What changed in this filing

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Item 1A. Risk Factors

2023-10-06 compared with 2022-10-07 · 204 added, 188 removed, 328 unchanged (54% of the section changed)

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• volatility in average selling prices of our products;

• our ability to maintain or improve gross margins;

• a range of factors that may adversely affect our gross margins;

• our international operations, including geopolitical risks;

• the highly competitive nature of our industry;

• a downturn in the worldwide economy;

• our ability to develop and produce new and competitive memory and storage technologies and products;

• dependency on specific customers, concentration of revenue with a select number of customers, and customers who are located internationally;

• our international operations, including geopolitical risks;

• limited availability and quality of materials, supplies, and capital equipment and dependency on third-party service providers for ourselves and our customers;

• products that fail to meet specifications, are defective, or are incompatible with end uses;

• the effects of the COVID-19 pandemic;

• realizing expected returns from capacity expansions;

• achieving or maintaining certain performance or other obligations associated with incentives from various governments;

• availability and quality of materials, supplies, and capital equipment and dependency on third-party service providers;

• a downturn in regional or worldwide economies;

• disruptions to our manufacturing process from operational issues, natural disasters, or other events;

• dependency on a select number of key customers, including international customers;

• products that fail to meet specifications, are defective, or are incompatible with end uses;

• breaches of our security systems or products, or those of our customers, suppliers, or business partners;

• attracting, retaining, and motivating highly skilled employees;

• realizing expected returns from capacity expansions;

• achieving or maintaining certain performance obligations associated with incentives from various governments;

• acquisitions and/or alliances;

• restructure charges;

• responsible sourcing requirements and related regulations;

• environmental, social, and governance considerations;

• acquisitions and/or alliances;

• restructure plans may not realize expected savings or other benefits.

Risks Related to Intellectual Property and Litigation

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Risks Related to Laws and Regulations

• compliance with tariffs, trade restrictions, and/or trade regulations;

• impacts of government actions and compliance with tariffs, trade restrictions, and/or trade regulations;

• tax expense and tax laws in key jurisdictions;

• compliance with laws, regulations, or industry standards, including ESG considerations.

• compliance with laws, regulations, or industry standards, including environmental considerations.

Risks Related to Capitalization and Financial Markets

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• volatility in the trading price of our common stock;

• fluctuations in the amount and timing of our common stock repurchases and payment of cash dividends and resulting impacts.

• fluctuations in the amount and frequency of our common stock repurchases and payment of cash dividends and resulting impacts.

21 | 2023 10-K

Risks Related to Our Business, Operations, and Industry

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We have experienced significant volatility in our average selling prices and may continue to experience such volatility in the future.

For DRAM, annual percentage changes in average selling prices have ranged from plus or minus approximately 35% since 2017.

For NAND, average selling prices have generally declined since 2017, with annual price declines ranging from approximately 10% to nearly 50%.

In some prior periods, average selling prices for our products have been below our manufacturing costs and we may experience such circumstances in the future.

Average selling prices for our products that decline faster than our costs could have a material adverse effect on our business, results of operations, or financial condition.

We may be unable to maintain or improve gross margins.

For example, average selling prices for DRAM declined in the high-40s percent range and NAND declined in the low-50s percent range for 2023 as compared to 2022.

Since 2017, annual percentage changes in DRAM average selling prices have ranged from approximately plus 35% to a minus high-40s percent range.

Since 2017, annual percentage changes in NAND average selling prices have ranged from nearly flat to a minus low-50s percent range.

In current and recent periods, average selling prices for our products have been below our manufacturing costs and we may experience such circumstances in the future.

Average selling prices for our products that decline faster than our costs have recently had an adverse effect on our business and results of operations, and in future periods could have a material adverse effect on our business, results of operations, or financial condition.

Our gross margins may be adversely affected by a range of factors.

Our gross margins are dependent, in part, upon continuing decreases in per gigabit manufacturing costs achieved through improvements in our manufacturing processes and product designs.

