What changed in this filing

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Item 1A. Risk Factors

2022-11-17 compared with 2021-11-18 · 114 added, 91 removed, 304 unchanged (40% of the section changed)

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Expenditures by our customers depend on the current and anticipated market demand for semiconductors and products that use semiconductors, LEDs and batteries, including mobile devices, personal computers, consumer electronics, telecommunications equipment, automotive components, electric vehicles and other industrial products.

Reductions or other fluctuations in our customers' spending as a result of uncertain conditions in the macroeconomic environment, including from government, economic or fiscal instability, global health crises and pandemics, restricted global credit conditions, reduced demand, unbalanced inventory levels, fluctuations in interest rates, higher energy prices, or other conditions, could adversely affect our business, financial condition and operating results.

Reductions or other fluctuations in our customers' spending as a result of uncertain conditions and volatility in the macroeconomic environment, including from government, economic or fiscal instability, economic recession, actual or potential inflation, rising interest rates, slower growth in certain geographic regions, global health crises and pandemics, restricted global credit conditions, reduced demand, excess inventory, higher energy prices, or other conditions, could adversely affect our business, financial condition and operating results.

Further, our profitability can be affected by volatility because we incur a certain amount of fixed costs that we cannot modulate up and down to meet increases or decreases in demand.

The impact of general economic slowdowns could also make our customers cautious and delay orders until the economic environment becomes clearer.

The impact of broad-based weakening in the global macroeconomic environment could make our customers cautious and delay orders until the economic outlook becomes clearer.

Significant downturns in the market for semiconductor devices or in general economic conditions reduce demand for our products and can materially and adversely affect our business, financial condition and operating results.

Our visibility into future demand is generally limited and forecasting is difficult.

There can be no assurances regarding levels of demand for our products and we believe historic, industry-wide volatility will persist.

Our visibility into future demand is generally limited and forecasting is difficult, and we believe historic, industry-wide volatility will persist.

The COVID-19 pandemic has adversely affected our business, and may in the future materially and adversely affect our results of operations and financial condition.

The ongoing COVID-19 pandemic has significantly impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets, and initially significantly increased unemployment levels.

As a result of the pandemic, many countries have suspended or restricted travel to and from affected countries and imposed quarantines.

In addition, the pandemic has resulted in temporary closures and failures of many businesses and the institution of social distancing and sheltering-in-place requirements in many jurisdictions.

As these measures begin to be relaxed, in certain jurisdictions there has been a resurgence of illnesses, potentially leading to more severe restrictions in the future.

While we are currently operating at full capacity in all of our manufacturing locations, work-from-home practices have been instituted from time-to-time across every office worldwide, which have impacted our non-manufacturing productivity, including our research & development.

The COVID-19 pandemic has caused disruptions to our supply chain, including materials, equipment, engineering support and services, due to efforts to contain the spread of COVID-19.

It has also caused more difficult and more expensive travel and transportation of our supplies and products, ultimately affecting the sales of our products.

In addition, the costs of logistics have increased, and labor shortages have further contributed to rising costs across the supply chain, further exacerbating the impact the pandemic has had on the supply chain.

The ongoing COVID-19 pandemic and resulting containment measures have significantly impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets, and affected unemployment levels.

The global responses to the COVID-19 pandemic remain dynamic.

Some countries continue to impose quarantines, containment measures or travel restrictions, and certain countries, such as China, continue to impose periodic lockdowns in response to rising case numbers.

In certain jurisdictions, there has been a resurgence of illnesses or threat of emerging new variants of the virus, potentially leading to more severe restrictions in the future.

While we continue our normal operations in all of our manufacturing locations, work-from-home practices have been instituted or permitted from time-to-time across our offices worldwide, which have in some cases impacted our non-manufacturing productivity.

We could experience further productivity disruptions in the event of an outage to systems and technologies critical to effect remote work, or from the increased data security and technology risks arising therefrom.

The COVID-19 pandemic continues to disrupt our supply chain, including materials, equipment, engineering support and services, especially to, from and within China.

In addition, the costs of logistics have increased as a result of general inflationary pressures, and labor shortages have further contributed to rising costs across the supply chain, further exacerbating the impact the pandemic has had on the supply chain.

