Ichor Holdings Ltd (ICHR) 2019年年度報告「NASDAQ」.pdf

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1、ICHOR HOLDINGS,LTD.FORM 10-K(Annual Report)Filed 03/06/20 for the Period Ending 12/27/19 Address3185 LAURELVIEW CT.FREMONT,CA,94538Telephone510-897-5200CIK0001652535SymbolICHRSIC Code3674-Semiconductors and Related DevicesIndustrySemiconductorsSectorTechnologyFiscal Year12/27http:/www.edgar- Copyrig

2、ht 2020,EDGAR Online,a division of Donnelley Financial Solutions.All Rights Reserved.Distribution and use of this document restricted under EDGAR Online,a division of Donnelley Financial Solutions,Terms of Use.UNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWASHINGTON,D.C.20549FORM10 K(MarkOne)ANNUALREPO

3、RTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthefiscalyearendedDecember27,2019or TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthetransitionperiodfromtoCommissionFileNumber001 37961ICHORHOLDINGS,LTD.(Exactnameofregistrantasspecifiedinitscharter)Cayman

4、Islands001-37961NotApplicable(Stateorotherjurisdictionofincorporation)(CommissionFileNumber)(IRSEmployerIdentificationNo.)3185LaurelviewCt.Fremont,California94538(Addressofprincipalexecutiveoffices,includingZipCode)(510)897-5200(Registrantstelephonenumber,includingareacode)NotApplicable(Formernameor

5、formeraddress,ifchangedsincelastreport)SecuritiesregisteredpursuanttoSection12(b)oftheAct:TitleofeachclassTradingSymbol(s)NameofeachexchangeonwhichregisteredOrdinaryShares,parvalue$0.0001ICHRTheNASDAQStockMarketLLCSecuritiesregisteredpursuanttoSection12(g)oftheAct:NoneIndicatebycheckmarkiftheregistr

6、antisawellknownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesNoIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeAct

7、of1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofReg

8、ulationST(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anonacceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinit

9、ionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b2oftheExchangeAct.LargeacceleratedfilerAcceleratedfilerNon-acceleratedfilerSmallerreportingcompanyEmergingGrowthCompanyIfanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectedn

10、ottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b2oftheAct).YesNoTherewere22,805,443ordinaryshares,$0.0001parvalue,outstandingasofMarch4

11、,2020.Theaggregatemarketvalueofvotingordinarysharesheldbynon-affiliateswas$526,288,000asofJune28,2019,thelastbusinessdayofourmostrecentlycompletedsecondfiscalquarter.DOCUMENTSINCORPORATEDBYREFERENCETheinformationrequiredbyPartIIIofForm10KisincorporatedhereinbyreferencetotheregistrantsdefinitiveProxy

12、Statementrelatingtoits2020GeneralMeeting,whichwillbefiledwiththeSecuritiesandExchangeCommissionwithin120daysaftertheendoftheregistrantsfiscalyear.TABLEOFCONTENTSPagePARTIITEM1.BUSINESS1ITEM1A.RISKFACTORS9ITEM1B.UNRESOLVEDSTAFFCOMMENTS26ITEM2.PROPERTIES26ITEM3.LEGALPROCEEDINGS26ITEM4.MINESAFETYDISCLO

13、SURES26PARTIIITEM5.MARKETFORTHEREGISTRANTSCOMMONEQUITY,RELATEDSHAREHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIES27ITEM6.SELECTEDFINANCIALDATA28ITEM7.MANAGEMENTSDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS30ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK44ITEM8.FINA

14、NCIALSTATEMENTSANDSUPPLEMENTARYDATA44ITEM9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURE44ITEM9A.CONTROLSANDPROCEDURES44ITEM9B.OTHERINFORMATION45PARTIIIITEM10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE46ITEM11.EXECUTIVECOMPENSATION46ITEM12.SECURITYOWNERSHIPOFCERTA

15、INBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSHAREHOLDERMATTERS46ITEM13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE46ITEM14.PRINCIPALACCOUNTINGFEESANDSERVICES46PARTIVITEM15.EXHIBITSANDFINANCIALSTATEMENTSCHEDULES46ITEM16.FORM10-KSUMMARY46EXHIBITINDEXSIGNATURESCAUTIONARYSTATEMENTCON