Factors that may limit our ability to reduce our per gigabit manufacturing costs at sufficient levels to maintain or improve gross margins include, but are not limited to:

Factors that may limit our ability to reduce our per gigabit manufacturing costs at sufficient levels to prevent deterioration of or improve gross margins include, but are not limited to:

• strategic product diversification decisions affecting product mix;

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• higher costs of goods and services due to inflationary pressures or market conditions;

• higher manufacturing costs per gigabit due to fabrication facility underutilization, lower wafer output, and insufficient volume to run new technology nodes to achieve cost optimization.

Many factors may result in a reduction of our output or a delay in ramping production, which could lead to underutilization of our production assets.

These factors may include, among others, a weak demand environment, industry oversupply, inventory surpluses, difficulties in ramping emerging technologies, supply chain disruptions, and delays from equipment suppliers.

See “Part II – Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Industry Conditions” for information regarding our current underutilization.

A significant portion of our manufacturing costs are fixed and do not vary proportionally with changes in production output.

As a result, lower utilization and corresponding increases in our per gigabit manufacturing costs may adversely affect our gross margins, business, results of operations, or financial condition.

As a result, lower utilization, lower wafer output, and corresponding increases in our per gigabit manufacturing costs have resulted in higher inventory carrying costs, and have had, and may continue to have, an adverse effect on our gross margins, business, results of operations, or financial condition.

We have a broad portfolio of products to address our customers’ needs, which span multiple market segments and are subject to rapid technological changes.

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Consequently, we may incur charges in connection with obsolete or excess inventories, or we may not fully recover our costs, which would reduce our gross margins.

In addition, due to the customized nature of certain of the products we manufacture, we may be unable to sell certain finished goods inventories to alternative customers or manufacture in-process inventory to different specifications, which may result in excess and obsolescence charges in future periods.

For example, in 2023, we recorded aggregate charges of $1.83 billion to write down the carrying value of our inventories to their estimated net realizable value.

In addition, due to the customized nature of certain products we manufacture, we may be unable to sell certain finished goods inventories to alternative customers or manufacture in-process inventory to different specifications, which may result in excess and obsolescence charges in future periods.

In addition, if we are unable to supply products that meet customer design and performance specifications, we may be required to sell such products at lower average selling prices, which may reduce our gross margins.

Our gross margins may also be impacted by shifts in product mix, driven by our strategy to optimize our portfolio to best respond to changing market dynamics.

Our inability to maintain or improve gross margins could have a material adverse effect on our business, results of operations, or financial condition.

Our inability to prevent deterioration of or improve gross margins could have a material adverse effect on our business, results of operations, or financial condition.

We face geopolitical and other risks associated with our international operations that could materially adversely affect our business, results of operations, or financial condition.

In addition to our U.S.

operations, a substantial portion of our operations are conducted in Taiwan, Singapore, Japan, Malaysia, China, and India, and many of our customers, suppliers, and vendors also operate internationally.

In 2023, nearly half of our revenue was from sales to customers who have headquarters located outside the United States, while over 80% of our revenue in 2023 was from products shipped to customer locations outside the United States.

Our international operations are subject to a number of risks, including:

• restrictions on sales of goods or services to one or more of our significant foreign customers;

• export and import duties, changes to import and export regulations, customs regulations and processes, and restrictions on the transfer of funds, including currency controls in China, which could negatively affect the amount and timing of payments from certain of our customers and, as a result, our cash flows;

• compliance with U.S.

and international laws involving international operations, including the Foreign Corrupt Practices Act of 1977, as amended, sanctions and anti-corruption laws, export and import laws, and similar rules and regulations;

• theft of intellectual property;

• political and economic instability, including instability resulting from domestic and international conflicts;

• government actions or civil unrest preventing the flow of products and materials, including delays in shipping and obtaining products and materials, cancellation of orders, or loss or damage of products;

• problems with the transportation or delivery of products and materials;

• issues arising from cultural or language differences and labor unrest;

• longer payment cycles and greater difficulty in collecting accounts receivable;

• compliance with trade, technical standards, and other laws in a variety of jurisdictions;

• contractual and regulatory limitations on the ability to maintain flexibility with staffing levels;

• disruptions to manufacturing or R&D activities as a result of actions imposed by foreign governments;

• changes in economic policies of foreign governments;

• difficulties in staffing and managing international operations;

• public health issues.

