SOLAREDGE TECHNOLOGIES, INC. - 1419612 - 2024

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 utr: D

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 WASHINGTON,
D.C. 20549

 FORM

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December

 OR

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from _________ to __________

 Commission
File Number: 001-36894

TECHNOLOGIES, INC.

 (Exact
name of registrant as specified in its charter)

 Delaware

 20-5338862

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (IRS
 Employer

 Identification
 No.)

 HaMada Street

 Herziliya
 Pituach, Israel

 4673335

 (Address
 of Principal Executive Offices)

 (Zip
 Code)

 972 (9)
957-6620

 Registrant's
telephone number, including area code

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 stock, par value $0.0001 per share

 SEDG

 NASDAQ
 (Global Select Market)

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

 Yes
 No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

 Yes
 No

by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

 Yes
 No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files).

 Yes
 No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or "emerging growth company". See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

 Large
 accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an
emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.

 If securities
are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

 Yes
 No

 The
aggregate market value of the registrant's voting and non-voting common stock held by non-affiliates of the registrant on June 30,
2023, the last business day of the registrant's most recently completed second fiscal quarter was approximately $ 15.1
billion (assuming that the registrant's only affiliates are its officers, directors and non-institutional 10% stockholders) based
upon the closing market price on that date of $269.05 per share as reported on the Nasdaq Global Select Market.

 As of
February 1, 2024, there were 57,126,023
shares of the registrant's common stock, par value of $0.0001 per share, outstanding.

 DOCUMENTS
INCORPORATED BY REFERENCE

 The
information required by Part III of this report, to the extent not set forth herein, is incorporated herein by reference from our definitive
proxy statement relating to the Annual Meeting of Stockholders to be held in 2024, which definitive proxy statement shall be filed with
the Securities and Exchange Commission within 120 days after the end of the annual period to which this report relates.

 FISCAL
YEAR FORM 10-K

 TABLE
OF CONTENTS

 PART
 I

 Item
 1.

 Business

 Item
 1A.

 Risk
 Factors

 Item
 1B.

 Unresolved
 Staff Comments

 Item
 1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal
 Proceedings

 Item
 4.

 Mine
 Safety Disclosures

 PART
 II

 Item
 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 Reserved

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative
 and Qualitative Disclosures About Market Risk

 Item
 8.

 Statements and Supplementary Data

 F
 - 1

 Item
 9.

 in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls
 and Procedures

 Item
 9B.

 Other
 Information

 Item
 9C

 Disclosure
 Regarding Foreign Jurisdictions that Prevent Inspections

 PART
 III

 Item
 10.

 Directors,
 Executive Officers and Corporate Governance

 Item
 11.

 Executive
 Compensation

 Item
 12.

 Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain
 Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal
 Accountant Fees and Services

 PART
 IV

 Item
 15.

 Exhibits,
 Financial Statement Schedules

 Item

 Form
 10-K Summary

 Signatures

 SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This Annual Report on
Form 10-K and the documents incorporated herein by reference contain forward-looking statements that are based on our management's
expectations, estimates, projections, beliefs and assumptions and on information currently available to our management. The forward-looking
statements are contained principally in "Item 1. Business," "Item 1A. Risk Factors" "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations." and "Item 7A. Quantitative and Qualitative Disclosures
About Market Risk". This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include information
concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services,
financing and investment plans, competitive position, industry and regulatory environment, effects of acquisitions, growth opportunities,
and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms
such as "anticipate," "believe," "could," "seek," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "project," "should,"
"will," "would," or similar expressions and the negatives of those terms.

 Forward-looking statements
inherently involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements
to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking and other statements regarding
our sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or requiring
disclosure in our filing with the Securities and Exchange Commission ("SEC"). In addition, historical, current and forward-looking
sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes
that continue to evolve and assumptions that are subject to change in the future, including future rule-making. Also, forward-looking
statements represent our management's beliefs and assumptions only as of the date of this filing. Important factors that could cause
actual results to differ materially from our expectations include those discussed in Item 1A, Risk Factors, as well as those discussed
elsewhere in this Annual Report on Form 10-K, including:

 •

 future demand for renewable energy including solar
 energy solutions;

 •

 our ability to forecast demand for our products
 accurately and to match production to such demand as well as our customers' ability to forecast demand based on inventory levels;

 •

 macroeconomic conditions in our domestic and international
 markets, as well as inflation concerns, rising interest rates and recessionary concerns;

 •

 the retail price of electricity derived from the
 utility grid or alternative energy sources;

 •

 interest rates and supply of capital in the global
 financial markets in general and in the solar market specifically;

 •

 competition, including introductions of power
 optimizer, inverter and solar photovoltaic ("PV") system monitoring products by our competitors;

 •

 developments in alternative technologies or improvements
 in distributed solar energy generation;

 •

 historic cyclicality of the solar industry and
 periodic downturns;

 •

 product quality or performance problems in our
 products;

 •

 shortages, delays, price changes, or cessation
 of operations or production affecting our suppliers of key components;

 •

 delays, disruptions, and quality control problems
 in manufacturing;

 •

 our dependence upon a small number of outside
 contract manufacturers and limited or single source suppliers;

 •

 capacity constraints, delivery schedules, manufacturing
 yields, and costs of our contract manufacturers and availability of components;

 •

 disruption in our global supply chain and rising
 prices of oil and raw materials as a result of the conflict between Russia and Ukraine;

 •

 performance of distributors and large installers
 in selling our products;

 •

 consolidation in the solar industry among our
 customers and distributors;

 •

 our ability to manage effectively the growth of
 our organization and expansion into new markets;

 •

 Our ability to recognize expected benefits from
 restructuring plans

 •

 any unauthorized access to, disclosure, or theft
 of personal information or unauthorized access to our network or other similar cyber incidents;

 •

 our ability to integrate acquired businesses;

 •

 disruption to our business operations due to the
 evolving state of war in Israel and political conditions related to the Israeli government's plans to significantly reduce the Israeli
 Supreme Court's judicial oversight;

 •

 our dependence on ocean transportation to timely
 deliver our products in a cost-effective manner;

 •

 fluctuations in global currency exchange rates;

 •

 the impact of evolving legal and regulatory requirements
 related to emerging environmental, social and governance requirements;

 •

 existing and future responses to and effects of
 pandemics, epidemics or other health crises;

 •

 changes to net metering policies or the reduction,
 elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications;

 •

 federal, state, and local regulations governing
 the electric utility industry with respect to solar energy;

 •

 changes in tax laws, tax treaties, and regulations
 or the interpretation of them, including the Inflation Reduction Act;

 •

 changes in the U.S. trade environment, including
 the imposition of import tariffs;

 •

 our ability to maintain our brand and to protect
 and defend our intellectual property;

 •

 volatility of our stock price;

 •

 our customers' financial stability, creditworthiness
 and debt leverage ratio;

 •

 our ability to retain key personnel and attract
 additional qualified personnel;

 •

 our ability to effectively design, launch, market,
 and sell new generations of our products and services;

 •

 our ability to retain, and events affecting, our
 major customers;

 •

 our ability to service our debt; and

 •

 the other factors set forth under "Item
 1A. Risk Factors."

 The preceding list is
not intended to be an exhaustive list of all of our forward-looking statements. You should not rely upon forward-looking statements as
predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements
will be achieved or will occur. Except as required by law, we assume no obligation to update these forward-looking statements, or to update
the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information
becomes available in the future.

 i

 PART
I

 ITEM
1. Business

 Introduction

 We are
a leading provider of an optimized inverter solution that changed the way power is harvested and managed in photovoltaic (also known as
PV) systems. Our direct current ("DC"), optimized inverter system maximizes power generation while lowering the cost of energy
produced by the PV system for improved return on investment, or ROI. Additional benefits of the DC optimized inverter system include:
comprehensive and advanced safety features, improved design flexibility, efficient integration (DC coupled) with SolarEdge storage solutions,
and improved operation and maintenance, or O&M, with remote monitoring at the module-level. The typical SolarEdge DC optimized inverter
system consists of inverters, Power Optimizers, a communication device which enables access to a cloud-based Monitoring Platform and,
in many cases, a battery and additional smart energy management solutions and devices, such as EV chargers and load controllers. As part
of our hardware sales, we also provide the energy management software which controls, manages and optimizes the energy production, storage
and use of energy generated by our systems. Our solutions address a broad range of solar market segments, from residential solar installations
to commercial and small utility scale solar installations. Since we began commercial shipments in 2010, we have shipped approximately
52.6 gigawatts ("GW") of our DC optimized inverter systems and our products have been installed in solar PV systems in over
140 countries.

 Since
introducing the DC optimized inverter solution in 2010, SolarEdge has expanded its activity to other areas of smart energy technology,
both through organic growth and through acquisitions. By leveraging world-class engineering capabilities and with a relentless focus on
innovation, SolarEdge now offers energy solutions that include primarily the hardware technology used in residential, commercial, and
small scale utility PV systems and also product offerings in the areas of energy storage systems, or ESS, including manufacturing of lithium-ion
cells and batteries, smart trackers for solar panels, EV chargers, home and commercial energy management software, grid services and software
platforms and applications that enable development of virtual power plants, or VPPs.

 We primarily
sell our products indirectly to thousands of solar installers through large distributors and electrical equipment wholesalers and directly
to large solar installers and engineering, procurement, and construction firms, or EPCs. Our customers include leading providers of solar
PV systems to residential and commercial end users, key solar distributors, and electrical equipment wholesalers.

 As of
December 31, 2023, we have shipped in the aggregate approximately 125.1 million Power Optimizers and 5.6 million inverters. More than
3.7 million PV installations, many of which may include multiple inverters, are currently connected to and monitored through our cloud-based
Monitoring Platform.

 The
SolarEdge Solution. The key advantages of our solution over a traditional string inverter PV system include:

 •

 Maximized
 PV module power output. Our Power Optimizers provide module-level, or MPPT, and real-time adjustments of current and voltage to
 the optimal working point of each individual PV module. This enables each PV module to continuously produce its maximum power potential
 independent of other modules in the same string, thus minimizing module mismatch and partial shading losses. By performing these adjustments
 at a very high rate, our Power Optimizers also solve the dynamic MPP losses associated with traditional inverters.

 •

 Optimized
 architecture with economies of scale. Our system shifts certain functions of the traditional inverter to our Power Optimizers while
 keeping the DC to AC function and grid interaction in our inverter. As a result, our inverter is smaller, more efficient and more reliable
 than inverters used in traditional string inverter systems. The cost savings that we have achieved on the inverter enable our system to
 be priced at a cost per watt that is comparable with traditional inverter systems of leading manufacturers. As a PV system grows in size,
 our inverter benefits from economies of scale, making our technology viable for large commercial and small-scale utility applications.

 •

 Enhanced
 system design flexibility. Unlike a traditional inverter system that requires each string to be the same length, use the same type
 of PV modules and be positioned at the same angle toward the sun, our system allows significant design flexibility by enabling the installer
 to place PV modules in uneven string lengths and on multiple roof facets. This design flexibility increases the amount of the available
 roof that can be utilized for power production. As a result, our system is significantly less prone to wasted roof space resulting from
 rooftop asymmetries and obstructions.

 •

 Reduced
 balance of system (BoS) costs. Our DC optimized inverter system allows significantly longer strings to be connected to the same
 inverter (as compared to a traditional inverter system). This reduces the cost of cabling, fuse boxes and other ancillary electric components.
 These factors result in easier installations with shorter design times and a lower initial cost per watt, while enabling larger installations
 per rooftop.

 •

 Continuous
 monitoring and control to reduce operation and maintenance costs. Our cloud-based monitoring platform provides full data visibility
 at the module level, string level, inverter level and system level. The data can be accessed remotely by any web-enabled device, allowing
 comprehensive analysis, immediate fault detection and alerts. These monitoring features reduce O&M costs for the system owner by identifying
 and locating faults, enabling remote testing and reducing field visits.

 •

 Enhanced
 safety. We have incorporated module-level safety mechanisms in our system to protect installers, electricians and firefighters.
 Each Power Optimizer is configured to reduce output to 1 volt unless the Power Optimizer receives a fail-safe signal from a functioning
 inverter. As a result, if the inverter is shut down (e.g., for system maintenance, due to malfunction, in the event of a fire or otherwise),
 the DC voltage throughout the system is reduced to a safe level. Our DC optimized inverters comply with the applicable safety requirements
 of the regions in which they are sold, providing incremental cost savings to installers by eliminating the need for additional hardware
 such as DC breakers, switches or fire-proof ducts required by traditional inverter systems. In the U.S., the SolarEdge SafeDC feature
 is compliant with NEC 2014 & NEC 2017 Rapid Shutdown functionality, Section 690.12. SolarEdge inverters also have a built-in safety
 feature designed to mitigate the effects of some arcing faults that may pose a risk of fire, in compliance with the UL1699B arc detection
 standard. In addition, some of the SolarEdge Power Optimizers include a "sense connect capability" which is designed to monitor Power
 Optimizers' connectors, and identify improper connections and possible malfunctions for early detection and mitigation of arc risks.

 •

 High
 reliability. Solar PV systems are typically expected to operate for at least 25 years under harsh outdoor conditions. High reliability
 is critical and is facilitated by systems and components that have low heat generation, solid and stable materials, and an absence of
 moving parts. We have designed our system to meet these stringent requirements. Our Power Optimizers' high switching frequency allows
 the use of ceramic capacitors with a low, fixed rate of aging and a proven life expectancy in excess of 25 years. Further, we use automotive-grade,
 application-specific integrated circuits ("ASICs") that embed many of the required electronics. This reduces the number of
 components and consequently the potential points of failure.

 •

 DC
 Coupling with Energy Storage. Our DC optimized inverter system allows solar energy to be directly stored in batteries without any
 conversion, referred to as DC coupling, thereby eliminating energy losses that are associated with such conversions. This enables better
 management of energy stored in the battery, hence improving efficiency, increasing savings for the end user and increasing the overall
 return on investment, or, ROI. When coupled with a DC enabled EV charger, solar energy can directly charge the electric vehicle, without
 any AC conversion applying similar energy retention due to less conversions.

 •

 Management. Our residential and commercial systems feature the SolarEdge ONE energy optimization system which manages solar energy,
 battery storage, smart devices, and grid interaction. This smart energy management capability enables system owners to store solar energy
 at cost-effective times, and also control the timing of their PV energy consumption in order to increase their energy independence, take
 advantage of lower time-of-use rates, reduce electricity bills, and improve overall system ROI.

 •

 Distributed
 Energy Generation. As the electric grid transitions from centralized power stations to a network of distributed, renewable energy
 sources, our inverter can serve as a local control system that can manage the energy resources underlying such a distributed network.
 Our inverters can be used to create a distributed and interactive grid that can help support grid stability. One such example is inverter-enabled
 charging and discharging of batteries as part of a Virtual Power Plant or VPP, to help manage the load on the grid and support grid stability.

 Our
Product Offering

 Our primary segment is
our solar business, which includes the following products:

Power Optimizer. Our Power Optimizer which forms an integral part of our DC optimized inverter system is a highly reliable and
efficient DC-to-DC converter which is connected by installers to each PV module or embedded by PV module manufacturers into their modules
as part of the manufacturing process. Our Power Optimizer increases energy output from the PV module to which it is connected by continuously
tracking the Maximum Power Point or MPP of each module and controlling its production point. The Power Optimizer's ability to track
the MPP of each PV module and its ability to increase or decrease its output voltage enables the inverter's input voltage to remain
fixed under a large variety of string configurations. This feature enhances the flexibility in PV system designs, enabling use of different
string lengths in a single PV system connected to the same inverter, use of PV modules situated on multiple orientations connected to
the same inverter, and using varied PV module types in the same string. In addition, our Power Optimizers monitor the performance of each
PV module and communicate this data to our inverter using our proprietary power line communication. In turn, the inverter transmits this
information to our monitoring server. Each Power Optimizer is equipped with our proprietary safety mechanism which automatically reduces
the output voltage of each PV module to 1 volt unless the Power Optimizer receives a fail-safe signal from a functioning inverter. As
a result, if the inverter is shut down (e.g., for system maintenance, due to malfunction, in the event of a fire or otherwise), the system
is designed to reduce the DC voltage to a safe level.

 Our
Power Optimizers are designed to withstand high temperatures and harsh environmental conditions and contain multiple bypass features that
localize failures and enable continued system operation in the vast majority of cases of Power Optimizer failure. Our Power Optimizers
are compatible with most modules on the market today and carry a 25-year product warranty. During the year ended December 31, 2023, the
year ended December 31, 2022 and the year ended December 31, 2021, revenues derived from the sale of Power Optimizers represented 30.3%,
36.5% and 42.2% of total revenues, respectively.

Inverter. Our DC-to-AC inverters which form an integral part of our DC optimized inverter systems, contain sophisticated digital
control technology with efficient power conversion architecture resulting in superior solar power harvesting and high reliability, and
are designed to work exclusively with our DC Power Optimizers. A proprietary power line communication receiver is integrated into each
inverter, receiving data from our Power Optimizers, storing this data and transmitting it to our monitoring server when an internet connection
exists. Since each string which is equipped with our Power Optimizers provides fixed input voltage to our inverter, the inverter is able
to operate at its highest efficient at all times and therefore is more cost effective, energy efficient and reliable.

 Like
our Power Optimizers, our inverters are designed to withstand harsh environmental conditions. We currently offer single-phase inverters
designed to address the residential market (3 kilowatt ("kW") to 11.4 kW) three-phase inverters designed to address the residential
and commercial markets (4 kW to 120 kW), and three-phase inverters designed to address the ground mount market (300kW to 330kW). In 2023,
SolarEdge released the 330kW inverter coupled with new H-Series Power Optimizers for distributed and centralized inverter configurations.
This inverter is designed for small-scale utility installations, agriculture or Agri-PV sites that harvest crops and solar energy on the
same farmland, and Community Solar installations which bring smart energy savings to households, businesses and public organizations.

Solutions. The SolarEdge Home Battery 400V, our DC-coupled, 10kWh, single phase battery integrates with our SolarEdge Home Hub
family of inverters. When connected with our SolarEdge Home Backup Interface (BUI), the SolarEdge Home Battery provides homeowners the
ability to power their homes even when the grid is off for anywhere from several hours to many days, depending on use of loads and available
sunlight during the outage. The battery also works in tandem with the SolarEdge ONE energy optimization system to optimize the use of
solar energy in places with different types of import and export tariffs scenarios (such as time of use, or TOU and dynamic rates).

 With
the SolarEdge backup solution, power is stored in a battery and can be used during a power outage to power essential devices such as refrigerators,
communication devices, lighting, and AC outlets for anywhere from several hours to many days, depending on use of loads and available
sunlight during the outage.

 EV
Chargers. SolarEdge sells EV chargers for residential applications which allow the homeowner to redirect excess PV energy to power
their electric vehicles. This enables consumer to increase their self-consumption of clean energy. The SolarEdge ONE smart energy optimization
system can be programmed to automatically charge the vehicle using the most advantageous and economical times and rates.

 Smart
Energy Products. As the solar energy industry has evolved, SolarEdge has developed innovative solutions to further enhance smart
energy technology, including inverters that include compatibility with batteries for increased self-consumption for backup, backup interfaces
devices, smart meters, smart energy management devices (sockets, hot water controllers, wireless relay) and smart PV modules. This product
expansion has enabled us to increase average the revenue per installation, or ARPI.

 Smart
Trackers. Our SolarGik smart PV tracker is optimized for installations on constrained and sloped terrains, eliminating the need
for costly grading and construction. Our trackers come with advanced software that is designed to optimize production, predict weather
changes, maximize bifacial gains and respond to remote commands. The tracker solutions are light weight, which allows them to be installed
not only in regular ground mount projects, but also on rooftops, greenhouses, carports and agricultural fields.

 Smart
Energy Management. We have developed smart energy management software and capabilities that are offered with our hardware solutions
and enable system owners to store solar energy at cost-effective times, and also control the timing of their PV energy consumption in
order to increase their energy independence, take advantage of lower time-of-use rates, reduce electricity bills, and improve overall
system ROI.

 In 2023,
we launched the SolarEdge Home smart energy ecosystem which enables homeowners to control and optimize their energy production, consumption
and storage with mySolarEdge app. SolarEdge Home manages the home's production and usage 24 hours a day, 7 days a week through the
SolarEdge ONE energy optimization system which analyzes a variety of external and internal data to minimize electricity costs and maximize
savings. In addition to SolarEdge Power Optimizers, inverters and batteries, SolarEdge Home has capabilities enabling integration with
SolarEdge Home batteries, EV chargers, load controls and third party devices, to monitor and optimize the home energy production and usage.
The features are thus far available in the United States, in Germany and are being released elsewhere around the world over time.

 In
addition, in April 2023, we completed the acquisition of all outstanding shares of Hark Systems Ltd. ("Hark"), a UK-based energy IoT company
for the commercial and industrial ("C&I") sector. Hark's platform is designed to enable commercial and industrial customers expanded
capabilities in energy management and connectivity, including identification of potential energy savings, detection of anomalies in assets'
energy consumption, and optimization of energy usage and carbon emissions through load orchestration and storage control.

Software Solutions. We offer a variety of professional software tools to support the complete PV planning, installation, monitoring
and maintenance processes of our DC optimized inverter solutions:

 Monitoring
Platform. The SolarEdge monitoring platform is a cloud-based monitoring platform which collects power, voltage, current and system
data sent from SolarEdge inverters and Power Optimizers and allows users to view the data for their SolarEdge site/s at the module level,
string level, inverter level and system level from most browsers and from most smart phones and tablets. The monitoring software continuously
analyzes data and flags potential problems. The monitoring software includes features which are used on a routine basis by integrators,
installers, maintenance staff, and system owners to improve a solar PV system's performance.

 MySolarEdge
app. The mySolarEdge application enables system owners to track their real-time system production and household energy consumption,
view their inverter and battery status for quick troubleshooting, and control the battery's back-up capabilities, all from their mobile
phones.

 Designer
platform. Our designer platform is a proprietary web-based tool that helps solar professionals plan, build and validate residential
and commercial systems from inception to installation.

 Mapper
application. The mapper application provides SolarEdge installers with an efficient, streamlined process for registering the physical
layout of new PV sites installed with SolarEdge DC optimized inverter systems in the SolarEdge Monitoring Platform. Installers can use
the Mapper application to scan SolarEdge Power Optimizer and SolarEdge inverter barcodes, creating a virtual map of the PV site in the
monitoring platform which can later help facilitate remote diagnostics thereby enabling enhanced customer support and reducing maintenance
costs for installers and SolarEdge system owners.

 SetApp
application. The SetApp application is used to activate and configure SolarEdge inverters
during commissioning directly through a smartphone, in order to simplify and expedite installations.

 Grid
Services. As PV and storage continue to proliferate around the world, energy production is transitioning from a centralized system
to a distributed network model, where energy is produced close to the location in which it is consumed and stored. This model creates
an opportunity for new interconnected and decentralized energy networks offering improved grid reliability and stability, new energy service
and reduction of grid infrastructure costs. SolarEdge grid services deliver near real-time aggregative control and data reporting, enabling
the pooling of distributed energy resources - photovoltaic systems, battery storage and electric vehicle chargers — in the cloud
for the creation of virtual power plants (VPP). The SolarEdge grid services and VPP solution provide management platforms to enable near
real-time, aggregated control of available energy resources to meet ever-changing supply needs and demand. Our distributed energy resources
management system or DERMS application and application program interfaces (APIs) are used by utilities for countering peak demand events
and participating in various electricity markets. In 2023, SolarEdge continued to sell grid services in the U.S., Europe and Australia,
including services provided to independent system operators, energy retailers, national installers and others.

 Products
from Non-Solar businesses. The SolarEdge Energy Storage segment provides energy storage solutions which include battery cells,
modules, racks and containerized battery systems (BESS). The proprietary technology of our cells and batteries is manufactured and assembled
in our own facilities in South Korea, which have production capacity of 2GWh.

 Our
lithium-ion technology packs high energy density into small footprints and supports high c-rate power throughputs, without compromising
the calendar and cycle life of the battery.

 SolarEdge's
ESS solutions are used in different fields, such as stationary energy storage (EV charging, utility, commercial or industrial), energy
storage in transportation (trains, trams and marine-based transportation), different engineering, procurement and construction projects
in the grid and C&I energy space, and more.

 Product
Roadmap

 Our
products in the solar segment reflect the innovation focus and capabilities of our technology departments as well as the importance we
place on creating value for our customers. Our core solar product roadmap is divided into five categories: Power Optimizers, inverters,
software which supports our DC optimized inverter systems, batteries for PV applications, and smart energy management.

 Power
Optimizers. We currently sell our third and fourth generations of Power Optimizers (P-Series and S-Series, respectively) which
were designed for fully automated assembly and are based on our third and fourth generation ASICs, respectively. We have launched H1300,
a Gen 4 based power optimizer, as a part of the SolarEdge 330kW inverter solution. This is our first optimizer equipped with high frequency
DC power line communications technology which allows communication with larger numbers of optimizers for ground mount applications as
well as improved remote software upgrade capabilities, allowing larger installations to support Ground Mount applications, as well as
improved remote upgrade. We are in the process of launching our fifth generation S1400 Series Power Optimizers. A key element of our reliability
strategy, and a significant differentiator relative to our competitors, is our use of proprietary ASICs to control, among other things,
our Power Optimizer's power conversion, safety features, and PV module monitoring. Instead of using large numbers of discrete components,
our Power Optimizer uses a single proprietary ASIC, thus reducing the total number of components in an electrical circuit and thereby
improving reliability.

 Each
new ASIC generation reduces the number of components required for any given functionality, adds more functions to the Power Optimizer,
and meaningfully improves the efficiency of the Power Optimizer. The efficiency improvement reduces the energy losses which in turn reduces
the amount of heat dissipation. This enables design of a more cost-effective and usually smaller enclosure and also keeps the electronics
cooler, thereby improving the Power Optimizer's reliability. Our research and development teams continuously work on further improving
our ASICs and releasing new generations of this improved technology.

 Inverters.
Our inverter roadmap includes both new products as well as additional capabilities for existing inverters. Our inverter roadmap is intended
to serve four purposes: (i) expand addressable markets by developing new and larger inverters designed specifically for larger commercial
installations and utility-scale projects; (ii) improve the electronics to increase the total power throughput while minimally changing
the existing enclosure, thereby reducing the actual cost per watt and increasing economies of scale; (iii) improve ease of installation
by integrating additional functionality required in certain installations in order to reduce costs of additional hardware and subcontractors'
labor costs; and (iv) improve the residential inverter's functionality to serve as a hub for home energy management, integrating, controlling
and optimizing the main home energy sources and loads.

 Software.
We continue to expand our software offering with the introduction of new tools and features. This includes both professional web-based
software and system owner applications such as fleet management, the site designer tool, the mySolarEdge consumer applications, all of
which are offered to our install base as complimentary to the sales of our hardware solutions.

 Our cloud-based Monitoring
Platform is continuously growing by the amount of data aggregated. We are continuously developing tools to accommodate our growth and
further enhance our service offering. We plan to continue developing algorithms that detect and pinpoint problems that can affect power
production in field systems. We further plan to add more capabilities through our public API to allow users to build and integrate our
system into their own systems and build and share useful applications based on monitoring data gathered by our software.

 Batteries
for PV applications. Our residential storage solution, launched in 2021, is designed
to integrate with our single-phase and three-phase inverters to provide optimal energy management, maximum efficiency, longer backup times
and ease of use for the homeowners. We expect to continue to expand our storage solutions to cover more applications, improve battery
management, efficiency and integration with energy management systems.

 Smart
Energy Management. We are developing new features and capabilities for the smart energy
management solutions, which are constantly evolving, such as our SolarEdge Home Local Controller, which will enable the homeowner to run
and manage their most energy-intensive devices on excess solar energy. We are also introducing smart energy management and fleet management
to the commercial segment. We also plan on expanding the availability of our smart energy products, including smart energy management
devices, to new geographies and use cases.

 New
Products or Product Categories. We continuously evaluate opportunities to expand our product offerings and services to our customers.
We may from time to time develop new products or services that are a natural extension of our existing business, or may engage in acquisitions
of businesses or product lines with the potential to strengthen our market position, enable us to enter attractive markets, expand our
technological capabilities, or provide synergistic opportunities.

 Sales
and Marketing Strategy

 Our
solar business strategy is to focus on penetrating new geographic regions and increasing our market share. More specifically, we focus
on markets where electricity prices, irradiance and government policies make solar PV installations economically viable. Our solar products
have been installed in over 140 countries.

 We target
our sales and marketing efforts to the largest distributors, electrical equipment wholesalers, EPC contractors and installers in each
of the countries where we operate. Our products are carried and actively sold by most of the top solar PV distributors as well as the
largest electrical distribution companies. As of December 31, 2023, based on the number of installer accounts on our monitoring portal,
over 65,000 installers around the world have installed SolarEdge solar PV systems.

as further detailed below, we have a number of programs focused on educating installers and other industry professionals about our technology,
and we use a combination of road shows, webinars, and partner trainings to educate them how best to design, sell, and implement our technology
in their projects.

 Our
Customers

 We derive
a significant portion of our revenues from key solar distributors, electrical equipment wholesalers and large installers in the U.S. and
worldwide. In 2023, two of our customers, Memodo GmbH and Krannich Solar GmbH & Co. KG, represented 24.0% of our revenues. None of
our other customers accounted for more than ten percent of our revenues in the year ended December 31, 2023.

 Training
and Customer Support

 We offer
our installer base a comprehensive package of customer support and training services which include pre-sales support, ongoing trainings,
and technical support before, during, and after installation. We also provide customized support programs to large installers and distributors
to help prioritize and track support issues, thereby enabling short cycle times for issue resolution.

 In 2023,
we revamped our first level certification, SolarEdge Fundamentals Training, a comprehensive training course for installers, with up-to-date
installation methodologies and practices. During 2023, our training portal (Edge Academy) hosted over 222,000 learners.

in 2023, we enhanced our installer's performance enablement by adding over 50 product-specific courses, as well as increasing accessibility
by creating a professional installation toolkit. During 2023, over 19,000 installers completed our certification programs.

 In addition
to the above, we support our commercial system customers with design consulting throughout their sales process and installation.

 Our
technical support organization includes local expert teams, tech centers, an online service portal and live chat service. Our toll-free
call and live chat centers are open Monday through Friday at least from 9:00 a.m. to 6:00 p.m. in every region in which we sell our products.
In addition, customers can open and track support cases 24/7 utilizing our online portal. All support cases are monitored via a customer
relationship management system in order to provide service, track closure of all customer issues and further improve our customer service.
Our call centers have access to our cloud-based monitoring platform database, which enables real-time remote diagnostics.

 Customer
service and satisfaction continues to be a key component of our business offering and we consider it integral to our continued success.
We maintain high levels of customer engagement through our call centers in California, Australia, Japan, Israel, India, Bulgaria, Brazil,
Taiwan, Thailand, South Africa, Philippines and Poland. In addition to our call centers, we have field service engineers located in the
geographies where we are active, and support our customers with commissioning of large projects, introduction of new technologies and
features and on-the-job training of new installers. As of December 31, 2023, our customer support and training organization consisted
of 659 employees worldwide.

 Our
Technology

drawn on our expertise in the fields of power electronics, magnetic design, mechanical and heat dissipation, control loops and algorithms,
power line communications and lithium-ion battery technology to design and develop what we believe to be the most advanced commercial
solutions for harvesting power from solar PV, storage and energy management solutions for residential and commercial applications. These
technologies are explained in more detail below.

 As part
of our growth strategy, we have acquired companies that have technologies that can leverage our expertise in power electronics and power
optimization. By combining acquired resources with our current research and development teams, we are expanding our activities into other
areas such as energy IoT and energy storage systems.

 Power
Optimizers

 Our
Power Optimizers are DC/DC step up/step down (buck boost) converters designed and developed to operate in harsh outdoor environments at
very high conversion efficiency. Our Power Optimizers include proprietary power electronics and control loops customized to efficiently
convert power from the PV module to the inverter.

 A key
factor in the performance of our Power Optimizer is determined by the digital control algorithms and closed-loop control mechanism. The
Power Optimizer's control is built into our advanced ASIC which is responsible for all critical digital control functions of the
power optimizer, including detailed power analysis, digital real-time control of the power conversion subsystem, power line communications
and networking. Since each Power Optimizer handles the power and voltage of either a single or two modules, we are able to reach a high
degree of semiconductor integration by leveraging low-cost silicon in standard semiconductor packages. As a result, much of the Power
Optimizer functionality can be integrated into a standard ASIC instead of requiring discrete electronic components, resulting in lower
costs and higher reliability.

 The
ASIC performs the critical power analysis and power conversion control functions of the Power Optimizer. The power analysis functions
process the state and working parameters at the Power Optimizer's input and output and, together with advanced digital control and
state machine logic, control the power conversion function. In addition, our digital control system uses technology that allows the solar
PV installation to anticipate and adapt to changing operating conditions, and to protect itself against system anomalies.

 Each
Power Optimizer in the array is connected to the inverter by a power line communications networking link. Our power line communications
link uses a proprietary networking technology that we developed, utilizing the existing DC wiring between the Power Optimizers and the
inverter to transmit and receive data between these devices using scalable technology supporting a wide range of installation sizes, from
small residential to large commercial installations.

 Inverters

 Most
of our inverters are designed for single-stage DC/AC conversion. Using our inverter in combination with the Power Optimizers allows the
inverter control loop to maintain a regulated DC voltage level at its input, thereby enabling the inclusion of long, uneven, and multi-faceted
strings of solar modules while also enabling custom, cost efficient, and reliable inverter design and component selection. All of the
power components, as well as the main magnetic components for our inverters, can then be optimized for DC/AC inversion at high efficiency.

 Our
inverters' digital control algorithms are implemented using programmable digital signal processors which allow for flexibility and
adaptation of control loops for various grids and for the requirements and standards of different grid operators across geographies. We
have already implemented the control mechanisms necessary to support advanced grid codes and standards that are required to support high
penetration of solar energy into utility grids. We continue to develop and manufacture our own DSP (ASIC) in our inverters which enables
us to improve the performance of our control loops, increase our cost savings and be less dependent on third party suppliers in our manufacturing
process. The DSP (ASIC) performs the critical power analysis and power conversion control functions of the inverter. The power analysis
functions process the state and working parameters at the power inverter's input and output, and together with advanced digital
control and state machine logic controls the power conversion function. In addition, our digital control system uses technology that allows
the inverter to anticipate and adapt to changing operating conditions, and to protect itself against system anomalies as well as comply
with applicable regulations in the different regions in which we operate.

 Our
DSP (ASIC) is also in charge of the power line communications ("PLC") networking link towards the optimizers. Our PLC uses a proprietary
networking technology that we developed, utilizing the existing DC wiring between the Power Optimizers and the inverter to transmit and
receive data between these devices.

developed and continue to develop in-house design and manufacturing capabilities for several major passive components, such as magnetic
components, in order to decrease dependence on suppliers, improve component performance, reduce costs and have better control over our
production processes.

 Batteries
for PV applications

 In 2021,
we released our first lithium-ion residential batteries for sale in the U.S. and Europe through our solar distribution channels. Our batteries
are composed of lithium cells, a battery management system, or BMS, bi-directional DC/DC high efficiency converter that allows charge
and discharge of the battery, as well as user interface. Our DC/DC converter uses digital control algorithms, which are implemented using
a programmable digital signal processor. Our power products, inverter, Power Optimizers and battery are connected to the same DC bus,
allowing the battery to be directly charged by the DC current generated by the Power Optimizers and bypassing the AC conversion, thereby
reducing the rounding efficiency of PV generated power towards the AC loads.

 Our
DC-coupled battery is designed to connect with our inverters, allowing up to three batteries per inverter. Our batteries can be connected
to our cloud based monitoring platform, reporting information on the battery status, solar production, and self-consumption data.

 Manufacturing

designed our manufacturing processes to produce high quality products at competitive costs. The strategy is threefold: outsource, automate,
and localize. We currently contract to have our solar products manufactured by two of the world's leading global electronics manufacturing
service providers, Jabil Circuit, Inc. ("Jabil") and Flex Ltd. ("Flex"). By using contract manufacturers, we are
able to access advanced manufacturing equipment, processes, skills and capacity on a relatively "asset light" budget while
remaining flexible in our manufacturing operations and are able to enjoy the CM's global reach and access to different manufacturing
regions. Our contract manufacturers are responsible for funding some of the the capital expenses incurred in connection with the manufacture
of our products, except with regard to some of the automated optimizer assembly lines, our proprietary end-of-line testing equipment and
other specific manufacturing equipment utilized in assembling our products or sub-components which are financed and owned by the Company.
We expect to continue this funding arrangement in the future, with respect to any expansions to such existing lines save for circumstances
where the direct purchase by us of non-specific manufacturing equipment will result in a substantial reduction in costs in which case
we will consider financing such non-specific manufacturing equipment ourselves. Further, contracting with global providers, such as Jabil
and Flex, gives us added flexibility to enjoy such manufacturers' global reach and access to different regions such as China and Vietnam,
where we are able to manufacture closer to target markets in Asia, as well as Hungary, closer to target markets in Europe, in each case,
potentially increasing responsiveness to customers while reducing costs and delivery times. In light of recent Inflation Reduction Act
legislation in the United States which incentivizes the local manufacturing of renewable energy products by providing benefits to installers
for the purchase and installation of US-manufactured products, as well as by incentivizing manufacturers of such products domestically,
we have begun manufacturing inverters in Texas and are currently establishing additional manufacturing capabilities in Florida for optimizers
and inverters. With the ramp-up of these new sites and due to a decrease in demand for our products, we have reduced capacity in our manufacturing
site in China and discontinued manufacturing of our products in Mexico.

third quarter of 2020, we began commercial shipments from our own manufacturing facility in the North of Israel, "Sella 1". The
proximity of Sella 1 to our R&D team and labs enables us to accelerate new product development cycles as well as define equipment
and manufacturing processes of newly developed products which can then be adopted by our contract manufacturers worldwide.

 During
2023, we expanded the manufacturing portfolio available for manufacturing in Sella 1.

 In May
2022, we opened our own manufacturing facility, "Sella 2", a 2GWh Li-Ion cell factory in Korea. "Sella 2" began
producing and shipping cells at the end of 2022 and is expected to gradually increase manufacturing capacity during 2024, slightly behind
the original plan. We also have an additional smaller lithium-ion cells and batteries facility in South Korea that has the capacity to
manufacture up to 150 MWh per annum.

developed propriety automated assembly lines for the manufacturing of our power optimizers. These assembly lines, currently operating
in all of our manufacturing facilities, enable the manufacturing of more than 6,000 optimizers per manufacturing line per day. We invest
resources in additional automated assembly lines as well as in automated machinery for subassembly and self-manufacturing of certain components
used in our products, and we own and are responsible for funding all of the capital expenses related thereto. The current and expected
capital expenses associated with these automated assembly lines and other machinery is funded out of our cash flows.

 We source
our raw materials through various component manufacturers and invest resources in continued cost-reduction efforts as well as verifying
second and third sources so as to limit dependence on sole suppliers.

 In light
of the Company's decision to discontinue its LCV e-Mobility activity, we began ramping down manufacturing of e-Mobility components
in our facility in Umbertide, Italy, towards the end of 2023. We are still using this facility for Automation Machines, refurbishment
of batteries and support of the e-Mobility project.

 Reliability
and Quality Control

 Our
Power Optimizers are connected to each PV module by installers, and are designed to be as reliable as the PV module itself and capable
of withstanding the same operating and environmental conditions.

 Our
reliability methodology includes a multi-level plan with design analysis, sub-system testing of critical components by Accelerated Life
Testing, and integrative testing of design prototypes by Highly Accelerated Life Testing and large sample groups. As part of our reliability
efforts, we subject components to industry standard conditions and tests including in accelerated life chambers that simulate burn-in,
thermal cycling, damp-heat, and other stresses. We also conduct out of box audits (OBA) on our finished products. In addition, online
reliability tests (ORT) are conducted on our optimizers and we test complete products in stress tests and in the field. Our rigorous testing
processes have helped us to develop highly reliable products.

 In order
to verify the quality of each of our products when it leaves the manufacturing plant, each component, sub-assembly, and final product
are tested multiple times during production. These tests include Automatic Optical Inspection, In-Circuit Testing, Board-Functional Testing,
Safety Testing, and Integrative Stress Testing. We employ a serial number-driven manufacturing process auditing and traceability system
that allows us to control production line activities, verify correct manufacturing processes and to achieve item-specific traceability.