Other effects of the COVID-19 pandemic on our business will depend on future developments that cannot be accurately predicted at this time, but may include the following:

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• reduced sales volume to or loss of customers, or cancellation, delay or reduction of backlogged customer orders.

The ultimate significance of COVID-19 on our business will depend on, among other things:

the extent and duration of the pandemic, the severity of the disease and the number of people infected with the virus;

the emergence of new variants or strains of the virus;

the distribution and effectiveness of available vaccines and the rates at which they are administered;

the effects on

the economy of the pandemic and of the measures taken by governmental authorities and other third parties restricting day-to-day life, international travel and border crossings, and the length of time that such measures remain in place;

and governmental programs implemented to assist businesses impacted by the COVID-19 pandemic.

At this time, we cannot estimate the short- or long-term impacts of COVID-19 on our business, liquidity, results of operations or financial condition due to the unprecedented and rapidly changing social and economic impacts associated with the COVID-19 pandemic.

We depend on our suppliers, including sole source suppliers, for critical raw materials, components and subassemblies.

The ultimate impact of COVID-19 on our business will depend on, among other things:

• the extent and duration of the pandemic, the severity of the disease;

• the emergence of new variants of the virus;

• the distribution and effectiveness of available vaccines and boosters and the rates at which they are administered;

• the effects on the economy of the pandemic and of the measures taken by governmental authorities and other third parties restricting day-to-day life,

• international travel and border crossings, and the length of time that such measures remain in place;

• governmental programs implemented to assist businesses impacted by the COVID-19 pandemic.

To the extent the COVID-19 pandemic adversely affects our business, results of operations and financial conditions, it may also exacerbate the other risks discussed in this section on “Risk Factors”.

We depend on our suppliers, including sole source suppliers, for raw materials, components and subassemblies.

If our suppliers do not deliver their products to us, or deliver non-compliant or defective products, we would be unable to deliver our products to our customers.

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• reliability or quality issues with certain key subassemblies provided by single source suppliers as to which we may not have any short-term alternative;

• shortages caused by disruptions at our suppliers and subcontractors for a variety of reasons, including health pandemics (such as the current COVID-19 pandemic), regional or localized stay-at-home orders, work stoppage or fire, earthquake, flooding or other natural disasters;

• shortages caused by disruptions at our suppliers and subcontractors for a variety of reasons, including public health emergencies and associated containment measures (such as the COVID-19 pandemic), geopolitical tensions (such as the Ukraine/Russia conflict), significant natural disasters (including as a result of climate change) or significant price changes (including as a result of inflationary pressures);

• delays in the delivery of raw materials or subassemblies, which, in turn, may delay shipments to our customers;

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If any of these risks were to materialize, we might be unable to deliver our products to our customers on time and at expected cost, or at all.

For example, during fiscal year 2021 and in the first quarter of fiscal 2022, as demand for many of our products surged to unprecedented levels, some of our suppliers were not able to timely meet our full demand.

In some cases, the shortfalls were exacerbated by COVID-19 related disruptions.

In particular, at times we were not able to obtain all our chip requirements as the global semiconductor industry suffered broad shortages.

To date, these shortages and our resulting inability to deliver our products to some of our customers have not had a material impact on our results of operations or financial condition.

However, if demand for our products remains high or increases, or if other challenges in the supply chain continue, our suppliers may again be unable to fulfill all our needs.

If we persistently remain unable to deliver our products to our customers for these or any other reasons, or we are unable to meet customer expectations as to cycle time, or we are unable to maintain acceptable product quality or reliability, we may lose customers as a result or otherwise experience a reduction in the demand for our products, as a result of which our business, financial condition and operating results would be materially and adversely affected.

While we observed some easing of the industry-wide supply constraints towards the end of fiscal 2022, we expect constraints to continue and the duration of such constraints or their long-term impact on our business cannot be predicted at this time.

As part of our supply chain management, we have increased our inventory levels in an effort to mitigate component shortages.

These increases in our inventory levels may lead to an excess of materials in the future in the event that the demand for our products is lower than our expectations or if we otherwise fail to anticipate future customer demand properly.

Excess inventory levels could result in inventory write-downs at discounted prices, which could adversely affect our cash flows or gross margins.

As a result, our business, financial condition and operating results would be materially and adversely affected.

The semiconductor industry is volatile with sharp periodic downturns and slowdowns.

