What changed in this filing

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Item 1A. Risk Factors

2024-12-19 compared with 2023-12-26 · 152 added, 154 removed, 253 unchanged (55% of the section changed)

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Our dependency on the microelectronics industry, which as a whole is volatile, could create volatility in our demand and have a negative material impact on our business.

We sell substantially all of our photomasks to semiconductor or FPD designers, manufacturers and foundries, as well as to other high-performance electronics manufacturers.

We believe that the demand for photomasks

depends primarily on design activity rather than sales volume from products using photomask technologies.

We sell substantially all of our photomasks to semiconductor or FPD designers, manufacturers and foundries, or to other high-performance electronics manufacturers.

We believe that the demand for photomasks depends

primarily on design activity rather than sales volume from products using photomask technologies.

Consequently, an increase in semiconductor or FPD sales does not necessarily result in a corresponding increase in photomask sales.

addition, the reduced use of application-specific ICs, reductions in design complexities, other changes in the technology or methods of manufacturing or designing semiconductors or FPDs, or a slowdown in the introduction of new semiconductor or FPD

designs could reduce demand for photomasks ‒ even if the demand for semiconductors and FPDs increases.

In addition, the

reduced use of application-specific ICs, reductions in design complexities, other changes in the technology or methods of manufacturing or designing semiconductors or FPDs, or a slowdown in the introduction of new semiconductor or FPD designs

could reduce demand for photomasks ‒ even if the demand for semiconductors and FPDs increases.

Historically, the microelectronics industry has been volatile, with sharp periodic downturns and slowdowns.

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We have been dependent on sales to a limited number of large customers;

the loss of any of these customers or a significant reduction in orders from these customers could have a material adverse effect on our revenues

and results of operations.

the loss of any of these customers or a significant reduction in orders from these customers could have a material adverse effect on our

revenues and results of operations.

Historically, we have sold a significant proportion of photomasks to a limited number of IC and FPD manufacturers.

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The manufacture of leading-edge photomasks requires us to make substantial investments in additional manufacturing capability.

We expect that we will be required to continue to make substantial capital expenditures to

meet customer requirements and to position us for future growth.

Our capital expenditure payments for fiscal 2024 are expected to be approximately $140 million, of which approximately $18.7 million was included in Accounts

payable and Accrued liabilities on our October 31, 2023, consolidated balance sheet.

We cannot provide assurance that we will be able to obtain the additional capital required to fund our

operations or capital expenditures on reasonable terms, if at all, or that any such inability will not have a material adverse effect on our business and results of operations.

We expect that we will be required to continue to make substantial capital expenditures

to meet customer requirements and to position us for future growth.

Our capital expenditure payments for fiscal 2025 are expected to be approximately $200 million, of which approximately $6.7 million was included in Accounts payable and Accrued liabilities on our October 31, 2024 consolidated balance sheet.

We cannot provide assurance that we will be able to obtain the additional capital required to

fund our operations or capital expenditures on reasonable terms, if at all, or that any such inability will not have a material adverse effect on our business and results of operations.

Industry and Competitive Related Risk Factors

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chief executive officer, chief financial officer, and chief technology officer) could have a material adverse effect on our business and results of operations.

We cannot offer assurance that we can retain our key managerial and technical employees,

or that we can attract similar additional employees in the future.

We cannot offer assurance that we can retain our key managerial and technical

employees, or that we can attract similar additional employees in the future.

The photomask industry is dependent on the semiconductor and display industries, which are subject to rapid technological change and fluctuations in capacity needs.

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capabilities to market needs, which could have a material adverse effect on our business and results of operations.

The photomask industry has been, and we expect it to continue to be, characterized by technological change and evolving industry requirements, which recent supply chain regionalization efforts have accelerated.

order to remain competitive, we will be required to continually anticipate, respond to, and scale technologies of increasing complexity in both traditional and emerging markets that we serve.

In particular, we believe that, as semiconductor

geometries continue to become smaller and FPDs become larger or otherwise more advanced, we will be required to manufacture photomasks of increasingly more challenging complexity.

Moreover, the demand for photomasks in non-leading-edge nodes may

increase beyond our ability to meet our customers’ requirements within adequate response times.

