’ Employee Stock Purchase Plan.

(7)
(7)	Includes two thousand0.2 million shares available for future issuance under the assumed Ramtron Plan and 10.12.7 million shares available for future issuance under the assumed Spansion Plan.

See Note 89 of the Notes to the Consolidated Financial Statements under Part II, Item 8 for further discussion of Cypress’sCypress’ stock plans.

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Stock Buyback Programs:

Approval of a New $450 Million Stock Buyback Program

On October 20, 2015, our Board of Directors (the “Board”) approved a new share repurchase plan pursuant to which we are authorized to repurchase our common stock in an aggregate amount not to exceed $450 million. In connection with the approval of thethis new share repurchase plan, the share repurchase plan previously approved in September 2011 was terminated.  The new share repurchase plan may be funded all or in part by term loans under the Amended Credit Facility. The share repurchase program does not obligate us to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice and in compliance with legal and regulatory requirements.  

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The table below sets forth information with respect to repurchases of our common stock made during fiscal 2013, 20142015 and 20152016 under these programs:

programs. There were no repurchases of our common stock in fiscal 2017.

		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Programs				Total Dollar Value of Shares That May Yet Be Purchase Under the Plans or Programs
		(In thousands, except per-share amounts)
Authorized fund under 2011 Repurchase program:			—			$	—				—			$	400,000
Repurchases in fiscal 2013:
December 31, 2012—March 31, 2013			411			$	10.49				411			$	84,059
April 1, 2013—June 30, 2013			10			$	10.71				10			$	83,952
July 1, 2013—September 29, 2013			9			$	11.41				9			$	83,856
September 30, 2013—December 29, 2013			23			$	9.46				23			$	83,675
Total repurchases in fiscal 2013			453								453			$	83,675
Repurchases in fiscal 2014:
December 30, 2013—March 30, 2014			18			$	10.23				18			$	83,490
March 31, 2014—June 29, 2014			7			$	9.72				7			$	83,425
June 30, 2014—September 28, 2014			3			$	10.53				3			$	83,398
September 29, 2014—December 28, 2014			5			$	10.27				5			$	83,341
Total repurchases in fiscal 2014			33								33			$	83,341
Repurchases in fiscal 2015:
December 29, 2014—March 29, 2015			6			$	14.66				6			$	83,252
March 30, 2015—June 28, 2015			818			$	12.75				818			$	72,672
June 29, 2015—September 27, 2015			2			$	10.62				2			$	72,648
Total repurchases in fiscal 2015			826								826			$	72,648
Total repurchases under this program			1,312								1,312
Authorized fund under 2015 Repurchase program:														$	450,000
September 28, 2015—January 3, 2016			5,658			$	9.99				5,658			$	393,475
Total repurchases in fiscal 2015			5,658								5,658			$	393,475
Total repurchases under this program			5,658								5,658

	Total Number of Shares Purchased			Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Programs			Total Dollar Value of Shares That May Yet Be Purchase Under the Plans or Programs
	(In thousands, except per-share amounts)
Authorized fund under 2011 Repurchase program:	—			$	—			—			$	400,000
Repurchases in fiscal 2015:
December 29, 2014—March 29, 2015	6			$	14.66			6			$	83,252
March 30, 2015—June 28, 2015	818			$	12.75			818			$	72,672
June 29, 2015—September 27, 2015	2			$	10.62			2			$	72,648
Total repurchases in fiscal 2015	826							826			$	72,648
Total repurchases under this program	859							1,312
Authorized fund under 2015 Repurchase program:											$	450,000
September 28, 2015—January 3, 2016	5,658			$	9.99			5,658			$	393,475
Total repurchases in fiscal 2015	5,658							5,658			$	393,475
Repurchases in fiscal 2016:
January 4, 2016—April 3, 2016	23,822			$	7.66			23,822			$	210,968
April 4, 2016—July 3, 2016	4			$	9.74			4			$	210,931
July 4, 2016—October 2, 2016	2			$	11.46			2			$	210,913
October 3, 2016—January 1, 2017	7			$	10.59			7			$	210,844
Total repurchases in fiscal 2016	23,835							23,835			$	210,844
Total repurchases under this program	29,493							29,493

Yield Enhancement Program (“YEP”):

In fiscal 2009, the Audit Committee approved a yield enhancement strategy intended to improve the yield on our available cash. As part of this program, the Audit Committee authorized us to enter into short-term yield enhanced structured agreements, typically with maturities of 90 days or less, correlated to our stock price. Under the agreements we have entered into to date, we pay a fixed sum of cash upon execution of an agreement in exchange for the financial institution’s obligations to pay either a pre-determined amount of cash or shares of our common stock depending on the closing market price of our common stock on the expiration date of the agreement. Upon expiration of each agreement, if the closing market price of our common stock is above the pre-determined price, we will have our cash investment returned plus a yield substantially above the yield currently available for short-term cash investments. If the closing market price is at or below the pre-determined price, we will receive the number of shares specified at the agreement’s inception. As the outcome of these arrangements is based entirely on our stock price and does not require us to deliver either shares or cash, other than the original investment, the entire transaction is recorded in equity. The shares received upon the maturing of a yield enhancement structure are included in our “shares of common stock held in treasury” inon the Consolidated Balance Sheets under Item 8.