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Historically these downturns have severely and negatively affected the industry’s demand for capital equipment, including assembly equipment and, to a lesser extent, tools.

There can be no assurances regarding levels of demand for our products.

In any case, we believe the historical volatility of our business, both upward and downward, will persist.

Consequently, our revenues may decline, and our results of operations and financial condition may be adversely affected.

Difficulties in forecasting demand for our product lines may lead to periodic inventory shortages or excesses.

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This has led to, and may in the future lead to, delays in product shipments or, alternatively, an increased risk of inventory obsolescence.

As part of our supply chain management, we have increased our inventory levels in an effort to mitigate component shortages, which may increase the risk of inventory obsolescence.

If we fail to accurately forecast demand for our products, our business, financial condition and operating results may be materially and adversely affected.

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• the mix of products we sell because, for example:

◦ certain lines of equipment within our business segments are more profitable than others;

◦ certain lines of equipment or certain aftermarket tools within our business segments are more profitable than others;

◦ some sales arrangements have higher gross margins than others;

• canceled or deferred orders;

• variations in sales channel or mix of direct sales and indirect sales;

• seasonality;

• competitive pricing pressures may force us to reduce prices;

• higher than anticipated costs of development or production of new equipment models;

• higher than anticipated costs of development, achieving customer acceptance or production of new products;

• the availability and cost of the components for our products;

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In the semiconductor equipment industry, significant competitive factors include price, speed/throughput, production yield, process control, delivery time, innovation, quality and customer support.

In the semiconductor packaging materials industry, competitive factors include price, delivery and quality.

In the semiconductor packaging materials industry, significant competitive factors include price, delivery and quality.

In each of our markets, we face competition and the threat of competition from established competitors and potential new entrants.

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Some of these competitors are Asian and European companies that have had, and may continue to have, an advantage over us in supplying products to local customers who appear to prefer to purchase from local suppliers.

Some of these competitors compete across many of our product lines, while others are primarily focused in a specific product area, sometimes with government assistance or through the support of strategic alliances, all of which could result in lowering the barriers to entry.

We expect our competitors to improve their current products’ performance, and to introduce new products and materials with improved price and performance characteristics.

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Substantially all of our sales, distribution channels and manufacturing operations are located outside of the U.S., which subjects us to risks, including risks from changes in trade regulations, currency fluctuations, political instability and conflicts.

Over 90% of our net revenue is for shipments to customers located outside of the U.S., primarily in the Asia/Pacific region.

In the Asia/Pacific region, our customer base has and continues to become more geographically concentrated in China as a result of economic and industry conditions.

Approximately 55.6%, 51.6% and 46.7% of our net revenue for fiscal 2021, 2020, and 2019, respectively, was for shipments to customers located in China.

Over 90% of our net revenue is derived from shipments to customers located outside of the U.S., primarily in the Asia/Pacific region.

In the Asia/Pacific region, our customer base remains more geographically concentrated in China as a result of economic and industry conditions.

Approximately 56.9%, 55.6% and 51.6% of our net revenue for fiscal 2022, 2021, and 2020, respectively, was derived from shipments to customers located in China.

We expect our future performance to depend on our ability to continue to compete in foreign markets, particularly in the Asia/Pacific region.

Some of these economies have been highly volatile, resulting in significant fluctuation in local currencies, and political and economic instability.

Some of these economies may also increase trade protectionism, thereby increasing barriers to entry, amplifying supply chain risks and adversely affecting the demand for our products.

These conditions may continue or worsen, which may materially and adversely affect our business, financial condition and operating results.

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• stringent and frequently changing trade compliance regulations;

• less protective foreign intellectual property laws;

• less protective foreign intellectual property laws, and the enforcement of patent and other intellectual property rights;

• longer payment cycles in foreign markets;

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• episodic events outside our control such as, for example, outbreaks of coronaviruses, influenza or other illnesses;

• natural disasters such as earthquakes, fires or floods;

• risks of war and civil disturbances or other events that may limit or disrupt manufacturing and markets;

• natural disasters such as earthquakes, fires or floods, including as a result of climate change;

• risks of war and civil disturbances, including the Ukraine/Russia conflict, or other events that may limit or disrupt manufacturing, markets and international trade;

• act of terrorism that impact our operations, customers or supply chain or that target U.S.

