What changed in this filing

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Item 1A. Risk Factors

2022-02-18 compared with 2021-02-22 · 46 added, 34 removed, 300 unchanged (21% of the section changed)

6 unchanged sentences

We have experienced increased competition in the markets in which we operate, and we expect competition to intensify in the future.

Increased competition has resulted in, and in the future is likely to result in, price reductions, reduced gross margins or loss of market share.

Increased competition has resulted in, and in the future may result in, price reductions, reduced gross margins or loss of market share.

Existing competitors might introduce new competitive products for the same markets that our products currently serve.

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• in some cases, engage with third parties who have particular expertise in order to complete one or more aspects of the design and manufacturing process;

• qualify with the customer(s) the new product, or an existing product incorporating new technology;

• transition our products to new manufacturing technologies;

• qualify with customers new products, or an existing product incorporating new technology;

• transition our products to new manufacturing technologies, as necessary;

• offer our products for sale at competitive price levels while maintaining our gross-margins within our financial model;

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A relatively small number of customers account for a significant portion of our revenues.

One customer represented 31.5% of total revenues in fiscal 2020, two customers represented a combined 36.8% of total revenues in fiscal 2019 and one customer represented 19.0% of total revenues in fiscal 2018.

We anticipate that sales of our products to a relatively small number of customers will continue to account for a significant portion of our revenues and can drive material fluctuations in sales volume.

Two customers represented a combined 31.8% of total revenues in fiscal 2021, one customer represented 31.5% of total revenues in fiscal 2020 and two customers represented a combined 36.8% of total revenues in fiscal 2019.

We anticipate that sales of our products to a relatively

small number of customers will continue to account for a significant portion of our revenues and can drive material fluctuations in sales volume.

Consolidation in the semiconductor industry may increase this concentration.

In the future, the loss of any of these customers, or cancellation, reduction or deferral of even a small number of purchases of our products by these customers, could

significantly reduce our revenues.

In the future, the loss of any of these customers, or cancellation, reduction or deferral of even a small number of purchases of our products by these customers, could significantly reduce our revenues.

A decline in our customers' market share and commercial success, including their ability to compete favorably within their respective end markets, could significantly impact demand for our products and reduce our revenues.

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The global economic and semiconductor downturns have caused and may in the future cause our operating results to decline dramatically from one period to the next.

Global economic stability can be negatively affected by a variety of factors and interrelationships, including the potential impact of Brexit, epidemics and pandemics (such as the current COVID-19 pandemic), military conflicts, climate change, trade barriers and other factors acting alone or in combination.

Some of these factors can also have a more direct adverse impact upon our operations to varying degrees.

our customers, which, in turn, depend upon the current and anticipated market demand for semiconductors and products, such as servers, personal computers, automobiles and cell phones, that use semiconductors.

Global economic stability can be negatively affected by a variety of factors and interrelationships, including the impacts of Brexit, epidemics and pandemics (such as the current COVID-19 pandemic), military conflicts, climate change, trade barriers and other factors acting alone or in combination.

Some of these factors can also have a more direct adverse impact

upon our operations to varying degrees.

Our business depends heavily upon the development and manufacture of new semiconductors, the rate at which semiconductor manufacturers make transitions to smaller nanometer technology nodes and implement tooling cycles, the volume of production by semiconductor manufacturers and the overall financial strength of our customers, which, in turn, depend upon the current and anticipated market demand for semiconductors and products, such as servers, personal computers, automobiles and cell phones, that use semiconductors.

During industry downturns, semiconductor manufacturers sharply curtail their spending, including their spending on our products, which may adversely impact our revenues, gross margins and results of operations.

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We have experienced, and may experience in the future, manufacturing delays and other inefficiencies in connection with implementation of these improvements and customer qualifications of new processes or products, which have caused and could cause in the future, our operating results to decline.

