Silvaco Group, Inc.

Company Overview

Business Model: Silvaco Group, Inc. provides technology computer aided design (TCAD) software, electronic data automation (EDA) software, and semiconductor intellectual property (SIP). These solutions enable engineers to optimize semiconductor manufacturing processes, accelerate product time-to-market, and reduce development and manufacturing costs. The Company's offerings span from atomic-level simulation of semiconductor and photonics materials to design and analysis of circuits and system-level solutions, including SIP for system-on-a-chip (SoC) and integrated circuits (ICs). Revenue is primarily generated from software licensing, customization, and related maintenance and services.

Market Position: Silvaco Group, Inc. operates in highly competitive industries, differentiating itself through efficiency, cost, performance, and time-to-market. The Company is a pioneer in leveraging artificial intelligence (AI) and machine learning (ML) for process development, notably with its Fabrication Technology Co-Optimization (FTCO) solution. Its solutions address critical needs in growing markets such as display, automotive semiconductor, memory, quantum computing, photonics, data center, cellular technologies, and AI. The Company serves a global and diverse customer base of over 800 customers, including foundries, integrated device manufacturers, fabless semiconductor companies, and academic institutions.

Recent Strategic Developments:

• Acquisitions: In March 2025, Silvaco Group, Inc. acquired the Process Proximity Compensation product line (an optical proximity correction suite of tools) from Cadence Design Systems, Inc. for $11.5 million in cash. In April 2025, it acquired Tech-X Corporation for $8.2 million (comprising $4.1 million cash, 457,666 shares of common stock, and contingent consideration). In August 2025, it acquired Mixel Group, Inc. for $22.5 million (comprising $19.7 million cash and 643,617 shares of common stock). These acquisitions aim to expand the Company's solution portfolio and market footprint.
• AI/ML Leadership: The Company continues to invest in its FTCO AI/ML solution, which creates "digital twins" of manufacturing processes to simulate fabrication in real-time, reducing development time and costs. This includes GPU-enablement for plasma simulation and photonics, acquired through Tech-X Corporation.
• Cost Reduction Initiatives: In October 2025, Silvaco Group, Inc. initiated a Restructuring Plan, including voluntary early retirement, voluntary exit programs, an involuntary reduction in force, and site closures, incurring $1.3 million in pre-tax charges in 2025, with anticipated significant annualized operating expense reductions.

Geographic Footprint: Silvaco Group, Inc. has a global presence with headquarters in Santa Clara, California, and 12 offices worldwide, including locations in Colorado, Georgia (United States), China, Egypt, France, Japan, Korea, Singapore, Taiwan, the United Kingdom, and Vietnam. As of December 31, 2025, revenue was geographically distributed as follows: 54% from customers in Asia, 38% from customers in the Americas, and 8% from customers in Europe.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 78% (2025), 80% (2024)
• Operating Margin: (73)% (2025), (67)% (2024)
• Net Margin: (65)% (2025), (66)% (2024)

Investment in Growth:

• R&D Expenditure: $29.9 million (47% of revenue) in 2025, up from $20.7 million (35% of revenue) in 2024.
• Capital Expenditures: $0.6 million in 2025, up from $0.5 million in 2024.
• Strategic Investments:
  • Acquisition of OPC Business from Cadence Design Systems, Inc.: $11.5 million cash.
  • Acquisition of Tech-X Corporation: $4.1 million cash, 457,666 shares of common stock (fair value $2.4 million), and contingent consideration (estimated fair value $1.7 million).
  • Acquisition of Mixel Group, Inc.: $19.7 million cash and 643,617 shares of common stock (fair value $2.8 million).

Business Segment Analysis

Silvaco Group, Inc. manages its operations as a single operating segment, focusing on providing TCAD software, EDA software, and SIP solutions to engineers and researchers globally. The Chief Executive Officer reviews financial information on a consolidated basis for resource allocation and performance evaluation.

Financial Performance (by Revenue Type):

• Software license revenue: $42.9 million (-3% YoY) in 2025, $44.0 million in 2024.
• Maintenance and service revenue: $20.2 million (+29% YoY) in 2025, $15.7 million in 2024.
• Software solutions accounted for 68% of total revenue in 2025 (74% in 2024).
• Associated maintenance and services accounted for 32% of total revenue in 2025 (26% in 2024).