 As a
part of our quality and reliability approach, failed products from the field are returned and subjected to root cause analysis, the results
of which are used to improve our product and manufacturing processes and design and further reduce our field failure rate.

 Certifications

 Our
products and systems comply with the applicable regulatory requirements of the jurisdictions in which they are sold as well as all other
major markets around the world. These include safety regulations, electromagnetic compatibility standards and grid compliance.

and Development

 We devote
substantial resources to research and development with the objective of developing new products and systems, adding new features and reducing
unit costs of our products and systems. Our development strategy is to identify software and hardware features, products, and systems
that reduce the cost and improve the effectiveness of our solutions for our customers. We measure the effectiveness of our research and
development by metrics including product unit cost, efficiency, reliability, power output, and ease of use.

a strong research and development team with wide ranging experience in power electronics, semiconductors, power line communications and
networking, chemical, mechanical and software engineering. In addition, many members of our research and development team have expertise
in solar technologies. As of December 31, 2023 our research and development organization had a headcount of 1,525 employees.

 Intellectual
Property

 The
success of our business depends, in part, on our ability to maintain and protect our proprietary technologies, information, processes,
and know-how. We rely primarily on patent, trademark, copyright and trade secrets laws in the U.S. and similar laws in other countries,
confidentiality agreements and procedures and other contractual arrangements to protect our technology. As of December 31, 2023, SolarEdge
had 602 issued patents worldwide and 528 patent applications pending for examination. A majority of our patents relate to DC power optimization
and DC to AC conversion for alternative energy power systems, power system monitoring and control, battery technology and management systems.
Our issued patents are scheduled to expire between 2024 and 2042.

 We continually
assess opportunities to seek patent protection for those aspects of our technology, designs, and methodologies and processes that we believe
provide significant competitive advantages.

 We rely
on trade secret protection and confidentiality agreements to safeguard our interests with respect to proprietary know-how that is not
patentable and processes for which patents are difficult to enforce. We believe that many elements of our manufacturing processes involve
proprietary know-how, technology, or data that are not covered by patents or patent applications, including technical processes, test
equipment designs, algorithms, and procedures.

 All
of our research and development personnel are required to enter into confidentiality and proprietary information agreements with us. These
agreements address intellectual property protection issues and require our employees to assign to us all of the inventions, designs, and
technologies they develop during the course of employment with us.

 Our
customers and business partners are required to enter into confidentiality agreements before we disclose any sensitive aspects of our
technology or business plans.

 Competition

 The
markets for our solar products are competitive, and we compete with manufacturers of traditional inverters, as well as manufacturers of
other MLPE systems. The principal areas in which we compete with other companies include:

 •

 product and system performance and features;

 •

 total cost of ownership (TCO);

 •

 reliability and duration of product warranty;

 •

 customer service and support;

 •

 breadth of product line;

 •

 local sales and distribution capabilities;

 •

 compliance with applicable certifications and
 grid codes;

 •

 size and financial stability of operations; and

 •

 size of installed base.

 Recent
market trends show an increased focus on safety features in rooftop installations, and the emergence of standards that are evolving to
address such concerns. In particular, the arc fault detection and interruption (AFDI) and rapid shutdown (RSD) standards in the US market,
have led to the introduction of module-level rapid-shutdown devices from our competitors. We believe the existence of rapid shutdown capabilities
built into our Power Optimizers positions us well in this regard, and serves as a competitive advantage. Additionally, we have seen PV
module manufacturers introduce larger PV modules with higher power levels reaching over 600W. This market trend, which comes as a result
of PV cell manufacturers introducing larger cell sizes such as M10 and M12 as well as different module build configurations, leads to
market interest in higher power rating Power Optimizers, micro inverters, and other MLPE devices. The increasing demand for storage and
battery solutions is an additional noteworthy market trend which is expected to increase the attachment rate of storage to PV installations
in the coming years.

 Our
DC optimized inverter system competes principally with products from traditional inverter manufacturers, such as SMA Solar Technology
AG, Sungrow Power Supply Co., Ltd. and Huawei Technologies Co. Ltd. as well as from other Chinese inverter manufacturers. In the North
American residential market, we compete with traditional inverter manufacturers such as Tesla Motors Inc., as well as microinverter manufacturers
such as Enphase Energy, Inc. In addition, there are several new entrants to the MLPE market, including low-cost Asian manufacturers. We
believe that our DC optimized inverter system offers significant technology and cost advantages that reflect a competitive differentiation
over traditional inverter systems and microinverter technologies.

 The
markets for our Energy Storage division products are competitive as well. The competition ranges from other cell manufacturers, both of
Nickel Manganese Cobalt (NMC) and of Lithium Iron Phosphate (LFP), which are also vertically integrated and provide a partial or complete
storage system as well as from integrators that are acquiring cells from different vendors and assemble their own storage system. Our
competitors include global manufacturers such as LG Energy Solutions, Samsung SDI, CATL, BYD etc.

 Our
residential lithium-ion batteries for PV applications compete with global manufacturers of both lithium-ion and other residential battery
storage solutions such as Tesla, LG Energy solutions, BYD and Enphase Energy.

 Government
Incentives

 U.S.
federal, state, and local government bodies as well as non-U.S. government bodies, provide incentives to owners, end users, distributors,
and manufacturers of solar PV systems to promote solar electricity in the form of rebates, tax credits, lower VAT rate and other financial
incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation, and
exclusion of solar PV systems from property tax assessments. The market for on grid applications, where solar power is used to supplement
a customer's electricity purchased from the utility network or sold to a utility under tariff, often depends in large part on the
availability and size of these government subsidies and economic incentives, which vary from time to time by geographic market.

 In August
2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the "IRA"), which contains several provisions intended
to accelerate U.S. manufacturing and adoption of clean energy such as solar, wind, hydrogen and electric vehicles and therefore is expected
to impact our business and operations. Some of the applicable provisions in IRA that are expected to positively impact the market for
renewable energy include the extension of the investment tax credit ("ITC") and the Production Tax Credit ("PTC") through
2034. The IRA also further incentivizes residential and commercial solar customers and developers through the inclusion of a tax credit
for qualifying energy projects of up to 30%. These provisions of the law are new and regulations and guidance concerning their implementation
are gradually being published by the U.S. Treasury Department. We continue to monitor the benefits that may be available to us. Section
45X of the IRA offers advanced manufacturing production tax credits, that incentivize the production of eligible components within the
United States. To that end, we have established manufacturing capabilities in the United States in 2023 and announced additional capacity
expected during 2024.

 To the
extent that tax benefits or credits may be available to competing technology and not to our technology, our business could be adversely
disadvantaged.

 Trade
Regulation and Import Tariffs

 Our
business activities are subject to numerous laws and regulations in the jurisdictions in which we operate. Particularly, our exports and
imports are subject to complex trade and customs laws, tax requirements and tariffs set by governments through mutual agreements or unilateral
actions. Countries duties, tariffs or other restrictions on our imports or adversely modify existing restrictions. Changes in tax policies
or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products,
could have an adverse effect on our business and results of operations.

 Escalating
trade tensions between the United States and China have led to increased tariffs and trade restrictions, including tariffs applicable
to some of our products. As of June 2019, the U.S. trade representative ("USTR") imposed import tariffs of 25% on a long list
of products imported from China, including inverters and power optimizers. On January 15, 2020, the United States and China entered into
an initial trade deal, which preserves the initial tariffs from 2018 and indicates additional sanctions may be imposed if China breaches
the terms of the deal.

 In order
to mitigate the negative effect of increased tariffs, we increased our manufacturing capabilities at our Vietnam manufacturing facility.
We reached full manufacturing capacity in our manufacturing facility in Israel, Sella 1. In addition, as mentioned above, we established
manufacturing capabilities in the United States. For the year ended December 31, 2023, the majority of our products being imported to
the U.S. were manufactured in Mexico, Vietnam, Israel and Hungary and were therefore not subject to the aforementioned tariffs.

 Seasonality

 The
solar energy market is subject to seasonal and quarterly fluctuations affected by weather. For example, during the winter months in Europe
and the northeastern U.S. where the climate is particularly cold and snowy, it is typical to see a decline in PV installations and this
decline can impact the timing of orders for our products.

 Sustainable,
Responsible and Transparent Business Practices

 During
2023, we continued making progress in our Environmental, Social and Governance ("ESG") performance and disclosure. Our ESG practices are
guided by our social purpose: "To power the future of energy so we can all enjoy better living and a cleaner, greener future"
and our social mission: "Shaping the future of sustainable energy production, energy storage and e-mobility through innovation".
We have crafted a comprehensive sustainability strategy with 2025 targets in several areas. Our fifth annual Sustainability Report, published
in 2023, was prepared in alignment with leading global sustainability disclosure standards, GRI (Global Reporting Initiative) and SASB
(Sustainability Accounting Standards Board). Our sustainability strategy includes the following pillars:

 •

 Powering Clean
 Energy: Accelerating the uptake of clean energy, delivering new smart energy, innovative solutions and improving the lifecycle
 impacts of our products. As a business founded upon the acceleration of clean energy, we strive to reduce our climate impact by minimizing
 GHG (greenhouse gas) emissions and transitioning to renewable electricity usage in our facilities. We have completed a lifecycle analysis
 for three of our key products, examining the carbon footprint of all product life stages and following the examination of the results
 of such analysis were able to highlight possible reduction opportunities. We have taken significant efforts to reduce energy and resource
 consumption in our sites, reducing related GHG emissions. We continue to act to recycle our e-waste. We also act to minimize landfill
 for all waste types, and in 2022, a total of 88% of all waste at our owned and operated sites was either recycled or recovered to energy
 (2023 figures are currently in examination and will be published in our upcoming sustainability report).

 •

 Powering People:
 Maintaining leading responsible employment practices, upholding human rights and investing in communities. In 2023, we continued to expand
 our workforce to support SolarEdge's business growth, and maintained responsible employment practices, including an enhanced focus
 on safety and on employee growth and development. We set quantitative targets and formulated multi-year programs to enhance gender equality
 in accordance with equal opportunities laws within our workforce and to strengthen its inclusiveness, including by reaching over 150 women
 in management roles. (see further details in "Human Capital" below). Also in 2023, we continued to enhance our community engagement program.
 Our updated program focuses on the advancement of renewable energy for environmental community value, encouraging STEM education and youth
 innovation and strengthening diverse populations. A prominent example is our long-term educational program, EDGEUcate, aimed to raise
 awareness and educate children from a young age on sustainable practices and the role of solar energy on the global efforts of decarbonization.

 •

 Powering
 Business: Maintaining and reinforcing ethical conduct throughout our value chain, advancing climate resilience, improving the efficiency
 of our resource consumption and ethical sourcing of raw materials and components. Our supplier code of conduct ("SCoC"), includes provisions
 regarding, among others, ethics, safety, environmental protection, human rights, and fair employment. As of December 31, 2023, over 280
 key suppliers have signed their acknowledgment of the SCoC terms. To date, we also conducted on-site audits of four contract manufacturers
 and three major raw material suppliers in connection with their compliance with the SCoC requirements, and are aiming to further expand
 these efforts in 2024. In addition, our conflict-minerals practices involve engaging our suppliers to evaluate the traceability of their
 upstream sources.

 We believe
that our sustainability strategy aligns directly with 10 United Nations Sustainable Development Goals (SDGs), and our products and activities
are most critical to achievement of SDG #7, Affordable Clean Energy.

 Human
Capital

 We believe
our success depends on our ability to attract and retain outstanding employees at all levels of our business. As of December 31, 2023,
we had 5,633 employees (full time and part time). Of these employees, 1,525 were engaged in research and development, 689 in sales and
marketing, 2,857 in operations, production, Q&R, and support, and 562 in general and administrative capacities. Of our employees,
3,160 were based in Israel, 746 were based in Europe, 725 were based in Korea, 326 were based in the U.S and 676 were based in the remaining
countries in which we operate including China, Vietnam, India, Mexico, Australia and others.

 Except
for our SolarEdge Automation Machines employees and the employees of SolarEdge e-Mobility, none of our employees are represented by a
labor union. We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good.

 Recruitment:
As a rapidly growing business, we rely on the success of our recruitment efforts to attract and retain technically skilled people who
can support our ongoing innovation and expansion. We aim to be inclusive in our hiring practices, focusing on the best talent for the
role, welcoming all genders, nationalities, ethnicities, abilities and other dimensions of diversity.

benefits: We aim to provide our employees with competitive salary and benefits that enable them to achieve a good quality of life
and plan for the future. Our benefits differ according to local norms and market preferences, but typically include all salary and social
benefits required by local law (including retirement saving programs, paid vacation and sick leave) and many additional benefits that
go beyond legal requirements in local markets.

 Leadership,
Training and Development: We aim to provide our employees with advanced professional and development skills, so that they can perform
effectively in their roles and build their capabilities and career prospects for the future. We maintain a leadership program for managers
and team leaders and deliver advanced professional training for sales, research and development and other functional teams as part of
our extensive training program each year. Furthermore, we partner with local educational resources to offer formal learning programs on
a variety of subjects for the personal development and advancement of our workforce.

 Diversity,
Equity and Inclusion: We are striving to increase opportunities for women in executive and management positions as part of our
mission to promote gender parity and equal pay in accordance with equal opportunity laws.

 We are
taking active steps to increase the diversity of our workforce and promote inclusiveness among our employee base. We have been providing
training and promoting education to create awareness and encourage inclusive practices across our global workplaces. For example, we have
conducted foundational diversity and inclusion training for both managers and employees, training on the inclusion of people with disabilities
in the workplace, as well as hosting workshops, lectures, and webinars on various topics such as valuing diversity and fostering respectful
and positive interactions. Additionally, as part of our commitment to enhance gender equality within our workforce, we maintained partnerships
with NGOs to enhance our pool of female candidates for tech roles and to encourage more women to take up tech-related careers. We conducted
an annual analysis of our gender pay gap to identify and work on closing any gaps, and we launched a global internal Women's Day campaign
called "Towards Gender Equality." The campaign included lectures by women in executive roles from SolarEdge and other global businesses
to empower and inspire women. We also helped foster mentoring relationships among our female employees and managers across various professional
fields and geographical regions within SolarEdge. Over 50 women from sites around the globe have successfully completed these programs
in 2023.

 Workplace
safety and health: We believe that all accidents and injuries at work are preventable and we strive to achieve a zero-injury culture
across our offices and operations. Our safety practices are designed to comply with applicable occupational health and safety regulations
and are certified to Occupational Health and Safety Quality Management Standard ISO 45001:2018. Our safety practices include: nominated
safety officers at each of our manufacturing or R&D sites, mandatory annual safety training for all employees, mandatory job-specific
training for all employees in relevant roles (e.g., for those working in high-voltage labs), comprehensive safety, fire, and emergency
drill programs so that our employees are well-versed with emergency procedures and root-cause assessments of incidents and corrective
actions.

 Corporate
Information

 We were
incorporated in Delaware in 2006. Our principal executive offices are located at 1 HaMada Street, Herziliya Pituach 4673335, Israel and
our telephone number at this address is 972 (9) 957-6620. Our website is www.solaredge.com.

 We file
annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (the "SEC"),
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"). Our reports, proxy statements and other documents filed
electronically with the SEC are available at the website maintained by the SEC at www.sec.gov.

 We use
the Investor Relations portion of our website at www.solaredge.com, as a routine channel of distribution
of important information such as press releases, analyst presentations, corporate governance practices and corporate responsibility information,
financial information including our annual, quarterly, and current reports, our proxy statements, and, if applicable, amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically
file such reports with, or furnish them to, the SEC. All such postings and filings are available on our Investor Relations website free
of charge.

 Information
contained on our website is not incorporated by reference into this Annual Report, and you should not

 consider information
contained on our website as part of this Annual Report.

 ITEM
1A. Risk Factors

 When
evaluating our business, you should carefully consider the risks, events and uncertainties described below together with the other information
set forth in this Annual Report on Form 10-K. The events and consequences discussed in these risk factors could materially affect our
business, financial condition, results of operations and future growth prospects. The risks described below are not the only risks facing
our company. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely
affect our business, financial condition and operating results in the future.

 Risk
Factors Summary

 The
following summarizes the principal factors that make an investment in our company speculative or risky. This summary should be read in
conjunction with the full risk factors discussed below and should not be relied upon as an exhaustive summary of the material risks facing
our business. The order of presentation is not necessarily indicative of the level of risk that each factor poses to us.

 We
face risks related to our business and our industry, including those related to:

 •

 Our
 ability to be profitable in the future.

 •

 The
 rapidly evolving and competitive nature of the solar industry, which makes it difficult to evaluate our future prospects.

 •

 Fluctuations
 in demand for solar energy solutions, including if demand for solar energy solutions does not resume growth or grows at a slower rate
 than anticipated, and our ability to accurately forecast customer demand.

 •

 Macroeconomic
 conditions in our domestic and international markets, as well as inflation concerns, instability of financial institutions, rising interest
 rates, and recessionary concerns.

 •

 The
 impact of declines in the retail price of electricity derived from the utility grid or from alternative energy sources.

 •

 The
 impact of increases in interest rates or tightening of the supply of capital on the ability of end-users to finance the cost of a solar
 PV system.

 •

 The
 impact of increased competition as new and existing competitors introduce power optimizers, inverters, solar PV system monitoring, batteries
 and other smart energy products.

 •

 Developments
 in alternative technologies or improvements in distributed solar energy generation.

 •

 The
 cyclicality of the solar industry.

 •

 Defects
 or performance problems in our products.

 •

 Our
 dependence on a small number of outside contract manufacturers, including difficulties ramping production with new contract manufacturers.

 •

 Any
 delays, disruptions, or quality control problems in our manufacturing operations.

 •

 Our
 dependence on a limited number of suppliers for key components and raw materials in our products to adequately meet anticipated demand.

 •

 Disruptions
 to our global supply chain and rising prices of oil and raw materials due to the conflict between Russia and Ukraine.

 •

 Our
 reliance on distributors and large installers to assist in selling our products, and the failure of these customers to perform as expected.

 •

 Mergers
 in the solar industry among our current or potential customers.

 •

 Our
 planned expansion into new geographic markets or new product lines or services.

 •

 Our
 ability to build our non-solar businesses and manage future growth effectively.

 •

 Discontinuance
 of our e-Mobility business, resulting in the write-off of tangible and intangible assets.

 •

 Our
 ability to recognize expected benefits from cost reduction and restructuring.

 •

 Any
 unauthorized access to, disclosure, or theft of personal information we gather, store, or use.

 •

 Attempts
 by third parties, our employees, or our vendors to gain unauthorized access to our network or seek to compromise our products and services.

 •

 Our
 entry into business engagements with military bodies as our customers in the lithium-ion battery and energy storage business.

 •

 Our
 entry into adjacent markets through recent acquisitions and risks associated with acquisitions, including our ability to be effective
 in integrating such acquisitions.

 •

 Disruption
 to our business operations as a result of war and hostilities in Israel and other conditions in Israel that affect our operations.

 •

 The
 tax benefits that are available to us under Israeli law that require us to meet various conditions and may be terminated or reduced in
 the future, which could increase our costs and taxes.

 •

 Difficulties
 in enforcing a judgment of a U.S. court against our officers and directors, to assert U.S. securities laws claims in Israel, or to serve
 process on our officers and directors.

 •

 Our
 dependence on ocean transportation to deliver our products in a timely and cost-efficient manner.

 •

 Fluctuations
 in currency exchange rates.

 •

 Corporate
 social responsibility and sustainability, including the impact of evolving legal and regulatory requirements.

 •

 Complications
 with the design or implementation of our new ERP system.

 •

 Natural
 disasters, public health events, significant disruptions of information technology systems, data security breaches, or other catastrophic
 events.

 We face
risks related to legal, compliance and regulatory matters, including those related to:

 •

 Any
 reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications.

 •

 Any
 change in or elimination of regulatory treatment, or guidance related to, or an inability to ramp up production to benefit from incentives
 under the IRA.

 •

 to net metering policies.

 •

 Existing
 electric utility industry regulations and changes to regulations, which may present technical regulatory, and economic barriers to the
 purchase and use of solar PV systems.

 We face
risks related to intellectual property, including those related to:

 •

 Our
 ability to protect our intellectual property and other proprietary rights.

 •

 Any
 claims by third parties that we are infringing upon their intellectual property rights.

 •

 Any
 claims for remuneration or royalties for assigned service invention rights by our employees.

 •

 The
 impairment of our goodwill or other intangible assets.

 We face
risks related to our Notes and the ownership of our common stock, including those related to:

 •

 Volatility
 of our stock price.

 •

 Provisions
 in our certificate of incorporation and by-laws that may have the effect of delaying or preventing a change of control or changes in our
 management.

 •

 The
 forum selection clause contained in our certificate of incorporation.

 •

 Our
 ability to raise the funds necessary to settle conversion of our Convertible Senior Notes or Notes in cash or to repurchase the Notes
 upon a fundamental change.

 •

 Our
 ability to raise additional capital to execute on our current or future business opportunities.

 •

 Our
 lack of plans to pay any cash dividends on our common stock in the foreseeable future.

 •

 Our
 share repurchase program.

 Risk
Factors

 Risks
related to Our Business and Our Industry

 We
cannot be certain that we will be profitable in the future.

 We achieved
a net profit of $34.3 million and $93.8 million for the years ended December 31, 2023 and 2022 respectively. Maintaining profitability
in the currently volatile market may not be sustainable over time. Our revenue and profitability for the year ended December 31, 2020
did not grow as we previously anticipated mainly due to the adverse effects of Covid-19 on demands for our products, and on the global
economy in general. In 2021, we experienced an increase in revenues and profitability when compared to the same period in 2020 and in
2022 our revenues grew when compared to the same period in 2021 while our net profit decreased due to reasons detailed in the Management's
Discussion and Analysis Section of our Annual Report on Form 10-K for the year ended December 31, 2022. Conversely, in the third quarter
of 2023, we experienced a slowdown in the demand for our products and during the second part of the third quarter of 2023, we experienced
substantial unexpected cancellations and push outs of existing backlog from our European distributors. As a result, revenues in 2023 were
significantly lower than the Company expected.

future, our revenues from both solar and non-solar business may not grow at the pace we anticipate, or may decline for a number of reasons,
many of which are outside our control, including a decline in demand for our products, increased competition, a decrease in the growth
of the solar industry, and business and industry trends including component shortages and supply chain disruptions due to ocean freight
capacity, shipping times and port congestions as well as other macroeconomic conditions in our domestic and international markets, inflation
concerns, rising interest rates and recessionary concerns, or our failure to continue to capitalize on growth opportunities. If we fail
to maintain sufficient revenue to support our operations, we may not be able to sustain profitability.

we expect to incur additional costs and expenses related to the continued development and expansion of our business, including in connection
with recent or future acquisitions as well as ongoing marketing and developing our products, development of our own manufacturing facilities,
expanding into new product markets and geographies, maintaining and enhancing our research and development operations and hiring additional
personnel. We do not know whether our revenues will grow rapidly enough to absorb these costs, or the extent of these expenses or their
impact on our results of operations.

 The
rapidly evolving and competitive nature of the solar industry makes it difficult to evaluate our future prospects.

 The
rapidly evolving and competitive nature of the solar industry makes it difficult to evaluate our current business and future prospects.
In addition, we have limited insight into emerging trends that may adversely affect our business, financial condition, results of operations
and prospects.

 The
viability and demand for our products and services may be affected by many factors beyond our control, including:

 •

 cost competitiveness, reliability and performance
 of solar PV systems compared to conventional and non-solar renewable energy sources and products;

 •

 competing new technologies at more competitive
 prices than those we offer for our products and services;

 •

 availability and amount of government subsidies
 and incentives to support the development and deployment of solar energy solutions;

 •

 the extent of deregulation in the electric power
 industry and broader energy industries to permit broader adoption of solar electricity generation;

 •

 prices of traditional carbon-based energy sources;

 •

 levels of investment by end-users of solar energy
 products, which tend to decrease when economic growth slows; and

 •

 the emergence, continuance or success of, or increased
 government support for, other alternative energy generation technologies and products.

 Demand
for solar energy solutions fluctuates, and if demand for solar energy solutions does not resume growth or grows at a slower rate than
anticipated, or if we are unable to accurately forecast customer demand,
 our business and results of operations will suffer.

 Our
revenues are primarily derived from products utilized in solar PV installations. Thus, our future success depends on continued demand
for solar energy solutions and the ability of vendors to meet this demand. The solar industry is an evolving industry that has experienced
substantial changes in recent years, and we cannot be certain that consumers, businesses, or utilities will adopt solar PV systems as
an alternative energy source at levels sufficient to grow our business. If demand for solar energy solutions fails to continue to develop
sufficiently, demand for our products and services will decrease, resulting in an adverse impact on our ability to increase our revenue
and grow our business.

there is fluctuating demand for solar energy solutions and we manufacture our products according to our estimate of future customer demand.
We have experienced, and may in the future continue to experience, excess or shortages of product inventory as a result. This process
requires us to make multiple forecasts and assumptions relating to the demand of our distributors, their end customers and general market
conditions. Because we sell most of our products to distributors, who in turn sell to their end customers, we have limited visibility
as to end-customer demand. We depend significantly on our distributors to provide us visibility into their end-customer demand, and we
use these forecasts to make our own forecasts and planning decisions. If the information from our distributors turns out to be incorrect
or incomplete, then our own forecasts may also be inaccurate. Furthermore, we do not have long-term purchase commitments with most of
our distributors or end customers, and our sales are generally made by purchase orders that may be canceled, changed or deferred without
notice to us or penalty. As a result, it is difficult to forecast future customer demand to plan our operations.

 The
cancellation or deferral of product orders, or overproduction due to a change in anticipated order volumes could result in us holding
excess or obsolete inventory, which could result in inventory write-downs and, in turn, could have a material adverse effect on our financial
condition. For example, in the second part of 2023, the solar industry began to experience a downturn, particularly in Europe, and we
experienced substantial unexpected cancellations and push outs of existing backlog from our European distributors. This was a result of
operational challenges in the later part of 2022, followed by record level shipments in the first half of 2023 and slowing market demand
in the third quarter of 2023 as distributors began to experience financial challenges. We may have to make significant provisions for
inventory write-downs based on events that are currently not known, and such provisions or any adjustments to such provisions could be
material. We may also become involved in disputes with our suppliers who may claim that we failed to fulfill forecast or minimum purchase
requirements.

 Conversely,
if we underestimate demand, we may not have sufficient inventory to meet end-customer demand, and we may incur excess costs related to
expedited deliveries, lose market share, damage relationships with our distributors and end customers, harm our reputation and forego
potential revenue opportunities. Obtaining additional supply in the face of product shortages may be costly or impossible, particularly
in light of supply chain disruptions and our outsourced manufacturing processes, which could prevent us from fulfilling orders in a timely
and cost-efficient manner or at all. In addition, if we overestimate our production requirements, our contract manufacturers may purchase
excess components and build excess inventory. If our contract manufacturers, at our request, purchase excess components that are unique
to our products and are unable to recoup the costs of such excess through resale or return or build excess products, we could be required
to pay for these excess parts or products and recognize related inventory write-downs.

we plan our operating expenses, including research and development expenses, hiring needs and inventory investments, in part on our estimates
of customer demand and future revenue. If customer demand or revenue for a particular period is lower than we expect, we may not be able
to proportionately reduce our fixed operating expenses for that period, which would harm our operating results for that period.

 Macroeconomic
conditions in our domestic and international markets, as well as inflation concerns, instability of financial institutions, rising interest
rates, and recessionary concerns may adversely affect our industry, business and financial results.

 Our
business depends on the overall demand for our solar energy products and on the economic health and willingness of our customers and potential
customers to make capital commitments to purchase our products and services. As a result of macroeconomic or market uncertainty, including
inflation concerns, rising interest rates, recessionary concerns, and geopolitical conflicts, customers may decide to delay purchasing
our products and services or not purchase at all. In addition, a number of the risks associated with our business, which are disclosed
in these risk factors, may increase in likelihood, magnitude or duration, and we may face new risks that we have not yet identified.

past, unfavorable macroeconomic and market conditions have resulted in sustained periods of decreased demand. Macroeconomic and market
conditions could be adversely affected by a variety of political, economic or other factors in the U.S. and international markets, which
could, in turn, adversely affect spending levels of installers and end users and could create volatility or deteriorating conditions in
the markets in which we operate. Macroeconomic uncertainty or weakness could result in:

 •

 reduced demand for our products as a result of
 constraints on capital spending for residential solar energy systems by our customers;

 •

 increased price competition for our products that
 may adversely affect revenue, gross margin and profitability;

 •

 decreased ability to forecast operating results
 and make decisions about budgeting, planning and future investments;

 •

 business and financial difficulties faced by our
 suppliers or other partners, including impacts to material costs, sales, liquidity levels, ability to continue investing in their businesses,
 ability to import or export goods, ability to meet development commitments and manufacturing capability; and

 •

 increased overhead
 and production costs as a percentage of revenue.

 Reductions
in customer spending in response to unfavorable or uncertain macroeconomic and market conditions, globally or in a particular region where
we operate, would adversely affect our business, results of operations and financial condition.

 A
drop in the retail price of electricity derived from the utility grid or from alternative energy sources may harm our business, financial
condition, results of operations, and prospects.

 Decreases
in the retail prices of electricity from the utility grid, or other renewable energy resources, would make the purchase of solar PV systems
less economically attractive and would likely lower sales of our products. The price of electricity derived from the utility grid could
decrease as a result of:

 •

 construction of a significant number of new power
 generation plants, including plants utilizing natural gas, nuclear, coal, renewable energy, or other generation technologies;

 •

 relief of transmission constraints that enable
 local centers to generate energy less expensively;

 •

 reductions in the price of natural gas, or alternative
 energy resources other than solar;

 •

 utility rate adjustment and customer class cost
 reallocation;

 •

 energy conservation technologies and public initiatives
 to reduce electricity consumption;

 •

 development of smart-grid technologies that lower
 the peak energy requirements of a utility generation facility;

 •

 development of new or lower-cost energy storage
 technologies that have the ability to reduce a customer's average cost of electricity by shifting load to off-peak times; and

 •

 development of new energy generation technologies
 that provide less expensive energy.

 Moreover,
technological developments in the solar components industry could allow our competitors and their customers to offer electricity at costs
lower than those that can be offered by us to our customers, which could result in reduced demand for our products. If the cost of electricity
generated by solar PV installations incorporating our systems is high relative to the cost of electricity from other sources, our business,
financial condition, and results of operations may be harmed.

 An
increase in interest rates or tightening of the supply of capital in the global financial markets could make it difficult for end-users
to finance the cost of a solar PV system and could reduce the demand for smart energy products and thus the demand for our products.

 Many
end-users depend on financing to fund the initial capital expenditure required to develop, build, or purchase a solar PV system. An increase
in interest rates or a reduction in the supply of project debt financing or tax equity investments, could reduce the number of solar projects
that receive financing or otherwise make it difficult for our customers or the end-users to secure the financing necessary to develop,
build, purchase, or install a solar PV system on favorable terms, or at all, and thus lower demand for our products which could limit
our growth or reduce our net sales. In addition, we believe that a significant percentage of end-users install solar PV systems as an
investment, funding the initial capital expenditure through financing. An increase in interest rates could lower such end-user's
return on investment on a solar PV system, increase equity return requirements or make alternative investments more attractive relative
to solar PV systems, and, in each case, could cause such end-users to seek alternative investments. During 2022 and 2023, record levels
of inflation have resulted in significant volatility and disruptions in the global economy. In response to rising inflation, central banks
in the markets in which we operate, including the U.S. Federal Reserve and the European Central Bank, have tightened their monetary policies
and raised interest rates. Such measures have adversely impacted the demand for our products which may continue if there is a period of
sustained heightened inflation.

 The
market for our products is highly competitive and we expect to face increased competition as new and existing competitors introduce power
optimizers, inverters, solar PV system monitoring, batteries and other smart energy products, which could negatively affect our results
of operations and market share.

 The
market for solar PV solutions is highly competitive. We principally compete with traditional inverter manufacturers as well as microinverter
manufacturers. Currently, our DC optimized inverter system competes with products from traditional inverter manufacturers, microinverter
manufacturers, as well as emerging technology companies offering alternative MLPE products. Over the past few years, several new entrants
to the inverter and MLPE market, including low-cost Asian manufacturers, have announced plans to ship or have already shipped products
in markets in which we sell our products, including, with respect to sales in the U.S., Australia and in Europe. We expect competition
to intensify as new and existing competitors enter the market. In addition, there are several new entrants that are proposing storage
batteries as well as solutions to the rapid shutdown functionality which has become a regulatory requirement for PV rooftop solar systems
in the U.S. If these new technologies are successful in offering a price competitive and technological attractive solution to the residential
solar PV market, this could make it more difficult for us to maintain market share.

 Several
of our existing and potential competitors have the financial resources to offer competitive products at aggressive or below-market pricing
levels, which could cause us to lose sales or market share or require us to lower prices for our products in order to compete effectively.
If we have to reduce our prices by more than we anticipated, or if we are unable to offset any future reductions in our average selling
prices by increasing our sales volume, reducing our costs and expenses or introducing new products, our revenues and gross profit would
suffer.

competitors may be able to develop new products more quickly than us, may partner with other competitors to provide combined technologies
and competing solutions and may be able to develop products that are more reliable or that provide more functionality than ours.

 Developments
in alternative technologies or improvements in distributed solar energy generation may have a material adverse effect on demand for our
offerings.

 Significant
developments in alternative technologies, such as advances in other forms of distributed solar PV power generation, storage solutions,
such as batteries, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms
of centralized power production, may have a material adverse effect on our business and prospects. Any failure by us to adopt new or enhanced
technologies or processes, or to react to changes in existing technologies, could result in product obsolescence, the loss of competitiveness
of our products, decreased revenue and a loss of market share to competitors.

 The
solar industry has historically been cyclical and experienced periodic downturns.

 Our
future success partly depends on continued demand for solar PV systems in the end-markets we serve, including the residential and commercial
sectors in the U.S. and Europe. The solar industry has historically been cyclical and has experienced periodic downturns which have affected
and may in the future affect demand for our products. The solar industry has undergone challenging business conditions in past years,
including downward pricing pressure for PV modules, mainly as a result of overproduction, and reductions in applicable governmental subsidies,
contributing to demand decreases. For example, in the second part of 2023, the solar industry began to experience a downturn, particularly
in Europe, which led to a large amount of requests to cancel or push out orders and the buildup of significant backlog for our products.
Therefore, there is no assurance that the solar industry will not suffer significant downturns in the future, which will adversely affect
demand for our solar products and our results of operations.

 Defects
or performance problems in our products could result in loss of customers, reputational damage, and decreased revenue, and we may face
warranty, indemnity, and product liability claims arising from defective products.

 Although
our products meet our stringent quality requirements, they may contain undetected errors or defects, especially when first introduced
or when new generations are released. Errors, defects, or poor performance can arise due to design flaws, defects in raw materials or
components or manufacturing difficulties, which can affect both the quality and the yield of the product. Any actual or perceived errors,
defects, or poor performance in our products could result in the replacement or recall of our products or components thereof, shipment
delays, rejection of our products, damage to our reputation, lost revenue, diversion of our personnel from our product development efforts,
and increases in customer service and support costs, all of which could have a material adverse effect on our business, financial condition,
and results of operations.

 Furthermore,
defective components may give rise to warranty, indemnity, or product liability claims against us that exceed any revenue or profit we
receive from the affected products. In most cases, we offer a minimum 12-year limited warranty for our inverters, extendable to twenty-five
years for an additional cost, a 25-year limited warranty for our power optimizers and a 10-year limited warranty for our residential energy
bank battery. Our limited warranties cover defects in materials and workmanship of our products under normal use and service conditions;
therefore, we bear the risk of warranty claims long after we have sold products and recognized revenue. While we do have accrued reserves
for warranty claims, our estimated warranty costs for previously sold products may change to the extent future products are not compatible
with earlier generation products under warranty. Our warranty accruals are based on our assumptions and we do not have a long history
of making such assumptions. As a result, these assumptions could prove to be materially different from the actual performance of our systems,
causing us to incur substantial unanticipated expenses to repair or replace defective products in the future or to compensate customers
for defective products. Our failure to accurately predict future claims could result in unexpected volatility in, and have a material
adverse effect on, our financial condition. In particular, our residential energy hub batteries are still relatively new on the market
and we do not have the experience in servicing these products yet.

 If one
of our products were to cause injury to someone or cause property damage, or in the event that a claim is made alleging false or misleading
advertisement, unfair competition or other consumer related claims, we could potentially be exposed to product liability claims and lawsuits
which could result in significant costs and liabilities if damages are awarded against us. Further, any product liability claim we face
could be expensive to defend and could divert management's attention. Even in litigation where we believe our liability is remote,
there is a risk that a negative finding or decision in a matter involving multiple plaintiffs or a purported class action could have a
material adverse effect on our competitive position, results of operations or financial condition.

 The
successful assertion of a product liability claim against us could result in potentially significant monetary damages, penalties or fines,
subject us to adverse publicity, damage our reputation and competitive position, and adversely affect sales of our products. In addition,
product liability claims, injuries, defects, or other problems experienced by other companies in the residential solar industry could
lead to unfavorable market conditions for the industry as a whole.

 We
depend upon a small number of outside contract manufacturers. Our operations could be disrupted if we encounter problems with these contract
manufacturers, including difficulties ramping production with new contract manufacturers.

 While
we are manufacturing a portion of our products in Israel, we still heavily rely upon our contract manufacturers to manufacture most of
our products. We mainly rely on two contract manufacturers. Any change in our relationship or contractual terms with our contract manufacturers,
or changes in our contract manufacturers' ability to comply with their contractual obligations could adversely affect our financial
condition and results of operations. Our reliance on a small number of contract manufacturers makes us vulnerable to possible capacity
constraints and reduced control over component availability, delivery schedules, manufacturing yields and costs. Even though we have commenced
manufacturing in our facilities in Israel, the expected production volumes will not be sufficient to relieve our significant dependence
on our contract manufacturers. In addition, we remain heavily dependent on suppliers of the components needed for our manufacturing.

 The
revenues that our contract manufacturers generate from our orders represent a relatively small percentage of their overall revenues. Therefore,
fulfilling our orders may not be considered a priority in the event of constrained ability to fulfill all of their customer obligations
in a timely manner.

 If either
of our contract manufacturers were unable or unwilling to manufacture our products in required volumes and at high quality levels or continue
to supply under existing terms, we would have to identify, qualify, and select acceptable alternative contract manufacturers, which may
not be available to us when needed or may be unable to satisfy our quality or production requirements on commercially reasonable terms.
Any significant interruption in manufacturing would require us to reduce our supply of products to our customers or increase our shipping
costs to make up for delays in manufacturing, which in turn could reduce our revenues, harm our relationships with our customers, subject
us to liquidated damages for late deliveries, and damage our reputation with local installers and potential end-users, all of which will
cause us to forego potential revenue opportunities.

 Further,
the ramp of a new contract manufacturer is time consuming and draining on the resources of our operations team. For example, in light
of the IRA, legislation in the United States that incentivizes the local manufacturing of renewable energy products by providing benefits
to installers for the purchase and installation of U.S.-manufactured products as well as by incentivizing manufacturers of such products
domestically, we have engaged two contract manufacturers in the U.S. Our ability to ramp up production with these contract manufacturers
in a timely manner, and to realize the benefits from the IRA as planned, is dependent upon supply times of equipment deliveries and readiness
of the assembly lines, recruitment and training of the necessary work force, ramp up of the assembly lines and the quality of the initial
production.

 We
may experience delays, disruptions, or quality control problems in our manufacturing operations.

 Our
product development, manufacturing, and testing processes are complex and require significant technological and production process expertise
involving several precise steps from design to production. Any change in our processes could cause one or more production errors, requiring
a temporary suspension or delay in our production line until the errors can be identified and properly rectified. This may occur particularly
as we introduce new products, modify our engineering and production techniques, and/or expand our capacity. In addition, our failure to
maintain appropriate quality assurance processes could result in increased product failures, loss of customers, increased warranty reserve,
increased costs and delays, all of which could have a material adverse effect on our business, financial condition, and results of operations.

