Risk factor changes · AAPL

What changed in Apple's risk factors

Item 1A (Risk Factors) of Apple's FY2025 10-K compared with its FY2024 10-K, sentence by sentence.

Newer: 10-K filed 2025-10-31 · Older: 10-K filed 2024-11-01

New in the latest 10-K 65

• The following summarizes factors that could have a material adverse effect on the Company s business, reputation, results of operations, financial condition and stock price.
• The Company may not be able to accurately predict, control or mitigate these risks.
• Statements in this section are based on the Company s beliefs and opinions regarding matters that could materially adversely affect the Company in the future and are not representations as to whether such matters have or have not occurred previously.
• The risks and uncertainties described below are not exhaustive and should not be considered a complete statement of all potential risks or uncertainties that the Company faces or may face in the future.
• Restrictive measures can increase the cost or limit the availability of the Company s products and the components and rare earths and other raw materials that go into them.
• Restrictive measures can also require the Company to change suppliers, restructure business relationships and operations, refrain from offering and distributing or cease to offer and distribute affected products, services and third-party applications to its customers, and increase the prices of its products and services.
• Trade and other international disputes can also have an adverse impact on the overall macroeconomic environment and result in shifts and reductions in consumer spending and negative consumer sentiment for the Company s products and services, all of which can further adversely affect the Company s business and results of operations.
• Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S.
• Tariffs ), including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union ( EU ), among others.
• In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures.
• Various modifications to the U.S.
• Tariffs have been announced and further changes could be made in the future, which may include additional sector-based tariffs or other measures.
• For example, the U.S.
• Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into, among other things, imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors.
• The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S.
• Tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures.
• The Company s products and services are offered in highly competitive global markets.
• These markets are characterized by aggressive price competition, downward pressure on gross margins, continual improvement in product performance, and price sensitivity on the part of consumers and businesses.
• These markets are further defined by frequent introduction of new products and services, short product life cycles, evolving industry standards, and rapid adoption of technological advancements.
• The Company s ability to compete successfully also depends on the effective protection and enforcement of its intellectual property rights.
• Regulatory requirements, government investigations and litigation can force the Company to withdraw from, or modify its products and services for, certain countries and limit its ability to derive value from, or to enjoin others from using, its intellectual property rights.
• Additionally, they may require the Company to share its innovations with competitors.
• Any of these outcomes can have a negative impact on the Company s competitive advantage and materially adversely affect its business, results of operations, financial condition and stock price.
• If the Company is unable to compete successfully, its business, reputation, results of operations, financial condition and stock price can be materially adversely affected.
• The success of new product and service introductions depends on a number of factors, including the Company s ability to recruit and retain highly skilled personnel to execute on its strategic initiatives, and the timely and successful development and market acceptance of new products, services and technologies.
• Additionally, quality issues or other defects or deficiencies can adversely affect the success of new product and service introductions and market acceptance.
• The Company may not be able to successfully manage future introductions and transitions of products and services, which can materially adversely affect the Company s business, reputation, results of operations, financial condition and stock price.
• The Company may not be able to extend or renew agreements for the supply of components on similar terms, or at all, and may not be successful in obtaining sufficient quantities from its suppliers in a timely manner, or in identifying and obtaining sufficient quantities from an alternative source.
• The Company s products and services include technology or intellectual property that must be licensed from third parties.
• This risk may be exacerbated by the use of new and emerging technologies, including machine learning and artificial intelligence, which can involve, among other things, the acquisition and use of copyrighted materials for training as well as the potential reproduction of copyrighted materials in their outputs .
• The Company is not always able to obtain all necessary licenses to third-party intellectual property rights on commercially reasonable terms or at all.
• Third-party developers may discontinue the development and maintenance of software applications and services for the Company s products.
• Periods of intense competition for talent in particular fields can lead to increased costs as the Company seeks to offer competitive compensation to recruit and retain highly skilled employees.
• In addition to competition for talent, workforce dynamics are constantly evolving and the Company must navigate changes effectively in order to achieve its strategic initiatives.
• Laws and regulations, including immigration, labor and employment laws and export controls, among others, can materially adversely affect the Company s ability to recruit and retain a highly skilled, global workforce.
• Resellers offer financing, installment payment plans or subsidies for users purchases of devices, and such plans may be discontinued or modified any time.
• These attacks target the confidentiality, integrity or availability of confidential information and may disrupt normal business operations.
• These risks, and the risks of novel claims being attempted, may be exacerbated as new and emerging technologies, including machine learning and artificial intelligence, are further integrated into the Company s products and services.
• However, such agreements may not always be available on acceptable terms, and litigation may still arise.
• Such agreements can also significantly reduce the Company s revenue and increase the Company s cost of sales and operating expenses, materially adversely affecting the Company s business, results of operations, financial condition and stock price.