16、CERNINGFORWARD LOOKINGSTATEMENTSThisreportcontainsforward-lookingstatementswithinthemeaningofthefederalsecuritieslaws.Allstatementsotherthanstatementsofhistoricalfactincludedinthisreportareforward-lookingstatements.Thesestatementsrelatetoanalysesandotherinformation,whicharebasedonforecastsoffuturere

17、sultsandestimatesofamountsnotyetdeterminable.Thesestatementsalsorelatetoourfutureprospects,developmentsandbusinessstrategies.Theseforward-lookingstatementsareidentifiedbytheuseoftermsandphrasessuchas“anticipate,”“believe,”“could,”“estimate,”“expect,”“intend,”“may,”“plan,”“predict,”“project,”“will”an

18、dsimilartermsandphrases,includingreferencestoassumptions.However,thesewordsarenottheexclusivemeansofidentifyingsuchstatements.Thesestatementsarecontainedinmanysectionsofthisreport,includingthoseentitled“Business”and“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations.”Although

19、webelievethatourplans,intentionsandexpectationsreflectedinorsuggestedbysuchforward-lookingstatementsarereasonable,wecannotassureyouthatwewillachievethoseplans,intentionsorexpectations.Allforward-lookingstatementsaresubjecttorisksanduncertaintiesthatmaycauseactualresultstodiffermateriallyfromthosetha

20、tweexpected.Importantfactorsthatcouldcauseactualresultstodiffermateriallyfromourexpectations,orcautionarystatements,aredisclosedunderthesectionsentitled“RiskFactors”and“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations”inthisreport.Allwrittenandoralforward-lookingstatementsa

21、ttributabletous,orpersonsactingonourbehalf,areexpresslyqualifiedintheirentiretybythecautionarystatementscontainedinthisreportundertheheading“RiskFactors,”aswellasothercautionarystatementsthataremadefromtimetotimeinourotherfilingswiththeSecuritiesandExchangeCommissionandpubliccommunications.Youshould

22、evaluateallforward-lookingstatementsmadeinthisreportinthecontextoftheserisksanduncertainties.Wecautionyouthattheimportantfactorsreferencedabovemaynotcontainallofthefactorsthatareimportanttoyou.Inaddition,wecannotassureyouthatwewillrealizetheresultsordevelopmentsweexpectoranticipateor,evenifsubstanti

23、allyrealized,thattheywillresultintheconsequencesoraffectusorouroperationsinthewayweexpect.Theforward-lookingstatementsincludedinthisreportaremadeonlyasofthedatehereof.Weundertakenoobligationtopubliclyupdateorreviseanyforward-lookingstatementasaresultofnewinformation,futureeventsorotherwise,exceptaso

24、therwiserequiredbylaw.PARTIITEM1.BUSINESSUnlessexpresslyindicatedorthecontextrequiresotherwise,theterms“Ichor,”“Company,”“we,”“us,”“our,”andsimilartermsinthisreportrefertoIchorHoldings,Ltd.anditsconsolidatedsubsidiaries.Weusea52or53weekfiscalyearendingonthelastFridayinDecember.Thefollowingtabledetai

25、lsourfiscalperiodsincludedelsewhereinthisreport.Allreferencestofiscalyearsorquartersrelatetoourfiscalperiodassodetailed.FiscalPeriodPeriodEndingWeeksinPeriodFiscalYear2019:December27,201952FirstQuarterMarch29,201913SecondQuarterJune28,201913ThirdQuarterSeptember27,201913FourthQuarterDecember27,20191

26、3FiscalYear2018:December28,201852FirstQuarterMarch30,201813SecondQuarterJune29,201813ThirdQuarterSeptember28,201813FourthQuarterDecember28,201813FiscalYear2017:December29,201752FirstQuarterMarch31,201713SecondQuarterJune30,201713ThirdQuarterSeptember29,201713FourthQuarterDecember29,201713FiscalYear2

27、016December30,201653FiscalYear2015December25,201552CompanyOverviewWearealeaderinthedesign,engineering,andmanufacturingofcriticalfluiddeliverysubsystemsandcomponentsforsemiconductorcapitalequipment.Ourproductofferingsincludegasandchemicaldeliverysystemsandsubsystems,collectivelyknownasfluiddeliverysy

28、stemsandsubsystems,whicharekeyelementsoftheprocesstoolsusedinthemanufacturingofsemiconductordevices.Ourgasdeliverysubsystemsdeliver,monitor,andcontrolprecisequantitiesofthespecializedgasesusedinsemiconductormanufacturingprocessessuchasetchanddeposition.Ourchemicaldeliverysystemsandsubsystemsprecisel

