What changed in this filing

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Item 1A. Risk Factors

2025-02-21 compared with 2024-02-23 · 37 added, 33 removed, 314 unchanged (18% of the section changed)

15 unchanged sentences

We must continue to innovate and to invest in research and development to improve our competitive position and to meet the test and measurement requirements of our customers.

Our future growth depends, in significant part, upon our ability to work effectively with and anticipate the future technical and operational needs of our customers and to develop and support new

products and product enhancements to meet those needs on a timely and cost-effective basis.

Our customers’ needs are becoming more challenging as the semiconductor industry continues to experience rapid technological change driven by the demand for complex circuits that are shrinking in size, are increasing in speed and functionality, and are produced on shorter cycle times and at reduced unit cost.

Our future growth depends, in significant part, upon our ability to work effectively with and anticipate the future technical and operational needs of our customers and to develop and support new products and product enhancements to meet those needs on a timely and cost-effective basis.

This may become more difficult to do as the semiconductor industry innovates to address demand for AI-related products, which may develop more slowly than we anticipate or change rapidly from one period to another for a variety of reasons, including industry-wide shifts in expectations and technological developments.

Our customers’ needs are becoming more challenging as the semiconductor industry continues to experience rapid technological change driven by the demand for complex circuits that are shrinking in size, are increasing in speed and functionality, have more complex layouts, and are produced on shorter cycle times and at reduced unit cost.

Successful product design, development and introduction on a timely basis require that we:

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We depend upon the sale of our probe card products for the substantial majority of our revenues.

We derive the majority of our revenues from the sale of our probe card products, primarily to manufacturers of microprocessors, foundry & logic and memory devices, despite progress in diversifying our product offerings.

We derive the majority of our revenues from the sale of our probe card products, primarily to manufacturers of foundry & logic and memory devices, despite progress in diversifying our product offerings.

We anticipate that sales of probe cards will represent a substantial majority of our revenues for the foreseeable future.

3 unchanged sentences

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

One customer represented 17.1% of total revenues in fiscal 2023, one customer represented 19.0% of total revenues in fiscal 2022 and two customers represented a combined 31.8% of total revenues in fiscal 2021.

Two customers represented a combined 33.5% of total revenues in fiscal 2024, one customer represented 17.1% of total revenues in fiscal 2023 and one customer represented 19.0% of total revenues in fiscal 2022.

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, which can drive material fluctuations in sales volume, gross margins due to changes in mix, and leverage on fixed costs.

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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.

Cancellations, reductions, deferrals or non-payment of invoices could result from downturns in the semiconductor industry, including the cyclical downturn we are now experiencing, manufacturing delays, quality or reliability issues with our products, or from interruptions to our customers’ operations due to fire, natural disasters or other events, or other issues with the financial stability of our customers.

Cancellations, reductions, deferrals or non-payment of invoices could result from downturns in the semiconductor industry, including the cyclical downturn we have been experiencing, manufacturing delays, quality or reliability issues with our products, or from interruptions to our customers’ operations due to fire, natural disasters or other events, or other issues with the financial stability of our customers.

Furthermore, because our probe cards are custom products designed for our customers’ unique wafer designs, any cancellations, reductions or delays can result in significant non-recoverable costs, including but not limited to the potential for impairment of inventories.

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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.

For example, the semiconductor industry has been experiencing a cyclical downturn since the second half of fiscal 2022, which has extended through fiscal 2023, resulting in a significant decline in demand for foundry & logic and DRAM products over the same period.

Global economic stability can be negatively affected by a variety of factors and interrelationships, including the impacts of epidemics and pandemics, military conflicts or regional tensions, climate change, trade barriers (such as the U.S.-China trade restrictions implemented since fiscal 2022) and other factors acting alone or in combination.

For example, the semiconductor industry in general experienced a cyclical downturn beginning the second half of fiscal 2022 that extended through at least fiscal 2024, resulting in a significant decline in demand for foundry & logic and DRAM products over the same period.

