SEMTECH CORPSMTC
SEMTECH CORP Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets
Goodwill
The following table summarizes goodwill by applicable operating segments:
| Balance as of January 25, 2026 | Balance as of January 26, 2025 | ||||||||||||||||||||||||||||||||||
| (in thousands) | Goodwill | Accumulated Impairment Losses | Carrying Value | Goodwill | Accumulated Impairment Losses | Carrying Value | |||||||||||||||||||||||||||||
| Signal Integrity | $ | 267,205 | $ | — | $ | 267,205 | $ | 267,205 | $ | — | $ | 267,205 | |||||||||||||||||||||||
Analog Mixed Signal and Wireless | 91,068 | — | 91,068 | 83,101 | — | 83,101 | |||||||||||||||||||||||||||||
| IoT Systems and Connectivity | 947,548 | (847,896) | 99,652 | 945,896 | (763,111) | 182,785 | |||||||||||||||||||||||||||||
| Total goodwill | $ | 1,305,821 | $ | (847,896) | $ | 457,925 | $ | 1,296,202 | $ | (763,111) | $ | 533,091 | |||||||||||||||||||||||
The following table summarizes the change in goodwill by applicable operating segments:
| (in thousands) | Signal Integrity | Analog Mixed Signal and Wireless | IoT Systems and Connectivity | Total | |||||||||||||||||||
| Balance at January 26, 2025 | $ | 267,205 | $ | 83,101 | $ | 182,785 | $ | 533,091 | |||||||||||||||
| Addition from acquisition | — | 7,967 | — | 7,967 | |||||||||||||||||||
| Cumulative translation adjustment | — | — | 1,652 | 1,652 | |||||||||||||||||||
| Impairment | — | — | (84,785) | (84,785) | |||||||||||||||||||
| Balance at January 25, 2026 | $ | 267,205 | $ | 91,068 | $ | 99,652 | $ | 457,925 | |||||||||||||||
During the fourth quarter of fiscal year 2026, the Company completed an immaterial acquisition, which resulted in the addition of $8.0 million in the carrying value of goodwill.
The Company currently has three operating segments—Signal Integrity ("SIP"), Analog Mixed Signal and Wireless ("AMW"), and IoT Systems and Connectivity ("ISC"). As of January 25, 2026 the Company has six reporting units—Signal Integrity, Advanced Protection and Sensing, Wireless, IoT Systems–Modules, IoT Systems–Routers and IoT Connected Services. SIP operating segment includes the Signal Integrity reporting unit, AMW operating segment includes the Advanced Protection and Sensing and Wireless reporting units, and ISC operating segment includes the IoT Systems–Modules, IoT Systems–Routers and IoT Connected Services reporting units. See Note 15, Segment Information, for further discussion of the Company's operating and reportable segments.
Goodwill is not amortized, but is tested for impairment at the reporting unit level using either a qualitative or quantitative assessment on an annual basis during the fourth quarter of each fiscal year, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair market value of the reporting unit.
A total of $84.8 million of pre-tax non-cash goodwill impairment charges were recorded for fiscal year 2026 in the Statements of Operations. During the second quarter of fiscal year 2026, as a result of reduced earnings forecasts of the IoT Connected Services reporting unit, the Company performed an interim impairment test using a quantitative assessment of IoT Connected Services, included in the IoT Systems and Connectivity operating segment. The interim impairment test resulted in $42.0 million of total pre-tax non-cash goodwill impairment charges for IoT Connected Services recorded in the Statements of Operations during the second quarter of fiscal year 2026. During the fourth quarter of fiscal year 2026, the Company performed its annual goodwill and intangible asset impairment assessment using a qualitative assessment for all of its reporting units, with the exception of IoT Connected Services, for which the Company performed a quantitative assessment. Due to a shift in strategic direction associated with this reporting unit, the Company recorded an additional $42.8 million of total pre-tax non-cash goodwill impairment charges for IoT Connected Services and $1.8 million of intangible impairment. There was no goodwill impairment for any of the Company's other reporting units.
The fair value of the reporting unit was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach). Significant inputs to the reporting unit fair value measurements included forecasted cash flows, discount rates, terminal growth rates and earnings multiples, which were determined by management estimates and assumptions. The reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because it involves significant unobservable inputs.