Key Growth Drivers:

• Revenue from EDA tools increased by $8.8 million in 2025.
• Revenue from IP sales increased by $4.8 million in 2025.
• These increases were partially offset by a $10.2 million decrease in revenue from TCAD tools in 2025.
• Growth is driven by advanced manufacturing processes, and advancements in end markets such as memory, automotive, quantum computing, photonics, data center, cellular technologies, and AI.

Product Portfolio:

• TCAD Solutions: Foundational TCAD tools for device performance optimization and advanced AI/ML simulation tools (FTCO) for process development, including GPU-enabled plasma simulation and photonics (from Tech-X Corporation acquisition).
• EDA Solutions: Full IC-CAD signoff design platform, automated standard cell library creation and characterization, and advanced IP management tool suites. Products include SPICE modeling and simulation, parasitic extraction and reduction, standard cell generation, and optical proximity correction (enhanced by OPC Business acquisition).
• SIP Solutions: Comprehensive portfolio for SoC designs, including hard and soft IP, foundational libraries, and embedded memory technologies.
  • Interface IP: Production-ready and custom mixed-signal IP for high-speed interfaces (e.g., Mixel® MIPI® C-PHY™, D-PHY™, M-PHY®, LVDS, SerDes), and soft IP for industry-standard interfaces (e.g., MIPI® I3C, Arm® AMBA®).
  • Logic Libraries and Physical IP: Standard cell logic libraries (Core, Power Management, ECO, Advanced Compute, physical completion).
  • Embedded Memory Solutions: Embedded memory compilers for volatile and non-volatile memory, with integrated test and repair features.
  • Automotive IP: Production-ready IP for automotive applications (e.g., CAN FD, CAN XL) designed for safety, reliability, and security.

Market Dynamics:

• SIP products are integrated early in customer development cycles, with long production lifecycles in markets like automotive, industrial, and robotics, and shorter cycles in mobile, consumer drones, edge AI computing, IoT, and wearables.
• The Company's SIP business is influenced by customer design activity, adoption of industry standards, and trends in semiconductor integration and system complexity.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed.
• Dividend Payments: Silvaco Group, Inc. has never declared or paid cash dividends and intends to retain future earnings for business development and growth, with no expectation of paying dividends in the foreseeable future.
• Future Capital Return Commitments: No authorized programs or amounts disclosed.

Balance Sheet Position:

• Cash and Equivalents: $9.0 million as of December 31, 2025, down from $19.6 million in 2024.
• Total Debt: $3.2 million (vendor financing obligation) as of December 31, 2025. In 2024, the $5.0 million Micron Note and the East West Bank Loan were extinguished.
• Net Cash Position: $6.8 million as of December 31, 2025, down from $83.1 million in 2024.
• Credit Rating: Not disclosed.
• Debt Maturity Profile: The vendor financing obligation has scheduled payments of $1.2 million in 2026, $1.2 million in 2027, and $1.2 million in 2028.

Cash Flow Generation:

• Operating Cash Flow: $(33.9) million in 2025, compared to $(19.8) million in 2024. The increased use of cash in 2025 primarily reflects a higher net loss and $16.1 million paid for litigation settlement.
• Free Cash Flow: $(34.5) million in 2025, compared to $(20.3) million in 2024.
• Cash Conversion Metrics: Not explicitly disclosed.

Operational Excellence

Production & Service Model: Silvaco Group, Inc. provides software solutions that enable customers to simulate and optimize semiconductor manufacturing processes and design, simulate, and verify semiconductor products. The operational philosophy centers on delivering differentiated solutions that increase productivity, accelerate time-to-market, and reduce development and manufacturing costs. Customer support is provided through a global network of application engineering teams, including frequent software updates and workshops.

Supply Chain Architecture: As a software provider, the Company's supply chain architecture primarily involves internal R&D and strategic partnerships rather than a traditional manufacturing supply chain.

Key Suppliers & Partners:

• Technology Development: Micron Technology, Inc. (partnered for development and deployment of AI/ML tools, specifically FTCO).
• SIP Licensing: NXP Semiconductors Netherlands B.V. (license agreement to sell SIP developed in partnership).
• Acquisition Partners: Cadence Design Systems, Inc. (acquired OPC Business), Tech-X Corporation (acquired for multi-physics simulation tools), Mixel Group, Inc. (acquired for low-power connectivity silicon IP solutions).

