What changed in this filing

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Item 1A. Risk Factors

2020-11-19 compared with 2019-11-21 · 65 added, 103 removed, 300 unchanged (36% of the section changed)

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The following risk factors should be read in conjunction with the other information and risks set forth herein.

Risks Related to the Semi conductor Industry

Risks Related to the Semiconductor Industry

There is ongoing volatility in the semiconductor equipment industry.

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For these and other reasons, our results of operations for past periods may not be indicative of future operating results.

In addition, as we announced in April 2019, we are focused on exiting the Solar business segment in order to focus our strategic efforts on our semiconductor and silicon carbide/polishing business segments.

While these efforts remain ongoing, we expect our results of operations for past periods related to our Solar business segment will not be indicative of our future operating results.

The purchasing decisions of our customers are highly dependent on their capacity utilization, which changes when new facilities are put into production and with the level of demand for our products, as well as their company’s capital expenditure budget.

Purchasing decisions are also impacted by changes in the economies of the countries which our customers serve, as well as the state of the worldwide industries in which we operate or expect to operate in the future.

Purchasing decisions are also impacted by changes in the economies of the countries served by our customers, as well as the state of the worldwide industries in which we operate or expect to operate in the future.

The timing, length and severity of the up-and-down cycles in the semiconductor equipment industry are difficult to predict.

Additionally, we generally experience a one-to-two quarter lag between upturns/downturns experienced by larger equipment manufacturers.

The cyclical nature of our marketplace affects our ability to accurately budget our expense levels, which are based in part on our projections of future revenue.

When cyclical fluctuations result in lower than expected revenue levels, operating results are adversely affected.

The cyclical nature of the markets we serve affects our ability to accurately budget our expense levels, which are based in part on our projections of future revenue.

When cyclical fluctuations result in lower than expected revenue levels, our operating results are adversely affected.

Cost reduction measures may be necessary in order for us to remain competitive and financially sound.

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In addition, we face competition from emerging semiconductor equipment companies whose strategy is to provide a portion of the products and services that we offer often at a lower price than ours and use innovative technology to sell products into specialized markets.

We also face competition from Chinese equipment manufacturers that may receive greater support than we do from Chinese customers and governmental agencies because they are locally based.

Our local Chinese competitors may offer lower prices and more liberal payment terms than ours.

Loss of our competitive position due to any of these factors could impair our prices, customer orders, revenue, gross margin and market share, any of which would negatively affect our financial position and results of operations.

We also face competition from Chinese

equipment manufacturers that may receive greater support than we do from Chinese customers and governmental agencies because they are locally based.

In addition, o ur local Chinese competitors may offer lower prices and more liberal payment terms than ours.

Risks Related to Our Business and Our Operations

Business interruptions, including those related to the novel strain of the coronavirus (COVID-19), have had and continue to have an adverse impact on our operations, including among others, our manufacturing and supply chain, sales and product development and could have an adverse impact on our business, financial condition and results of operations in future quarterly periods.

The World Health Organization declared the outbreak of COVID-19 as a “pandemic,” or a worldwide spread of a new disease, on March 11, 2020.

The outbreak has resulted in government authorities and businesses throughout the world implementing numerous measures intended to contain and limit the spread of COVID-19, including travel bans and restrictions, quarantines, “shelter-in-place” and lock-down orders, and business limitations and shutdowns.

These measures have negatively impacted consumer and business spending generally and have significantly contributed to deteriorating macroeconomic conditions.

While governments around the world have taken steps to attempt to mitigate some of the more severe anticipated economic effects of COVID-19, there can be no assurance that such steps will be effective or achieve their desired results in a timely fashion.

While we continue to monitor and assess the impact on our business from the spread of COVID-19 and the ever evolving actions implemented by governments across the globe, our operations in China have returned to near-capacity and we continue to experience an adverse impact of COVID-19 on our operations in the United States.

The degree to which the coronavirus impacts our future business and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, spread and severity of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

In particular, the continued spread and/or resurgence of the coronavirus globally could result in a widespread health crisis and/or change in consumer behavior that could adversely affect the global economy and financial markets, resulting in an economic downturn, and could also adversely impact our operations, including, without limitation, our manufacturing and supply chain, sales and product development operations, particularly our prospective sales if the Semiconductor and SiC/LED business segments we seek to serve suffer long-term damage.

Such an economic downturn could have an adverse impact on the successful and timely implementation of our strategic growth plan and on our business, financial condition results of operations.