29、yblendanddispensethereactiveliquidchemistriesusedinsemiconductormanufacturingprocessessuchaschemical-mechanicalplanarization,electroplating,andcleaning.Wealsomanufactureprecisionmachinedcomponents,weldments,andproprietaryproductsforuseinfluiddeliverysystemsfordirectsalestoourcustomers.Thisvertically

30、integratedportionofourbusinessisprimarilyfocusedonmetalandplasticpartsthatareusedingasandchemicalsystems,respectively.Fluiddeliverysubsystemsensureaccuratemeasurementanduniformdeliveryofspecialtygasesandchemicalsatcriticalstepsinthesemiconductormanufacturingprocesses.Anymalfunctionormaterialdegradat

31、ioninfluiddeliveryreducesyieldsandincreasesthelikelihoodofmanufacturingdefectsintheseprocesses.MostOEMsoutsourcealloraportionofthedesign,engineering,andmanufacturingoftheirgasdeliverysubsystemstoafewspecializedsuppliers,includingus.Additionally,manyOEMsarealsoincreasinglyoutsourcingthedesign,enginee

32、ring,andmanufacturingoftheirchemicaldeliverysubsystemsduetotheincreasedfluidexpertiserequiredtomanufacturethesesubsystems.OutsourcingthesesubsystemshasallowedOEMstoleveragethesuppliershighlyspecializedengineering,design,andproductionskillswhilefocusingtheirinternalresourcesontheirownvalue-addedproce

33、sses.WebelievethatthisoutsourcingtrendhasenabledOEMstoreducetheircostsanddevelopmenttime,aswellasprovidegrowthopportunitiesforspecializedsubsystemssupplierslikeus.1OurgoalistobealeadingsupplieroffluiddeliverysubsystemsandcomponentstoOEMsengagedinmanufacturingcapitalequipmenttoproducesemiconductorsan

34、dtoleverageourtechnologyandproductstoexpandtheshareofouraddressablemarkets.Toachievethisgoal,weengagewithourcustomersearlyintheirdesignanddevelopmentprocessesandutilizeourdeepengineeringresourcesandoperatingexpertise,aswellasourexpandedproductportfolio,tojointlycreateinnovativeandadvancedsolutionsth

35、atmeetthecurrentandfutureneedsofourcustomers.Thesecollaborationsfrequentlyinvolveourengineersworkingatourcustomerssitesandservingasanextensionofourcustomersproductdesignteams.Weemploythisapproachwiththreeofthelargestmanufacturersofsemiconductorcapitalequipmentintheworld.Webelievethisapproachenablesu

36、stodesignproductsthatmeettheprecisespecificationsourcustomersdemand,allowsustooftenbethesolesupplierofthesesubsystemsduringtheinitialproductionramp,andpositionsustobethepreferredsupplierforthefullfivetoten-yearlifespanoftheprocesstool.Thebroadtechnicalexpertiseofourengineeringteam,coupledwithourearl

37、ycustomerengagementapproach,enablesustoofferinnovativeandreliablesolutionstocomplexfluiddeliverychallenges.WithtwodecadesofexperiencedevelopingcomplexfluiddeliverysubsystemsandmeetingtheconstantlychangingproductionrequirementsofleadingsemiconductorOEMs,wehavedevelopedexpertiseinfluiddeliverythatweof

38、fertoourOEMcustomers.Inaddition,ourcapitalefficientmodelandtheintegrationofourbusinesssystemswiththoseofourcustomersprovidesustheflexibilitytofulfillincreaseddemandandmeetchangingcustomerrequirementswithrelativelylowlevelsofcapitalexpenditures.Withanaimtoprovidesuperiorcustomerservice,wehaveaglobalf

39、ootprintwithmanyfacilitiesstrategicallylocatedincloseproximitytoourcustomers.WehavelongstandingrelationshipswithtoptierOEMcustomers,includingLamResearch,AppliedMaterials,andASML,whichwereourthreelargestcustomersbysalesin2019.Wegeneratedrevenuefromcontinuingoperationsof$620.8million,$823.6million,and