Global economic stability can be negatively affected by a variety of factors and interrelationships, including the impacts of epidemics and pandemics, military conflicts or regional tensions, climate change, trade tensions, barriers and conflicts (such as the U.S.-China trade restrictions implemented since fiscal 2022 and those proposed to be implemented by the new U.S.

presidential administration) 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.

1 unchanged sentence

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.

protracted downturn could cause one or more of our customers to become insolvent, resulting in a loss of revenue and impacting our ability to collect on accounts receivable.

Further, a protracted downturn could cause one or more of our customers to become insolvent, resulting in a loss of revenue and impacting our ability to collect on accounts receivable.

The timing, length and severity of these cyclical downturns are difficult to predict, and our business depends on our ability to plan for and react to these cyclical changes.

2 unchanged sentences

Rather, a substantial percentage of our revenues in any quarter depend upon customer orders for our products that we receive and fulfill in that quarter.

Because our expense levels are based in part on our expectations as to future revenues and to a large extent are fixed in the short term, we might be unable to adjust spending in time to compensate for any unexpected shortfall in revenues.

Because our expense levels are based in part on

our expectations as to future revenues and to a large extent are fixed in the short term, we might be unable to adjust spending in time to compensate for any unexpected shortfall in revenues.

If our ability to forecast demand for our products or the predictability of our manufacturing yields deteriorates, we could incur high inventory losses.

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Our dependence upon sole or limited source suppliers exposes us to several other risks, including inability to obtain an adequate supply of materials, late deliveries, poor component quality, and business disruptions while we seek to identify and qualify alternative suppliers.

This could be exacerbated by certain events outside the control of either the supplier or us, such as global, regional or national health crises, armed conflicts, regional tensions or other adverse global, regional and national events.

This could be exacerbated by certain events outside the control of either the supplier or us, such as global, regional or national health crises, armed conflicts, increased tariffs and trade barriers, regional tensions or other adverse global, regional and national events.

The occurrence of any of these risks could adversely impact our business, results of operations and financial condition.

4 unchanged sentences

It is also possible that future natural and man-made disasters could negatively impact the sales of our products as a result of impacts upon our customers’ ability to make or sell their products, or impacts upon our suppliers’ ability to supply components to us on a timely basis.

For example, the COVID-19 pandemic has shown the extent to which new pathogens are capable of disrupting business operations and economic activity locally and worldwide.

For example, the COVID-19 pandemic showed the extent to which new pathogens are capable of disrupting business operations and economic activity locally and worldwide.

Health crises can severely disrupt global supply chains, including for parts and materials that we use to manufacture our products, and affect economic conditions in the markets for our products.

5 unchanged sentences

We have previously 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.

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.

Climate change, or legal, regulatory or market measures to address climate change, may negatively affect our business and operations.

14 unchanged sentences

A variety of factors, including natural disasters, health crises, climate change, military conflicts and other geopolitical events, may adversely affect national, regional and global economies and financial markets.

Any such adverse events may result in global, regional or national economic slowdowns or other economic downturns.

Such downturns could curtail or delay spending by businesses and consumers which may ultimately result in reductions in the demand for our products, greater volatility in demand and supply conditions and other adverse impacts.

Recent political changes have created an environment of tension and uncertainty in economic matters, particularly with regard to tariffs and international trade.

Any such adverse events may result in global, regional or national economic slowdowns or other economic disruptions or downturns.

Such disruption or downturns could curtail or delay spending by businesses and consumers which may ultimately result in reductions in the demand for our products, greater volatility in demand and supply conditions and other adverse impacts.

For example, any deterioration in the relations between Taiwan and China, and other factors affecting military, political or economic conditions in Taiwan or elsewhere in Asia, could adversely impact our suppliers, manufacturers and customers with operations located in the region, which could disrupt our business operations, affect demand for our products or increase our costs, negatively impacting our revenues, gross margins, and overall results of operations.

8 unchanged sentences

We have generally been able to offset increases in these costs through various productivity improvement and cost reduction initiatives, as well as by adjusting our selling prices to pass through some of these higher costs to our customers;

however, our ability to raise our selling prices depends on market conditions and

competitive dynamics.

however, our ability to raise our selling prices depends on market conditions and competitive dynamics.

Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs.

