What changed in this filing

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Item 1A. Risk Factors

2025-08-19 compared with 2024-08-20 · 59 added, 46 removed, 468 unchanged (18% of the section changed)

9 unchanged sentences

We have depended, and will continue to depend, upon a small number of customers for a significant percentage of our revenues.

During fiscal years 2024 and 2023, we had two and four customers, respectively, that each contributed 10% or more of our revenues.

During fiscal years 2025 and 2024, we had two customers that each contributed 10% or more of our revenues.

Such customers together accounted for 45.8% and 48.5% of our revenues during the respective periods.

1 unchanged sentence

Further, our customer concentration increases the concentration of our accounts receivable and our exposure to payment default by any of our key customers.

Many of our existing and potential customers have substantial debt burdens, have experienced financial distress or have static or declining revenues, all of which may be exacerbated by the current global economic downturn and subsequent adverse conditions in the credit markets, as well as the impact of the U.S.-China trade dispute.

and international trade policies.

Certain of our customers have gone out of business, declared bankruptcy, been acquired, or announced their withdrawal from segments of the optics market.

7 unchanged sentences

Consolidation in the markets we serve has resulted in a reduction in the number of potential customers for our services.

For example, Lumentum Holdings Inc.

For example, Nokia Corporation completed its acquisition of Infinera Corporation in February 2025;

Lumentum Holdings Inc.

completed its acquisition of NeoPhotonics Corporation in August 2022;

46 unchanged sentences

If our customers choose to manufacture products internally rather than to outsource production to us, or choose to outsource to a different third-party manufacturer, our business, financial condition and operating results could be harmed.

Competitors in the market for optical manufacturing services include Benchmark Electronics, Inc., Celestica Inc., Sanmina-SCI Corporation, Jabil Circuit, Inc., and Venture Corporation Limited.

Our customized optics and glass operations face competition from companies such as Fujian Castech Crystals, Inc., Photop Technologies, Inc., and Research Electro-Optic, Inc.

Competitors in the market for optical manufacturing services include Benchmark Electronics, Inc., Celestica Inc., InnoLight Technology (Suzhou) Ltd., Jabil Inc., Sanmina Corporation and Venture Corporation Limited.

Our customized optics and glass operations face competition from companies such as CASTECH, Inc., Excelitas Technologies Corp.

and Photop Technologies, Inc.

(a subsidiary of Coherent Corp.).

Other existing contract manufacturing companies, original design manufacturers or outsourced semiconductor assembly and test companies could also enter our target markets.

20 unchanged sentences

Some of our customers and suppliers have in the past and may in the future experience financial difficulty, particularly in light of adverse conditions in the credit markets that have affected access to capital and liquidity.

In addition, the failures of Silicon Valley Bank and Signature Bank in March 2023 created significant market disruption and uncertainty within the U.S.

banking sector, in particular with respect to regional banks.

During challenging economic times, our customers may face difficulties in gaining timely access to sufficient credit, which could impact their ability to make timely payments to us.

As a result, we devote significant resources to monitor receivables and inventory balances with certain of our customers.

customers experience financial difficulty, we could have difficulty recovering amounts owed to us from these customers, or demand for our services from these customers could decline.

If our suppliers experience financial difficulty, we could have trouble sourcing materials necessary to fulfill production requirements and meet scheduled shipments.

If our customers experience financial difficulty, we could have difficulty recovering amounts owed to us from these customers, or demand for our services from these customers could decline.

If our suppliers experience financial difficulty,

we could have trouble sourcing materials necessary to fulfill production requirements and meet scheduled shipments.

Any such financial difficulty could adversely affect our operating results and financial condition by resulting in a reduction in our revenues, a charge for inventory write-offs, a provision for expected credit losses, and larger working capital requirements due to increased days in inventory and days in accounts receivable.

7 unchanged sentences

The semiconductor supply chain is complex, and, in recent years, there has been a significant global shortage of semiconductors.

Demand for consumer electronics surged during the COVID-19 pandemic and remains strong, which in turn has increased the demand for semiconductors.

Demand for consumer electronics surged during the COVID-19 pandemic, which in turn has increased the demand for semiconductors.

At the same time, wafer foundries that support chipmakers have not invested enough in recent years to increase capacities to the levels needed to support the increased demand from all of their customers.

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or (4) decide against using our services for their new products.

Most recently, we expanded our manufacturing capacity by building a new facility at our Chonburi campus in Thailand in 2022.