We are similarly unable to predict the extent to which the pandemic impacts our customers, suppliers and other partners and their financial conditions, but adverse effects on these parties could also adversely affect us.

We may not be able to generate sufficient cash flows or obtain access to external financing necessary to fund existing operations and planned expansions.

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There is no assurance that any additional financing will be available if and when required, or, even if available, that it would not materially dilute the ownership percentage of our then existing shareholders, result in increased expenses or result in covenants or special rights that would restrict our operations.

We may not be able to find a buyer for our solar assets.

In April 2019, we announced our intent to divest all of our operations in the Netherlands, which comprise the majority of our Solar segment, as we plan to focus on our Semiconductor and SiC/LED operations.

There can be no assurances that we will be able to timely complete a sale of our Solar segment or otherwise find a buyer for these assets, or, if we do complete a sale transaction, that it will be on terms acceptable to the Company.

If we are unable to locate a buyer, we will have to seek other strategic alternatives, which may include an auction of our solar business assets, suspending or winding down operations or the discontinued operations may file for bankruptcy.

It is not possible to predict the outcome of any suspension, winding down or bankruptcy proceeding that may be required.

The failure to successfully implement cost reduction initiatives through our restructuring activities, could materially adversely affect our business and results of operations.

As noted immediately above, in April 2019, we announced our intent to divest all of our operations in the Netherlands, which comprised the majority of our Solar segment.

In June 2019, we announced that we had completed the sale of our subsidiary, SoLayTec, to a third party located in the Netherlands.

We expect to complete a sale of R2D in the first quarter of fiscal 2020.

These restructuring initiatives are being made, in part, in response to significant challenges in the solar industry.

We cannot assure you that our restructuring initiatives will be successfully or timely implemented or that they will materially and positively impact our profitability.

Because our restructuring activities involve changes to many aspects of our business, the associated cost reductions could materially adversely impact productivity and sales to an extent we have not anticipated.

Even if we fully execute and implement these activities and they generate the anticipated cost savings, there may be other unforeseeable and unintended consequences that could materially adversely impact our profitability and business, including unintended employee attrition or harm to our competitive position.

To the extent that we do not achieve the profitability enhancement or other benefits of restructuring initiatives that we anticipate, our results of operations may be materially adversely affected.

We may not be able to manage the business successfully through severe business cycles.

We may not be able to manage our business successfully through severe business cycles.

We may be unable to successfully expand or contract our business to meet fluctuating demands.

Market fluctuations place significant strain on our management, personnel, systems and resources.

In fiscal years 2010 and 2011, we purchased additional equipment and real estate to significantly expand our manufacturing capacity and hired additional employees to support an increase in manufacturing, field service, research and development and sales and marketing efforts.

Over the past several years, the rapid decline in demand caused us to reduce headcount in manufacturing and field service and to reduce certain research and development costs.

To successfully manage our growth through such market fluctuations, we believe we must effectively:

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Acquisitions involve numerous risks, including, but not limited to:

difficulties and increased costs in connection with integration of geographically diverse personnel,

operations, technologies and products;

difficulties and increased costs in connection with integration of geographically diverse personnel, operations, technologies and products;

diversion of management’s attention from other operational matters;

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potential litigation that may arise in connection with an acquisition;

reductions in cash balances and/or increases in debt obligations to finance activities associated with a transaction, which reduce the availability of cash flow for general corporate o r other purposes;

inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, and/or environmental, health and safety, anti-corruption, human resource or other policies or practices;

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No assurance can be given that we will be able to successfully complete future strategic acquisitions if we cannot reach agreement on acceptable terms or for other reasons.

We may have to incur debt or issue equity securities to pay for any future acquisitions, the issuance of which could involve the imposition of restrictive covenants or be dilutive to our existing shareholders.

We may have to incur debt, issue equity securities or a combination of the foregoing to pay for any future acquisitions, the issuance of which could involve the imposition of restrictive covenants or be dilutive to our existing shareholders.

Our reliance on sales to a few major customers, often on credit terms, places us at financial risk.

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The loss of sales to any of these customers would have a significant negative impact on our business.

Additionally, our customers cancel their agreements with us if we fail to meet certain product specifications, materially breach agreements or encounter insolvency or bankruptcy.

Additionally, our customers may cancel their agreements with us if we fail to meet certain product specifications, materially breach agreements or encounter insolvency or bankruptcy.

They also may seek to renegotiate the terms of current agreements or renewals.

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If we are unable to expand our customer base, we may not be able to maintain or increase our revenue.

