Item 1A. Risk Factors
Item 1A.
RISK FACTORS
In light of external events that have taken place subsequent to the close of the first fiscal quarter, we have decided to modify two
of the risk factors included in our 2021 Form 10-K, under the “General Risk Factors” heading, as follows:
Our business could be adversely impacted by global or regional catastrophic events.
Our business could be materially, adversely affected by terrorist acts, widespread outbreaks of infectious diseases (such as COVID-19), government responses emplaced to limit the impact of infectious diseases (such
as shelter-in-place directives), or the outbreak or escalation of wars including, but not limited to, the invasion of Ukraine by the Russian Federation. Such events in the geographic regions in which we do business, including escalations of
political tensions and military conflicts in the U.S., Europe, the Republic of South Korea, the People’s Republic of China, or the Republic of China (Taiwan), and any governmental sanctions enacted in reaction thereto, could result in a global
energy crisis, economic inflation, supply-chain disruptions, or the confiscation or destruction of our facilities; all and any of these outcomes could have material, adverse impacts on our results of operations, financial condition, and cash
flows.
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Our products and technology could be subject to and negatively impacted by the recent expansion of the foreign-produced direct
product rule, as well as other contemplated regulatory actions.
In May 2019, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) amended export administration regulations by
adding Huawei Technologies Co., Ltd. (“Huawei”) and certain affiliates to the “Entity List” for actions contrary to the national security and foreign policy interests of the United States, imposing significant new restrictions on export,
re-export and transfer of U.S. regulated technologies and products to Huawei. On August 17, 2020, BIS issued a final rule adding additional Huawei non-U.S. affiliates to the Entity List, confirming the expiration of a temporary general
license applicable to Huawei, and amended the foreign-produced direct product rule in a manner that represents a significant expansion of its application to Huawei.
Expansion of the foreign-produced direct product rule and additional companies being added to the entity list may adversely affect
our business in various ways, including by: increasing the cost of regulatory compliance for the export of our products, equipment, services, and technology from the United States and abroad; increasing the time necessary to obtain required
authorizations; increasing the risk of monetary fines and other penalties for non-compliance, and negatively impacting our customers who may no longer be able to supply their customers and thereby reducing demand for their or our products.
Any of these effects could result in lost revenue, additional product costs, increased lead times and deployment delays that could harm our business and customer relationships.
In addition, it has been reported that BIS is considering a ban on American companies selling advanced chipmaking equipment to
Chinese firms. Such a rule would expand on an existing ban on U.S. companies selling equipment to China's leading chipmaker, which remains a customer of PDMCX through an exception to the rule. There can be no assurance that an expanded ban
would not make it difficult for us to continue supplying to this customer, or allow us to pursue new relationships with Chinese companies, which could result in diminished sales for us.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.