What changed in this filing

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Item 1. Business

2023-02-24 compared with 2022-02-18 · 46 added, 46 removed, 196 unchanged (32% of the section changed)

9 unchanged sentences

in July 2020, we acquired the probe card assets of Advantest Corporation (“Baldwin Park”);

and in October 2020, we acquired High Precision Devices, Inc.

These acquisitions have helped transform our business into a semiconductor test and measurement market leader with greater scale, diversification, breadth and market opportunities.

in October 2020, we acquired High Precision Devices, Inc.

(“HPD”), and in June 2022, we acquired the assets of the dilution refrigerator product line of American ULT Cyrogenics, formerly d/b/a JanisULT (“Woburn”).

These acquisitions have helped transform our business into a semiconductor test and measurement market leader with greater scale, diversification, breadth and market opportunities from lab to fab.

As of December 31, 2022, we operate in two reportable segments consisting of the Probe Cards segment and the Systems segment.

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We design probe cards to provide for a precise match with the thermal expansion characteristics of the wafer under test across the range of test operating temperatures.

For many of our products, our customers can use the same probe card

for both low and high temperature testing.

For many of our products, our customers can use the same probe card for both low and high temperature testing.

We also design probe cards for customers that require extreme positional accuracy at a specific temperature.

Through ongoing investments in both our technology and operations, we continue to innovate and improve so that our products will meet customers’ future technical roadmap performance, quality, and commercial requirements.

We also focus upon leveraging these ongoing investments across all advanced probe card markets to realize synergies and economies of scale to benefit our competitiveness, time-to-market and overall profitability.

We also focus on leveraging these ongoing investments across all advanced probe card markets to realize synergies and economies of scale to benefit our competitiveness, time-to-market and overall profitability.

Analytical Probes.

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The modular architecture of the systems allows for the sensor configuration to be customized for the application while leveraging a common platform.

These systems integrate hybrid metrology capabilities and proprietary software to enable non-destructive and rapid measurement of multiple features and parameters simultaneously, which has multiple applications but is particularly useful in the growing space of advanced packaging and MEMS applications.

Thermal Subsystems.

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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 include advanced cryogenic probe systems to test complete wafers or singulated die, as well as Dilution Refrigerator (DR) and 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.

1 unchanged sentence

In addition to routine installation services at the time of sale, we offer services to enable our customers to maintain and more effectively utilize our products and to enhance our customer relationships.

In addition to traditional maintenance services, our applications engineers assist our customers in test methodologies to make advanced measurements during process and product development, and during mass production.

Our customers include companies, universities and institutions that design or make semiconductor, and semiconductor related products in the Foundry & Logic, DRAM, Flash, Display and Sensor markets.

Our customers use our products to test nearly all semiconductor device types, including SoCs, mobile application processors, microprocessors, quantum processors,

microcontrollers, graphic processors, radio frequency, analog, mixed signal, image sensors, electro-optical, DRAM memory, NAND flash memory and NOR flash memory devices.

Fabless semiconductor suppliers do not manufacture their own semiconductors, but they purchase our analytical probes, probe stations, and other System products for research and development, and device characterization.

Our applications engineers assist our customers in test methodologies to make advanced measurements during process and product development, and during mass production, along with offering traditional maintenance services.

Our customers include companies, universities and institutions that design or make semiconductor and semiconductor related products in the foundry & logic, DRAM, flash, display, sensor and quantum computer markets.

Our customers use our products to test nearly all semiconductor device types, including SoCs, mobile application processors, microprocessors, quantum processors, microcontrollers, graphic processors, radio frequency, analog, mixed signal, image sensors, electro-optical, DRAM memory, NAND flash memory, NOR flash memory, and quantum computer processor devices.

Fabless semiconductor suppliers do not manufacture their own semiconductors, but they purchase our analytical probes, probe stations, and other System segment products for research and development, and device characterization.

They also purchase, or direct their foundries or wafer test facilities to purchase, our probe cards to test wafers manufactured for them.

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Information concerning revenue by geographic region and by country based upon ship-to location appears under Item 7:

Management's Discussion and Analysis of Financial Condition and Results of Operations - Revenues - Revenues by Geographic Region and Note 16 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Revenues by Geographic Region and Note 16 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Information concerning revenue concentration by customer appears under Note 2 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

The following customers represent 10% or more of our quarterly revenues:

The following customers represented 10% or more of our quarterly revenues for the quarters indicated:

Fiscal Quarters Ended

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Intel Corporation 16.5 % 17.0 % 20.9 % 20.8 % 16.7 % 20.8 % 16.3 % 28.1 %

Samsung Electronics Co., LTD.

SK hynix Inc.

* 10.7 * * * * * *

1 unchanged sentence

* * * 10.7 * * 11.0 11.5

Micron Technology, Inc.

