What changed in this filing

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Item 1. Business

2022-02-18 compared with 2021-02-22 · 45 added, 50 removed, 197 unchanged (33% of the section changed)

FormFactor, Inc., headquartered in Livermore, California, is a leading provider of test and measurement technologies.

FormFactor, Inc., headquartered in Livermore, California, is a leading provider of essential test and measurement technologies along the full semiconductor product lifecycle - from characterization, modeling, reliability, and design de-bug, to qualification and production test.

We provide a broad range of high-performance probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems to both semiconductor companies and scientific institutions.

Our products provide electrical and physical information from a variety of semiconductor and electro-optical devices and integrated circuits from early research, through development, to high-volume production.

Customers use our products and services to lower production costs, improve yields, and enable development of their complex next generation products.

FormFactor, Inc.

was incorporated in 1993, and we introduced our first product in 1995.

Customers use our products and services to accelerate profitability by optimizing device performance and advancing yield knowledge.

FormFactor, Inc., was incorporated in 1993, and we introduced our first product in 1995.

In October 2012, we acquired Astria Semiconductor Holdings, Inc., including its subsidiary Micro-Probe Incorporated (together “MicroProbe”);

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As of December 25, 2021, we operate in two reportable segments consisting of the Probe Cards segment and the Systems segment.

Sales of our probe cards and analytical probes are included in the Probe Cards Segment, while sales of our probe stations, metrology systems, and thermal and cryogenic systems are included in the Systems Segment.

Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, metrology systems, thermal systems and cryogenic systems are included in the Systems segment.

We design, manufacture and sell multiple product lines, including probe cards, analytical probes, probe stations, metrology systems, thermal systems, and cryogenic systems, and related services.

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Probe Stations.

Probe stations, also referred to as probing systems, are a critical tool for the development of new generations of semiconductor and electro-optical processes and designs.

Probe stations, also referred to as probe systems, are a critical tool for the development of new generations of semiconductor and electro-optical processes and designs.

Probe stations are highly configurable for the required measurements, the size and type of wafer under test, the characteristics of the device design to be tested, and the temperatures at which testing is to be performed.

Process development and design complexities have continually increased with each new generation of semiconductor technology to accommodate smaller design geometries, complex 3-D architectures, new materials and more layers.

Probing systems are a fundamental tool for characterizing and verifying electrical performance and reliability to enable new semiconductor technologies.

We design our probing systems for semiconductor design engineers to capture and analyze more accurate data in a shorter amount of time and to be able to control and manage testing at temperatures from near absolute zero to hundreds of degrees centigrade.

Probe systems are a fundamental tool for characterizing and verifying electrical performance and reliability to enable new semiconductor technologies.

We design our probe systems for semiconductor design engineers to capture and analyze more accurate data in a shorter amount of time and to be able to control and manage testing at temperatures from near absolute zero to hundreds of degrees centigrade.

We build upon our probe stations to create integrated measurement systems that provide complete solutions for our customers’ complex measurement requirements.

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These systems are both marketed externally and allow for vertical integration with our probe stations.

Cryogenic Subsystems.

Our cryogenic subsystems include the manufacture of precision cryogenic instruments.

These include advanced cryogenic probe stations that function both at the wafer and the chip level, as well as Adiabatic Demagnetization Refrigerator (ADR) cryostats used in various applications, including cryogenic probe stations, sensor applications, quantum and super-conducting computing applications, and other situations where cryogenic temperature management is required.

These systems are marketed externally and also allow for vertical integration with our existing cryogenic wafer probe stations and cryogenic engineering probes.

Cryogenic Systems.

Our cryogenic systems include the manufacture of precision cryogenic instruments and semiconductor test and measurement systems.

These include advanced cryogenic probe systems to test wafer or singulated die, as well as Adiabatic Demagnetization Refrigerator (ADR) cryostats used in various applications at close to absolute zero degree temperature, including quantum and superconducting computing applications, astronomy, and other situations where cryogenic temperature management is required.

These systems are marketed externally and also allow for vertical integration with our existing cryogenic wafer and chip probe stations and cryogenic engineering probes.

Services and Support.

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Intel Corporation 16.7 % 20.8 % 16.3 % 28.1 % 29.3 % 25.6 % 36.1 % 36.2 %

Samsung Electronics., LTD.

Samsung Electronics Co., LTD.