Reworded 118

Removed words are struck through; added words are highlighted.

• When any one or more Any of these risks materialize from time to time, the foregoing can materially adversely affect the Company s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. price.
• Macroeconomic and Industry Risks The Company s operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can materially adversely affect the Company s business, results of operations and operations, financial condition. condition and stock price.
• In addition to an adverse impact on demand for the Company s products and services, uncertainty Uncertainty about, or a decline in, global or regional economic conditions can also have a significant impact on the Company s suppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel partners, and developers.
• Apple Inc. | 2024 2025 Form 10-K | 5 The Company s business can be impacted by political events, trade and other international disputes, geopolitical tensions, conflict, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions.
• Substantially all A significant majority of the Company s manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam. Vietnam, in addition to sourcing from partners and facilities located in the U.S.
• Changing the Company s business and supply chain in accordance with new or changed restrictions on international trade can be expensive, time-consuming and disruptive to the Company s business and results of operations.
• Such restrictions can be announced with little or no advance notice, which can create uncertainty, and the Company may not be able to effectively mitigate any or all adverse impacts from such measures.
• If disputes and conflicts further escalate in the future, escalate, actions by governments in response could be significantly more severe and restrictive and could materially adversely affect the Company s business. restrictive.
• Many of the Company s operations operations, retail stores and facilities, as well as critical business operations of the Company s suppliers and contract manufacturers, are in locations that are prone to earthquakes and other natural disasters.
• In addition, the Company s and its suppliers operations operations, retail stores and facilities are subject to the risk of interruption by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware and other cybersecurity attacks, labor disputes, public health issues and other events beyond the Company s control.
• For example, global Global supply chains can be highly concentrated concentrated, and an escalation of geopolitical tensions or conflict could result in significant disruptions.
• Apple Inc. | 2025 Form 10-K | 6 Following any interruption to its business, the Company can require substantial recovery time, experience incur significant expenditures to resume operations, and lose significant sales.
• Apple Inc. | 2024 Form 10-K | 6 Global markets for the Company s products and services are highly competitive and subject to rapid technological change, and the Company may be unable to compete effectively in these markets.
• There can be no assurance these These investments will may not achieve expected returns, and the Company may not be able to develop and market new products and services successfully.
• The Company faces s products and services face substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digital content supplier relationships. service offerings.
• In addition, some Some of the Company s competitors have broader broad product lines, lower-priced products and a larger low-priced products, large installed base bases of active devices. devices, and large customer bases.
• Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins.
• Certain competitors have the resources, experience or cost structures to provide products and services at little or no profit or even at a loss.
• Some The Company has a minority market share in the global smartphone, personal computer, tablet and wearables markets, and some of the markets in which the Company competes have from time to time experienced little to no growth or contracted overall.
• Additionally, In addition, the Company faces significant competition as competitors imitate the Company s product features and applications within their products or collaborate to offer solutions that are more competitive than those they currently offer. solutions.
• Apple Inc. | 2025 Form 10-K | 7 Business Risks To remain competitive and stimulate customer demand, the Company must successfully manage frequent introductions and transitions of products and services.
• Due to the highly volatile and competitive nature of the markets and industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and services, navigate global regulatory requirements and barriers to market access, and successfully manage the transition to these new and upgraded products and services.