As of September 30, 2019, one Semiconductor customer individually represented 15% of our accounts receivable.

In addition to having a relatively limited number of customers, we manufacture a limited number of products for each of our customers.

If we lose any of our largest customers (as we have in the past from time to time), experience a significant reduction in sales to any such customers or no longer manufacture a particular product line for one of our largest customers, we would experience a significant reduction in our revenue.

As of September 30, 2020, two Semiconductor customers individually represented 11 % and 10% of our accounts receivable.

As of September 30, 2019, one Semiconductor customer individually represented 15% of our accounts receivable.

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In such a scenario, a significant change in the liquidity or financial position of any of our customers that purchase large systems could have a material impact on the collectability of our accounts receivable and our future operating results.

We attempt to manage this credit risk by performing credit checks, by requiring significant partial payments prior to shipment, where appropriate, and by actively monitoring collections.

We attempt to manage this credit risk by requiring significant partial payments prior to shipment, where appropriate, and by actively monitoring collections.

We also require letters of credit from certain customers depending on the size of the order, type of customer or its creditworthiness and its country of domicile.

Our major customers may seek and, on occasion, may receive pricing, payment, intellectual property-related or other commercial terms that are less favorable to us than the current terms we customarily obtain.

If any one or more of our major customers were to re-negotiate their agreements on more favorable terms, or not pay us or continue business with us, it could adversely affect our financial position and results of operations.

If we are unable to require certain customers to make advance payments when they place orders with us, or if our customers fail to meet their payment obligations, we may experience increased needs to finance our working capital requirements and may be exposed to increased credit risk.

We require many of our customers to make an advance payment representing a percentage of their orders, which is a business practice that helps us manage our accounts receivable, prepay our suppliers and reduce the amount of funds that we need to meet our working capital requirements.

We cannot assure that this practice will continue in the future.

If this practice ceases, we may not be able to secure additional financing on a timely basis or on terms acceptable to us or at all.

Currently, a significant portion of our revenue is derived from credit sales to our customers, generally with payments due within less than three months after shipment.

As a result, any future decrease in the use of cash advance payments by our customers may negatively impact our short-term liquidity and expose us to additional and more concentrated credit risk.

From time to time, we also may need to commence legal proceedings to recover accounts receivables from customers, which would increase our expenses.

Any failure by our customers to settle outstanding accounts receivable in the future could materially and adversely affect our cash flow, financial condition and results of operations.

customers may seek and, on occasion, may receive pricing, payment or other commercial terms that are less favorable to us than the current terms we customarily obtain.

If any one or more of our major customers were to seek to re-negotiate their agreements on more favorable terms, or not pay us or continue business with us, it could adversely affect our business, financial position and results of operations.

Our customers could cancel or fail to accept a large system order.

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We also may experience significant interruptions of our manufacturing operations, delays in our ability to deliver products or services, increased costs or customer order cancellations as a result of any of the following:

the failure or inability of suppliers to timely deliver sufficient quantities of quality parts on a cost-effective basis;

the failure or inability of suppliers to timely deliver sufficient quantities of quality parts on a cost-effective and timely basis;

volatility in the availability and cost of materials, including rare earth elements;

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Because we depend on revenue from international customers, our business may be adversely affected by changes in the economies and policies of the countries or regions in which we do business.

During fiscal 2018, 76% of our net revenue came from customers outside of North America.

During fiscal 2019, 59% of our net revenue came from customers outside of North America as follows:

Asia - 41% (including China - 18%, Malaysia - 5% and Taiwan - 10%);

In 2019, 59% of our net revenue came from customers outside of North America.

In 2020, 65% of our net revenue came from customers outside of North America as follows:

Asia - 52% (including China - 25%, Taiwan - 15% and Malaysia - 5%);

Each geographic region in the markets in which we operate exhibits unique characteristics that can cause capital equipment investment patterns to vary significantly from period to period.

Our business and results of operations could be negativ ely affected by periodic local or international economic downturns, trade balance issues and political, social and military instability in countries such as China, India, South Korea, Taiwan and possibly elsewhere.

Our business and results of operations could be negatively affected by periodic local or international economic downturns, trade balance issues

and political, social and military instability in countries such as China, India, South Korea, Taiwan and possibly elsewhere.

In addition, we face competition from a number of suppliers based in Asia that have certain advantages over suppliers from outside of Asia.

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Our business may be adversely affected by significant exchange rate fluctuations.

Though our business has not been materially affected in the past by currency fluctuations, there is a risk that it may be materially adversely affected in the future, especially as we continue to expand operations into other countries.