Additionally, the demand for photomasks has been, and could in the future be, adversely affected by changes in semiconductor and high-performance

electronics fabrication methods that affect the type or quantity of photomasks utilized, such as changes in semiconductor demand that favor field-programmable gate arrays and other semiconductor designs that replace application-specific ICs, or the

use of certain chip-stacking methodologies that lessen the emphasis on conventional lithography technology.

Furthermore, evidence of the viability and the corresponding market acceptance of alternative methods of transferring IC designs onto

semiconductor wafers could reduce or eliminate the need for photomasks in the production of semiconductors.

As of the end of 2023, one alternative method, direct-write lithography, has not been proven to be a commercially viable alternative to

photomasks, as it is considered to be too slow for high-volume semiconductor wafer production.

However, should direct-write or any other alternative method of transferring IC or FPD designs without the use of photomasks achieve market acceptance,

and if we are unable to anticipate, respond to, or utilize these or other technological changes, due to resource, technological, or other constraints, our business and results of operations could be materially adversely affected.

The risk of loss of our intellectual property, trade secrets, or other sensitive business or customer confidential information or disruption of operations due to cyberattacks or data breaches could

negatively impact our financial results.

The photomask industry has been, and we expect it to continue to be, characterized by technological change and evolving industry requirements, which recent

supply chain regionalization efforts have accelerated.

In order to remain competitive, we will be required to continually anticipate, respond to, and scale technologies of increasing complexity in both the traditional and emerging markets that we serve.

In particular, we believe that, as semiconductor geometries continue to become smaller and FPDs become larger or otherwise more advanced, we will be

required to manufacture photomasks of increasingly challenging complexity.

Moreover, the demand for photomasks in non-leading-edge nodes may increase beyond our ability to meet our customers’ requirements within adequate response times.

Additionally, the demand for photomasks has been, and could in the future be, adversely affected by changes in semiconductor and high-performance electronics fabrication methods that affect the type or quantity of photomasks utilized, such as

changes in semiconductor demand that favor field-programmable gate arrays and other semiconductor designs that replace application-specific ICs, or the use of certain chip-stacking methodologies that lessen the emphasis on conventional

lithography technology.

Furthermore, evidence of the viability and the corresponding market acceptance of alternative methods of transferring IC designs onto semiconductor wafers could reduce or eliminate the need for photomasks in the

production of semiconductors.

As of the end of 2024, one alternative method, direct-write lithography, has not been proven to be a commercially viable alternative to photomasks, as it is considered to be too slow for high-volume semiconductor

wafer production.

However, should direct-write or any other alternative method of transferring IC or FPD designs without the use of photomasks achieve market acceptance, and if we are unable to anticipate, respond to, or utilize these or other

technological changes, due to resource, technological, or other constraints, our business and results of operations could be materially adversely affected.

The risk of loss of our intellectual property, trade secrets, or other sensitive business or customer confidential information or disruption of operations due to cyberattacks or data breaches

could negatively impact our financial results.

Cyberattacks or data breaches could compromise confidential, business-critical information, cause disruptions in our operations, expose us to potential litigation, or harm our reputation.

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maintained, and upgraded, we cannot assure that we are invulnerable to cyberattacks and data breaches which, if significant, could negatively impact our business and financial results.

We may be unable to enforce or defend our ownership and use of proprietary technology, and the utilization of unprotected company developed technology by our competitors could adversely affect our business, results of

operations, and financial position.

We may be unable to enforce or defend our ownership and use of proprietary technology, and the utilization of unprotected Company developed technology by our competitors could adversely affect our business, results of operations, and financial position.

We believe that the success of our business depends more on proprietary technology, information and processes, and know-how than on our patents or trademarks.

Much of our proprietary information and technology related

to manufacturing processes is not patented and may not be patentable.

Much of our proprietary information and technology

related to manufacturing processes is not patented and may not be patentable.

We cannot offer assurance that:

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Any such claims, with or without merit, or litigation to enforce or

protect our intellectual property rights that require us to defend against claimed infringements of the rights of others, could result in substantial costs, diversion of resources, and product shipment delays or could force us to enter into royalty

or license agreements, rather than dispute the merits of these claims.

royalty or license agreements, rather than dispute the merits of these claims.

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

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Ltd., Taiwan Mask Corporation, and Toppan Electronics Products Co., Ltd.

We also compete with

semiconductor and FPD manufacturers' captive photomask manufacturing operations, some of which market their photomask manufacturing services to outside customers.