These delays and other inefficiencies may arise from a variety of factors, including disruptions to or the unavailability of sufficient electrical power as a result of insufficient electrical power infrastructure in the regions where we have manufacturing facilities such as in California.

These delays and other inefficiencies may arise from a variety of factors, including disruptions to, or the unavailability of, sufficient electrical power as a result of insufficient electrical power infrastructure in the regions where we have manufacturing facilities such as in California and China.

We have also experienced, and may experience in the future, difficulties in manufacturing our complex products in volume on time, and at acceptable yields and cost, and installation issues in the field, due to the complexity of customer requirements.

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The complexity and ongoing development of our product designs and manufacturing processes could lead to design or manufacturing problems.

Problems might result from a number of factors, including design defects, materials failure, failure of

components manufactured by our suppliers to meet our specifications, contamination in the manufacturing environment, impurities in the materials used, and unknown sensitivities to process conditions such as temperature and humidity, and equipment failures.

Problems might result from a number of factors, including design defects, materials failure, failure of components manufactured by our suppliers to meet our specifications, contamination in the manufacturing environment, impurities in the materials used, and unknown sensitivities to process conditions such as temperature and humidity, and equipment failures.

Any errors or defects could:

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Another example of events outside of our control arises from our manufacturing facilities being located in seismically active areas in California and Oregon.

The manufacturing equipment and processes that we use can be severely disrupted by seismic activity.

The manufacturing equipment and processes that we use can be severely disrupted by seismic

A significant seismic event in the areas of our operations could have a materially negative impact on our operations, financial results or financial condition.

Much of the infrastructure on which we rely for our operations is outside of our control, such as for electric power.

We have recently experienced disruptions to electrical power at some of our premises in California, especially when aging infrastructure or inadequate electric power service has been impacted by high demand, fires, and weather which may worsen over time with climate change, and other events.

We have recently experienced disruptions to electrical power at some of our premises in California and China, especially when aging infrastructure or inadequate electric power service has been impacted by high demand, fires, and weather which may worsen over time with climate change, and other events.

Our efforts to mitigate the effects on us from interruptions in the availability of electric power, or other infrastructure, may not adequately prevent materially negative impacts on our operations, and in turn our financial results.

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A variety of health orders and regulations arising from the pandemic apply to our operations and employees in the regions where we operate which have had, and will continue to have, negative affects upon our operations and business.

Even as the availability of vaccines may begin to relieve the economic effects of the COVID-19 pandemic in the future, there remains substantial risk that vaccination rates will remain slow, new variants of the virus may impede the vaccines’ efficacy, or other factors may prolong or worsen the pandemic and its direct and indirect affects upon our business.

The extension of existing government orders and implementation of new orders or mandates, such as government vaccine and testing mandates, could impact the availability of members of our workforce or lead to the loss of key employees, further adversely impacting our business.

I mplementation of such mandates and requirements could also have similar consequences for our suppliers, which may impact their ability to deliver the goods and services to us.

Even as the availability of vaccines has begun to relieve the economic effects of the COVID-19 pandemic in the future, there remains substantial risk that vaccination rates will remain slow, new variants of the virus may continue to impede the vaccines’ efficacy, or other factors may prolong or worsen the pandemic and its direct and indirect affects upon our business.

A significant amount of our management resources have been, and will continue to be, focused on mitigating the negative impacts of COVID-19 on our business.

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the severity and duration of the pandemic;

governmental, business and other actions (which could include further restrictions on our operations);

governmental, business and other actions including government vaccine and testing mandates (which could include further restrictions on our operations);

the ongoing requirements of social distancing and health orders;

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The COVID-19 pandemic has also increased uncertainty in global credit and financial markets.

The impacts of such uncertainty and disruptions to the availability of credit or other sources of capital as the pandemic continues or worsens, could also adversely affect our ability to access capital on favorable terms to meet our objectives.

The impacts of such uncertainty and disruptions

to the availability of credit or other sources of capital as the pandemic continues or worsens, could also adversely affect our ability to access capital on favorable terms to meet our objectives.

