Item 1A. Risk Factors.
In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating us and our common stock. Any of the following risks, many of which are beyond our control, could materially and adversely affect our financial condition, results of operations or cash flows or cause our actual results to differ materially from those projected in any forward-looking statements. We may also face other risks and uncertainties that are not presently known, are not currently believed to be material or are not identified below because they are common to all businesses. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Cautionary Statements” in Item 7 of this Annual Report on Form 10-K.
Risk Factor Summary
Risks Related to Our Business and Industry
• Fluctuations in demand for semiconductors and volume of semiconductor manufacturing.
• Global economic uncertainty, including volatile financial markets, inflation, fluctuations in interest rates, economic recessions, and national debt and bank failures.
• Supply chain risks, including partial reliance on sole, single or limited source suppliers.
• Challenges inherent in operating a global business, including managing complex political, legal, regulatory, and operational environments across the jurisdictions in which the Company operates.
• The impact of export controls, economic sanctions and other similar restrictions.
• Customer concentration.
• The need for continuing innovation and introduction of new products.
• Manufacturing interruptions or delays and other operational disruptions.
• Information technology (“IT”) system failures, network disruptions, data breaches, and other cybersecurity threats.
• The impact of tariffs and a volatile trade environment.
• The use of hazardous materials in our operations.
• Goodwill impairment.
• Loss of key employees.
• Our ability to obtain, protect, and enforce intellectual property rights.
• Our use, and our competitors’ use, of AI
• Environmental, social, and governance commitments.
Risks Related to Government Regulation
• The impact of being subject to numerous rapidly evolving environmental laws and regulations across many jurisdictions.
• Risks related to the regulatory environment, including compliance costs and being subject to potentially inconsistent or conflicting regulations.
• Changes in taxation or adverse tax rulings.
• The impact of government incentives, including added operational complexity and competition.
Risks Related to Our Indebtedness
• The impact of our indebtedness, including our ability to obtain future financing.
• Risks related to our ability to generate sufficient cash to service our indebtedness.
• Restrictions on our operations as a result of the terms of the Amended Credit Agreement (as defined below) and the Indentures (as defined below).
Risks Related to Owning Our Common Stock
• The volatility of the price of our common stock.
• Changes in capital allocation strategy.
• Provisions in our charter documents and Delaware law may delay or prevent us from being acquired.
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General Risks
• Significant competition.
• Our ability to successfully acquire or integrate other businesses, form joint ventures, or divest businesses.
• The impact of climate change, including changes in market dynamics and stakeholder expectations, and unexpected operational disruptions.
Risks Related to Our Business and Industry
Our revenue is primarily dependent upon demand from the global semiconductor ecosystem. Fluctuations in demand, whether from industry cyclicality, changes in consumer spending, macroeconomic conditions, or other factors, may cause our revenues and operating results to vary significantly, which could adversely affect our business.
Our revenue is primarily dependent upon demand from the global semiconductor ecosystem. The semiconductor industry has historically been, and is likely to continue to be, cyclical with periodic downturns, resulting in decreased demand for our products, which has negatively impacted our results of operations in the past and could do so again in the future. Our revenues and operating results may fluctuate significantly from quarter-to-quarter or year-to-year due to a number of factors, many of which are outside our control. A lower volume of sales can have a large and disproportionate impact on our profitability because some of our expenses are fixed in the short term.
Factors that may negatively impact the demand for our solutions or cause our financial results to fluctuate unpredictably include, but are not limited to:
• decreased consumer spending or changes in purchasing habits related to (1) macroeconomic uncertainty, market conditions, slow or negative economic growth or uncertainty about economic and other policies; or (2) geopolitical instability, including the Russian invasion of Ukraine and conflicts in the Middle East;
• trends in the semiconductor industry and demand trends for different types of electronic devices such as logic versus memory integrated circuit (“IC”) devices, or digital versus analog IC devices, and the various technology nodes at which those products are manufactured;
• customer considerations, which may impact their future purchasing decisions, including (1) the size and timing of customer orders; (2) customers’ decisions to accelerate, decelerate or delay shipments; (3) customer inventory management and corrections; (4) customers’ rate of use and replacement of our consumable products; (5) customers’ decisions to delay expansion projects; (6) customers’ device architectures and specific manufacturing processes; (7) consolidation of our customers; and (8) the relative success of our customers vis-à-vis each other;
• the short order-to-delivery time for our products; market share and competitive losses; and pricing changes by us and our competitors;
• legal, tax, accounting or regulatory changes (including changes in import/export regulations and tariffs, such as regulations imposed by the U.S. government restricting exports to China or regulations imposed by other countries restricting the export of certain materials or the re-export of products containing such materials, or potential additional tariffs on imports, and tariffs imposed by other countries) or changes in the interpretation or enforcement of existing requirements;
• procurement shortages and related increased prices, and the failure of suppliers to perform their obligations;
• changes in our capital expenditure requirements to meet demand for our solutions, and the schedule and timing, including potential delays, thereof;
• unanticipated manufacturing difficulties;
• changes in average selling prices, customer mix and product mix;
• our ability to develop, introduce and market new, enhanced and competitive products in a timely and cost-effective manner;
• our competitors’ introduction of new products;
• disruptions in transportation, communication, demand, IT or supply resulting from factors outside of our control, including strikes, acts of God, wars, terrorist activities, international conflict and natural or man-made disasters; and
• foreign currency exchange rate fluctuations.
During downturns in the semiconductor industry, which can occur suddenly, we typically experience greater pricing pressure and shifts in product and customer mix, which can adversely affect our gross margin and net income. The semiconductor industry is also affected by seasonal shifts in demand, and as a result, we have in the past experienced and may experience in the future short-term fluctuation in our results of operations from one period to the next. We are unable to predict the timing, duration or severity of any current or future downturns in the semiconductor industry and cost control or other measures we implement to maintain profitability during such downturns or periods of limited growth may constrain or limit our ability to capitalize on subsequent industry recoveries.
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Furthermore, the semiconductor industry is subject to rapid advancements and demand for new and emerging technologies, such as AI. If we do not have, or are unable to develop, products and solutions that are utilized to manufacture semiconductors that enable new end-user demand trends, we may not be able to grow our revenue as fast as anticipated and our results of operations may be impacted. Furthermore, our performance is dependent, in large part, on our exposure to certain market trends and the growth of certain segments of the semiconductor ecosystem. For example, we have less exposure to the market for back-end assembly and testing. If certain markets in which we have limited or no exposure grow more rapidly than the markets we serve, our growth relative to our competitors may lag.
To remain competitive in the semiconductor industry, we have in the past, and will likely in the future, maintain or increase our ER&D activity and invest in our infrastructure, even during downturns and periods of slower demand. Additionally, if we do not, or are unable to, adequately anticipate changes in our business environment, we may lack the infrastructure, manufacturing capacity and resources to scale up our business to meet customer expectations and compete successfully during a period of growth. Conversely, we may expand our capacity too rapidly, resulting in excess fixed costs and lower profitability.