We expect to face continued competition from these and other suppliers in the future.

We also compete

with semiconductor and FPD manufacturers’ captive photomask manufacturing operations, some of which market their photomask manufacturing services to outside customers.

We expect to face continued competition from these and other suppliers in the

Some of our competitors have substantially greater financial, sales, marketing, or other resources than we do.

Also, when producing smaller geometry photomasks, some of our competitors may be able to more rapidly develop and produce such masks and

achieve higher manufacturing yields than we can.

We believe that consistency of product quality, timeliness of delivery, competitive pricing, technical capability and service are the principal factors considered by customers when selecting their

photomask suppliers.

Also, when producing smaller geometry photomasks, some of our competitors may be able to more rapidly develop and produce such

masks and achieve higher manufacturing yields than we can.

We believe that consistency of product quality, timeliness of delivery, competitive pricing, technical capability and service are the principal factors considered by customers when

selecting their photomask suppliers.

Our inability to meet these competitive requirements could have a material adverse effect on our business and results of operations.

In the past, competition has led to pressure to reduce prices and the need to invest in

advanced manufacturing technology, which we believe contributed to the decrease in the number of independent photomask suppliers, several years ago.

In the past, competition has led to pressure to reduce prices and the need

to invest in advanced manufacturing technology, which we believe contributed to the decrease in the number of independent photomask suppliers, several years ago.

These pressures may worsen in the future, causing further consolidation.

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to these joint ventures.

The nature of a joint venture requires us to share control in certain areas with unaffiliated third parties and it is always possible that the alignment that brought us and our joint venture partner together may change over time, whether due to change in business strategy, change in control, change in market conditions or

applicable laws, or other events.

Differing views among joint venture participants may result in delayed decisions or failures to agree on major issues.

If our joint venture partner does not fulfill its obligations or that alignment changes , the affected joint venture may not be able to operate in accordance with its business plan or the parties may

seek to exit the joint venture under the terms of the joint venture agreement or otherwise.

Under such a scenario, among other possible consequences, our results of

operations may be adversely affected, we may be compelled to increase the level of our resources devoted to the joint venture or our company-wide business plan may need to be adjusted.

If such differences caused a joint venture to deviate from its business plan, or put , change of control or other exit or termination provisions triggered, our results of operations could be materially adversely affected.

change over time, whether due to change in business strategy, change in control, change in market conditions or applicable laws, or other events.

Differing views among joint venture participants may result in delayed decisions or failures to

agree on major issues.

If our joint venture partner does not fulfill its obligations or that alignment changes, the affected joint venture may not be able to operate in accordance with its business plan or the parties may seek to exit the joint

venture under the terms of the joint venture agreement or otherwise.

Under such a scenario, among other possible consequences, our results of operations may be adversely affected, we may be compelled to increase the level of our resources devoted

to the joint venture or our company-wide business plan may need to be adjusted.

If such differences caused a joint venture to deviate from its business plan, or put, change of control or other exit or termination provisions are triggered, our

results of operations could be materially adversely affected.

Our operations in China expose us to substantial risks.

In 2019, we commenced operations at our two manufacturing facilities in China.

These investments are subject to substantial risks which may include,

but are not limited to:

These investments are subject to substantial risks which may include, but are not

the inability to protect our intellectual property rights under Chinese law, which may not offer as high a level of protection as U.S.

unexpectedly long negotiation periods with Chinese suppliers and customers;

issues related to materials sourced from local vendors;

quality issues

related to materials sourced from local vendors;

limited access to electricity;

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and China, we believe there is an enhanced risk

that our substantial investments in China may be subject to unforeseen restrictions, which may include expropriation of the investments by the Chinese government or restrictions imposed

on our operations by the U.S.

that our substantial investments in China may be subject to unforeseen or additional restrictions, which may include expropriation of our investments by the Chinese government or restrictions imposed on our operations by the U.S.

or other countries.

These and other risks may result in our not realizing a return on, or losing some, or all, of our investments in China, which would have a material adverse effect on our financial condition

and financial performance.

These and other risks may result in our not realizing a return on, or losing some, or

all, of our investments in China, which would have a material adverse effect on our financial condition and financial performance.

We may incur unforeseen charges related to possible future facility closures, restructurings, or forfeitures.