 We
depend on a limited number of suppliers for key components and raw materials in our products to adequately meet anticipated demand. Due
to the limited number of such suppliers, any changes or shortages in raw materials or key components we use could result in sales delays,
higher costs associated with air shipments, cancellations, and loss of market share.

 We depend
on limited or single source suppliers for certain key components and raw materials used to manufacture our products, making us susceptible
to quality issues, shortages and price changes. Any of these limited or single source suppliers could stop supplying, or offering at commercially
reasonable prices, our components or raw materials, cease operations or be acquired by, or enter into exclusive arrangements with our
competitors. Moreover, we rely on suppliers in China for certain key components, and rising tensions between China and other countries
could damage our relationships with these suppliers. Because there are few suppliers of raw materials used to manufacture our products,
it may be difficult to timely identify and/or qualify alternate suppliers on commercially reasonable terms; therefore, our ability to
satisfy customer demand may be adversely affected. Transitioning to a new supplier or redesigning a product to accommodate a new component
manufacturer would result in additional costs and delays that could harm our business or financial performance.

given our dependence on suppliers in China, changes in international trade policies, tariffs, or trade disputes could significantly and
adversely affect our business, revenues, margins, results of operations, and cash flows.

 Managing
our supplier and contractor relationships is particularly difficult when we are introducing new products. For example, as we began to
ramp assembly and production of powertrain kits for the automotive industry, we became heavily reliant on new third-party suppliers that
needed to be approved through rigorous testing and validation processes for use in our supply chain. Once selected, it is time consuming
and costly to replace such vendors. The same is true for our residential and commercial battery for which we rely on a single source for
supply of the lithium-ion cells. Any delay or shortage of supply or inability to deliver the components to our manufacturing facilities
could harm our business or financial performance.

 Any
interruption in the supply of limited source components or raw materials for our products would adversely affect our ability to meet scheduled
product deliveries to our customers and could result in lost revenue or higher expenses associated with increased air shipments required
to meet customer demand in a timely manner and would harm our business. For example, in 2021 and 2022, we experienced raw material shortages
due to increased lead time which affected our ability to timely receive certain components within the previously expected lead times.
If this were to reoccur, such shortages could result in a delay in sales, higher costs associated with air shipments, cancellations of
orders by customers, liquidated damages for late deliveries and loss of market share.

 Disruption
in our global supply chain and rising prices of oil and raw materials as a result of the conflict between Russia and Ukraine may adversely
affect our businesses and results of operations.

 The
conflict that began between Russia and Ukraine in late February 2022 may significantly amplify disruptions to our supply-chain and logistics.
Specifically, the conflict may disrupt the transit of goods by train from China to Europe, resulting in an increase in prices of certain
raw materials sourced in Russia (such as nickel and aluminum) that we use in the manufacture of our products as well as increase in oil
prices that will in turn cause overall shipping costs to rise. In addition, the governments of the U.S., the European Union, Japan and
other jurisdictions have announced sanctions on certain industry sectors and parties in Russia and the regions of Donetsk and Luhansk,
as well as enhanced export controls on certain products and industries. These and any additional sanctions, as well as any counter responses
by the governments of Russia or other jurisdictions, could adversely affect the global financial markets generally and levels of economic
activity as well as increase financial markets volatility and any additional measures or sanctions, as well as the resulting rise in prices
of oil and certain raw materials sourced in Russia may disrupt our business and results of operations and/or adversely affect the pricing
of our products.

 We
rely on distributors and large installers to assist in selling our products, and the failure of these customers to perform as expected
could reduce our future revenues.

 Our
customers' decisions to purchase our products are influenced by several factors outside of our control. The agreements we have with
some of our largest customers do not have long-term purchase commitments and are generally cancellable by either party after a relatively
short notice period. The loss of, or events affecting, one or more of these customers could have a material adverse effect on our business,
financial condition, and results of operations (see Note 2.aa to our consolidated financial statements).

we do not have exclusive arrangements with our third-party distributors and large installers, many of which also market and sell products
from our competitors. These distributors and large installers may terminate their relationships with us at any time and with little or
no notice. Further, these distributors and large installers may fail to devote resources necessary to sell our products at the prices,
in the volumes, and within the time frames that we expect, or may focus their marketing and sales efforts on products of our competitors.
Termination of agreements with current distributors or large installers, failure by these distributors or large installers to perform
as expected, or failure by us to cultivate new distributor or large installer relationships, could hinder our ability to expand our operations
and could negatively impact our revenue and results of operations.

second half of 2023 and into 2024, with the downturn of the renewable energy demand, some players in the market have announced exiting
the solar market and others have shown signs of financial distress. For example, in January 2024, ADT announced that it was exiting the
residential solar business completely after having bought Sunpro Solar in 2021. ADT was not a customer of SolarEdge, but the trend could
continue and SolarEdge customers could also decide to exit the solar business. Some of our customers and some installers who purchase
our products from distributors have shown signs of financial distress and some have requested and received extended payment terms or loans
from us. If these installers and distributors become insolvent or if some of their customers fail to pay our distributors for products
sold by such distributors, we may need to write off some of their debt to us and we may suffer harm to our business, financial condition,
and results of operations.

 Mergers
in the solar industry among our current or potential customers may adversely affect our competitive position.

 There
has been an increase in consolidation activities among distributors, large installers, and other strategic partners in the solar industry.
For example, in October 2020, Sunrun, a leading provider of residential solar, battery storage and energy services, acquired Vivint Solar.
In addition, in December 2021, Stem Inc., a storage software and services company acquired AlsoEnergy, a solar asset management software
company. If this consolidation continues and impacts our customers, it will further increase our reliance on a small number of customers
for a significant portion of our sales and may negatively impact our competitive position in the solar market.

 Our
planned expansion into new geographic markets or new product lines or services could subject us to additional business, financial, and
competitive risks.

in the past, and may in the future, evaluate opportunities to expand into new geographic markets and introduce new product offerings and
services. We also may from time to time engage in acquisitions of businesses or product lines with the potential to strengthen and expand
our market position, technological capabilities, or provide synergy opportunities. For example, we intend to continue to introduce new
products targeted at large commercial and utility-scale installations and to continue to expand into other international markets.

 Our
successful operation in these new markets, or any acquired business, will depend on a number of factors, including our ability to develop
solutions to address the requirements of the large commercial and utility-scale solar PV markets, timely certification of new products
for large commercial and utility-scale solar PV installations, acceptance of power optimizers in solar PV markets in which they have not
traditionally been used, and our ability to manage increased manufacturing capacity and production and to identify and integrate any acquired
businesses.

 Further,
we expect these new solar PV markets and additional markets we have entered, or may enter, into to have different characteristics from
the markets in which we currently sell our products. Our success will depend on our ability to properly adapt to these differences, which
include differing regulatory requirements, such as tax laws, trade laws, labor regulations, tariffs, export quotas, customs duties, or
other trade restrictions, limited or unfavorable intellectual property protection, international, political or economic conditions, restrictions
on the repatriation of earnings, longer sales cycles, warranty expectations, product return policies and cost, and performance and compatibility
requirements. In addition, expanding into new geographic markets will increase our exposure to existing risks, such as fluctuations in
the value of foreign currencies and increased expenses in complying with U.S. and foreign laws, regulations and trade standards, including
the Foreign Corrupt Practices Act of 1977, as amended (the "FCPA").

 Failure
to successfully develop and introduce these new products, successfully integrate acquired businesses, or to otherwise manage the risks
and challenges associated with our potential expansion into new product and geographic markets, could adversely affect our revenues and
our ability to sustain profitability.

 If
we fail to build our non-solar businesses and manage future growth effectively, we may be unable to execute our business plan, maintain
high levels of customer service, or adequately address competitive challenges.

spent significant resources in the past five years on organic and non-organic growth in order to expand our business significantly within
existing and new markets. This growth has placed, and any future growth may place, a significant strain on our management, operational,
and financial infrastructure. In particular, we will be required to expand, train, and manage our growing employee base and scale and
otherwise improve our IT infrastructure in tandem with such headcount growth. Our management will also be required to maintain and expand
our relationships with customers, suppliers, and other third parties and attract new customers and suppliers, as well as manage multiple
geographic locations.

 Conversely,
the recent decline in demand for our products requires us to be flexible and react rapidly to changes in market conditions for example
by reducing manufacturing capacity and decreasing expenses where growth has slowed down while retaining the ability to quickly increase
manufacturing capacity should conditions change. Our ability to timely react to market conditions is not always in our control and any
inability to do so could also adversely impact our business. For example, in January 2024, we announced adoption of a restructuring plan
in response to challenging industry conditions that included a reduction in workforce.

 Our
current and planned operations, personnel, customer support, IT, information systems, and other systems and procedures might be inadequate
to support our future growth and may require us to make additional unanticipated investment in our infrastructure. Our success and ability
to further scale our business will depend, in part, on our ability to manage these changes in an efficient manner. If we cannot manage
changes in the downturn and upturn in our industry swiftly and efficiently, we may be unable to take advantage of market opportunities
when they arise, execute our business plans or strategies, or respond to competitive pressures. This could also result in declines in
quality or customer satisfaction, increased costs, difficulties in introducing new offerings, or other operational difficulties. Any failure
to effectively manage growth and changes in demand could adversely impact our business and reputation.

 We
have discontinued our e-Mobility business, resulting in the write-off of tangible and intangible assets.

 In October
2023, the Company decided to discontinue its LCV e-Mobility activity related to the supply of products to its sole customer, Stellantis.
Our e-Mobility business currently does not have additional substantial projects in the pipeline, and we do not plan to engage additional
customers or generate revenues from the e-Mobility business. We have therefore discontinued this business. In the year ended December
31, 2022, we impaired goodwill and intangible assets related to our e-Mobility business (see Notes 8 and 9 of the financial statements
for additional information) and in the year ended December 31, 2023 we impaired tangible assets including machinery and inventory write-off
(see Note 24 of the financial statements for additional information). Such impairment charges have had negative impact on our operating
results and related financial statements.

 We
may not realize expected benefits from our cost reduction and restructuring efforts, and our profitability or our business otherwise might
be adversely affected.

 In order
to operate more efficiently and cost effectively, we have, and we may from time to time, adjust employment levels, optimize our footprint
and/or implement other restructuring activities. For example, in January 2024, we announced adoption of a restructuring plan in response
to challenging industry conditions, including a reduction in workforce. These activities are complex and may involve or require significant
changes to our operations. If we do not successfully manage these activities, expected efficiencies and benefits might be delayed or not
realized. Risks associated with these actions and other workforce management issues include: unfavorable political responses and reputational
harm; unforeseen delays in the implementation of the restructuring activities; additional costs; adverse effects on employee morale; the
failure to meet operational targets due to the loss of employees or work stoppages; and difficulty managing our operations during or after
facility consolidations, any of which may impair our ability to achieve anticipated cost reductions, harm our business or reputation,
or have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.

 Any
unauthorized access to, disclosure, or theft of personal information we gather, store, or use could harm our reputation and subject us
to claims or litigation.

 Our
business and operations may be impacted by cybersecurity incidents data security breaches and cybersecurity attacks, including attempts
to gain unauthorized access to confidential data. We receive, store, and use certain personal information of our employees, customers,
and the end-users of our customers' solar PV systems. We may also share information with contractors and third-party providers to
conduct our business. Although such contractors and third-party providers typically implement encryption and authentication technologies
to secure the transmission and storage of data, those third-party providers may experience a significant data security breach, which may
also detrimentally affect our business, results of operations, and financial condition.

 As detailed
in Item 106 - Cybersecurity, we take steps to protect the security, integrity, and confidentiality of the personal information we process;
however, we have been subject to cybersecurity attacks and other information technology system disruptions in the past and there is no
guarantee that inadvertent or unauthorized access, use or disclosure will not occur despite our efforts. As such, while we have not experienced
a material cybersecurity incident to date, a material cybersecurity incident could materially affect our operations and production, including
our ability to produce goods or provide services and our ability to timely and accurately produce financial reports. In addition, because
techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until after they
are launched against a target, we and our suppliers or vendors may be unable to anticipate these techniques or to implement adequate preventative
or mitigatory measures.

 Unauthorized
use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems,
breach of the systems of our suppliers or vendors by an unauthorized third party, or through employee or contractor error, theft or misuse,
or otherwise, could harm our business, particularly in light of the European General Data Protection Regulation, the California Consumer
Privacy Act, and China Personal Information Protection Law (PIP), and other state and federal laws in the U.S., which are already in effect
or are coming into effect between 2024 and 2026. If any such unauthorized use manipulation, corruption, loss, or disclosure of, or access
to, such personal information were to occur, our operations could be seriously disrupted, including the inability to render services due
to system outages, and we could be subject to demands, claims and litigation by private parties, and investigations, related actions,
and penalties by regulatory authorities. In addition, we could incur significant costs in notifying affected persons and entities and
otherwise complying with the multitude of foreign, federal, state, and local laws and regulations relating to the unauthorized access
to, or use or disclosure of, personal information. Any perceived or actual unauthorized access to, or use or disclosure of, such information
could harm our reputation, substantially impair our ability to attract and retain customers, and have an adverse impact on our business,
financial condition and results of operations. Any of the foregoing may be exacerbated by a delay or failure to detect a cybersecurity
incident or the full extent of such incident. We may be required to incur significant costs to protect against damage caused by these
disruptions or security breaches in the future. In addition, our liability insurance, which includes cyber insurance, might not be sufficient
in type or amount to cover us against claims related to security incidents, cyberattacks and other related incidents.

 Third
parties, our employees, or our vendors might gain unauthorized access to our network or seek to compromise our products and services.

 Occasionally,
we face attempts by others, including our own employees or vendors, to access our networks, to gain unauthorized access through the Internet,
introduce malicious software to our information technology (IT) systems, or corrupt the processes of hardware and software products that
we manufacture and services we provide. We or our products may be a target of computer hackers, organizations or malicious attackers who
attempt to gain access to our network or data centers or those of our customers or end users; steal proprietary information related to
our business, products, employees, and customers; or interrupt our systems or those of our customers or others. Occasionally, we encounter
intrusions or attempts at gaining unauthorized access to our network. To date, none of these incidents have resulted in any material adverse
impact to our business or operations, although there can be no guarantee that such impacts will not be material in the future. While we
seek to detect and investigate all unauthorized attempts and attacks against our network and products, and to prevent their recurrence
where practicable, we remain potentially vulnerable to additional known or unknown threats. In addition to intentional third-party cybersecurity
breaches, the integrity and confidentiality of Company and customer data may be compromised as a result of human error, product defects,
or technological failures. Cybersecurity breaches, whether successful or unsuccessful, and other IT system interruptions, including those
resulting from human error and technological failures, could subject us to significant costs arising from, among others, rebuilding internal
systems, reduced inventory value, providing modifications to our products and services, defending against litigation, responding to official
inquiries or actions, paying damages, or taking other remedial steps with respect to third parties.

 Our
entry into business engagements with military bodies as our customers in the lithium-ion battery and energy storage business embodies
a risk for potentially large-scale and uncapped liability.

 As a
result of the acquisition of our Korean subsidiary (formerly Kokam), we sell a small portion of our products to customers who integrate
our storage systems or cells and then sell these products to military customers. Our sales to military customers often involve standard
form contracts, which may not be subject to negotiation. In particular, certain of these contracts involve unlimited damages provisions
that could result in large-scale liabilities.

 Our
entry into adjacent markets through recent acquisitions is new and highly competitive and it is difficult to evaluate our future in these
new markets. Our business could be materially adversely affected as a result
of the risks associated with acquisitions and investments including our ability to effectively integrate such acquisitions.

 Our
non-solar businesses in adjacent markets, such as energy storage, are highly competitive markets in which we will need to compete. We
have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in rapidly changing
industries, including unpredictable and volatile revenues and increased expenses as our business continues to grow. For example, in October
2023, we decided to discontinue our light commercial vehicle e-Mobility ("LCV") activity related to the supply of products to the sole
customer and do not plan to be active in the e-Mobility business in 2024. The viability and demand for our products and services may be
affected by many factors beyond our control, including:

 •

 cost competitiveness, reliability and performance
 of storage solutions, including the price of raw materials for battery cells and the manufacturing costs of battery cells, packs and containers;

 •

 competing new technologies at more competitive
 prices than those we offer for our products and services;

 •

 prices of traditional carbon-based energy sources;
 and

 •

 the emergence, continuance or success of, or increased
 government support for, other alternative energy generation and storage technologies and products.

 As part
of our growth strategy, we have made a number of acquisitions, and may continue to make acquisitions and investments in the future. We
frequently evaluate the tactical or strategic opportunities available related to complementary businesses, products or technologies. There
can be no assurance that we will be successful in making additional acquisitions. Even if we are successful in making additional acquisitions,
integrating an acquired company's business into ours or investing in new technologies may result in unforeseen operating difficulties
and large expenditures and absorb significant management attention that would otherwise be available for the ongoing development of our
business, both of which may result in the loss of key customers or personnel and expose us to unanticipated liabilities. Further, we may
not be able to retain the key employees that may be necessary to operate the businesses we acquire and we may not be able to attract,
in a timely manner, new skilled employees and management to replace them.

 We may
not be able to consummate acquisitions or investments that we have identified as crucial to the implementation of our strategy for other
commercial or economic reasons. Further, we may not be able to obtain the necessary regulatory approvals, including those of competition
authorities and foreign investment authorities, in countries where we seek to consummate acquisitions or make investments. For those and
other reasons, we may ultimately fail to consummate an acquisition, even if we announce the intended acquisition.

 Disruption
to our business operations as a result of war and hostilities in Israel and other conditions
in Israel that affect our operations may limit our ability to develop, produce and sell our products.

 Our
headquarters and research and development center are located in Israel. Accordingly, political, economic, and military conditions in Israel
directly affect us. Israel has been and is currently involved in a number of armed conflicts and is the target of terrorist activity,
including threats from Hezbollah militants in Lebanon, Iranian militia in Syria, and others. The state of hostility disrupts day-to-day
civilian activity and negatively affects our business conditions.

 Violence
between Hamas and Israel intensified on October 7th, 2023 when the terrorist group launched an unprecedented attack on Israel. On October
8, 2023 the Israeli Government declared that the Security Cabinet of the State of Israel approved a war situation in Israel. Since our
headquarters and most of our employees operate from Israel, the state of war has disrupted and is continuing to disrupt our business operations.
This situation has impacted the availability of our workforce, as part of our workforce in Israel, where we are headquartered, have been
called into active reserve duty. In November 2023, the Houthis, a rebel Shi'a group in Yemen began attacking international shipping lanes
in the red sea forcing commercial ships to redirect away from the Bab al Mandab Strait and find alternative longer and safer travel routes.
If this situation continues or intensifies shipment costs and energy prices may increase which in turn may have an impact on the Company
as well as on the global economy. While our offices and facilities are open worldwide, including in Israel, and, to date, we have not
had disruptions to our ability to manufacture and deliver products and services to customers, a prolonged war or an escalation of the
current conditions in Israel could materially adversely affect our business, financial condition, and results of operations.

any future armed conflict, political instability or violence in the region may impede our ability to manage our business effectively,
operate our manufacturing plant in northern Israel, engage in research and development, or otherwise adversely affect our business or
operations. In the event of escalation of the current war situation or others, we may be forced to cease operations, which may cause delays
in the distribution and sale of our products. Some of our directors, executive officers, and employees in Israel are obligated to perform
annual reserve duty in the Israeli military and are subject to being called for additional active duty under emergency circumstances.
In the event that our principal executive office is damaged as a result of hostile action, or hostilities otherwise disrupt the ongoing
operation of our offices, our ability to operate could be materially adversely affected.

several countries principally in the Middle East, restrict doing business with Israeli companies, and additional countries and groups
may impose similar restrictions if hostilities in Israel or political instability in the region continue or increase. If instability in
neighboring states results in the establishment of fundamentalist Islamic regimes or governments more hostile to Israel, or if Egypt or
Jordan abrogates its respective peace treaty with Israel, Israel could be subject to additional political, economic, and military confines,
and our operations and ability to sell our products to countries in the region could be materially adversely affected.

 Any
current or future hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners,
or significant downturn in the economic or financial condition of Israel, could have a material adverse effect on our business, financial
condition, and results of operations.

 In that
regard, since the start of the war on Hamas, we have become aware of pressure being placed on our customers not to engage in business
with us due to our affiliation with Israel. In addition, foreign policy could be negatively impacted with regard to Israel. If these pressures
intensify or continue to occur, they could impact our business with suppliers and customers which could in turn adversely impact our reputation,
results of operations or financial condition.

in 2023, the Israeli government announced plans to significantly reduce the Israeli Supreme Court's judicial oversight, including reducing
its ability to strike down legislation that it deems unreasonable, and plans to increase political influence over the selection of judges.
. Although the Israeli Supreme Court partially struck down these plans, the current government has vowed to make other changes to law
that limit the powers of the Supreme Court. If such government plans are eventually enacted, they may cause operational challenges for
us since we are headquartered in Israel and many of our employees are located in Israel.

 The
tax benefits that are available to us under Israeli law require us to meet various conditions and may be terminated or reduced in the
future, which could increase our costs and taxes.

 Our
Israeli subsidiary was eligible for certain tax benefits provided to "Benefited Enterprises" under the Israeli Law for the
Encouragement of Capital Investments, 1959 (the "Investments Law"). Beginning in January 2019, and with respect to its taxable
results from 2019 onwards, our Israeli subsidiary further elected to apply the terms of the Investments Law as per "Preferred Enterprise"
("PE") or "Preferred Technological Enterprise" ("PTE"). In order to remain eligible for the tax benefits
for "Benefited Enterprises" with respect to our Israeli subsidiary's taxable results until 2018 and with respect to
its taxable results from 2019 for PE or PTE, we must continue to meet certain conditions stipulated in the Investments Law and its regulations,
as amended. If these tax benefits are reduced, cancelled, or discontinued, or if we are held to have violated the conditions stipulated
in the Law, our Israeli taxable income would be subject, in whole or in part, to regular Israeli corporate tax rates and we may be required
to refund any tax benefits that we have already received, plus interest and penalties thereon. The statutory corporate tax rate for Israeli
companies is 23% as of January 1, 2018 and onward. Additionally, if we increase our activities outside of Israel through acquisitions
or otherwise through our Israeli subsidiary, our existing or expanded activities might not be eligible for inclusion in existing or future
Israeli tax benefit programs. The Israeli government may furthermore independently determine to reduce, phase out or eliminate entirely
the benefit programs under the Investments Law, regardless of whether we then qualify for benefits under those programs at the time, which
would also adversely affect our global tax rate and our results of operations.

 It
may be difficult to enforce a judgment of a U.S. court against our officers and directors, to assert U.S. securities laws claims in Israel,
or to serve process on our officers and directors.

 Many
of our directors and executive officers, their assets, and most of our assets are located outside of the U.S. Consequently, a judgment
obtained against any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws,
may not be collectible in the U.S. It also may be difficult to effect service of process on these persons in the U.S. or to assert U.S.
securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation
of U.S. securities laws on the grounds of forum non conveniens. In addition, even if an Israeli
court hears a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable,
the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a lengthy and costly process. Further, an
Israeli court may not enforce a judgment awarded by a U.S. or other non-Israeli court. Certain matters of procedure will also be governed
by Israeli law. There is little binding case law in Israel that addresses these matters. As a result of the difficulty associated with
enforcing a judgment against any of these persons in Israel, judgment against many of our directors and executive officers may be unachievable
or unenforceable.

 We
are dependent on ocean transportation to deliver our products in a timely and cost efficient manner. If we are unable to use ocean transportation
to deliver our products, our business and financial condition could be materially and adversely impacted. Additionally, we are impacted
by storage prices that have increased in the past year.

 We rely
on ocean transportation for the delivery of most of our products to our customers, and when unavailable, incompatible with customer delivery
time requirements, or when we are unable to accommodate accelerated delivery times due to growing customer volume demands or shipment
constraints, we rely on alternative, more expensive air transportation. Our ability to deliver our products via ocean transportation could
be adversely impacted by shortages in available cargo capacity, changes by carriers and transportation companies in policies and practices,
such as scheduling, pricing, payment terms and frequency of service or increases in the cost of fuel, taxes and labor, disruptions to
ports and other shipping facilities as a result of the Covid-19 or other epidemics and other factors not within our control. If we are
unable to use ocean transportation and are required to substitute more expensive air transportation, our financial condition and results
of operations could be materially and adversely impacted.

 While
we witnessed a reduction in shipment rates in the fourth quarter of 2022, during the year ended December 31, 2022, we experienced an increase
in the cost of revenues sold due to an increase in shipping rates that resulted from a reduction in ocean freight capacity and the reduction
in the availability of air freight that increased the demand for ocean freight. We also experienced disruptions to our logistics supply
chain caused by constraints in the global transportation system including limited availability of local ground transportation coupled
with congestion in ports and borders. In the second half of 2023, we experienced increased storage fees, associated with higher levels
of inventory and general increases in pricing for storage.

 Fluctuations
in currency exchange rates may negatively impact our financial condition and results of operations.

 Although
our financial results are reported in U.S. dollars, 68.2% of our revenues in the year ended December 31, 2023 were generated in currencies
other than the U.S. Dollar. In addition, a significant portion of our operating expenses are accrued in New Israeli Shekels (primarily
related to payroll), the Euro and, to a lesser extent, the South Korean Won ("KRW") and other currencies. As detailed in the
Foreign Currency Exchange Risk under Item 7A - Quantitative and Qualitative Disclosures About Market Risk, our profitability is affected
by movements of the U.S. dollar against the Euro, and, to a lesser extent, the New Israeli Shekel, KRW and other currencies in which we
generate revenues, incur expenses and maintain cash balances. Foreign currency fluctuations may also affect the prices of our products
which are denominated primarily in U.S. dollars. If there is a devaluation of a particular currency, the prices of our products will increase
relative to the local currency and may be less competitive. Despite our efforts to minimize foreign currency risks, primarily by maintaining
cash balances in New Israeli Shekels, significant long-term fluctuations in relative currency values, in particular a significant change
in the relative values of the Euro and, New Israeli Shekel, KRW and other currencies, against the U.S. dollar could have an adverse effect
on our profitability and financial condition.

 Occasionally,
we enter into derivative financial instruments to hedge the exchange rates impacts on our assets, liabilities and certain transactions
denominated in Israeli Shekels, Euro, KRW and other currencies.

 Our
hedging activities may also contribute to increased losses as a result of volatility in foreign currency markets. If foreign exchange
currency markets continue to be volatile, such fluctuations in foreign currency exchange rates could materially and adversely affect our
profit margins and results of operations in future periods, and may make it difficult to hedge our foreign currency exposures effectively.

 We
are subject to risks related to corporate social responsibility and sustainability, including the impact of evolving legal and regulatory
requirements.

 We are
facing increasing scrutiny related to our environmental, social and governance ("ESG") practices and requested disclosures
by institutional and individual investors who are increasingly using ESG screening criteria in making investment decisions. Our disclosures
on these matters or a failure to satisfy evolving stakeholder expectations for ESG practices and reporting may potentially harm our reputation
and impact relationships with investors. Certain market participants including major institutional investors use third-party benchmarks
or scores to measure our ESG practices in making investment decisions. Furthermore, some of our customers and suppliers evaluate our ESG
practices or request that we adopt certain ESG policies as a condition of awarding contracts. At the same time, stakeholders and regulators
have increasingly expressed or pursued opposing views, legislation, and investment expectations with respect to sustainability initiatives,
including the enactment or proposal of "anti-ESG" legislation or policies in certain U.S. jurisdictions. In addition, our
failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the
timelines we announce, or at all, could expose us to government enforced actions and/or private litigation.

 As ESG-related,
reporting standards and disclosure requirements continue to develop, we may incur increasing costs related to ESG monitoring and reporting.
For example, in March 2022, the U.S. Securities and Exchange Commission proposed climate disclosure rules that would require public companies
to significantly increase disclosure of GHG emissions and strategies, targets, costs and risks associated with climate change and the
energy transition. Additionally, in January 2023, the EU enacted the Corporate Sustainability Reporting Directive, which will require
sustainability reporting across a broad range of environmental, social and governance topics for both EU and non-EU companies, and in
October 2023, California enacted legislation addressing the disclosure of greenhouse gas emissions, climate-related risks, environmental
claims and the use or sale of voluntary carbon offsets. Numerous countries have also begun proposing climate-reporting frameworks aligned
with the International Sustainability Standards Board standards. These proposed regulatory changes related to climate change and reporting
could increase the complexity of and costs associated with compliance with such regulations that could have a material adverse effect
on our business, results of operations and financial condition.

 Complications
with the design or implementation of our new ERP system could adversely impact our business and operations.

 We rely
extensively on information systems and technology to manage our business and summarize operating results. We are in the process of a multi-year
implementation of a new global enterprise resource planning ("ERP") system. This ERP system will replace our existing operating
and financial systems. The ERP system is designed to accurately maintain the Company's financial records, enhance operational functionality
and provide timely information to the Company's management team related to the operation of the business. The ERP system implementation
process has required, and will continue to require, the investment of significant personnel and financial resources. We may not be able
to successfully implement the ERP system without experiencing delays, increased costs and other difficulties. If we are unable to successfully
design and implement the new ERP system as planned, our financial positions, results of operations and cash flows could be negatively
impacted. Additionally, if we do not effectively implement the ERP system as planned or the ERP system does not operate as intended, the
effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess those controls adequately
could be delayed.

 Natural
disasters, public health events, significant disruptions of information technology systems, data security breaches, or other catastrophic
events could adversely affect our operations.

 Our
worldwide operations could be subject to natural disasters (including as a result of climate change), public health events, significant
disruptions of information technology systems, data security breaches and other catastrophic business disruptions, which could harm our
future revenue and financial condition and increase our costs and expenses. We own manufacturing facilities in Israel, Italy and South
Korea and rely on third-party manufacturing facilities, including for all product assembly and final testing of our products, which are
performed at third-party manufacturing facilities, in China, Vietnam, Hungary, and the United States. There may be conflict or uncertainty
in the countries in which we operate, including public health issues (for example, a pandemic or an outbreak of contagious diseases or
health epidemics), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant accidents, regional
wars, or general economic or political factors. Such risks could result in an increase in the cost of components, production delays, general
business interruptions, delays from difficulties in obtaining export licenses for certain technology, tariffs and other barriers and restrictions,
longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign
laws, any of which could ultimately have a material adverse effect on our business.

event that natural disasters (including as a result of climate change), public health epidemics or technical catastrophes were to damage
or destroy any part of our facilities or those of our contract manufacturers, destroy or disrupt vital infrastructure systems or interrupt
our operations or services for any extended period of time, our business, financial condition and results of operations would be materially
and adversely affected.

 Risks
Related to Legal, Compliance and Regulations

 The
reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications could
reduce demand for solar PV systems and harm our business.

 Federal,
state, local and foreign government bodies provide incentives to promote solar electricity in the form of rebates, tax credits or exemptions
and other financial incentives. The market for on-grid applications, where solar power is used to supplement a customer's electricity
purchased from the utility network or sold to a utility under tariff, often depends in large part on the availability and size of government
and economic incentives. Because our customers' sales are typically to the on-grid market, the reduction, elimination or expiration
of government subsidies and incentives for on-grid solar electricity may negatively affect the desirability of solar electricity and could
harm or halt the growth of the solar electricity industry and our business. For example, in 2015 the U.S. congress passed a multi-year
extension to the solar Investment Tax Credit (ITC), and such extension helped grow the U.S. solar market. The Inflation Reduction Act
of 2022 (the "IRA") extended the term of the ITC through 2034. However, future reduction in the ITC could reduce the demand
for solar energy solutions in the U.S. which would have an adverse effect on our business, financial condition, and results of operations.

 In general,
subsidies and incentives may expire on a particular date, end when the allocated funding is reduced or terminated due to, inter
alia, legal challenges, adoption of new statutes or regulations or the passage of time, they often occur without warning.

several jurisdictions have adopted renewable portfolio standards, mandating that a certain portion of electricity delivered by utilities
to customers come from a set of eligible renewable energy resources, such as solar, by a certain compliance date. Under some programs,
a utility can receive a "credit" for renewable energy produced by a third party by either purchasing the electricity directly
from the producer or paying a fee to obtain the right to renewable energy generated but used or sold by the generator. A renewable energy
credit allows the utility to add this electricity to its renewable portfolio requirement without actually expending the capital for generating
facilities. However, there can be no assurances that such policies will continue. Reduction or elimination of renewable portfolio standards
or successful efforts to meet current standards could harm or halt the growth of the solar PV industry and our business.

 A
change in or elimination of regulatory treatment or guidance related to, or an inability to ramp up production to benefit from incentives
under the Inflation Reduction Act of 2022 may harm our business.

 On August
16, 2022, the IRA was signed into federal law. The IRA provides for, among other things, certain incentives, including certain tax credits,
intended to promote clean energy. The Company has invested resources in establishing a manufacturing presence in the U.S. to benefit from
the incentives available under the IRA, including benefits to installers for the purchase and installation of U.S. manufactured products
and incentives for manufacturers of such products domestically. Moreover, we incorporated into our financial planning and agreements with
our customers and suppliers certain assumptions regarding the future level of U.S. tax incentives. Any unfavorable regulatory treatment,
or guidance, expiration of or changes to the benefits being made available, which we relied upon in structuring certain projects and investments,
or any adverse impacts on our ability to ramp up production in the U.S. in a timely manner to benefit from the incentives available under
the IRA, could adversely impact our business and financial condition.

to net metering policies may reduce demand for electricity from solar PV systems and harm our business.

 Our
business benefits from favorable net metering policies in most U.S. states and some European countries, that allow a solar PV system owner
to pay his or her electric utility only for power usage net of production from the solar PV system. System owners receive credit for the
energy that the solar installation generates to offset energy usage at times when the solar installation is not generating energy. Under
a net metering program, the customer typically pays for the net energy used or receives a credit against future bills if more energy is
produced than consumed.

 Most
U.S. states have adopted some form of net metering. Yet, net metering programs have recently come under regulatory scrutiny in some U.S.
states due to allegations that net metering policies inequitably shift costs onto non-solar ratepayers, by allowing solar ratepayers to
sell electricity at rates that are too high for utilities to recoup their fixed costs. For example, in 2019, Louisiana Public Service
Commissions adopted net metering policies aimed at lowering the solar customers' savings. In December 2022, the California Public
Utilities Commission voted to approve lowering current net energy metering tariffs, in addition to imposing a new grid-connection fee,
on new rooftop solar users. The tariff cuts became effective in April of 2023. This new rate plan, known as NEM 3.0, has significantly
reduced how much money California solar homeowners receive for a PV system resulting in a reduced rate of installations in the second
half of 2023. We cannot be certain that similar programs will not be adopted in other states or that existing programs will not be further
modified going forward.

 If the
value of the credit that customers receive for net metering is reduced, it could impact the current level of cost savings associated with
net metering. The absence of favorable net metering policies or of net metering entirely, or the imposition of new charges that only or
disproportionately affect end-users that use net metering would significantly limit demand for our products and could have a material
adverse effect on our business, financial condition, results of operations and future growth.

 Existing
electric utility industry regulations and changes to regulations, may present technical, regulatory, and economic barriers to the purchase
and use of solar PV systems, that may significantly reduce demand for our products or harm our ability to compete. In
addition, determinations of various regulatory bodies regarding lack of compliance with certifications or other regulatory requirements,
could harm our ability to sell our products in certain countries.

 Federal,
state, local and foreign government regulations and policies concerning the electric utility industry, and internal policies and regulations
promulgated by electric utilities, heavily influence the market for electricity generation products and services, and could deter purchases
of solar PV systems sold by our customers, significantly reducing the potential demand for our products. For example, utilities commonly
charge fees to larger, industrial customers for disconnecting from the electric grid or for having the capacity to use power from the
electric grid for back-up purposes. These fees could increase the cost to use solar PV systems sold by our customers and make them less
desirable, thereby harming our business, prospects, financial condition and results of operations. In addition, depending on the region,
electricity generated by solar PV systems competes most effectively with expensive peak-hour electricity from the electric grid, rather
than the less expensive average price of electricity. Modifications to the utilities' peak hour pricing policies or rate design,
such as to a flat rate, could require the price of solar PV systems and their component parts to be lower in order to compete with the
price of electricity from the electric grid.

in current laws or regulations applicable to us or the imposition of new laws and regulations in the U.S., Europe, or other jurisdictions
in which we do business could have a material adverse effect on our business, financial condition and results of operations. Any changes
to government or internal utility regulations and policies that favor electric utilities could reduce the competitiveness of solar PV
systems sold by our customers, causing a significant reduction in demand for our products and services. In addition, changes in our products
or changes in export and import laws and implementing regulations may delay the introduction of new products in international markets,
prevent our customers from deploying our products internationally or, in some cases, prevent the export or import of our products to certain
countries altogether, resulting in a material adverse effect on our business, financial condition, and results of operations.

 Compliance
with various regulatory requirements and standards is a prerequisite for placing our products on the market in most countries in which
we do business. We have all such certifications but there are at times, challenges by local administrative telecommunications, consumer
board or other authorities that can place sales bans on products.

 Risks
Related to Intellectual Property

 If
we fail to protect, or incur significant costs in defending our intellectual property and other proprietary rights, our business and results
of operations could be materially harmed.

 Our
success depends to a significant degree on our ability to protect our intellectual property and other proprietary rights. We rely on a
combination of patents, trademarks, copyrights, trade secrets, and unfair competition laws, as well as confidentiality and license agreements
and other contractual provisions with our customers, suppliers, employees, and others, to establish and protect our intellectual property
(IP) and other proprietary rights. Our ability to enforce these rights is subject to litigation risks, as well as uncertainty as to the
enforceability of our IP rights in various countries, specifically claims that our IP rights are invalid or unenforceable. Our assertion
of IP rights may result in another party seeking to assert claims against us, which could harm our business. Our inability to enforce
our IP rights under any of these circumstances can harm our competitive position and business.

applied for patents in the U.S., Europe, China, and other jurisdictions, some of which have been issued. We cannot guarantee that any
of our pending applications will be approved or that our existing and future intellectual property rights will be sufficiently broad to
protect our proprietary technology. Any failure to obtain such approvals or finding that our intellectual property rights are invalid
or unenforceable could force us to, among other things, rebrand or re-design our affected products. In countries where we have not applied
for patent protection or where effective intellectual property protection is not available to the same extent as in the U.S., we may be
at greater risk that our proprietary rights will be misappropriated, infringed, or otherwise violated.

 Our
intellectual property may be stolen or infringed upon. We were in the past and may in the future engage in legal proceedings related to
intellectual property. Litigation proceedings are inherently uncertain, and adverse rulings may occur, including monetary damages, injunction
stopping us from manufacturing or selling certain products, or requiring other remedies. Lawsuits are intended to protect our significant
investment in our intellectual property, but they also may consume management and financial resources for long periods of time and may
not result in favorable outcome for us, which may adversely affect our business, results of operations or financial condition.

 Third
parties may assert that we are infringing upon their intellectual property rights, which could divert management's attention, cause
us to incur significant costs, and prevent us from selling or using the technology to which such rights relate.

 Our
competitors and other third parties hold numerous patents related to technology used in our industry. Occasionally, we may also be subject
to claims of intellectual property right infringement and related litigation, and, as we gain greater recognition in the market, we face
a higher risk of being the subject to claims of violation of others' intellectual property rights. For example, in July 2022, we
were served with a complaint by Ampt LLC filed with the International Trade Commission pursuant to Section 337 of the Tariff Act of 1930,
as amended and the District Court for the District of Delaware alleging patent infringement against the Company and its subsidiary SolarEdge
Technologies Ltd. In May 2023, we entered into a settlement agreement under which the parties agreed to dismiss all proceedings related
to the complaints and the parties have granted each other 10-year cross-licenses for certain intellectual property.

 Responding
to such claims can be time consuming, divert management's attention and resources and may cause us to incur significant expenses
in litigation or settlement. While we believe that our products and technology do not infringe in any material respect upon any valid
third-party IP rights, we cannot be certain of successfully defending against any such claims. If we do not successfully defend or settle
an IP claim, we could be liable for significant monetary damages and could be prohibited from continuing to use certain technology, business
methods, content, or brands. To avoid a prohibition, we could seek a license from the applicable third party, which could require us to
pay significant royalties, increasing our operating expenses. If a license is unavailable at all or unavailable on reasonable terms, we
may be required to develop or license a non-violating alternative, either of which could require significant effort and expense. If we
cannot license or develop a non-violating alternative, we could be forced to modify, limit or, in extreme cases, stop manufacturing and
sales of our affected products in the relevant country and may be unable to effectively compete. Any of these results could adversely
affect our business, financial condition, and results of operations.