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• seizure of our foreign assets, including cash;

• changing political conditions;

• the imposition of sanctions of countries in which we do business;

• changing political conditions and rising geopolitical tensions;

• legal systems which are less developed and may be less predictable than those in the U.S.

In addition, there is a potential risk of conflict and instability in the relationship between Taiwan and China which could disrupt the operations of our customers and/or suppliers in both Taiwan and China and our manufacturing operations in China.

Our international operations also depend on favorable trade relations between the U.S.

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Catastrophic events, such as pandemics and extreme weather events as a result of climate change, can have a material adverse effect on our operations and financial results.

Our operations and business, and those of our customers and suppliers, can be disrupted by natural disasters, public health issues (including the COVID-19 pandemic), cybersecurity incidents, interruptions of service from utilities, or other catastrophic events.

For example, we have at times experienced temporary disruptions in our manufacturing processes as a result of power outages.

Global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability.

For example, in February 2021, Texas experienced historic cold weather, resulting in prolonged power outages, which impacted our components suppliers who operate there.

The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe.

Catastrophic events could make it difficult or impossible to manufacture or deliver products to our customers, receive materials from our suppliers, or perform critical

functions, whether on a timely basis or at all, which could adversely affect our revenue and operations.

In addition, global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability.

For example, in August 2022, China’s Sichuan province ordered all factories to shut down for an extended period to ease a power shortage in the region resulting from an unprecedented heat wave crossing 104-degree Fahrenheit in dozens of Chinese cities.

As Sichuan is a key manufacturing location for the semiconductor and solar panel industries, such power rationing measures impacted factories and suppliers who operate there.

The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe, and could exacerbate the other risk factors described herein.

Catastrophic events could make it difficult or impossible to manufacture or deliver products to our customers, receive materials from our suppliers, or perform critical functions, whether on a timely basis or at all, which could adversely affect our revenue and operations.

Some of the systems we maintain as part of our business recovery plans cannot guarantee us protection from such disruptions.

Furthermore, even if our operations are unaffected or recover quickly, if our customers or suppliers cannot timely resume their own operations due to a catastrophic event, we may be unable to fulfil our customers' orders, and experience reduced or cancelled orders or other disruptions to our supply chain that may adversely affect our results of operations.

We are subject to export restrictions that may limit our ability to sell to certain customers and the U.S.-China trade war could adversely affect our business.

Furthermore, even if our operations are unaffected or recover quickly, if our customers or suppliers cannot timely resume their own operations due to a catastrophic event, we may be unable to fulfil our customers’ orders, and may experience reduced or cancelled orders or other disruptions to our supply chain that may adversely affect our results of operations.

We are subject to export restrictions that may limit our ability to sell to certain customers, and trade wars, in particular the U.S.-China trade war, could adversely affect our business.

and several other countries levy tariffs on certain goods and impose other trade restrictions that may impact our customers’ investment in manufacturing equipment, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies.

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For products listed on the CCL, a license may be required as a condition to export depending on the end destination, end use or end user and any applicable license exceptions.

In 2020, the BIS amended the EAR to expand controls on certain foreign products based on U.S.

In 2020, the U.S.

Department of Commerce Bureau of Industry and Security (“BIS”) amended the EAR to expand controls on certain foreign products based on U.S.

technology and sold to Huawei and certain other companies.

This amendment impacts some of our advanced packaging products, which are based on U.S.

technology and are within the scope of the expanded EAR controls on Huawei.

Therefore, these products cannot be sold to Huawei, and are subject to certain end-use restrictions.

To date, this amendment to the EAR has not had a material direct impact on our business, financial condition or results of operations and we do not expect that it will, although it could have indirect impacts, including increasing tensions in U.S.

In October 2022, the BIS amended the EAR again to extend those foreign controls to numerous companies on BIS’ so-called Entity List.

The 2020 and 2022 amendments impact some of our advanced packaging products, which are based on U.S.

technology and are within the scope of the expanded EAR controls on Huawei and other Entity List companies.

Therefore, these products cannot be sold to Huawei and other Entity List companies, and are subject to certain end-use restrictions.

To date, these amendments to the EAR have not had a material direct impact on our business, financial condition or results of operations and we do not expect that they will, although they could have indirect impacts, including increasing tensions in U.S.

and Chinese trade relations, potentially leading to negative sentiments towards U.S.-based companies among Chinese consumers.