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As part of our business growth strategy, we have acquired businesses and entered into joint ventures in the past, and we may pursue acquisitions and joint venture opportunities in the future.

Our future efforts to grow

the Company may include expanding into new or related markets or industries.

Our ability to implement this component of our growth strategy may be limited by both our ability to identify appropriate acquisition or joint venture candidates and our

financial resources, including our available cash and borrowing capacity.

The expense incurred in consummating acquisitions or entering into joint ventures, the time it takes to integrate an acquisition, or our failure to integrate businesses

successfully, could result in unanticipated expenses and losses.

Our future efforts to

grow the Company may include expanding into new or related markets or industries.

Our ability to implement this component of our growth strategy may be limited by both our ability to identify appropriate acquisition or joint venture candidates

and our financial resources, including our available cash and borrowing capacity.

The expense incurred in consummating acquisitions or entering into joint ventures, the time it takes to integrate an acquisition, or our failure to integrate

businesses successfully, could result in unanticipated expenses and losses.

Furthermore, we may not be able to realize any of the anticipated benefits from acquisitions or joint ventures.

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problems enforcing the indemnification obligations of sellers of businesses or joint venture partners for claims and liabilities;

unexpected losses

of customers of, or suppliers to, the acquired business;

losses of customers of, or suppliers to, the acquired business;

difficulty in conforming the acquired business’ standards, processes, procedures and controls with our operations;

variability in financial performance arising from the implementation of

acquisition accounting;

variability in financial performance arising from the

implementation of acquisition accounting;

inability to coordinate new product and process development;

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problems with new labor unions;

and challenges arising from the increased scope, geographic diversity, and

complexity of our operations.

and challenges arising from the increased scope,

geographic diversity, and complexity of our operations.

Operations Related Risk Factors

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We have experienced fluctuations in our quarterly operating results, and we anticipate that such fluctuations will continue and could intensify in the future.

Fluctuations in operating results may result in volatility

in the prices of our common stock and financial instruments that could be linked to its value.

Operating results may fluctuate as a result of many factors, including the size and timing of orders and shipments, the loss of significant customers,

changes in product mix, the flow of customer design releases, technological change, fluctuations in manufacturing yields, the actions of our competitors, and general economic conditions.

We operate in a high fixed-cost environment and, should our

revenues and asset utilization decrease, our operating margins could be negatively impacted.

Fluctuations in operating results may result in

volatility in the prices of our common stock and financial instruments that could be linked to its value.

Operating results may fluctuate as a result of many factors, including the size and timing of orders and shipments, the loss of significant

customers, changes in product mix, the flow of customer design releases, technological change, fluctuations in manufacturing yields, the actions of our competitors, and general economic conditions.

We operate in a high fixed-cost environment and,

should our revenues and asset utilization decrease, our operating margins could be negatively impacted.

Our customers generally order photomasks on an as-needed basis;

thus, our revenue in any quarter is dependent primarily on orders received during that quarter.

Since we operate with little backlog, and the rate of new

orders may vary significantly from quarter to quarter, our capital expenditures and consequential expense levels are, to some extent, based primarily on sales forecasts and technological advancements in photomask manufacturing equipment.

Since we operate with little backlog, and the rate of

new orders may vary significantly from quarter to quarter, our capital expenditures and consequential expense levels are, to some extent, based primarily on sales forecasts and technological advancements in photomask manufacturing equipment.

Consequently, if anticipated revenues in any quarter do not occur when expected, our capital investments could result in underutilized capacity and disproportionately high expense levels, causing operating results to be adversely affected.

the foregoing factors, we believe that quarter to quarter comparisons of our operating results cannot be relied upon as indicators of future performance.

In addition, in future quarters, our operating results could be below guidance we may provide

or the expectations of public market analysts and investors, which could have a material adverse effect on the market price of our common stock.

In addition, in future quarters, our operating results could be below guidance we may

provide or the expectations of public market analysts and investors, which could have a material adverse effect on the market price of our common stock.

Our substantial non-U.S.

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believe that maintaining significant international operations requires us to have, among other things, a local presence in the geographic markets that we supply.

This requires significant investments in financial, managerial, operational, and other

This requires significant investments in financial, managerial, operational, and

other resources.

Since 1996, we have significantly expanded our operations in international markets by acquiring existing businesses in Europe and Asia, and building manufacturing facilities in Taiwan and China.