As a result of global economic uncertainty, we may experience reduced demand for our products, increased costs, challenges in forecasting our operating results and identifying and prioritizing business risks, and other negative effects, any of which may materially and adversely affect our business, financial condition and results of operations.
Uncertain and volatile economic conditions, including financial market instability, inflation and increased costs, trade wars, fluctuating interest rates, economic slowdowns and/or recessions, difficulties in obtaining capital, and national debt and bank failures, could materially and adversely impact our operating results. Such conditions, particularly if present in any of our key sales or manufacturing regions, can cause or exacerbate negative trends in business and consumer spending, which, in turn, historically have increased our manufacturing and delivery costs and reduced customer demand for our products (and may do so in the future). We may also face a number of other negative effects related to global economic uncertainty, including.
• an increase in reserves for accounts receivable due to our customers’ inability to pay us;
• lower utilization of our manufacturing facilities, which could lead to lower margins;
• an increase in write-offs for excess or obsolete inventory that we cannot sell;
• potential impairment charges relating to goodwill, intangible assets, manufacturing equipment or other long-lived assets, to the extent that any downturn indicates that the carrying amount of the asset may not be recoverable;
• an inability of suppliers to deliver parts and raw materials, which would negatively affect our ability to manage operations, manage our costs and sell our products;
• consolidation or strategic alliances among other suppliers to semiconductor manufacturers, which could adversely affect our ability to compete effectively;
• greater challenges in forecasting operating results, making business decisions and identifying and prioritizing business risks;
• a need to undertake additional cost reduction efforts, including additional restructuring activities, which may adversely affect our ability to capitalize on opportunities; and
• limitations on our ability to access cash maintained in our bank accounts as a result of bank failures, which could affect our ability to manage our operations.
Interruptions in our supply chain, including those from our sole, single and limited source suppliers, could affect our ability to manufacture our products and meet demand, which, in turn, could have an adverse effect on our revenue and results of operations.
Our ability to increase sales of our products depends in part upon our ability, in a very short timeframe, to ramp up our manufacturing capacity and to mobilize our supply chain. If we are unable to do so, our customers could obtain products from our competitors, which would reduce our market share, harm our reputation as a trusted partner and impact our results of operations. Ensuring a robust and resilient supply chain is critical for us to meet the demand, quality and technological requirements of our customers. We rely on the timely delivery of parts, materials and services, including components and subassemblies, from our suppliers and contract manufacturers.
The Company’s strategies to limit its reliance on single, sole or limited source suppliers and utilize alternative sources are not feasible or practical in all circumstances. For example, we rely on single, sole or limited source suppliers for certain raw materials that are critical to manufacturing our products, such as plastic polymers, filtration membranes, abrasive particles, petroleum coke and other materials. If we were to lose any of these critical sources, or there is an industry-wide increase in demand for, or discontinuation of, raw materials or components used in our products, it could be difficult or impossible to find an alternative supplier, which could adversely affect our operations. In addition, qualifying alternative suppliers or materials (or relocating manufacturing) can be time-consuming and costly due to customer qualification requirements, regulatory approvals,
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and the technical sensitivity of many of our products. Disruptions to transportation routes, ports, air freight capacity, or regional infrastructure in Asia (including in locations where we or our suppliers manufacture or where key customers operate) could further delay deliveries, increase costs, or reduce our ability to serve customers.
Several factors outside of our control, including, but not limited to, surges in demand for semiconductors, changes in trade policies, the imposition of foreign export controls on critical materials and minerals and international conflicts, have resulted in, and may in the future result in, a shortage of raw materials and components needed to manufacture and deliver our products, higher raw materials costs, costly and time-consuming re-qualification of products manufactured with new raw materials and delays in, and unpredictability of, shipments due to transportation interruptions. These results could harm our reputation or the competitiveness of our products. Such shortages, delays and unpredictability have adversely impacted, and may impact in the future (1) our suppliers’ ability to meet our demand requirements, (2) our manufacturing operations, (3) our ability to meet customer demand, (4) our gross margins and (5) our other operating results. Our actions to counteract impacts to our gross margins and other operating results could be or reduce demand, which would impact our revenue. Additionally, our suppliers may not have the capacity to meet increases in our demand for raw materials and other components, in turn, making us to meet customer demand for our products. If our suppliers or sub-suppliers are to maintain their operations due to operational restrictions or financial caused by an economic or , we may need to increase our safety stocks of raw materials or components or alter our payment terms with such suppliers, including prepaying for raw materials. These measures could reduce our available working capital, increase our inventory carrying costs, and impact our liquidity and overall financial flexibility.
Further, increased restrictions imposed on a class of chemicals known as per- and polyfluoroalkyl substances (“PFAS”), which are used in a number of products, including parts and materials that are incorporated into our products, may negatively impact our supply chain due to the potentially decreased availability, or non-availability, of PFAS-containing products. Proposed regulations under consideration could require that we transition away from the usage of PFAS-containing products, which could adversely impact our business, operations, revenue, costs, and competitive position. Suitable replacements for PFAS-containing parts and materials may not be available at similar performance and costs, or at all.
Because a significant amount of our sales and manufacturing activity occurs outside the U.S., we are exposed to risks inherent in operating a global business, including changes in economic policy, geopolitical tensions and challenges in managing a diverse workforce and operating under differing business and legal environments, which may harm our reputation or profitability.
Sales to customers outside the U.S. accounted for approximately 82%, 79% and 75% of our net sales in 2025, 2024 and 2023, respectively. We anticipate that international sales will continue to account for a majority of our net sales. In addition, a number of our key domestic customers derive a significant portion of their revenues from sales in international markets. We also develop and manufacture a significant portion of our products outside the U.S. and depend on international suppliers for many of our parts and raw materials. We intend to continue to maintain extensive sales, product development and manufacturing operations internationally, which are subject to a number of risks, uncertainties and potential costs that could adversely affect our revenue, profitability and reputation, including:
• changes and uncertainties with respect to trade and export regulations (including new and changing regulations for exports of certain technologies to China), trade policies and sanctions, tariffs, international trade disputes and any retaliatory measures;
• geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the ongoing conflict in the Middle East, and tensions between China and Taiwan and between China and the U.S.;
• cybersecurity incidents;
• challenges in hiring and integrating workers in different countries and in managing a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, along with differing employment practices and labor issues;
• challenges of maintaining appropriate business processes, procedures and internal controls and complying with legal, environmental, health and safety, anti-bribery, anti-corruption, trade compliance, data privacy, cybersecurity and other regulatory requirements that vary by jurisdiction;
• challenges in developing relationships with local customers, suppliers and governments;
• public health crises;
• fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against foreign currencies that are important to our business;
• liability for foreign taxes assessed at rates higher than those applicable to our domestic operations;
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• imposition of a global minimum tax rate, including by the Organization of Economic Co-operation and Development (“OECD”);
• challenges and costs associated with the protection of our intellectual property throughout the world;
• challenges associated with managing global and regional third-party service providers, including certain engineering, software development, manufacturing, IT and other functions;
• customer or government efforts to encourage operations and sourcing in a particular country, such as Korea or China, including efforts to develop and grow local competitors, require local manufacturing, and provide special incentives to government-backed local customers to buy from local competitors; and
• impacts of natural disasters and extreme and chronic weather events on our operations and those of our customers and suppliers, which may be exacerbated by climate change.