40、$655.9millionin2019,2018,and2017,respectively(hereinafter,allreferencesto“sales”or“revenue”relatestonetsalesfromcontinuingoperations,unlessexplicitlystatedotherwise).Wegeneratednetincomefromcontinuingoperationsof$10.7million,$57.9million,and$56.9millionin2019,2018,and2017,respectively.Wegeneratednon

41、-GAAPadjustednetincomefromcontinuingoperationsof$28.3million,$75.1million,and$65.1millionin2019,2018,and2017,respectively.SeeItem 7 Managements Discussion and Analysis ofFinancial Condition and Results of Operations,Non-GAAP Resultsforadiscussionofnon-GAAPadjustednetincomefromcontinuingoperations,an

42、accompanyingpresentationofthemostdirectlycomparablefinancialmeasurecalculatedinaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates,netincomefromcontinuingoperations,andareconciliationofthedifferencesbetweennon-GAAPadjustednetincomefromcontinuingoperationsandnetincomefromcontinuingop

43、erations.OurCompetitiveStrengthsAsaleaderinthefluiddeliveryindustry,webelievethatourkeycompetitivestrengthsincludethefollowing:Deep Fluids Engineering ExpertiseWebelievethatourengineeringteam,comprisedofchemicalengineers,mechanicalengineers,andsoftwareandsystemsengineers,haspositionedustoexpandthesc

44、opeofoursolutions,provideinnovativeproductsandsubsystems,andstrengthenourincumbentpositionatourOEMcustomers.Manyofourengineersareindustryveteransandhavespentasignificantportionoftheircareersatourcustomers,bringingfirst-handexpertiseandaheightenedunderstandingofourcustomersneeds.Ourengineeringteamact

45、sasanextensionofourcustomersproductdevelopmentteams,providingourcustomerswithtechnicalexpertisethatisoutsideoftheircorecompetencies.Early Engagement with Customers on Product DevelopmentWeseektoengagewithourcustomersandpotentialcustomersveryearlyintheirprocessfornewproductdevelopment.Webelievethisap

46、proachenablesustocollaborateonproductdesign,qualification,manufacturing,andtestinginordertoprovideacomprehensive,customizedsolution.Throughearlyengagementduringthecomplexdesignstages,ourengineeringteamgainsearlyinsightintoourcustomerstechnologyroadmapswhichenablesustopioneerinnovativeandadvancedsolu

47、tions.Inmanycasesourearlyengagementwithourcustomersenablesustobethesolesourcesupplierwhentheproductisinitiallyintroduced.Long History and Strong Relationships with Top Tier CustomersWehaveestablisheddeeprelationshipswithtoptierOEMssuchasLamResearch,AppliedMaterials,andASML,whichwereourthreelargestcu

48、stomersbysalesin2019.Ourcustomersaregloballeadersbysalesinthesemiconductorcapitalequipmentindustry.Ourexistingrelationshipswithourcustomershaveenabledustoeffectivelycompetefornewfluiddeliverysubsystemsforourcustomersnextgenerationproductsindevelopment.Weleverageourdeeprootedexistingcustomerrelations

49、hipswiththesemarketleaderstopenetratenewbusinessopportunitiescreatedthroughindustryconsolidation.Ourclosecollaborationwiththemhascontributedtoourestablishedmarketpositionandseveralkeysupplierawards.2Operational Excellence with Scale to Support the Largest CustomersOverour20yearexperienceindesigninga

50、ndbuildinggasdeliverysystems,wehavedevelopeddeepcapabilitiesinoperations.Wehavestrategicallylocatedourmanufacturingfacilitiesnearourcustomerslocationsinordertoprovidefastandefficientresponsestonewproductintroductionsandaccommodateconfigurationordesignchangeslateinthemanufacturingprocess.Wewillcontin

51、uetoaddcapacityasneededtosupportfuturegrowth.Inadditiontoprovidinghighqualityandreliablefluiddeliverysubsystems,oneofourprincipalstrategiesisdeliveringthelead-timesthatprovideourcustomerstherequiredflexibilityneededintheirproductionprocesses.Wehaveaccomplishedthisbyinvestinginmanufacturingsystemsand

52、processesandanefficientsupplychain.Ourfocusonoperationalefficiencyandflexibilityallowsustoreducemanufacturingcycletimesinordertorespondquicklytocustomerrequestsandlead-timesthatareoftenlessthanfourweeks.Capital Efficient and Scalable Business ModelIngeneral,ourbusinessisnotcapitalintensiveandweareab