In order to enable us to optimize our

investments and other resources, we closely monitor the semiconductor and FPD manufacturing markets for indications of geographic movement and, in conjunction with these efforts, continue to assess the locations of our manufacturing facilities.

In order to enable us to optimize

our investments and other resources, we closely monitor the semiconductor and FPD manufacturing markets for indications of geographic movement and, in conjunction with these efforts, continue to assess the locations of our manufacturing

These assessments could result in the opening of additional facilities or closing of our current facilities.

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unstable political and economic conditions in various countries;

changes in economic alliances;

changes in economic

unexpected changes in regulatory requirements including import and export regulations;

compliance with a variety of burdensome foreign laws and regulations;

compliance with anti-bribery and anti-corruption laws (such as the Foreign Corrupt

Practices Act);

compliance with anti-bribery and anti-corruption laws (such as the Foreign

Corrupt Practices Act);

tariffs and other trade barriers;

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and longer accounts receivable collection cycles.

foreign countries may enact other restrictions on foreign trade or

investment, including:

foreign countries may enact other restrictions on foreign

trade or investment, including:

currency exchange controls;

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legislation which renders agreements to be difficult to enforce;

impositions on the movement of funds or other assets;

impositions on the movement of funds or

other assets;

or we may be subject to adverse tax consequences.

These factors may have a material adverse effect on our costs or our ability to generate revenues outside of the United States and, consequently, on our business and results of operations.

These factors may have a material adverse effect on our costs or our ability to generate revenues outside of the United States and, consequently, on our business and results of

We could be subject to damages based on claims brought against us by our customers, or lose customers as a result of the failure of our products to meet certain quality specifications.

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technologies and perform such processes could have a material adverse effect on our business and results of operations.

Our complex manufacturing processes require the use of expensive and technologically sophisticated equipment and materials, and are continually modified in an effort to improve manufacturing yields and product quality.

Minute impurities, defects, or other difficulties in the manufacturing process can lower manufacturing yields and render products unmarketable.

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Because of the capital-intensive nature of the photomask manufacturing business, we have a high level of fixed costs and a high degree of operating leverage.

Accordingly, should our sales volumes decline as a result of

a decrease in design releases from our customers or for any other reason, we may have excess or underutilized production capacity which could significantly impact our operating margins or result in write-offs from asset impairments.

Accordingly, should our sales volumes decline as a result

of a decrease in design releases from our customers or for any other reason, we may have excess or underutilized production capacity which could significantly impact our operating margins or result in write-offs from asset impairments.

Regulatory Related Risk Factors

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Currently, we believe there are no outstanding assessments whose resolution would result in a material adverse financial result.

However, we cannot offer assurances that unasserted or potential future assessments

would not have a material adverse effect on our financial condition or results of operations.

However, we cannot offer assurances that unasserted or potential future

assessments would not have a material adverse effect on our financial condition or results of operations.

Our products and technology could be subject to U.S.

export control laws and the export control laws of the foreign jurisdictions where we operate.

We are subject to various laws relating to the export of products we manufacture, and the technology related thereto, and our failure to comply with these laws could subject us to substantial fines, penalties, and even

injunctions, the imposition of which could have a material adverse effect on the success of our business.

export control laws and /or

the export control laws of the foreign jurisdictions where we operate.

even injunctions, the imposition of which could have a material adverse effect on the success of our business.

Certain of our products are or could be subject to the Export Administration Regulations (“EAR”) if they are manufactured in the U.S., or based on U.S.

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Increases in tariffs, additional taxes or other trade restrictions and retaliatory measures may increasingly impact customer demand and customer investment in manufacturing equipment, increase our

manufacturing costs, decrease margins, reduce the competitiveness of our products, or inhibit our ability to sell, export products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of

operations, or financial condition.

of operations, or financial condition.

We may be unprepared for changes to environmental laws and regulations and may incur liabilities arising from environmental matters.

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disposal, and cleanup of solid and hazardous wastes.

Changes in these laws and regulations may have a material adverse effect on our financial position and results of operations, and inadequate compliance with their requirements could give rise to

significant liabilities.

Changes in these laws and regulations may have a material adverse effect on our financial position and results of operations, and inadequate compliance with their requirements could give rise

to significant liabilities.