We have entered into various yield enhanced structured agreements based upon a comparison of the yields available in the financial markets for similar maturities against the expected yield to be realized per the structured agreement and the related risks associated with thisthese type of arrangement.arrangements. We believe the risk associated with these types of agreements is no different than alternative investments available to us with equivalent counterparty credit ratings. All counterparties to a yield enhancement program have a credit rating of at least Aa2 or A as rated by major independent rating agencies. For all such agreements that matured to date, the yields of the structured agreements were far superior to the yields available in the financial markets primarily due to the volatility of our stock price and the pre-payment aspect of the agreements. The counterparty iscounterparties are willing to pay a premium over the yields available in the financial markets due to the structure of the agreement.

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The following table summarizes the activity of our settled yield enhanced structured agreements during fiscal 2015 and 2014:

2015:

Periods		Aggregate Price Paid				Total Cash Proceeds Received Upon Maturity				Yield Realized				Total Number of Shares Received Upon Maturity				Average Price Paid per Share
Fiscal 2015:		(in thousands)
Settled through cash proceeds		$	28,966			$	29,353			$	387				—			$	—
Settled through issuance of common stock			9,601				—				—				1,000,000			$	9.60
Total for fiscal 2015		$	38,567			$	29,353			$	387				1,000,000				9.60
Fiscal 2014:
Settled through cash proceeds		$	19,415			$	19,733			$	318				—			$	—
Settled through issuance of common stock			—				—				—				—				—
Total for fiscal 2014		$	19,415			$	19,733			$	318				—			$	—

Periods	Aggregate Price Paid				Total Cash Proceeds Received Upon Maturity				Yield Realized				Total Number of Shares Received Upon Maturity			Average Price Paid per Share
Fiscal 2015:	(in thousands)
Settled through cash proceeds	$	28,966			$	29,353			$	387			—			$	—
Settled through issuance of common stock	9,601				—				—				1,000,000			$	9.60
Total for fiscal 2015	$	38,567			$	29,353			$	387			1,000,000			$	9.60

There was no activity ofin our yield enhanced structured agreements during fiscal 2013.

34

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2016 and 2017.

ITEM 6.	SELECTEDSELECTED FINANCIAL DATA

The following selected consolidated financial data is not necessarily indicative of results of future operations, and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations under Part II, Item 7, and the Consolidated Financial Statements and Notes to the Consolidated Financial Statements under Part II, Item 8:

		Year Ended
		January 3, 2016 (2)				December 28, 2014 (2)				December 29, 2013				December 30, 2012				January 1, 2012
						(In thousands, except per-share amounts)
Consolidated Statement of Operations Data:
Revenues		$	1,607,853			$	725,497			$	722,693			$	769,687			$	995,204
Cost of revenues		$	1,207,850			$	361,820			$	384,121			$	376,887			$	448,602
Operating income (loss)		$	(336,905	)		$	22,873			$	(58,195	)		$	(18,915	)		$	153,719
Income (loss) attributable to Cypress (3)		$	(378,867	)		$	17,936			$	(48,242	)		$	(23,444	)		$	167,839
Noncontrolling interest, net of income taxes		$	(2,271	)		$	(1,418	)		$	(1,845	)		$	(1,614	)		$	(882	)
Net income (loss) (3)		$	(381,138	)		$	16,518			$	(50,087	)		$	(25,058	)		$	166,957
Adjust for net loss (income) attributable to noncontrolling    interest		$	2,271			$	1,418			$	1,845			$	1,614			$	882
Net income (loss) attributable to Cypress		$	(378,867	)		$	17,936			$	(48,242	)		$	(23,444	)		$	167,839
Net income (loss) per share—basic:
attributable to Cypress		$	(1.25	)		$	0.11			$	(0.32	)		$	(0.16	)		$	1.02
Net income (loss) per share—basic		$	(1.25	)		$	0.11			$	(0.32	)		$	(0.16	)		$	1.02
Net income (loss) per share—diluted:
attributable to Cypress		$	(1.25	)		$	0.11			$	(0.32	)		$	(0.16	)		$	0.90
Net income (loss) per share—diluted		$	(1.25	)		$	0.11			$	(0.32	)		$	(0.16	)		$	0.90
Dividends per share:
Declared		$	0.44			$	0.44			$	0.44			$	0.44			$	0.27
Paid		$	0.44			$	0.44			$	0.44			$	0.42			$	0.18
Shares used in per-share calculation:
Basic			302,036				159,031				148,558				149,266				164,495
Diluted			302,036				169,122				148,558				149,266				186,895