53、letogrowsaleswithalowinvestmentinproperty,plant,andequipment.In2019,2018,and2017,ourtotalcapitalexpenditureswere$12.3million,$13.9million,and$8.2million,respectively,representingonly2.0%,1.7%,and1.3%ofsales,respectively.Thesemiconductorcapitalequipmentmarkethashistoricallybeencyclical.Wehavestructur

54、edourbusinesstominimizefixedmanufacturingoverheadandoperatingexpensestoenableustogrownetincomeatahigherratethansalesduringperiodsofgrowth.Conversely,ourlowfixedcostapproachallowsustominimizetheimpactofcyclicaldownturnsonournetincome,butresultsinalowerlevelofgrossmarginleverageorimprovementasapercent

55、ageofsalesintimesofincreaseddemand.OurGrowthStrategyOurobjectiveistoenhanceourpositionasaleaderinprovidingfluiddeliverysolutions,includingsubsystems,components,andtoolrefurbishment,toourcustomersbyleveragingourcorestrengths.Thekeyelementsofourgrowthstrategyare:Grow Our Market Share within Existing C

56、ustomer BaseWeintendtogrowourpositionwithinourexistingcustomersbycontinuingtoleverageourspecializedengineeringtalent,earlycollaborationapproachwithOEMstofosterlong-termrelationships,andexpandedproductofferings.Eachofourcustomersproducesmanydifferentprocesstoolsforvariousprocesssteps.Ateachcustomer,w

57、eareanoutsourcedsupplieroffluiddeliverysubsystemsandcomponentsforasubsetoftheirentireprocesstoolofferings.Weareconstantlylookingtoexpandourmarketshareatourexistingcustomers.Webelievethatourearlycollaborativeapproachwithcustomerspositionsustodeliverinnovativeanddynamicsolutions,offertimelydeploymenta

58、ndmeetcompetitivecosttargets,furtherincreasingourmarketshare.Throughourintellectualproperty(“IP”)purchaseofdevelopedflowcontrollertechnologyinMay2019andouracquisitionsofaKoreangaspanelsupplierinApril2018,aweldmentcompanyandaprecisionmachiningcompanyinJulyandDecember2017,respectively,andaplasticmachi

59、ning&fabricationcompanyinApril2016,wesignificantlyexpandedourservedmarketandalsoenteredthemarketforchemicaldeliverysubsystemsforwetprocesstoolswherewehadonlylimitedengagementinthepast.Usingthisandourexistingengineeringcapability,wedevelopedaliquiddeliverymoduleandwasqualifiedonawetprocessequipmentsy

60、stematoneofourlargestcustomerswhoisamarketleaderinthisspace.Grow Our Total Available Market at Existing Customers with Expanded Product OfferingsWecontinuetoworkwithourexistingcorecustomersonadditionalopportunities,includingchemicaldelivery,oneofourimportantpotentialgrowthareas.Webelievethatwetproce

61、sses,includingcleanandelectrochemicaldeposition(“ECD”),thatrequireprecisechemicaldeliveryarecurrentlyanunderpenetratedmarketopportunityforus.Byleveragingourexistingcustomerrelationshipsandstrongreputationinfluidmechanics,weintendtoincreaseourchemicaldeliverymodulemarketshareandintroduceadditionalrel

62、atedproducts.ThroughourIPpurchaseofdevelopedflowcontrollertechnologyinMay2019andouracquisitionsofaKoreangaspanelsupplierinApril2018,aweldmentcompanyandaprecisionmachiningcompanyinJulyandDecember2017,respectively,andaplasticmachining&fabricationcompanyinApril2016,wesignificantlyexpandedourservedmarke

63、tandenteredthemarketforchemicaldeliverysubsystems.Theacquisitionsallowustomanufactureandassemblethecomplexplasticandmetalproductsandprecisionmachinedcomponentsforthesemiconductorequipment,aerospace,andgeneral-industrialindustries,aswellasprovideusexposuretoandgrowthopportunitiesintheKoreansemiconduc

64、torcapitalequipmentmarket.Expand Our Total Customer Base within Fluid Delivery MarketWehaveexpandedourcustomerbaseandarecurrentlyasupplierofgasdeliverysystemsforaleadinglithographysystemmanufacturer,aleadingALDsystemmanufacturer,andKoreanprocesstoolOEMs.Wecontinuetoactivelyengagewithnewcustomersthat