If we violate environmental, health or safety laws or regulations, in addition to being required to correct such violations, we can be held liable in administrative, civil, or criminal proceedings, and substantial

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Liabilities associated with the investigation and cleanup of hazardous substances, as well as personal injury, property damages or natural resource damages

arising from the release of, or exposure to, such hazardous substances, may be imposed in many situations without regard to violations of laws or regulations or other fault, and may also be imposed jointly and severally (so that a responsible party

may be held liable for more than its share of the losses involved, or even the entire loss).

Such liabilities may also be imposed on many different entities with a relationship to the hazardous substances at issue, including, for example, entities

that formerly owned or operated the property affected by the hazardous substances and entities that arranged for the disposal of the hazardous substances at the affected property, as well as entities that currently own or operate such property.

nature of our business, including historical operations at our current and former facilities, exposes us to risks of liability under these laws and regulations due to the production, storage, use, transportation and sale of materials that can cause

contamination or personal injury if released into the environment.

Additional information may arise in the future concerning the nature or extent of our liability with respect to identified sites and additional sites that may be identified, for

which we are alleged to be liable.

party may be held liable for more than its share of the losses involved, or even the entire loss).

Such liabilities may also be imposed on many different entities with a relationship to the hazardous substances at issue, including, for example,

entities that formerly owned or operated the property affected by the hazardous substances and entities that arranged for the disposal of the hazardous substances at the affected property, as well as entities that currently own or operate such

The nature of our business, including historical operations at our current and former facilities, exposes us to risks of liability under these laws and regulations due to the production, storage, use, transportation and sale of

materials that can cause contamination or personal injury if released into the environment.

Additional information may arise in the future concerning the nature or extent of our liability with respect to identified sites and additional sites that

may be identified, for which we are alleged to be liable.

General Risk Factors

We could be negatively impacted by

Environmental, Social and Governance (ESG), climate change and other sustainability-related matters .

In recent years, there has been an increased focus from stakeholders on environmental, social, and governance matters,

including greenhouse gas emissions and climate-related risks, sustainability, renewable energy, water stewardship, waste management, diversity, equality and inclusion, responsible sourcing and supply chain, human rights, and social

responsibility.

Evolving stakeholder expectations and our efforts to manage these issues, report on them, and accomplish our goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could

have a material adverse impact, including on our reputation and stock price, reputational harm, including damage to our relationships with customers, suppliers, investors, governments, or other stakeholders, adverse impacts on our ability to

manufacture and sell products and maintain our market share, the success of our collaborations with third parties, increased risk of litigation, investigations, or regulatory enforcement action, unfavorable environmental, social, and governance

ratings or investor sentiment, diversion of resources and increased costs to control, assess, and report on environmental, social, and governance metrics.

We could be negatively impacted by Environmental, Social and Governance (ESG), climate change and other sustainability-related matters .

In recent years, there has been an increased focus from stakeholders on environmental, social, and governance matters, including greenhouse gas emissions and climate-related risks, sustainability, renewable energy,

water stewardship, waste management, diversity, equality and inclusion, responsible sourcing and supply chain, human rights, and social responsibility.

Evolving stakeholder expectations and our efforts to manage these issues, report on them,

and accomplish our goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material adverse impact, including on our reputation and stock price, reputational harm, including

damage to our relationships with customers, suppliers, investors, governments, or other stakeholders, adverse impacts on our ability to manufacture and sell products and maintain our market share, the success of our collaborations with third

parties, increased risk of litigation, investigations, or regulatory enforcement action, unfavorable environmental, social, and governance ratings or investor sentiment, diversion of resources and increased costs to control, assess, and report

on environmental, social, and governance metrics.

Ineffective internal controls could impact our business and operating results.

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otherwise fail to prevent financial reporting misstatements;

or experience difficulties in implementing internal controls, our business and operating results could be adversely impacted, and we could fail to meet

our financial reporting obligations.

or experience difficulties in implementing internal controls, our business and operating results could be adversely impacted, and we could fail to

meet our financial reporting obligations.

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.

Our business could be materially adversely affected by terrorist acts, widespread outbreaks of infectious diseases , 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

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.

Our production facilities could be damaged or disrupted by natural or manmade disasters or labor strikes, either of which could adversely affect our financial position, results of operations, and cash flows.

A major catastrophe, such as an earthquake, flood, fire, or other disaster, labor strike, or work stoppage at any of our manufacturing facilities, or a manufacturing facility of our suppliers or customers, could result

in a prolonged interruption of our business.