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Sales to a relatively small number of customers have historically accounted for a significant percentage of our net revenue.

There was one customer with sales representing more than 10% of net revenue in fiscal 2021.

There was no customer with sales representing more than 10% of net revenue in fiscal 2022.

Sales to our ten largest customers comprised 49.1% and 62.0% of our net revenue for fiscal 2022 and fiscal 2021, respectively.

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Even in cases where our standard terms and conditions of sale or other contractual arrangements do not permit a customer to cancel an order without penalty, we may from time to time accept cancellations to maintain customer relationships or because of industry practice, custom or other factors.

Our inability to sell products after we devote significant resources to them could have a material adverse effect on our levels of inventory, revenues and profitability.

While we currently believe our inventory levels are appropriate for the current economic environment, continued global economic uncertainty may result in lower than expected demand.

The broad-based weakening in the global macroeconomic environment may result in lower than expected demand for our products, and our inability to sell products after we devote significant resources to them could have a material adverse effect on our levels of inventory, revenues and profitability.

Human Capital Risks

Increased labor costs and competition for qualified personnel may reduce the efficiency of our flexible manufacturing model and adversely impact our operating results.

There is some uncertainty with respect to the pace of rising labor costs in the various countries in which we operate.

In addition, there is substantial competition in China, Singapore, Israel and the Netherlands for qualified and capable manufacturing personnel, which may make it difficult for us to recruit and retain qualified employees.

For example, the Singapore border restrictions related to COVID-19 have made hiring and retaining qualified direct labor for our Singapore manufacturing operations in particular more difficult.

The labor costs in the various countries in which we operate are rising.

There is substantial competition in China and Singapore for qualified and capable manufacturing personnel, which may make it difficult for us to recruit and retain qualified employees.

In addition, current or future immigration laws, policies or regulations may limit our ability to attract, hire and retain qualified employees in Singapore.

If we are unable to staff sufficient personnel at our China, Singapore, Israel and the Netherlands facilities or if there are increases in labor costs that we are unable to recover in our pricing to our customers, we may experience increased manufacturing costs, which would adversely affect our operating results.

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Failure to ensure effective transfer of knowledge and smooth transitions involving senior management could hinder our strategic planning and execution.

From time to time, senior management or other key employees may leave our company.

While we strive to reduce the negative impact of such changes, the loss of any key employee could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives, the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, and the results of our operations.

From time to time, senior management or other key employees may leave our company, and the loss of any key employee could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of company initiatives, the effectiveness of our disclosure controls and procedures and our internal control over financial reporting, and the results of our operations.

Changes in immigration policies may also impair our ability to recruit and hire technical and professional talent.

In addition, hiring, training, and successfully integrating replacement critical personnel could be time consuming, may cause additional disruptions to our operations, and may be unsuccessful, which could negatively impact future revenues.

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Given that a majority of our revenue comes from wire bonding, a reduced demand for our wire bonding equipment could materially and adversely affect our financial results.

We send products and equipment to customers or potential customers for trial, evaluation or other purposes which may result in retrofit charges, impairments or write-down of inventory value if the products and equipment are not subsequently purchased by the customers.

We may send products and equipment to customers or potential customers for trial, evaluation or other purposes which may result in retrofit charges, impairments or write-down of inventory value if the products and equipment are not subsequently purchased by the customers.

From time to time we send certain products and equipment to customers or potential customers for testing, evaluation or other purposes in advance of receiving any confirmation of purchase or purchase orders.

Such equipment may be at the customer location for an extended period of time per the agreements with these customers and potential customers.

The customer may refuse to buy all or partial quantities of such product or equipment and return this back to us.

The customer or potential customer may refuse to buy all or partial quantities of such product or equipment and return this back to us.

As a result, we may incur charges to retrofit the machines or sell the machines as second hand at a lower price, and accordingly may have to record impairments on the returned inventory, all of which would adversely affect our operating results.

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Continued improvement in manufacturing capabilities, control of material and manufacturing quality and costs and product testing are critical factors in our future growth.

There can be no assurance that our efforts to monitor, develop, modify and implement appropriate tests and manufacturing processes for our products will be sufficient to permit us to avoid a rate of failure in our products that results in substantial delays in shipment, significant repair or replacement costs, potential damage to our reputation or general customer dissatisfaction with our products.