26 unchanged sentences

Political developments in the United States and elsewhere may increase the risks and uncertainties associated with conducting international business, including the possibilities of greater tariffs and other trade barriers in the regions where we conduct business.

In fiscal 2023, we observed a continuing trend of increasing risks and challenges in the conduct of our international business activities, including expanded tariffs and other trade barriers affecting the United States and China.

In fiscal 2024 and 2023, we observed a continuing trend of increasing risks and challenges in the conduct of our international business activities, including expanded tariffs and other trade barriers affecting the United States and China, and currently there are rising trade tensions and conflicts (including proposed tariffs) between the United States and other countries, such as China.

Additionally, we are required to comply with foreign import and export requirements, customs and value added tax standards that can be unclear or complex.

5 unchanged sentences

dollars, we incur certain costs in other currencies, and have certain foreign currency denominated assets and liabilities.

We, therefore, face

exposure to fluctuations in currency exchange rates.

We, therefore, face exposure to fluctuations in currency exchange rates.

Significant fluctuations in exchange rates between the U.S.

dollar and foreign currencies may adversely affect our revenues and earnings, despite our hedging of a portion of our international currency exposures.

dollar and foreign currencies may adversely affect our revenues and earnings, despite our hedging of a portion of our international

currency exposures.

Additionally, hedging programs are inherently risky and could expose us to additional costs and risks that could adversely affect our financial condition and results of operations.

3 unchanged sentences

For example, the U.S.

Department of Commerce, Bureau of Industry and Security (“BIS”), has recently amended the U.S.

Department of Commerce, Bureau of Industry and Security (“BIS”), has amended the U.S.

Export Administration Regulations to expand license requirements on exports to entities in China that may support military end uses.

9 unchanged sentences

access to certain minerals and has blocked certain companies that provide products to Taiwan's military from selling products in China.

Also, in China, we are already observing stronger preferences for non-U.S.

Also, in China, we are observing stronger preferences for non-U.S.

suppliers in general, and in favor of new and existing local suppliers in particular.

21 unchanged sentences

License agreements might not be available on terms acceptable to us or at all.

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.

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.

22 unchanged sentences

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.

Additionally, anti-ESG sentiment exists among certain stakeholders.

We have been and may again be subject to negative responses from certain stakeholders regarding our selection of certain goals and our strategic choices regarding related matters due to anti-ESG sentiment, which could negatively impact our reputation, business and financial results.

Risks Relating to Our Acquisitions

We have made acquisitions, and may make additional acquisitions or investments in the future, which could put a strain on our resources, cause ownership dilution to our stockholders, or adversely affect our financial results.

We have made acquisitions and investments, and may make additional acquisitions or investments in the future, which could put a strain on our resources, cause ownership dilution to our stockholders, or adversely affect our financial results.

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 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, particularly when we conduct these activities internationally.

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

3 unchanged sentences

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 the case where we hold a minority equity interest in a company, we may not have the ability to exert control over the entity and therefore may be subject to additional risks that could adversely impact our reputation, business, financial performance and growth.

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.

15 unchanged sentences

The trading prices of the securities of technology companies have been highly volatile.

During fiscal 2023, our stock price (Nasdaq Global Market close price) ranged from $21.92 per share to $42.01 per share.

During fiscal 2024, our stock price (Nasdaq Global Select Market close price) ranged from $37.66 per share to $62.22 per share.

The trading price of our common stock is likely to continue to be subject to wide fluctuations.

14 unchanged sentences

The trading price of our common stock also might decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.

In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action litigation has often been instituted against that company.

Securities litigation, if instituted against us, could result in substantial costs and divert our management’s attention and resources from our business.

This could have an adverse impact on our business, results of operations and financial condition.

Provisions of our certificate of incorporation and bylaws or Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.

1 unchanged sentence

These provisions:

• establish a transition from a classified board of directors to a declassified board of directors, such that, until the annual shareholder meeting in 2024, not all members of our board are elected at one time;

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

• provide that directors may only be removed with the approval of 66.7% of our stockholders;

• require super-majority voting to amend some provisions in our certificate of incorporation and bylaws;

5 unchanged sentences

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

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.

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