If we or our customers, suppliers, or vendors are impacted by any of these risks, it could have a material adverse effect on our business, results of operations, or financial condition.

23 | 2023 10-K

Following the May 21, 2023 decision of its cybersecurity review of our products sold in China, the CAC determined that critical information infrastructure operators in China may not purchase Micron products, impacting our revenue with companies headquartered in mainland China and Hong Kong, including direct sales as well as indirect sales through distributors.

Some revenue with customers headquartered outside of China has also been impacted.

As we try to mitigate possible impacts due to the CAC decision, revenue may come at lower prices or gross margins due to product or customer mix changes, which may impact our business results.

Further actions by the Chinese government could impact additional revenue inside or outside China, or our operations in China, or our ability to ship products to our customers, any of which could have a material adverse effect on our business, results of operations, or financial condition.

Political, economic, or other actions may adversely affect our operations in Taiwan.

A majority of our DRAM production output in 2023 was from our fabrication facilities in Taiwan and any loss of output could have a material adverse effect on us.

Any political, economic, or other actions may also adversely affect our customers and the technology industry supply chain, for which Taiwan is a central hub, and as a result, could have a material adverse impact on us.

In addition, the U.S.

government has in the past restricted American firms from selling products and software to certain of our customers and may in the future impose similar restrictions on one or more of our significant customers.

These restrictions may not prohibit our competitors from selling similar products to our customers, which may result in our loss of sales and market share.

Even as such restrictions are lifted, financial or other penalties or continuing export restrictions imposed with respect to our customers could have a continuing negative impact on our future revenue and results of operations, and we may not be able to recover any customers or market share we lose, or make such recoveries at acceptable average selling prices, while complying with such restrictions.

The semiconductor memory and storage markets are highly competitive.

We face intense competition in the semiconductor memory and storage markets from a number of companies, including Intel;

Kioxia Holdings Corporation;

We face intense competition in the semiconductor memory and storage markets from a number of companies, including Kioxia Holdings Corporation;

Samsung Electronics Co., Ltd.;

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Our competitors may use aggressive pricing to obtain market share.

Some of our competitors are large corporations or conglomerates that may have greater resources to invest in technology, capitalize on growth opportunities, and withstand downturns in the semiconductor markets in which we compete.

Some of our competitors are large corporations or conglomerates that may have a larger market share and greater resources to invest in technology, capitalize on growth opportunities, and withstand downturns in the semiconductor markets in which we compete.

Consolidation of industry competitors could put us at a competitive disadvantage as our competitors may benefit from increased manufacturing scale and a stronger product portfolio.

We operate in different jurisdictions than our competitors and may be impacted by unfavorable changes in currency exchange rates.

In addition, some governments may provide, or have provided and may continue to provide, significant assistance, financial or otherwise, to some of our competitors or to new entrants and may intervene in support of national industries and/or competitors.

In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, such as YMTC and CXMT, that is intended to advance China’s stated national policy objectives.

In addition, the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.

In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, in companies such as Yangtze Memory Technologies Co., Ltd.

(“YMTC”) and ChangXin Memory Technologies, Inc.

In addition, the CAC’s decision that critical information infrastructure operators in China may not purchase Micron products had an impact on our ability to compete effectively in China and elsewhere.

We and our competitors generally seek to increase wafer output, improve yields, and reduce die size, which could result in significant increases in worldwide supply and downward pressure on prices.

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The competitive nature of our industry could have a material adverse effect on our business, results of operations, or financial condition.

A downturn in the worldwide economy may harm our business.

Downturns in the worldwide economy, due to inflation, geopolitics, major central bank policy actions including interest rate increases, public health crises, or other factors, have harmed our business in the past and future downturns could also adversely affect our business.

Adverse economic conditions affect demand for devices that incorporate our products, such as personal computers, smartphones, automobiles, and servers.

Reduced demand for these or other products could result in significant decreases in our average selling prices and product sales.

In addition, to the extent our customers or distributors have elevated inventory levels, we may experience a decrease in short-term and/or long-term demand resulting in industry oversupply and declines in pricing for our products.