 We
may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result
in litigation and adversely affect our business.

 We enter
into agreements with our employees pursuant to which they agree that any inventions created in the scope of their employment or engagement
are assigned to us or owned exclusively by us, depending on the jurisdiction, without the employee retaining any rights. A significant
portion of our intellectual property has been developed by our employees in the course of their employment for us. Under the Israeli Patent
Law, 5727-1967 (the "Patent Law"), inventions conceived by an employee during the scope of his or her employment with a company
are regarded as "service inventions," which belong to the employer, absent a specific agreement between the employee and employer
giving the employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and
an employee, the Israeli Compensation and Royalties Committee (the "Committee"), a body constituted under the Patent Law,
shall determine whether the employee is entitled to remuneration for his or her inventions. Case law clarifies that the right to receive
consideration for "service inventions" can be waived by the employee and that in certain circumstances, such waiver does not
necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties,
using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined the method for calculating
this Committee-enforced remuneration, but rather uses the criteria specified in the Patent Law. Although our employees have agreed that
any rights related to their inventions are owned exclusively by us, we may face claims demanding remuneration in consideration for such
acknowledgement. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or
former employees, or be forced to litigate such claims, which could negatively affect our business.

 If
our goodwill or other intangible assets become impaired, our financial condition and results of operations could be negatively affected.

 Due
to our acquisitions and following the latest impairment recorded during 2023, goodwill and other intangible assets totaled approximately
$78.3 million, or approximately 1.7% of our total assets, as of December 31, 2023. We test our goodwill for impairment at least annually,
or more frequently if an event occurs indicating the potential for impairment, and we assess on an as-needed basis whether there have
been impairments in our other intangible assets, which include complex, and often subjective, assumptions and estimates. These assumptions
and estimates can be affected by a variety of external factors such as industry and economic trends, and internal factors such as changes
in our business strategy or our internal forecasts. To the extent that the factors described above change, we could be required to record
additional non-cash impairment charges in the future, which could negatively affect our financial condition and results of operations
(see Notes 9 and 10 of the financial statements for additional information).

 Risks
Related to our Notes and the Ownership of Our Common Stock

 Our
stock price has been, and may continue to be, subject to significant volatility.

 Our
common stock price during the year ended December 31, 2023, ranged from $63.25 to $345.80 per share. As further detailed in the Performance
Graph in Item 5 below, the price of our Common Stock in 2023 was highly volatile and may fluctuate in response to our results of operations
in future periods or due to other factors, including factors specific to companies in our industry, many of which are beyond our control.
As a result, our share price may experience significant volatility and may not necessarily reflect the value of our expected performance.
We have been subject to securities class action litigation as a result of our stock price volatility, which could result in substantial
cost and diversion of our management's attention from other business concerns, which could seriously harm our business.

 Among other factors that
could affect our stock price are:

 •

 the addition or loss of significant customers;

 •

 changes in laws or regulations applicable to our
 industry, products or services;

 •

 speculation about our business in the press or
 the investment community;

 •

 price and volume fluctuations including due to
 general macro-economic and geopolitical changes and developments in the overall stock market;

 •

 volatility in the market price and trading volume
 of companies in our industry or companies that investors consider comparable;

 •

 share price and volume fluctuations attributable
 to inconsistent trading levels of our shares;

 •

 our ability to protect our intellectual property
 and other proprietary rights;

 •

 sales of our common stock by us or our significant
 stockholders, officers and directors;

 •

 the expiration of contractual lock-up agreements;

 •

 success of competitive products or services;

 •

 the public's response to press releases
 or other public announcements by us or others, including our filings with the Securities and Exchange Commission (the "SEC"),
 announcements relating to litigation or significant changes to our key personnel;

 •

 the effectiveness of our internal controls over
 financial reporting;

 •

 changes in our capital structure, such as future
 issuances of debt or equity securities;

 •

 our entry into new markets;

 •

 tax developments in the U.S., Europe, or other
 markets;

 •

 the inclusion, exclusion, or deletion of our stock
 from any trading indices, such as the S&P 500 Index;

 •

 conversion of all or portion of the Notes;

 •

 strategic actions by us or our competitors, such
 as acquisitions or restructurings; and

 •

 changes in accounting principles.

 Further,
the stock markets have experienced extreme price and volume fluctuations unrelated or disproportionate to the operating performance of
affected companies. In addition, the stock prices of many renewable energy companies have experienced wide fluctuations that have often
been unrelated to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic,
political, and market conditions such as recessions, changes in U.S. regulations and policies with respect to renewable energy, interest
rate changes, or international currency fluctuations, may cause the market price of our common stock to decline.

 Provisions
in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management.

 Our
certificate of incorporation and by-laws contain provisions that could depress the trading price of our common stock by discouraging,
delaying, or preventing a change of control of our Company or changes in our management that the stockholders of our Company may believe
advantageous. These provisions include:

 •

 authorizing "blank check" preferred
 stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

 •

 providing for a classified board of directors
 with staggered, three-year terms until the 2026 annual meeting of stockholders at which time all of the board members will be subject
 to annual elections, which, until then, could delay the ability of stockholders to change the membership of a majority of our board of
 directors;

 •

 not providing for cumulative voting in the election
 of directors, which limits the ability of minority stockholders to elect director candidates;

 •

 limiting the ability of stockholders to call a
 special stockholder meeting;

 •

 prohibiting stockholders from acting by written
 consent;

 •

 establishing advance notice requirements for nominations
 for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and

 •

 the removal of directors only for cause and only
 upon the affirmative vote of the holders of at least a majority in voting power of all the then-outstanding shares of common stock of
 the Company entitled to vote thereon, voting together as a single class until the 2026 annual meeting of stockholders;

 •

 providing that our board of directors is expressly
 authorized to amend, alter, rescind or repeal our by-laws.

we are governed by the provisions of Section 203 of the Delaware General Corporation Law ("DGCL"), which generally prohibits
a Delaware corporation from engaging in a broad range of business combinations with any "interested" stockholder for a period
of three years following the date on which the stockholder becomes an "interested" stockholder.

 Our
certificate of incorporation includes a forum selection clause, which could limit our stockholders' ability to obtain a favorable
judicial forum for disputes with us.

 Our
certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive
forum for any stockholder (including any beneficial owner) to bring (i) any derivative action or proceeding brought on our behalf, (ii)
any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or employees to us or to our stockholders,
(iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or by-laws, or (iv)
any action asserting a claim governed by the internal affairs doctrine, will be a state court located within the State of Delaware (or,
if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware). In
addition, unless the Corporation, in writing, selects or
consents to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for any complainant
asserting a cause of action arising under the Securities Act of 1933, to the fullest extent permitted by law, shall be the federal district
courts of the United States of America. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock
is deemed to have notice of and consented to the foregoing provisions. This forum selection provision may limit our stockholders'
ability to obtain a favorable judicial forum for disputes with us. It is also possible that, notwithstanding the forum selection clause
that is included in our certificate of incorporation, a court outside of Delaware could rule that such a provision is inapplicable or
unenforceable.

 We
may not have the ability to raise the funds necessary to settle conversion of our Convertible Senior Notes or Notes in cash or to repurchase
the Notes upon a fundamental change, and
our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes.

 Holders
of the Notes have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as
defined in the Indentures governing their respective Notes) at a repurchase price equal to 100% of the principal amount of the Notes to
be repurchased, plus accrued and unpaid special interest, if any. In addition, upon conversion of the Notes, unless we elect to deliver
solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will
be required to make cash payments in respect of the Notes being converted. We may not have enough available cash or be able to obtain
financing at the time we are required to make repurchases of Notes surrendered or Notes being converted. In addition, our ability to repurchase
the Notes or to pay cash upon conversions of the Notes may be limited by law, regulatory authority or agreements governing our future
indebtedness. Our failure to repurchase Notes at a time when the repurchase is required by the indenture governing such Notes or to pay
cash upon conversion of the Notes as required by such indenture would constitute a default under such indenture. A default under the indenture
governing the Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient
funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversion of the Notes.

 We
may not be able to raise additional capital to execute on our current or future business opportunities on favorable terms, if at all,
or without dilution to our stockholders.

 We believe
that our existing cash and cash equivalents and cash flows from our operating activities will be sufficient to meet our anticipated cash
needs for at least the next 12 months. However, we may need to raise additional capital or debt financing to execute on our current or
future business strategies, including to:

 •

 provide additional cash reserves to support our
 operations;

 •

 invest in our research and development efforts;

 •

 expand our operations into new product markets
 and new geographies;

 •

 acquire complementary businesses, products, services
 or technologies; or

 •

 otherwise pursue our strategic plans and respond
 to competitive pressures, including adjustments to our business to mitigate the effects of any tariffs that might apply to us or our industry.

 We do
not know what forms of financing, if any, will be available to us. If financing is not available on acceptable terms, if and when needed,
our ability to fund our operations, enhance our research and development and sales and marketing functions, develop and enhance our products,
respond to unanticipated events and opportunities, or otherwise respond to competitive pressures would be significantly limited. In any
such event, our business, financial condition and results of operations could be materially harmed, and we may be unable to continue our
operations. Moreover, if we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership
of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior
to those of existing stockholders.

 We
do not intend to pay any cash dividends on our common stock in the foreseeable future.

never declared or paid any dividends on our common stock and currently do not expect to pay any dividends in the foreseeable future. Any
future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and
organizational documents. As a result, capital appreciation in the price of our common stock, if any, may be your only source of gain
on an investment in our common stock.

 Our
share repurchase program may be subject to certain risks.

 Although
the board of directors has authorized the share repurchase program, any determination to execute the share repurchase program will be
subject to, among other things, the Company's financial position and results of operations, available cash and cash flow, capital
requirements and other factors, as well as the board of director's continuing determination that the repurchase program is in the
best interests of its stockholders and is in compliance with all laws and agreements applicable to the repurchase program. Our share repurchase
program does not obligate us to acquire any common stock. If we fail to meet any expectations related to share repurchases, this could
have a material adverse impact on investor confidence and the market price of our common stock could decline. Additionally, price volatility
of our common stock over a given period may cause the average price at which we repurchase our common stock to exceed the stock's
market price at a given point in time.

 We may
further increase or decrease the amount of repurchases of our common stock in the future. Any reduction or discontinuance of repurchases
of our common stock pursuant to our current share repurchase program could cause the market price of our common stock to decline. Moreover,
in the event repurchases of our common stock are reduced or discontinued, our failure or inability to resume repurchasing common stock
at historical levels could result in a lower market valuation of our common stock.

 ITEM
1B. Unresolved Staff Comments.

 Not applicable.

 ITEM
1C. Cyber security

 Cyber
security risk is an area of increasing focus for our Board, particularly as an increasingly significant part of our operations rely on
digital technologies. As a result, we have implemented a cyber security program to assess, identify, and manage risks from cyber security
threats that may result in material adverse effects on the confidentiality, integrity, and availability of our information systems. This
program has been integrated into the Company's overall risk management process.

 Risk
Management and Strategy

 While
we follow IoT cybersecurity standards and regulations, our products and information systems are potentially subject to cyber risks of
data leakage and operational damages. To protect our products and information systems from cybersecurity threats, we use various security
tools that help prevent, identify, escalate, investigate, resolve and recover from identified vulnerabilities and security incidents in
a timely manner. These include, but are not limited to, annual cyber testing, internal auditing, monitoring and detection tools, and a
bug bounty program to allow security researchers to assist us in identifying vulnerabilities in our products before they are exploited
by malicious threat actors. Any reported vulnerability is analyzed and reported to the CISO.

 As part
of our program to mitigate risk from cyber security threats, the Company actively evaluates and refines its cyber security tools and processes
with the intention of reducing cyber security risks and aligning with the National Institute of Standards and Technology Cyber-security
Framework for risk management. Features of our cybersecurity program include:

 Processes designed to comply with information
 security standards and privacy regulations, including the European Union's General Data Protection Regulation.

 Maintenance of an ISO 27001 Information Security
 Management Standard certification.

 Implementation of a variety of security controls,
 such as firewalls, and intrusion detection systems.

 Protection against Denial-of-Service attacks which
 prevent legitimate use of our services.

 Security events monitoring in our security operations
 center.

 Development of incident response policies and
 procedures designed to initiate remediation and compliance activities in a timely manner.

 Implementation of data loss prevention tools.

 Implementing an ID management system to enforce
 granular role-based access controls.

 Performing penetration testing on cloud and app
 platform.

 Administration of a comprehensive cyber security
 awareness program to educate employees about cyber security risks and best practices.

 Retention of a third-party, independent cyber
 security firm to conduct cyber security assessments of our systems and procedures.

 Employment of a responsible disclosure policy,
 which includes a Bug Bounty Program designed to help identify and fix any potential flaws in the company's services or products.

 We also
employ processes designed to oversee, identify, and reduce the potential impact of a security incident at a third-party vendor, or customer,
or otherwise implicating the third-party technology and systems we use. Such security measures include, without limitation:

 A security solution designed to safeguard customer
 data and systems.

 Security assessments of our major vendors.

 Risk assessments by an insurance company.

 Implementation of endpoint detection and response
 (EDR) technology, as well as partial operational technology (OT) security measures on some of our factories, to protect our on-premises
 systems.

 Governance
& Oversight

 The
Board has delegated primary oversight of the Company's risks from cyber security threats to the Technology Committee. Our management team,
including our Chief Information Security Officer (CISO), provides quarterly updates to our Technology Committee and annually to the full
Board regarding our cyber security activities and other developments impacting our digital security. We have protocols by which certain
cyber security incidents are escalated within the Company and, where appropriate, reported to the Board and Technology Committee in a
timely manner.

 At the
management level, our CISO, who reports to our Chief Information Officer, is responsible for overseeing the assessment and management
of our material risks from cyber security threats. Our CISO has extensive experience and knowledge in cyber security as a result of 26
years of experience in leading security teams, developing security strategies, and managing risk across various industries. The CISO is
informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents through reports from a number
of experienced information security officers responsible for various parts of the business and regularly reviewing risk management measures
implemented by the Company to identify and mitigate cyber security risks.

 The
Company's internal auditor and CISO are informed in the event of any significant cyber security incident and operate to comply with
applicable laws regulations.

 Cyber
Security Risks

 A material
cyber security incident could materially affect our operations and production, including our ability to produce goods or provide services
and our ability to timely and accurately produce financial reports. Further a cyber security incident could result in unauthorized access
or disclosure of sensitive data, such as financial information, intellectual property, or customer, employee or supplier related data,
including personally identifiable information. A material cyber incident could adversely affect our financial condition and results of
operations, have as an adverse effect on our reputation and could result in legal actions against the Company. Please see the discussion
under " Any unauthorized access to, disclosure, or theft of personal information we gather, store, or use
could harm our reputation and subject us to claims or litigation." and "Third parties, our employees, or our vendors might gain unauthorized
access to our network or seek to compromise our products and services" in Item 1A. Risk Factors for additional information.

 To date,
risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, including
our business strategy, results of operations or financial condition, and we do not believe that such risks are reasonably likely to have
such an effect over the long term. However, there can be no guarantee that we will not be the subject of future successful threats or
incidents. The Company has not been subject to any information security breach penalties or settlement payments.

 ITEM
2. Properties

 Our
corporate headquarters are located in Herziliya Pituach, Israel.

 Leased
Offices and R&D Laboratories

 As of
December 31, 2023, we lease office, testing, and product design facilities in Israel. In May 2021, we signed a long-term lease agreement
for the development of a 38,000 square meter campus, to be built on 16,500 square meters of land, in the central area of Israel. The campus,
which is scheduled to be completed in by the end of 2025, will replace our current headquarters in Herziliya, Israel.

 In addition
to our leased properties in Israel, we lease offices and lab facilities in California, Nevada, Germany, Netherlands, Italy, France, Australia,
UK, Japan, India, Bulgaria, Belgium, Taiwan, Korea, Brazil, Mexico, China, Spain, Sweden, Vietnam and Poland.

 Manufacturing

 We outsource
most of our manufacturing to our manufacturing partners. We have our own manufacturing facility, Sella 1 (which property is leased), in
the North of Israel, which is used in our solar segment. We also have our own manufacturing facility, Sella 2 (which property is leased),
in South Korea and own an additional smaller facility in South Korea, both of which are used in our Energy Storage segment. We also own
manufacturing facilities in Umbria, Italy which currently are used by Automation Machines and for refurbishment of solar products as well
as support for remaining commitments of e-Mobility parts.

 We believe
that our existing properties are in good condition and are sufficient and suitable for the conduct of our business for the foreseeable
future. To the extent our needs change as our business grows, we expect that additional space and facilities will be available on commercially
reasonable terms.

 ITEM
3. Legal Proceedings

 On November
3, 2023, Daphne Shen, a purported stockholder of the Company, filed a proposed class action complaint for violation of federal securities
laws, individually and putatively on behalf of all others similarly situated, in the U.S District Court of the Southern District of New
York against the Company, the Company's CEO and the Company's CFO. The complaint alleges violations of Section 10(b) and Rule
10b-5 of the Exchange Act, as well as violations of Section 20(a) of the Exchange Act against the individual defendants. The complaint
seeks class certification, damages, interest, attorneys' fees, and other relief. On December 13, 2023, Javier Cascallar filed a
similar proposed class action. On February 7, 2024, the Court consolidated the two actions, and appointed co-lead plaintiffs and lead
counsel. Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any, or the likelihood
of a potential adverse outcome. The Company disputes the allegations of wrongdoing and intends to vigorously defend against them.

 In August
2019, the Company was served with a lawsuit filed in the Tribunal of Milan, Italy against our Italian subsidiary SolarEdge e-Mobility
S.r.l (previously SMRE S.p. A) that purchased the shares of SolarEdge e-Mobility s.r.l in the tender offer that followed the SolarEdge
e-Mobility Acquisition by certain former shareholders of SolarEdge e-Mobility who tendered their shares. The lawsuit asked for damages
of approximately $3 million, representing the difference between the amount for which they tendered their shares (6 Euro per share) and
6.7 Euros per share. On December 6, 2023, the courts of Milan rendered a decision ordering SolarEdge to pay, in favor of each plaintiff,
the difference between the price paid (6 Euro per share) and 6.44 Euro per share, i.e. 0.44 euros per share for a total payment of approximately
$1.6 million Euros. The Company is evaluating whether to appeal this decision.

 ITEM
4. Mine Safety Disclosures.

 Not applicable.

 PART
II

ITEM 5. Market
for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

 Market
Information

 Our
common stock, par value $0.0001 per share, trades on the Nasdaq Global Select Market, where prices are quoted under the symbol "SEDG".

 Holders
of Record

 As of
December 31, 2023, there were 11 holders of record of our common stock. Because many of our shares of common stock are held by brokers
and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record
holders.

 Dividends

never declared or paid any dividends on our common stock. We currently intend to retain any future earnings to finance the operation and
expansion of our business and fund our share repurchase program, and we do not expect to pay any dividends in the foreseeable future.
Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws
and organizational documents.

 Recent
Sales of Unregistered Securities

 None.

 Issuer
Purchases of Equity Securities

 On
 November 1, 2023,
we announced the approval by the Board of Directors of a share repurchase program which authorizes the repurchase of up to $300 million
of the Company's common stock. Under the share repurchase program, repurchases can be made using a variety of methods, which may
include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary
trading plan or other means, including through 10b5-1
trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount
of any common share repurchases under the share repurchase program are determined by the Company in its discretion and depend on a variety
of factors, including legal requirements, price and economic and market conditions. The program does not obligate the Company to acquire
any amount of common stock, it may be suspended, extended, modified, discontinued or terminated at any time at the Company's discretion
without prior notice, and will expire on December 31, 2024. As of December 31, 2023, we had not yet repurchased any Company shares.

 Performance
Graph

 The
following graph compares the cumulative total shareholder return on our common stock from December 31, 2018 to December 31, 2023 to that
of the total return of the S&P 500 Index and the Invesco Solar ETF. This graph is furnished and not "filed" with the Securities
and Exchange Commission or "soliciting material" under the Securities Exchange Act of 1934 and shall not be incorporated by
reference into any such filings, irrespective of any general incorporation contained in such filing.

 I TEM
6. Reserved

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section
of this Annual Report on Form 10-K captioned "Business" and our consolidated financial statements and the related notes to
those statements included elsewhere in this Form 10-K. In addition to historical financial information, the following discussion and analysis
contains forward looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events
may differ materially from those anticipated in these forward looking statements as a result of many factors, including those discussed
under the sections of this Annual Report captioned "Special Note Regarding Forward Looking Statements" and "Risk Factors".
For discussion related to changes in financial condition and the results of operations for the year ended December 31, 2022, refer to
Item 7- Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K, filed
with the Securities and Exchange Commission on February 22, 2023.

 Overview

 We
develop, manufacture and sell products in a solar segment that addresses a broad range of energy market segments through our diversified
product offering, including residential, commercial and large scale photovoltaic or PV, energy storage and backup solutions, electric
vehicle or EV charging capabilities, home energy management, grid services and virtual power plants, as well as products in our non-solar
businesses including lithium-ion cells, batteries and energy storage systems, which are part of our Energy Storage Segment as well as
automation machines ("Automation Machines") and in prior years, we also had product offerings for the e-mobility market. In October 2023,
we decided to discontinue our light commercial vehicle e-Mobility ("LCV") activity and the remaining e-mobility activity which include
PV applications, will be included under the solar segment starting January 1, 2024.

fourth quarter 2023 the Company identified two reportable segments: the Solar segment and Energy Storage segment. The Solar segment includes
the design, development, manufacturing, and sales of its DC optimized inverter solutions designed to maximize power generation at the
PV module level and batteries for PV applications. The Solar segment solution consists mainly of the Company's power optimizers,
inverters, batteries and cloud based monitoring platform. The Energy Storage segment includes the design, development, manufacturing,
and sales of high-energy, high-power, lithium-ion cells and BESS solutions for C&I and Utility markets. The Energy Storage segment
provides purpose-built components and solutions, hardware and software, as well as pre and post sales engineering support to design, build,
and manage battery and system solutions according to the customer's use cases and mission profiles. The "All other"
category includes the design, development, manufacturing and sales of e-Mobility products, automated machines and UPS products (in prior
periods).

 Further
information regarding our business is provided in "Part I, Item 1. Business" of this Annual Report.

 In
the year ended December 31, 2023, two customers accounted for 24.0% of our revenues and our top three customers (all distributors) together
represented 31.1% of our revenues.

 Our
revenues were $2,976.5 million and $3,110.3 million for the year ended December 31, 2023 and 2022, respectively. Gross margins were 23.6%
and 27.2% for the year ended December 31, 2023 and 2022, respectively. Net income was $34.3 million and $93.8 million for the year ended
December 31, 2023 and 2022, respectively.

 Performance
Measures

 In
managing our business and assessing financial performance, we supplement the information provided by the financial statements with other
operating metrics. These operating metrics are utilized by our management to evaluate our business, measure our performance, identify
trends affecting our business and formulate projections. We use metrics relating to shipments of inverters, power optimizers and megawatts
to evaluate our sales performance and to track market acceptance of our products. We use metrics relating to monitoring (systems monitored)
to evaluate market acceptance of our products and usage of our solution.

 We provide
the "megawatts shipped" and "megawatts hour shipped" metrics, which are calculated based on inverter or battery nameplate
capacity shipped respectively, to show adoption of our system on a nameplate capacity basis. Nameplate capacity shipped is the maximum
rated power output capacity of an inverter or battery, and corresponds to our financial results in that higher total nameplate capacities
shipped are generally associated with higher total revenues. However, revenues may increase in a non-correlated manner to the "megawatt
shipped" metric since other products such as Power Optimizers, are not accounted for in this metric.

 Year

 2023

 2022

 Inverters shipped

 1,011,890

 1,019,307

 Power optimizers shipped

 17,430,082

 23,736,368

 Megawatts shipped 1

 12,629

 10,491

 Megawatts hour shipped
 - batteries for PV applications

Excluding batteries for PV applications, based on the aggregate nameplate capacity of inverters shipped during the applicable period.
Nameplate capacity is the maximum rated power output capacity of an inverter as specified by the manufacturer.

 Global
Circumstances Influencing our Business and Operations

 Demand
for Products

seen a slowdown in demand for our products in our Solar segment from our direct customers since the second part of the third quarter of
2023. This was a result of slowed market demand in the third quarter of 2023 as distributors began to take actions to reduce inventory
levels. In particular, beginning in the second part of the third quarter of 2023, we experienced substantial unexpected cancellations
and push outs of existing backlog from our European distributors. We attribute these cancellations and pushouts to high inventory in the
channels and slower than expected installation rates both in the United States and Europe. This trend continued in the fourth quarter
of 2023.Additionally, the Company anticipates significantly lower revenues in the first quarter of 2024 as the inventory destocking process
continues.

 Disruptions
due to the war in Israel

 Due
to the war that began on October 7, 2023, approximately 10% of our employees in Israel were called to active reserve duty and additional
employees may be called in the future, if needed. About half of these employees have returned to work. While our offices and facilities
are open worldwide, including in Israel, and, to date, we have not had disruptions to our ability to manufacture and deliver products
and services to customers, a prolonged war or an escalation of the current conditions in Israel could materially adversely affect our
business, financial condition, and results of operations. Due to the recency of these events, and their ongoing and evolving nature, the
extent of the adverse effect on our business operations is still unknown.

 Impact
of Ukraine's Conflict on the Energy Landscape

 The
conflict between Ukraine and Russia, which started in early 2022, and the sanctions and other measures imposed in response to this conflict,
have increased the level of economic and political uncertainty. While we do not have any meaningful business in Russia or Ukraine and
we do not have physical assets in these countries, this conflict has, and is likely to continue to have, a multidimensional impact on
the global economy, the energy landscape in general and the global supply chain. In 2022, rising global interest in becoming less dependent
on gas and oil led to higher demand for our products. The conflict adversely affected the prices of raw materials arriving from Eastern
Asia and resulted in an increase in gas and oil prices. Furthermore, various shipment routes were adversely impacted by the conflict resulting
in increased shipment lead times and shipping costs for our products. While the impact of this conflict decreased in 2023, a change or
escalation of this ongoing conflict could increase the impacts from the circumstances described above and may lead to an adverse effect
on our business and results of operations.

 Inflation
Reduction Act

 In August
2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the "IRA"), which includes several provisions intended
to accelerate U.S. manufacturing and adoption of clean energy, battery and energy storage, electrical vehicles, and other solar products
and is expected to impact our business and operations. As part of such incentives, the IRA, among other things, extends the investment
tax credit and production tax credit through 2034 and is therefore expected to increase the demand for solar products. The IRA also further
incentivizes residential and commercial solar customers and developers through the inclusion of a tax credit for qualifying energy projects
of up to 30%. Section 45X of the IRA offers advanced manufacturing production tax credits that incentivize the production of eligible
components within the U.S. To that end, we established manufacturing capabilities in the U.S. in 2023 and announced additional capacity
expected during 2024. These provisions of the law are new and regulations and guidance concerning their implementation are gradually being
published by the U.S. Treasury Department. We continue to monitor the benefits that may be available to us, such as the availability of
tax credits for domestic manufacturers. To the extent that tax benefits or credits may be available to competing technology and not to
our technology, our business could be adversely disadvantaged.

 Key
Components of Our Results of Operations

 The
following discussion describes certain line items in our Consolidated Statements of Operations.

 We
generate revenues from the sale of DC optimized inverter systems for solar PV installations, which include power optimizers, inverters,
storage and backup solutions, EV chargers, smart energy devices, our cloud-based monitoring platform and grid services. Our customer base
mainly includes distributors, large solar installers, wholesalers, and EPCs. In addition, we also generated revenues from the sale of
lithium-ion cells, batteries and energy storage solutions, automation machines and EV powertrain solutions for electric vehicles.

 Our
revenues from the sale of solar-related products are affected by changes in the volume and average selling prices of our DC optimized
inverter systems. The volume and average selling price of our systems is driven by the supply and demand for our products, changes in
the product mix between our residential and commercial products, the customer mix between large and small customers, the geographical
mix of our sales, sales incentives, end user government incentives, seasonality, and competitive product offerings. Revenues from the
sale of lithium-ion cells, batteries, energy storage system or ESS products, are affected by the type of product sold (cell, battery or
system) and the type of the battery that is sold. Revenues from the sale of Automation Machines and e-Mobility products are affected by
the changes in the volumes, customers' size and average selling prices of the products we sell.

 Our
revenue growth is dependent on our ability to expand our market share in each of the geographies in which we compete, expand our global
footprint to new evolving markets, manage our production capabilities to meet demand, continue to develop and introduce new and innovative
products that address the changing technology and performance requirements of our customers and expand of the new businesses we acquired.

 In
the year ended December 31, 2023, 64% of our revenues were generated from Europe, 25.5% of our revenues were generated from the United
States and 10.5% of our revenues were generated from ROW. In the year ended December 31, 2022, 54.3% of our revenues were generated from
Europe, 36.5% of our revenues were generated from the United States and 9.2% of our revenues were generated from ROW.

 Cost
of Revenues and Gross Profit

 Cost
of revenues consists primarily of product costs, including purchases from our contract manufacturers and other suppliers, as well as costs
related to shipping, customer support, product warranty, personnel, depreciation of testing and manufacturing equipment, amortization
of intangible assets and other fixed costs, provision for losses related to slow moving and dead inventory, hosting services for our cloud
based monitoring platform, variable utility costs, operational costs related to the manufacturing factories, other logistics services,
contract termination costs and renewable electricity production credits. Our product costs are affected by technological innovations,
such as advances in semiconductor integration and new product introductions, economies of scale resulting in lower component costs, improvements
in production processes and automation, the volume of products subject to import tariffs (for example, for imports from China to the U.S.)
and the volume of products for which manufacturing credits are available (for example, for products made in the U.S.). Some of these costs,
primarily personnel, amortization of intangible assets and depreciation of testing and manufacturing equipment, are not directly affected
by sales volume.

 We continue
to develop our own manufacturing capabilities. During 2023, we continued to ramp up our manufacturing capabilities in Sella 2, our Li-Ion
battery factory in South Korea which serves our Energy Storage segment. We intend to gradually increase the manufacturing capabilities
of Sella 2 in 2024, which will result in additional expenses. We intend to use our available cash balances for this expansion.

 Cost
of revenues also includes our operations, production and support departments' costs. The operations and production departments are
responsible for production management such as planning, procurement, supply chain, production methodologies and machinery planning, logistics
management and manufacturing support to our contract manufacturers, as well as the quality assurance of our products. Our support department
provides customer and technical support at various levels through our call centers around the world as well as second and third-level
support services, which are provided by support personnel located in our headquarters. Our employees headcount in our operations, production
and support departments has grown to 2,857 as of December 31, 2023 from 2,383 as of December 31, 2022.

 In October
of 2023, the Company made an announcement regarding its restructuring plans to adjust its manufacturing capacity and increase operating
efficiency,including, terminating the manufacturing process in Mexico, reducing manufacturing capacity in China, and discontinuing the
Company's LCV e-Mobility activity, and on January 21, 2024, the Company announced adoption of additional measures in response to
challenging industry conditions, including reducing its headcount by approximately 16% over the first half of 2024 through an involuntary
workforce reduction plan (together, the "Restructuring Plan"). These decisions were made in order to better align the Company
with current market conditions. The majority of these activities related to the discontinuation of LCV activity and the reduction of our
manufacturing footprint which occurred in December 2023 and the significant part of the workforce reduction occurred in January 2024.

 Gross
profit may vary from quarter to quarter and is primarily affected by our average selling prices, product costs, manufacturing ramp-up
costs, restructuring costs, product mix, customer mix, geographical mix, location of manufacturing, shipping method, warranty costs, inventory
write-offs, exchange rates and seasonality.

Expenses

expenses consist of research and development, sales and marketing, general and administrative, goodwill impairment and other operating
expenses, net. Personnel-related costs are a significant component of the operating expenses and include salaries, benefits, payroll taxes,
commissions, severance and stock-based compensation. Our employees headcount in our research and development, sales and marketing and
general and administrative departments, has grown to 2,776 as of December 31, 2023 from 2,543 as of December 31, 2022. Under the 2024
Restructuring Plan described above, we expect to reduce our headcount over the first half of 2024.

and development expenses

and development expenses include personnel-related expenses such as salaries, severance, benefits, stock-based compensation and payroll
taxes. Our research and development employees are engaged in the design and development of power electronics, semiconductors, software,
power-line communications, networking and chemistry. Our research and development expenses also include third-party design and consulting
costs, materials for testing and evaluation, ASIC development and licensing costs, depreciation and amortization expenses, and other indirect
costs. We devote substantial resources to ongoing research and development programs that focus on enhancements to, and cost efficiencies
in, our existing products and timely development of new products that utilize technological innovation, thereby maintaining our competitive
position.

 Sales
and marketing expenses

 Sales
and marketing expenses consist primarily of personnel-related expenses such as salaries, severance, sales commissions, benefits, payroll
taxes, and stock-based compensation. These expenses also include travel, fees of independent consultants, trade shows, marketing, costs
associated with the operation of our sales offices and other indirect costs. We currently have a sales presence in many countries worldwide
and intend to continue to expand our sales presence to additional regions.

and administrative expenses

and administrative expenses consist primarily of salaries, severance, employee benefits and stock-based compensation related to our executives,
finance, human resources, information technology, and legal organizations, travel expenses, facilities costs, fees for professional services,
and registration fees related to being a publicly-traded company. Professional services consist of audit and legal costs, remuneration
to board members, insurance, information technology and other costs. General and administrative expenses also include expenses related
to certain legal claims and allowance for doubtful accounts in the event of uncollectible account receivables balances.

impairment

impairment consists of impairment charges of goodwill assigned to our reporting units and tested for impairment at least on an annual
basis, in the fourth quarter of the fiscal year.

 Other

 Other
operating expenses, net, consist primarily of impairment of long-lived assets and certain other nonrecurring items.

 Non
Operating Expenses

income (expense), net

income (expense), net, consists primarily of interest income, interest expense, gains or losses from foreign currency fluctuations and
hedging transactions.

 Interest
income consists of interest from our investment in available for sale marketable securities, deposits, loans to third parties and accretion
of discounts related to our investment in available for sale marketable securities.

 Interest
expense consists of interest related to bank loans, advance payments received for performance obligations that extend for a period greater
than one year, related to Accounting Standard Codification 606, "Revenue from Contracts with Customers" (ASC 606), interest
related to Accounting Standard Codification 842, "Leases" (ASC 842), amortization of premium related to our investment in
available for sale marketable securities and the amortization of debt issuance cost associated with our Notes due 2025.

 Our
functional currency is the U.S. dollar. With respect to certain of our subsidiaries, the functional currency is the applicable local currency.
Financial (expenses) income, net, also consists of gains or losses from foreign currency fluctuations, the fair value remeasurement of
hedging contracts not designated as cash flow hedge and bank charges. Foreign currency fluctuations primarily consist of the effect of
foreign exchange differences between the U.S. dollar and the New Israeli Shekel, the Euro, the South Korean Won and other currencies related
to our monetary assets and liabilities.

 Other
income (loss)

 Other
income (loss) consists primarily of realized and unrealized gains and losses on investments in privately-held companies and realized gains
and losses on investment in available for sale marketable securities.

taxe s

 We
are subject to income taxes in the countries where we operate.

 In
the year ended December 31, 2023, we recorded a net income tax expense of $46.4 million, which consists of a $89.5 million current income
tax expense and $43.1 million of deferred tax income. In the year ended December 31, 2022, we recorded a net income tax expense of $83.4
million, which consists of a $94.4 million current income tax expense and a $11.0 million deferred tax income. Our tax rate for 2023 is
57% compared with 47% in 2022. The increase in tax rate was mainly attributed to the GILTI effect of IRC Section 174, requiring the capitalization
of R&D expenditures outside the U.S. (see below), and impairments and losses that did not have a corresponding tax effect.

 On
December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law, making significant changes to U.S. income tax law. These
changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years 2018 onwards and created
new taxes on certain foreign-sourced earnings (including tax on Global Intangible Low Taxed Income ("GILTI") and certain related-party
payments. The Tax Act also amended Section 174 of the U.S Internal Revenue Code, effective from January 1, 2022, eliminating the option
to deduct research and development expenditures currently and requiring taxpayers to amortize them over five years (if incurred in the
U.S.) or fifteen years (if incurred outside the U.S.).

 Furthermore,
the Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiaries earnings not previously subject to U.S.
income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, and 8% on the remaining earnings. The
total tax liability will be paid over the eight-year period provided in the Tax Act (ending 2024).

Technologies Ltd., our Israeli subsidiary, is taxed under Israeli law. Income not eligible for benefits under the Investments Law is taxed
at the corporate tax rate. The Israeli corporate tax rate is 23%.

 Our
Israeli subsidiary elected tax year 2012 as a "Year of Election" for "Benefited Enterprise" under the Israeli
Investments Law, which provides certain benefits, including tax exemptions and reduced tax rates. Upon meeting the requirements under
the Israeli Investments Law, the two-year tax exemption has ended on December 31, 2018.

 The
Investment Law was amended in 2005 and was further amended as of January 1, 2011 and in August 2013 (the "2011 Amendment").
The 2011 Amendment canceled the availability of the benefits granted in accordance with the provisions of the Investments Law prior to
2011 and, instead, introduced new benefits for income generated by a "Preferred Company" through its "Preferred Enterprise"
(both as defined in the 2011 Amendment). Under the 2011 Amendment, income derived by Preferred Companies from Preferred Enterprise would
be subject to a uniform rate of corporate tax. The tax rate applicable to such income, referred to as "Preferred Income",
would be 7.5% in areas in Israel that are designated as Development Zone A and 16% elsewhere in Israel starting in the year 2017 and thereafter.
Our Israeli subsidiary has established its own manufacturing facility in Israel, located in a Development Zone A, therefore income from
manufacturing attributed to that facility is subject to a 7.5% tax rate.

 In
December 2016, Amendment 73 to the Investments Law (the "2017 Amendment") was published. According to the 2017 Amendment,
special tax tracks for technological enterprises have been introduced, which are subject to rules that were issued by the Israeli Ministry
of Finance. A Preferred Technological Enterprise (PTE), as defined in the 2017 Amendment, that is located in the central region of Israel,
will be subject to a tax at a rate of 12% on profits deriving from intellectual property, or 6% if its annual revenues exceed New Israeli
Shekel 10 billion.

 On
June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technological Income and Capital Gain for Technological
Enterprise), 2017 (the "Regulations") were published. The Regulations describe, inter alia, the mechanism used to determine
the calculation of the benefits under the PTE regime. A company that complies with the terms under the PTE regime, may be entitled to
certain tax benefits with respect to certain income generated during the company's regular course of business and derived from the
preferred intangible asset.

 As
of January 2019, our Israeli subsidiary elected to implement the 2011 and 2017 Amendments starting as of tax year 2019 and as a result,
under the PTE regime with respect to our business activities in Israel. Our PTE income was subject to a 12% tax rate in Israel in the
years 2019-2021, and in 2022-2023 to a 6% tax rate as we surpassed 10 billion New Israeli Shekel revenues threshold. We currently expect
not to meet the threshold in 2024 and consequently expect our tax on our PTE income to be 12% in 2024.

 The
Law for the Encouragement of Industry (Taxes), 1969, (the "Industry Encouragement Law"), provides certain tax benefits for
an 'Industrial Company' as such term is defined in the Industry Encouragement Law. An Industrial Company is entitled to certain
tax benefits including, inter alia, amortization over an eight-year period of the cost of purchased know-how, patents and accelerated
depreciation rates on equipment and buildings. We qualify as an Industrial Company under the Law and benefit from its provisions as applicable.

 Loss
from equity method investments

 Loss
from equity method investments consists of our proportionate share of the net income or loss of equity method investments.

 Results
of Operations

 The
following tables set forth our consolidated statements of income for the years ended December 31, 2023 and 2022. We have derived this
data from our consolidated financial statements included elsewhere in this Annual Report. This information should be read in conjunction
with our consolidated financial statements and related notes included elsewhere in this Annual Report. The results of historical periods
are not necessarily indicative of the results of operations for any future period.