In the past, these factors have disrupted our operations and increased our costs, and we expect that these factors will continue to do so in the future. Furthermore, there is inherent risk, based on the complex relationships among China, Japan, Korea, Taiwan, and the U.S., that political, diplomatic and national security influences could lead to disputes, impacts and/or disruptions, in particular those affecting the semiconductor industry. This can adversely affect our business with China, Japan, Korea, and/or Taiwan and potentially the entire Asia Pacific region or global economy. A significant dispute, impact and/or disruption in any area where we do business could have a materially adverse impact on our future revenue and profits.
Export controls, economic sanctions, and other similar restrictions may limit our ability to sell our products to certain customers, require us to obtain governmental licenses, put the Company at a competitive disadvantage both domestically and internationally and expose us to additional legal liability, all of which could harm our business and financial condition.
We are subject to export control and economic sanctions laws and regulations that restrict the delivery of some of our products and services to certain countries (and nationals thereof), to certain end users, and for certain end uses. These restrictions may prohibit the sale of certain of our products, services and technologies, and they may require us to obtain a license from the U.S. government and/or other governments before delivering the controlled item or service. Obtaining export licenses may be difficult, costly and time-consuming, and we may fail to receive licenses that we apply for on a timely basis or at all. Even where a license is ultimately granted, the licensing process may result in extended delivery timelines, increased administrative burden, and customer uncertainty, any of which could cause customers to delay, reduce, or cancel orders, shift purchases to competitors, or redesign processes around non-U.S. alternatives. In addition, export controls and sanctions regimes are dynamic and may be expanded to cover additional products, technology, end uses, end users, or jurisdictions (including through restrictions applicable to non-U.S. persons or foreign subsidiaries), which could further limit our ability to sell or support products and services in certain markets. We must also comply with export control and economic sanctions laws and regulations imposed by other countries. Although we maintain an export and trade control compliance program, it may not be fully or may be , us to legal liabilities. Compliance with these laws could significantly limit our sales in the future. Changes in, or responses to, U.S. or other countries’ trade controls could reduce the competitiveness of our products and cause our sales to , which could have a material effect on our business, financial condition and results of operations.
Over the last several years, the U.S. and other governments have significantly expanded export controls on certain technologies and commodities to certain markets, particularly with respect to semiconductor and other high technology exports to China, a market which represented approximately 21% of our sales in 2025. These and other regulations have reduced our ability to sell our products to customers in China and it is possible future regulation could further reduce demand for our products. As a result of these restrictive measures, certain of our customers have made efforts to source products domestically in order to mitigate perceived risks to their supply chain. Furthermore, these restrictive measures have incentivized Chinese domestic semiconductor companies to work more closely with local Chinese companies and companies headquartered outside of the U.S. in an effort to enable these companies to enhance the technology-level and quality of their products and, as a result, to better compete with our products. We may be unable to continue to compete favorably against these local and foreign competitors. If these efforts are successful, are widespread amongst our customers and expand to our products and solutions broadly, overall global demand for our products may be reduced, which could have a material effect on our business, financial condition and results of operations. Furthermore, government authorities may take actions, impose conditions that require the use of local suppliers or partnerships with local companies, increase tariff and other customs costs, impose export restrictions on raw materials and components, such as the restrictions imposed on materials and minerals by China in 2025, or require the license or other transfer of intellectual property, which could have a significant impact on our business.
These measures could also increase our costs (including logistics, compliance, and supplier qualification costs), disrupt our sourcing and manufacturing plans, and adversely affect our ability to meet customer requirements or contractual commitments.
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A significant portion of our sales is concentrated on a limited number of key customers, and our net sales and profitability may materially decline if we were to lose one or more of these customers.
Sales to a limited number of large customers constitute a significant portion of our overall revenue, shipments, cash flows, collections and profitability and our success is tied in part to their competitive position in their respective markets. Our top ten customers accounted for 50%, 48% and 43% of our net sales in 2025, 2024 and 2023, respectively. Consolidation among semiconductor manufacturers, shifts in customer build plans, and evolving procurement strategies (including efforts to localize supply chains in response to export controls or trade policies) may increase these customers’ bargaining power and result in pricing pressure, more restrictive commercial terms (including audit, cybersecurity, ESG, and flow-down requirements), longer payment cycles, or demands for dual sourcing or rapid qualification of alternative products. If we are unable to satisfy these requirements on commercially reasonable terms, we could lose design wins, experience reduced volumes, or incur additional costs, any of which could materially adversely affect our results of operations.
Because we have limited or no contractual recourse if our customers decided to stop buying and using our products with limited advance notice, the cancellation, reduction or deferral of purchases of our products by any one of these customers could significantly reduce our revenues in any particular quarter. If we were to lose any of our significant customers, if our products are not specified for our significant customers’ products, if our customers lose market share to competitors with whom we do not have as strong relationships or as favorable commercial terms, or if we suffer a material reduction in their purchase orders, our revenue could decline and our business, financial condition and results of operations could be materially and adversely affected. Due to the long design and development cycle and lengthy customer product qualification periods required for most of our products, we may be unable to replace these customers quickly, if at all. In addition, our principal customers hold considerable purchasing power and may be to negotiate sales terms that result in decreased pricing, increased costs, lower margins and/or limit our ability to share jointly-developed technology with others. The semiconductor industry may continue to undergo consolidation, and if any of our customers merge or are acquired, we may experience lower overall sales to, or lower from sales to, the merged or combined companies. Furthermore, we rely on independent distributors, in addition to our direct sales , to market and sell certain of our products globally. If these distributors to devote sufficient resources to selling our products or are otherwise in doing so, our revenue and results of operations could be materially affected.
Our customer base is also geographically concentrated, particularly in Taiwan, Korea, Japan, China and the U.S. As a result, export regulations, the imposition of tariffs or other trends that apply to customers in certain countries, such as those in China, have exposed and may further expose our business and results of operations to greater volatility. The geographic concentration of our customer base could shift over time as a result of changes in technology and competitive landscape, as well as government policy and incentives to develop regional semiconductor industries.
If we are unable to anticipate and respond to rapid technological change and customer requirements by continuing to innovate and introduce new and enhanced products and solutions, we may experience a loss of market share, decreased sales, revenue, profitability and damage to our reputation.
The semiconductor industry is subject to rapid technological change, changing customer requirements and frequent new product introductions. In our industry, the first company to introduce an innovative product that addresses an identified market need will often have a significant advantage over competing products. Following development, it may take several years for sales of a new product to reach a substantial level, if ever. If a product concept does not progress beyond the development stage or only achieves limited acceptance in the marketplace, we may not receive a direct return on our expenditures, which may be significant, we may lose market share and our revenue, and profitability may decline. In the past, we incurred significant impairment charges for capital expenditures related to developing the capability to manufacture shippers and FOUPs for 450 millimeter wafers, which major semiconductor manufacturers announced that they would not initiate manufacturing for the foreseeable future, and for other projects that failed to find commercial viability.