Our efforts to monitor, develop, modify and implement appropriate tests and manufacturing processes for our products may not be sufficient to permit us to avoid a rate of failure in our products that results in substantial delays in shipment, significant repair or replacement costs, potential damage to our reputation or general customer dissatisfaction with our products.

We may also not be able to obtain product liability or other insurance to fully cover such risks.

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Should we consolidate, we may experience unanticipated events, including the actions of governments, suppliers, employees or customers, which may result in unanticipated costs and disruptions to our business.

We may also incur restructuring charges, severance costs, asset impairments and other effects that could negatively impact our financial condition and results of operations.

We may also incur restructuring charges, severance costs, asset impairments, loss of accumulated knowledge, inefficiency during transitional periods, employee attrition and other effects that could negatively impact our financial condition and results of operations.

We may be materially and adversely affected by environmental and safety laws and regulations, including laws and regulations implemented in response to climate change.

We are subject to various federal, state, local and foreign laws and regulations governing, among other things, the generation, storage, use, emission, discharge, transportation and disposal of hazardous material, investigation and remediation of contaminated sites and the health and safety of our employees.

Increasingly, public attention has focused on the environmental impact of manufacturing operations and the risk to neighbors of chemical releases from such operations.

Regulations in response to climate change could result in increased manufacturing costs (for us and for our suppliers) associated with air pollution requirements and increased compliance and energy costs.

Public attention continues to focus on the environmental impact of manufacturing operations and the risk to neighbors of waste and chemical releases from such operations.

Proper waste disposal plays an important role in the operation of our manufacturing plants.

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These facilities operate under permits that must be renewed periodically.

A violation of those permits may lead to revocation of the permits, fines, penalties or the incurrence of capital or other costs to comply with the permits, including potential shutdown of operations.

A violation of those permits may lead to revocation of the permits, fines, penalties or the incurrence of capital or other costs to comply with the permits, including the potential shutdown of operations.

Compliance with existing or future land use, environmental, climate-related and health and safety laws and regulations may:

(1) result in significant costs to us for additional capital equipment or other process requirements, (2) restrict our ability to expand our operations and/or (3) cause us to curtail our operations.

(1) result in significant costs to us for additional capital equipment or other process requirements;

(2) restrict our ability to expand our operations, and/or (3) cause us to curtail our operations.

We also could incur significant costs, including cleanup costs, fines or other sanctions and third-party claims for property damage or personal injury, as a result of violations of or liabilities under such laws and regulations.

Increasingly, various agencies and governmental bodies have expressed interest in promulgating rules relating to climate change.

For example, in March 2022, the SEC published a proposed rule that would require companies to provide significantly expanded climate-related disclosures in their Form 10-K, which may require us to incur significant additional costs to comply and impose increased oversight obligations on our management and Board of Directors.

The cost of complying, or of failing to comply, with these and other regulatory requirements or contractual obligations could adversely affect our operating results, financial condition and ability to conduct our business.

To the extent that higher costs result in higher prices for our products, we may experience a reduction in the demand for those products, which could negatively affect our results of operations.

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We continually evaluate our portfolio of businesses and may decide to buy or sell businesses or enter into joint ventures or other strategic alliances.

We may not find suitable acquisition candidates, we may not be able to close such acquisitions, and the acquisitions we complete may not be successful.

We may be unable to successfully integrate acquired businesses with our existing businesses and successfully implement, improve and expand our systems, procedures and controls to accommodate these acquisitions.

These transactions place additional demands on our management and current labor force.

Additionally, these transactions require significant resources from our legal, finance and business teams.

In addition, we may divest existing businesses, which would cause a decline in revenue or profitability and may make our financial results more volatile.

If we fail to integrate and manage acquired businesses successfully or to mitigate the risks associated with divestitures, joint ventures or other alliances, our business, financial condition and operating results may be materially and adversely affected.

If we are not able to successfully integrate any acquired businesses with ours, the anticipated benefits of the acquisitions may not be realized fully or may take longer than expected to be realized.

We may also incur higher than expected costs as a result of any acquisitions or experience an overall post-completion process that takes longer than originally anticipated.

These transactions place additional demands on our management, our various functional teams and our current labor force.

The combination of businesses may result in the loss of key personnel or an interruption of, or loss of momentum in, our existing businesses and/or the acquired business.