 Comparison
of year ended December 31, 2023 and year ended December 31, 2022

 Year

 2022

 2023

 2022

 (In

 $

 $

 $

 (133,751

)

 (4.3

)%

 2,272,705

 2,265,631

 7,074

 0.3

 %

 Gross profit

 703,823

 844,648

 (140,825

)

 (16.7

) %

 Operating expenses:

 and development

 321,482

 289,814

 31,668

 10.9

 %

 Sales
 and marketing

 164,318

 159,680

 4,638

 2.9

 %

 and administrative

 146,504

 112,496

 34,008

 30.2

 %

 impairment

 —

 90,104

 (90,104

)

 (100

)%

 Other

 31,314

 26,434

 4,880

 18.5

 %

 Total
 operating expenses

 663,618

 678,528

 (14,910

)

 (2.2

)%

 Operating income

 40,205

 166,120

 (125,915

)

 (75.8

) %

 Financial income, net

 41,212

 3,750

 37,462

 999.0

 %

 Other income (loss),
 net

 (318

)

 7,285

 (7,603

)

 (104.4

)%

 Income before income
 taxes

 81,099

 177,155

 (96,056

)

 (54.2

) %

 Income taxes

 (46,420

)

 (83,376

)

 36,956

 (44.3

)%

 Net loss from equity
 method investments

 (350

)

 —

 (350

)

 100.0

 %

 Net income

 $

 $

 $

 (59,450

)

 (63.4

)%

 Year

 2022

 2023

 2022

 (In

 $

 $

 $

 (133,751

)

 (4.3

)%

decreased by $133.8 million, or 4.3%, in the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily
due to (i) a decrease of $58.2 million in the amount of ancillary solar products sold; and (ii) a decrease of $50.8 million related to
the number of batteries for PV applications sold, mainly in Europe; and (iii) a decrease of $26.0 million in revenues generated from e-mobility
components, related to the discontinuation of the Company's LCV e-Mobility activity. The overall decrease in revenues was due to
the decline in demand that began in the third quarter of 2023 and continued in the fourth quarter of 2023. This decline was the result
of high inventory in the channels and slower than expected installation rates beginning in the third quarter of 2023, leading to substantial
unexpected cancellations and push outs of existing backlog, from our European distributors, which continued into the fourth quarter of
2023.

from outside of the U.S. comprised 74.5% of our revenues in the year ended December 31, 2023 as compared to 63.5% in the year ended December
31, 2022.

 The
number of power optimizers recognized as revenues decreased by approximately 6.2 million units, or 26.2%, from approximately 23.7 million
units in the year ended December 31, 2022 to approximately 17.5 million units in the year ended December 31, 2023 as a result of reduced
demand. The number of inverters recognized as revenues, increased by approximately 1.2 thousand units, or 0.1%, from approximately 1,014.6
thousand units in the year ended December 31, 2022 to approximately 1,015.8 thousand units in the year ended December 31, 2023. Revenues
from inverters relative to optimizers was higher this year due to a "catch up" in inverter production in the first half of 2023 which
was needed to meet backlog demand that we were not able to fulfill in the previous year. The megawatts hour of batteries for PV applications
recognized as revenues decreased by approximately 148.3 megawatts hour, or 16.7% from approximately 885.7 megawatts in the year ended
December 31, 2022 to approximately 737.4 megawatts in the year ended December 31, 2023 due to a decrease in demand.

 Our
blended Average Selling Price or ASP per watt for solar products excluding batteries for PV applications is calculated by dividing solar
revenues, excluding revenues from the sale of batteries for PV applications, by the nameplate capacity of inverters shipped. Our blended
ASP per watt for solar products shipped decreased by 0.049, or 20.1%, in the year ended December 31, 2023 as compared to the year ended
December 31, 2022. The decrease in blended ASP per watt is mainly attributed to a relatively lower number of power optimizers and other
solar products shipped compared to the number of inverters shipped, leading to an overall reduction in our ASP per watt as well as due
to an increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix. This
decrease in blended ASP per watt was partially offset by price increases that went into effect gradually during 2022 and in the first
half of 2023, as well as by the appreciation of the Euro against the U.S. Dollar.

 Our
blended ASP per hour watt for batteries for PV applications is calculated by dividing batteries for PV applications revenues, by the nameplate
capacity of batteries for PV applications shipped. Our blended ASP per watt/hour for batteries for PV applications decreased by 0.016
or 3.3%, in the year ended December 31, 2023 as compared to the year ended December 31, 2022. The decrease in blended ASP per watt/hour
is mainly attributed to an increase in the portion of three phase batteries, which are sold at a lower ASP per watt/hour and a price decrease
of our single phase batteries, that went into effect gradually during 2023. This decrease was partially offset by the appreciation of
the Euro against the U.S Dollar.

 Cost
of Revenues and Gross Profit

 Year

 2022

 2023

 2022

 (In

 Cost
 of revenues

 $

 2,272,705

 $

 2,265,631

 $

 7,074

 0.3

 %

 Gross
 profit

 $

 703,823

 $

 844,648

 $

 (140,825

)

 (16.7

)%

 Cost of revenues increased
by $7.1 million, or 0.3%, in the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to:

 •

 an increase in warranty expenses and warranty
 accruals of $70.5 million associated primarily with an increased number of products in our install base, which increases our actual spending
 on product warranty, and an increase in costs related to the different elements of our warranty expenses, which include the cost of the
 products, shipment and other related expenses, which impacts our remaining obligations for all units under warranty, including those sold
 in previous years;

 •

 an increase of $48.1 million in inventory costs,
 which is mainly attributed to changes in inventory valuation, higher inventory accruals related to our initial manufacturing in Sella
 2 and the write-off related to the discontinuation of the Company's LCV e-Mobility activity, partially offset by a decrease in inventory
 write-off related to discontinuation of our UPS activities in the year ended December 31, 2022;

 •

 an increase in personnel-related costs of $14.2
 million, related to the expansion of our production, operations, and support headcount, which grew in parallel to our growing install
 base worldwide, as well as an increase in severance and related benefit costs as a result of the Restructuring Plan announced to adjust
 our manufacturing capacity and increase distribution efficiency, which includes termination of manufacturing in Mexico, reduction of manufacturing
 capacity in China, and discontinuation of the Company's LCV e-Mobility activity;

 •

 an increase in other costs of $11 million mainly
 due to the contract termination expenses related to components procurement obligations related to the discontinued LCV e-mobility activity;

 •

 an increase of $9.1 million in depreciation expenses
 of property, plant and equipment and in expenses related to overhead costs; and

 •

 an increase of $3.9 million in expenses related
 to consultants and sub-contractors.

 These
were partially offset by:

 •

 a decrease in direct cost of revenues sold of
 $97.5 million associated primarily with a decrease in the volume of product sold;

 •

 a decrease in shipment and logistic costs in an
 aggregate amount of $42.5 million due to a decrease in the volume of shipments, a decrease in shipment rates and a decrease in expedited
 shipments costs; and

 •

 a decrease in other production costs of $12.6
 million mainly attributed to a decrease in charges from our contract manufacturers, due to manufacturing disruptions related to global
 supply constraints in the year ended December 31, 2022, partially offset by an increase related to ramp up costs associated with Sella
 2, our Li-Ion battery cell manufacturing facility located in South Korea, as well as contract termination cost related to claims from
 our contract manufacturers as part of the Restructuring Plan in Mexico and China.

 Gross
profit as a percentage of revenue decreased by 3.6% to 23.6% in the year ended December 31, 2023 from 27.2% in the year ended December
31, 2022 primarily due to:

 •

 an increase in actual warranty expenses and accruals
 for future warranty obligations related to our existing install base, which were divided this fiscal year by slightly lower revenues resulting
 in lower gross margin of 2.7%; and

 •

 an increase in the inventory accrual due to the
 write-offs of excess inventory, write-offs of inventory related to the discontinuation of the Company's LCV e-Mobility activity
 and inventory disposal related to our initial manufacturing in Sella 2 resulting in lower gross margin of 1.6%;

 These were partially
offset by a decrease in shipment rates as well as a reduced portion of expedited shipments out of our total shipments and a decrease in
customs duties attributed to the decrease in volumes of products manufactured in China for the U.S. market resulting in higher gross margin
of 1.1%.

Expenses:

and Development

 Year

 2022

 2023

 2022

 (In

 and development

 $

 321,482

 $

 289,814

 $

 31,668

 10.9

 %

and development costs increased by $31.7 million or 10.9%, in the year ended December 31, 2023 compared to the year ended December 31,
2022, primarily due to:

 •

 an increase in personnel-related costs of $18.3
 million resulting from an increase in our research and development headcount, as well as salary expenses associated with annual merit
 increases and employee stock-based compensation, which were partially offset by the depreciation of the NIS against the U.S. dollar. The
 increase in headcount reflects our continuing investment in enhancements of existing products, as well as research and development expenses
 associated with bringing new products to the market;

 •

 an increase in expenses related to consultants
 and sub-contractors in the amount of $6.8 million:

 •

 an increase in depreciation expenses of property
 and equipment in the amount of $3.4 million; and

 •

 an increase in expenses related to overhead costs
 in the amount of $1.5 million.

 Sales
and Marketing

 Year

 2022

 2023

 2022

 (In

 Sales
 and marketing

 $

 164,318

 $

 159,680

 $

 4,638

 2.9

 %

 Sales
and marketing expenses increased by $4.6 million, or 2.9%, in the year ended December 31, 2023 compared to the year ended December 31,
2022, primarily due to:

 •

 an increase in expenses related to marketing activities
 in the amount of $2.4 million;

 •

 an increase of $1.4 million in training-related
 expenses as a result of resuming training activities that had been previously cancelled or postponed due to Covid-19 restrictions in 2022;
 and

 •

 an increase in expenses related to overhead costs
 in the amount of $1.2 million.

 These
were partially offset by a decrease in personnel-related costs of $1.2 million as a result of a decrease in commissions and the depreciation
of the NIS against the U.S. dollar.

and Administrative

 Year

 2022

 2023

 2022

 (In

 and administrative

 $

 146,504

 $

 112,496

 $

 34,008

 30.2

 %

and administrative expenses increased by $34.0 million, or 30.2%, in the year ended December 31, 2023 compared to the year ended December
31, 2022, primarily due to:

 •

 an increase in expenses related to doubtful debt
 in the amount of $14.0 million;

 •

 an increase in expenses related to consultants
 and sub-contractors in the amount of $11.5 million;

 •

 an increase in personnel-related costs of $6.5
 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with annual merit
 increases, partially offset by a decrease in employee stock-based compensation and the depreciation of the NIS against the U.S. dollar;
 and

 •

 an increase in expenses related to overhead costs
 in the amount of $1.5 million.

impairment

 Year

 2022

 2023

 2022

 (In

 Goodwill impairment

 —

 90,104

 (90,104

)

 (100

)%

impairment decreased by $90.1 million or 100% in the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease
was mainly due to a decrease in the goodwill impairment charge related to three reporting units e-Mobility, Automation Machines, and Critical
Power in the year ended December 31, 2022.

 Other

 Year

 2022

 2023

 2022

 (In

 Other

 31,314

 26,434

 4,880

 18.5

 %

 Other
operating expenses, net, increased by $4.9 million, or 18.5% in the year ended December 31, 2023 compared to the year ended December 31,
2022, primarily due to:

 •

 an increase of $24.5 million in impairment of
 property, plant and equipment income related to the announced Restructuring Plan to adjust our manufacturing capacity and increase distribution
 efficiency; and

 •

 an increase of $1.7 million in legal claims provision,
 as a result of a recent court decision against our Italian subsidiary relating to the 2019 acquisition of SolarEdge e-Mobility.

 These
were partially offset by a decrease of $22.8 million in impairment of intangible assets, which was attributed to the intangible assets
impairment recorded in the year ended December 31, 2022 for e-Mobility and Critical Power asset groups.

income (expenses), net

 Year

 2022

 2023

 2022

 (In

 income, net

 $

 41,212

 $

 3,750

 $

 37,462

 999.0

 %

income, net increased by $37.5 million or 999.0% in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily
due to:

 •

 a gain of $24.2 million in the year ended December
 31, 2023, compared to a loss of $1.5 million in 2022, as a result of fluctuations in foreign exchange rates, primarily between the Euro
 and NIS against the U.S dollar; and

 •

 an increase of $10.6 million in interest income
 from marketable securities and loans to third parties.

 Other
income (loss)

 Year

 2022

 2023

 2022

 (In

 Other
 income (loss), net

 $

 (318

)

 $

 7,285

 $

 (7,603

)

 (104.4

)%

 Other
loss was $0.3 million in the year ended December 31, 2023 compared to other income of $7.3 million in the year ended December 31, 2022,
primarily due to a decrease in gains from the sale of an investment in a privately-held company.

taxes

 Year

 2022

 2023

 2022

 (In

 taxes

 $ (46,420)

 $ (83,376)

 $ 36,956

 (44.3)%

taxes decreased by $37.0 million, or 44.3%, in the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily
due to:

 •

 a decrease of $5.0 million in current tax due
 to a decrease in profit before tax, offset by an increase in non-deductible expenses, lower tax benefits relating to stock-based compensation

 •

 and an increase in our provision for uncertain
 tax positions; and

 •

 an increase of $32.0 million in deferred tax income,
 mainly related to the update of the projected preferred technological enterprises tax rate change and certain write-offs items which will
 be tax deductible in future periods.

 Loss
from equity method investments

 Year

 2022

 2023

 2022

 (In

 Net loss from equity
 method investments

 $

 (350

)

 $

 —

 $

 (350

)

 100.0

 %

 Net
loss from equity method investments increased by $0.4 million, or 100% in the year ended December 31, 2023 as compared to the year ended
December 31, 2022.

 Net

 Year

 2022

 2023

 2022

 (In

 Net

 $

 $

 $

 (59,450

)

 (63.4

)%

 As
a result of the factors discussed above, net income decreased by $59.5 million, or 63.4% in the year ended December 31, 2023 as compared
to the year ended December 31, 2022.

analysis

 Following
the discontinuation of the Critical Power segment in June 2022, we operated in four different operating segments: Solar, Energy Storage,
e-Mobility and Automation Machines. In October 2023, we decided to discontinue our LCV e-Mobility) activity and the remaining e-Mobility
activity is included under the solar segment starting January 1, 2024. In the fourth quarter of 2023, we identified two operating segments
as reportable – the Solar and the Energy Storage segments. The other operating segments are insignificant individually, and therefore,
their results are presented together under "All other."

 We
do not allocate our operating segments revenue recognized due to advance payments received for performance obligations that extend for
a period greater than one year ("financing component"), related to Accounting Standard Codification 606, "Revenue from
Contracts with Customers" (ASC 606).

profit (loss) is comprised of gross profit (loss) for the segment less operating expenses excluding amortization and impairment of purchased
intangible assets, stock based compensation expenses, restructuring charges, discontinued activity charges, impairment of property, plant
and equipment and certain other items (which are reported under "Not allocated to segments").

 Year

 2022

 2023

 2022

 (In

 Solar

 2,815,539

 2,921,175

 (105,636

)

 (3.6

)%

 profit

 364,517

 486,862

 (122,345

)

 (25.1

)%

 83,717

 76,325

 7,392

 9.7

 %

 loss

 (60,119

)

 (13,863

)

 (46,256

)

 333.7

 %

 All
 other

 76,438

 112,165

 (35,727

)

 (31.9

)%

 loss

 (14,374

)

 (31,274

)

 16,900

 (54.0

)%

 Not
 allocated to segments

 35.8

 %

 loss

 (249,819

)

 (275,605

)

 25,786

 (9.4

)%

 Solar

 Solar revenues
decreased by $105.6 million, or 3.6%, in the year ended December 31, 2023, as compared to the year ended December 31, 2022 primarily due
to a $58.2 million decrease in the amount of ancillary solar products sold and a $50.8 million decrease in the number of batteries sold
for PV applications. As discussed above, this decrease in revenues was due to high inventory in the channels and slower than expected
installation rates beginning in the third quarter of 2023, leading to substantial unexpected cancellations and push outs of existing backlog
from our European distributors.

 Solar
operating profit decreased by $122.3 million, or 25.1%, in the year ended December 31, 2023, as compared to the year ended December 31,
2022. This decrease was mainly due to the decrease in revenue followed by a lower decrease of $55.6 million in cost of revenues, which
was primarily caused by a decrease of $96.5 million in direct cost of revenues and a decrease of $43.0 million in shipment and logistic
costs, which were offset by an increase of $78.0 million in warranty expenses and an increase of $13.2 million in inventory write-downs.
Additionally, operating expenses increased by $72.3 million, primarily due to higher personnel-related costs, expenses related to consultants
and sub-contractors and an increase in expenses related to doubtful debt.

Storage revenues increased by $7.4 million, or 9.7%, in the year ended December 31, 2023,
as compared to the year ended December 31, 2022.

Storage operating loss increased by $46.3 million, or 333.7%, in the year ended December 31, 2023, as compared to the year ended December
31, 2022. The increase in operating loss was primarily due to an increase of $48.8 million in cost of revenues associated with ramp-up
cost and an increase in inventory accrual, both related to the start of manufacturing in our Sella 2 factory.

 All
other

 All
other segments revenues decreased by $35.7 million, or 31.9%, in the year ended December 31,
2023, as compared to the year ended December 31, 2022 primarily due to the discontinuation of the Company's LCV e-Mobility activity
and the discontinuation of our Critical Power activity.

 All
other segments operating loss decreased by $16.9 million, or 54.0%, in the year ended December 31, 2023, as compared to the year ended
December 31, 2022. This improvement was mainly due to a decrease in warranty accruals related to our LCV e-Mobility activity, a reduction
in personnel-related expenses, and a decrease in the loss incurred in the year ended December 31, 2022 associated with the discontinued
Critical Power business.

 Not
allocated to segments

 Not
allocated to segments revenues increased by $0.2 million, or 35.8%, in the year ended December
31, 2023, as compared to the year ended December 31, 2022.

 Not
allocated to segments operating loss decreased by $25.8 million, or 9.4%, in the year ended December 31, 2023, as compared to the year
ended December 31, 2022. The decrease was mainly due to a decrease in goodwill and intangible assets impairment charges, which were related
to our LCV e-Mobility activity during the year ended December 31, 2022. However, during the year ended December 31, 2023 we have experienced
an increase in costs related to the Restructuring Plan, including costs related to the discontinuation of the Company's LCV e-Mobility
activity, and an increase in impairment of property, plant, and equipment, all of which are not assessed by our CODM and therefore not
allocated to any of the segments above.

 Liquidity
and Capital Resources

 The
following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods:

 Year

 2023

 2022

 (In

 Net
 cash provided by (used in) operating activities

 $

 (180,113

)

 $

 31,284

 Net
 cash used in investing activities

 (268,894

)

 (417,044

)

 Net
 cash provided by (used in) financing activities

 (11,956

)

 654,607

 Increase
 (decrease) in cash, cash equivalents and restricted cash

 $

 (460,963

)

 $

 268,847

 As
of December 31, 2023, our cash and cash equivalents were $338.5 million. This amount does not include $929.4 million invested in available
for sale marketable securities and $0.3 million invested in restricted bank deposits. Our principal uses of cash are for funding our operations,
capital expenditures, other working capital requirements, other investments and potential future share repurchases. As of December 31,
2023, we have open commitments for capital expenditures in the amount of approximately $95.5 million. These commitments reflect purchases
of automated assembly lines and other machinery related to our manufacturing operations. We also have purchase obligations in the amount
of $1,041.3 million related to raw materials and commitments for the future manufacturing of our products.

 We
believe our cash and cash equivalents and available for sale marketable securities, will be sufficient to meet our anticipated cash needs
for at least the next 12 months as well as in the longer term, including the self-funding of our capital expenditure and operational commitments.

Activities

 Cash
used in operating activities consists of net income adjusted for certain non-cash items and changes in assets and liabilities. Cash used
in operating activities was $180.1 million in the year ended December 31, 2023 as compared to $31.3 million cash provided by operating
activities in the year ended December 31, 2022, mainly due to lower net income adjusted for certain non-cash items, as well as higher
operating working capital requirements, specifically, an increase in inventory procurement and manufacturing.

 Investing
Activities

 Investing
cash flows consist primarily of cash used for capital expenditures, cash provided by government grants for capital expenditures, investment
in, sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits,
cash used for acquisitions, cash provided by the sale of equity investments and disbursements and receipts from loans made by the Company.
Cash used for investing activities decreased by $148.2 million in the year ended December 31, 2023 as compared to the year ended December
31, 2022, primarily driven by a decrease of $210.8 million in purchases of available-for-sale debt investments and an increase of $49.0
million in proceeds from sales and maturities of available-for-sale debt investments. This was partially offset by an increase of $58.0
million in disbursements of loans made by the Company, a decrease of $23.0 million in proceeds provided by the sale of a privately-held
company, an increase of $16.7 million in cash used for a business combination and an increase of $11.2 million in the purchase of intangible
assets.

 Financing
Activities

 Financing
cash flows consisted primarily of the issuance and repayment of short-term and long-term debt, proceeds from the sale of shares of common
stock in a public offering, and proceeds provided by the exercise of stock-based awards and withholding taxes remitted to the tax authorities
related to stock-based awards. Cash used in financing activities in the year ended December 31, 2023 was $12.0 million, compared to $654.6
million cash provided by financing activities in the year ended December 31, 2022, primarily due to a $650.5 million decrease in cash
provided by the issuance of common stock, net, through a secondary public offering which occurred in March 2022 and a decrease of $38.6
million in proceeds provided by the exercise of stock-based awards. This was partially offset by a decrease of $22.5 million in withholding
taxes remitted to the tax authorities related to the exercise of stock-based awards.

 Convertible
Senior Note

 On
September 25, 2020, we issued $632.5 million aggregate principal amount of our Convertible Senior Notes or Notes in a transaction exempt
from registration pursuant to Rule 144A and Regulation S under the Securities Act. Net proceeds from the offering, after underwriters'
discount and commissions and offering expenses, was $617.9 million. We intend to use the proceeds of the Notes for general corporate purposes
(see Note 17 to our annual financial statements for more information).

 Secondary
public offering

 On
March 17, 2022, we offered and sold 2,300,000 shares of the Company's common stock at a public offering price of $295.00 per share.
The net proceeds to the Company after underwriters' discounts and commissions and offering costs were $650,526. We intend to use the proceeds
from the public offering for general corporate purposes, which may include acquisitions (see Note 19b to our consolidated financial statements
for more information).

 Share
Repurchases

 On
November 1, 2023, we announced the approval by the Board of Directors of a share repurchase program which authorizes the repurchase of
up to $300 million of the Company's common stock. Under the share repurchase program, repurchases can be made using a variety of
methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs
and/or a non-discretionary trading plan or other means, including through 10b5-1 trading plans, all in compliance with the rules of the
SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the share repurchase
program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic
and market conditions. The program does not obligate SolarEdge to acquire any amount of common stock, it may be suspended, extended, modified,
discontinued or terminated at any time at the Company's discretion without prior notice, and will expire on December 31, 2024.

 Critical
Accounting Policies and Significant Management Estimates

 We
prepare our consolidated financial statements in accordance with generally accepted accounting principles in the U.S. ("GAAP").
The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates
made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement
presentation, financial condition, results of operations, and cash flows will be affected. We believe that the accounting policies discussed
below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving
management's judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to
the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments,
often as a result of the need to make estimates about the effects of matters that are inherently uncertain (see Note 2 to our annual financial
statements for more information).

 Revenue
Recognition

 We
generate revenues from the sale of DC optimized inverter systems for solar PV installations which include our power optimizers, inverters,
and cloud-based monitoring platform as well as other solar related ancillary products, Lithium-ion cells, batteries, energy storage solutions,
EV powertrain solutions and machinery. Our worldwide customer base includes large solar installers, distributors, EPCs, utility companies
and other customers. Our products are fully functional at the time of shipment to the customer and do not require production, modification,
or customization with the exception of some ESS systems that require installation and commissioning. We recognize revenue under the core
principle that transfer of control to the customers should be depicted in an amount reflecting the consideration we expect to receive
in revenue. In order to achieve that core principle, we apply the following five-step approach: (1) identify the contract with a customer,
(2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the
performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. Provisions for rebates,
sales incentives and discounts to customers are accounted for as reductions in revenue in the same period that the related sales are recorded.

 We
generally sell our products to our customers pursuant to a customer's standard purchase order and our customary terms and conditions.
We do not offer rights to return our products other than for normal warranty conditions, and as such, revenue is recognized based on the
transfer of control, which includes but is not limited to, the agreed International Commercial terms. We evaluate the creditworthiness
of our customers to determine that appropriate credit limits are established prior to the acceptance and shipment of an order.

 We
provide our full web-based monitoring platform for our solar products free of charge and revenues associated with the service since that
date are being recognized ratably over 25 years. In the absence of third party comparable pricing for such service, management determines
the revenue levels of this service based on the costs associated with providing the service plus appropriate margins that reflect management's
best estimate of the selling price. These revenues are minimal and we do not expect this to become a significant source of revenue in
the near future.

 We
recognize financing component expenses in our consolidated statement of income in relation to advance payments for performance obligations
that extend for a period greater than one year. These financing component expenses are reflected in our deferred revenues balance. Such
performance obligations are those that include a financing component, specifically: (i) warranty extension services, (ii) cloud-based
monitoring, and (iii) communication services.

 See
Notes 2u and 15 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional
information related to revenue recognition.

 Product

 We
provide a standard limited product warranty for our solar products against defects in materials and workmanship under normal use and service
conditions. Our standard warranty period is 25 years for our power optimizers, 12 years for our inverters, 10 years for our storage interface
and a 10-year limited warranty for our batteries for PV applications. Other products are sold with standard limited warranties that typically
range in duration from one to ten years, and in some cases for a longer period. In certain cases, customers can purchase an extended warranty
for our battery storage products and for our batteries for PV applications that extend the standard warranty period. In addition, customers
can purchase extended warranties for inverters that extend the warranty period to up to 25 years.

 Our
products are designed to meet the warranty periods and our reliability procedures cover component selection, design, accelerated life
cycle tests, and end-of-manufacturing line testing. However, since our history in selling power optimizers and inverters is shorter than
the warranty period, the calculation of warranty provisions is inherently uncertain.

 We
accrue for estimated warranty costs at the time of sale based on anticipated warranty claims and actual historical warranty claims experience.
Warranty provisions, computed on a per-unit sold basis, are based on our best estimate of such costs and are included in our cost of revenues.
The warranty obligation is determined based on actual and predicted failure rates of the products, cost of replacement and service and
delivery costs incurred to correct a product failure. Our warranty obligation requires management to make assumptions regarding estimated
failure rates and replacement costs.

 In
order to predict the failure rate of each of our products, we have established a reliability model based on the estimated mean time between
failures ("MTBF"). The MTBF represents the average elapsed time predicted for each product unit between failures during operation.
Applying the MTBF failure rate over our install base for each product type and generation allows us to predict the number of failed units
over the warranty period and estimates the costs associated with the product warranty. Predicted failure rates are updated periodically
based on data returned from the field and new product versions, as are replacement costs which are updated to reflect changes in our actual
production costs for our products, subcontractors' labor costs, and actual logistics costs.

 Since
the MTBF model does not take into account additional non-systematic failures, such as failures caused by workmanship or manufacturing
or design-related issues, and since warranty claims are at times opened for cases in which the error has been triggered by an improper
installation, we have developed a supplemental model to predict such cases and recognize the associated expenses ratably over the expected
claim period. This model, which is based on actual root cause analysis of returned products, identification of the causes of claims and
time until each identified problem is revealed, allows us to better predict actual warranty expenses and is updated periodically based
on our experience, taking into account the installed base of approximately 125.1 million power optimizers and approximately 5.6 million
inverters as of December 31, 2023.

 If
actual warranty costs differ significantly from these estimates, adjustments may be required in the future, which could adversely affect
our gross profit and results of operations. Warranty obligations are classified as short-term and long-term warranty obligations, based
on the period in which the warranty is expected to be claimed. The warranty provision (short and long-term) was $518.2 million and $385.1
million, in the year ended December 31, 2023 and 2022, respectively.

 See
Notes 2w and 14 "Warranty obligations" to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form
10-K for additional information related to product warranty.

 Inventory
Valuation

 Our
inventories comprise sellable finished goods, raw materials bought for our own manufacturing facilities or on behalf of our contract manufacturers,
and faulty units returned under our warranty policy.

 Sellable
finished goods and raw material inventories are valued at the lower of cost or net realizable value, based on the moving average cost
method. Certain factors could affect the realizable value of our inventories, including market and economic conditions, technological
changes, existing product changes (mainly due to cost reduction activities) and new product introductions. We consider historic usage,
expected demand, anticipated sales price, the effect of new product introductions, product obsolescence, product merchantability, and
other factors when evaluating the net realizable value of inventories. Inventory write-downs are equal to the difference between the cost
of inventories and their estimated net realizable value. Inventory write-downs are recorded as cost of revenues in the accompanying statements
of income and were $46.4 million and $10.2 million, in the year ended December 31, 2023 and 2022, respectively.

 Faulty
products returned under our warranty policy are often refurbished and used as replacement units. Such products are written off upon receipt.

 We
do not believe that there is a reasonable likelihood that there will be a material change in future estimates or assumptions that we use
to record inventory at the lower of cost or net realizable value. However, if estimates regarding customer demand are inaccurate or changes
in technology affect demand for certain products in an unforeseen manner, we may be exposed to losses that could be material.

 See
Notes 2j and Note 5 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional
information related to inventory valuation.

 Business
Combination

 We
allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired
based on their estimated fair value. The excess of the fair value of purchase consideration over the fair values of these identifiable
assets and liabilities is recorded as goodwill. Such valuations require our management to make significant estimates and assumptions,
especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited
to, future expected cash flows from acquired technology and other intangible assets, their useful lives and discount rates. Our management's
estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and,
as a result, actual results may differ from estimates. During the measurement period, which is not to exceed one year from the acquisition
date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion
of the measurement period, any subsequent adjustments are recorded to earnings.

 See
Note 2n and Note 3 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional
information related to business combination.

 Intangible
and other long-lived assets

 We
evaluate the recoverability of finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the
carrying amount of such assets may not be recoverable. The evaluation is performed at the lowest level for which identifiable cash flows
are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison
of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying
amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.

 The
more significant estimates and assumptions inherent in the estimate of the fair value of finite-lived intangible assets include (i) assumptions
associated with forecasting product profitability, including sales and cost to sell projections, (ii) tax rates which seek to incorporate
the geographic diversity of the projected cash flows, (iii) expected impact of competitive, legal and/or regulatory forces on the projections
and the impact of technological risk, R&D expenditure for ongoing support of product rights, and (iv) estimated useful lives.

 During
the year ended December 31, 2023, we recorded impairment charge of $5.6 million mainly related to intangible assets within the Solar asset
group.

 Acquired
identifiable finite-lived intangible assets are amortized on a straight-line basis or accelerated method over the estimated useful lives
of the assets. We believe the basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful
lives. We routinely review the remaining estimated useful lives of finite-lived intangible assets. In case we reduce the estimated useful
life assumption for any asset, the remaining unamortized balance is amortized or depreciated over the revised estimated useful life.

 See
Notes 2.o and 9 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional
information related to intangible assets.

reflects the excess of the consideration transferred, including the fair value of any contingent consideration and any non-controlling
interest in the acquiree, over the assigned fair values of the identifiable net assets acquired. Goodwill is not amortized, and is assigned
to reporting units and tested for impairment at least on an annual basis.

 The
goodwill impairment test is performed according to the following principles:

 (1)

 An initial qualitative assessment may be performed
 to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

 (2)

 If the Company concludes it is more likely than
 not that the fair value of the reporting unit is less than its carrying mount, a quantitative fair value test is performed. An impairment
 charge for the amount by which the carrying amount exceeds the reporting unit's fair value is recognized.

 We
estimate the fair values of all reporting units using a discounted cash flow model which utilizes Level 3 unobservable inputs. Key estimates
include the revenue growth rates taking into consideration industry and market conditions, terminal growth rate and the discount rate.
The discount rate used is based on the WACC, adjusted for the relevant risk associated with country-specific and business-specific characteristics.
The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill, to those
reporting units.

 We
complete the required annual testing of goodwill impairment for the reporting units in the fourth quarter of each year and accordingly,
determine whether goodwill should be impaired. During the year ended December 31, 2023, no impairment of goodwill has been identified.

 See
Notes 2.q and 10 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional
information related to goodwill.

 Government
grants

 In
August 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the "IRA"), which contains several provisions
intended to accelerate U.S. manufacturing and adoption of clean energy such as solar. Some of the applicable provisions in IRA include
the extension of the Production Tax Credit through 2034. These provisions of the law are new and regulations and guidance concerning their
implementation are gradually being published by the U.S. Treasury Department. Section 45X of the IRA offers advanced manufacturing production
tax credits ("AMPTC"), that incentivize the production of eligible components within the United States. To that end, we established manufacturing
capabilities in the United States in 2023 and announced additional capacity planned for 2024. IRA allows taxpayers to elect to have AMPTCs
refunded in cash ("direct pay") or transfer these credits to a third party. In addition to using the tax credits to offset tax due to
the U.S. government, the direct pay option is available as a one-time election, in any taxable year after December 31, 2022, for a facility
in which eligible components are produced, and is applicable for five years.

 Refundable
and transferable tax credits are similar in essence to government grants. This is because the taxpayer can realize the benefit regardless
of whether they owe income tax or not in the relevant years. Therefore, these amounts are not considered income taxes and fall outside
the scope of Topic 740. Instead, they are treated as government grants.

 Government
grants are recognized when there is reasonable assurance that: (1) we will comply with the relevant conditions and (2) the grant disbursement
will be received. We recognize PTCs as a reduction in the cost of revenues in the statement of income. We do this systematically over
time as we recognize the related expenses. Alternatively, we recognize the grant immediately if it compensates us for expenses that we
have already incurred. The AMPTCs are also reflected in the consolidated balance sheet as a reduction of income tax payable within accrued
expenses and other liabilities, as a tax prepayment, or as AMPTCs to be sold within prepayment and other assets. The way we expects to
utilize the AMPTCs determines where they are recorded. In the year ended December 31, 2023, we recognized AMPTCs worth $6.0 million for
inverters produced in the United States and sold to customers. As of December 31, 2023, benefits recognized from AMPTCs of $6.0 were recorded
as a tax prepayment within prepayment and other current assets.

taxes

 We
account for income taxes in accordance with ASC 740, "Income Taxes." ASC 740, which prescribes the use of the liability method,
whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax basis
of assets and liabilities, and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

 We
account for uncertain tax positions in accordance with ASC 740-10 two-step approach to recognizing and measuring uncertain tax positions.
The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available
evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained
on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest
amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.

 See
Note 2.af and 25 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional
information related to income taxes.

 ITEM
7A. Quantitative and Qualitative Disclosures About Market Risk

 We
are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial
position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in
foreign currency exchange rates, customer concentrations, and interest rates. We do not hold or issue financial instruments for trading
purposes.

Currency Exchange Risk

 Approximately
68.2%, 60.1% and 54.3% of our revenues for the years ended December 31, 2023, 2022 and 2021, respectively, were earned in non-U.S. dollar
denominated currencies, principally the Euro. Our expenses are generally denominated in the currencies in which our operations are located,
primarily the U.S. dollar and New Israeli Shekel ("NIS"), Euro, and the South Korean Won ("KRW"). Our NIS denominated expenses consist
primarily of personnel and overhead costs. Our consolidated results of operations and cash flows are, therefore, subject to fluctuations
due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.
A hypothetical 10% change in foreign currency exchange rates between the Euro and the U.S. dollar would increase or decrease our net income
by $194.7 million for the year ended December 31, 2023. A hypothetical 10% change in foreign currency exchange rates between the NIS and
the U.S. dollar would increase or decrease our net income by $39.3 million for the year ended December 31, 2023.

 For
purposes of our consolidated financial statements, local currency assets and liabilities are translated at the rate of exchange to the
U.S. dollar on the balance sheet date and local currency revenues and expenses are translated at the exchange rate as of the date of the
transaction or at the average exchange rate to the U.S. dollar during the reporting period.

 To
date, we have used derivative financial instruments, specifically foreign currency forward contracts and put and call options, to manage
exposure to foreign currency risks by hedging portions of the anticipated payroll payments denominated in NIS. Our foreign currency forward
contracts are expected to mitigate exchange rate changes related to the hedged assets. Those hedging contracts are designated as cash
flow hedges.

 In
addition, from time to time we enter into derivative financial instruments to hedge the Company's exposure to currencies other than
the U.S. dollar, mainly forward contracts or put and call options to sell Euro for U.S. dollars. These derivative instruments are not
designated as cash flow hedges.

 We
had cash and cash equivalents of $338.5 million and $783.1 million as of December 31, 2023 and 2022, respectively, which was held for
working capital purposes. We had available-for-sale marketable securities with an estimated fair value of $929.4 million and $886.6 million
as of December 31, 2023 and 2022, respectively. In addition, we had restricted bank deposits of 0.3 million and $1.9 million as of December
31, 2023 and 2022, respectively.

our hedging activities may also contribute to increased losses as a result of volatility in foreign currency markets. If foreign exchange
currency markets continue to be volatile, such fluctuations in foreign currency exchange rates could materially and adversely affect our
profit margins and results of operations in future periods. Also, the volatility in the foreign currency markets may make it difficult
to hedge our foreign currency exposures effectively.

 Concentrations
of Major Customers

 Our
trade accounts receivables potentially expose us to a concentration of credit risk with our major customers. For the year ended December
31, 2023, two major customers accounted for 24.0% of our total revenues, and as of December 31, 2023, three major customers accounted
for approximately 46.8% of our consolidated trade receivables balance. For the year ended December 31, 2022, one major customers accounted
for 18.5% of total revenues, and as of December 31, 2022, two major customers accounted for approximately 42.2% of our consolidated trade
receivables balance. We currently do not foresee a credit risk associated with these receivables.

 Commodity
Price Risk

 We
are subject to risk from fluctuating market prices of certain commodity raw materials which are used in our products, including Copper,
Lithium, Nickel and Cobalt. Prices of these raw materials may be affected by supply restrictions or other market factors from time to
time, and we do not enter into hedging arrangements to mitigate commodity risk. Significant price changes for these raw materials could
reduce our operating margins if we are unable to recover such increases from our customers, and could harm our business, financial condition,
and results of operations.

 ITEM
8.
 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

TO CONSOLIDATED FINANCIAL STATEMENTS

 Financial Statements

 Reports
 of Independent Registered Public Accounting Firm (PCAOB ID: 1281)

 Balance Sheets as of December 31, 2023 and 2022

 Statements of Income for the year ended December 31, 2023, 2022 and 2021

 Statements of Comprehensive Income for the year ended December 31, 2023, 2022 and 2021

 Statements of Stockholders' Equity for the year ended December 31, 2023, 2022 and 2021

 Statements of Cash Flows for the year ended December 31, 2023, 2022 and 2021

 Notes
 to Consolidated Financial Statements

 Report
of Independent Registered Public Accounting Firm

 To
the Shareholders and the Board of Directors of SolarEdge Technologies Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of SolarEdge Technologies Inc. (the "Company") as of December 31, 2023 and 2022,
the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2023, in conformity with U.S. generally accepted accounting principles.

 We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's
internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2024
expressed an unqualified opinion thereon.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable
basis for our opinion.

 Critical
Audit Matters

 The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the critical audit matters or on the account or disclosures to which they
relate.

 F
- 2

obligation

 Description of the Matter

 As
 described in Notes 2w and 14 to the consolidated financial statements, as of December 31, 2023, the warranty obligation was $512,748 thousand.

 Substantially all of
 the Company's warranty obligations are related to the solar business. The Company's products include a warranty of up to 12 years for
 inverters, up to 25 years for its power optimizers and 10 years for batteries for PV applications. In order to predict the failure rate
 of each product, the Company established a reliability model based on the estimated mean time between failures ("MTBF") and an additional
 model to capture non-systematic failures. Predicted failure rates are updated periodically based on new product versions and analysis
 of the root cause of actual failures, as are warranty related replacement costs.