During the fourth quarter of fiscal year 2025, the Company performed its annual goodwill and intangible asset impairment assessment using a qualitative assessment for all of its reporting units, with the exception of IoT Systems–Modules, for which the Company performed a quantitative assessment. Due to a reduction in earnings forecasts associated with this reporting unit,
the Company impaired the remaining IoT Systems–Modules goodwill balance of $7.5 million. There was no goodwill impairment for any of the Company's other reporting units.
A total of $755.6 million of pre-tax non-cash goodwill impairment charges were recorded for fiscal year 2024 in the Statements of Operations as a result of impairment tests performed. The impairment tests were triggered due to a reduction in earnings forecasts associated with the business acquired from Sierra Wireless, adverse macroeconomic conditions including an elevated interest rate environment, and finalization of the measurement period adjustments. The Company recorded $209.0 million of goodwill impairment for the IoT Connected Services reporting unit, $245.2 million of goodwill impairment for the IoT Systems–Modules reporting unit and $301.4 million of goodwill impairment for the IoT Systems–Routers reporting unit, resulting from quantitative assessments of the reporting units. There was no goodwill impairment for any of the Company's other reporting units. The fair values of these reporting units were determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach). Significant inputs to the reporting unit fair value measurements included forecasted cash flows, discount rates, terminal growth rates and earnings multiples, which were determined by management estimates and assumptions. The reporting unit fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.
In performing the annual goodwill impairment testing during the fourth quarter of fiscal year 2024, the Company also determined that the carrying amounts of our asset groups related to the Sierra Wireless Acquisition may not be recoverable. The Company therefore performed impairment tests on the long-lived assets in each asset group, including definite-lived intangible assets using an undiscounted cash flow analysis, to determine whether the carrying amounts of each asset group related to the Sierra Wireless Acquisition are recoverable. All three asset groups failed the undiscounted cash flow recoverability test and therefore the Company estimated the fair value of the asset group to determine whether any asset impairment was present. The Company’s estimation of the fair value of the long-lived assets included the use of discounted cash flow analyses. Based on these analyses, the Company concluded that the fair values of certain assets were lower than their carrying amounts. During the fourth quarter of fiscal year 2024, the Company recognized intangible impairment charges of $91.8 million for core technologies, $34.8 million for customer relationships and $4.8 million for trade name, reducing the carrying amounts to $28.1 million for core technologies, $4.1 million for customer relationships and $1.5 million for trade name.
Purchased and Other Intangibles
The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions, which are amortized over their estimated useful lives:
| January 25, 2026 | |||||||||||||||||||||||||||||
| (in thousands) | Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Accumulated Impairment | Net Carrying Amount | ||||||||||||||||||||||||
| Core technologies | 1-8 years | $ | 167,178 | $ | (54,383) | (91,792) | $ | 21,003 | |||||||||||||||||||||
| Customer relationships | 1-10 years | 53,248 | (15,265) | (34,777) | 3,206 | ||||||||||||||||||||||||
| Trade name | 2-10 years | 9,000 | (3,257) | (4,816) | 927 | ||||||||||||||||||||||||
| Capitalized development costs | 3-7 years | 3,912 | (1,023) | (1,777) | 1,112 | ||||||||||||||||||||||||
| Software licenses | 7-10 years | 3,740 | (312) | — | 3,428 | ||||||||||||||||||||||||
| Total finite-lived intangible assets | $ | 237,078 | $ | (74,240) | $ | (133,162) | $ | 29,676 | |||||||||||||||||||||