• The success of new product and service introductions depends Success also relies on a number of factors, including timely and successful development, market acceptance, the Company s ability to manage the risks associated with new technologies and production ramp-up issues, the availability effective integration of third-party services and technologies into the Company s products and services, the availability, delivery and performance of application software or other third-party support for the Company s products and services, the effective management of manufacturing and other purchase commitments and the management of inventory levels in line with anticipated product demand, and the availability of products in appropriate quantities and at expected costs to meet anticipated demand, and the risk that new products and services may have quality or other defects or deficiencies. demand.
• New products, services and technologies may replace or supersede existing offerings and may produce lower revenues and lower profit margins, which can materially adversely impact the Company s business, results of operations and financial condition. margins.
• Apple Inc. | 2024 Form 10-K | 7 The Company depends on component and product manufacturing and logistical services provided by outsourcing partners, many of which are located outside of the U.S.
• Substantially all A significant majority of the Company s manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam, in addition to sourcing from partners and a significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often facilities located in single locations. the U.S.
• Such diminished control has from time to time had, and may in the future have have, an adverse effect on the cost, quality or quantity of products manufactured or services provided, or adversely affect the Company s flexibility to respond to changing conditions.
• While the Company relies on its partners to adhere to its supplier code of conduct, violations of the supplier code of conduct occur from time to time and can materially adversely affect the Company s business, reputation, results of operations and operations, financial condition. condition and stock price.
• The Company relies on single-source outsourcing partners in the U.S., Asia and Europe to supply and manufacture many components, and on outsourcing partners primarily located in Asia, for final assembly of substantially all of the Company s hardware products.
• Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations that can materially adversely affect the Company s business, results of operations and operations, financial condition. condition and stock price.
• In addition, component suppliers may suffer from poor financial conditions, which can lead fail, be subject to business failure for the supplier or consolidation within a particular industry, or decide to concentrate on the production of common components instead of components customized to meet the Company s requirements, further limiting the Company s ability to obtain sufficient quantities of components on commercially reasonable terms, or at all.
• Therefore, the Company remains subject to significant risks of supply shortages and price increases that can materially adversely affect its business, results of operations and operations, financial condition. condition and stock price.
• The Additionally, the Company s new products often utilize custom components available from only one source.
• Apple Inc. | 2024 2025 Form 10-K | 8 The Company s products and services may be affected from time to time by design and manufacturing defects that could materially adversely affect the Company s business and result in harm to the Company s reputation.
• There can be no assurance the The Company will may not be able to detect and fix all issues and defects in the hardware, software and services it offers. offers, which can result in widespread technical and performance issues affecting the Company s products and services.
• The Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand, or for which if cost exceeds net realizable value.
• The Company also accrues necessary cancellation fee reserves for orders of excess products and components.
• The Company reviews long-lived other assets, including capital assets held at its suppliers facilities and facilities, inventory prepayments, prepayments and other long-lived assets, for impairment whenever events or circumstances indicate the assets may not be recoverable.
• Although the Company believes its inventory, capital assets, inventory prepayments and other assets and purchase commitments are currently recoverable, there can be no assurance the Company will not may incur write-downs, fees, impairments and other charges given the rapid and unpredictable pace of product obsolescence in the industries in which the Company competes.
• Because the Company s markets are volatile, competitive and subject to rapid technology and price changes, there is a risk the Company will forecast incorrectly and order or produce excess or insufficient amounts of components or products, or not fully utilize firm purchase commitments.