Though our business has not been materially affected in the past by currency fluctuations, there is a risk that it may be materially adversely affected in the future.

Such risk includes possible losses due to currency exchange rate fluctuations, future prohibitions against repatriation of earnings, or proceeds from disposition of investments.

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Related factors, including unemployment, inflation and fuel prices, exacerbate negative trends in business and consumer spending and may cause our customers to delay, cancel, or refrain from placing orders for equipment or services.

These actions may, in turn, reduce our net sales, reduce backlog, and affect our ability to convert backlog to sales.

These actions may, in turn, reduce our net sales, reduce backlog, and negatively affect our ability to convert backlog to sales.

Uncertain market conditions, difficulties in obtaining capital, or reduced profitability also may cause some customers to scale back operations, exit businesses, merge with other manufacturers, or file for bankruptcy protection and potentially cease operations, which can result in lower sales and/or additional inventory or bad debt expense for us.

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Uncertainty about future economic and industry conditions also makes it more challenging for us to forecast our operating results, make business decisions, and identify and prioritize the risks that may affect our businesses, sources and uses of cash, financial condition and results of operations.

We may be required to implement additional cost reduction efforts, including restructuring activities, and/or modify our business model, which may adversely affect our ability to capitalize on opportunities in a market recovery.

We may be required to implement additional cost reduction efforts, including

restructuring activities, and/or modify our business model, which may adversely affect our ability to capitalize on opportunities in a market recovery.

If we do not timely and appropriately adapt to changes resulting from these uncertain macroeconomic environment and industry conditions, or to difficulties in the financial markets, our business, financial condition and results of operations may be materially and adversely affected.

We are dependent on key personnel for our business and product development and sales.

Historically, our relationships with key customers and partners have depended on personal relations and other contacts established by certain of our executive officers.

Though we cannot assure that such relationships will continue, such cooperation is expected to continue to be a significant element in our future development efforts.

Furthermore, it may not be feasible for any successor to maintain the same business relationships that our executive officers have established.

While we are the beneficiary of a life insurance policy on the life of our Executive Chairman and Chief Executive Officer, Mr.

Whang, there is no assurance that such insurance will be sufficient to cover the cost of finding and hiring a suitable replacement for Mr.

If we were to lose the services of Mr.

Whang for any reason, it could have a material adverse effect on our business.

We also depend on the management efforts of our officers and other key personnel and on our ability to attract and retain key personnel.

During times of strong economic growth, competition is intense for highly-skilled employees.

There can be no assurance that we will be successful in attracting and retaining such personnel or that we can avoid increased costs in order to do so.

There can be no assurance that employees will not leave Amtech or compete against us.

Our failure to attract additional qualified employees, or to retain the services of key personnel, could negatively impact our financial position and results of operations.

Our inability to attract, train and retain effective employees and management could harm our business.

Our success depends upon the continued contributions of our executive officers and certain other employees, many of whom have many years of experience with us and would be extremely difficult to replace.

We must also attract and retain experienced and highly skilled engineering, sales and marketing and managerial personnel.

Competition for qualified personnel is intense in our industry, and we may not be successful in hiring and retaining these people.

If we lost the services of our executive officers or our other highly qualified and experienced employees or cannot attract and retain other qualified personnel, our business could suffer through less effective management due to loss of accumulated knowledge of our business or through less successful products due to a reduced ability to design, manufacture and market our products.

If we fail to maintain optimal inventory levels, our inventory obsolescence costs could increase, our liquidity could be significantly reduced or our revenue could decrease.

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We also rely on third parties for certain machined parts, steel frames and metal panels and other components used particularly in the assembly of our production equipment.

Although we strive to ensure that parts are available from multiple suppliers, we procure some key parts from a single supplier or a limited group of suppliers.

Although we strive to ensure that parts are available from multiple suppliers, we procure some key parts from a single supplier or a limited number of suppliers.

Thus, at times, certain parts may not be available in sufficient quantities, or on a timely and cost-efficient basis, to adequately meet our needs and the needs of our customers.

Further, because the selling price of some of our systems exceeds $1.0 milli on, the delay in the shipment of even a single system could cause significant variations in our quarterly revenue.

In the event of supplier capacity constraints, production disruptions, or failure to meet our requirements concerning quality, cost or perfor mance factors, we may transfer our business to alternative sourcing which could lead to further delays, additional costs or other difficulties.