13.8 % 12.9 % 14.7 % * 12.5 % 10.6 % * *

SK hynix Inc.

Taiwan Semiconductor Manufacturing Co., LTD.

* * 11.0 % 11.5 % * 10.6 % * *

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* * * * * 10.1 % * *

Taiwan Semiconductor Manufacturing Co., LTD.

30.5 % 33.7 % 42.0 % 39.6 % 41.8 % 56.9 % 36.1 % 36.2 %

41.8 % 56.9 % 36.1 % 36.2 % 43.2 % 49.3 % 47.3 % 35.1 %

* Less than 10% of revenues.

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Some of these components and materials are supplied by a single vendor, and some are subject to certain minimum order quantities.

Generally, we rely on purchase orders rather than long-term contracts

with our suppliers, which subjects us to risks, including price increases, manufacturing capacity constraints and component shortages.

We continually assess and evaluate alternative sources of supply for all components and materials.

Our primary manufacturing facilities are located in Livermore, San Jose, Carlsbad, and Baldwin Park, California, Beaverton, Oregon, Boulder, Colorado, United States, and in Thiendorf, Germany.

Generally, we rely on purchase orders rather than long-term contracts with our suppliers, which subjects us to risks, including price increases, manufacturing capacity constraints and component shortages.

We regularly assess and evaluate alternative sources of supply for all components and materials.

Our primary manufacturing facilities are located in Livermore, San Jose, Carlsbad, and Baldwin Park, California, Beaverton, Oregon, Boulder, Colorado, United States;

and in Thiendorf, Germany.

We also perform manufacturing operations in our facilities in Munich and Bergisch Gladbach, Germany;

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Thiendorf, Dresden and Munich, Germany;

Montbonnot Saint Martin, France;

Bundang, South Korea;

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We employ a highly skilled team of application and customer support engineers that support our customers as they integrate our products into their research, development and manufacturing processes.

Through these customer relationships, we seek to develop a close understanding of customer and product requirements to align our capabilities with our customers’ roadmaps and production ramps.

Through these customer relationships, we seek to develop a strong understanding of customer and product requirements to align our capabilities with our customers’ roadmaps and production ramps.

We also have a network of representatives and distributors across the globe to broaden our reach.

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We typically use distributors in particular geographies due to local regulations or business customs.

Governmental Regulations

We are subject to international, federal, state and local regulations that are customary to businesses in our industry.

These regulations relate to, among other things, environmental matters, anti-corruption, marketing, fraud and abuse, export control, employment, and privacy.

Environmental Matters

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Environmental contamination or violations may negatively impact our business.

Import and Export Control

We manufacture, market and sell our products both inside and outside the U.S.

Certain products are subject to export control regulations.

Failure to comply with these laws could result in sanctions by the U.S.

or other respective governments, including substantial monetary penalties, denial of import or export or other privileges and debarment from government contracts.

The markets for our products are highly competitive and we anticipate that these markets will continually evolve and be subject to rapid technological change.

Our current and potential competitors are as below:

Probe Card Market.

The probe card market comprises of many domestic and foreign companies, and has historically been fragmented with many local suppliers servicing individual customers in often differentiated applications.

Our primary competitors are AMST Co., Ltd., Feinmetall GmbH, Japan Electronic Materials Corporation, Korea Instrument Co., Ltd., M2N Co., Ltd., Microfriend Inc., Micronics Japan Co., Ltd., MPI Corporation, Micro Square Technology Inc., NHK Spring Co., Ltd., Soulbrain Engineering, Nidec SV TCL, Synergie CAD, TechnoProbe S.p.A, TSE Co., Ltd., WinWay Technology Co., Ltd., WILL-Technology Co., Ltd., and Yokowo, among others.

Probe card vendors such as Japan Electronic Materials Corporation, Micronics Japan Company, Ltd.

and TechnoProbe, offer probe cards built using similar types of MEMS technology as do we.

Our primary competitors are AMST Co., Ltd., Chungwa Precision Technology, Feinmetall GmbH, Japan Electronic Materials Corporation, Korea Instrument Co., Ltd., M2N Co., Ltd., Microfriend Inc., Micronics Japan Co., Ltd., MPI Corporation, Micro Square Technology Inc., NHK Spring Co., Ltd., Soulbrain Engineering, Nidec SV TCL, Synergie CAD, TechnoProbe S.p.A, TSE Co., Ltd., WinWay Technology Co., Ltd., WILL-Technology Co., Ltd., and Yokowo, among others.