We most recently expanded our manufacturing capacity by building a new facility at our Chonburi campus in Thailand in 2022, and we began construction of a new manufacturing building at our Chonburi campus in February 2025.

We may continue to devote significant resources to the expansion of our manufacturing capacity, and any such expansion will be expensive, will require management’s time and may disrupt our operations.

48 unchanged sentences

We may experience significant unexpected losses from fluctuations in exchange rates.

For example, in the three months ended December 30, 2022, we experienced a $3.9 million foreign exchange loss, which negatively affected our net income per share for the same period by $0.11.

For example, in the three months ended September 27, 2024, we experienced a $7.1 million foreign exchange loss, which negatively affected our net income per share for the same period by $0.19.

Our customer contracts generally require that our customers pay us in U.S.

4 unchanged sentences

As of June 27, 2025, the U.S.

dollar had appreciated approximately 3.7% against the Thai baht since June 24, 2022.

dollar had depreciated approximately 8.5% against the Thai baht since June 30, 2023.

While we attempt to hedge against certain exchange rate risks, we typically enter into hedging contracts with maturities of up to 12 months, leaving us exposed to longer term changes in exchange rates.

8 unchanged sentences

As of June 27, 2025, the U.S.

dollar had appreciated approximately 8.9% against the RMB since June 24, 2022.

dollar had depreciated approximately 1.3% against the RMB since June 30, 2023.

There remains significant international pressure on the PRC government to adopt a substantially more liberalized currency policy.

24 unchanged sentences

Various countries regulate the import of certain technologies and have enacted laws or taken actions that could limit (1) our ability to export or sell the products we manufacture and (2) our customers’ ability to export or sell products that we manufacture for them.

The export of certain technologies from the United States, the United Kingdom and other nations to the PRC is barred by applicable export controls, and similar prohibitions could be extended to Thailand, thereby limiting our ability to manufacture certain products.

The export of certain technologies from the United States and other nations to the PRC is barred by applicable export controls, and similar prohibitions could be extended to Thailand, thereby limiting our ability to manufacture certain products.

Any change in export or import regulations or related legislation, shift in approach to the enforcement of existing regulations, or change in the countries, persons or technologies targeted by such regulations could limit our ability to offer our manufacturing services to existing or potential customers, which could harm our business, financial condition and operating results.

6 unchanged sentences

We expect this ban to continue to adversely affect orders from our customers for the foreseeable future.

We are subject to risks related to the ongoing U.S.-China trade dispute, including increased tariffs on materials that we use in manufacturing, which could adversely affect our business, financial condition and operating results.

In August 2019, the U.S.

imposed tariffs on a wide range of products and goods manufactured in the PRC that are directly or indirectly imported into the U.S.

Although the U.S.

announced on January 15, 2020 the reduction of certain tariffs on Chinese imported goods and delayed the implementation of certain other related tariffs, we have no assurance that the U.S.

will not continue to increase or impose tariffs on imports from the PRC or alter trade agreements and terms between the PRC and the U.S., which may include limiting trade with the PRC.

Trade restrictions, including tariffs, quotas, embargoes, safeguards and customs restrictions, could increase the cost of materials we use to manufacture certain products, which could result in lower margins.

The tariffs could also result in disruptions to our supply chain, as suppliers struggle to fill orders from companies trying to purchase goods in bulk ahead of announced tariffs taking effect.

The adoption of trade tariffs both globally and between the U.S.

and the PRC specifically could also cause a decrease in the sales of our customers’ products to end-users located in the PRC, which could directly impact our revenues in the form of reduced orders.

If existing tariffs are raised further, or if new tariffs are imposed on additional categories of components used in our manufacturing activities, and if we are unable to pass on the costs of such tariffs to our customers, our operating results would be harmed.

We are subject to risks related to changes in U.S.

and international trade policies, including new or increased tariffs on materials that we use in manufacturing, which could adversely affect our business, financial condition and operating results.

In April 2025, the U.S.

imposed global trade tariffs on a wide range of products and goods.

Our business may be adversely affected by evolving global trade policies, including tariffs and other trade restrictions.

We are subject to risks associated with changes in international trade policies, regulations, and relationships.

In recent years, multiple countries, including the United States, the PRC, and members of the European Union, among others have enacted tariffs, export controls, quotas, and other forms of trade restrictions on a variety of goods and services.