In addition, we may need to divest existing businesses, which would cause a decline in revenue or profitability and may make our financial results more volatile.

If we fail to integrate and manage acquired businesses successfully or to mitigate the risks associated with divestitures, joint ventures or other alliances, or if the time and costs associated with integration exceeds our expectations, or if our acquired business were to perform poorly, our business, financial condition and operating results may be materially and adversely affected.

Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business

Certain investors, shareholder advocacy groups, other market participants, customers and other stakeholder groups have focused increasingly on companies' environmental, social and governance (“ESG”) initiatives, including those concerning climate change, human rights, diversity and inclusion, and shareholder proxy access.

This may result in increased costs, enhanced compliance or disclosure obligations and costs, or other adverse impacts on our business, financial condition or results of operations.

From time to time, we create and publish voluntary disclosures regarding ESG matters.

Our sustainability report, currently in its sixth edition, continues to outline our Company’s strategies, initiatives and performance of ESG topics identified through a materiality assessment to be most relevant to the operations and stakeholders of our Company.

The identification, assessment, and disclosure of such matters is complex.

Many of the statements in such voluntary disclosures are based on our expectations and assumptions, which may require substantial discretion and forecasts about costs and future circumstances.

Additionally, ESG matters continue to evolve rapidly.

Organizations that provide information to investors on ESG matters may develop more discrete rating matrices, benchmarks and processes on evaluating companies on their ESG approach.

This may create opportunities for misalignment or perceived failure resulting in unfavorable ESG ratings.

This could foster negative investor sentiment toward us, our customers, or our industry, which could negatively impact our business and operations.

To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to recruit or retain employees, which may adversely affect our operations.

Intellectual Property Risks

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Our success depends in part on our proprietary technology.

To protect this technology, we rely principally on contractual restrictions (such as nondisclosure and confidentiality provisions) in our agreements with employees, subcontractors, vendors, consultants and customers and on the common law of trade secrets and proprietary “know-how.” We also rely, in some cases, on patent and copyright protection, although this protection may in some cases be insufficient due to the rapid development of technology in our industry.

We also rely, in some cases, on patent and copyright protection, although this protection may in some cases be insufficient due to the rapid development of technology in our industry.

We may not be successful in protecting our technology for a number of reasons, including the following:

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A disruption, infiltration or failure of our information technology systems or any of our data centers as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business.

Our security procedures, such as virus protection software and our business continuity planning, such as our disaster recovery policies and back-up systems, may not be adequate or implemented properly to fully address the adverse effect of such events, which could adversely impact our operations.

Our security procedures, such as virus protection software, data loss protection and our business continuity planning, such as our disaster recovery policies and back-up systems, may not be adequate or implemented properly to fully address the adverse effect of such events, which could adversely impact our operations.

In addition, our business could be adversely affected to the extent we do not make the appropriate level of investment in our technology systems as our technology systems become out-of-date or obsolete and are not able to deliver the type of data integrity and reporting we need to run our business.

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However, depending on the nature and scope, cybersecurity incidents could result in business disruption;

the misappropriation, corruption or loss of confidential information and critical data (of the Company or that of third parties);

the misappropriation, corruption or loss of confidential information and critical data (of the Company or that belonging to third parties);

reputational damage;

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Our failure to implement it successfully, on time and on budget could have a material adverse effect on us.

We are currently implementing a new enterprise resource planning (“ERP”) system and will be implementing the new system over the next two years.

ERP implementations are complex, time-consuming, and involve substantial expenditures on system software and implementation activities.

The ERP system will be critical to our ability to provide important information to our management, obtain and deliver products, provide services and customer support, send invoices and track payments, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, and otherwise operate our business.

In 2020 we began implementing a new enterprise resource planning (“ERP”) system, and will continue to implement the new system in phases across our various entities over the next two years.

ERP implementations are complex, time-consuming, labor intensive, and involve substantial expenditures on system software and implementation activities.

The ERP system is critical to our ability to provide important information to our management, obtain and deliver products, provide services and customer support, send invoices and track payments, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, and otherwise operate our business.

ERP implementations also require transformation of business and financial processes in order to reap the benefits of the ERP system.

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In addition, we may not be able to successfully complete the implementation of the new ERP system without experiencing difficulties.

Any disruptions, delays or deficiencies in the design and implementation or the ongoing maintenance of the new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, including reports required by the SEC, and otherwise operate our business.