Probe card vendors such as Japan Electronic Materials Corporation, Micronics Japan Co., and TechnoProbe, offer probe cards built using similar types of MEMS technology as we do.

The high capital investment and other costs associated with the development of MEMS probe cards and the time and high cost of the customer evaluation process represent significant barriers to entry for this type of technology.

We believe that the primary competitive factors in the production probe card market depend upon the type of integrated circuit being tested, but also include customer service, knowledge of measurement techniques, delivery time, price, probe card lifetime, chip damage prevention, probe tip touch-down accuracy, speed and frequency of the probe card, number of chips contacted in parallel, number of probe tips and their layout and pitch, signal integrity, and frequency and effectiveness of any required cleaning.

We believe that the primary competitive factors in the production probe card market depend upon the type of integrated circuit being tested, and include customer service, knowledge of measurement techniques, delivery time, price, probe card lifetime, chip damage prevention, probe tip touch-down accuracy, speed of the probe card, number of chips contacted in parallel, number of probe tips and their layout and pitch, signal integrity, and frequency and effectiveness of any required cleaning.

As a result of our relative strengths in these areas, we believe that we compete favorably in the advanced probe card market, and in probe cards for parallel testing of chips with densely-packed bond pads, bumps or pillars, and in high signal integrity testing of wireless radio frequency devices that operate up to millimeter-wave frequencies, a capability needed for components used in 5G applications.

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Our primary competitor in the analytical probe market is GGB Industries Inc.

Regional competitors include Yokowo and TechnoProbe Co Ltd.

in Japan, and MPI/Allstron in Taiwan.

Regional competitors include Yokowo and TechnoProbe Co., Ltd., in Japan, and MPI Corporation.

We believe that the primary competitive factors in this market are breadth of probe types, probe frequency and electrical signal integrity, contact integrity and the related cleaning required, knowledge of measurement techniques, calibration support, delivery time and price.

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Probe Stations.

Our primary competitors in the probe station market are HiSOL, Inc., LTD/Accretech, The Micromanipulator Company Inc., MPI Corporation, Semiprobe, Signatone Corporation, Tokyo Electron (“TEL”), Tokyo Seimitsu Co., Vector Semiconductor Co.

Ltd., and Wentworth Laboratories Inc.

We believe that the primary competitive factors in the probe station market are measurement accuracy and versatility at temperature, including cryogenic temperatures, measurement speed, automation features, knowledge of measurement techniques, completeness of the measurement solutions, delivery time and price.

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Our primary competitors in the metrology system market are Bruker Corporation, Camtek Ltd., Cohu, Inc., Filmetrics, Onto Innovation, and Unity SC.

We believe that the primary competitive factors in this market are breadth of measurement types, measurement accuracy, measurement speed and throughput, ability apply algorithms to multiple sensor inputs to indirectly measure attributes not otherwise directly observable, knowledge of measurement techniques and applications, delivery time and price.

We believe that the primary competitive factors in this market are breadth of measurement types, measurement accuracy, measurement speed and throughput, ability to apply algorithms to multiple sensor inputs to indirectly measure attributes not otherwise directly observable, knowledge of measurement techniques and applications, delivery time and price.

We believe that we compete favorably with respect to these factors.

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We believe that we compete favorably with respect to these factors.

Cryogenic Subsystems.

In the market for cryogenic subsystems, we compete principally against Bluefors Oy, Entropy, Lakeshore Cryotronics, Inc.

(which recently acquired Janis Research), Leiden Cryogenics B.V., Montana Instruments, Nagase Techno-Engineering Co., Oxford Instruments, and STAR Cryoelectronics.

Cryogenic Systems.

In the market for cryogenic systems, we compete principally against Bluefors Oy, Entropy, Leiden Cryogenics B.V., Montana Instruments, Nagase Techno-Engineering Co., Oxford Instruments, and STAR Cryoelectronics.

We believe the primary competitive factors in this market are cryogenic performance, reliability, throughput and application expertise.

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This may reduce or eliminate some or all of our current products’ advantages.

Semiconductor manufacturers may also increase their use of test strategies that include low performance semiconductor testers, less complex probe cards, or test procedures that do not involve our products.