65、areconsideringoutsourcingtheirgasandchemicaldeliveryneedsaswellasexpandingourcomponentsbusiness.3Continue to Improve Our Manufacturing Process EfficiencyWecontinuallystrivetoimproveourprocessestoreduceourmanufacturingprocesscycletime,improveourabilitytorespondtoshortlead-timeandlastminuteconfigurati

66、onchanges,reduceourmanufacturingcosts,andimproveourinventoryefficiencyrequirementsinordertoimproveprofitabilityandmakeourproductofferingsmoreattractivetonewandexistingcustomers.OurProductsandServicesWearealeaderinthedesign,engineeringandmanufacturingofcriticalfluiddeliverysubsystems.Ourproductandser

67、viceofferingsareclassifiedinthefollowingcategories:Gas Delivery SubsystemsGasdeliveryisamongthemosttechnologicallycomplexfunctionsinsemiconductorcapitalequipmentandisusedtodeliver,monitorandcontrolprecisequantitiesofthevaporsandgasescriticaltothemanufacturingprocess.Ourgasdeliverysystemsconsistofanu

68、mberofgaslines,eachcontrolledbyaseriesofmassflowcontrollers,regulators,pressuretransducers,andvalves,andanintegratedelectroniccontrolsystem.Ourgasdeliverysubsystemsareprimarilyusedinequipmentfor“dry”manufacturingprocesses,suchasetch,chemicalvapordeposition,physicalvapordeposition,epitaxy,andstrip.4C

69、hemical Delivery Products and SubsystemsOurchemicaldeliveryproductsandsubsystemsareusedtopreciselyblendanddispensereactivechemistriesandcolloidalslurriescriticaltothespecific“wet”front-endprocess,suchaswetclean,electrochemicaldeposition,andchemical-mechanicalplanarization(“CMP”).Inadditiontothechemi

70、caldeliverysubsystem,wealsomanufacturetheprocessmodulesthatapplythevariouschemicalsdirectlytothewaferinaprocessandapplication-uniquemannertocreatethedesiredchemicalreaction.Theimagebelowshowsatypicalwet-processfrontendsemiconductortool,withachemicaldeliverysubsystemandcorrespondingapplicationprocess

71、modulehighlighted:WeldmentsOurcompleteofferingofweldmentssupportthedeliveryofgasesthroughtheprocesstool.Wehavedevelopedbothautomatedandmanualweldingprocessestosupportworldclassworkmanshiponalltypesofmetalsneededtosupportfluiddeliverywithinthesemiconductormarket.Theweldedassembliesareusedinbothwetand

72、dryprocesses.Precision MachiningPrecisionmachiningprovidesustheabilitytosupplyourcustomerswithcomponentsusedinourgasdeliverysystemsandweldments,whilealsoprovidingcustommachinedsolutionsthroughoutcustomersequipment.Manyoftheseitemsareuseddownstreamofthegassystemandinprocesscriticalapplications.Ourpre

73、cisionmachinedproductscanbeusedinbothwetanddryapplications.5HistoryWewereoriginallyincorporatedasCelerity,Inc.(“Celerity”)in1999.Ourbusinessofdesigningandmanufacturingcriticalsystemsforsemiconductorcapitalequipmentmanufacturersoperatedasastand-alonebusinessuntil2009whenCeleritysoldthebusinesstoapriv

74、ateequityfund.FranciscoPartners(“FP”)acquiredthebusinessinDecember2011andformedIchorHoldings,Ltd.,anexemptcompanyincorporatedintheCaymanIslands,inMarch2012toserveastheparentcompanyaspartofarestructuringtoaccommodatetheexpansionofourbusinessinSingaporeandMalaysia.InApril2012,weacquiredSemiScenicUKLim

75、itedtoproviderefurbishmentservicesforlegacytools.InApril2016,wepurchasedAjax-UnitedPatterns&Molds,Inc.(“Ajax”)for$17.6milliontoaddchemicaldeliverysubsystemcapabilitieswithexistingcustomers.WecompletedtheinitialpublicofferingofourordinarysharesinDecember2016.InJuly2017weacquiredCalWeld,Inc.(“CalWeld”