A deterioration of conditions in worldwide credit markets could limit our ability to obtain external financing to fund our operations and capital expenditures.

In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties.

Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults.

As a result, downturns in the worldwide economy could have a material adverse effect on our business, results of operations, or financial condition.

Our future success depends on our ability to develop and produce new and competitive memory and storage technologies and products.

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25 | 2023 10-K

A significant portion of our revenue is concentrated with a select number of customers.

In each of the last three years, approximately one-half of our total revenue was from our top ten customers.

A disruption in our relationship with any of these customers could adversely affect our business.

We could experience fluctuations in our customer base or the mix of revenue by customer as markets and strategies evolve.

Our customers’ demand for our products may fluctuate due to factors beyond our control.

In addition, any consolidation of our customers could reduce the number of customers to whom our products may be sold.

Our inability to meet our customers’ requirements or to qualify our products with them could adversely impact our revenue.

A meaningful change in the inventory strategy of our customers could impact our industry bit demand growth outlook.

The loss of, or restrictions on our ability to sell to, one or more of our major customers, or any significant reduction in orders from, or a shift in product mix by, customers could have a material adverse effect on our business, results of operations, or financial condition.

We face geopolitical and other risks associated with our international operations that could materially adversely affect our business, results of operations, or financial condition.

In addition to our U.S.

In 2022, nearly half of our revenue was from sales to customers who have headquarters located outside the United States, while over 80% of our revenue in 2022 was from products shipped to customer locations outside the United States.

Our international operations are subject to a number of risks, including:

• imposition of bans on sales of goods or services to one or more of our significant foreign customers;

• public health issues;

• compliance with U.S.

• theft of intellectual property;

• political and economic instability, including the effects of disputes between China and Taiwan and Russia’s invasion of Ukraine;

• problems with the transportation or delivery of products and materials;

• issues arising from cultural or language differences and labor unrest;

• longer payment cycles and greater difficulty in collecting accounts receivable;

• compliance with trade, technical standards, and other laws in a variety of jurisdictions;

• contractual and regulatory limitations on the ability to maintain flexibility with staffing levels;

• disruptions to manufacturing or R&D activities as a result of actions imposed by foreign governments;

• changes in economic policies of foreign governments;

• difficulties in staffing and managing international operations.

If we or our customers, suppliers, or vendors are impacted by any of these risks, it could have a material adverse effect on our business, results of operations, or financial condition.

For example, political, economic, or other actions may adversely affect our operations in Taiwan.

A majority of our DRAM production output in 2022 was from our fabrication facilities in Taiwan and any loss of output could have a material adverse effect on us.

In addition, the U.S.

These restrictions may not prohibit our competitors from selling similar products to our customers, which may result in our loss of sales and market share.

Even when such restrictions are lifted, financial or other penalties or continuing export restrictions imposed with respect to our customers could have a continuing negative impact on our future revenue and results of operations, and we may not be able to recover any customers or market share we lose, or make such recoveries at acceptable average selling prices, while complying with such restrictions.

Our business, results of operations, or financial condition could be adversely affected by the limited availability and quality of materials, supplies, and capital equipment, or dependency on third-party service providers.

We may not be able to achieve expected returns from capacity expansions.

We have announced our intent to expand our production capacity and/or make capital investments in the United States and in other regions where we operate.

These expansions involve several risks including the following:

• capital expenditure requirements for capacity expansions during periods of relatively low free cash flow generation, resulting from challenging memory and storage industry conditions;

• availability of necessary funding, which may include external sources;

• ability to realize expected grants, investment tax credits, and other government incentives, including through the U.S.

CHIPS and Science Act of 2022 (“CHIPS Act”) and other national, international, state, and local grants;

• potential changes in laws or provisions of grants, investment tax credits, and other government incentives;

• potential restrictions on expanding in certain geographies;

• availability of equipment and construction materials;

• ability to complete construction as scheduled and within budget;

• availability of the necessary workforce;

• ability to timely ramp production in a cost-effective manner;

• increases to our cost structure until new production is ramped to adequate scale;

• sufficient customer demand to utilize our increased capacity.