Additionally, if we do not effectively implement the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess it adequately could be delayed.

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Because most of our foreign sales are denominated in U.S.

dollar or Euro, an increase in value of the U.S.

dollar or the Euro against foreign currencies will make our products more expensive than those offered by some of our foreign competitors.

dollar, an increase in value of the U.S.

dollar against foreign currencies will make our products more expensive than those offered by some of our foreign competitors.

In addition, a weakening of the U.S.

dollar against other currencies other than the Euro could make our costs in non-U.S.

more expensive to fund.

dollar against other currencies could make our costs in non-U.S.

locations more expensive to fund.

Our ability to compete overseas may therefore be materially and adversely affected by the fluctuations of the U.S.

dollar or the Euro against other currencies.

dollar against other currencies.

Because nearly all of our business is conducted outside the U.S., we face exposure to adverse movements in foreign currency exchange rates which could have a material adverse impact on our financial results and cash flows.

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dollar could increase the cost of local operating expenses and procurement of raw materials, both of which could have an adverse effect on our cash flows.

Our primary exposures include the Singapore Dollar, Chinese Yuan, Japanese Yen, Swiss Franc, Philippine Peso, Thai Baht, Taiwan Dollar, South Korean Won, Israeli Shekel and Euro.

Our primary exposures include the Singapore Dollar, Chinese Yuan, Japanese Yen, Swiss Franc, Philippine Peso, Thai Baht, Taiwan Dollar, South Korean Won, Israeli Shekel, Malaysian Ringgit and Euro.

Although we from time to time have entered into foreign exchange forward contracts to hedge certain foreign currency exposure of our operating expenses, our attempts to hedge against these risks may not be successful and may result in a material adverse impact on our financial results and cash flows.

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If we cannot, or elect not to, comply with these conditions, we could be required to refund material tax benefits previously realized with respect to this tax incentive.

Subsequent renewals are at the discretion of the Singapore government and we may not be able to extend the tax incentive arrangement beyond its expiration date or w e may also elect not to renew this tax incentive arrangement .

Subsequent renewals are at the discretion of the Singapore government and we may not be able to extend the tax incentive arrangement beyond its expiration date or we may also elect not to renew this tax incentive arrangement.

In the absence of the tax incentive, the income tax rate in Singapore that would otherwise apply is 17%, which would result in a significant increase in our provision for (benefit from) income taxes in future periods.

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and many foreign jurisdictions.

Tax laws and regulations are continuously evolving with corporate tax reform, base-erosion efforts, and increased transparency continuing to be high priorities in many tax jurisdictions in which we operate.

Tax laws and regulations are continuously evolving with corporate tax reform, base-erosion efforts, global minimum tax, and increased transparency continuing to be high priorities in many tax jurisdictions in which we operate.

Although the timing and methods of implementation may vary, many countries, including those in the Asia/Pacific region in which we have significant operations, have implemented, or are in the process of implementing, legislation or practices inspired by the base erosion and profit shifting project undertaken by the Organization for Economic Co-operation and Development (“OECD”).

Also, while too early to predict the outcome, if the tax regulation changes contemplated by the Biden administration and the recent OECD agreement on global minimum tax of 15% were to be enacted, they could materially increase future tax expense.

Unless repealed or otherwise modified, beginning in our fiscal 2023, the U.S.

Tax Cuts and Jobs Act of 2017 (“TCJA”) enactment of IRC Section 174 will require the capitalization and amortization of R&D expenditures which will increase our effective tax rate and reduce our operating cash flows.

Further, the increased scrutiny on international tax and continuous changes to countries’ tax legislation may also affect the policies and decisions of tax authorities with respect to certain income tax and transfer pricing positions taken by the Company in prior or future periods.

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We may from time to time issue additional equity securities or securities convertible into equity securities, which would result in dilution of our existing shareholders’ equity interests in us.

Our board of directors has the authority to issue, without vote or

action of shareholders, preferred shares in one or more series, and has the ability to fix the rights, preferences, privileges and restrictions of any such series.

Our board of directors has the authority to issue, without vote or action of shareholders, preferred shares in one or more series, and has the ability to fix the rights, preferences, privileges and restrictions of any such series.

Any such series of preferred shares could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences or other rights superior to the rights of holders of our common shares.

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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