We believe that our future success will depend upon our ability to continue to develop novel, mission-critical solutions to maximize our customers’ manufacturing yields and enable higher performance semiconductor devices. A failure to successfully anticipate and respond to technological changes by developing, marketing and manufacturing new products or enhancements to our existing products could harm our business prospects, limit our market share, result in unanticipated costs and significantly reduce our sales. Developing new products or enhancing existing products is complex, costly and uncertain, and, if a new product is adopted by our customers, we must ramp manufacturing quickly, while also managing costs. In addition, our customers impose very high quality and reliability standards on our products, which often change and can be difficult and costly to . A to these customer standards or to comply with industry, regulatory and technical requirements may
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result in reduced orders, higher manufacturing costs, delays in acceptance and payment, additional service and warranty expense and damage to our reputation, which may adversely affect our revenue and results of operations.
Manufacturing interruptions or delays, or other disruptions to our operations, could adversely affect our business, financial condition, results of operations and reputation.
Our manufacturing processes are complex and require the use of expensive and technologically sophisticated equipment and materials. We have, on occasion, experienced manufacturing difficulties, such as critical equipment breakdowns, delayed ramp up of newly constructed or expanded manufacturing facilities or the introduction of impurities in the manufacturing process, which cause lower yields, delivery delays and harm our ability to serve our customers. In addition, any modification to the manufacturing process of a product, including changes designed to improve manufacturing yields, process stability and product quality, could require that the product be re-qualified by customers, which can increase our costs and delay or prevent our ability to sell this product to our customers. We have moved, and we may in the future move, the manufacture of certain products from one plant to another, which may be costly and time-consuming. If we fail to transfer and re-establish the manufacturing processes in the destination plant and effectively, we may not be to meet customer demand, we may credibility with our customers and our business may be . Even if we move our manufacturing processes, we may not the anticipated levels of cost savings or , if any, and such may cause in developing or shipping our products. These and other manufacturing may result in the of sales and exposure to warranty and product liability .
Disruptions to our operations may be caused by factors outside of our control, including severe weather events and natural catastrophes, civil unrest, outbreaks of disease, and terrorist actions. Our continuity plans may be insufficient to mitigate the impact of disruptions to our operations, and any prolonged disruption may impede our ability to manufacture and deliver products to our customers or to engage with customers on new product applications, resulting in an adverse impact on our business and results of operations.
We may be subject to IT system failures, network disruptions and cybersecurity and data breaches, which could damage our reputation and adversely affect our financial condition, results of operations and cash flows. New laws and regulations regarding data privacy may also increase our costs.
In conducting our business, we use, collect and store sensitive data, including our financial information, intellectual property, confidential information, proprietary business information and personally identifiable information of our employees and others, as well as similar information of our customers, suppliers and business partners. We maintain this information in our data centers, on our networks and on IT systems owned and maintained by third parties. The secure processing, maintenance and transmission of this information is critical to our operations. All IT systems are subject to disruptions, security breaches, outages and failures, which may be caused by a variety of internal and external factors. We and our third-party suppliers have experienced, and expect to continue to be subject to, cybersecurity threats and incidents ranging from employee or contractor error or misuse to individual attempts to gain unauthorized access to systems, to sophisticated and targeted measures known as advanced . Cybersecurity may target us directly or indirectly through our third-party providers and global supply chain. Cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors. Geopolitical tensions or , such as Russia’s invasion of Ukraine and tensions with China, have created a heightened risk of cybersecurity attacks. AI capabilities are and will be used by actors to identify and craft increasingly sophisticated cybersecurity attacks, making them even more to by creating more phishing emails or social engineering and by in electronic security programs utilizing image or voice recognition. The use of AI by us, our customers, suppliers and other business partners and third-party providers may introduce onto our IT systems. We may be to anticipate, prevent or remediate future attacks, , or and in some instances we may be of or cybersecurity or or their magnitude and effects, particularly as attackers are increasingly to controls and remove forensic evidence.
We continue to devote significant resources to network security, threat monitoring and other measures to protect our systems and data from unauthorized access or misuse, and we may be required to expend greater resources in the future, especially in the face of evolving and increasingly sophisticated cybersecurity threats and laws, regulations, contractual and other actual and asserted obligations to which we are or may become subject relating to privacy, data protection, and cybersecurity. These security procedures and protection systems are costly and yet they may not be fail-safe. We may still suffer cybersecurity and other incidents, which could have a material adverse effect on our business or operations.
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IT system failures, network disruptions and breaches of data security could (1) cause disruption in our operations, issues with customer communication and order management, the unauthorized or unintentional disclosure of sensitive information, or disruptions in our transaction processing or (2) undermine the integrity of our disclosure controls and procedures and our internal control over financial reporting, which could affect our reputation, result in significant liabilities and expenses, adversely affect our ability to report our financial results in a timely manner and could have a material adverse effect on our financial condition, results of operations and cash flows. Cybersecurity incidents affecting our suppliers could impact our supply chain, which, in turn, could lead to difficulties and delays in our ability to obtain parts, materials and services needed to manufacture our products and provide services. to timely recover from such could materially and affect our business, financial condition and results of operations, and may also cause our business and financial outlook to be .
Our efforts to comply with current and evolving laws, regulations and other obligations, such as contractual or commercial obligations from our customers or other third parties, concerning privacy, cybersecurity, and data protection, increase our compliance costs and could result in significant additional expenses. Any actual or alleged failure to comply with these obligations could result in inquiries, investigations, and other proceedings against us by regulatory authorities or other third parties.
Recent tariffs and other trade actions taken by the U.S. and other countries where we do business have increased, and may continue to increase, our import and export costs, requiring us, in certain situations, to increase our prices, add a surcharge or find alternative suppliers which, in turn, may harm our relationships with customers, reduce demand for our products and decrease our profitability.
In recent years, including during 2025, the U.S. government has imposed tariffs and implemented other trade actions affecting products and materials imported into the U.S. In response to these tariffs and other changes in U.S. trade policy, several countries, including China, have threatened or imposed retaliatory tariffs on U.S. exports. The continuing imposition of tariffs by the U.S. and others may also give rise to further escalations of protectionist and retaliatory trade measures. Tariffs and related trade measures may be expanded, modified or restructured, and exemptions or exclusions may be limited or unavailable, which could further increase costs or disrupt supply chains.
These tariffs and other trade measures could have a material adverse effect on our business, results of operations, or financial condition. Our business and operating results are heavily dependent on international trade. We import raw materials and finished goods into the U.S. and we export products from the U.S. to our customers throughout the world, including those in China. Because of the recent tariffs and other trade restrictions, we have experienced increased and additional costs with respect to our import and export of such materials, finished goods, and products, and we may continue to experience these costs. In turn, we may be required to increase the prices of our products or add surcharges, which may reduce demand and harm our relationships with our customers. If we do not, or are unable to, increase prices or add surcharges without reducing demand, we may experience reduced profitability. Furthermore, retaliatory tariffs imposed by countries where we have significant sales, like China, could cause our customers to source products from local and non-U.S. competitors, which could further reduce demand for, and the overall competitiveness of, our products and decrease our market share. Additionally, we may be required to source our materials from alternative suppliers which could significantly increase our costs, lead to significant , and result in reliability or quality issues, all of which could our reputation and decrease demand for our products. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations and overall relationships between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets.
