What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-02-23 compared with 2023-02-24 · 52 added, 70 removed, 172 unchanged (41% of the section changed)

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.

FormFactor, Inc.

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 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”);

in June 2016, we acquired Cascade Microtech, Inc.

(“Cascade Microtech” or “CMI”);

in October 2019, we acquired FRT GmbH (“FRT”);

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

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.

Our products provide electrical 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 accelerate profitability by optimizing device performance, reducing scrap, and improving yields.

Founded in 1993, we introduced our first product in 1995.

From time to time, we have acquired businesses to help transform our business into a semiconductor test and measurement market leader with greater scale, diversification, breadth and market opportunities from Lab to Fab.

We continue to evaluate opportunities to acquire businesses and technologies to further these goals.

As of December 30, 2023, 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, 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.

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

On November 1, 2023, we completed the sale of our FRT Metrology business.

Our probe cards utilize a variety of technologies and product architectures, including micro-electromechanical systems (MEMS) technologies.

3 unchanged sentences

Our range of capabilities enable us to rapidly produce customer-design specific probe cards that deliver leading precision, quality, reliability, and electro-mechanical performance.

Our probe cards are customized for our customers’ unique wafer and chip designs by modifying and adapting our standard product architectures to meet an individual customer’s specific wafer and chip design layouts and electrical test requirements.

We offer probe cards to test a variety of semiconductor device types, including systems on a chip (SoC), mobile application processors, microprocessors, microcontrollers, graphic processors, radio frequency, analog, mixed signal, image sensors, electro-optical, DRAM memory, NAND flash memory and NOR flash memory devices.

We offer probe cards to test a variety of semiconductor device types, including systems on a chip (SoCs), mobile application processors, microprocessors, quantum processors, microcontrollers, graphic processors, radio frequency, analog, mixed signal, image sensors, electro-optical, DRAM memory (including high-bandwidth memory, or “HBM”), NAND flash memory, NOR flash memory, and quantum computer processor devices.

For many advanced applications, our products must maintain tens of thousands of simultaneous high-fidelity low-impedance electrical contacts with the corresponding chip contacts on the wafer.

3 unchanged sentences

These tools and processes are intended to enable the rapid and accurate customization of products required to meet customer requirements, including automated routing and trace length adjustment within our probe cards, to rapidly design complex structures.

In addition, some of our customers test certain chips over a large range of operating temperatures, such as for automotive applications.

In addition, some of our customers test certain chips over a large range of operating temperatures, such as for automotive and cryogenic applications.

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.

16 unchanged sentences

Metrology Systems.

We offer surface metrology systems for various applications including the development, production and quality control of semiconductor products.

With resolution down to nanometer scales, these systems measure topography, structure, step height, roughness, wear, thickness variation, film thickness and other parameters.

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, Silicon Carbide (SiC) power, Silicon Photonics, and MEMS applications.

Until the sale of FRT in November 2023, we offered surface metrology systems for various applications including the development, production and quality control of semiconductor products.

With resolution down to nanometer scales, these systems measured topography, structure, step height, roughness, wear, thickness variation, film thickness and other parameters.

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

These systems integrated hybrid metrology capabilities and proprietary software to enable non-destructive and rapid measurement of multiple features and parameters simultaneously, which had multiple applications but is particularly useful in the growing space of advanced packaging, Silicon Carbide (SiC) power, Silicon Photonics, and MEMS applications.

Thermal Subsystems.

4 unchanged sentences

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

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.

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 temperatures close to absolute zero, 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 probes.

Services and Support.

2 unchanged sentences

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.

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 (including HBM), 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.

1 unchanged sentence

We believe our customers consider timely service and support to be an important aspect of our relationship as our products are critical elements of high-volume manufacturing and design-specific product ramps.

Our probe stations and metrology systems are installed at customer sites either by us, our manufacturers’ representatives or our distributors, depending on the complexity of the installation and the customer’s geographic location.

Our probe stations are installed at customer sites either by us, our manufacturers’ representatives or our distributors, depending on the complexity of the installation and the customer’s geographic location.

We assist our customers in the selection, integration and use of our products through application engineering support.

1 unchanged sentence

In certain geographic regions, and for selected products, our manufacturers’ representatives and distributors provide additional service and support.

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 - 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.

1 unchanged sentence

Fiscal Quarters Ended

2022 June 25, 2022 Mar.

26, 2022 Dec.