Facility Network:

• Manufacturing: Not applicable as the Company is a software provider.
• Research & Development: Significant R&D activities are conducted globally, with a substantial portion in California. The Company has offices in Santa Clara, CA (headquarters), Colorado, Georgia (United States), China, Egypt, France, Japan, Korea, Singapore, Taiwan, the United Kingdom, and Vietnam.
• Distribution: Software solutions are distributed globally through direct sales and channel partners.

Operational Metrics: No specific capacity utilization, efficiency measures, or quality indicators are explicitly disclosed in the filing.

Market Access & Customer Relationships

Go-to-Market Strategy: Silvaco Group, Inc. employs a direct sales model globally, augmented by distributors in growth or emerging markets such as Israel, India, and Southeast Asia. Account managers with specialized knowledge engage customers early in their design cycles, collaborating throughout the design journey. Field application engineers provide product specialization, and sales operations handle universities and smaller sales opportunities. Sales cycles for manufacturing process development and EDA opportunities typically range from six to nine months, while SIP opportunities range from three to nine months.

Distribution Channels:

• Direct Sales: Primary channel across the world, utilizing account managers and field application engineers.
• Channel Partners: Distributors are used in growth or emerging markets.
• Digital Platforms: The Company's website is used for investor relations and information, but specific digital sales platforms are not detailed.

Customer Portfolio:

• Total Customers: Over 800 customers worldwide as of December 31, 2025, including over 200 academic institutions.
• Customer Types: Foundries, integrated device manufacturers, and fabless semiconductor companies.
• Customer Concentration: Customer B accounted for 14% of total revenue in 2025 (15% in 2024). Accounts receivable concentration as of December 31, 2025: Customer A (14%), Customer B (11%), Customer C (10%).

Geographic Revenue Distribution:

• Asia: 54% of total revenue in 2025.
• Americas: 38% of total revenue in 2025.
• Europe: 8% of total revenue in 2025.
• Specific country revenue (2025): United States ($23.3 million), China ($12.3 million), Japan ($6.1 million), Korea ($7.0 million), Taiwan ($6.8 million), All other ($7.5 million).

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Silvaco Group, Inc. operates in highly competitive industries characterized by constant and rapid technological change, frequent product introductions and improvements, evolving industry standards, short product life cycles, and significant fluctuations in product supply and demand. The semiconductor and electronics systems industries are cyclical, and the increasing complexity of designs, coupled with cost management concerns, can influence design starts and activity. The emergence of AI technologies introduces new demands and potential disruption to existing business models and technology offerings.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Synopsys, Inc.: A major competitor in the EDA space.
• Siemens EDA: A significant competitor, particularly after its acquisition of Mentor Graphics Corporation.
• Cadence Design Systems, Inc.: A key competitor, from whom Silvaco Group, Inc. recently acquired an OPC product line.
• Other Tools Providers: Keysight Technologies, Inc., Schrödinger, Inc., CEVA, Inc., Zuken Ltd., Huada Empyrean, M31, and Primarius Technologies.

Emerging Competitive Threats:

• AI-native companies and large technology companies: These entities are increasingly entering adjacent software markets, leveraging AI expertise and substantial resources to develop competing solutions rapidly and potentially at lower cost.
• Internal Development: Customers may choose to develop their own EDA capabilities or IP internally due to strategic changes, enhanced internal capacity, budget constraints, or excess engineering capacity.
• Open-source solutions: Availability of open-source alternatives not subject to certain restrictions could pose a threat.

Competitive Response Strategy: Silvaco Group, Inc. aims to enhance its competitive advantage through R&D agility, designing capabilities specific to customer requirements, and integrating these into its software solutions. The Company focuses on a portfolio approach to licensing, expanding its customer base through a global salesforce, and establishing/expanding relationships with key technology providers and academic partners. Strategic acquisitions are pursued to accelerate growth and expand market footprint.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Highly Competitive Industries: Operates in industries with larger competitors (e.g., Synopsys, Inc., Siemens EDA, Cadence Design Systems, Inc.) possessing greater resources, requiring continuous innovation and competitive pricing.
• Industry Cyclicality: Dependence on the cyclical semiconductor and electronics systems industries, which are characterized by rapid technological change, product obsolescence, and demand fluctuations.
• AI Landscape Evolution: Rapidly evolving AI landscape creates risks if the Company fails to develop and offer competitive AI features or if competitors integrate AI more quickly.
• Customer Consolidation: Consolidation among customers could lead to fewer customers, increased bargaining power, or reduced spending.