A disruption resulting from any one of these events could cause significant delays in shipments of our products and the loss of revenue and customers, which could have a material adverse effect on our

financial position, results of operations, and cash flows.

result in a prolonged interruption of our business.

A disruption resulting from any one of these events could cause significant delays in shipments of our products and the loss of revenue and customers, which could have a material adverse effect

on our financial position, results of operations, and cash flows.

Our facilities in Taiwan are located in a seismically-active area.

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or other countries in which we or our customers conduct business may have the effect of reducing the demand for photomasks.

Economic downturns may lead to a decrease

in demand for end products whose manufacturing processes involve the use of photomasks, which may result in a reduction in new product design and development by semiconductor or FPD manufacturers and adversely affect our results of operations and

Economic downturns may lead to a

decrease in demand for end products whose manufacturing processes involve the use of photomasks, which may result in a reduction in new product design and development by semiconductor or FPD manufacturers and adversely affect our results of

operations and cash flows.

Technology failures or cyber security breaches could have a material adverse effect on our operations.

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The GDPR created a range of new compliance obligations and imposes significant fines and sanctions for violations.

It is possible that the GDPR may be interpreted or applied in a manner that

is adverse to, or unforeseen by us, including requirements that are inconsistent with our practices, or that we may otherwise fail to construe its requirements in ways that are satisfactory to the E.U.

It is possible that the GDPR may be interpreted or applied in a manner

that is adverse to, or unforeseen by us, including requirements that are inconsistent with our practices, or that we may otherwise fail to construe its requirements in ways that are satisfactory to the E.U.

Upon leaving the E.U.

31, 2021, the U.K.

January 31, 2021, the U.K.

enacted a new domestic data privacy law called the “U.K.

– General Data Protection Regulation” (“UK-GDPR”).

Although somewhat less restrictive than the GDPR, the UK-GDPR is similar to the GDPR with respect to both an entity’s

obligation to protect personal information and the imposition of significant fines for violations.

Although somewhat less restrictive than the GDPR, the UK-GDPR is similar to the GDPR with respect to both an

entity’s obligation to protect personal information and the imposition of significant fines for violations.

Any failure, or perceived failure, by us to comply with the GDPR or the UK-GDPR, or with any applicable regulatory requirements or orders, including, but not limited to privacy, data protection, information security,

2 unchanged sentences

result in proceedings or actions against us by governmental entities or individuals;

subject us to significant

fines, penalties, and/or judgments;

subject us to

significant fines, penalties, and/or judgments;

require us to change our business practices;

limit access to our products and services in certain countries, or otherwise adversely affect our business, as we would be at risk to lose both customers and revenue,

and incur substantial costs.

limit access to our products and services in certain countries, or otherwise adversely affect our business, as we would be at risk to lose both customers

and revenue, and incur substantial costs.

We may, in the future, incur net losses.

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consolidated statement of income, while our net assets increased by $8.6 million as a result of the translation of foreign currency financial statements to U.S.

Significant foreign currency fluctuations may adversely affect our results of

operations, financial condition, or cash flows.

Significant foreign currency fluctuations may adversely affect our results

of operations, financial condition, or cash flows.

Our hedging activity could negatively impact our results of operations and cash flows.

We may enter into derivatives to manage our exposures to interest rate and currency movements.

If we do not accurately forecast our results of operations, execute contracts that do not effectively mitigate our economic

exposures to interest rates and currency rates, elect to not apply hedge accounting (when doing so would have mitigated our losses), or fail to comply with the complex accounting requirements for hedging transactions, our results of operations and

cash flows could be volatile, as well as negatively impacted.

If we do not accurately forecast our results of operations, execute contracts that do not effectively mitigate our

economic exposures to interest rates and currency rates, elect to not apply hedge accounting (when doing so would have mitigated our losses), or fail to comply with the complex accounting requirements for hedging transactions, our results of

operations and cash flows could be volatile, as well as negatively impacted.

The market price of our common stock is subject to volatility and could fluctuate widely in response to various factors, many of which are beyond our control.

27 unchanged sentences

changes to bilateral and regional trade agreements, could negatively impact our results of operations.

UNRESOLVED STAFF COMMENTS

CYBERSECURITY

Not applicable

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