76、)for$56.2milliontoaddtoourgasdeliverysubsystemandweldmentcapabilities.InDecember2017weacquiredTalonInnovationsCorporation(“Talon”)for$137.8milliontoaddtoourgasdeliverysubsystem,precisionmachining,andcomponentmanufacturingcapabilities.InApril2018,weacquiredIANEngineeringCo.,Ltd.(“IAN”)for$6.5milliont

77、oprovideusexposuretoandgrowthopportunitiesintheKoreansemiconductorcapitalequipmentmarket.Weintendtocontinuetoevaluateopportunisticacquisitionstosupplementourorganicgrowth.Customers,SalesandMarketingWeprimarilymarketandsellourproductsdirectlytoequipmentOEMsinthesemiconductorequipmentmarket.InJapan,we

78、utilizeavalueaddedresellertomarketandsellourchemicaldeliverysystem.Wearedependentuponasmallnumberofcustomers,asthesemiconductorequipmentmanufacturermarketishighlyconcentratedwithfourcompaniesaccountingforover80%ofallprocesstoolrevenues.For2019,ourtwolargestcustomerswereLamResearchandAppliedMaterials

79、,whichaccountedfor51%and33%ofsales,respectively.Wedonothavelong-termcontractsthatrequirecustomerstoplaceorderswithusinfixedorminimumvolumes,andwegenerallyoperateonapurchaseorderbasiswithcustomers.Oursalesandmarketingeffortsfocusonfosteringclosebusinessrelationshipswithourcustomers.Asaresult,welocate

80、manyofouraccountmanagersnearthecustomertheysupport.Oursalesprocessinvolvesclosecollaborationbetweenouraccountmanagersandengineeringandoperationsteams.Accountmanagersandengineersworktogetherwithcustomersandincertaincasesprovideon-sitesupport,includingattendingcustomersinternalmeetingsrelatedtoproduct

81、ionandengineeringdesign.Eachcustomerprojectissupportedbyouraccountmanagersandcustomersupportteamwhoensurewearealignedwithallofthecustomersquality,cost,anddeliveryexpectations.Operations,ManufacturingandSupplyChainManagementWehavedevelopedahighlyflexiblemanufacturingmodelwithcost-effectivelocationssi

82、tuatednearbythemanufacturingfacilitiesofourlargestcustomers.WehavefacilitiesintheUnitedStates,Singapore,Malaysia,theUnitedKingdom,andKorea.OperationsOurproductcycleengagementsbeginbyworkingcloselywithourcustomerstooutlinethesolutionspecificationsbeforedesignandprototypingevenbegin.Ourdesignandmanufa

83、cturingprocessishighlyflexible,enablingourcustomerstomakealterationstotheirfinalrequirementsthroughoutthedesign,engineering,andmanufacturingprocess.Thisflexibilityresultsinsignificantlydecreasedorder-to-deliverycycletimesforourcustomers.Forinstance,itcantakeaslittleas20to30daysforustomanufactureagas

84、deliverysystemwithfullyevaluatedperformancemetricsafterreceivinganorder.ManufacturingWeareISO9001certifiedorcompliantateachofourmanufacturinglocations,andourmanufacturedsubsystemsandmodulesadheretostrictdesigntolerancesandspecifications.WeoperateClass100andClass10,000cleanroomfacilitiesforcustomer-s

85、pecifiedtesting,assembly,andintegrationofhigh-puritygasandchemicaldeliverysystemsatourlocationsinSingapore,Oregon,Texas,andKorea.WeoperateadditionalfacilitiesinMalaysia,Oregon,andCaliforniaforweldmentsandrelatedcomponentsusedinourgasdeliverysubsystems,andweoperateaseparatefacilityinCaliforniaforcrit

86、icalcomponentsusedinourchemicaldeliverysubsystems.WeoperatefacilitiesinMinnesotaandFloridaforprecisionmachiningofcomponentsforsaletoourcustomersandinternaluse.Manyofourfacilitiesarelocatedincloseproximitytoourlargestcustomerstoallowustocollaboratewiththemonaregularbasisandtoenableustodeliverourprodu

87、ctsonajust-in-timebasis,regardlessofordersizeorthedegreeofchangesintheapplicableconfigurationorspecifications.6Wequalifyandtestkeycomponentsthatareintegratedintooursubsystemsandtestourfluiddeliverysubsystemsduringthedesignprocessandagainpriortoshipping.Ourqualitymanagementsystemallowsustoaccessreal-