Technology Disruption:

• Product Errors or Defects: Software products frequently contain errors, especially new versions or integrated acquired technologies, potentially leading to liability, reputational harm, and market share loss.
• Intellectual Property Protection: Failure to protect proprietary technology through patents, copyrights, trademarks, and trade secrets could harm the business, especially in foreign countries with weaker legal protections.
• Third-Party Software/IP Licenses: Inability to obtain or maintain licenses to third-party software and IP on reasonable terms could disrupt product delivery and development.

Customer Concentration:

• Payment Delays/Defaults: Customers facing financial challenges may delay or default on payments, or seek to modify/cancel contracts, adversely affecting revenue and cash flow.
• Dependence on Key Customers: Reliance on a relatively small number of large customers for a significant portion of revenue creates risk if these customers reduce purchases or do not renew licenses.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Software Components: Reliance on third-party open-source software components, with risks of non-compliance with license terms, vulnerabilities, and potential litigation.

Geographic Concentration:

• Global Operations: Increased risks from economic slowdowns, political instability, trade restrictions, and weaker IP protection in international markets.
• China Exposure: 20% of 2025 revenue from China, exposing the Company to economic, political, and legal uncertainties, including government influence, currency restrictions, and IP enforcement challenges.
• Geopolitical Conflicts: Operations could be disrupted by political/social instability, acts of war (e.g., Middle East regional conflict, Russia-Ukraine conflict), impacting employees (8 employees, 4 contractors, 4 interns in Ukraine), supply chains, and global trade.

Capacity Constraints: Not explicitly detailed as a risk.

Financial & Regulatory Risks

Market & Financial Risks:

• Operating Results Fluctuations: Revenue and net income are subject to significant fluctuations due to demand changes, competition, sales cycle delays, customer renewals, product mix, and timing of IP drawdowns.
• Foreign Exchange Fluctuations: Volatility in exchange rates between the U.S. dollar and other currencies can adversely impact revenue, expenses, and financial condition.
• Capital Raising Limitations: Ability to raise additional capital in the future may be limited, potentially hindering growth strategy execution.
• Stock Price Volatility: Stock price is subject to fluctuations based on analyst recommendations, market sentiment, financial results, and company announcements.

Regulatory & Compliance Risks:

• Anti-Corruption/Anti-Money Laundering: Subject to stringent laws (FCPA, UK Bribery Act 2010), with risks of non-compliance leading to investigations, sanctions, and reputational harm.
• Export Controls and Sanctions: Subject to U.S. export controls and sanctions (e.g., Export Administration Regulations, OFAC), which can limit international market access and lead to penalties for non-compliance. Voluntary disclosures regarding potential violations have been filed with BIS and OFAC.
• Data Privacy and Security: Subject to numerous data privacy and security obligations (e.g., EU/UK GDPR, CCPA), with evolving interpretations and potential for significant compliance costs, legal claims, or reputational damage.

Geopolitical & External Risks

Geopolitical Exposure:

• U.S.-China Tensions: Ongoing geopolitical and economic uncertainty, including U.S. export controls on China's semiconductor industry and outbound investment restrictions, could disrupt markets, reduce demand, and lead to regulatory retaliation.
• Regional Conflicts: Middle Eastern regional conflict and Russia-Ukraine conflict pose risks to global trade, regional economies, and employee safety/productivity.

Trade Relations:

• Tariffs and Trade Barriers: Imposition of tariffs, export controls, or other trade barriers by governments could reduce customer demand, increase costs, and make products less competitive.

Sanctions & Export Controls:

• Compliance Requirements: Strict compliance with U.S. export controls and sanctions is required, with risks of non-compliance and potential expansion of restrictions to current software solutions.

Innovation & Technology Leadership

Research & Development Focus: Silvaco Group, Inc.'s R&D priorities are centered on its TCAD, EDA, and SIP product areas. The R&D team continuously evolves existing products to address new customer challenges and develops next-generation, innovative solutions. Significant investments are made in R&D to maintain leadership and cater to strategic customer needs, with R&D expenses increasing to 47% of revenue in 2025 from 35% in 2024.

Core Technology Areas:

• TCAD: Traditional TCAD tools for device performance optimization and leading-edge AI/ML simulation tools (FTCO) for manufacturing process development.
• EDA: IC-CAD signoff design platform, automated standard cell library creation, and IP management tool suites.
• SIP: Interface IP, logic libraries, physical IP, embedded memory solutions, and automotive IP.