Any of these factors could have a material adverse impact on our business, results of operations, financial condition and cash flows.

In addition, governments in several countries where we operate, including the United States, have enacted stabilization and stimulus measures in an effort to counteract some of the economic impacts of COVID-19.

The demand and business environments in which we operate have benefited from some of these measures, while the long-term economic impacts of

increased government borrowing to fund these measures may have future negative effects on certain economies.

The demand and business environments in which we operate have benefited from some of these measures, while the long-term economic impacts of increased government borrowing to fund these measures may have future negative effects on certain economies.

Any significant discontinuations, reductions, or other changes to such stabilization and stimulus programs may harm our customers’ or suppliers’ financial results and financial condition, and could also have an adverse macroeconomic impact that may lead to reductions in the demand for our products.

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We rely on electronic data systems, including a variety of software and networking, computing and storage equipment and other information technologies, to operate and manage our business and to collect, process, maintain, and safeguard information, including information belonging to our customers, partners, and personnel.

Our electronic data systems may be subject to defects, failures or disruptions as a result of, among other things, natural disasters, accidents, power disruptions, telecommunications failures, deficiencies in new system designs and implementations, acts of terrorism or war, physical security breaches, computer viruses or other cyber security attacks.

For example, in June 2020, we discovered a data breach incident involving malware and related behaviors that resulted in unauthorized access to our information technology systems.

For example, in fiscal 2020, we discovered a data breach incident involving malware and related behaviors that resulted in unauthorized access to our information technology systems.

Although we do not believe this incident had any significant impacts on our production and ordinary course operations, such incidents or other system failures or disruptions could subject us to downtime and delays, compromise or loss of sensitive or proprietary information, destruction or corruption of data, financial losses from remedial actions, breaches of obligations to third parties under privacy laws or contracts, or damage to our reputation or customer relationships.

Any of the foregoing could have a material adverse effect on our business, operating results and financial condition.

In addition, we are actively implementing new electronic data systems relating to substantial parts of our business, operations and accounting.

In addition, we are actively implementing new electronic data systems relating to parts of our business, operations and accounting.

The process of implementing and commencing our reliance on these new systems involves particularly higher risks of deficiencies or disruptions than the continued use of systems which have had a longer history of use and observed performance in the Company.

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export controls to items which are the foreign direct products of the U.S.

technologies which can affect a variety of customers outside of China who supplier products to certain entities in China.

technologies which can affect a variety of customers outside of China who supply products to certain entities in China.

There is no assurance that we will obtain any export licenses on a timely basis or at all.

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In addition, certain of our customer contracts contain provisions that require us to defend or indemnify our customers for third party intellectual property infringement claims, which could increase the costs and negative impacts of intellectual property claims.

We have recorded restructuring, inventory write-offs and asset impairment charges in the past and may do so again in the future, which could have a material negative impact on our business.

We recorded restructuring charges in fiscal 2019 and 2018.

We have recorded restructuring, inventory write-offs and asset impairment charges in the past, in fiscal 2021, and may do so again in the future, which could have a material negative impact on our business.

We recorded restructuring charges in fiscal 2021 and 2019 and will record further restructuring charges in the near future in relation to the recent restructuring announced during fiscal 2021.

We may implement restructuring plans in the future, which would require us to take additional, potentially material, restructuring charges related to employee terminations, asset disposal or exit costs.

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We may not be able to recruit or retain qualified personnel.

We believe our ability to manage successfully and grow our business and to develop new products depends, in large part, on our ability to recruit and retain qualified employees, particularly highly skilled technical, sales, management, and key staff personnel.

Competition for qualified resources is intense and other companies may have greater resources available to provide substantial inducements to lure key personnel away from us or to offer more competitive compensation packages to individuals we are trying to hire.

Competition for qualified resources is intense, and the increased availability of work-from-home arrangements accelerated by the COVID-19 pandemic has intensified and expanded competition.