These measures have led to increased costs, supply chain disruptions, and reduced demand across several industries.

Although certain tariffs have been reduced or delayed, the potential for future escalation or the imposition of new trade restrictions remains.

Ongoing or future trade disputes may impact the availability and cost of materials used in our manufacturing processes.

In some cases, suppliers may struggle to meet increased demand resulting from accelerated purchasing ahead of anticipated policy changes, further exacerbating supply chain instability.

Additionally, retaliatory actions or changes in trade policies by foreign governments may reduce the demand for our customers’ products in impacted regions, which could lead to reduced orders and revenue for us.

If we are unable to mitigate the effects of increased costs or pass them on to our customers, our gross margins, financial condition, and results of operations could be materially and adversely affected.

We cannot predict the outcome of current or future trade negotiations, the timing of any policy changes, or the impact such changes may have on our industry, supply chain, or customer base.

Political unrest and demonstrations, as well as changes in the political, social, business or economic conditions in Thailand, could harm our business, financial condition and operating results.

6 unchanged sentences

Further, the Thai government may raise the minimum wage standards for labor and could repeal certain promotional certificates that we have received or tax holidays for certain export and value added taxes that we enjoy, either preventing us from engaging in our current or anticipated activities or subjecting us to higher tax rates.

We expect to continue to invest in our manufacturing operations in the People's Republic of China ("PRC"), which will continue to expose us to risks inherent in doing business in the PRC, any of which risks could harm our business, financial condition and operating results.

We expect to continue to invest in our manufacturing operations in the PRC, which will continue to expose us to risks inherent in doing business in the PRC, any of which risks could harm our business, financial condition and operating results.

We anticipate that we will continue to invest in our customized optics manufacturing facilities located in Fuzhou, the PRC.

7 unchanged sentences

The PRC has made significant progress in the promulgation of laws and regulations pertaining to economic matters such as corporate organization and governance, foreign investment, commerce, taxation and trade.

However, the promulgation of new laws, changes in existing laws and abrogation of local regulations by national laws may have a negative impact on our business and prospects.

However, the promulgation of new laws, changes in existing laws and abrogation of local regulations by national laws may have a negative impact on our

business and prospects.

In addition, these laws and regulations are relatively new, and published cases are limited in volume and non-binding.

20 unchanged sentences

Such developments, as well as the policies impacting these, could adversely affect our financial results.

In particular, the economic disruption caused by COVID-19 has led to reduced demand in some of our customers’ optical communications product portfolios and significant volatility in global stock markets and currency exchange rates.

Uncertainty about worldwide economic conditions poses a risk as businesses may further reduce or postpone spending in response to reduced budgets, tight credit, negative financial news and declines in income or asset values, which could adversely affect our business, financial condition and operating results and increase the volatility of our share price.

68 unchanged sentences

In addition, tax returns that remain open to examination in Thailand, the PRC, the U.K.

and Israel range from the tax years 2017 through 2023.

and Israel range from the

tax years 2018 through 2024.

The results of audits and examinations of previously filed tax returns and continuing assessments of our tax exposures may have an adverse effect on our provision for income taxes and tax liability.

During fiscal year 2025, our U.S.

federal tax returns were under examination by the U.S.

Internal Revenue Service (“IRS”) for fiscal years 2022 and 2023.

As a result of the examination, which was completed in the fourth quarter of fiscal year 2025, we recorded additional tax liability of $5.9 million during fiscal year 2025.

We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the tax laws of the various countries in which we have assets or conduct activities.

However, our tax position is subject to review and possible challenge by tax authorities and to possible changes in law, which may have retroactive effect.

Fabrinet (the “Cayman

Islands Parent”) is an exempted company incorporated in the Cayman Islands.

Fabrinet (the “Cayman Islands Parent”) is an exempted company incorporated in the Cayman Islands.

We maintain manufacturing operations in Thailand, the PRC, the U.S.

3 unchanged sentences

Similar preferential tax treatment was available to us through June 2020 with respect to products manufactured at our Pinehurst campus.

After June 2020, 50% of our income generated from products manufactured at our Pinehurst campus will be exempted from tax through June 2025.

New preferential tax treatment is available to us for products manufactured at our Chonburi campus Building 9, where income generated will be tax exempt through 2031, capped at our actual investment amount.

Between June 2020 and June 2025, 50% of our income generated from products manufactured at our Pinehurst campus was exempted from tax.