Removed since the previous 10-K 63

• The Company s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described below.
• Because of the following factors, as well as other factors affecting the Company s results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
• This discussion of risk factors contains forward-looking statements.
• Restrictive measures can increase the cost of the Company s products and the components and raw materials that go into them, and can require the Company to take various actions, including changing suppliers, restructuring business relationships and operations, and ceasing to offer and distribute affected products, services and third-party applications to its customers.
• For example, tensions between governments, including the U.S. and China, have in the past led to tariffs and other restrictions affecting the Company s business.
• The Company s products and services are offered in highly competitive global markets characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in product price and performance characteristics, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and businesses.
• The Company has a minority market share in the global smartphone, personal computer and tablet markets.
• The Company s services also face substantial competition, including from companies that have significant resources and experience and have established service offerings with large customer bases.
• The Company competes with business models that provide content to users for free.
• The Company also competes with illegitimate means to obtain third-party digital content and applications.
• The Company s business, results of operations and financial condition depend substantially on the Company s ability to continually improve its products and services to maintain their functional and design advantages.
• There can be no assurance the Company will be able to continue to provide products and services that compete effectively.
• There can be no assurance the Company will successfully manage future introductions and transitions of products and services.
• Any failure of these partners to perform can have a negative impact on the Company s cost or supply of components or finished goods.
• In addition, manufacturing or logistics in these locations or transit to final destinations can be disrupted for a variety of reasons, including natural and man-made disasters, information technology system failures, commercial disputes, economic, business, labor, environmental, public health or political issues, trade and other international disputes, geopolitical tensions, or conflict.
• The Company has invested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has made prepayments to certain of its suppliers associated with long-term supply agreements.
• While these arrangements help ensure the supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, such continued supply can be disrupted or terminated, and the recoverability of manufacturing process equipment or prepayments can be negatively impacted.
• While the Company has entered into agreements for the supply of many components, there can be no assurance the Company will be able to extend or renew these agreements on similar terms, or at all.
• The continued availability of these components at acceptable prices, or at all, can be affected for any number of reasons, including if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company s requirements.
• When the Company s supply of components for a new or existing product has been delayed or constrained, or when an outsourcing partner has delayed shipments of completed products to the Company, the Company s business, results of operations and financial condition have been adversely affected and future delays or constraints could materially adversely affect the Company s business, results of operations and financial condition.
• The Company s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the source, or to identify and obtain sufficient quantities from an alternative source.
• Failure to do so can result in widespread technical and performance issues affecting the Company s products and services.
• If the Company determines that an impairment has occurred, it records a write-down equal to the amount by which the carrying value of the asset exceeds its fair value.
• The Company s products and services are designed to include intellectual property owned by third parties, which requires licenses from those third parties.
• Based on experience and industry practice, the Company believes licenses to such third-party intellectual property can generally be obtained on commercially reasonable terms.
• However, there can be no assurance the necessary licenses can be obtained on commercially reasonable terms or at all.
• There can be no assurance third-party developers will continue to develop and maintain software applications and services for the Company s products.
• The Company distributes third-party applications for its products through the App Store.
• For the vast majority of applications, developers keep all of the revenue they generate on the App Store.
• Where applicable, the Company retains a commission from sales of applications and sales of digital services or goods initiated within an application.
• Changes to the Company s products and services could materially adversely affect the Company s business, results of operations and financial condition, including if such business changes result in reduced App Store or other sales, reductions in the rate of the commission that the Company retains on such sales, or if the rate of the commission is otherwise narrowed in scope or eliminated.
• Some third-party digital content providers require the Company to provide digital rights management and other security solutions.
• If requirements change, the Company may have to develop or license new technology to provide these solutions.
• There can be no assurance the Company will be able to develop or license such solutions at a reasonable cost and in a timely manner.
• In addition to intense competition for talent, workforce dynamics are constantly evolving.
• The Company also sells its products and services and resells third-party products in most of its major markets directly to consumers, small and mid-sized businesses, and education, enterprise and government customers through its retail and online stores and its direct sales force.
• Some carriers providing cellular network service for the Company s products offer financing, installment payment plans or subsidies for users purchases of the device.
• There can be no assurance such offers will be continued at all or in the same amounts.
• The Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access to or loss of sensitive data, and mitigate the impact of unauthorized access, including through the use of encryption and authentication technologies.
• The Company s retail stores are subject to numerous risks and uncertainties.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.