Innovation Pipeline:

• FTCO AI/ML Solution: Utilizes manufacturing and simulated data to create "digital twins" for real-time fabrication process simulation, enabling rapid yield improvement and cost reduction. Developed in partnership with Micron Technology, Inc.
• GPU-enablement: Recent additions to the product portfolio from the Tech-X Corporation acquisition include GPU-enablement for plasma simulation and photonics.

Intellectual Property Portfolio:

• Patent Strategy: Focuses on proprietary and unique technologies that differentiate products. As of December 31, 2025, the Company held 47 issued U.S. patents (expiring 2026-2039), 5 pending U.S. patent applications, 4 issued foreign patents (expiring 2032-2041), and 9 pending foreign patent applications. Patents cover SIP characterization, standard cells, memory, physical verification, LED simulation, computational lithography, optical proximity correction, multi-patterning, photomask optimization, semiconductor manufacturability modeling, yield enhancement, and mixed-signal physical layer interface technologies.
• Licensing Programs: Engages in licensing programs, such as the partnership with NXP Semiconductors Netherlands B.V. for SIP.
• IP Litigation: Has been involved in IP litigation, including a settled dispute with former shareholders of Nangate, Inc. and a dismissed lawsuit by Aldini AG.

Technology Partnerships:

• Strategic Alliances: Partnerships with SIP providers, foundries, design service companies, EDA companies, commercial customers, and academia.
• Research Collaborations: Collaborations with Micron Technology, Inc. for FTCO development and deployment.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company experienced CEO and CFO transitions in 2025. Dr. Rhines joined as CEO in August 2025, and Mr. Zegarelli as CFO in September 2025.

Board Composition: As of December 31, 2025, Ms. Ngai-Pesic and the Pesic Family collectively own over 59.4% of the total outstanding common stock, making Silvaco Group, Inc. a "controlled company" under Nasdaq listing rules. This status allows the Company to rely on exemptions from certain corporate governance requirements, such as having a majority of independent directors or independent compensation and nominating committees. The Stockholders Agreement grants the Pesic Family significant rights, including approval for certain amendments to the certificate of incorporation or bylaws, change of control transactions, liquidation, and the ability to designate up to four board nominees and one non-voting board observer.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Silvaco Group, Inc. had 406 employees worldwide.

• United States: 105 full-time equivalent employees (61 in R&D, 18 in sales and marketing, 26 in general and administrative).
• Egypt: 99 full-time equivalent employees.
• Ukraine: 8 employees, 4 contractors, and 4 interns, all working remotely.

Talent Management:

• Acquisition & Retention: The Company offers competitive compensation programs, including a bonus program, 401(k) match, Employee Stock Purchase Plan, and equity compensation. Competition for qualified engineers and other key employees is intense globally.
• Retention Metrics: Not explicitly disclosed, but the Company has recently conducted headcount reductions as part of cost-savings initiatives.
• Employee Value Proposition: Focuses on linking compensation to business and individual performance, along with comprehensive benefits and equity compensation.

Diversity & Development:

• Development Programs: Not explicitly detailed.
• Culture & Engagement: The Company considers relations with its employees to be good and has never experienced a work stoppage.

Environmental & Social Impact

Environmental Commitments: No specific environmental commitments, emissions targets, carbon neutrality goals, or renewable energy strategies are explicitly disclosed in the filing.

Supply Chain Sustainability: No specific supply chain sustainability initiatives, supplier engagement programs, or responsible sourcing practices are explicitly disclosed.

Social Impact Initiatives: No specific community investment, philanthropic programs, or product social benefit applications are explicitly disclosed.

Business Cyclicality & Seasonality

Demand Patterns: The growth of Silvaco Group, Inc.'s business is primarily dependent on the semiconductor and electronics systems industries, which are cyclical and characterized by constant and rapid technological change, product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand. Demand for the Company's tools is driven by the launch of more advanced manufacturing processes and advancements in end markets such as memory, automotive, quantum computing, photonics, data center, cellular technologies, and AI.

Seasonal Trends: Not explicitly detailed.

Economic Sensitivity: The Company's business is sensitive to the global macroeconomic environment, including changes in trade policy, inflationary pressures, elevated interest rates, potential economic slowdowns or recessions, supply chain disruptions, geopolitical pressures, and foreign exchange rate fluctuations. These factors can lead customers to postpone decisions, decrease spending, or delay payments.

Industry Cycles: The semiconductor and electronics systems industries have experienced significant downturns in connection with, or in anticipation of, maturing product cycles. The increasing complexity of designs and cost management concerns can lead to decreased design starts.