If, in the future, we do not receive, in a timely and cost-effective manner, a sufficient quantity and quality o f parts to meet our production requirements, our financial position and results of operations may be materially and adversely affected.

Further, because the selling price of some of our systems exceeds $1.0 million, the delay in the shipment of even a single system could cause significant variations in our quarterly revenue.

In the event of supplier capacity constraints, production disruptions, or failure to meet our requirements concerning quality, cost or performance factors, we may transfer our business to alternative sourcing which could lead to further delays, additional costs or other difficulties.

If, in the future, we do not receive, in a timely and cost-effective manner, a sufficient quantity and

quality of parts to meet our production requirements, our financial position and results of operations may be materially and adversely affected.

We might fail to develop adequate internal organizational structures, internal controls and risk monitoring and management systems for an organization of our scale.

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Unsatisfactory performance of, or defects in, our products may cause us to incur additional warranty expenses, damage our reputation and cause our sales to decline.

As of September 30, 2019 and 2018, our accrued warranty costs at our continuing operations amounted to $0.6 million in each period.

As of September 30, 2020 and 2019, our accrued warranty costs at our continuing operations amounted to $0.4 million and $0.6 million , respectively.

Our assumptions regarding the durability and reliability of our products may not be accurate, and because our products have relatively long warranty periods, we cannot assure you that the amount of accrued warranty by us for our products will be adequate in light of the actual performance of our products.

If we experience a significant increase in warranty claims, we may incur significant repair and replacement costs associated with such claims.

Furthermore, widespread product underperformances or failures will damage our reputation and customer relationships and may cause our sales to decline, which in turn could have a material adverse effect on our financial condition and results of operations.

We may incur impairment charges to goodwill or long-lived assets.

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Natural disasters, outbreaks of infectious diseases, terrorist attacks, wars and threats of war may negatively impact our operations, revenue, costs and stock price.

Natural disasters such as earthquakes, floods, severe weather conditions, outbreaks of infectious diseases or other catastrophic events may severely affect our operations or those of our suppliers and customers.

Natural disasters such as earthquakes, floods, severe weather conditions, outbreaks of infectious diseases in addition to COVID-19 or other catastrophic events may severely affect our operations or those of our suppliers and customers.

Such catastrophic events may have a material adverse effect on our business.

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They also could result in economic recession either globally or in the markets in which we operate.

Any of these occurrences could have a significant adverse impact on our financial position and results of operations.

Any of these occurrences could have a significant adverse impact on our business, financial position and results of operations.

Risks Related to Regulations and Litigation

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The operations of our companies are subject to numerous foreign and domestic regulatory regimes, including taxation policies, governance and audit requirements, employment and labor laws, transportation regulations, import and export regulations and tariffs, possible foreign exchange restrictions and international monetary fluctuations.

Our policies, procedures and internal controls are designed to help us comply with all applicable foreign and domestic laws, accounting and reporting requirements, regulatio ns and tax requirements.

We could be subject to legal or regulatory action in the event of our failure to comply, which could be expensive to defend and resolve and be disruptive to our business.

Our policies, procedures and internal controls are designed to help us comply with all applicable foreign and domestic laws, accounting and reporting requirements, regulations and tax requirements.

We could be subject to legal or regulatory action in the event of our failure to comply with any of the foregoing requirements , which could be expensive to defend and resolve and be disruptive to our business.

Any changes in regulations, the imposition of additional regulations or the enactment of any new legislation that affects us may increase the complexity of the legal and regulatory environment in which we operate and the related costs of compliance.

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The application of these laws to us also may place us at a competitive disadvantage to foreign companies that are not subject to similar regulations.

The United States could withdraw from or materially modify certain international trade agreements, or change tariff, trade, or tax provisions related to the glo bal manufacturing and sales of our products in ways that we currently cannot predict.

A portion of our business activities are conducted in foreign countries, including China, Malaysia, Taiwan, France and the Netherlands.

The United States could withdraw from or materially modify certain international trade agreements, or change tariff, trade, or tax provisions related to the global manufacturing and sales of our products in ways that we currently cannot predict.

A portion of our business activities are conducted in foreign countries, including China, Malaysia and Taiwan.

Our business benefits from free trade agreements, and we also rely on various U.S.

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presidential administration, with support of some members in Congress, has announced trade policy changes, including an intention to impose new tariffs on imported goods, which have created significant uncertainty about the future relationship between the United States and other countries with respect to trade, treaties and tariffs.

For example, on June 15, 2018, the Office of the USTR published a list of products covering 818 separate U.S.

