What changed in this filing

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Item 1A. Risk Factors

2025-02-14 compared with 2024-02-16 · 175 added, 92 removed, 418 unchanged (39% of the section changed)

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Our business is cyclical and future periods of decline and increased demand are not predictable.

We make significant decisions, including order acceptance, production schedules, personnel needs, material purchases, and other resource requirements,

based on customer forecasts and estimates of customer requirements.

The electronic component industry is highly cyclical and experiences periods of decline from time to time.

We and others in the electronic components industry have

experienced these conditions in the recent past and cannot predict when we may experience downturns in the future.

Market conditions, such as during a decline in product demand on a global basis, could result in order cancellations and deferrals,

lower average selling prices, and a material and adverse impact on our results of operations.

These declines in demand are usually driven by market conditions in the end markets for our products, but may also result from distributors not

appropriately managing their inventory levels.

We may also experience intense demand for our products in periods of a rising economy and we may have difficulty expanding our manufacturing capacity to satisfy demand

during such periods.

Factors which could limit such expansion include delays in procurement of manufacturing equipment, shortages of skilled personnel, and physical constraints on expansion of our facilities.

Changes in the demand mix, needed technologies, and these end markets may adversely affect our ability to match our products, inventory, and capacity to meet customer

demand and could adversely affect our operating results and financial condition.

A slowdown in demand or recessionary trends in the global economy makes it more difficult for us to predict our future sales and manage our operations, and could

adversely impact our results of operations.

C apacity that we add during upturns in the business cycle may result in excess capacity during periods when demand for our products recede,

resulting in inefficient use of capital which could also adversely affect us.

A downturn in our business in general, or isolated to a particular sector, could require us to incur restructuring and severance charges and/or asset write-downs.

We and others in the electronic components industry have experienced

these conditions in the recent past and cannot predict when we may experience downturns in the future.

If demand falls below customers' forecasts or if customers do not control their inventory effectively, customers may significantly and abruptly

reduce their demand, or even cancel orders.

Orders for materials purchases from certain suppliers may include noncancellable purchase commitments or advance payments from us, and those obligations and commitments could reduce our ability to adjust

our inventory or expense levels to reflect declining market demands.

Because certain of our sales, research and development, and internal manufacturing overhead expenses are relatively fixed, a reduction in customer demand likely would decrease our

gross margins and operating income.

Unexpected declines in customer demands can also result in lower average selling prices and additional expenses.

We may also experience intense demand for our products in periods of a rising economy and we may have difficulty expanding our manufacturing capacity to

satisfy demand during such periods.

We may not be able to purchase sufficient supplies, allocate sufficient manufacturing capacity, hire skilled personnel, or expand our facilities to meet such increases in demand.

Rapid customer ramp-up and

significant increases in demand may strain our resources or negatively affect our margins.

Inability to satisfy customer demand in a timely manner may harm our reputation, reduce our other opportunities, damage our relationships with customers,

reduce our market share, reduce revenue growth, and/or cause us to incur contractual penalties.

Changes in the demand mix, needed technologies, and these end markets may adversely affect our ability to match our products, inventory, and capacity to

meet customer demand and could adversely affect our operating results and financial condition.

A slowdown in demand or recessionary trends in the global economy makes it more difficult for us to predict our future sales and manage our operations,

and could adversely impact our results of operations.

Capacity that we add during upturns in the business cycle may result in excess capacity during periods when demand for our products recede, resulting in inefficient use of capital which could

also adversely affect us.

A downturn in our business in general, or isolated to a particular sector, could require us to incur restructuring and severance charges and/or asset

We face significant challenges managing our capacity expansion strategy.

As part of our strategy to drive growth and increase capacity, we are increasing internal capacity

by investing $329 million in 2023 and plan to invest $1.2 billion total from 2023 to 2025 and plan to increase external capacity by outsourcing additional commodity products to subcontractors.

Our capacity expansion plans include building a

12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab , a new power inductor site in Mexico, a resistor manufacturing expansion in Mexico, and expanded diode manufacturing in

Taiwan and Turin, Italy.

Additionally, the planned transaction with Nexperia BV will add a wafer fabrication facility and operations in Newport, South Wales, U.K.

There is no assurance that we will be

able to close the transaction for the Nexperia wafer fabrication facility.

As part of our strategy to drive growth and increase capacity to assure customers of reliable

volume as they scale, we are increasing internal capacity by heavily investing in capital expenditures, and plan to increase external capacity by outsourcing additional commodity products to subcontractors.