Planning & Forecasting: Operational and strategic decisions are based on short-term and long-term sales forecasts, which are subject to significant estimation and external factors. Variations in actual sales activity from forecasts can adversely affect the business.

Regulatory Environment & Compliance

Regulatory Framework: Silvaco Group, Inc. is subject to a complex and evolving regulatory landscape, including anti-corruption, anti-bribery, and anti-money laundering laws in the United States (e.g., FCPA, U.S. Travel Act, USA PATRIOT Act) and other countries (e.g., United Kingdom Bribery Act 2010).

Industry-Specific Regulations: Not explicitly detailed beyond general compliance.

International Compliance:

• Export Controls and Sanctions: The Company's software solutions and technology are subject to U.S. export controls and sanctions, including the Export Administration Regulations and OFAC regulations. The Company has filed voluntary disclosures with BIS and OFAC regarding potential violations, receiving warning and cautionary letters, respectively, with the possibility of future enforcement actions.
• Data Privacy: The Company processes personal data and is subject to various federal, state, local, and foreign data privacy and security obligations, including the EU/UK General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).

Trade & Export Controls:

• U.S. Export Controls on China: The U.S. government has implemented and tightened export controls affecting China, particularly in semiconductor manufacturing, advanced computing, and AI. This includes restrictions on certain advanced AI chips, semiconductors, and supercomputing items, as well as an executive order addressing U.S. investments in sensitive Chinese technology sectors. While BIS revoked export restrictions on EDA software to China in July 2025, future reimposition remains a risk.

Legal Proceedings:

• Nangate Litigation: In May 2025, the Company settled litigation with former shareholders of Nangate, Inc. for $32.5 million, with Silvaco Group, Inc. bearing 75% ($24.4 million) and two principal stockholders bearing 25% ($8.1 million). The Company recorded litigation settlement expenses of $13.1 million in 2025 and $11.3 million in 2024. The remaining liability of $8.3 million as of December 31, 2025, was paid in February 2026.
• Aldini AG Lawsuit: A lawsuit alleging trade secret theft and other tort claims, seeking $703.0 million, was dismissed in March 2023 and the dismissal was affirmed by the U.S. Court of Appeals for the Ninth Circuit in December 2024.

Tax Strategy & Considerations

Tax Profile: Silvaco Group, Inc. is subject to various U.S. and non-U.S. taxes, including corporate income, withholding, customs, excise, value-added, and sales taxes. Significant judgment is required in determining tax provisions, and tax returns are subject to audit by various authorities.

Effective Tax Rate: The Company reported an income tax benefit of 8% in 2025, compared to an income tax provision of (1)% in 2024. The 2025 benefit primarily relates to the partial release of the valuation allowance on net deferred tax assets due to deferred liabilities from acquisitions.

Geographic Tax Planning: The Company intends to reinvest foreign undistributed earnings indefinitely and has not recorded a provision for deferred U.S. tax expense related to their remittance.

Tax Reform Impact: The Company's tax profile is affected by significant changes in U.S. tax laws, including the Tax Cuts and Jobs Act (2017), the Coronavirus Aid, Relief, and Economic Security Act (2020), the Inflation Reduction Act (2022), and the One Big Beautiful Bill Act (2025).

NOLs & Credits: As of December 31, 2025, the Company had federal net operating loss (NOL) carryforwards of $39.2 million and federal research and development credits of $8.2 million (expiring from 2028). State NOL carryforwards were $16.3 million (expiring from 2034) and state research and development credits were $9.2 million (expiring from 2026). A full valuation allowance has been recorded against these deferred tax assets.

Insurance & Risk Transfer

Risk Management Framework: Silvaco Group, Inc. integrates cybersecurity risk management into its overall enterprise risk management approach. The program is guided by industry practices and frameworks from the International Organization for Standardization and the National Institute of Standards and Technology. The SVP, Global Operations, is responsible for monitoring cybersecurity incidents and reports quarterly to the Audit Committee of the Board. The program includes identifying assets and threats, assessing risks, employing tools like vulnerability scanning and penetration testing, and conducting annual security awareness training for employees.

Insurance Coverage: Director and officer liability insurance is mentioned as an expense associated with operating as a public company. No other specific insurance coverage details are disclosed.

Risk Transfer Mechanisms: No specific risk transfer mechanisms (e.g., hedging strategies, contractual risk allocation) are explicitly detailed in the filing.