Our operations use hazardous materials that expose us to various risks, including potential liability for personal injury and potential remediation obligations.
Our operations involve, and we are exposed to the risks associated with, the use and manufacture of hazardous materials. In particular, we manufacture specialty chemicals, which is an inherently hazardous process that may result in accidents, and store and transport hazardous raw materials, products and waste in, to and from various facilities. Potential risks that may disrupt our operations or expose us to significant losses and liabilities include explosions and fires, chemical spills and other discharges, releases of toxic or hazardous substances or gases, and pipeline and storage tank leaks and ruptures. These and other hazards may result in (1) liability for personal injury, death, damage to property and contamination of the environment; (2) suspension of operations; (3) the imposition of civil or , and other sanctions; (4) cleanup costs; (5) by governmental entities or third parties; (6) reputational ; (7) increases in our insurance costs; and (8) other impacts on our results of operations. Moreover, a of one of our products at a customer site could the business operations of the customer. For example, while we believe that our SDS and VAC delivery systems are safe to transport, store and deliver toxic gases, any leakage could cause , including or death, to any person to those toxic gases,
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potentially creating significant product liability exposure for us. Our insurance coverage may be inadequate to satisfy any such liabilities, and our financial results or financial condition could be adversely affected.
We carry a significant amount of goodwill on our balance sheet.
As of December 31, 2025, we had goodwill of $3,946.7 million. The future occurrence of a potential indicator of impairment, such as a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with significant customers, strategic decisions made in response to economic or competitive conditions, loss of key personnel, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could result in goodwill impairment charges. We have recorded goodwill impairment charges in the past, and such charges have materially affected our historical results of operations. For additional information see Note 8 – Goodwill and Intangible Assets to the accompanying consolidated financial statements.
Loss of any of our key personnel could harm our business, and our inability to attract and retain new qualified personnel could inhibit our ability to operate and grow our business successfully.
Many of our key personnel have significant experience in the semiconductor industry and deep technical expertise. The loss of our key employees or an inability to attract, hire, train, motivate and retain qualified and skilled employees, particularly research and development and engineering personnel, could cause business interruptions and inhibit our ability to operate and grow our business. As the semiconductor industry has grown in recent years, competition for qualified talent, particularly those with significant industry experience, has intensified. Other factors impacting our ability to attract and retain key employees include the attractiveness of our compensation and benefit programs, global economic or political conditions, the ability to obtain necessary authorizations for workers to provide services outside their home countries and our ability to continue to foster a challenging and rewarding work environment. We have experienced in the past, and may in the future continue to experience, an increasingly competitive and constrained labor market, which may limit our ability to add headcount required to meet our customers’ demand, decrease our productivity due to an influx of inexperienced workers and cause our labor costs to increase and our to . As a result, the and costs associated with attracting and retaining employees has risen and may continue to rise.
If we fail to obtain, protect and enforce intellectual property rights, our business and prospects could be harmed.
Our future success and competitive position depend in part upon our ability to obtain, maintain and enforce intellectual property rights. We rely on patent, trade secret and trademark laws as well as confidentiality agreements to protect many of our major product platforms. Even if patents are issued in respect of our patent applications, these patents may nonetheless (1) expire; (2) be challenged, invalidated, circumvented, rendered unenforceable or otherwise compromised by third parties; or (3) fail to provide us with any competitive advantage. We may lose trade secret protections as a result of actions or omissions by us, our employees, or third parties. Our confidentiality agreements (including confidentiality agreements entered into between us and our employees) may be breached and the remedies for any such breach may be inadequate. Our confidential and proprietary information and technology may also be replicated or obtained through lawful means. Replication of our intellectual property or the or of our intellectual property rights could result in uncompensated market and revenue , which could affect our business and financial condition. Monitoring and detecting any access, use or disclosure of our intellectual property is and and we cannot be certain that the protective measures we have implemented will completely prevent . Our to monitor and ensure the proper use of our data, confidential information, and intellectual property in the training and operation of generative artificial intelligence products may result in the of intellectual property and raise complex compliance, intellectual property and other issues.
We have initiated, and may initiate in the future, litigation in order to enforce our intellectual property rights, protect our trade secrets, and determine the validity and scope of the proprietary rights of others. From time to time, third parties have also asserted, and may continue to assert, intellectual property claims against us and our products. In the past, intellectual property-related litigation has been time consuming and has caused us to expend significant financial and other resources. In the future, such litigation could (1) impose substantial costs and cause the diversion of resources and the attention of management; (2) require us to pay damages or royalties; (3) require us to alter our products or processes, or obtain a license to continue selling the impacted product, which we may be unable to do on commercially acceptable terms, or at all; (4) severely harm our reputation and competitive position; and (5) negatively affect our sales, and prospects to commercialize new products.
As we incorporate AI capabilities into our operations, we may be subject to various risks, including compliance risks, the potential for AI to produce inaccurate results, intellectual property and cybersecurity risks, and the risk that we are unable to use AI as successfully as our competitors, which may result in legal liability, reputational damage and other harm to our business.
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AI technology is complex and rapidly evolving, as are the operational, competitive, legal and regulatory environments in which it exists. We are increasingly incorporating AI capabilities into our business operations and our ways of working, which can be both challenging and costly. For example, we may experience difficulty in effectively using, or be unable to use, AI in a manner that benefits our business operations, enhances our efficiency and enables us to improve our products and services more rapidly. AI algorithms or training methodologies may also be flawed, and datasets may contain irrelevant, insufficient or biased information, which can cause errors in outputs. This may give rise to legal liability, reputational damage and other adverse effects. Our business may be further impacted if our competitors are more than we are in executing their AI strategies and developing products and services with the aid of AI technology.
In addition, the use of AI in the development of our products and services could cause the loss of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity. Countries may also adopt laws and regulations related to AI that could cause us to incur greater compliance costs or limit the use of AI in our business. Any failure or perceived failure by us to comply with such legal or regulatory requirements could subject us to legal liabilities, damage our reputation, or otherwise have a material and adverse impact on our business.
Implementation of, and reporting on, our environmental, social and governance commitments could result in additional costs, and our inability to achieve these commitments could have an adverse impact on our reputation and performance.