 Auditing
 the management's warranty obligations valuation of the solar business was complex and subject to judgment due to the significant
 estimations required in calculating its amount. In particular, the warranty obligations are subject to significant assumptions such as
 product failure rates, the average cost of products replacements and other warranty related costs.

 How We Addressed the

 Matter in Our Audit

 We
 obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting for warranty
 obligations of solar business, including controls over management's review of the significant assumptions and data underlying the warranty
 obligations valuation.

 To
 test the Company's warranty obligations our substantive audit procedures included, among others, look back analysis and testing
 the accuracy and completeness of the underlying data used in management's warranty obligations valuation assessment. We assessed the accuracy
 of historical data used in estimating forecasted failure rates, repair replacement ratios and other warranty related costs and compared
 them to actual warranty claims. In addition, we involved a specialist to assess the assumptions and the precision of the inputs underlying
 the MTBF model, including, evaluating the appropriateness of the MTBF model and its consistency with data obtained from external sources.

 Valuation
of Inventories - Provisions for Excess Inventories and excess product for the contractual obligations

 Description of the Matter

 As
 of December 31, 2023, the Company's consolidated inventories balance was $1,443 thousand and the Company's contractual obligations
 to purchase inventories from contract manufacturers ("contractual purchase obligations") were $543 thousand.

 As described in Notes
 1, 5 and 20 to the consolidated financial statements, the Company values its inventories at the lower of cost or net realizable value.
 Reserves for potentially excess inventories and excess product contractual purchase obligations are made based on management's analysis
 of inventory levels, future sales forecasts, and market conditions.

 Auditing the valuation
 of inventory reserves for the excess inventories and excess product contractual purchase obligations were complex and subject to judgment
 due to the significant estimates and assumptions required by management to calculate the reserves, especially, the future salability of
 the inventories. These assumptions include the assessment by inventory category of future demand and market conditions for the Company's
 products.

 How We Addressed the

 Matter in Our Audit

 We
 obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess
 inventory reserve process and excess product contractual purchase obligations including management's assessment of the underlying assumptions
 and data.

 To
 test the valuation of inventory reserve for the excess inventories and excess product contractual purchase obligations our substantive
 audit procedures included, among others, evaluating the reasonableness of the significant assumptions used by management including those
 related to forecasted inventory usage, future demand, and market conditions. We examined the completeness, accuracy, and relevance of
 the underlying data used in management's estimate. We held discussions with appropriate non-financial personnel including sales, R&D
 and operating management, regarding strategic or operational changes in the business would impact expected demand or related carrying
 value of inventories, introduction of new products and other factors to corroborate management's assertions regarding excess inventories.
 We performed an examination of historical forecasted sales estimation to actual utilization of inventories and performed sensitivity analysis
 on demand assumptions to evaluate the changes in the inventory reserve that would result from changes in the assumptions.

 /s/
 Kost Forer Gabbay & Kasierer

 A
Member of EY Global

 We
have served as the Company's auditor since 2007.

 Tel-Aviv,
Israel

 February 26, 2024

 F
- 3

 Report
of Independent Registered Public Accounting Firm

 To
the Shareholders and the Board of Directors of SolarEdge Technologies Inc.

 Opinion
on Internal Control Over Financial Reporting

 We
have audited SolarEdge Technologies Inc.'s internal control over financial reporting as of December 31, 2023, based on criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),
(the COSO criteria). In our opinion, SolarEdge Technologies Inc. (the Company) maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2023, based on the COSO criteria.

 We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders'
equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February
26, 2024 expressed an unqualified opinion thereon.

 Basis
for Opinion

 The
Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

 We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

 Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 Definition
and Limitations of Internal Control Over Financial Reporting

 A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

 /s/
Kost Forer Gabbay & Kasierer

 A
Member of EY Global

 Tel-Aviv,
Israel

 February
26, 2024

 F
- 4

BALANCE SHEETS

 (in

 31,

 2023

 2022

 ASSETS

 CURRENT
 ASSETS:

 Cash
 and cash equivalents

 $

 338,468

 $

 783,112

 Marketable

 521,570

 241,117

 Trade
 receivables, net of allowances of $ 16,400
 and $ 3,202,
 respectively

 622,425

 905,146

 Inventories,
 net

 1,443,449

 729,201

 Prepaid
 expenses and other current assets

 378,394

 241,082

 Total
 current assets

 3,304,306

 2,899,658

 LONG-TERM
 ASSETS:

 Marketable

 407,825

 645,491

 tax assets, net

 80,912

 44,153

 Property,
 plant and equipment, net

 614,579

 543,969

 lease right-of-use assets, net

 64,167

 62,754

 Intangible
 assets, net

 35,345

 19,929

 42,996

 31,189

 Other
 long-term assets

 37,601

 18,806

 Total
 long-term assets

 1,283,425

 1,366,291

 Total
 assets

 $

 4,587,731

 $

 4,265,949

 The
accompanying notes are an integral part of the consolidated financial statements.

 F - 5

BALANCE SHEETS (Cont.)

 (in

 31,

 2023

 2022

 LIABILITIES
 AND STOCKHOLDERS' EQUITY

 CURRENT
 LIABILITIES:

 Trade
 payables, net

 $

 386,471

 $

 459,831

 Employees
 and payroll accruals

 76,966

 85,158

 obligations

 183,047

 103,975

 revenues and customers advances

 40,836

 26,641

 205,911

 214,112

 Total
 current liabilities

 893,231

 889,717

 LONG-TERM
 LIABILITIES:

 Convertible
 senior notes, net

 $

 627,381

 $

 624,451

 obligations

 335,197

 281,082

 revenues

 214,607

 186,936

 41,892

 45,385

 45,070

 46,256

 Other
 long-term liabilities

 18,444

 15,756

 Total
 long-term liabilities

 1,282,591

 1,199,866

 COMMITMENTS
 AND CONTINGENT LIABILITIES

 STOCKHOLDERS'
 EQUITY:

 Common
 stock of $ 0.0001
 par value - Authorized: 125,000,000
 shares as of

 31, 2023 and December 31, 2022; issued and outstanding:

 57,123,437
 and 56,133,404
 shares as of December 31, 2023 and December 31, 2022, respectively

 Additional
 paid-in capital

 1,680,622

 1,505,632

 Accumulated
 other comprehensive loss

 ( 46,885

)

 ( 73,109

)

 Retained
 earnings

 778,166

 743,837

 Total
 stockholders' equity

 2,411,909

 2,176,366

 Total
 liabilities and stockholders' equity

 $

 4,587,731

 $

 4,265,949

 The
accompanying notes are an integral part of the consolidated financial statements.

 F - 6

STATEMENTS OF INCOME

 (in

 Year

 2023

 2022

 2021

 $

 $

 $

 1,963,865

 Cost
 of revenues

 2,272,705

 2,265,631

 1,334,547

 Gross
 profit

 703,823

 844,648

 629,318

 expenses:

 and development

 321,482

 289,814

 219,633

 Sales
 and marketing

 164,318

 159,680

 119,000

 and administrative

 146,504

 112,496

 82,196

 impairment

 -

 90,104

 -

 Other

 31,314

 26,434

 1,350

 Total
 operating expenses

 663,618

 678,528

 422,179

 40,205

 166,120

 207,139

 income (expense), net

 41,212

 3,750

 ( 20,014

)

 Other
 income (loss), net

 ( 318

)

 7,285

 before income taxes

 81,099

 177,155

 187,224

 taxes

 46,420

 83,376

 18,054

 Net
 loss from equity method investments

 -

 -

 Net

 $

 $

 $

 Net
 basic earnings per share of common stock

 $

 0.61

 $

 1.70

 $

 3.24

 Net
 diluted earnings per share of common stock

 $

 0.60

 $

 1.65

 $

 3.06

 average number of shares used in computing net basic earnings per share of common stock

 56,557,106

 55,087,770

 52,202,182

 average number of shares used in computing net diluted earnings per share of common stock

 57,237,518

 58,100,649

 55,971,030

 The
accompanying notes are an integral part of the consolidated financial statements.

 F - 7

STATEMENTS OF COMPREHENSIVE INCOME

 (in

 Year

 2023

 2022

 2021

 Net

 $

 $

 $

 Other
 comprehensive income (loss), net of tax:

 Available-for-sale
 marketable securities

 20,489

 ( 20,740

)

 ( 4,949

)

 Cash
 flow hedges

 5,701

 ( 2,635

)

 currency translation adjustments on intra-entity transactions that are of a long-term investment nature

 ( 5,375

)

 ( 20,540

)

)

 currency translation adjustments

 5,409

 ( 1,875

)

 ( 9,681

)

 Total
 other comprehensive income (loss)

 26,224

 ( 45,790

)

 ( 31,176

)

 Comprehensive

 $

 60,553

 $

 47,989

 $

 137,994

 The
accompanying notes are an integral part of the consolidated financial statements.

 F - 8

STATEMENTS OF STOCKHOLDERS' EQUITY

 (in

 Technologies, Inc. Stockholders' Equity

 Common
 stock

 Additional

 paid
 in

 Capital

 Accumulated

 other

 comprehensive

 (loss)

 Retained

 earnings

 Total

 Number

 Amount

 as of December 31, 2020

 51,560,936

 $

 $

 603,891

 $

 3,857

 $

 478,004

 $

 1,085,757

 Cumulative
 effect of adopting ASU 2020-06

 -

 -

 ( 36,336

)

 -

 2,884

 ( 33,452

)

 of common stock upon exercise of stock-based awards

 1,204,861

 *
 -

 6,486

 -

 -

 6,486

 of Common stock under employee stock purchase plan

 49,598

 *
 -

 10,661

 -

 -

 10,661

 Stock
 based compensation

 -

 -

 102,593

 -

 -

 102,593

 Other
 comprehensive loss adjustments, net

 -

 -

 -

 ( 31,176

)

 -

 ( 31,176

)

 Net

 -

 -

 -

 -

 as of December 31, 2021

 52,815,395

 $

 $

 687,295

 $

 ( 27,319

)

 $

 650,058

 $

 1,310,039

 of common stock upon exercise of stock-based awards

 940,880

 *
 -

 4,030

 -

 -

 4,030

 of Common stock under employee stock purchase plan

 77,129

 *
 -

 17,863

 -

 -

 17,863

 Stock
 based compensation

 -

 -

 145,919

 -

 -

 145,919

 of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140
 and $ 834
 of offering costs

 2,300,000

 650,525

 -

 -

 650,526

 Other
 comprehensive loss adjustments, net

 -

 -

 -

 ( 45,790

)

 -

 ( 45,790

)

 Net

 -

 -

 -

 -

 as of December 31, 2022

 56,133,404

 $

 $

 1,505,632

 $

 ( 73,109

)

 $

 743,837

 $

 2,176,366

 of common stock upon exercise of stock-based awards

 790,745

 *
 -

 -

 -

 of Common stock under employee stock purchase plan

 199,288

 *
 -

 20,693

 -

 -

 20,693

 Stock
 based compensation

 -

 -

 154,071

 -

 -

 154,071

 Other
 comprehensive income adjustments, net

 -

 -

 -

 26,224

 -

 26,224

 Net

 -

 -

 -

 -

 as of December 31, 2023

 57,123,437

 $

 $

 1,680,622

 $

 ( 46,885

)

 $

 778,166

 $

 2,411,909

 *
Represents an amount less than $1.

 The
accompanying notes are an integral part of the consolidated financial statements.

 F - 9

STATEMENTS OF CASH FLOWS

 (in

 Year

 2023

 2022

 2021

 Cash
 flows from operating activities:

 Net

 $

 $

 $

 Adjustments
 to reconcile net income to net cash provided by (used in) operating activities:

 Depreciation
 and amortization

 57,196

 49,676

 39,535

 Loss
 (gain) from exchange rate fluctuations

 ( 26,878

)

 9,527

 21,131

 Stock-based
 compensation expenses

 149,945

 145,539

 102,593

 of goodwill and long-lived assets

 30,790

 119,141

 -

 income taxes, net

 ( 43,071

)

 ( 11,055

)

 ( 12,045

)

 Other
 items

 8,164

 4,382

 11,931

 in assets and liabilities:

 Inventories,
 net

 ( 690,854

)

 ( 341,085

)

 ( 43,051

)

 Prepaid
 expenses and other assets

 ( 91,523

)

 ( 64,991

)

 ( 39,444

)

 Trade
 receivables, net

 296,429

 ( 457,610

)

 ( 247,723

)

 Trade
 payables, net

 ( 67,795

)

 194,524

 91,709

 Employees
 and payroll accruals

 21,419

 26,238

 26,519

 obligations

 133,090

 120,169

 60,524

 revenues and customers advances

 39,632

 44,376

 29,936

 expenses and other liabilities, net

 ( 30,986

)

 98,674

 3,344

 Net
 cash provided by (used in) operating activities

 ( 180,113

)

 31,284

 214,129

 Cash
 flows from investing activities:

 Investment
 in available-for-sale marketable securities

 ( 296,396

)

 ( 507,171

)

 ( 579,377

)

 from sales and maturities of available-for-sale marketable securities

 280,189

 231,210

 202,188

 of property, plant and equipment

 ( 170,523

)

 ( 169,341

)

 ( 149,251

)

 Disbursements for loans receivables

 ( 58,000

)

 -

 -

 Business
 combinations, net of cash acquired

 ( 16,653

)

 -

 -

 of intangible assets

 ( 10,600

)

 -

 -

 Investment
 in privately-held companies

 ( 8,000

)

 -

 ( 16,643

)

 from governmental grant

 6,794

 4,479

 -

 from sale of a privately-held company

 1,313

 24,362

 -

 Withdrawal
 from bank deposits, net

 -

 -

 60,096

 Other
 investing activities

 2,982

 ( 583

)

 ( 1,224

)

 Net
 cash used in investing activities

 $

 ( 268,894

)

 $

 ( 417,044

)

 $

 ( 484,211

)

 F - 10

STATEMENTS OF CASH FLOWS (Cont.)

 (in

 Year

 2023

 2022

 2021

 Cash
 flows from financing activities:

 Tax
 withholding in connection with stock-based awards, net

 $

 ( 9,259

)

 $

 3,023

 $

 ( 4,283

)

 Payments
 of finance lease liability

 ( 2,794

)

 ( 2,834

)

 ( 1,308

)

 from secondary public offering, net of issuance costs

 -

 650,526

 -

 Repayment
 of bank loans

 ( 129

)

 ( 138

)

 ( 16,073

)

 Other
 financing activities

 4,030

 6,486

 Net cash
 provided by (used in) financing activities

 ( 11,956

)

 654,607

 ( 15,178

)

 Increase
 (decrease) in cash and cash equivalents

 ( 460,963

)

 268,847

 ( 285,260

)

 Cash and
 cash equivalents at the beginning of the period

 783,112

 530,089

 827,146

 Effect of
 exchange rate differences on cash and cash equivalents

 16,319

 ( 15,824

)

 ( 11,797

)

 Cash and
 cash equivalents at the end of the period

 $

 338,468

 $

 783,112

 $

 530,089

 Supplemental
 disclosure of non-cash activities:

 of intangible assets and business combinations

 $

 11,307

 $

 -

 $

 -

 Right-of-use
 asset recognized with corresponding lease liability

 $

 18,077

 $

 46,004

 $

 20,526

 of property, plant and equipment

 $

 6,323

 $

 16,016

 $

 10,781

 Supplemental
 disclosure of cash flow information:

 Cash paid
 for income taxes

 $

 137,981

 $

 74,689

 $

 45,977

 The accompanying
notes are an integral part of the consolidated financial statements.

 F - 11

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 (in

 NOTE
1: GENERAL

Technologies, Inc. (the "Company") and its subsidiaries design, develop, and sell an intelligent inverter solution designed
to maximize power generation at the individual photovoltaic ("PV") module level while lowering the cost of energy produced
by the solar PV system and providing comprehensive and advanced safety features. The Company's products consist mainly of (i) power
optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually
per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company's future
ready energy hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup capabilities,
and optional connection to the Company's smart EV charger, (iii) a remote cloud-based monitoring platform, that collects and processes
information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv)
batteries for PV applications that are used to increase energy independence and maximize self-consumption for PV system's owners including
a battery,and (v) additional smart energy management solutions.

 The
Company and its subsidiaries sell products worldwide through large distributors, electrical equipment wholesalers, as well as directly
to large solar installers and engineering, procurement and construction firms.

 The
Company has expanded its activity to other areas of smart energy technology organically and through acquisitions. The Company offers a
variety of energy solutions, which include lithium-ion cells, batteries and energy storage systems ("Energy Storage"), full
powertrain kits and batteries for electric vehicles, or EVs ("e-Mobility"), as well as automated machines for industrial use
("Automation Machines").

 On
April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd. ("Hark"), a UK-based energy IoT company
for the commercial and industrial ("C&I") sector.

 In
October 2023, the Company decided to discontinue its light commercial vehicle e-Mobility ("LCV") activity (see Note 24).

 NOTE 2:
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 The
consolidated financial statements are prepared according to United States generally accepted accounting principles ("U.S. GAAP").

 a.
 Principles of consolidation:

 The
consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances including
profit from intercompany sales not yet realized outside the Company have been eliminated upon consolidation.

 b.
 Use of estimates:

 The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, costs and expenses, government grants, income taxes and related disclosures in the accompanying
notes. Actual results could differ from those estimates.

 In
preparing the Company's consolidated financial statements, management also considered the economic implications of inflation expectations
on its critical and significant accounting estimates. In addition, the duration, scope and effects of the war in Israel and the conflict
in Ukraine, government and other third-party responses to it, and the related macroeconomic effects, including to the Company's
business and the business of the Company's suppliers and customers are uncertain, rapidly changing and difficult to predict. As
a result, the Company's accounting estimates and assumptions may change over time in response to these evolving situations. Such
changes could result in future impairments of goodwill and long-lived assets, inventories write-offs, incremental credit losses on receivables
and available-for-sale marketable debt securities and changes in warranty obligations as of the time of a relevant measurement event.

 F - 12

 NOTES

 c.
 Financial statements in U.S. dollars:

 A
major part of the Company's operations is carried out in the United States, Israel and certain other countries. The functional currency
of these entities is the U.S. dollar. Financing activities, including cash investments are primarily made in U.S. dollars.

 Accordingly,
monetary accounts maintained in currencies other than the U.S. dollar are translated into U.S. dollars in accordance with Financial Accounting
Standards Board Accounting Standards Codification ("ASC") No. 830 "Foreign Currency Matters". All transaction
gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of income as financial income or
expenses, as appropriate.

 The
financial statements of other Company's subsidiaries whose functional currency is other than the U.S. dollar have been translated
into U.S dollars. Assets and liabilities have been translated using the exchange rates in effect as of the balance sheet date. Statements
of income amounts have been translated using the date of the transaction or at the average exchange rate for the relevant period.

 The
resulting translation adjustments are reported as a component of stockholders' equity in accumulated other comprehensive income
(loss). Gains and losses arising from intercompany foreign currency transactions that are of a long-term investment in nature are reported
in the same manner as translation adjustments.

 d.
 Cash and cash equivalents:

 Cash
equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or
less at the date acquired.

 e.
 Restricted bank deposits:

 Short-term
restricted bank deposits possess an original maturity of more than three months and less than a year from the date of investment. Long-term
restricted bank deposits possess an original maturity of more than one year from the date of investment. Restricted bank deposits are
primarily used as collateral for the Company's office leases and credit cards.

 f.
 Marketable Securities:

 Marketable
securities consist of corporate and governmental bonds. The Company determines the appropriate classification of marketable securities
at the time of purchase and re-evaluates such designation at each balance sheet date. In accordance with FASB ASC No. 320 "Investments
- Debt and Equity Securities", the Company classifies marketable securities as available-for-sale.

 Available-for-sale
("AFS") securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss),
a separate component of stockholders' equity, net of taxes. Realized gains and losses on sales of marketable securities, as determined
on a specific identification basis, are included in other income (loss), net on the consolidated statements of income. The amortized cost
of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest,
are included in financial income (expenses), net.

 The
Company classifies its marketable securities as either short-term or long-term based on each instrument's underlying contractual
maturity date. Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with
maturities greater than 12 months are classified as long-term.

 On
each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as
well as the ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 326.

 Allowance
for credit losses on AFS debt securities are recognized as a charge in financial income (expenses), net, on the consolidated statements
of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders'
equity.

 The
Company has not recorded credit losses on AFS debt securities for the years ended December 31, 2023, 2022 and 2021.

 F - 13

 NOTES

 g.
 Investment in privately-held companies:

 The
Company's equity investments are investments in equity securities of privately-held companies, that are not traded and therefore not supported
with observable market prices. The Company elected to account for its equity investments without readily determinable market values that
either (i) do not meet the definition of in-substance common stock or (ii) do not provide the Company with control or significant influence
using Accounting Standards Update ("ASU") 2016-01.

 The
Company adjusts the carrying value of its investments to fair value upon observable transactions for identical or similar investments
of the same issuer.

 The
Company periodically evaluates the carrying value of the investments in privately-held companies when events and circumstances indicate
that the carrying amount of the investment may not be recovered. The maximum loss the Company can incur for its investments is their carrying
value.

 The
Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the privately-held
companies, the amount of cash that the privately-held companies have on-hand, the ability to obtain additional financing and overall market
conditions in which the privately-held companies operate or based on the price observed from the most recent completed financing.

 All
gains and losses on investments in privately-held companies, realized and unrealized, are recognized in other income (loss).

 h.
 Trade receivables:

 Trade
receivables are stated net of credit losses allowance. The Company is exposed to credit losses primarily through sales of products. The
allowance against gross trade receivables reflects the current expected credit loss inherent in the receivables portfolio determined based
on the Company's methodology. The Company's methodology is based on historical collection experience, customer creditworthiness,
current and future economic condition and market condition. Additionally, specific allowance amounts are established to record the appropriate
provision for customers that have a higher probability of default. Trade receivables are written off after all reasonable means to collect
the full amount have been exhausted.

 The
following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of trade receivables
to present the net amount expected to be collected:

 Year
 Ended

 Balance, at beginning
 of the period

 $

 3,202

 Increase in provision
 for expected credit losses

 13,760

 Recoveries collected

 ( 134

)

 Amounts written off charged against the allowance

 ( 568

)

 Foreign currency translation

 Balance, at end of the
 period

 $

 16,400

 i.
 Loan receivables:

 Loan
receivables are carried at the outstanding principal amount. An allowance for credit loss on loan receivables is established when, based
on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual
terms of the loan agreement. The Company determines this by considering several factors, including the credit risk and current financial
condition of the borrower, the borrower's ability to pay current obligations, historical trends, and economic and market conditions.
The Company performs a credit quality assessment on the loan receivable on a quarterly basis and reviews the need for an allowance in
accordance with ASC 326. The Company evaluates the extent and impact of any credit deterioration that could affect the performance and
the value of the secured property, as well as the financial and operating capability of the borrower.

 Interest
income is recorded on an accrual basis at the stated interest rate and is recorded in financial income (expense) in the accompanying consolidated
statements of income. Expected provision for credit loss regarding the Company's loans was immaterial. The amortized cost of the loan
receivable approximates its fair value as of December 31, 2023.

 F - 14

 NOTES

 j.
 Inventories:

 Inventories
are stated at the lower of cost or net realizable value. Cost includes depreciation, labor, material, shipment and overhead costs. Inventory
reserves are provided to cover risks arising from slow-moving, excess inventory items or technological obsolescence. The Company periodically
evaluates the quantities on hand relative to historical, current and projected sales volume. Based on this evaluation, an impairment charge
is recorded when required to write-down inventory to its net realizable value. Cost of finished goods and raw materials is determined
using the moving average cost method.

 k.
 Property, plant and equipment:

 Property,
plant and equipment are stated at cost, net of accumulated depreciation and government grants. Assets under construction represent the
construction or development stage of property and equipment that have not yet been placed in service for the Company's intended use. Depreciation
is calculated by the straight-line method over the estimated useful life of the assets, at the following rates:

 %

 Buildings and plants

 2.5 - 5.7
 (mainly 2.5)

 Computers and peripheral
 equipment

 14.3 - 33.3
 (mainly 33.3)

 Office furniture and
 equipment

 7 - 25
 (mainly 7)

 Machinery and equipment

 10 - 25
 (mainly 10)

 Laboratory and testing
 equipment

 10 - 20
 (mainly 10)

 Leasehold
 improvements

 over
 the shorter of the lease term or useful economic life

 l.
 Government assistance

 Advanced
manufacturing production tax credits

 In
August 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the "IRA"), which contains several provisions
intended to accelerate U.S. manufacturing and adoption of clean energy such as solar. Some of the applicable provisions in the IRA include
the extension of the Production Tax Credit ("PTC") through 2034. These provisions of the law are new and regulations and guidance
concerning their implementation are gradually being published by the U.S. Treasury Department. Section 45X of the IRA offers advanced
manufacturing production tax credits ("AMPTC"), which incentivize the production of eligible components within the United States. To that
end, the Company established manufacturing capabilities in the United States in 2023 and announced additional capacity expected in 2024.
In addition to using the tax credits to offset tax due to the U.S. government, the IRA allows taxpayers to elect to have AMPTCs refunded
in cash ("Direct Pay") or transfer these credits to a third party. The Direct Pay option is available as a one-time election, in any taxable
year after December 31, 2022, for a facility in which eligible components are produced, and is applicable for five years.

 F - 15

 NOTES

 Refundable and transferable tax credits are
similar in essence to government grants. This is because the taxpayer can realize the benefit regardless of whether they owe income tax
or not in the relevant years. Therefore, these amounts are not considered income taxes and fall outside the scope of Topic 740. Instead,
they are treated as government grants.

 Government
grants are recognized when there is reasonable assurance that: (1) the Company will comply with the relevant conditions and (2) the grant
disbursement will be received. The Company recognize's AMPTCs as a reduction in the cost of revenues in the statement of income. The Company
does this systematically over time as it recognizes the related expenses. Alternatively, the Company recognizes the grant immediately
if the grant compensates the Company for expenses that it has already incurred. The AMPTCs are also reflected in the consolidated balance
sheet as a reduction of income tax payable within accrued expenses and other liabilities, as a tax prepayment, or as AMPTCs to be sold
within prepayment and other assets. The way the Company expects to utilize the AMPTCs determines where they are recorded.

 In
the year that ended December 31, 2023, the Company recognized AMPTCs worth $ 6,020
as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers. As of December 31, 2023,
benefits recognized from AMPTCs of $ 6,020
were recorded as a tax prepayment within prepayment and other current assets.

 Property,
plant and equipment

 In
2020, SolarEdge Ltd, a wholly owned subsidiary of the Company, entered into an agreement with the Israeli Ministry of Economy and Industry
to partially subsidize the construction of Sella 1, a factory for production of inverters and optimizers, in the amount of approximately
$ 7,000.

 In
2020, SolarEdge Korea (formerly Kokam), a wholly owned subsidiary of the Company, entered into an agreement with Chungcheongbuk-do province
of South Korea to partially subsidize the construction of Sella 2, a factory for production of lithium-ion cells and batteries, in the
amount of approximately $ 12,000.

 The
assistance is in the form of a cash subsidy, which the government will pay as a grant upon the satisfaction of predetermined construction
completion milestones. When the defined milestones are reached and the right to receive a subsidy amount becomes virtually certain, the
amount of the grant is recorded as a reduction of the related asset's value under "Property, plant and equipment, net".

 The
Company did not record reduction of property, plant and equipment for the year ended December 31, 2023.

 The
Company recorded reduction of property, plant and equipment in the amount of $ 7,359
for the year ended December 31, 2022.

 As
of December 31, 2023, the Company has a right to receive of $ 2,018
that has yet to be received which was recorded under "Prepaid expenses and other current assets".

 m.
 Leases:

 The
Company determines if an arrangement is a lease at inception. Contracts containing a lease are further evaluated for classification as
an operating or finance lease. In determining the leases classification the Company assesses among other criteria: (i) The lease term
is for a major part of the remaining economic life of the underlying asset (ii) The present value of the sum of the lease payments and
any residual value guaranteed by the lessee that is not already included in the lease payments equals or exceeds substantially all of
the fair value of the underlying asset. Operating leases are included in operating lease right-of-use ("ROU") assets, other
current liabilities and long-term operating lease liabilities in the Company's consolidated balance sheets. Finance leases are included
in property, plant and equipment, net, other current liabilities, and long-term finance lease liabilities in the Company's consolidated
balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company's
obligation to make lease payments arising from the lease. For leases with terms greater than 12 months, the Company records the ROU asset
and liability at commencement date based on the present value of lease payments according to their term. Certain lease agreements include
rental payments that are adjusted periodically for the consumer price index ("CPI"). The ROU and lease liability were calculated using
the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons.

 The
Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the
lease payments at commencement date. The ROU asset also includes any lease payments made and net of lease incentives. Lease terms may
include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses
are recognized on a straight-line basis over the lease term or the useful life of the leased asset.

 In
addition, the carrying amount of the ROU and lease liabilities are remeasured if there is a modification, a change in the lease term,
a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

 F - 16

 NOTES

 n.
 Business Combination:

 The
Company allocates the fair value of the purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired
based on their estimated fair value. The excess of the fair value of the purchase price over the fair values of these identifiable assets
and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially
with respect to intangible assets.

 Significant
estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology and
discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently
uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which does not
exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the
corresponding offset to goodwill. Upon the finalization of the measurement period, any subsequent adjustments are recorded to earnings.

 o.
 Intangible Assets:

 Acquired
identifiable finite-lived intangible assets are amortized on a straight-line basis or accelerated method over the estimated useful lives
of the assets. The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives.
The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets. In case the Company reduces the
estimated useful life for any asset, the remaining unamortized balance is amortized over the revised estimated useful life (see Note 9).

 p.
 Impairment of long-lived assets:

 The
Company's long-lived assets to be held and used, including property, plants and equipment, ROU assets and identifiable intangible
assets that are subject to amortization, other than goodwill, are reviewed for impairment in accordance with ASC 360 "Property,
Plants and Equipment", whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group)
may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or
asset group) to the future undiscounted cash flows expected to be generated by the assets (or asset group). If such evaluation indicates
that the carrying amount of the asset (or asset group) is not recoverable, the assets are considered to be impaired, the impairment to
be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value (see Note 9).

 For
the years ended December 31, 2023, 2022 and 2021, the Company recorded impairment charges of long-lived assets in the amount of $ 30,790,
$ 29,037
 and $ 2,209,
respectively, presented under Other operating expenses, net.

 F - 17

 NOTES

 q.
 Goodwill:

reflects the excess of the consideration transferred, including the fair value of any contingent consideration and any non-controlling
interest in the acquiree, over the assigned fair values of the identifiable net assets acquired. Goodwill is not amortized, and is assigned
to reporting units and tested for impairment at least on an annual basis, in the fourth quarter of the fiscal year.

 The
goodwill impairment test is performed according to the following principles:

 (1) An
initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit
is less than its carrying amount.

 (2) If
the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative
impairment test is performed. An impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair
value is recognized (see Note 10).

 For
the year ended December 31, 2023, the Company did not record any impairment charges.

 For
the year ended December 31, 2022, the Company recorded impairment charges of goodwill in the amount of $ 90,104.

 For
the year ended December 31, 2021, the Company did not record any impairment charges.

 r.
 Cloud computing arrangements:

 In
2021, due to the growing size and complexity of the Company, the Company decided to implement a new global enterprise resource planning
("ERP") system, which will replace the Company's existing operating and financial systems. During 2022, the Company began implementing
a cloud-based ERP system. The implementation is expected to occur in phases over the next several years.

 The
Company incurs costs to implement cloud computing arrangements ("CCA") that are hosted by third party vendors. Implementation costs associated
with CCA are capitalized when incurred during the application development phase until the software is ready for its intended use. The
costs are then amortized on a straight-line basis over the contractual term of the cloud computing arrangement and are recognized as an
operating expense within the consolidated statements of income. Capitalized amounts related to such arrangements are recorded within other
long-term assets in the consolidated balance sheets. Cash payments for CCA implementation costs are classified as cash outflows from operating
activities.

 As
of December 31, 2023, and 2022 the Company had capitalized implementation costs related to its upcoming ERP conversion in the amounts
of $ 13,666
 and $ 3,457,
respectively presented under other long-term assets in the consolidated balance sheet.

 s.
 Severance pay:

 The
employees of the Company's Israeli subsidiary are included under Section 14 of the Severance Pay Law, 1963, under which these employees
are entitled only to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary. These payments
cause the Company to be released from any future obligation under the Israeli Severance Pay Law to make severance payments in respect
of those employees; therefore, related assets and liabilities are not presented in the consolidated balance sheets.

 If
applicable, severance costs are recorded in each entity in accordance with local laws and regulations.

 For
the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 23,643,
$ 17,202
and $ 14,231
in severance expenses related to its employees, respectively.

 F - 18

 NOTES

 t.
 Derivatives and Hedging:

 The
Company accounts for derivatives and hedging based on ASC 815 ("Derivatives and Hedging"). ASC 815 requires the Company to
recognize all derivatives on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of
a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the
type of hedging relationship.

 To
protect against the increase in value of forecasted foreign currency cash flows resulting from salary denominated in the Israeli currency,
the New Israeli Shekels ("NIS"), during the year ended December 31, 2023, the Company instituted a foreign currency cash flow
hedging program whereby portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts.

 Accordingly,
when the dollar strengthens against the NIS, the decline in present value of future foreign currency expenses is offset by losses in the
fair value of the hedging contracts. Conversely, when the dollar weakens, the increase in the present value of future foreign currency
cash flows is offset by gains in the fair value of the hedging contracts. These hedging contracts are designated as cash flow hedges,
as defined by ASC 815 and are all effective hedges.

 The
Company also entered into derivative instrument arrangements to hedge the Company's exposure to currencies other than the U.S. dollar.
These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting
from fair value remeasurement, were recorded immediately in the statement of income, as a financial income (expense), net.

 The
Company classifies cash flows related to its hedging as operating activities in its consolidated statement of cash flows.

 u.
 Revenue recognition:

are recognized in accordance with ASC 606; revenue from contracts with customers is recognized when control of the promised goods or services
is transferred to the customers, in an amount that the Company expects in exchange for those goods or services.

 The
Company's products and services consist mainly of (i) power optimizers, (ii) inverters, (iii) batteries for PV applications, (iv)
a related cloud-based monitoring platform, (v) communication services, (vi) warranty extension services, (vii) Lithium-ion cells and other
storage solutions (viii) EV components, and (ix) automated machinery for manufacturing lines.

 The
Company recognizes revenue under the core principle that transfer of control to the Company's customers should be depicted in an
amount reflecting the consideration the Company expects to receive in revenue.

 In
order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer,
(2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the
performance obligations in the contract, and (5) recognize revenue when the performance obligation is satisfied.

 (1)
 Identify the contract with a customer

 A
contract is an agreement or purchase order between two or more parties that creates enforceable rights and obligations. In evaluating
the contract, the Company analyzes the customer's intent and ability to pay the amount of promised consideration (credit risk) and
considers the probability of collecting substantially all of the consideration.

 The
Company determines whether collectability is reasonably assured on a customer-by-customer basis pursuant to its credit review policy.
The Company typically sells to customers with whom it has a long-term business relationship and a history of successful collection. For
a new customer, or when an existing customer substantially expands its commitments, the Company evaluates the customer's financial
position, the number of years the customer has been in business, the history of collection with the customer, and the customer's
ability to pay, and typically assigns a credit limit based on that review.

 F - 19

 NOTES

 (2) Identify
the performance obligations in the contract

 At
a contract's inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance
obligations. The main performance obligations are the provisions of the following: providing of the Company's products; cloud based
monitoring services; extended warranty services and communication services. Depending on the shipping terms agreed with the customer,
the Company may perform shipping and handling activities after the customer obtains control of the goods and revenue is recognized. The
Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods. As a result
of this accounting policy election, the Company does not consider shipping and handling activities after the customer obtains control
of the goods as promised services to its customers.

 (3)
 Determine the transaction price

 The
transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services
to a customer, excluding amounts collected on behalf of third parties. Generally, the Company does not provide price protection, stock
rotation, and/or right of return. The Company determines the transaction price for all satisfied and unsatisfied performance obligations
identified in the contract from contract inception to the beginning of the earliest period presented. Rebates or discounts on goods or
services are accounted for as variable consideration. The rebate or discount program is applied retrospectively for future purchases.
Provisions for rebates, sales incentives and discounts to customers are accounted for as reductions in revenue in the same period the
related sales are recorded.

 Accrual
for rebates for direct customers is presented net of receivables. Accrual for sale incentives related to non-direct customers is presented
under accrued expenses and other current liabilities. The Company accrued $ 74,096
and $ 176,706
for rebates and sales incentives as of December 31, 2023 and 2022, respectively.

 When
a contract provides a customer with payment terms of more than a year, the Company considers whether those terms create variability in
the transaction price and whether a significant financing component exists.

 As
of December 31, 2023, the Company has not provided payment terms of more than a year.

 The
performance obligations that extend for a period greater than one year are those that include a financial component: (i) warranty extension
services, (ii) cloud-based monitoring, and (iii) communication services. The Company recognizes financing component expenses in its consolidated
statement of income in relation to advance payments for performance obligations that extend for a period greater than one year. These
financing component expenses are reflected in the Company's deferred revenues balance.

 (4)
 Allocate the transaction price to the performance obligations in the contract

 The
Company performs an allocation of the transaction price to each separate performance obligation, in proportion to their relative standalone
selling prices.

 (5)
 Recognize revenue when a performance obligation is satisfied

 Revenue
is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control
either transfers over time or at a point in time, which affects when revenue is recorded.

from sales of products are recognized based on the transfer of control, which includes but is not limited to, the agreed International
Commercial terms, or "INCOTERMS". Revenues related to warranty extension services, cloud-based monitoring, and communication
services are recognized over time on a straight-line basis.

revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments
received from customers for the Company's products. Deferred revenues are classified as short-term and long-term deferred revenues
based on the period in which revenues are expected to be recognized (see Note 15).

 F - 20

 NOTES

 v.
 Cost of revenues:

 Cost
of revenues includes the following: product costs consisting of purchases from contract manufacturers and other suppliers, direct and
indirect manufacturing costs, shipping and handling, support, warranty expenses, provision for losses related to slow moving and dead
inventory, personnel and government grants related to the AMPTCs.

 Shipping
and handling costs, which amounted to $ 214,349,
$ 257,753
 and $ 116,574,
for the years ended December 31, 2023, 2022 and 2021, respectively, are included in the cost of revenues in the consolidated statements
of income. Shipping and handling costs include custom tariff charges and all other costs associated with the distribution of finished
goods from the Company's point of sale directly to its customers.

 In
the year ended December 31, 2023, the Company recognized AMPTCs worth approximately $ 6,020
as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers.

 w.
 Warranty obligations:

 The
Company provides a product warranty for its solar segment related products as follows: a standard 10 -year
limited warranty for its batteries for PV applications, a standard 12 -year
limited warranty for the majority of its inverters, that is extendable up to 25
 years for an additional cost and a 25 -year
limited warranty for power optimizers.

 The
Company maintains reserves to cover the expected costs that could result from the standard warranty. The warranty liability is in the
form of product replacement and associated costs. Warranty reserves are based on the Company's best estimate of such costs and are
included in cost of revenues. The reserve for the related warranty expenses is based on various factors including assumptions about the
frequency of warranty claims on product failures, derived from results of accelerated lab testing, field monitoring, analysis of the history
of product field failures, and the Company's reliability estimates.

 The
Company has established a reliability measurement system based on the units' estimated mean time between failure, or MTBF, a metric
that equates to a steady-state failure rate per year for each product generation. The MTBF predicts the expected failure rate of each
product within the Company's products installed base during the expected product warranted lifetime.

 The
Company performs accelerated life cycle testing, which simulates the service life of the product in a short period of time.

 The
accelerated life cycle tests incorporate test methodologies derived from standard tests used by solar module vendors to evaluate the period
over which solar modules wear out. Corresponding replacement costs are updated periodically to reflect changes in the Company's
actual and estimated production costs for its products, rate of usage of refurbished units as a replacement of faulty units, and other
costs related to logistic and subcontractors' services associated with the replacement products.

 In
addition, through the collection of actual field failure statistics, the Company has identified several additional failure causes that
are not included in the MTBF model. Such causes, which mostly consist of design errors, workmanship errors caused during the manufacturing
process and, to a lesser extent, replacement of non-faulty units by installers, result in generating additional replacement costs to the
replacement costs projected under the MTBF model.