We invest our capital in areas that we believe best align with our business strategy and optimize future returns.

Investments in capital expenditures may not generate expected returns or cash flows.

Significant judgment is required to determine which capital investments will result in optimal returns, and we could invest in projects that are ultimately less profitable than those projects we do not select.

Delays in completion and ramping of new production facilities, or failure to optimize our investment choices, could significantly impact our ability to realize expected returns on our capital expenditures.

Any of the above factors could have a material adverse effect on our business, results of operations, or financial condition.

Our incentives from various governments are conditional upon achieving or maintaining certain performance or other obligations and are subject to reduction, termination, clawback, or could impose certain limitations on our business.

We have received, and may in the future continue to receive, benefits and incentives from national, state, and local governments in various regions of the world designed to encourage us to establish, maintain, or increase investment, workforce, or production in those regions.

These incentives may take various forms, including grants, loan subsidies, and tax arrangements, and typically require us to achieve or maintain certain levels of investment, capital spending, employment, technology deployment, or research and development activities to qualify for such incentives or could restrict us from undertaking certain activities.

We may be unable to obtain significant future incentives to continue to fund a portion of our capital expenditures and operating costs, without which our cost structure would be adversely impacted.

We also cannot guarantee that we will successfully achieve performance or other obligations required to qualify for these incentives or that the granting agencies will provide such funding.

These incentive arrangements typically provide the granting agencies with rights to audit our compliance with their terms and obligations.

Such audits could result in modifications to, or termination of, the applicable incentive program.

The incentives we receive could be subject to reduction, termination, or clawback, and any decrease or clawback of government incentives could have a material adverse effect on our business, results of operations, or financial condition.

Our business, results of operations, or financial condition could be adversely affected by the availability and quality of materials, supplies, and capital equipment, or dependency on third-party service providers.

Our supply chain and operations are dependent on the availability of materials that meet exacting standards and the use of third parties to provide us with components and services.

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To the extent we do not have firm commitments from our third-party suppliers over a specific time period or for any specific capacity, quantity, and/or pricing, our suppliers may allocate capacity to their other customers and capacity and/or materials may not be available when needed or at reasonable prices.

Inflationary pressures and shortages have increased, and may continue to increase, costs for materials, supplies, and services.

Inflationary pressures have increased, and may continue to increase costs for materials, supplies, and services.

Regardless of contract structure, large swings in demand may exceed our contracted supply and/or our suppliers’ capacity to meet those demand changes resulting in a shortage of parts, materials, or capacity needed to manufacture our products.

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Certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals.

Trade disputes, geopolitical tensions, economic circumstances, political conditions, or public health issues, such as COVID-19, may limit our ability to obtain such materials.

Trade disputes, geopolitical tensions, economic circumstances, political conditions, or public health issues may limit our ability to obtain such materials.

Although these rare earth and other materials are generally available from multiple suppliers, China is the predominant producer of certain of these materials.

If China were to restrict or stop exporting these materials, our suppliers’ ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost.

Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China.

We and/or our suppliers and service providers could be affected by regional conflicts, sanctions, tariffs, embargoes, or other trade restrictions, as well as laws and regulations enacted in response to concerns regarding climate change, conflict minerals, responsible sourcing practices, public health crises, contagious disease outbreaks, or other matters, which could limit the supply of our materials and/or increase the cost.

Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory and storage manufacturers who are able to obtain sufficient quantities of these materials from China.

We and/or our suppliers and service providers could be affected by regional conflicts, civil unrest, labor disruptions, sanctions, tariffs, embargoes, or other trade restrictions, as well as laws and regulations enacted in response to concerns regarding climate change, conflict minerals, responsible sourcing practices, public health crises, or other matters, which could limit the supply of our materials and/or increase the cost.

Environmental regulations could limit our ability to procure or use certain chemicals or materials in our operations or products.

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Similarly, if our customers experience disruptions to their supplies, materials, components, or services, or the extension of their lead times, they may reduce, cancel, or alter the timing of their purchases with us, which could have a material adverse effect on our business, results of operations, or financial condition.