From time to time we communicate our strategies, commitments and targets related to sustainability, greenhouse gas emissions, the sustainability of our products, human rights, and other environmental, social and governance matters. These strategies, commitments and targets reflect our current plans and aspirations, and we may be unable to achieve them. Changing customer sustainability requirements, including increasing customer demand for sustainable products, as well as actions taken to achieve our sustainability targets, could cause us from time to time to alter our manufacturing, operations or products, and incur substantial additional expense. Any failure or perceived failure to timely meet these sustainability requirements or targets could adversely impact the demand for our products and subject us to significant costs and liabilities and reputational risks that could adversely affect our business, financial condition and results of operations. In addition, standards and processes for measuring and reporting greenhouse gas emissions and other sustainability metrics may change over time, increase our costs and result in inconsistent data or significant revisions to our strategies, commitments and targets, and our ability to them. We also are or may become subject to new climate and sustainability laws and regulations, such as the State of California’s climate change disclosure rules, the EU’s Corporate Sustainability Reporting Directive and the SEC’s rules on climate-related risks. Compliance with such laws and regulations, as well as increased from regulators, customers and other stakeholders in our sustainability practices, could result in additional costs and us to new risks, including reputational risks. Any of our greenhouse gas emissions or other sustainability disclosures or our to related strategies, commitments and targets, or our to our sustainability measures consistent with applicable laws and regulations or to the of regulators or our stakeholders, could impact our reputation or performance.
Risks Related to Government Regulation
We are subject to a variety of rapidly evolving environmental laws and regulations that could cause us to incur significant liabilities and expenses.
The wide variety of federal, state, local and non-U.S. regulatory requirements relating to the design, manufacture, sale, shipping, import, export and use of our products, as well as the release, use, storage, treatment, transportation, discharge, disposal and remediation of, and human exposure to, hazardous chemicals, could result in future liabilities, remediation efforts or the suspension of production or shipment. These requirements are dynamic and have become stricter over time. These laws and regulations, among others, increase the complexity and costs of operating our facilities and manufacturing and transporting our products. Further changes to, or our failure to comply with, these and similar regulations could (1) restrict our ability to expand, build or acquire new facilities, (2) require us to acquire costly control equipment, (3) cause us to incur expenses associated with remediation of contamination, (4) cause us to modify our product design, operations, manufacturing or shipping processes or (5) otherwise increase our cost of doing business, which may have a negative impact on our financial condition, results of operations and cash flows. In addition, the potential adoption of new laws, rules or regulations related to climate change and the use or sale of PFAS-containing products poses risks, including us to future costs and liabilities, that could our results of operations or affect the way we conduct our businesses. New or modified regulations could require us to make substantial expenditures to our environmental compliance efforts, or to reformulate our products or substitute raw materials or components with alternatives that may be more expensive, less readily available, or in quality or performance. Any such changes could increase our production costs, our supply chain, or result in less competitive products and may require requalification by our customers, which could result in , of design wins, or customers transitioning to competing products..
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We are exposed to various risks from our regulatory environment, including being subject to potentially inconsistent or conflicting laws and regulations in the jurisdictions in which we operate, international trade-related disputes and compliance costs, which may adversely impact our reputation, financial condition and results of operations.
We are subject to risks related to new, different, inconsistent, or even conflicting laws, rules, and regulations that may be enacted by legislative or executive bodies and/or regulatory agencies in the countries where we operate; disagreements or disputes related to international trade; and the interpretation and application of laws, rules, and regulations. As a public company with global operations, we are subject to the laws of multiple jurisdictions and the rules and regulations of various governing bodies, including those related to health and safety, import and export controls, financial and other disclosures, accounting standards, corporate governance, public procurement and public funding, environment (including those relating to sustainability, carbon emissions and climate change concerns), privacy, anti-corruption, such as the Foreign Corrupt Practices Act and other local laws prohibiting corrupt payments to governmental officials or customers, conflict minerals or other social responsibility legislation, employment practices, immigration or travel regulations and antitrust regulations, among others. Each of these laws, rules and regulations imposes costs on our business, including financial costs and potential of our management’s attention. There have been, and may continue to be, instances where we to ensure full compliance with all of the laws, rules and regulations to which we are subject. These instances present risks to our business, including potential , restrictions on our actions and reputational . The volume of changes to such laws, rules and regulations may increase in the countries where we operate.
Changes in or ambiguous interpretations of laws, regulations and standards, and the speed with which new regulations may be enacted and come into effect, may create uncertainty regarding compliance matters or instances where we may not be in full compliance. Efforts to comply with new and changing regulations have resulted in, and are likely to continue to result in, increased administrative expenses and diversion of management’s time and attention from revenue-generating activities to compliance activities. If we are found by a court or regulatory agency not to be in compliance with laws and regulations, our reputation, business, financial condition and/or results of operations could be adversely affected, we may be disqualified or barred from participating in certain activities and we may be forced to modify our operations to achieve full compliance.
Changes in taxation or adverse tax rulings could adversely affect our results of operations.
We operate in many foreign countries and are subject to taxation at various rates and audit by multiple taxing authorities. Our results of operations could be affected by tax audits, changes in tax rates, changes in laws and regulations governing the calculation, location and taxation of earned profit, changes in laws and regulations affecting our ability to realize deferred tax assets on our balance sheet and changes in laws and regulations relating to the repatriation of cash into the U.S. Each quarter, we forecast our tax liability based on our forecast of our performance for the year in each tax jurisdiction. If our performance forecast changes, our forecasted tax liability would also likely change, perhaps materially.
We have undertaken, and expect to continue to undertake, complex internal reorganizations of our foreign subsidiaries in order to rationalize and streamline our foreign operations, focus our management efforts on certain local opportunities and take advantage of favorable business conditions in certain localities. These or any future reorganizations could result in adverse tax consequences in one or more jurisdictions, which could adversely impact our profitability from foreign operations and result in a material reduction in our results of operations.
Various jurisdictions in which we operate are considering changes to, or have already changed, their tax laws. For example, the OECD introduced the Base Erosion and Profit Shifting 2.0 project that seeks to impose a global minimum income tax rate of 15%. Any tax reform adopted in any foreign jurisdiction may exacerbate the risks described above and cause our corporate tax rate to increase.
We receive government incentives, grants, and subsidies that are subject to conditions, reporting requirements, and compliance obligations, and failure to satisfy these requirements could result in the reduction, termination, or clawback of benefits, as well as potential penalties or reputational harm, any of which could adversely affect our business, financial condition, and results of operations.
From time to time, we may receive and enter agreements for grants, subsidies, loans, tax arrangements and other incentives from national, state and local governments in jurisdictions throughout the world designed to encourage us to establish, maintain or increase our investment, research and development and production activities in those jurisdictions. Our future business plans are impacted by obtaining these government incentives, and they typically require us to achieve or maintain certain levels of investment, capital spending, employment, technology deployment or development milestones, construction or production milestones, or research and development activities to qualify for such incentives or could restrict us from undertaking certain
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activities. Compliance with these requirements may add complexity to our operations and increase our costs, and a failure to comply could result in cancellation of agreements or transactions, investigations, civil and criminal penalties, forfeiture of profits, reduction, termination or clawback of any funding, suspension or debarment from doing business with the government, or other penalties, any of which could have a material and adverse effect on our business, financial condition and results of operations. For example, we have entered into a direct funding agreement with the U.S. Department of Commerce to receive a grant under the U.S. CHIPS and Science Act of 2022. We may be unable to successfully the milestones and ancillary requirements to qualify for these incentives or such incentives may otherwise be withheld. In addition, incentives may be subject to ongoing compliance “guardrails,” audit rights, domestic sourcing or workforce requirements, and restrictions on certain activities or transactions. The timing of any reimbursements or funding may not align with our capital spending or operating needs, and we may be required to fund substantial costs in advance of receiving any benefits (if received at all). We also may be to obtain future incentives, which may put us at a competitors, especially foreign competitors that may from such incentives in the countries in which they are headquartered.