 For
other products, the Company accrues for warranty costs based on the Company's best estimate of product and associated costs. The
Company's other products are sold with a standard limited warranty that typically range in duration from one to ten years.

obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.

 F - 21

 NOTES

 x.
 Convertible senior notes:

 Effective
January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach. The Notes are accounted for as a single
liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives. Adoption of
the new standard resulted in an increase of retained earnings in the amount of $ 2,884,
a decrease of an additional paid-in capital in the amount of $ 36,336,
an increase of convertible senior notes, net, in the amount of $ 45,282
and a decrease of deferred tax liabilities, net, in the amount of $ 11,830.
The impact of adoption of this standard on the Company's earnings per share was immaterial.

 The
Company's Convertible Senior Notes are included in the calculation of diluted Earnings Per Share ("EPS") if the assumed
conversion into common shares is dilutive, using the "if-converted" method. This involves adding back the periodic non-cash
interest expense net of tax associated with the Notes to the numerator and by adding the shares that would be issued in an assumed conversion
(regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS,
unless the Notes are antidilutive (see Note 22).

 y.
 Advertising costs

 Advertising
costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of income. The Company
incurred advertising expenses of $ 13,476,
$ 11,090,
and $ 6,323
 for the years ended December 31, 2023, 2022, and 2021, respectively.

 z.
 Research and development costs:

and development costs, are charged to the consolidated statement of income as incurred.

 aa.
 Concentrations of credit risks:

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted
bank deposits, marketable securities, trade receivables, loan receivables, derivative instruments and other accounts receivable.

 Cash
and cash equivalents and restricted bank deposits are mainly invested in major banks in the U.S., Israel, Germany, Italy and Korea. Management
believes that the financial institutions that hold the Company's investments are financially sound and, accordingly, minimal credit
risk exists with respect to these investments.

 The
Company's debt marketable securities include investments in highly-rated corporate debentures (located mainly in U.S., Canada, France,
UK, Australia, Cayman Islands and other countries) and governmental bonds. The financial institutions that hold the Company's debt marketable
securities are major financial institutions located in the United States. The Company believes its debt marketable securities portfolio
is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount the Company may invest in an issuer
(see Note 2f.).

 The
trade receivables of the Company derive from sales to customers located primarily in the United States and Europe.

 The
Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for credit losses
(see Note 2h.). The Company generally does not require collaterals, however, in certain circumstances, the Company may require letters
of credit, other collateral, or additional guarantees. From time to time, the Company may purchase trade credit insurance.

 The
Company had two major customers (customers with attributable revenues that represents more than 10% of total revenues) for the year ended
December 31, 2023, one major customer for the year ended December 31, 2022, and two major customers for the year ended December 31, 2021
that accounted for approximately 24.0 %,
 18.5 %
and 30.9 %
of the Company's consolidated revenues, respectively. All of the revenues from these customers were generated in the solar segment.

 The
Company had three major customers (customer with a balance that represents more than 10% of total trade receivables, net) as of December
31, 2023 and as of December 31, 2022 that accounted in the aggregate for approximately 47.1 %
and 42.2 %,
of the Company's consolidated trade receivables, net, respectively.

 F - 22

 NOTES

 ab.
 Concentrations of supply risks:

 The
Company depends on two contract manufacturers and several limited or single source component suppliers. Reliance on these vendors makes
the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing
yields, and costs.

 As
of December 31, 2023 and 2022, two contract manufacturers collectively accounted for 58.5 %
and 34.3 %
of the Company's total trade payables, net, respectively.

 In
the second quarter of 2022, the Company announced the opening of "Sella 2", a two gigawatt-hour (GWh) Li-Ion battery cell
manufacturing facility located in South Korea. Sella 2 began producing and shipping cells at the end of 2022 and is expected to gradually
increase manufacturing capacity throughout 2024. Sella 2 is the Company's second owned manufacturing facility following the establishment
of Sella 1 in 2020. Sella 1 is the Company's manufacturing facility in the North of Israel that produces power optimizers and inverters.

 ac.
 Fair value of financial instruments:

 The
following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

 The
carrying value of cash and cash equivalents, short-term bank deposits, restricted bank deposits, trade receivables, net, bank loans, prepaid
expenses, loan receivables and other current assets, trade payables, net, employee and payroll accruals and accrued expenses and other
current liabilities approximate their fair values due to the short-term maturities of such instruments.

 Assets
measured at fair value on a recurring basis as of December 31, 2023 and 2022 are comprised of money market funds, derivative instruments
and marketable securities (see Note 13).

 The
Company applies ASC 820 "Fair Value Measurements and Disclosures", with respect to fair value measurements of all financial
assets and liabilities. Fair value is an exit price, representing the amount that would be received for the sale of an asset or paid to
transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should
be determined based on assumptions that market participants would use in pricing an asset or a liability.

 A
three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies
in measuring fair value:

 Level
1- Observable
inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 Level
2- Include
other inputs that are directly or indirectly observable in the marketplace.

 Level
3- Unobservable
inputs which are supported by little or no market activity.

 The
fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value.

 F - 23

 NOTES

 ad.
 Stock-based compensation:

 The
Company uses the closing trading price of its common stock on the day of the grant date as the fair value of awards of restricted stock
units ("RSUs"), and performance stock units that are based on the Company's financial performance targets ("PSUs"). The compensation expense
for RSUs is recognized using a straight-line attribution method over the requisite employee service period while compensation expense
for PSUs is recognized using an accelerated amortization model. The Company estimates the forfeitures at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on actual historical
pre-vesting forfeitures.

 The
Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance
or market conditions subject to their continued employment with the Company.

 The
Company's PSUs is based on the Company's total shareholder return ("TSR") compared to the TSR of companies listed in the S&P
500 index over a one to three year performance period. For market conditions awards, the Company uses a Monte-Carlo simulation to determine
the grant date fair value for these awards, which takes into consideration the market price of a share of the Company's common stock
on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes
pertaining to the TSR market condition. The Company recognizes such compensation expenses on an accelerated vesting method.

 The
Company selected the Black-Scholes-Merton option-pricing model as the most appropriate fair value method for its stock-option awards and
Employee Stock Purchase Plan ("ESPP"). The option-pricing model requires a number of assumptions, of which the most significant
are the fair market value of the underlying common stock, expected stock price volatility, and the expected option term. Expected volatility
for stock-option awards and ESPP was calculated based upon the Company's stock prices. The expected term of options granted is based
upon historical experience and represents the period between the options' grant date and the expected exercise or expiration date.
The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company does not use dividend
yield rate since the Company has not declared or paid any dividends on its common stock and does not expect to pay any dividends in the
foreseeable future.

 A
modification of the terms of a stock-based award is treated as an exchange of the original award for a new award with total compensation
cost equal to the grant-date fair value of the original award plus the incremental value of the modification to the award.

 F - 24

 NOTES

 The fair value for options, PSU and ESPP
granted to employees is estimated at the date of grant using the following assumptions:

 Year

 2023

 2022

 2021

 Stock Options (1)

 Risk-free interest

 -

 -

 0.43 %

 Dividend yields

 -

 -

 0 %

 Volatility

 -

 -

 60.74 %

 Expected option term
 in years

 -

 -

 5.48

 Estimated forfeiture
 rate

 -

 -

 0 %

 ESPP

 Risk-free interest

 5.38 %
 - 5.46 %

 1.64 %
 - 4.70 %

 0.03 %
 - 0.10 %

 Dividend yields

 0 %

 0 %

 0 %

 Volatility

 56.44 %
 - 66.78 %

 71.28 %
 - 71.97 %

 48.39 %
 - 76.05 %

 Expected term

 months

 months

 months

 PSU

 Risk-free interest

 4.09 %

 1.77 %

 -

 Dividend yields

 0 %

 0 %

 -

 Volatility

 71.60 %

 67.42 %

 -

 Expected term

 years

 - 3
 years

 -

 (1)
No new options were granted in 2023 and 2022.

 ae.
 Earnings per share

 Basic
net EPS is computed by dividing the net earnings attributable to SolarEdge Technologies, Inc. by the weighted-average number of shares
of common stock outstanding during the period.

 Diluted
net EPS is computed by giving effect to all potential shares of common stock, to the extent dilutive, including stock options, RSUs, PSUs,
shares to be purchased under the Company's ESPP, and the Notes due 2025, all in accordance with ASC No. 260, "Earnings Per Share."

 af.
 Income taxes:

 The
Company and its subsidiaries account for income taxes in accordance with ASC 740, "Income Taxes". ASC 740 prescribes the use
of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences
are expected to reverse.

income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax
bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Deferred tax assets are
evaluated for future realization and reduced by a valuation allowance to the extent the Company believes they will not be realized. The
Company considers all available evidence, including historical information, long range forecast of future taxable income and evaluation
of tax planning strategies. Amounts recorded for valuation allowance can result from a complex series of judgments about future events
and can rely on estimates and assumptions.

 Tax
has not been recorded for (a) taxes that would apply in the event of disposal of investments in subsidiaries, as it is generally the Company's
intention to hold these investments, not to realize them; and (b) taxes that would apply on the distribution of unremitted earnings from
foreign subsidiaries, as these are retained for reinvestment in the Group.

 F - 25

 NOTES

 The
Company accounts for uncertain tax positions in accordance with ASC 740-10 two-step approach to recognizing and measuring uncertain tax
positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of
available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be
sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit
as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.

 ag.
 New accounting pronouncements not yet effective:

 In
November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures"
("ASU 2023-07"). Additional segment reporting information required by ASU 2023-07 includes: disclosing the title and position
of the individual or the name of the group or committee identified as the CODM, provide in interim periods all disclosures about a reportable
segment's profit or loss and assets that are currently required annually, and additional disclosures regarding significant segment
expenses. ASU 2023-07 is effective for fiscal periods beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-07.

 In
December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU
2023-09"). ASU 2023-09 requires additional categories of information about federal, state and foreign income taxes to be included
in effective tax rate reconciliation disclosure. Additionally, the newly added categories also apply to the income taxes paid disclosure.
Implementation of said additions are subject to quantitative thresholds. ASU 2023-09 is effective for fiscal years beginning after December
15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09.

 ah.
 Recently issued and adopted pronouncements:

 From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting
bodies are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued or newly
effective standards were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements
or are not expected to have a material impact on the condensed consolidated financial statements.

 F - 26

 NOTES

 NOTE
3: BUSINESS COMBINATIONS

 On
April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd. ("Hark"), a UK-based energy IoT company
for the commercial and industrial ("C&I") sector for approximately $ 18,346
in cash, out of which $ 1,245
held by the company for a period of one year. Hark's platform is expected to enable the Company to offer its commercial and industrial
customers expanded capabilities in energy management and connectivity, including identification of potential energy savings, detection
of anomalies in assets' energy consumption, and optimization of energy usage and carbon emissions through load orchestration and
storage control.

 Pursuant
to ASC 805, "Business Combination", the Company accounted for the Hark acquisition as a business combination using the acquisition method
of accounting. Identifiable assets and liabilities of Hark, including identifiable intangible assets, were recorded based on their estimated
fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired
was recorded as goodwill. The Company recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as
of the acquisition date. Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future
cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company's
management believes the fair values recognized for the assets acquired and the liabilities assumed were based on reasonable estimates
and assumptions.

 The
following table summarizes the fair values estimation of assets acquired and liabilities assumed as of the date of the acquisition:

 Amount

 Average

 Useful
 Life

 (In
 years)

 Cash

 $

 Net liabilities assumed

 ( 1,837

)

 Identified intangible
 assets:

 Current
 technology

 6,576

 Customer
 relationships

 Trade
 name

 12,266

 Total

 $

 18,346

 Acquisition
costs were immaterial and are included in general and administrative expenses in the consolidated statements of income.

generated from this acquisition was primarily attributable to the assembled workforce and expected post-acquisition synergies from combining
Hark platform with the Company's product offering to its commercial and industrial customers. All of the Goodwill was assigned to the
Solar segment (see Note 21). Goodwill was not deductible for tax purposes. The fair values of technology, customer relationships and trade
name were derived by applying the multi-period excess earnings method, with-and-without method, and the relief-from-royalty method, respectively,
all of which are under the income approach whose underlying inputs are considered Level 3. The fair values assigned to assets acquired
and liabilities assumed were based on management's estimates and assumptions.

 The
results of Hark have been included in the Company's consolidated statements of income since the acquisition date and are not material.
Pro forma financial information has not been presented because the impact of the acquisition was not material to the Company's statement
of income.

 F - 27

 NOTES

 NOTE
4: MARKETABLE SECURITIES

 The
following is a summary of available-for-sale marketable securities at December 31, 2023:

 Amortized

 cost

 Gross
 unrealized

 gains

 Gross
 unrealized

 losses

 Fair
 value

 Matures within one year:

 Corporate bonds

 $

 487,083

 $

 $

 ( 5,942

)

 $

 481,820

 U.S. Treasury securities

 15,324

 -

 ( 63

)

 15,261

 U.S. Government agency

 8,787

 ( 3

)

 8,795

 Non-U.S. Government securities

 15,161

 ( 140

)

 15,694

 526,355

 1,363

 ( 6,148

)

 521,570

 Matures after one year:

 Corporate bonds

 342,223

 1,902

 ( 4,444

)

 339,681

 U.S. Treasury securities

 2,430

 -

 ( 22

)

 2,408

 U.S. Government agency

 44,100

 ( 121

)

 44,086

 Non-U.S. Government securities

 20,488

 1,162

 -

 21,650

 409,241

 3,171

 ( 4,587

)

 407,825

 Total

 $

 935,596

 $

 4,534

 $

 ( 10,735

)

 $

 929,395

 The
following is a summary of available-for-sale marketable securities at December 31, 2022:

 Amortized

 cost

 Gross
 unrealized

 gains

 Gross
 unrealized

 losses

 Fair
 value

 Matures within one year:

 Corporate bonds

 $

 222,482

 $

 -

 $

 ( 4,657

)

 $

 217,825

 U.S. Treasury securities

 15,963

 -

 ( 284

)

 15,679

 Non-U.S. Government securities

 7,882

 -

 ( 269

)

 7,613

 246,327

 -

 ( 5,210

)

 241,117

 Matures after one year:

 Corporate bonds

 657,238

 ( 26,460

)

 630,858

 U.S. Treasury securities

 9,939

 -

 ( 261

)

 9,678

 Non-U.S. Government securities

 5,311

 -

 ( 356

)

 4,955

 672,488

 ( 27,077

)

 645,491

 Total

 $

 918,815

 $

 $

 ( 32,287

)

 $

 886,608

from maturity of available-for-sale marketable securities during the years ended December 31, 2023, 2022 and 2021, were $ 277,382,
$ 201,974
and $ 187,375,

from sales of available-for-sale marketable securities during the year ended December 31, 2023 were $ 2,807,
which led to realized losses of $ 125.

from sales of available-for-sale marketable securities during the year ended December 31, 2022 were $ 29,236,
which led to realized losses of $ 434.

from sales of available-for-sale marketable securities during the year ended December 31, 2021 were $ 14,813,
which led to realized losses of $ 16.

 F - 28

 NOTES

 NOTE
5: INVENTORIES, NET

 As

 2023

 2022

 Raw materials

 $

 340,604

 $

 503,257

 Work in process

 20,885

 23,407

 Finished goods

 1,081,960

 202,537

 $

 1,443,449

 $

 729,201

 The
Company recorded inventory write-downs of $ 46,369,
$ 10,170
and $ 7,142
for the years ended December 31, 2023, 2022 and 2021, respectively.

 NOTE
6: PREPAID EXPENSES AND OTHER CURRENT ASSETS

 As

 2023

 2022

 Vendor non-trade
 receivables 1

 $

 102,991

 $

 147,597

 Government authorities

 167,221

 55,670

 Loan receivables 2

 55,418

 -

 Interest from marketable

 7,515

 6,235

 Prepaid expenses
 and other

 45,249

 31,580

 Total prepaid expenses
 and other current assets

 $

 378,394

 $

 241,082

Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products, components and other
testing equipment for the Company. The Company purchases these components directly from other suppliers. The Company does not reflect
the sale of these components to the contract manufacturers in its revenues.

Loan receivables are loans to third parties. The loan repayments are expected on a monthly or annual basis as per the contractual terms
of each loan agreement. The loans bear interest that represent market interest rate. The amortized cost of the loan receivable approximates
its fair value as of December 31, 2023.

 F - 29

 NOTES

 NOTE
7: PROPERTY, PLANT AND EQUIPMENT, NET

 As

 2023

 2022

 Cost:

 Land

 $

 12,823

 $

 13,070

 Buildings
 and plants

 153,813

 152,218

 Computers
 and peripheral equipment

 57,527

 46,376

 Office furniture
 and equipment

 10,992

 10,911

 Laboratory
 and testing equipment

 67,248

 58,454

 Machinery
 and equipment

 362,363

 315,155

 Leasehold
 improvements

 96,730

 85,147

 Assets under
 construction and payments on account

 88,077

 47,168

 Gross property,
 plant and equipment

 849,573

 728,499

 Less - accumulated
 depreciation

 234,994

 184,530

 Total property,
 plant and equipment, net

 $

 614,579

 $

 543,969

 Depreciation
expenses for the years ended December 31, 2023, 2022 and 2021, were $ 49,544,
$ 40,580
 and $ 29,359,

 For
the year ended December 31, 2023, impairment loss of $ 25,168
was recorded as a result of Company's decision to discontinue its LCV activity and other restructuring efforts related
to the Solar segment (see Note 23).

losses for the years ended December 31, 2022, and 2021, were $ 649
and $ 2,113,

 NOTE
8: LEASES

 The
following table summarizes the Company's lease-related assets and liabilities recorded in the consolidated balance sheets:

 Description

 Classification
 on the consolidated Balance Sheet

 2023

 2022

 Assets:

 Operating lease assets,
 net of lease incentive obligation

 lease right-of use assets, net

 $

 64,167

 $

 62,754

 Finance lease assets

 Property,
 plant and equipment, net

 49,926

 52,934

 Total lease assets

 $

 114,093

 $

 115,688

 Liabilities:

 Operating leases short
 term

 $

 17,704

 $

 16,183

 Finance leases short
 term

 3,253

 3,263

 Operating leases long
 term

 45,070

 46,256

 Finance leases long term

 41,892

 45,385

 Total lease liabilities

 $

 107,919

 $

 111,087

 F - 30

 NOTES

 The
following table presents certain information related to the operating and finance leases:

 Year

 2023

 2022

 leases:

 lease cost

 $

 4,154

 $

 4,196

 average remaining lease term in years

 14.99

 16.28

 average annual discount rate

 2.30

 %

 2.30

 %

 leases:

 lease cost

 $

 18,479

 $

 15,901

 average remaining lease term in years

 9.50

 8.33

 average annual discount rate

 3.68

 %

 2.17

 %

 The
following table presents supplemental cash flows information related to the lease costs for operating and finance leases:

 Year

 2023

 2022

 Cash paid for amounts
 included in measurement of lease liabilities:

 cash flows for operating leases

 $

 17,930

 $

 16,343

 cash flows for finance leases

 $

 $

 Financing
 cash flows for finance leases

 $

 2,794

 $

 2,834

 The
following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years of the operating
and finance lease liabilities recorded in the consolidated balance sheets:

 Leases

 Leases

 2024

 $

 17,933

 $

 3,288

 2025

 10,693

 3,452

 2026

 6,585

 3,452

 2027

 5,209

 4,017

 2028

 4,479

 3,155

 Thereafter

 30,169

 36,087

 Total
 lease payments

 $

 75,068

 $

 53,451

 Less
 amount of lease payments representing interest

 ( 12,294

)

 ( 8,306

)

 Present
 value of future lease payments

 $

 62,774

 $

 45,145

 Less
 current lease liabilities

 ( 17,704

)

 ( 3,253

)

 Long-term

 $

 45,070

 $

 41,892

 F - 31

 NOTES

 NOTE
9: INTANGIBLE ASSETS, NET

 I n
October 2023, the Company has decided to cease the use of SolarEdge Korea's (formerly Kokam) trade name and solar technology, as such,
the Company recognized an impairment charge of $ 4,798
and the assets were disposed.

 In
June 2022, the Company decided to discontinue its stand-alone uninterrupted power supply activities or UPS ("Critical Power").
The Company recorded a loss in the amount of $ 1,226
pertaining to Critical Power's current technology and customer relationships.

 In
October 2022, following the e-Mobility and Automation Machines reporting unit's analysis, an impairment test for long-lived assets
was performed. The test included comparing the sum of the estimated undiscounted future cash flow attributable to the identified assets
group and its carrying amounts, and recognizing an impairment for the amount to which the carrying amount exceeds the fair value of the
assets groups. As a result, the Company recorded a current technology impairment
of $ 26,917
related to e-Mobility's asset group and a $ 245 trade
name impairment related to Automation Machines' asset group.

 The
impairments are recorded under Other operating expenses, net in the consolidated statement of income (see Note 23) additional information.

 Acquired
intangible assets consisted of the following as of December 31, 2023, and 2022:

 As

 2023

 2022

 Intangible assets
 with finite lives:

 Current
 Technology

 $

 26,990

 $

 29,196

 Customer
 relationships

 3,193

 2,958

 Trade
 names

 3,287

 Assembled
 workforce

 3,575

 3,575

 Patents

 22,000

 1,400

 Gross intangible
 assets

 56,382

 40,416

 Less - accumulated
 amortization

 ( 21,037

)

 ( 20,487

)

 Total intangible
 assets, net

 $

 35,345

 $

 19,929

 Amortization
expenses for the years ended December 31, 2023, 2022 and 2021, were $ 7,652,
$ 9,096
and $ 10,176,

 Expected
future amortization expenses of intangible assets as of December 31, 2023 are as follows:

 2024

 $

 7,415

 2025

 6,518

 2026

 5,930

 2027

 3,762

 2028

 2,612

 2029
 and thereafter

 9,108

 $

 35,345

 F - 32

 NOTES

 NOTE
10: GOODWILL

is tested for impairment annually in the fourth quarter of each year and is examined between annual tests if an event occurs or circumstances
change that would indicate the carrying amount may be impaired.

 The
Company completed its annual goodwill impairment test in the fourth quarter of 2023 for all reporting units and determined the following:

 Due
to impairment indicators of the solar reporting unit, which include, among other things, a deterioration in the environment in which the
Company operates, a qualitative assessment of the Company's solar reporting unit was performed in order to determine whether it
is necessary to conduct the quantitative goodwill impairment test. Based on the results, the Company believes that it is more likely than
not that the fair value of said reporting unit is greater than its carrying value and therefore a quantitative goodwill impairment test
was not performed, and no goodwill impairment was recorded for the year ended December 31, 2023.

 Due
to impairment indicators of the Energy Storage reporting unit, which include, among other things, a decline in planned revenue and earnings
compared with the projected results, the Company performed a quantitative goodwill impairment test and determined that the fair value
of this reporting unit is greater than its carrying value and therefore no goodwill impairment was recorded for the year ended December
31, 2023.

 The
Company completed its annual goodwill impairment test in the fourth quarter of 2022 for all reporting units and determined the following:

 In
June 2022, the Company decided to discontinue its stand-alone Critical Power activities. The Company recorded an impairment in the amount
of $ 2,782
pertaining to Critical Power's goodwill.

 Due
to impairment indicators of the e-Mobility reporting unit, which include, among other things, a shift in the Company's strategy that may
result in a decline of the projected growth forecasted at the time of acquisition, the Company performed a quantitative goodwill impairment
test. As a result, the Company recorded goodwill impairment in the amount of $ 80,534
for the year ended December 31, 2022, which is presented under Goodwill impairment in the consolidated statement of income.

 In
addition, a quantitative test has also been performed for the Automation Machines reporting unit due to indicators of impairment identified,
which include, among other things, managerial changes and a decline in the overall financial performance compared with past projections.
As a result, the Company recorded goodwill impairment in the amount of $ 6,788,
for the year ended December 31, 2022, which was recorded under Goodwill impairment in the consolidated statement of income.

 The
fair value of the reporting units was estimated using a discounted cash flow analysis. When performing this analysis, the Company also
considered multiples of earnings from comparable public companies. The decline in fair value of the e-Mobility and Automation Machines
reporting units was primarily resulted from an increased discount rate and reduced estimated future cash flows.

 The following summarizes
the goodwill activity for the years ended December 31, 2023, and 2022:

 Solar

 All
 other

 Total

 Goodwill at December
 31, 2021

 $

 30,505

 $

 2,568

 $

 96,556

 $

 129,629

 Changes during the year:

 currency adjustments

 ( 1,737

)

 ( 147

)

 ( 6,452

)

 ( 8,336

)

 losses

 -

 -

 ( 90,104

)

 ( 90,104

)

 Goodwill at December
 31, 2022

 28,768

 2,421

 -

 31,189

 Changes during the year:

 Acquisitions

 12,266

 -

 -

 12,266

 currency adjustments

 ( 402

)

 ( 57

)

 -

 ( 459

)

 Goodwill at December

 $

 40,632

 $

 2,364

 $

 -

 $

 42,996

 As
of December 31, 2023 and December 31, 2022 there were $ 90,104
accumulated goodwill impairment losses.

 F - 33

 NOTES

 NOTE
11: OTHER LONG TERM ASSETS

 As

 2023

 2022

 Cloud computing arrangements

 $

 13,666

 $

 3,457

 Severance pay fund

 9,241

 8,799

 Investments in privately
 held companies 1

 7,650

 1,863

 Loan receivables

 2,438

 -

 Prepaid expenses and
 other

 4,606

 4,687

 Total other long term
 assets

 $

 37,601

 $

 18,806

 1 In
January 2023, the Company completed an investment of $ 5,500
in the common stock of a privately-held company which represents 34.8 %
of its outstanding shares. The Company accounted for this investment using the equity method of accounting. The Company's share of net
loss for the year ended December 31, 2023 was $ 350.

 In
April and July of 2023, the Company completed a total investment of $ 2,500
in the preferred stock of a privately-held company which represents 4.5 %
of its outstanding shares on a fully diluted basis. The Company accounted for this investment as an equity investment without readily
determinable fair values. No impairment or other adjustments related to observable price changes in orderly transactions for identical
or similar investments were identified.

 F - 34

 NOTES

 NOTE
12: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

 As
of December 31, 2023, the Company entered into contracts of put and call options to sell U.S. dollars ("USD") for NIS and
Euro ("EUR") for USD in the amounts of approximately NIS 541
million and EUR 60
million, respectively.

 The
fair values of outstanding derivative instruments were as follows:

 sheet location

 31, 2022

 Derivative
 assets of options and forward contracts:

 Designated
 cash flow hedges

 Prepaid
 expenses and other current assets

 $

 4,477

 $

 -

 Non-designated
 hedges

 Prepaid
 expenses and other current assets

 -

 Total
 derivative assets

 $

 4,887

 $

 -

 Derivative
 liabilities of options and forward contracts:

 Designated
 cash flow hedges

 $

 -

 $

 ( 1,874

)

 Non-designated
 hedges

 -

 -

 Total
 derivative liabilities

 $

 -

 $

 ( 1,874

)

 Gains
(losses) on derivative instruments are summarized below:

 Year

 Affected
 line item

 2023

 2022

 2021

 exchange contracts

 Non
 Designated Hedging Instruments

 Statements of Income - Financial income (expense), net

 $

 2,337

 $

 4,716

 $

 9,417

 Designated
 Hedging Instruments

 Statements of Comprehensive Income - Cash flow hedges

 $

 ( 1,990

)

 $

 ( 8,965

)

 $

 3,289

 See
Note 21 for information regarding gains (losses) from designated hedging instruments reclassified from accumulated other comprehensive
loss.

 F - 35

 NOTES

 NOTE
13: FAIR VALUE MEASUREMENTS

 In
accordance with ASC 820, the Company measures its cash equivalents and marketable securities, at fair value using the market approach
valuation technique. Cash and cash equivalents are classified within Level 1 because these assets are valued using quoted market prices.
Marketable securities and foreign currency derivative contracts are classified within level 2 due to these assets being valued by alternative
pricing sources and models utilizing market observable inputs.

 The
following table sets forth the Company's assets that were measured at fair value as of December 31, 2023 and 2022 by level within
the fair value hierarchy:

 Fair
 value measurements as of

 Description

 Fair
 Value Hierarchy

 31, 2022

 Assets:

 Cash and cash equivalents:

 Cash

 Level

 $

 309,521

 $

 695,004

 Money
 market mutual funds

 Level

 $

 22,311

 $

 25,149

 Deposits

 Level

 $

 6,636

 $

 62,959

 Derivative instruments

 Level

 $

 4,887

 $

 -

 Short-term marketable
 securities:

 Corporate
 bonds

 Level

 $

 481,820

 $

 217,825

 U.S.
 Treasury securities

 Level

 $

 15,261

 $

 15,679

 U.S.
 Government agency securities

 Level

 $

 8,795

 $

 -

 Non-U.S.
 Government securities

 Level

 $

 15,694

 $

 7,613

 Long-term marketable
 securities:

 Corporate
 bonds

 Level

 $

 339,681

 $

 630,858

 U.S.
 Treasury securities

 Level

 $

 2,408

 $

 9,678

 U.S.
 Government agency securities

 Level

 $

 44,086

 $

 -

 Non-U.S.
 Government securities

 Level

 $

 21,650

 $

 4,955

 Liabilities:

 Derivative instruments

 Level

 $

 -

 $

 ( 1,874

)

 F - 36

 NOTES

 NOTE
14: WARRANTY
OBLIGATIONS

in the Company's product warranty obligations for the years ended December
31, 2023, 2022 and 2021 were as follows:

 December 31,

 2023

 2022

 2021

 Balance, at the beginning of the period

 $

 385,057

 $

 265,160

 $

 204,994

 Accruals for warranty during the period

 250,266

 211,202

 127,057

 Changes in estimates

 20,017

 1,914

 7,685

 Settlements

 ( 137,096

)

 ( 93,219

)

 ( 74,576

)

 Balance, at end of the period

 518,244

 385,057

 265,160

 Less current portion

 ( 183,047

)

 ( 103,975

)

 ( 71,480

)

 Long term portion

 $

 335,197

 $

 281,082

 $

 193,680

 NOTE
15: DEFERRED
REVENUES

revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments
received from customers for the Company's products. Deferred revenues are classified as short-term and long-term deferred revenues
based on the period in which revenues are expected to be recognized.

 Significant
changes in the balances of deferred revenues during the period are as follows:

 31,

 2023

 2022

 2021

 Balance, at the beginning
 of the period

 $

 213,577

 $

 169,345

 $

 140,020

 Revenue recognized

 ( 29,650

)

 ( 23,017

)

 ( 26,093

)

 Increase in deferred
 revenues and customer advances

 71,516

 67,249

 55,418

 Balance, at the end of
 the period

 255,443

 213,577

 169,345

 Less current portion

 ( 40,836

)

 ( 26,641

)

 ( 17,789

)

 Long term portion

 $

 214,607

 $

 186,936

 $

 151,556

 The
following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied
(or partially unsatisfied) as of December 31, 2023:

 2024

 $

 40,836

 2025

 13,786

 2026

 13,417

 2027

 11,314

 2028

 10,084

 Thereafter

 166,006

 Total
 deferred revenues

 $

 255,443

 F - 37

 NOTES

 NOTE
16: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 As of December 31,

 2023

 2022

 Accrued expenses

 $

 142,130

 $

 117,638

 Government authorities

 34,309

 67,514

 Operating lease liabilities

 17,704

 16,183

 Accrual for sales incentives

 5,862

 6,790

 Finance lease

 3,253

 3,263

 Other

 2,653

 2,724

 Total accrued expenses and other current liabilities

 $

 205,911

 $

 214,112

 NOTE
17: CONVERTIBLE SENIOR NOTES

 On
September 25, 2020, the Company sold $ 632,500
aggregate principal amount of its 0.00 %
convertible senior notes due 2025 (the "Notes"). The Notes were sold pursuant to an indenture, dated September 25, 2020 (the
"Indenture"), between the Company and U.S. Bank National Association, as trustee (the "Trustee"). The Notes do
not bear regular interest and mature on September
15, 2025, unless earlier repurchased or converted in accordance with their terms. The Notes are general senior unsecured
obligations of the Company.

 Holders
may convert their Notes prior to the close of business on the business day immediately preceding June 15, 2025 in multiples of $ 1,000
principal amount, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending
on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading
days (whether or not consecutive) during the period of 30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than
or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business-day period after any five consecutive
trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of that five consecutive trading
day period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading
day; or (3) upon the occurrence of specified corporate events as described in the Indenture. In addition, holders may convert their Notes,
in multiples of $1,000 principal amount, at their option at any time beginning on or after June 15, 2025, and prior to the close of business
on the second scheduled trading day immediately preceding the stated maturity date of the Notes, without regard to the foregoing circumstances.
The initial conversion rate for the Notes was 3.5997
shares of common stock per $ 1,000
principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 277.80
per share of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture.

 Upon
conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares
of common stock.

 In
addition, upon the occurrence of a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase
all or a portion of their Notes, in multiples of $ 1,000
principal amount, at a repurchase price of 100% of the principal amount of the Notes, plus any accrued and unpaid special interest, if
any, to, but excluding, the repurchase date. If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion
rate for the Notes may be increased.

 F - 38

 NOTES

 The
Convertible Senior Notes consisted of the following as of December 31, 2023 and 2022:

 As

 2023

 2022

 Liability:

 Principal

 $

 632,500

 $

 632,500

 Unamortized
 issuance costs

 ( 5,119

)

 ( 8,049

)

 Net
 carrying amount

 $

 627,381

 $

 624,451

 For
the years ended December 31, 2023, 2022 and 2021 the Company recorded amortized debt issuance costs related to the Notes in the amount
of $ 2,930,
$ 2,916
and $ 2,903,

 As
of December 31, 2023, the issuance costs of the Notes will be amortized over the remaining term of approximately 1.70
years.

 The
annual effective interest rate of the Notes is 0.47 %.

 As
of December 31, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 577,156.
The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day
of the reporting period.

 As
of December 31, 2023, the if-converted value of the Notes did not exceed the principal amount.

 NOTE
18: OTHER LONG TERM LIABILITIES

 As

 2023

 2022

 Tax liabilities

 $

 3,577

 $

 3,830

 Accrued severance pay

 12,967

 9,848

 Other

 1,900

 2,078

 $

 18,444

 $

 15,756

 F - 39

 NOTES

 NOTE
19: STOCK CAPITAL

 a.

 Common stock rights:

 Common
stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each
share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions
out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation
of the Company.

 b.

 Secondary public offering:

 On
March 17, 2022, the Company offered and sold 2,300,000
shares of the Company's common stock, at a public offering price of $ 295.00
per share. The shares of Common Stock were issued and sold in a registered offering pursuant to the underwriting agreement dated March
17, 2022, among the Company, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Morgan Stanley & Co. LLC (the "Underwriting
Agreement"). All of the offered shares were issued at closing, including 300,000
shares of Common Stock that were issued and sold pursuant to the underwriters' option to purchase additional shares under the Underwriting
Agreement, which was exercised in full on March 18, 2022.

 The
net proceeds to the Company were $ 650,526
after deducting underwriters' discounts of $ 27,140
and commissions of $ 834.

 c.

 Equity Incentive Plans:

 The
Company's 2007 Global Incentive Plan (the "2007 Plan") was adopted by the board of directors on August 30, 2007. The
2007 Plan terminated upon the Company's IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards
will continue to be governed by their existing terms and 379,358
available options for future grants were transferred to the Company's 2015 Global Incentive Plan (the "2015 Plan") and
are reserved for future issuances under the 2015 plan. The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan
provides for the grant of options, restricted stock units ("RSU"), performance stock units ("PSU"), and other share-based awards to directors,
employees, officers, and non-employees of the Company and its subsidiaries. As of December 31, 2023, a total of 20,853,755
shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the "Share Reserve"), an aggregate
of 11,042,805
shares are still available for future grants.

 The
Share Reserve will automatically increase on January 1 st of
each year during the term of the 2015 Plan, commencing on January 1 st
of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5 %
of the total number of shares of capital stock outstanding on December 31 st
of the preceding calendar year; provided, however, that the Company's board of directors may determine that there will not be a
January 1 st increase in the Share Reserve in a given year or
that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31 st.

 The
Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance
or market conditions subject to their continued employment with the Company.

 In
2021, the Company has also committed to issuing additional shares, which are subject to resale registration rights and which carry certain
performance conditions (including business performance targets and a continued service relationship with the Company) and are treated
as PSUs for accounting purposes.

 The
market condition for the PSUs is based on the Company's total shareholder return ("TSR") compared to the TSR of companies listed
in the S&P 500 index over a one to three year performance period. The Company uses a Monte-Carlo simulation to determine the grant
date fair value for these awards, which takes into consideration the market price of a share of the Company's common stock on the
date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining
to the TSR market condition. The Company recognizes such compensation expenses on an accelerated vesting method.

 F - 40

 NOTES

 The
aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000.
As of December 31, 2023, an aggregate of 8,617,974
options are still available for future grants under the 2015 Plan.

 A
summary of the activity in stock options and related information is as follows:

 Number
 of options

 average exercise price

 average remaining contractual term in years

 Aggregate
 intrinsic Value

 Outstanding as
 of December 31, 2022

 339,029

 $

 50.64

 4.86

 $

 79,414

 Exercised

 ( 21,613

)

 10.48

 -

 3,572

 Outstanding as
 of December 31, 2023

 317,416

 $

 53.38

 4.05

 $

 17,366

 Vested and expected
 to vest as of December 31, 2023

 317,166

 $

 53.24

 4.05

 $

 17,366

 Exercisable as
 of December 31, 2023

 307,719

 $

 47.70

 3.97

 $

 17,366

 The
intrinsic value is the amount by which the closing price of the Company's common stock on December 31, 2023 of $ 93.60
or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.

 The
total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 3,572,
$ 37,948,
and $ 65,668,

 No
options were granted in 2023.

 A
summary of the activity in the RSUs and related information is as follows:

 Number
 of RSUs

 average grant date fair value

 Unvested
 as of January 1, 2023

 1,488,515

 $

 232.05

 Granted

 1,138,764

 133.44

 Vested

 ( 661,967

)

 198.16

 Forfeited

 ( 105,026

)

 253.80

 Unvested
 as of December 31, 2023

 1,860,286

 $

 182.52

 A
summary of the activity in the PSUs and related information is as follows:

 Number
 of PSUs

 average grant date fair value

 Unvested
 as of January 1, 2023

 $

 149,232

 $

 295.88

 Granted

 32,348

 314.22

 Vested

 ( 107,165

)

 296.76

 Unvested
 as of December 31, 2023

 $

 74,415

 $

 302.58

 F - 41

 NOTES

 d.

 Employee Stock Purchase Plan:

 The
Company adopted an ESPP effective upon the consummation of the IPO. As of December 31, 2023, total of 4,150,380
shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase
automatically on January 1st of each year, for ten years, by the lesser of 1 %
of the total number of shares of the Company's common stock outstanding on December 31st of the preceding calendar year or 487,643
shares. However, the Company's board of directors may reduce the amount of the increase in any particular year at their discretion,
including a reduction to zero.

 The
ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 15 %
of their salaries to purchase common stock up to an aggregate limit of $ 15
per participant for every six months plan. The price of an ordinary share purchased under the ESPP is equal to 85 %
of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

 As
of December 31, 2023, 938,164
shares of common stock had been purchased under the ESPP.

 As
of December 31, 2023, 3,212,216
shares of common stock were available for future issuance under the ESPP.

 In
accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.

 e.

 Stock-based compensation expenses:

 The
Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the
years ended December 31, 2023, 2022 and 2021, as follows:

 Year

 2023

 2022

 2021

 Stock-based compensation
 expenses:

 Cost
 of revenues

 $

 23,200

 $

 21,818

 $

 18,743

 and development

 66,944

 63,211

 45,424

 Selling
 and marketing

 30,987

 31,017

 22,834

 and administrative

 28,814

 29,493

 15,592

 Total stock-based
 compensation expenses

 $

 149,945

 $

 145,539

 $

 102,593

 Stock-based compensation
 capitalized:

 Inventories,
 net

 $

 2,460

 $

 -

 $

 -

 Other
 long-term assets

 1,666

 -

 Total stock-based
 compensation capitalized

 $

 4,126

 $

 $

 -

 The
total tax benefit associated with share-based compensation for the year ended December 31, 2023, 2022 and 2021 was $ 27,551,
$ 7,747
and $ 19,113,
respectively. The tax benefit realized from share-based compensation for the year ended December 31, 2023, 2022 and 2021 was $ 8,866,
$ 10,171
and $ 13,379,

 As
of December 31, 2023, there were total unrecognized compensation expenses in the amount of $ 332,367
related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized during the period from
January 1, 2024 through November 30, 2027.