For example, on

June 15, 2018, the Office of the USTR published a list of products covering 818 separate U.S.

tariff lines valued at approximately $34 billion in 2018 trade values, imposing an additional duty of 25% on the listed product lines.

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corporate tax policies related to international commerce, could depress economic activity and have a material adverse effect on our business, financial condition and results of operations.

Recent changes to U.S.

tax laws may adversely affect our financial condition or results of operation and create the risk that we may need to adjust our accounting for these changes.

The TCJA, enacted on December 22, 2017, makes significant changes to U.S.

tax laws and includes numerous provisions that affect businesses, including ours.

For instance, as a result of lower corporate tax rates, the TCJA tends to reduce both the value of deferred tax assets and the amount of deferred tax liabilities.

It also limits interest rate deductions and the amount of net operating losses that can be used each year and alters the expensing of capital expenditures.

Other provisions have international tax consequences for businesses like ours that operate internationally.

The TCJA is unclear in certain respects and will require interpretations and implementing regulations by the Internal Revenue Service, as well as state tax authorities, and the TCJA could be subject to amendments and technical corrections, any of which could lessen or increase the adverse (and positive) impacts of the TCJA.

The accounting treatment of these tax law changes is complex, and some of the changes may affect both current and future periods.

Others will primarily affect future periods.

We accounted for the impact of the TCJA on us in fiscal 2018, and, though we believe our analysis and computations of the tax effects of the TCJA on us to be correct, any adjustments to our conclusions or the effects of currently unknown impacts of the TCJA on us could affect our current or future financial statements, or both.

Regulations related to conflict minerals will force us to incur additional expenses, may make our supply chains more complex, and may result in damage to our relationships with customers.

Under the Dodd-Frank Act, the SEC adopted requirements for companies that manufacture products that contain certain minerals and metals known as “conflict minerals”.

These rules require public companies to perform diligence and to report annually to the SEC whether such minerals originate from the Democratic Republic of Congo and adjoining countries.

The implementation of these requirements could adversely affect the sourcing, availability, and pricing of minerals we use in the manufacture of our products.

In addition, we have incurred and will continue to incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals used in our products.

Given the complexity of our supply chain, we may not be able to ascertain the origins of these minerals used in our products through the due diligence procedures that we implement, which may harm our reputation.

We may also face difficulties in satisfying customers who may require that our products be certified as conflict mineral free, which could harm our relationships with these customers and lead to a loss of revenue.

These requirements could limit the pool of suppliers that can provide conflict-free minerals, and we may be unable to obtain conflict-free minerals at competitive prices, which could increase our costs and adversely affect our manufacturing operations and our profitability.

We are subject to environmental regulations, and our inability or failure to comply with these regulations could result in significant costs or the suspension of our ability to operate portions of our business.

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We may not be able to keep pace with the rapid change in the technology needed to meet customer requirements.

Success in the solar and semiconductor equipment industries depends, in part, on continual improvement of existing technologies and rapid innovation of new solutions.

For example, the solar industry continues to develop new technologies to increase the efficiencies and lower the costs of solar cells.

Also, the semiconductor industry continues to shrink the size of semiconductor devices.

These and other evolving customer needs require us to continually respond with new product developments.

Success in the semiconductor equipment industry depends, in part, on continual improvement of existing technologies and rapid innovation of new solutions.

For example, the semiconductor industry continues to shrink the size of semiconductor devices.

This and other evolving customer needs require us to continually respond with new product developments.

Technical innovations are inherently complex and require long development cycles and appropriate professional staffing.

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We also must manufacture these new products in a timely and cost-effective manner.

To realize future growth through technical innovations in the solar and semiconductor industries, we must acquire the technology through product development, merger and acquisition activity or through the licensing of products from our technology partners.

To realize future growth through technical innovations in the semiconductor industry, we must acquire the technology through product development, merger and acquisition activity or through the licensing of products from our technology partners.

Potential disruptive technologies could have a material adverse effect on our business if we do not successfully develop and introduce new products, technologies or uses for existing products in a timely manner and continually find ways of reducing the cost to produce them in response to changing market conditions or customer requirements.

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We attempt to protect our trade secrets and other proprietary information through confidentiality agreements with our customers, suppliers, employees and consultants and through other security measures.

We also maintain exclusive and non-exclusive licens es with third parties for the technology used in certain products.

We also maintain exclusive and non-exclusive licenses with third parties for the technology used in certain products.

However, these employees, consultants and third parties may breach these agreements, and we may not have adequate remedies for wrongdoing.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors