What changed in this filing

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Item 1A. Risk Factors

2026-02-20 compared with 2025-02-21 · 74 added, 59 removed, 292 unchanged (31% of the section changed)

41 unchanged sentences

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

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.

One customer represented 22.9% of total revenues in fiscal 2025, two customers represented a combined 33.5% of total revenues in fiscal 2024 and one customer represented 17.1% of total revenues in fiscal 2023.

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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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.

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.

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, 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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Consolidation in the semiconductor industry may reduce our customer base and could adversely affect the market for our products, which could negatively impact our revenues.

With consolidation, the number of actual and potential customers for our products has decreased in recent years.

Consolidation may lead to relatively fewer opportunities to sell our products if we are not chosen as a supplier by any given prospective customer, and may lead to increased pricing pressures from customers that have greater volume purchasing power.

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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 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.

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 U.S.-China trade restrictions) 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 that use semiconductors, such as servers, personal computers, automobiles and cell phones.

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 that use semiconductors, such as servers, artificial intelligence, personal computers, automobiles and cell phones.

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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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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To improve our manufacturing processes, we have incurred, and may incur in the future, substantial costs in an effort to optimize capacity and yields, open new manufacturing facilities, implement new manufacturing technologies, methods and processes, purchase new equipment, upgrade existing equipment, and train technical personnel.

For example, in June 2025, we purchased a manufacturing site in Farmers Branch, Texas, which is being built out for an expected production ramp beginning late in the fourth quarter of fiscal 2026.

The successful ramp of this facility is subject to numerous risks and uncertainties, including delays in construction, equipment delivery or installation, challenges in achieving planned production capacity, yields or cost targets, difficulties recruiting, retaining and training qualified personnel, delays in obtaining customer qualifications or regulatory approvals, supply chain constraints, and integration challenges with our existing operations.

If we are unable to increase capacity at our Farmers Branch site in a timely and cost-effective manner, or if the site does not perform as expected, we may be unable to meet customer demand, which could result in lost sales opportunities, reduced market share, damage to customer relationships and our reputation, and potential contractual penalties.

In addition, if actual costs to build out and operate the facility exceed our estimates, or if production volumes or yields are lower than anticipated, our margins and operating results could be adversely affected.

Further, rapid production ramps or process changes may negatively impact product quality, reliability or consistency, which could result in increased warranty claims, field failures, returns, rework costs or customer dissatisfaction.

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.

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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 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.

The circumstances which give rise to epidemics and pandemics from new or existing pathogens with similar impacts are expected to persist indefinitely.

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

For example, our manufacturing facilities are located in seismically active areas in California and Oregon.

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

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

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.

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

The physical impacts of climate change could adversely impact our costs and operations.

There has been public discussion that climate change may be associated with rising sea levels as well as extreme weather conditions such as more intense hurricanes, thunderstorms, tornadoes, drought, and snow or ice storms.

Extreme weather conditions may increase our costs or cause damage to our facilities, and any damage resulting from extreme weather may not be fully insured, and may also limit our ability to fully insure facilities on a cost-effective basis in the future.

Periods of extended inclement weather may inhibit construction of our capital improvement projects.

Any such events could adversely impact our costs or results of operations.

Concerns relating to climate change have led to a range of local, state, federal, and international regulatory and policy efforts to seek to address greenhouse gas (“GHG”) emissions.

In the U.S., various approaches are being proposed or adopted at the federal, state, and local government levels, such as recent legislation enacted in California.

These efforts could lead to additional costs on the Company now or in the future, including increased energy and other capital or operational costs, or additional legal requirements on the Company.

These efforts could also materially increase our costs of evaluating potential manufacturing sites, or in some cases eliminate some potential locations as feasible sites.

In addition to the potential for additional GHG regulation or incentives, enhanced corporate, public, and stakeholder awareness of climate change could affect the Company's reputation or customer demand.

Climate change concerns and GHG regulatory efforts could also affect the Company's customers themselves.

We could also face pressure from these groups to adapt our physical facilities for alternative sources of energy, which may be less cost-effective than current sources.

Any of these factors, individually or combined with one or more factors, or other unforeseen factors or other impacts of climate change, could affect the Company and adversely impact our business, operations, or financial condition.

We have previously 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.

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.

Adverse global, regional and national economic conditions could have a negative effect on our business, results of operations, financial condition, liquidity, and access to capital markets.

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

Our business is subject to complex and evolving data privacy and security laws, regulations, and industry standards, and our failure to comply could materially and adversely affect our business, financial condition, and results of operations.

We collect, process, store, and transmit large amounts of sensitive and confidential data, including personal data of our customers, employees, and third parties.

This activity subjects us to a complex and continually evolving landscape of U.S.

federal and state laws, foreign laws, and industry standards regarding data privacy and security.

These include, but are not limited to, the General Data Protection Regulation in the European Union, the California Consumer Privacy Act as amended by the California Privacy Rights Act, and other state-specific privacy laws in the United States, as well as contractual obligations and industry-specific requirements.

These laws and standards are subject to varying interpretations and can be inconsistent across jurisdictions, creating compliance challenges and increasing our legal and operational exposure.

Compliance with these laws and regulations requires significant investment in personnel, technology, and process changes, and these costs are likely to increase as new requirements emerge.

Our efforts to comply may not be successful, and any failure or perceived failure to comply, whether intentional or inadvertent, could result in governmental investigations, inquiries, enforcement actions, fines, civil penalties, litigation, private rights of action, or other liabilities.

Such events could lead to significant financial costs, reputational damage, loss of customer trust, and restrictions on our ability to process data, which could materially and adversely affect our business, financial condition, and results of operations.

Failures in our information technology systems, including those incorporating artificial intelligence, or our inability to adapt to technological advancements, could disrupt our operations and harm our business.

Our operations rely significantly on the continuous and secure operation of our information technology systems, networks, and infrastructure, including those of our third-party service providers.

These systems are critical for managing our internal operations, processing transactions, communicating with customers and suppliers, and protecting sensitive data.

Despite our efforts to maintain the security and integrity of our IT environment, our systems are subject to inherent risks, including natural disasters, power outages, telecommunications failures, malicious cyberattacks (such as ransomware, phishing, and denial-of-service attacks), computer viruses, or human error.

Any significant disruption, security breach, or unauthorized access to or disclosure of confidential information could lead to significant financial losses, reputational damage, regulatory penalties, legal liabilities, and operational disruptions, which could materially and adversely affect our business.

Furthermore, we utilize artificial intelligence (“AI”) technologies in various aspects of our operations, which introduces novel and evolving risks.

AI models can produce inaccurate, biased, or unpredictable outputs, potentially leading to flawed decision-making, operational inefficiencies, or customer dissatisfaction.

The use of AI also raises complex legal and ethical questions, including those related to intellectual property ownership of AI-generated content, the privacy and security of data used to train AI models, and accountability for AI system failures.

The regulatory landscape governing AI is rapidly developing, and new laws or interpretations could impose significant compliance costs, restrict our use of AI, or expose us to unforeseen liabilities.

These risks, individually or in the aggregate, could materially and adversely affect our business, financial condition, and results of operations.

Our reliance on third-party data and open-source software components could expose us to intellectual property, security, and accuracy risks.

We incorporate research, published data, and open-source software components into our products, services, and internal operations.

While these resources can enhance our capabilities and efficiency, they also introduce significant risks.

The use of third-party data may expose us to risks of data inaccuracy, incompleteness, or misinterpretation, which could lead to flawed analyses, erroneous business decisions, and reputational harm.

We may also inadvertently infringe upon the intellectual property rights of others if the data we use is not properly licensed or if its use violates existing copyrights, patents, or trade secrets.

Moreover, the use of open-source software components carries inherent risks.

Open-source licenses may contain terms that require us to disclose our proprietary source code, grant licenses to our intellectual property, or incur significant costs to re-engineer our solutions if we are unable to comply with such terms.

Additionally, open-source software is often maintained by a community of developers and may not be subject to the same rigorous security and quality assurance processes as commercial software.

This can result in undiscovered vulnerabilities, security flaws, or bugs that could be exploited by malicious actors, leading to data breaches, system outages, or other security incidents.

Any of these risks could result in significant legal liabilities, enforcement actions, operational disruptions, and reputational damage, which could materially and adversely affect our business, financial condition, and results of operations.

Geopolitical tensions, particularly between the U.S.

and China, and the Chinese data regulatory regime, could materially and adversely affect our operations in China and globally.

Our operations, including data processing and transfer activities, are subject to the evolving geopolitical landscape and the increasingly stringent regulatory environment in jurisdictions where we operate or from which we process data.

Specifically, escalating trade tensions and policy divergence between the U.S.

and China, including restrictions on technology transfers, cross-border data transfers, export controls, and investment limitations, could impact our ability to conduct business, access critical technologies, or operate effectively in the Chinese market.

The sale of our products as a percentage of our revenues to customers inside of China represented 7%, 14%, and 14% of total revenue for fiscal 2025, 2024 and 2023, respectively.

Furthermore, China's comprehensive data regulatory framework, including the recently amended Cybersecurity Law, the Data Security Law, and the Personal Information Protection Law, imposes strict requirements on data localization, cross-border data transfers, and data security assessments.

These laws contain broad extraterritorial reach and often conflict with privacy and data transfer norms in other jurisdictions.

Our compliance with these complex and sometimes ambiguous regulations may require significant operational adjustments, increase our compliance costs, and restrict our ability to transfer data necessary for our global operations.

Any failure or perceived failure to comply with these laws could result in severe penalties, including substantial fines, suspension of business operations, blacklisting, damage to our reputation, and restrictions on our ability to collect, process, or transfer data, which could materially and adversely affect our business, financial condition, and results of operations.

Because we conduct most of our business internationally, we are subject to operational, economic, financial and political risks abroad.

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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 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.

In fiscal years 2025, 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 trade tensions and conflicts (including proposed tariffs) between the United States and other countries.

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

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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.

Increasingly restrictive export regulations and other trade barriers may materially harm our business.

Sales of our products to customers outside of the United States represent a significant part of our past and anticipated revenues, including sales involving exports from the United States to China.

Geopolitical and trade tensions between the United States and China, one of our largest markets, have led to increased tariffs and trade restrictions and have affected customer ordering patterns, and this dynamic between the countries may persist or increase for the foreseeable future.

For example, 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.

These rules expand export license requirements on a broader set of items from the U.S., including many of our products, and for a broader set of customers in China and elsewhere.

The BIS has also broadened the application of U.S.

export controls to certain items which may be subject to Foreign Direct Product Rules (“FDPR”).

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

There also remains considerable uncertainty regarding the interpretation and implementation of new regulations.

Sales of our products to customers outside of the United States represent a significant part of our past and anticipated revenues.

In recent months, markets have reacted adversely to geopolitical tensions, volatility and uncertainty in international trade policies, substantially stemming from the U.S.

government’s implementation of rapidly evolving changes to trade policies, including new and expanded tariffs and changes in U.S.

participation in multilateral trade agreements resulting in reciprocal tariffs and other trade restrictions imposed and modified, and selective tariff exemptions being granted, often suddenly and with little notice, impacting a broad range of raw materials and trade globally.

In reaction to U.S.

trade regulations, governments and private businesses outside the United States, particularly in China, may implement retaliatory controls and preferences for non-U.S.

or local suppliers, which can increase our manufacturing costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers, limit our ability to procure components or raw materials, or impede or slow the movement of our goods across borders.

For example, China has restricted U.S.

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 observing stronger preferences for non-U.S.

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

These and other regulatory and policy changes, and the reactions of customers to such changes, in the U.S.

and elsewhere, could materially and negatively affect our future sales and operating results.

trade regulations, governments and private businesses outside the United States may implement retaliatory controls and preferences for non-U.S.

or local suppliers, which can increase our manufacturing and transaction costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers, limit our ability to procure components or raw materials, or impede or slow the movement of our goods across borders.

These and other regulatory and policy changes, and the reactions of customers to such changes, in the United States and elsewhere, could materially and negatively affect our future sales and operating results.

If we fail to protect our proprietary rights, our competitors might gain access to our technology, which could adversely affect our ability to compete successfully in our markets.

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Any such additional charges, whether related to restructuring, asset impairment or factory underutilization, may have a material negative impact on our operating results and related financial statements.

For example, in the first quarter of 2026 we announced restructuring plans, which include the consolidation of the manufacturing facilities located in Carlsbad and Baldwin Park, California to other manufacturing facilities, that are expected to result in the Company recording restructuring charges in the aggregate amount of approximately $30 million to $40 million.

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

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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 energy usage, greenhouse gas emissions, health and safety, diversity and inclusion, and labor and human rights.

In addition, we have provided voluntary disclosures on ESG matters, including 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.

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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 our resources in ways that can be expensive and time consuming, particularly when we conduct these activities internationally.

Integrating any newly acquired businesses, property, manufacturing facilities, 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.

Acquisitions and investments can divert management’s attention and expose our business to new liabilities or risks associated with entering into new business activities.

In addition, we might lose key employees while integrating new organizations.

We might not be successful in integrating any acquired businesses, products or technologies, and might not achieve anticipated revenues and cost benefits.

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.

Acquisitions and investments can divert management’s attention and expose our business to new liabilities or risks associated with entering into new or expanded business activities.

In addition, we might lose key employees or have difficulty finding adequate talent while integrating new organizations or expanding our business activities.

We might not be successful in integrating any acquired businesses, property, manufacturing facilities, products or technologies, and might not achieve anticipated revenues and cost benefits.

Investments, including investments in capital projects, 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.

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During fiscal 2025, our stock price (Nasdaq Global Select Market close price) ranged from $23.18 per share to $59.25 per share.

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

The trading price of our common

stock is likely to continue to be subject to wide fluctuations.

Factors affecting the trading price of our common stock could include:

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• announcements of technological innovations, new products or product enhancements, new product adoptions at semiconductor customers or significant agreements by us or by our competitors;

• changes, including delays or declines, in investment in artificial intelligence infrastructure;

• reports regarding our ability to bring new products into volume production efficiently;

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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