Our capacity expansion plans include

the expansion of the recently acquired Newport wafer fab, building a 12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab , a new site in Mexico for power inductors and

non-linear resistors, a resistor manufacturing expansion in Mexico, and expanded diode manufacturing in Taiwan and Turin, Italy.

There are demand-related risks associated with all growth initiatives.

There are also inherent execution risks in building and starting new wafer fabs, acquiring

existing wafer fabs, and expanding production capacity at our own facilities or that of new or existing subcontractors that could significantly increase costs and negatively impact our operating results.

The risks include, but are not limited

to, the following:

There are also inherent execution risks in building and starting new wafer fabs, acquiring existing wafer fabs, and expanding production capacity at our own facilities or that of new or existing subcontractors that could significantly increase

costs and negatively impact our operating results.

The risks include, but are not limited to, the following:

design and construction delays and cost overruns;

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insufficient personnel with requisite expertise and experience to operate the facilities.

We have incurred, and may in the future incur, restructuring costs and associated asset write-downs.

To remain competitive, particularly when business conditions are difficult, or to implement organizational change, we sometimes

implement restructuring programs.

The programs attempt to reduce our cost structure by achieving synergies, eliminating redundant facilities and staff positions, and moving operations, where possible, to jurisdictions with lower labor costs.

2024, we announced a restructuring program that primarily focuses on optimizing our manufacturing footprint and streamlining business decision making.

Additionally, our long-term strategy includes growing through the integration of acquired businesses, and GAAP requires plant closure

and employee termination costs that we incur in connection with our acquisition activities to be recorded as expenses in our consolidated statement of operations, as such expenses are incurred.

For this reason, we expect to have some level of

future restructuring expenses due to acquisitions.

Our business may be adversely affected by the widespread outbreak of diseases and the mitigation efforts

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continue to grow, in part, through targeted acquisitions, we may be unable to continue to identify, have the financial capabilities to acquire, or successfully complete transactions with suitable acquisition candidates.

The rapid consolidation that

our industry has experienced may further decrease our ability to identify attractive opportunities for acquisition.

The rapid consolidation

that our industry has experienced may further decrease our ability to identify attractive opportunities for acquisition.

We are subject to various U.S.

and foreign competition laws and regulations that may affect our ability to complete certain

acquisitions.

Also, if an acquired business fails to operate as anticipated, cannot be successfully integrated with our other businesses, or we cannot effectively mitigate the assumed, contingent, and unknown liabilities acquired, our results of

operations, financial condition, enterprise value, market value, and prospects could all be materially adversely affected.

and foreign competition laws and regulations that may affect our ability to complete

certain acquisitions.

results of operations, financial condition, enterprise value, market value, and prospects could all be materially adversely affected.

To remain successful, we must continue to innovate, and our investments in new technologies may not prove successful.

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can be no assurance that our current and future investments in start-up enterprises will prove successful.

Potential investments in artificial intelligence may not be successful, which could adversely affect our business, reputation, or

financial results.

We are evaluating investments in A.I.

initiatives, including generative A.I.

There are significant risks involved in developing and deploying A.I., and there can be no assurance that the usage of A.I.

our products or services or be beneficial to our business, including our efficiency or profitability.

For example, our A.I.-related efforts, particularly those related to generative A.I., subject us to risk related to harmful content,

inaccuracies, bias, discrimination, toxicity, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, and sanctions and export controls, among others.

It is also uncertain how various laws will apply to

content generated by A.I.

We are subject to risks of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and A.I., or other complications that

could adversely affect our business, reputation, or financial results.

As a result of the complexity and rapid development of A.I., it is the subject of evolving review by various U.S.

governmental and

regulatory agencies, and other foreign jurisdictions are applying, or are considering applying, their intellectual property, cybersecurity, data protection and other laws to A.I.

and/or are considering general legal frameworks on A.I.

always be able to anticipate how to respond to these frameworks, given that they are still rapidly evolving.

We may also have to expend resources to adjust our use of A.I.

in certain jurisdictions if the legal frameworks on A.I.

are not consistent

across jurisdictions.

As such, it is not possible to predict all of the risks related to the use of A.I., and changes in laws, rules, directives, and

regulations governing the use of A.I.

may adversely affect our ability to develop and use A.I.

or subject us to legal liability.

Our business and our results of operations are sensitive to supply chain disruptions.

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could require us to reduce production or incur additional costs.

We use third-party foundries and subcontractors for certain of our manufacturing activities, primarily wafer fabrication and the assembly and testing of finished goods.

We use third-party foundries and subcontractors for certain of our manufacturing activities, primarily wafer fabrication, the assembly and testing of finished goods, and

the manufacturing of certain commodity products.