 F - 42

 NOTES

 NOTE
20: COMMITMENTS AND CONTINGENT LIABILITIES

 a.

 Guarantees:

 As
of December 31, 2023, contingent liabilities exist regarding guarantees in the amounts of $ 6,123
and $ 1,946
in respect of office rent lease agreements and customs and other transactions, respectively.

 b.

 Contractual purchase obligations:

 The
Company has contractual obligations to purchase goods and raw materials. These contractual purchase obligations relate to inventories
and other purchase orders, which cannot be canceled without penalty. In addition, the Company acquires raw materials or other goods and
services, including product components, by issuing authorizations to its suppliers to purchase materials based on its projected demand
and manufacturing needs.

 As
of December 31, 2023, the Company had non-cancelable purchase obligations totaling approximately $ 1,041,253,
out of which the Company recorded a provision for loss in the amount of $ 24,963.

 As
of December 31, 2023, the Company had contractual obligations for capital expenditures totaling approximately $ 95,499.
These commitments reflect purchases of automated assembly lines and other machinery related to the Company's manufacturing process.

 c.

 Legal claims:

 From
time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses
its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be
reasonably estimated, the Company accrues a liability for the estimated loss. These accruals are reviewed at least quarterly and adjusted
to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a
particular matter.

 On
November 3, 2023, Daphne Shen, a purported stockholder of the Company, filed a proposed class action complaint for violation of federal
securities laws, individually and putatively on behalf of all others similarly situated, in the U.S District Court of the Southern District
of New York against the Company, the Company's CEO and the Company's CFO. The complaint alleges violations of Section 10(b)
and Rule 10b-5 of the Exchange Act, as well as violations of Section 20(a) of the Exchange Act against the individual defendants. The
complaint seeks class certification, damages, interest, attorneys' fees, and other relief. On December 13, 2023, Javier Cascallar
filed a similar proposed class action. On February 7, 2024, the Court consolidated the two actions, and appointed co-lead plaintiffs and
lead counsel. Due to the early stage of this proceeding, the Company cannot reasonably estimate the potential range of loss, if any, or
the likelihood of a potential adverse outcome. The Company disputes the allegations of wrongdoing and intends to vigorously defend against
them.

 In
August 2019, the Company was served with a lawsuit filed in the civil courts of Milan, Italy against the Italian subsidiary of SolarEdge
e-Mobility S.r.l (previously SMRE S.p. A) that purchased the shares of SolarEdge e-Mobility in the tender offer that followed the SolarEdge
e-Mobility Acquisition by certain former shareholders of SolarEdge e-Mobility who tendered their shares. The lawsuit asked for damages
of approximately $ 3,000,
representing the difference between the amount for which they tendered their shares ( 6
Euro per share) and 6.7
Euros per share. In December 2023 the court of Milan, rendered a decision ordering SolarEdge to pay, in favor of each plaintiff, the difference
between the price paid ( 6
Euro per share) and 6.44
Euro per share, i.e. 0.44
euros per share. The Company is currently evaluating whether to appeal this decision.

 As
of December 31, 2023, the Company recorded an accrual of $ 2,011
for legal claims which was recorded under accrued expenses and other current liabilities.

 F - 43

 NOTES

 NOTE
21: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 Unrealized gains (losses) on available-for-sale marketable securities

 Unrealized gains (losses) on cash flow hedges

 Foreign currency translation adjustments on intra-entity transactions
 that are of a long-term investment in nature

 Unrealized gains (losses) on foreign currency translation

 Total

 Beginning balance as of January 1, 2021

 $

 $

 -

 $

 -

 $

 3,617

 $

 3,857

 Revaluation

 ( 6,283

)

 3,735

)

 ( 9,681

)

 ( 29,649

)

 Tax on revaluation

 1,346

 ( 446

)

 -

 -

 Other comprehensive income (loss) before reclassifications

 ( 4,937

)

 3,289

)

 ( 9,681

)

 28,749

 Reclassification

 ( 16

)

 ( 2,742

)

 -

 -

 ( 2,758

)

 Tax on reclassification

 -

 -

 Gains reclassified from accumulated other comprehensive income

 ( 12

)

 ( 2,415

)

 -

 -

 ( 2,427

)

 Net current period other comprehensive income (loss)

 ( 4,949

)

)

 ( 9,681

)

 ( 31,176

)

 Ending balance as of December 31, 2021

 $

 ( 4,709

)

 $

 $

)

 $

 ( 6,064

)

 $

 ( 27,319

)

 Revaluation

 ( 26,944

)

 ( 9,890

)

 ( 20,540

)

 ( 1,875

)

 ( 59,249

)

 Tax on revaluation

 5,583

 -

 -

 6,508

 Other comprehensive income (loss) before reclassifications

 ( 21,361

)

 ( 8,965

)

 ( 20,540

)

 ( 1,875

)

 ( 52,741

)

 Reclassification

 7,024

 -

 -

 7,760

 Tax on reclassification

 ( 115

)

 ( 694

)

 -

 -

 ( 809

)

 Losses reclassified from accumulated other comprehensive income

 6,330

 -

 -

 6,951

 Net current period other comprehensive loss

 ( 20,740

)

 ( 2,635

)

 ( 20,540

)

 ( 1,875

)

 ( 45,790

)

 Ending balance as of December 31, 2022

 $

 ( 25,449

)

 $

 ( 1,761

)

 $

 ( 37,960

)

 $

 ( 7,939

)

 $

 ( 73,109

)

 Revaluation

 25,898

 ( 1,973

)

 ( 5,375

)

 5,409

 23,959

 Tax on revaluation

 ( 5,487

)

 ( 17

)

 -

 -

 ( 5,504

)

 Other comprehensive income (loss) before reclassifications

 20,411

 ( 1,990

)

 ( 5,375

)

 5,409

 18,455

 Reclassification

 8,325

 -

 -

 8,432

 Tax on reclassification

 ( 29

)

 ( 634

)

 -

 -

 ( 663

)

 Losses reclassified from accumulated other comprehensive income

 7,691

 -

 -

 7,769

 Net current period other comprehensive income (loss)

 20,489

 5,701

 ( 5,375

)

 5,409

 26,224

 Ending balance as of December 31, 2023

 $

 ( 4,960

)

 $

 3,940

 $

 ( 43,335

)

 $

 ( 2,530

)

 $

 ( 46,885

)

 F - 44

 NOTES

 The
following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the years ended December
31, 2023, 2022 and 2021:

 Details
 about Accumulated Other

 Comprehensive
 Income (Loss) Components

 Amount
 Reclassified from Accumulated Other

 Comprehensive
 Income (Loss)

 Affected
 Line Item in the

 Statement
 of Income

 2023

 2022

 2021

 Unrealized gains (losses) on available-for-sale marketable securities

 $

 ( 107

)

 $

 ( 736

)

 $

 Financial income (expenses), net

 ( 4

)

 Income taxes

 $

 ( 78

)

 $

 ( 621

)

 $

 Total, net of income taxes

 Unrealized gains (losses) on cash flow hedges

 ( 964

)

 ( 801

)

 ( 4,981

)

 ( 4,142

)

 1,645

 Research and development

 ( 1,057

)

 ( 959

)

 ( 1,323

)

 ( 1,122

)

 $

 ( 8,325

)

 $

 ( 7,024

)

 $

 2,742

 Total, before income taxes

 ( 327

)

 Income taxes

 ( 7,691

)

 ( 6,330

)

 2,415

 Total, net of income taxes

 Total reclassifications for the period

 $

 ( 7,769

)

 $

 ( 6,951

)

 $

 2,427

 F - 45

 NOTES

 NOTE
22: EARNINGS PER SHARE

 The
following table presents the computation of basic and diluted EPS attributable to SolarEdge Technologies Inc.:

 Year ended December 31,

 2023

 2022

 2021

 Basic:

 Numerator:

 Net income

 $

 $

 $

 Denominator:

 Shares used in computing net EPS of common stock, basic

 56,557,106

 55,087,770

 52,202,182

 Diluted:

 Numerator:

 Net income attributable to common stock, basic

 $

 $

 $

 Notes due 2025

 -

 2,203

 2,134

 Net income attributable to common stock, diluted

 $

 $

 95,982

 $

 171,304

 Denominator:

 Shares used in computing net EPS of common stock, basic

 56,557,106

 55,087,770

 52,202,182

 Notes due 2025

 -

 2,276,818

 2,276,818

 Effect of stock-based awards

 680,412

 736,061

 1,492,030

 Shares used in computing net EPS of common stock, diluted

 57,237,518

 58,100,649

 55,971,030

 Earnings per share:

 Basic

 $

 0.61

 $

 1.70

 $

 3.24

 Diluted

 $

 0.60

 $

 1.65

 $

 3.06

 Shares excluded from the calculation of net diluted due to their anti-dilutive effect

 1,994,328

 207,980

 132,133

 F - 46

 NOTES

 NOTE
23: OTHER OPERATING EXPENSES, NET

 Year

 2023

 2022

 2021

 Impairment of property,
 plant and equipment

 $

 25,168

 $

 $

 2,209

 Impairment of intangible
 assets 1

 5,622

 28,388

 -

 Gain on sale of assets

 ( 1,262

)

 ( 2,603

)

 -

 Legal settlements and
 contingencies 2

 1,786

 -

 -

 SolarEdge Korea (formerly
 Kokam) purchase escrow 3

 -

 -

 ( 859

)

 Total other operating
 expense, net

 $

 31,314

 $

 26,434

 $

 1,350

See Note 9

 See Note 20c

 In the year ended December 31, 2021, the Company received a payment of $ 859
out of the SolarEdge Korea (formerly Kokam) acquisition escrow, with regards to a working capital adjustment.

 F - 47

 NOTES

 NOTE
24: RESTRUCTURING AND OTHER EXIT ACTIVITIES

 In
October of 2023, the Company made an announcement regarding its restructuring plans to adjust its manufacturing capacity and increase
operating efficiency, including terminating the manufacturing process in Mexico, reducing manufacturing capacity in China, and discontinuing
the Company's LCV activity. The program is expected to be completed by the end of the first half of 2024. These decisions were made
in order to better align the Company with current market conditions.

 The
Company determined that the discontinuation of the LCV activity does not represent a strategic shift that will have a major effect on
the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

 Restructuring
and other exit charges for the year ended December 31, 2023 by segments and type of cost were as follows:

 Solar

 e-Mobility

 termination costs

 Contract
 termination

 and
 other

 termination costs

 Inventory

 write-down

 Contract
 termination and other

 Total

 $

 2,561

 $

 20,593

 $

 -

 $

 27,158

 $

 9,489

 $

 59,801

 -

 -

 -

 -

 -

 -

 -

 Total

 $

 2,561

 $

 20,593

 $

 $

 27,158

 $

 9,576

 $

 60,189

 For
the year ended December 31, 2022, the Company recorded $ 4,314
of inventory write-downs in cost of revenues as a result of Critical Power's discontinuation.

 The Company did not record
any restructuring and other exit activities costs for the year ended December 31, 2021

 The Company's liability
balance for the restructuring and other exit charges is as follows:

 termination costs

 Inventory
 write-down 1

 Contract
 termination and other

 Balance as of January
 1, 2023

 $

 -

 $

 -

 $

 -

 Charges

 2,862

 27,158

 30,169

 Cash payments

 ( 548

)

 -

 -

 Foreign currency adjustments

 Balance as of December

 $

 2,373

 $

 27,774

 $

 30,393

 Inventory write-down is included under Inventories, net on the balance sheet.

 The total amount expected
to be incurred for restructuring and other exit charges, which primarily consists of contract terminations related to the solar segment,
is $ 10,558.

 F - 48

 NOTES

 NOTE
25: INCOME TAXES

 a.

 Tax rates in the U.S:

 The
Company is subject to U.S. federal tax at the rate of 21 %.

 On
December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to U.S. income tax law. These
changes include, but are not limited to, a corporate tax rate decrease from 35 %
to 21 %
effective for tax years 2018 onwards and created new taxes on certain foreign-sourced earnings and certain related-party payments - the
Global Intangible Low Taxed Income ("GILTI"). Furthermore, changes introduced by the Tax Act to Section 174 of the Internal
Revenue Code, that came into effect on January 1, 2022, require taxpayers to amortize research and development expenditures over five
years (if incurred in the U.S.) or fifteen years (if incurred outside the U.S.), thereby increasing taxable income and payable tax.

 The
Tax Act required the Company to pay U.S. income taxes on accumulated foreign subsidiaries earnings not previously subject to U.S. income
tax at a rate of 15.5 %
to the extent of foreign cash and certain other net current assets and 8 %
on the remaining earnings. The total tax liability was calculated to approximately $ 8,500,
which will be paid over the eight-year period provided in the Tax Act (ending 2024).

 b.

 Corporate tax in Israel:

 The
taxable income of Israeli companies is subject to corporate tax at the rate of 23 %.
The Israeli subsidiary is also eligible for tax benefits as further described in note 25j.

 c.

 Carryforward tax losses:

 As
of December 31, 2023, the foreign subsidiaries have carryforward tax losses of $ 205,263
which do not have an expiration date.

 d.

 Deferred taxes:

taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

 F - 49

 NOTES

 Significant
components of the Company's deferred tax liabilities and assets are as follows:

 31,

 2023

 2022

 tax assets, net:

 and Development carryforward expenses

 $

 25,527

 $

 9,335

 Carryforward
 tax losses (1)

 44,294

 19,916

 Stock based
 compensation expenses

 28,715

 9,863

 revenue

 13,244

 8,954

 Lease liabilities

 12,872

 6,520

 Inventory

 11,136

 Foreign currency
 translation

 4,985

 6,987

 Allowance
 and other reserves

 17,367

 23,255

 Total Gross
 deferred tax assets, net

 $

 158,140

 $

 85,457

 Less, Valuation
 Allowance

 ( 51,245

)

 ( 23,777

)

 Total deferred
 tax assets, net

 $

 106,895

 $

 61,680

 tax liabilities, net:

 Intercompany
 transactions

 $

 ( 4,470

)

 $

 ( 6,292

)

 Right-of-use
 assets

 ( 13,353

)

 ( 6,618

)

 price allocation

 ( 4,129

)

 ( 4,617

)

 Property, plant and equipment

 ( 5,481

)

 -

 Total deferred
 tax liabilities, net

 $

 ( 27,433

)

 $

 ( 17,527

)

 Recorded
 as:

 tax assets, net

 $

 80,912

 $

 44,153

 tax liabilities, net

 ( 1,450

)

 -

 Net deferred
 tax assets

 $

 79,462

 $

 44,153

 (1)
 Related to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.

 The
Company's Israeli subsidiary's tax-exempt profit from Benefited Enterprises (as defined in note 25j) is permanently reinvested,
Therefore, deferred taxes have not been provided for such tax-exempt income.

 The
Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries. Such additional
tax liability in respect of these subsidiaries has not been provided for in the Financial Statements as the Company's management
and the Board of Directors has determined that the Company intends to reinvest earnings of its subsidiaries indefinitely.

 e.

 Uncertain tax positions are comprised
 as follows:

 31,

 2023

 2022

 2021

 Balance,
 at the beginning of the period

 $

 2,756

 $

 2,192

 $

 10,564

 Increases
 related to current year tax positions

 1,502

 Increase
 for tax positions related to prior years

 11,778

 -

 -

 Decreases
 related to prior year tax positions

 ( 128

)

 -

 ( 9,007

)

 Balance,
 at end of the period

 $

 15,908

 $

 2,756

 $

 2,192

 F - 50

 NOTES

 The
total amount of gross unrecognized tax benefits above would affect the Company's effective tax rate, if recognized.

 The
Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 31, 2023,
the Company accrued $ 2,927.

 The
total amount of penalties and interest were not material as of December 31, 2022 and 2021.

 It
is reasonably possible that the Company's gross unrecognized tax benefits will decrease by an insignificant amount in the next 12
months, primarily due to the lapse of the statute of limitations.

 f.

 Income before income taxes are comprised
 as follows:

 Year

 2023

 2022

 2021

 Domestic

 $

 49,758

 $

 47,324

 $

 13,659

 31,341

 129,831

 173,565

 Income before
 income taxes

 $

 81,099

 $

 177,155

 $

 187,224

 g.

 Income taxes (tax benefit) are comprised
 as follows:

 Year

 2023

 2022

 2021

 Current taxes:

 Domestic

 $

 42,960

 $

 56,958

 $

 ( 7,872

)

 46,531

 37,473

 37,564

 Total current
 taxes

 89,491

 94,431

 29,692

 taxes:

 Domestic

 ( 2,244

)

 ( 8,955

)

 ( 3,682

)

 ( 40,827

)

 ( 2,100

)

 ( 7,956

)

 Total deferred
 taxes

 ( 43,071

)

 ( 11,055

)

 ( 11,638

)

 Income taxes,
 net

 $

 46,420

 $

 83,376

 $

 18,054

 F - 51

 NOTES

 h.

 Reconciliation of theoretical tax
 expense to actual tax expense:

 The
differences between the statutory tax rate of the Company and the effective tax rate are result of a variety of factors, including different
effective tax rates applicable to non-US subsidiaries that have tax rates different than the Company tax rate, tax benefits relating to
stock-based compensation and adjustments to valuation allowances on deferred tax assets of such subsidiaries.

 A
reconciliation between the theoretical tax expense and the actual tax expense as reported in the consolidated statements of income is
as follows:

 Year

 2023

 2022

 2021

 Statutory
 tax rate

 %

 %

 %

 Effect of:

 Income tax
 at rate other than the U.S. statutory tax rate

 ( 37.3

)%

 ( 10.8

)%

 ( 7.4

)%

 Losses and
 timing differences for which valuation allowance was provided

 27.7

 %

 5.2

 %

 2.7

 %

 Prior year
 income taxes (benefit)

 ( 1.0

)%

 2.9

 %

 ( 4.4

)%

 R&D Capitalization
 and other effects of TCJA

 42.5

 %

 18.9

 %

 0.1

 %

 Non-deductible
 expenses

 4.5

 %

 13.2

 %

 2.0

 %

 Other individually
 immaterial income tax items, net

 ( 0.2

)%

 ( 3.3

)%

 ( 4.4

)%

 Effective
 tax rate

 57.2

 %

 47.1

 %

 9.6

 %

 i.

 Tax assessments:

 The
Israeli tax authorities issued a tax order for tax year 2016 and tax assessments for tax years 2017 and 2018 against the Company's
Israeli subsidiary, challenging the subsidiary's positions on several issues. The Israeli subsidiary has protested the order before the
Central District Court in Israel and appealed the tax assessments.

 The
Company believes it has adequately provided for these items, however adverse results could have a material impact on the Company's
financial statements.

 As
of December 31, 2023, the Company and certain of its subsidiaries filed U.S. federal and various state and foreign income tax returns.
The statute of limitations relating to the consolidated U.S. federal income tax return is closed for all tax years up to and including
2018.

 The
statute of limitations related to tax returns of the Company's Israeli subsidiary for all tax years up to and including 2015 has
lapsed.

 The
statute of limitations related to tax returns of the Company's other subsidiaries has lapsed for part of the tax years, which differs
between the different subsidiaries.

 j.

 Tax benefits for Israeli companies
 under the Law for the Encouragement of Capital Investments, 1959 (the "Investments Law"):

 The
Israeli subsidiary elected tax year 2012 as a "Year of Election" for "Benefited Enterprise" status under the Investments Law.
According to the Investments Law, the Israeli subsidiary elected to participate in the alternative benefits program which provides certain
benefits, including tax exemptions and reduced tax rates (which depend on, inter alia, the geographic location in Israel). Income not
eligible for Benefited Enterprise benefits is taxed at a regular corporate tax rate.

 Upon
meeting the requirements under the Investments Law, undistributed income derived from Benefited Enterprise from productive activity will
be exempt from tax for two years from the year in which the Israeli subsidiary first has taxable income ("exempt period"),
provided that 12 years have not passed from the beginning of the year of election.

 On
October 24, 2018, the Company's Israeli subsidiary received an approval from the Israeli Tax Authorities confirming the applicability
of the two-year tax exemption as provided in the Investments Law until December 31, 2018. As of December 31, 2018, approximately $ 289,900
was derived from tax exempt profits earned by the Israeli subsidiary "Benefited Enterprises" in the two tax years exempt period,
tax years 2017 - 2018. The Company has determined that such tax-exempt income will not be distributed as dividends and intends to reinvest
the amount of its tax-exempt income earned by the Israeli subsidiary. Accordingly, no provision for deferred income taxes has been provided
on income attributable to the Israeli subsidiary "Benefited Enterprises" as such income is essentially permanently reinvested.

 F - 52

 NOTES

 If
the Israeli subsidiary's retained tax-exempt income is distributed, the income would be taxed at the applicable corporate tax rate
which depends on the foreign ownership in each tax year.

 Through
December 31, 2023, the Israeli subsidiary had generated income under the provision of the Investments Law.

 Pursuant
to amendment 73 to the Investments Law (the "2017 Amendment"), a preferred enterprise located in development area A will be subject
to a tax rate of 7.5 %
instead of 9 %
effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16 %).

 The
2017 Amendment also prescribes special tax tracks for preferred technological enterprises ("PTE"), which are subject to rules
that were issued by the Ministry of Finance.

 On
June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technological Income and Capital Gain for Technological
Enterprise), 2017 (the "Regulations") were published.

 The
Regulations describe, inter alia, the mechanism used to determine the calculation of the benefits under the PTE regime. According to these
regulations, a company that complies with the terms under the PTE regime may be entitled to certain tax benefits with respect to income
generated during the company's regular course of business and derived from the preferred intangible asset, excluding income derived
from intangible assets used for marketing and income attributed to production activity.

 A
PTE, which is located in the center of Israel will be subject to tax at a rate of 12 %
on profits deriving from intellectual property, or 6 %
if its annual revenues exceed NIS 10
billion ("Threshold"). The Israeli subsidiary notified the ITA of its election to implement the PTE with effect from January 1, 2019,
and its PTE income was subject to a 12% tax rate in the years 2019-2021, and in 2022-2023 to a 6% tax rate as the group surpassed the
Threshold. The Company currently expects not to meet the Threshold in 2024 and consequently expects its tax on its PTE income to be 12%
in 2024. The Company adjusted its deferred taxes accordingly.

 Tax
Benefits for Research and Development:

 Israeli
tax law (section 20A to the Israeli Tax Ordinance (New Version), 1961) allows a tax deduction for research and development expenses, including
capital expenses, in the year in which they are paid. Such expenses must relate to scientific research in industry, agriculture, transportation
or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research. Expenses incurred in
scientific research that are not approved by the relevant government ministry are amortized over a three-year period starting from the
tax year in which they are paid. The Company's Israeli subsidiary intends to submit a formal request to the relevant government
ministry in order to obtain such approval for 2019 - 2021.

 k.

 Tax benefits under the Law for the
 Encouragement of Industry (Taxes), 1969:

 The
Company's Israeli subsidiary claims currently to be qualified as 'industrial company' as defined by this law and as
such, is entitled to certain tax benefits, consisting mainly of accelerated depreciation and amortization of patents and certain other
intangible property.

 F - 53

 NOTES

 NOTE
26: FINANCIAL INCOME (EXPENSE), NET

 Year

 2023

 2022

 2021

 Exchange rate (loss)
 gain, net

 $

 24,181

 $

 ( 1,547

)

 $

 ( 22,493

)

 Interest income on marketable

 25,668

 10,551

 2,973

 Convertible note

 ( 2,930

)

 ( 2,916

)

 ( 2,903

)

 Hedging

 2,337

 4,716

 9,417

 Financing component expenses
 related to ASC 606

 ( 9,773

)

 ( 7,038

)

 ( 5,771

)

 Bank charges

 ( 1,418

)

 ( 1,584

)

 ( 1,991

)

 Interest income

 7,494

 2,932

 Interest expense

 ( 1,269

)

 ( 1,530

)

 ( 605

)

 Other

 ( 3,078

)

 Total financial income
 (expenses), net

 $

 41,212

 $

 3,750

 $

 ( 20,014

)

 NOTE
27: SEGMENT,
GEOGRAPHIC AND PRODUCT INFORMATION

 a.

 Segment Information:

 Following
the discontinuation of the Critical Power segment in June 2022, the Company operated in four different operating segments: Solar, Energy
Storage, e-Mobility and Automation Machines. In October 2023, the Company decided to discontinue its LCV activity.

 The
Company's Chief Executive Officer, who is the chief operating decision maker ("CODM"), makes resource allocation decisions
and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information about
revenues and contributed profit by the operating segments.

 The
Company does not allocate to its operating segments revenue recognized due to advance payments received for performance obligations that
extend for a period greater than one year ("financing component"), related to Accounting Standard Codification 606, "Revenue
from Contracts with Customers" (ASC 606).

profit (loss) is comprised of gross profit for the segment less operating expenses that do not include amortization and impairment of
purchased intangible assets, stock based compensation expenses, restructuring charges, discontinued activity charges and
certain other items.

 The
Company manages its assets on a group basis, not by segments, as many of its assets are shared or co-mingled. The Company's CODM
does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

 The
Company identified two
operating segments as reportable – the Solar segment and the Energy Storage segment. The other operating segments are insignificant
individually and therefore their results are presented together under "All other".

 The
Solar segment includes the design, development, manufacturing, and sales of an intelligent inverter solution designed to maximize power
generation at the individual PV module level and batteries for PV applications. The Solar segment solution consists mainly of the Company's
power optimizers, inverters, batteries and cloud based monitoring platform.

 The
Energy Storage segment includes the design, development, manufacturing, and sales of high-energy, high-power, lithium-ion cells and racks
and containerized battery systems for C&I and Utility markets. The Energy Storage segment provides purpose-built components and solutions,
hardware and software, as well as pre and post sales engineering support to design, build, and manage battery and system solutions according
to the customer's use cases and mission profiles.

 F - 54

 NOTES

 The
"All other" category includes the e-Mobility products, automated machines and UPS products (in prior periods).

 The
following tables presents information on reportable segments profit (loss) for the period presented:

 Year
 ended December 31, 2023

 Solar

 All
 other

 $

 2,815,539

 $

 83,717

 $

 76,438

 1,994,578

 112,518

 75,469

 Gross profit (loss)

 820,961

 ( 28,801

)

 Research and development

 226,776

 17,370

 9,403

 126,207

 3,539

 2,654

 103,461

 10,409

 3,286

 Segments profit (loss)

 $

 364,517

 $

 ( 60,119

)

 $

 ( 14,374

)

 Year
 ended December 31, 2022

 Solar

 All
 other

 $

 2,921,175

 $

 76,325

 $

 112,165

 2,050,147

 63,752

 118,171

 Gross profit (loss)

 871,028

 12,573

 ( 6,006

)

 Research and development

 196,381

 15,108

 13,908

 118,154

 4,095

 5,592

 69,631

 7,233

 5,768

 Segments profit (loss)

 $

 486,862

 $

 ( 13,863

)

 $

 ( 31,274

)

 Year
 ended December 31, 2021

 Solar

 All
 other

 $

 1,787,280

 $

 83,430

 $

 92,737

 1,136,896

 61,099

 108,483

 Gross profit (loss)

 650,384

 22,331

 ( 15,746

)

 Research and development

 143,173

 10,289

 20,217

 85,309

 3,698

 6,232

 53,156

 5,841

 7,695

 Segments profit (loss)

 $

 368,746

 $

 2,503

 $

 ( 49,890

)

 F - 55

 NOTES

 The
following table presents information on reportable segments reconciliation to consolidated revenues for the periods presented:

 Year

 2023

 2022

 2021

 Solar segment revenues

 $

 2,815,539

 $

 2,921,175

 $

 1,787,280

 Energy Storage segment
 revenues

 83,717

 76,325

 83,430

 All other segment revenues

 76,438

 112,165

 92,737

 Revenues from financing
 component

 Consolidated revenues

 $

 $

 $

 1,963,865

 The
following table presents information on reportable segments reconciliation to consolidated operating income for the periods presented:

 Year

 2023

 2022

 2021

 Solar segment profit

 $

 364,517

 $

 486,862

 $

 368,746

 Energy Storage segment
 profit (loss)

 ( 60,119

)

 ( 13,863

)

 2,503

 All other segment loss

 ( 14,374

)

 ( 31,274

)

 ( 49,890

)

 Segments operating profit

 290,024

 441,725

 321,359

 Amounts not allocated
 to segments:

 Stock
 based compensation expenses

 ( 149,945

)

 ( 145,539

)

 ( 102,593

)

 Amortization
 and depreciation of acquired assets

 ( 7,969

)

 ( 9,478

)

 ( 10,812

)

 of goodwill and long-lived assets

 ( 30,790

)

 ( 119,141

)

 -

 Restructuring
 and other exit activities

 ( 60,189

)

 ( 4,314

)

 -

 Other
 unallocated income (expenses), net

 ( 926

)

 2,867

 ( 815

)

 Consolidated operating

 $

 40,205

 $

 166,120

 $

 207,139

 b.

 Revenues by geographic, based on customers'
 location:

 Year

 2023

 2022

 2021

 United States

 $

 759,611

 $

 1,133,798

 $

 786,019

 Europe (*)

 661,542

 528,197

 297,684

 Germany

 692,047

 449,160

 191,066

 Netherlands

 326,314

 382,226

 222,103

 Italy

 223,943

 330,565

 181,644

 Rest of the world

 313,071

 286,333

 285,349

 Total revenues

 $

 $

 $

 1,963,865

 (*)
Except for Germany, Netherlands and Italy

 F - 56

 NOTES

 c.

 Revenues by type:

 Year

 2023

 2022

 2021

 Inverters

 $

 1,374,026

 $

 1,137,142

 $

 828,101

 Optimizers

 902,411

 1,135,040

 828,542

 Batteries for PV applications

 378,275

 429,119

 19,531

 e-Mobility components
 and telematics

 68,425

 94,446

 68,946

 Communication

 32,945

 72,812

 24,111

 Others

 220,446

 241,720

 194,634

 Total revenues

 $

 $

 $

 1,963,865

 d.

 Long-lived assets by geographic location:

 As

 2023

 2022

 Israel

 $

 364,438

 $

 333,740

 Korea

 199,422

 201,731

 United
 States

 47,083

 12,030

 China

 38,037

 34,230

 Europe

 23,478

 21,282

 Other

 6,288

 3,710

 Total long-lived assets (*)

 $

 678,746

 $

 606,723

 (*)
Long-lived assets are comprised of property and equipment, net and Operating lease right-of-use assets, net.

 F - 57

 NOTES

 NOTE
28: SUBSEQUENT EVENTS

 1.

 In January 2024, the Company entered into an agreement
 to acquire minority shares in Ampeers Energy GmbH ("Ampeers") from existing shareholders as well as through a share capital increase.
 Ampeers, a German-based company, is involved in the programming, operation and marketing of an information and communications technology
 platform. The investment is subject to customary closing conditions and regulatory approvals and is expected to close during the first
 half of 2024.

 2.

 Also in January 2024, the Company completed a
 minority investment in Ivy Energy, a U.S. company that provides software to real estate owners for distribution of solar energy between
 multi dwelling units.

 3.

 On January 21, 2024, the Company announced adoption
 of additional measures in response to challenging industry conditions, including reducing its headcount by approximately 16 %
 over the first half of 2024 through an involuntary workforce reduction plan. These decisions were made in order to better align the Company
 with current market conditions. The significant part of the workforce reduction occurred in January 2024.

 -
- - - - - - - - - - - - - - - - - - - -

 F
- 58

 ITEM 9. Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure

 Not
applicable.

 Item
9A. Controls and Procedures.

 Disclosure
Controls and Procedures

 Our
management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure
controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as of December 31, 2023. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management
is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 Based
on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were
effective and operating to provide reasonable assurance that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and
to provide reasonable assurance that such information is accumulated and communicated to our management, including our chief executive
officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 Management's
Report on Internal Control Over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 Management
assessed our internal control over financial reporting as of December 31, 2023. Management based its assessment on criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
Management's assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting
controls, process documentation, accounting policies, and our overall control environment.

 Based
on this assessment, management has concluded that our internal control over financial reporting was effective as of the end of the year
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements
for external reporting purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management's
assessment with the Audit Committee of our Board of Directors.

 Our
independent registered public accounting firm, Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, independently assessed
the effectiveness of the company's internal control over financial reporting, as stated in Part II, Item 8 of this Form 10-K.

 Our
management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures
or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed
and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design
of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance
that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation
of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes
in conditions or deterioration in the degree of compliance with policies or procedures.

in Internal Control over Financial Reporting

 There
have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred
during the fourth fiscal quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

 ITEM
9B. Other Information

 (a)
Not applicable.

 (b)
None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Not
applicable.

 PART
III

 ITEM
10. Directors, Executive Officers and Corporate Governance.

 The
information required by Item 10 will be included under the captions "Directors and Corporate Governance", "Board Committees",
"Code of Conduct and Ethical Business Conduct", "Compensation Committee Report", and "Deliquent Section
16(a) Reports" in our definitive Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120
days of the year ending December 31, 2023 (the "2024 Proxy Statement") and is incorporated herein by reference.

 ITEM
11. Executive Compensation

 The
information required by Item 11 will be included under the captions "Board Committees", "Director Compensation",
"Executive Compensation", and "Compensation Risk" in our 2024 Proxy Statement and is incorporated herein by reference.

 ITEM
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
information required by Item 12 will be included under the captions "Security Ownership of Certain Beneficial Owners and Management"
in our 2024 Proxy Statement and is incorporated herein by reference.

 Compensation
Plan Information

 The
information required regarding securities authorized for issuance under our equity compensation plans is incorporated by reference from
the information contained in the section entitled "Equity Compensation Plan Information" in our 2024 Proxy Statement.

 ITEM
13. Certain Relationships and Related Transactions, and Director Independence

 The
information required by Item 13 will be included under the captions "Transactions with Related Persons" and "Directors
and Corporate Governance" in our 2024 Proxy Statement and is incorporated herein by reference.

 ITEM
14. Principal Accountant Fees and Services

 The
information required by Item 13 will be included under the captions "Proposal No. 2 Ratification of Appointment of Independent Registered
Public Accounting Firm for 2024" in our 2024 Proxy Statement and is incorporated herein by reference.

 PART
IV

 ITEM
15. Exhibits, Financial Statement Schedules

 Our
Consolidated Financial Statements and Notes thereto are included in Item 8 of this Annual Report on Form 10-K. See Index to Item 8 for
more detail.

 All
financial schedules have been omitted either because they are not applicable or because the required information is provided in our Consolidated
Financial Statements and Notes thereto, included in Item 8 of this Annual Report on Form 10-K.

to Exhibits

 Exhibit

 No.

 Description

 Incorporation
 by Reference

 3.1

 Restated
 Certificate of Incorporation

 to Exhibit 3.2 to Form 8-K filed with the SEC on June 2, 2023

 3.2

 Amended
 and Restated By-Laws

 to Exhibit 3.1 to Form 8-K filed with the SEC on December 1, 2022

 4.1

 Description
 of Common Stock

 Filed with this report

 4.2

 Specimen
 Common Stock Certificate of the Registrant

 to Exhibit 4.1 of Amendment No. 1 to Form S-1 (Registration No. 333-202159) filed with the SEC on March 11, 2015

 4.3

 Indenture,
 dated September 25, 2020, between the Company and U.S. Bank National Association, as trustee

 to Exhibit 4.1 to Form 8-K filed with the SEC on September 25, 2020

 4.4

 Form
 of 0.000% Convertible Senior Note due 2025 (included in Exhibit 4.3)

 to Exhibit 4.2 to Form 8-K filed with the SEC on September 25, 2020

 10.1

 Employment
 Agreement, dated August 20, 2019 between SolarEdge Technologies Ltd. and Uri Bechor

 to Exhibit 10.1 to Form 8-K filed with the SEC on August 21, 2019

 10.2

 Employment
 Agreement, dated December 1, 2010, between SolarEdge
 Technologies, Inc. and Ronen Faier

 Incorporated
 by reference to Exhibit 10.3 of Amendment No. 1 to Form S-1 (Registration No. 333-202159) filed with the SEC on March 11, 2015

 10.3

 Employment
 Agreement, dated May 17, 2009, between SolarEdge Technologies, Inc. and Zvi Lando

 to Exhibit 10.3 of Amendment No. 1 to Form S-1 (Registration No. 333-202159) filed with the SEC on March 11, 2015

 10.4

 Technologies, Inc. 2007 Global Incentive Plan.

 to Exhibit 99.3 to Form S-8 (Registration No. 333-203193) filed with the SEC on April 2, 2015

 10.5

 Technologies, Inc. Amended and Restated 2015 Global Incentive Plan

 to Exhibit 10.1 to Form 10-Q filed with the SEC on May 10, 2017

 10.6

 Technologies, Inc. 2015 Employee Stock Purchase Plan

 to Exhibit 99.2 to Form S-8 (Registration No. 333-203193) filed with the SEC on April 2, 2015

 10.7

 Form
 of Non-Employee Director RSU Award Agreement

 to Exhibit 10.11 to Form 10-K filed with the SEC on August 20, 2015

 10.8

 Form
 of Non-Employee Director Stock Option Award Agreement

 to Exhibit 10.12 to Form 10-K filed with the SEC on August 20, 2015

 10.9

 Form
 of Employee RSU Award Agreement

 to Exhibit 10.13 to Form 10-K filed with the SEC on August 20, 2015

 10.10

 Form
 of Employee Stock Option Award Agreement

 to Exhibit 10.14 to Form 10-K filed with the SEC on August 20, 2015

 10.11

 Form
 of Performance Award Agreement

 to Exhibit 10.11 to Form 10-K filed with the SEC on February 22, 2023

 10.12

 Form
 of Indemnification Agreement for Directors and Officers

 to Exhibit 10.1 to form 8-K filed with the SEC on July 7, 2023

 21.1

 List
 of Subsidiaries of the Registrant

 23.1

 Consent
 of Kost Forer Gabbay & Kasierer, independent registered public accounting firm

 24.1

 Power
 of Attorney (included in signature page)

 31.1

 Certification
 of Chief Executive Officer Pursuant to Rules 13a-14(a) and15d-14(a) of the Securities Exchange Act of 1934, as amended

 31.2

 Certification
 of Chief Financial Officer Pursuant to Rules 13a-14(a) and15d-14(a) of the Securities Exchange Act of 1934, as amended

 32.1

 Certification
 of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.2

 Certification
 of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.1

 Rule
 10D-1 - Clawback Policy

 101.INS

 101.SCH

 Schema Document

 101.CAL

 Calculation Linkbase Document

 101.DEF

 Definition Linkbase Document

 101.LAB

 Label Linkbase Document

 101.PRE

 Presentation Linkbase Document

 Cover Page Interactive

 Management contract
or compensatory plan or arrangement.

 ITEM
16. Form 10–K Summary

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

 By:

 / s/
 Zvi Lando

 Name:

 Zvi Lando

 Title:

 Chief Executive Officer

 Date:

 February
 26, 2024

 POWER
OF ATTORNEY

 Know all persons by these
presents, that each person whose signature appears below constitutes and appoints Zvi Lando, Ronen Faier, and Rachel Prishkolnik, or any
of them, as such person's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such
person and in such person's name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report
on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them or their or such person's
substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed
by the following persons on behalf of the registrant and in the capacities and on the dates indicated below.

 Signature

 Title

 Date

 /s/Zvi Lando

 Chief
 Executive Officer and Director

 ( Principal
 Executive Officer)

 /s/Ronen Faier

 Chief
 Financial Officer

 ( Principal
 Financial and Accounting Officer)

 /s/Nadav Zafrir

 Chairman
 of the Board

 /s/Dirk Carsten Hoke

 /s/Marcel Gani

 /s/Avery More

 /s/Tal Payne

 /s/Betsy Atkins

 /s/ Dana Gross