The continued effects of the COVID-19 pandemic could adversely affect our business, results of operations, and financial condition.

The ongoing effects of the public health crisis caused by the COVID-19 pandemic and the measures being taken to limit COVID-19’s impact on our business, results of operations, and financial condition are uncertain and difficult to predict, but may include, and in some cases, have included and may continue to include:

• Disruptions to our supply chain and our operations, or those of our suppliers, especially as a result of public health measures, including zero-COVID policies in China or elsewhere;

• Impacts to customer demand, resulting in industry oversupply and declines in pricing for our products;

• Adverse impacts to our business activities and increased costs from our efforts to mitigate the impact of COVID-19;

• Increased costs for, or unavailability of, transportation, raw materials, components, electricity and/or other energy sources, or other inputs necessary for the operation of our business;

• Reductions in, or cessation of operations at one or more of our sites or those of our subcontractors or suppliers, resulting from government restrictions and/or our own measures to prevent and/or mitigate the spread of COVID-19;

• Adverse impacts to our construction projects, which could hamper our ability to introduce new technologies, reduce costs, or meet customer demand.

These effects and other impacts of the pandemic, alone or taken together, could have a material adverse effect on our business, results of operations, or financial condition.

Downturns in regional or worldwide economies may harm our business.

Downturns in regional or worldwide economies, due to inflation, geopolitics, major central bank policy actions including interest rate increases, public health crises, or other factors, have harmed our business in the past and current and future downturns could also adversely affect our business.

Adverse economic conditions affect demand for devices that incorporate our products, such as personal computers, smartphones, automobiles, and servers.

Reduced demand for these or other products could result in significant decreases in our average selling prices and product sales.

In addition, to the extent our customers or distributors have elevated inventory levels or are impacted by a deterioration in credit markets, we may experience a decrease in short-term and/or long-term demand resulting in industry oversupply and declines in pricing for our products.

A deterioration of conditions in regional or worldwide credit markets could limit our ability to obtain external financing to fund our operations and capital expenditures.

In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions and other parties.

Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults.

As a result, downturns in regional or worldwide economies could have a material adverse effect on our business, results of operations, or financial condition.

If our manufacturing process is disrupted by operational issues, natural disasters, or other events, our business, results of operations, or financial condition could be materially adversely affected.

We and our subcontractors manufacture products using highly complex processes that require technologically advanced equipment and continuous modification to improve yields and performance.

Difficulties in the manufacturing process or the effects from a shift in product mix can reduce yields or disrupt production and may increase our per gigabit manufacturing costs.

We and our subcontractors maintain operations and continuously implement new product and process technology at manufacturing facilities, which are widely dispersed in multiple locations in several countries including the United States, Singapore, Taiwan, Japan, Malaysia, and China.

As a result of the necessary interdependence within our network of manufacturing facilities, an operational disruption at one of our or a subcontractor’s facilities may have a disproportionate impact on our ability to produce many of our products.

From time to time, there have been disruptions in our manufacturing operations as a result of power outages, improperly functioning equipment, disruptions in supply of raw materials or components, or equipment failures.

We have manufacturing and other operations in locations subject to natural occurrences and possible climate changes, such as severe and variable weather and geological events resulting in increased costs, or disruptions to our manufacturing operations or those of our suppliers or customers.

In addition, climate change may pose physical risks to our manufacturing facilities or our suppliers’ facilities, including increased extreme weather events that could result in supply delays or disruptions.

Other events, including political or public health crises, such as an outbreak of contagious diseases, may also affect our production capabilities or that of our suppliers, including as a result of quarantines, closures of production facilities, lack of supplies, or delays caused by restrictions on travel or shipping.

Events of the types noted above have occurred from time to time and may occur in the future.

As a result, in addition to disruptions to operations, our insurance premiums may increase or we may not be able to fully recover any sustained losses through insurance.

If production is disrupted for any reason, manufacturing yields may be adversely affected, or we may be unable to meet our customers’ requirements and they may purchase products from other suppliers.

This could result in a significant increase in manufacturing costs, loss of revenue, or damage to customer relationships, any of which could have a material adverse effect on our business, results of operations, or financial condition.