Establishing third-party contract manufacturer relationships can be time consuming and costly, and the number of qualified providers is limited.

Our agreements with these manufacturers typically require us to commit to purchase services based on

forecasted product needs, which may be inaccurate, and, in some cases, require us to recognize losses on these adverse purchase commitments.

Our agreements may limit our ability to increase production, particularly during periods of growing demand

for our products.

Our agreements with these manufacturers typically

require us to commit to purchase services based on forecasted product needs, which may be inaccurate, and, in some cases, require us to recognize losses on these adverse purchase commitments.

Our agreements may limit our ability to increase

production, particularly during periods of growing demand for our products.

Due to our global supply chain, we are impacted by global trade disputes.

The governments of the U.S.

and the People’s Republic of China remain in a trade dispute that

has resulted in tariffs and other trade restrictions including import / export prohibitions.

Disruptions to global trade could result in customers seeking different sources of product or requiring us to seek different sources of supply.

revised trade agreements could require changes in operations in the long-term.

People’s Republic of China remain in a trade dispute that has resulted in tariffs and other trade restrictions including import / export prohibitions.

Disruptions to global trade could result in customers seeking different sources of product or

requiring us to seek different sources of supply.

New or revised trade agreements could require changes in operations in the long-term.

We remain cognizant of these supply chain challenges and seek to minimize their effects whenever possible.

Despite our best efforts, there can be no assurances we will

be successful in mitigating these risks and if we are unable to do so, they may have material negative impacts on our business and results of operations.

Despite our best efforts, there can be

no assurances we will be successful in mitigating these risks and if we are unable to do so, they may have material negative impacts on our business and results of operations.

Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our technology and

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We are exposed to changes in interest rates as a result of our borrowing activities and our cash balances.

Our credit facility bears interest at variable rates based on

Secured Overnight Financing Rate ("SOFR") and other currency-specific reference rates.

Our credit facility bears interest at

variable rates based on Secured Overnight Financing Rate ("SOFR") and other currency-specific reference rates.

A significant increase in such reference rates would significantly increase our interest expense.

A general increase in interest rates would be largely offset by

an increase in interest income earned on our cash and short-term investment balances, which are currently greater than our debt balances.

However, there can be no assurance that the interest rate earned on cash and short-term investments will move in

tandem with the interest rate paid on our variable rate debt.

A general increase in interest rates

would be largely offset by an increase in interest income earned on our cash and short-term investment balances.

However, there can be no assurance that the interest rate earned on cash and short-term investments will move in tandem with the

interest rate paid on our variable rate debt.

Cyberattacks and other interruptions in our information technology systems could adversely affect our business.

We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business.

We are exposed to, and may be

adversely affected by, potential cyberattacks or other disruptions to our information technology systems and data security.

Any significant system or network disruption, including, but not limited to, new system implementations, computer viruses,

security breaches, phishing, spoofing, cyberattacks, facility issues or energy blackouts could have a material adverse impact on our operations and results of operations.

These incidents, which might be related to industrial or other espionage,

include covertly introducing malware and spyware to our computers and networks (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.

Such a network disruption could result in a loss

of the confidentiality of our intellectual property or the release of sensitive competitive information or customer, supplier or employee personal data.

We are exposed to, and adversely

affected by, cyberattacks or other potential disruptions to our information technology systems and data security.

Any significant system or network disruption, including, but not limited to, new system implementations, computer viruses, security

breaches, phishing, spoofing, cyberattacks, facility issues or energy blackouts could have a material adverse impact on our operations and results of operations.

These incidents, which might be related to industrial or other espionage, include

covertly introducing malware and spyware to our computers and networks (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.

Such a network disruption could result in a loss of the

confidentiality of our intellectual property or the release of sensitive competitive information or customer, supplier or employee personal data.

Any loss of such information could harm our competitive position, result in a loss of customer

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to undertake an acquisition for equity, the acquisition may have a dilutive effect on the interests of the holders of our common stock.

We may experience significant variability in our quarterly and annual effective tax rate which would affect our reported net

We operate in a global environment with significant operations in various locations outside the United States.

Our effective income tax rate is the

result of the income tax rates in the various locations where we operate.

Our mix of income and losses in these locations affects our effective tax rate.

Variability in the mix and profitability of domestic and international activities,

identification and resolution of various tax uncertainties, changes in tax laws and rates, and the extent to which we are able to realize net operating loss and other carryforwards included in deferred tax assets and avoid potential adverse

outcomes included in deferred tax liabilities, among other matters, may significantly affect our effective income tax rate in the future.