Preferential tax treatment is available to us for products manufactured at our Chonburi campus Building 9, where income generated will be tax exempt through 2031, capped at our actual investment amount.

Such preferential tax treatment is contingent on various factors, including the export of our customers’ products out of Thailand and our agreement not to move our manufacturing facilities out of our current province in Thailand for at least 15 years from the date on which preferential tax treatment was granted.

9 unchanged sentences

If any tax authorities are successful in challenging our financing or transfer pricing policies, our income tax expense may be adversely affected and we could become subject to interest and penalty charges, which may harm our business, financial condition and operating results.

Several governments are considering tax reform proposals that, if enacted, could increase our tax expense.

The Organization for Economic Co-operation and Development (OECD) announced that it has reached agreement among its member countries to implement Pillar Two rules, a global minimum tax at 15% for certain multinational enterprises.

Many jurisdictions have enacted tax laws that will take effect in 2024 and 2025 to implement Pillar Two rules.

Other countries have announced plans to adopt tax laws to implement similar legislation with varying effective dates in the future.

Certain jurisdictions in which we operate have not adopted corresponding legislation to date.

These changes could increase tax uncertainty and may adversely affect our provision for income taxes and operating results.

We will continue to monitor legislative and regulatory developments to assess the impact on our business, financial condition and operating results.

As part of the Organization for Economic Cooperation and Development’s (“OECD”) Inclusive Framework on Base Erosion and Profit Shifting, over 140 countries have joined a two-pillar plan to reform international taxation rules.

The first pillar is focused on the allocation of taxing rights between countries for in-scope multinational enterprises that sell goods and services into countries with little or no local physical presence and is intended to apply to multinational enterprises with global revenues above €20 billion.

The second pillar is focused on developing a global minimum tax rate of at least 15% applicable to in-scope multinational enterprises and is intended to apply to multinational enterprises with annual consolidated group revenue in excess of €750 million.

The OECD has issued Pillar Two model rules and continues to release guidance on these rules.

As of June 27, 2025, these rules are either effective or have been adopted in draft form in various countries.

We evaluated the applicable tax law changes resulting from Pillar Two implementation in the countries where we operate, and there was no material impact to our tax provision for the year ended June 27, 2025.

In future years, the Pillar Two framework for the global minimum tax may increase the level of income tax in both Thailand and other foreign jurisdictions where we operate or have a presence.

We have incurred and will continue to incur significant increased costs as a result of operating as a public company, and our management will be required to continue to devote substantial time to various compliance initiatives.

20 unchanged sentences

ISO/IEC 17025 for Testing and Calibration Laboratories Certification;

and ISO 22301 for Business Continuity Management Systems.

ISO 22301 for Business Continuity Management Systems;

and ISO/IEC 27001 for Information Security Management Systems.

We also maintain compliance with various additional standards imposed by the FDA with respect to the manufacture of medical devices.

1 unchanged sentence

We hold the following additional certifications:

ANSI ESD S20.20 for facilities and manufacturing process control, in compliance with ESD standard;

TAPA and C-TPAT for Logistic Security Management System;

ANSI ESD S20.20 for facilities and manufacturing process control;

TAPA and CTPAT for logistics security and management;

and CSR-DIW for corporate social responsibility in Thailand.

5 unchanged sentences

In addition, rules adopted by the SEC implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 impose diligence and disclosure requirements regarding the use of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries in the products we manufacture for our customers.

Compliance with these rules has resulted in additional cost and expense, including for due diligence to determine and verify the sources of any conflict minerals used in the products we manufacture, and may result in additional costs of remediation and other changes to processes or sources of supply as a consequence of such verification activities.

sources of supply as a consequence of such verification activities.

These rules may also affect the sourcing and availability of minerals used in the products we manufacture, as there may be only a limited number of suppliers offering “conflict free” metals that can be used in the products we manufacture for our customers.

53 unchanged sentences

An objection can be made to the Grand Court of the Cayman Islands but is unlikely to succeed unless there is evidence of fraud, bad faith or collusion.

If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of a corporation incorporated in a jurisdiction in the U.S., providing rights to receive payment in cash for the judicially determined value of the shares.

jurisdiction in the U.S., providing rights to receive payment in cash for the judicially determined value of the shares.

This may make it more difficult for our shareholders to assess the value of any consideration they may receive in a merger or consolidation or to require that the offeror give them additional consideration if they believe the consideration offered is insufficient.

24 unchanged sentences

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