Risks R elated to Our Indebtedness
We have a substantial amount of indebtedness and may in the future incur substantially more debt, each of which could adversely affect our ability to obtain financing in the future and react to changes in our business.
As of December 31, 2025, we had an aggregate principal amount of $3.7 billion of indebtedness outstanding, including the $0.5 billion from our senior secured term loan facility due 2029 (the “Term Loan Facility”), $1.6 billion aggregate principal amount of the 4.75% senior secured notes due April 15, 2029, $1.7 billion aggregate principal amount of the 5.95% senior unsecured notes due June 15, 2030, our 4.375% senior unsecured notes due April 15, 2028, and our 3.625% senior unsecured notes due May 1, 2029 (collectively, the “Notes”). In addition, we have approximately $575.0 million of unutilized capacity under our senior secured revolving credit facility due 2027 (the “Revolving Facility”). We refer to the Term Loan Facility and the Revolving Facility as the “Credit Facilities”. The credit agreements that govern the Credit Facilities are referred to collectively as the “Amended Credit Agreement”. Further, we may incur significant additional secured and unsecured indebtedness in the future.
Although the indentures governing the Notes (the “Indentures”) and the Amended Credit Agreement restrict our ability to incur additional indebtedness, the restrictions have a number of significant qualifications and exceptions. For example, the Amended Credit Agreement provides that we can request additional loans and commitments up to the greater of $1.1 billion or 100% of our EBITDA, as well as additional amounts if our secured net leverage ratio is less than a specified ratio. Further, these restrictions do not prevent us from incurring monetary obligations that do not constitute indebtedness. If we add new indebtedness and other monetary obligations to our current debt levels, the related risks that we now face would intensify.
Our debt could have important consequences, including:
• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate purposes;
• requiring a substantial portion of our cash flow to be dedicated to debt service payments instead of other purposes;
• increasing our vulnerability to adverse changes in general economic, industry and competitive conditions;
• exposing us to increased interest expense for borrowings with variable interest rates, including borrowings under the Credit Facilities; and
• placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt having more favorable terms.
Higher or sustained interest rates and tighter credit market conditions could increase our borrowing costs, reduce refinancing flexibility and limit access to capital. Any downgrade in our credit profile, or reduced lender or investor appetite for debt financing, could further increase our cost of capital and adversely affect our liquidity and financial condition.
We may be unable to generate sufficient cash to service our indebtedness and may be forced to take other actions, which may not be successful, to satisfy our obligations under our indebtedness.
We may be unable to maintain sufficient cash flow from operating activities to permit us to pay the principal of, premium, if any, and interest on our indebtedness. Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance and the condition of the capital markets, which are subject to prevailing economic, industry and competitive conditions, as well as many financial, business, legislative, political, regulatory and other factors beyond our control. If our cash flow and capital resources are insufficient to fund our debt service obligations, we could
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face substantial liquidity problems, be forced to reduce or delay investments and capital expenditures, dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness, any of which could have a material adverse effect on our business, financial position and results of operations. In addition, the level and quality of our earnings, operations, business and management, among other things, will impact the determination of our credit ratings. Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis may result in a decrease in the ratings assigned to us by the ratings agencies, which may negatively impact our access to the debt capital markets and increase our cost of borrowing. In addition, we may be unable to maintain the current creditworthiness or prospective credit rating of the Company. Any actual or anticipated changes or downgrades in such credit rating or in the global financial markets may have a impact on our liquidity, capital position or access to capital markets and affect our ability to obtain any future required financing on acceptable terms or at all.
Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We may not be able to implement any refinancing on commercially reasonable terms or at all and, even if successful, a refinancing may not allow us to meet our scheduled debt service obligations. The agreements governing our indebtedness restrict our ability to dispose of assets and use the proceeds of such dispositions, and we may be unable to consummate any dispositions or generate proceeds sufficient to meet our debt service obligations.
If we cannot make scheduled payments on our debt, holders of the Notes and lenders under the Credit Facilities could declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Facility could terminate their commitments to advance further loans, our secured lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
The terms of the Amended Credit Agreement and the Indentures may restrict our operations, particularly our ability to respond to changes or raise additional funds.
The Amended Credit Agreement contains restrictive covenants that impose significant operating and financial restrictions that may limit our and our restricted subsidiaries’ ability to take actions that may be in our long-term best interest, including restrictions on our and our restricted subsidiaries’ ability to:
• incur additional indebtedness and guarantee indebtedness;
• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;
• prepay, redeem or repurchase certain debt;
• make investments, loans, advances and acquisitions;
• engage in sale-leaseback or hedging transactions;
• create liens on, sell or otherwise dispose of assets, including capital stock of our subsidiaries;
• enter into transactions with affiliates;
• enter into agreements that restrict the ability to create liens, pay dividends or make loan repayments;
• alter the businesses we conduct; and
• merge or sell all or substantially all of our assets or incur a change of control in our capital stock ownership.
Also, the Indentures contain limited covenants, such as a covenant restricting our ability and certain of our subsidiaries’ ability to incur certain debt secured by liens, engage in sale-leaseback and incur additional indebtedness by any restricted subsidiary.
In addition, the restrictive covenants under the credit agreement governing the Revolving Facility may, depending on the amount of revolving borrowings, unreimbursed letter of credit drawings and undrawn letters of credit, require us to maintain a secured net leverage ratio, which we may be unable to meet. Our failure to comply with these covenants could result in the acceleration of some or all of our indebtedness, which could lead to bankruptcy, reorganization or insolvency.
Risks Related to Owning our Common Stock
The price of our common stock has been and may remain volatile.
The price of our common stock has been volatile. In 2025, the closing price of our stock on The Nasdaq Global Select Market (“Nasdaq”) ranged from a low of $62.92 to a high of $109.53, and, as in past years, the price of our common stock may show even greater volatility in the future. The trading price of our common stock is subject to significant volatility in response to numerous factors, many of which are beyond our control or may be unrelated to our operating results, including the following:
• changes to our financial guidance, as well as potential decreased confidence in any guidance we do provide;
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• changes in global economic and geopolitical conditions, including those resulting from trade tensions, rising inflation, and fluctuations in foreign currency exchange and interest rates;
• failure to meet the expectations of securities analysts, which may vary significantly from our actual results;
• changes in financial estimates by securities analysts;
• press releases or announcements by, or changes in market values of, comparable companies;
• high volatility in price and volume in the markets for high-technology stocks;
• public perception of equity values of publicly traded companies;
• fluctuations in our results of operations; and
• other risks and uncertainties described in this Annual Report on Form 10-K and in our other filings with the SEC.
Fluctuations in our results of operations could cause our stock price to decline significantly. Future decreases in our stock price may adversely impact our ability to raise sufficient additional capital in the future, if needed.
We may decrease or discontinue cash dividends and may never adopt a new program to repurchase our shares of common stock.