		As of
		January 3, 2016				December 28, 2014				December 29, 2013				December 30, 2012				January 1, 2012
						(In thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments		$	227,561			$	118,812			$	104,462			$	117,210			$	166,330
Working capital (3)		$	322,376			$	37,479			$	13,871			$	20,060			$	79,190
Total assets (3)		$	4,004,261			$	743,281			$	762,884			$	830,554			$	810,090
Debt (1)		$	688,265			$	243,250			$	248,230			$	264,942			$	45,767
Stockholders’ equity (3)		$	2,712,685			$	201,865			$	175,683			$	175,786			$	397,842

	December 31, 2017				January 1, 2017 (2) (4)				January 3, 2016 (2) (4)				December 28, 2014 (2)				December 29, 2013
	(in thousands, except per-share amounts)
Consolidated Statement of Operations Data:
Revenues	$	2,327,771			$	1,923,108			$	1,607,853			$	725,497			$	722,693
Cost of revenues	1,370,309				1,235,540				1,204,196				$	361,820			$	384,121
Operating income (loss)	78,093				(608,738		)		(323,330		)		$	22,873			$	(58,195	)
Net income (loss) (3)	(80,783		)		(683,877		)		(367,563		)		$	16,518			$	(50,087	)
Adjust for net loss (income) attributable to noncontrolling    interest	$	(132	)		$	643			$	2,271			$	1,418			$	1,845
Net income (loss) attributable to Cypress	$	(80,915	)		$	(683,234	)		$	(365,292	)		$	17,936			$	(48,242	)
Net income (loss) attributable to Cypress per share—basic	$	(0.24	)		$	(2.14	)		$	(1.21	)		$	0.11			$	(0.32	)
Net income (loss) attributable to Cypress per share—diluted	$	(0.24	)		$	(2.14	)		$	(1.21	)		$	0.11			$	(0.32	)
Dividends per share:
Declared	$	0.44			$	0.44			$	0.44			$	0.44			$	0.44
Paid	$	0.44			$	0.44			$	0.44			$	0.44			$	0.44
Shares used in per-share calculation:
Basic	333,451				319,522				302,036				159,031				148,558
Diluted	333,451				319,522				302,036				169,122				148,558

	December 31, 2017				January 1, 2017 (4)				January 3, 2016 (4)				December 28, 2014				December 29, 2013
	(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments	$	151,596			$	121,144			$	227,561			$	118,812			$	104,462
Working capital (3)	$	147,854			$	191,486			$	326,114			$	37,479			$	13,871
Total assets (3)	3,537,050				$	3,871,871			4,004,261				$	743,281			$	762,884
Debt (1)	$	983,816			$	1,225,131			$	688,265			$	243,250			$	248,230
Stockholders’ equity (3)	$	1,817,592			$	1,892,752			2,716,423				$	201,865			$	175,683

(1)

(1)

The debt, net of costs, in fiscal year 2017 primarily included $90 million related to our Senior Secured Revolving Credit facility, $495.4 million related to our Term Loan B, $131.4 million related to our 2% 2023 Exchangeable Notes, $246.6 million related to our 4.5% 2022 Senior Exchangeable Notes, and $20.4 million related to our 2% 2020 Spansion Exchangeable Notes. The debt, net of costs, in fiscal year 2016 primarily included $332.0 million related to our Senior Secured Revolving Credit Facility, $95.0 million related to our Term Loan A, $444.4 million of Term Loan B, $287.5 million related to our 4.5% 2022 Senior Exchangeable Notes, and $150.0 million related to our 2% 2020 Spansion Exchangeable Notes. The debt, net of costs, in fiscal year 2015 primarily included $449.0 million related to our Senior Secured Revolving Credit Facility, $150$97.2 million of 2% Senior Exchange notes assumed from Spansion, $97.2 millionrelated to our Term Loan A, net of costs,$150 million related to our 2% 2020 Spansion Exchangeable Notes, $7.2 million ofrelated to our capital leases and $3.0 million ofrelated to our equipment loans. The debt in fiscal year 2014, net of costs, primarily included $227.0 million related to our revolving credit facility,Senior Secured Revolving Credit Facility, $10.3 million ofrelated to our capital leases, and $5.9 million ofrelated to our equipment loans. The debt in fiscal year 2013 primarily included $227.0 million related to our revolving credit facility,Senior Secured Revolving Credit Facility, $12.5 million ofrelated to our capital leases, and $8.7 million of equipment loans. The debt in fiscal year 2012 included $232.0 million related to our revolving credit facility, $15.0 million of capital leases, $11.5 million of equipment loans, $3.3 million of a mortgage note related to Ramtron, and $3.1 million of advances received for the sale of certain of our auction rate securities.loans. See Note 14 for more information on revolving credit facility, equipment loansCredit Facility and mortgage note and Note 19 for more information on capital leases. other debt.