A relative increase in income in higher tax rate jurisdictions increases our effective tax rate and thus

decreases net income.

Similarly, generating losses in tax jurisdictions for which no benefits are available also increases our effective income tax rate.

Our effective income tax rate may also be impacted by the recognition of discrete income

tax items, such as required adjustments to our liabilities for uncertain tax positions or our deferred tax asset valuation allowance.

A significant increase in our effective income tax rate could have a material adverse impact on our earnings.

Our intangible assets may become impaired.

Goodwill and indefinite-lived intangible assets are not amortized but rather are tested for impairment at least annually.

These tests are

performed more frequently whenever events or changes in circumstances indicate that the assets might be impaired.

The testing of assets for impairment requires us to make significant estimates about our future events, including our

performance and projected cash flows, as well as other assumptions.

These estimates can be affected by numerous factors, including developments in the global economic environment, including the prospect of higher interest rates, market

capitalization declines, developments in regulatory, industry and market conditions, changes in business operations, inability to effectively integrate acquired businesses, changes in competition, or changes in technologies.

Any changes in

key assumptions, or actual performance compared with key assumptions, about our business and its future prospects could affect the fair value of one or more of our assets, which may result in an impairment charge.

The acquisitions of MaxPower Semiconductor, Inc.

and the Newport wafer fab, as well as the planned capacity expansions at Itzehoe and Newport, are

long-term investments which were not expected to generate significant income or cash flows in the near-term, but should greatly enhance the long-term position of our MOSFETs business.

Such investments have significantly increased the net

asset base of our MOSFETs business without a corresponding increase in current income or cash flows.

We performed a quantitative assessment of each of our reporting units as of September 28, 2024 and determined that the estimated fair value

of each reporting unit exceeded its carrying value, although the MOSFETs reporting unit’s fair value exceeded its carrying value by less than 10%.

Several factors, including a further decrease in our stock price, a further increase in the

asset base, and other negative internal and external factors, required us to test our MOSFETs goodwill for impairment again in the fourth fiscal quarter of 2024.

As a result, we recorded a non-cash impairment charge of $66.5 million to

write-off the goodwill of the MOSFETs reporting unit.

If we are not able to achieve our anticipated results or our stock price decreases further, the fair value of our other reporting units would be adversely affected, which may result in

future impairment.

There is $179.0 million of goodwill remaining on our balance sheet as of December 31, 2024.

Any impairment charges would adversely affect our results of operations in the periods an impairment is recognized.

Regulatory and compliance related risks

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Many of these products are used in military applications.

contractors must comply with specific procurement regulations and other requirements.

Government contractors must comply with specific procurement regulations and other requirements.

These requirements, although customary in government contracts, impact our performance and compliance costs.

Failure to comply with these regulations and

requirements could result in contract modifications or termination, and the assessment of penalties and fines, which could negatively impact our results of operations and financial condition.

Failure to comply with these regulations

and requirements could result in contract modifications or termination, and the assessment of penalties and fines, which could negatively impact our results of operations and financial condition.

Our failure to comply with these regulations and

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covenants, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.

Additionally, our convertible debt instruments have cross-default provisions that could

accelerate repayment in the event the indebtedness under the credit facility is accelerated.

Additionally, our convertible senior notes due 2030 have cross-default provisions that

could accelerate repayment in the event the indebtedness under the credit facility is accelerated.

Risks associated with our operations outside the United States

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Although we have never experienced any material

interruption in our operations attributable to these factors, in spite of several Middle East crises, including the current war with Hamas, our financial condition and results of operations might be adversely affected if events were to occur in the

interruption in our operations attributable to these factors, in spite of several Middle East crises, including the recent war with Hamas, our financial condition and results of operations might be adversely affected if events were to occur in the

Middle East that interfered with our operations in Israel.

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We attempt to improve profitability by controlling labor costs, but these activities could result in labor unrest or considerable expense.

Historically, our primary labor cost controlling strategy was to transfer manufacturing operations to countries with lower production costs, such as the Dominican

Republic, India, Malaysia, Mexico, the People’s Republic of China, and the Philippines.

Historically, our primary labor cost controlling strategy was to transfer manufacturing operations to countries with lower production costs, such

as the Dominican Republic, India, Malaysia, Mexico, the People’s Republic of China, and the Philippines.

We believe that our manufacturing footprint is suitable to serve our customers and end markets, while maintaining lower manufacturing costs.