| January 26, 2025 | |||||||||||||||||||||||||||||
| (in thousands) | Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Accumulated Impairment | Net Carrying Amount | ||||||||||||||||||||||||
| Core technologies | 1-8 years | $ | 154,728 | $ | (44,014) | (91,792) | $ | 18,922 | |||||||||||||||||||||
| Customer relationships | 1-10 years | 51,781 | (13,394) | (34,777) | 3,610 | ||||||||||||||||||||||||
| Trade name | 2-10 years | 9,000 | (3,125) | (4,816) | 1,059 | ||||||||||||||||||||||||
| Capitalized development costs | 3 years | 1,368 | (278) | — | 1,090 | ||||||||||||||||||||||||
| Software licenses | 7 years | 200 | (14) | — | 186 | ||||||||||||||||||||||||
| Total finite-lived intangible assets | $ | 217,077 | $ | (60,825) | $ | (131,385) | $ | 24,867 | |||||||||||||||||||||
Amortization expense of finite-lived intangible assets was as follows:
| Fiscal Year Ended | |||||||||||||||||
| (in thousands) | January 25, 2026 | January 26, 2025 | January 28, 2024 | ||||||||||||||
| Core technologies | $ | 9,193 | $ | 9,106 | $ | 33,716 | |||||||||||
| Customer relationships | 499 | 459 | 12,345 | ||||||||||||||
| Trade name | 132 | 425 | 2,568 | ||||||||||||||
| Capitalized development costs | 745 | 278 | — | ||||||||||||||
| Software licenses | 298 | 14 | — | ||||||||||||||
| Total amortization expense | $ | 10,867 | $ | 10,282 | $ | 48,629 | |||||||||||
Amortization expense of finite-lived intangible assets related to core technologies was recorded in "Amortization of acquired technology" within "Total cost of sales" in the Statements of Operations and amortization expense of finite-lived intangible assets related to customer relationships and trade name was recorded in "Intangible amortization" within "Total operating expenses, net" in the Statements of Operations. Amortization expense of finite-lived intangible assets related to software licenses was recorded in "Cost of sales" in the Statements of Operations and amortization expense of finite-lived intangible assets related to capitalized development costs was recorded in "Product development and engineering" in the Statements of Operations.
Future amortization expense of finite-lived intangible assets is expected as follows:
| (in thousands) | Core Technologies | Customer Relationships | Trade Name | Capitalized Development Costs | Software Licenses | Total | |||||||||||||||||||||||||||||
| Fiscal year 2027 | $ | 6,035 | $ | 631 | $ | 133 | $ | 565 | $ | 384 | $ | 7,748 | |||||||||||||||||||||||
| Fiscal year 2028 | 4,762 | 432 | 133 | 287 | 384 | 5,998 | |||||||||||||||||||||||||||||
| Fiscal year 2029 | 4,276 | 432 | 133 | 57 | 384 | 5,282 | |||||||||||||||||||||||||||||
| Fiscal year 2030 | 1,572 | 432 | 133 | 57 | 384 | 2,578 | |||||||||||||||||||||||||||||
| Fiscal year 2031 | 1,572 | 432 | 133 | 57 | 384 | 2,578 | |||||||||||||||||||||||||||||
| Thereafter | 2,786 | 847 | 262 | 89 | 1,508 | 5,492 | |||||||||||||||||||||||||||||
| Total expected amortization expense | $ | 21,003 | $ | 3,206 | $ | 927 | $ | 1,112 | $ | 3,428 | $ | 29,676 | |||||||||||||||||||||||
Also in "Other intangible assets, net" in the Balance Sheets, are finite-lived intangible assets to be amortized upon placement in service. The following table sets forth the Company’s finite-lived intangible assets not yet placed in service:
| (in thousands) | Capitalized Development Costs | Software Licenses | Total | |||||||||||||||||
| Balance at January 26, 2025 | $ | 2,104 | $ | 6,140 | $ | 8,244 | ||||||||||||||
| Additions | 2,854 | 5,325 | 8,179 | |||||||||||||||||
| Placed in service | (2,544) | (3,540) | (6,084) | |||||||||||||||||
| Balance at January 25, 2026 | $ | 2,414 | $ | 7,925 | $ | 10,339 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 23, 2026 | Showing above |
| 2025 | Mar 25, 2025 | |
| 2024 | Mar 28, 2024 | |
| 2023 | Mar 30, 2023 | |
| 2022 | Mar 16, 2022 | |
| 2021 | Mar 24, 2021 | |
| 2020 | Mar 20, 2020 | |
| 2019 | Mar 21, 2019 | |
| 2018 | Mar 22, 2018 | |
| 2017 | Mar 23, 2017 | |
| 2016 | Mar 31, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.