Future payments of quarterly dividends and any future repurchases of shares of our common stock are subject to capital availability and periodic determinations by our Board of Directors that they are in the best interest of our stockholders and comply with all laws and applicable agreements. Future dividends and any future share repurchases may be affected by, among other factors, potential capital requirements for acquisitions and the funding of our research and development activities; legal risks; changes in federal and state income tax laws or corporate laws; contractual restrictions, such as financial or operating covenants in our debt arrangements; availability of domestic cash flow; and changes to our business model. The amounts of our dividend payments may change from time to time, and we may decide at any time to reduce, suspend or discontinue the payment of dividends. A reduction, suspension or discontinuation of our dividend payments or the lack of a share repurchase program could have a negative effect on the price of our common stock and may harm our reputation.
Provisions in our charter documents and Delaware law may delay or prevent an acquisition of us, which could decrease the value of our shares.
Our certificate of incorporation, our by-laws and Delaware law contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors. These provisions include limitations on actions by written consent of our stockholders.
Our certificate of incorporation makes us subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits publicly held Delaware corporations from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. This provision could discourage parties from bidding for our shares of common stock and could, as a result, reduce the likelihood of an increase in the price of our common stock that would otherwise occur if a bidder sought to buy our common stock.
Our certificate of incorporation authorizes our Board of Directors to issue, without further stockholder approval, up to 5,000,000 shares of preferred stock in one or more series and to fix and designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights and liquidation preferences. The holders of any shares of preferred stock could have preferences over the holders of our common stock with respect to dividends and liquidation rights. Any issuance of preferred stock may have the effect of delaying, deterring or preventing a change in control. Any issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of common stock and could adversely affect the rights and powers, including voting rights, of the holders of common stock. The issuance of preferred stock could have the effect of decreasing the market price of our common stock.
General Risks
Competition from new or existing companies could harm our financial condition, results of operations and cash flow.
We operate in a highly competitive, global industry. We face many domestic and international competitors, some of which have substantially greater manufacturing, financial, research and development and marketing resources than we do. In addition, some of our competitors may have better-established customer relationships than we do, which may enable them to have their products specified for use more frequently and more quickly by these customers. We also face competition from smaller,
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regional companies that focus on serving customers in their regions. Further, customers continually evaluate the benefits of internal manufacturing versus outsourcing, and a customer’s decision to internally manufacture products that we provide may negatively impact us. If we are unable to maintain our competitive position, we could experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and a loss of market share, any of which could have a material adverse effect on our results of operations. Further, we expect that existing and new competitors will improve their products and introduce new products with enhanced performance characteristics. The introduction of new products or more efficient production of existing products by competitors could diminish our market share and increase pricing pressure on our products.
Our competitors include companies outside of the U.S., including companies in countries where foreign governments seek to build a domestic-centric semiconductor ecosystem. From time to time, governments around the world may provide incentives or make other investments that could benefit and give competitive advantages to our competitors. Government incentives may not be available to us on acceptable terms or at all. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors' relative position and have a material adverse effect on our business.
We may acquire other businesses, form joint ventures or divest businesses, any of which could negatively affect our financial performance.
We intend to continue to engage in business combinations, acquisitions, joint ventures, investments, divestitures or other types of collaborations to (1) address gaps in our product offerings, (2) adjust our business and product portfolio to meet our ongoing strategic objectives, (3) diversify into new and complementary markets, (4) increase our scale or (5) accomplish other strategic objectives. These transactions involve numerous risks to our business, financial condition and operating results, including but not limited to:
• difficulty in identifying suitable acquisition candidates and completing transactions at appropriate valuations, in a timely manner, on a cost-effective basis or at all, due to substantial competition for acquisition targets;
• inability to successfully integrate any acquired businesses into our business operations;
• failure to realize the anticipated synergies or other benefits of any such transaction;
• entry into markets in which we have limited or no prior experience;
• finding acquirors and obtaining adequate value for businesses that no longer meet our strategic objectives;
• difficulties surrounding the disentanglement of a divested business, including the diversion of resources away from our business operations to address such matters;
• inability to complete proposed or pending transactions due to factors such as the failure or inability to obtain regulatory or other approvals, which may be exacerbated by the recent, more aggressive regulatory approaches to merger control globally, such as the July 19, 2023 joint statement of antitrust policy and final rules published on October 10, 2024 concerning changes to the premerger notification process under the Hart-Scott-Rodino Act of 1976 by the Department of Justice and Federal Trade Commission and the April 15, 2023 Provisions on the Review of Concentrations of Undertakings issued by China’s State Administration for Market Regulation, among others;
• requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and restrictions on the conduct of our existing business or the acquired business;
• undertaking multiple transactions at the same time in order to take advantage of acquisition or divestiture opportunities that do arise, which could strain our ability to effectively execute and integrate such transactions;
• diversion of management’s attention from our day-to-day business due to dedication of significant management resources to such transactions;
• employee uncertainty and lack of focus during the integration process that may also disrupt our business;
• risk of litigation or claims associated with a proposed or completed transaction;
• challenges associated with managing new, more diverse and more widespread operations, projects and people, potentially located in regions where we have not historically conducted or operated our business;
• dependence on unfamiliar or less secure supply chains and inefficient scale of the acquired entity;
• increasing costs of performing due diligence to meet the expectations of investors and government regulators;
• despite our due diligence, we could assume unknown, underestimated or contingent liabilities, such as potential environmental, health and safety liabilities, any of which could lead to costly litigation or mitigation actions;
• an acquired technology or product may have inadequate or invalid intellectual property protection or may be subject to claims of infringement by a third party, which may result in claims for damages and lower than anticipated revenue;
• negative effects on our reported results of operations from dilutive results from operations and/or from future potential impairment of acquired assets, including goodwill, related to acquisitions;
• an acquired company may have inadequate or ineffective internal controls over financial reporting, disclosure controls and procedures, cybersecurity, privacy, environmental, health and safety, anti-bribery, anti-corruption, human resource
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or other policies or practices, which may require unexpected or additional integration, mitigation and remediation costs;
• reductions in cash or increases in debt to finance transactions, which reduce the cash flow available for general corporate or other purposes, including repayment of existing debt, share repurchases and dividends; and
• difficulties in retaining key employees or customers of an acquired business.
Climate change may have a long-term impact on our business, including by causing disruptions to our operations which may result in decreased revenue and cash flows.
There are inherent climate-related risks wherever our business is conducted. Changes in market dynamics, stakeholder expectations, local, national and international climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure in the U.S. and abroad, all have the potential to disrupt our business and operations. Such events could result in a significant increase in our costs and expenses and harm our future revenue, cash flows and financial performance. In addition to physical risks, evolving climate-related and sustainability reporting regimes in jurisdictions where we operate (including state and international regimes) may increase compliance costs, require new data collection and assurance processes across our value chain and expose us to reputational harm or litigation if our disclosures, targets or progress are challenged. Global climate change is resulting in, and may continue to result, in certain natural disasters and adverse weather events, such as , wildfires, storms, sea-level rise and flooding, occurring more frequently or with intensity, which could cause business and impacts where we operate.