Samsung Electronics Co., LTD.

* * * * 13.8 12.9 14.7 *

6 unchanged sentences

Our proprietary manufacturing processes for our probe cards include a complex interconnection system-level design process;

a front-end process, which may include wire bonding, photolithography, plating and metallurgical processes, dry and electro-deposition, pick and place assembly;

a front-end process, which may include wire bonding, photolithography, plating and metallurgical processes, dry and electro-deposition, and pick and place assembly;

and a back-end process, which includes general assembly and test.

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We also rely on suppliers to provide certain contact elements and interconnects that are incorporated into our products.

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

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 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;

Suzhou, China;

Our primary manufacturing facilities are located in Livermore, Carlsbad, and Baldwin Park, California;

Beaverton, Oregon;

Boulder, Colorado;

and Woburn, Massachusetts, all in the United States;

and in Thiendorf, Munich, and Bergisch Gladbach, Germany.

We also have smaller manufacturing operations in Suzhou, China;

and Yokohama, Japan.

We maintain repair and service capabilities in Livermore, San Jose, and Carlsbad, California and Beaverton, Oregon, United States;

Thiendorf, Dresden and Munich, Germany;

We maintain repair and service capabilities in Livermore and Carlsbad, California and Beaverton, Oregon, United States;

Thiendorf, Dresden, Munich and Bergish Gladbach Germany;

Bundang, South Korea;

21 unchanged sentences

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.

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

Environmental Matters

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We believe that we comply in all material respects with the environmental laws and regulations that apply to us as of December 31, 2022.

We did not receive any notices of violations of environmental laws and regulations in fiscal 2021, 2020 or 2019.

There are no matters pending that we currently believe are reasonably possible of having a material impact to our business, consolidated financial condition, results of operations or cash flows.

In the future, we may receive notices of violations of environmental regulations, or otherwise learn of such violations.

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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.

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

Approximately 22% of our fiscal 2022 revenue was derived from sales to customers in China, which is subject to the recent

expanded export license requirements imposed by the United States government.

We continue to take all necessary steps to ensure full compliance with these new rules, including holding shipments, if necessary.

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:

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.

The probe card market is comprised 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., 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.

4 unchanged sentences

Analytical Probes.

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

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

Our primary competitors in the analytical probe market are GGB Industries Inc.

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.

5 unchanged sentences

Metrology Systems.

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

Our primary competitors in the metrology system market are Bruker Corporation, Camtek Ltd., Cohu, Inc., Filmetrics (a KLA company), 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 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.

10 unchanged sentences

Some of our competitors are also suppliers of other types of test and measurement equipment or other semiconductor equipment and may have greater financial and other resources than we do.

Our competitors may enhance their current products and may introduce new products that will be competitive with ours.

Our competitors may enhance their current products and may

introduce new products that will be competitive with ours.

New alternatives to our products may also be introduced, by our current competitors or others, which may reduce the value of one or more of our products.

1 unchanged sentence

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.

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

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 be adversely affected by the long-standing relationships between our competitors and certain semiconductor manufacturers.

Intellectual Property

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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 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, and 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.

Our training initiatives promote the continuous improvement of our workforce to keep pace with an increasingly complex business and industry, and are designed to foster skills development, compliance and our company values.

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.

We leverage both formal and informal programs to identify, foster, and retain top talent.

On an annual basis, we have conducted a talent review process with our chief executive officer, leaders of our business units and functions that is focused upon performance, potential, diversity, and succession for critical roles.

On an annual basis, we have conducted a talent review process with our Chief Executive Officer, and leaders of our business units and functions that is focused upon performance, potential, diversity, and succession for critical roles.

Our commitment to diversity and inclusion is a significant part of our human capital development programs.

1 unchanged sentence

We support these values through sponsored events, networking groups, and management objectives.

As an equal opportunity employer, we develop and implement an annual and targeted affirmative action plan reflecting specific metrics.

As an equal opportunity employer, we develop and implement an annual and targeted affirmative action plan.

We also inspire employee engagement through our commitment to corporate social responsibility, including in defined focus areas of sustainable technology, health and safety, labor and human rights, energy and climate change, supply chain responsibility, and waste and chemical management.

1 unchanged sentence

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;

COVID-19 safety protocols across all locations, including social distancing, personal protective equipment and cleanings;

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

and temperature screening at our manufacturing facilities.

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, and requiring those who may be sick to stay home.

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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None of our employees in the United States are covered by a collective bargaining agreement.

Certain employees at our manufacturing facility in Germany are represented by a works council.

Certain employees at one of our manufacturing facilities in Germany are represented by a works council.

Our employees take pride in their work and we believe that our overall relations with our employees is positive.

4 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 1. Business