Semiconductor manufacturers may also increase their use of test strategies that include low performance semiconductor testers,

less complex probe cards, or test procedures that do not involve our products.

Our ability to compete favorably may also adversely be affected by the long-standing relationships between our competitors and certain semiconductor manufacturers.

Intellectual Property

Our success depends in part upon our ability to continue to innovate and invest in research and development to meet the test and measurement requirements of our customers, to maintain and protect our proprietary technology, and to conduct our business

without infringing on the proprietary rights of others.

We rely on a combination of patents, trade secrets, trademarks and contractual restrictions on disclosure to protect our intellectual property rights.

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Due to the rapid pace of innovation within the markets that we serve, it is possible that our protection through patents may be less important than factors such as our technological expertise, continuing development of new products and technologies, protection of trade secrets, market penetration, customer relationships, and our ability to provide comprehensive support and service to customers worldwide.

No assurance can be given that any patents will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide us with a sustained competitive advantage.

No assurance can be given that patents will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide us with a sustained competitive advantage.

In addition, there can be no assurance that we will be able to protect our technology, or that competitors will not be able to independently develop similar or functionally competitive technologies, design around our patents, or attempt to manufacture and sell infringing products in countries that do not strongly enforce intellectual property rights.

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We reinforce this culture through our human capital development programs that drive talent acquisition, retention and employee engagement.

These programs include carefully designed compensation at all levels, a variety of training, diversity and inclusion objectives, and other initiatives.

These programs include carefully designed compensation across all levels, a variety of training, diversity and inclusion objectives, and other initiatives.

Our compensation programs help attract and retain key talent and are designed for our employees to share in our company’s success.

These programs focus on compensation that we believe is market-competitive, reflect company performance, and align with drivers of stockholder value with differentiation based on performance, skills, geographic location, and tenure.

These programs focus on compensation that we believe is market-competitive, reflects company performance, and aligns with drivers of stockholder value with differentiation based on performance, skills, geographic location, and tenure.

We use information from outside compensation and benefits consulting firms to evaluate the competitiveness of the compensation we offer to employees in specific job types, and the structure of our compensation programs, to help provide benchmarking against our peers within the industry.

We also offer a variety of benefits such as health insurance, paid and unpaid leaves, retirement, life and disability/accident coverage as applicable to their geographic location.

We offer a variety of benefits such as health insurance, paid and unpaid leaves, retirement, life and disability/accident coverage as applicable to their geographic location.

We also offer a variety of other benefits which allow employees to select the options which meet their needs such as for wellness, insurance and professional services.

Our training initiatives promote the continuous improvement of our workforce to keep pace with an ever-increasingly complex business and industry.

In addition to formal training, the capabilities of our workforce grow through structured feedback, mentorships, team building, career progression, tuition assistance, and a culture of transparency.

In 2020, we implemented a new training management platform, allowing for a more organized and efficient administration of training to our employees.

In addition to formal training, the capabilities of our workforce are intended to grow through structured feedback, mentorship, team building, career progression, tuition assistance, and a culture of transparency.

In 2020, we implemented a new training management platform designed to allow for a more organized and efficient administration of training to our employees.

Our training initiatives are designed to foster skills development, compliance and our company values.

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Our workplace health and safety programs include robust policies, procedures, training programs, and self-audits.

Nearly all of our manufacturing employees are located in California, Oregon and Germany, where workplace safety and labor regulations

support maintaining high standards of employee protection.

Nearly all of our manufacturing employees are located in California, Oregon and Germany, where workplace safety and labor regulations support maintaining high standards of employee protection.

We have also been demonstrating a focus on health and safety in our response to the COVID-19 pandemic world-wide, including work-from-home flexibility, requiring those who may be sick to stay home;

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regular internal communication regarding impacts of the COVID-19 pandemic and safety protocols;

temperature screening at our manufacturing facilities;

and restrictions on domestic and international non-essential travel.

and temperature screening at our manufacturing facilities.

We believe that our current human capital is appropriate to serve the requirements of our business, and that our human capital development programs and other initiatives are well designed to maintain the quality of our human capital.

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The reference to our website does not constitute incorporation by reference of the information contained at the site.

Directors and Executive Officers

The information required by this item is incorporated by reference to the proxy statement for our 2021 Annual Meeting of Stockholders.

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 1. Business