We do not anticipate

further transferring any significant existing operations to lower-labor-cost countries;

do not anticipate further transferring any significant existing operations to lower-labor-cost countries;

however, acquired operations may be transferred to lower-labor-cost countries when integrated into Vishay.

Currently, our primary labor cost controlling strategy

involves reducing hours and limiting the use of subcontractors and foundries when demand for our products decreases.

Shifting operations to lower-labor-cost countries, reducing hours, or limiting the use of subcontractors and foundries could result

in production inefficiencies, higher costs, and/or strikes or other types of labor unrest.

Currently, our primary labor cost

controlling strategy involves reducing hours and limiting the use of subcontractors and foundries when demand for our products decreases.

Shifting operations to lower-labor-cost countries, reducing hours, or limiting the use of subcontractors and

foundries could result in production inefficiencies, higher costs, and/or strikes or other types of labor unrest.

We are subject to foreign currency exchange rate risks which may impact our results of operations.

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From time to time, we utilize forward contracts to hedge a portion of projected cash flows from these exposures.

Our significant foreign subsidiaries are located in Germany, Israel, and Asia.

We finance our operations in Europe and certain locations in Asia in local currencies.

operations in Israel and most significant locations in Asia are largely financed in U.S.

Our significant foreign subsidiaries are located in Germany, Israel, the United Kingdom, and Asia.

We finance our operations in Europe and certain locations in Asia in

local currencies.

Our operations in Israel, the United Kingdom, and most significant locations in Asia are largely financed in U.S.

dollars, but these subsidiaries also have significant transactions in local currencies.

Our exposure to foreign currency risk is mitigated to the extent that the

costs incurred and the revenues earned in a particular currency offset one another.

Our exposure to foreign currency risk is more pronounced in situations where, for example, production labor costs are predominantly paid in local currencies while the

sales revenue for those products is denominated in U.S.

This is particularly the case for products produced in Israel, the Czech Republic, and China.

Our exposure to foreign

currency risk is mitigated to the extent that the costs incurred and the revenues earned in a particular currency offset one another.

Our exposure to foreign currency risk is more pronounced in situations where, for example, production labor costs

are predominantly paid in local currencies while the sales revenue for those products is denominated in U.S.

This is particularly the case for products produced in Israel, the United Kingdom, the Czech Republic, and China.

A change in the mix of the currencies in which we transact our business could have a material effect on results of operations.

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subsidiaries.

As of December 31, 2023, 65.5% of our cash and cash equivalents and short-term investments were held by subsidiaries outside of the United States.

Our revolving credit facility provides us with additional U.S.

As of December 31, 2024, substantially all of our cash and cash equivalents and short-term investments were held by subsidiaries outside of the United States.

Our revolving credit facility provides us with

additional U.S.

tax obligations, cash dividends to stockholders, share repurchases, additional convertible debt repurchases, and principal and interest payments on our debt

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parent company, Vishay Intertechnology, Inc.

A U.S.-domiciled subsidiary is expected to be the acquiring entity of Nexperia's wafer fabrication facility and operations in Newport, South Wales, U.K.

subsidiaries have other operating cash needs.

A U.S.-domiciled subsidiary is funding the expansion and operations of the Newport wafer fabrication facility.

subsidiaries have other operating cash

cash and cash equivalents and short-term investment and other liquidity sources are inadequate to satisfy these obligations, we may be required to repatriate

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imposing tariffs on certain goods manufactured in China and imported into the U.S., including certain of our products.

Such actions may impact our competitiveness and adversely affect the demand for these products, or if those costs cannot be passed

on to our customers, could adversely impact our results of operations for affected segments and the Company as a whole.

has also threatened to impose tariffs on certain goods manufactured in Mexico and other countries.

Such actions may

impact our competitiveness and adversely affect the demand for these products, or if those costs cannot be passed on to our customers, could adversely impact our results of operations for affected segments and the Company as a whole.

Further changes in U.S.

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payments upon conversions thereof.

The repurchase of $53 million principal amount of the 2025 Notes in the fourth fiscal quarter of 2024 reduces the risk associated with the 2025 Notes.

The conditional conversion feature of our outstanding 2030

Notes and 2030 Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2025 Notes or 2030 Notes is triggered, holders of such notes will be entitled to convert the notes at any time during specified periods at their option.

one or more holders elect to convert their notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity.

In addition, even if holders do not elect to convert their notes, we

could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2030 Notes is triggered, holders of such notes will be entitled to convert the notes at any time during specified periods at their option.

If one or more

holders elect to convert their notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity.

In addition, even if holders do not elect to convert their notes, we could be

required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Certain provisions in the indentures governing the 2025

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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