Other companies may have greater resources available to provide substantial inducements to lure key personnel away from us or to offer more competitive compensation packages to individuals we are trying to hire.

Our failure to comply with environmental laws and regulations could subject us to significant fines and liabilities, and new laws and regulations or changes in regulatory interpretation or enforcement could make compliance more difficult and costly.

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In addition, changing laws and regulations, new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination at our or others’ sites or the imposition of new cleanup requirements could require us to curtail our operations, restrict our future expansion, subject us to liability and cause us to incur future costs that could harm our operations, thereby adversely impacting our operating results and cash flow.

We are exposed to additional risks as a result of increased attention by our stakeholders to environmental, social and governance (“ESG”) matters.

Our stakeholders, including customers, investors, advisory firms, employees, and suppliers, among others, are increasing their attention to, and establishing expectations for, ESG and related matters.

These expectations can extend to our corporate practices, initiatives, and disclosures, as well as stakeholder standards or preferences for investments or doing business.

Third-party agencies have also established or added standards for rating companies on a range of ESG-related factors that may be inconsistent and subject to change.

As a result, these expectations may impact the attractiveness of our business, the manner in which we do business, our reputation, the costs of doing business, and the willingness of these stakeholders to engage with, invest in, or retain us.

We may be further impacted by the adoption and evolution of ESG-related regulation and legislation in the jurisdictions in which we do business, which could result in increased compliance, operational, and other costs.

In addition, the Company has provided voluntary disclosures on ESG matters, including regarding energy usage, greenhouse gas emissions, health and safety, diversity and inclusion, and labor and human rights.

Such disclosures are aspirational and based on frameworks and standards for such initiatives and progress that are still developing, assumptions that may change, and disclosure control and procedures that continue to evolve.

We may fail, or be perceived to fail, in attaining or maintaining our ESG-related initiatives.

The topics on which we focus may not be popular with our stakeholders.

These events or perceptions may expose us to additional reputational and operational risks.

Risks Relating to Our Acquisitions

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Our acquisitions or investments may subject us to new or heightened risks.

Integrating any newly acquired businesses, products or technologies into our company draws upon on our resources in ways that can be expensive and time consuming.

Integrating any newly acquired businesses, products or technologies into our company draws upon our resources in ways that can be expensive and time consuming.

These activities can substantially affect our financial resources, could cause delays in product delivery and might not be successful.

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Investments that we make may not result in a return consistent with our projections upon which such investments are made, or may require additional investment that we did not originally anticipate.

In addition, acquisitions can result in customer dissatisfaction, performance problems with an acquired company, potentially dilutive issuances of equity

securities or the incurrence of debt and restrictive debt covenants, contingent liabilities, possible impairment charges related to goodwill or other intangible assets or other adverse impacts or circumstances.

In addition, acquisitions can result in customer dissatisfaction, performance problems with an acquired company, potentially dilutive issuances of equity securities or the incurrence of debt and restrictive debt covenants, contingent liabilities, possible impairment charges related to goodwill or other intangible assets or other adverse impacts or circumstances.

If any of these risks were to come about, our business, financial results and stock price could be materially and adversely affected.

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These provisions:

• establish a classified board of directors so that not all members of our board are elected at one time;

• establish a classified board of directors so that not all members of our board are elected at one time (subject to shareholder approval of a declassification amendment at the 2022 annual meeting of Stockholders);

• provide that directors may only be removed “for cause” and only with the approval of 66.7% of our stockholders;

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In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company.

In addition, each of our named executive officers and certain other executives of the company have entered into change of control severance agreements, which were approved by our Compensation Committee, which could increase the costs associated with a change of control and thus, potentially deter such a transaction.

Also, each of our named executive officers and certain other executives of the company have entered into change of control severance agreements, which were approved by our Compensation Committee, which could increase the costs associated with a change of control and thus, potentially deter such a transaction.

Unresolved Staff Comments

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