Cost base
In response to the recent economic turmoil, CEVA executed a number of initiatives to reduce its costs. In the fourth quarter of 2014 the Company announced
a cost reduction plan that focuses on both direct and indirect cost reduction. In the event of another slowdown, CEVA may need to implement further cost
reduction initiatives. Despite the large variable cost component of CEVA’s business model, such initiatives may not achieve the necessary cost savings to offset
the potential decline of its revenues. In addition, CEVA consistently targets incremental cost savings as part of its operational improvements, however CEVA
may not achieve these targeted cost savings in the amounts or in the time frames expected or at all.