2021 June 26, 2021 Mar.

Intel Corporation 16.7 % 17.1 % 14.2 % 20.0 % 16.5 % 17.0 % 20.9 % 20.8 %

1 unchanged sentence

10.7 % * * * * 10.7 % * *

Taiwan Semiconductor Manufacturing Co., LTD.

* * * 10.7 * * 11.0 11.5

Samsung Electronics Co., LTD.

* 11.2 % * * * * * *

Taiwan Semiconductor Manufacturing Co., LTD.

* * * * * * * 10.7 %

27.4 % 28.3 % 14.2 % 20.0 % 16.5 % 27.7 % 20.9 % 31.5 %

* Less than 10% of revenues.

Segment and Enterprise-Wide Disclosures

See Note 16 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for certain financial information related to our segments and our enterprise-wide disclosures.

Manufacturing

4 unchanged sentences

Critical steps in our manufacturing process are performed in a variety of clean room environments as stringent as a Class 100, depending on the requirements of the specific manufacturing processes.

Our probe stations and metrology systems are designed to provide highly accurate electrical and optical measurements enabled by precise and reliable mechanical components and assemblies.

Our probe stations are designed to provide highly accurate electrical and optical measurements enabled by precise and reliable mechanical components and assemblies.

We prototype and perform robust testing of our product designs and components to ensure high electrical signal integrity, mechanical accuracy and safety.

2 unchanged sentences

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.

4 unchanged sentences

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 and Carlsbad, California and Beaverton, Oregon, United States;

Thiendorf, Dresden, Munich and Bergish Gladbach Germany;

and in Thiendorf and Munich, Germany.

We also have smaller manufacturing operations in Suzhou, China and Yokohama, Japan.

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

Thiendorf, Dresden and Munich Germany;

Bundang, South Korea;

3 unchanged sentences

and Singapore.

In February 2024, we entered into an agreement with Grand Junction Semiconductor Pte.

to divest our operations in China and establish an exclusive distribution and partnership agreement to continue sales and support of our products in the region (the “China Transaction”).

The China Transaction is expected to close in the first half of 2024.

Research, Development and Engineering

5 unchanged sentences

We sell our products worldwide through a global direct sales force and through a combination of manufacturers’ representatives and distributors.

Our direct sales and marketing staff is located in the United States, China, France, Germany, Italy, United Kingdom, Japan, Singapore, South Korea, and Taiwan.

Our direct sales and marketing staff is located in the United States, China (pending the close of the China Transaction), France, Germany, Italy, United Kingdom, Japan, Singapore, South Korea, and Taiwan.

They work closely with customers in the effort to understand their businesses, anticipate trends and define products that will provide significant technical and economic advantages to our customers.

8 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, trade regulations, employment, and privacy.

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

Environmental Matters

6 unchanged sentences

Import and Export Control

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

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

Certain products are subject to export control regulations.

1 unchanged sentence

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.

Approximately 14% of our fiscal 2023 revenue and 22% of our fiscal 2022 revenue was derived from sales to customers in China, which were subject to the expanded export license requirements imposed by the United States government.

The revenue derived from large multinational customers with a presence in China represented 5% of fiscal 2023 revenue, with the remaining 9% representing regional customers in China.

As noted above, we have entered into an agreement to divest our China operations, which is expected to close in the first half of 2024.

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

4 unchanged sentences

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, 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.

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, electrical signal speed and current carrying capability 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.

8 unchanged sentences

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

Metrology Systems.

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.

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

Thermal Subsystems.

8 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.

4 unchanged sentences

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.

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.

6 unchanged sentences

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.

Human Capital

We believe that each employee contributes to our culture of integrity, innovation, and teamwork.

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

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

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

These programs include carefully designed compensation programs across all levels, a variety of training, diversity and inclusion programs, 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, 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 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 to evaluate the structure of our compensation programs, as a benchmark against our peers within the industry.

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 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.

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, 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.

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

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

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

We believe that the recruitment, retention and promotion of a balanced workforce is an important driver of company performance.

2 unchanged sentences

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.

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

Our workplace health and safety programs include 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.

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.

For our manufacturing activities, the speed at which we can recruit, train and deploy quality new and replacement personnel is an important part of our ability to ramp up and maintain our production capacity.

8 unchanged sentences

As of December 30, 2023, our Probe Cards Segment had 1,565 regular full-time employees, our Systems Segment had 362 regular full-time employees, plus we had 188 regular full-time employees in corporate functions.

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

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.

Available Information

3 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