88、timecorrectiveactionreports,non-conformancereports,customercomplaints,andcontrolleddocumentation.Inaddition,ourseniormanagementconductsquarterlyreviewsofourqualitycontrolsystemtoevaluateeffectiveness.Ourcustomersalsocompletequarterlysurveyswhichallowustomeasuresatisfaction.Supply Chain ManagementWeu

89、seawiderangeofcomponentsandmaterialsintheproductionofourgasandchemicaldeliverysystems,includingfilters,massflowcontrollers,regulators,pressuretransducers,andvalves.Weobtaincomponentsandmaterialsfromalargenumberorsources,includingsinglesourceandsolesourcesuppliers.Weuseconsignmentmaterialandjust-in-t

90、imestockingprogramstobettermanageourcomponentinventoriesandbetterrespondtochangingcustomerrequirements.Theseapproachesenableustosignificantlyreduceourinventorylevelsandmaintainflexibilityinrespondingtochangesinproductdemand.Akeypartofourstrategyistoidentifymultiplesupplierswithastrongglobalreachthat

91、arelocatedwithincloseproximitytoourmanufacturinglocations.TechnologyDevelopmentandEngineeringWehavealonghistoryofengineeringinnovationanddevelopment.Wecontinuetotransitionfrombeinganintegrationengineeringandcomponentscompanyintoagasandchemicaldeliverysystemandsubsystemleaderwithproductdevelopmentand

92、systemsengineering,aswellasintegrationexpertise.Ourindustrycontinuestoexperiencerapidtechnologicalchange,requiringustocontinuouslyinvestintechnologyandproductdevelopmentandregularlyintroducenewproductsandfeaturesthatmeetourcustomersevolvingrequirements.Wehavebuiltateamoffluiddeliveryexperts.AsofDece

93、mber27,2019,ourengineeringteamconsistedofapproximately95engineersanddesignerswithmechanical,electrical,chemical,systems,andsoftwareexpertise.Ourengineersarecloselyconnectedwithourcustomersandtypicallyworkatourcustomerssitesandoperateasanextensionofourcustomersdesignteam.Weengineerwithinourcustomersp

94、rocesses,designvaults,drawingstandards,andpartnumberingsystems.Thesedevelopmenteffortsaredesignedtomeetspecificcustomerrequirementsintheareasofsubsystemdesign,materials,componentselection,andfunctionality.Themajorityofoursalesaregeneratedfromprojectsduringwhichourengineerscooperatedwithourcustomerea

95、rlyinthedesigncycle.Throughthisearlycollaborativeprocess,webecomeanintegralpartofourcustomersdesignanddevelopmentprocesses,andweareabletoquicklyanticipateandrespondtoourcustomerschangingrequirements.Ourengineeringteamalsoworksdirectlywithoursupplierstohelpthemidentifynewcomponenttechnologiesandmaken

96、ecessarychangesin,andenhancementsto,thecomponentsthatweintegrateintoourproducts.Ouranalyticalandtestingcapabilitiesenableustoevaluatemultiplesuppliercomponenttechnologiesandprovidecustomerswithawiderangeofappropriatecomponentanddesignchoicesfortheirgasandchemicaldeliverysystemsandothercriticalsubsys

97、tems.Ouranalyticalandtestingcapabilitiesalsohelpusanticipatetechnologicalchangesandtherequirementsincomponentfeaturesfornext-generationgasdeliverysystemsandothercriticalsubsystems.CompetitionThemarketsforourproductsareverycompetitive.Whenwecompetefornewbusiness,wefacecompetitionfromothersuppliersofg

98、asorchemicaldeliverysubsystems,andinsomecaseswiththeinternalmanufacturinggroupsofOEMs.WhilemanyOEMshaveoutsourcedthedesignandmanufacturingoftheirgasandchemicaldeliverysystems,wewouldfaceadditionalcompetitionifinthefuturetheseOEMselectedtodevelopthesesystemsinternally.Thefluiddeliverysubsystemmarketi

99、sconcentratedandwefacecompetitionprimarilyfromUltraCleanTechnology,withadditionalcompetitionfromregionalsuppliers.Thechemicaldeliverysubsystem,weldments,andprecisionmachiningindustriesarefragmentedandwefacecompetitionfromnumeroussmallersuppliers.Inaddition,themarketfortoolrefurbishmentisfragmentedan

100、dwecompetewithmanyregionalcompetitors.Theprimarycompetitivefactorsweemphasizeinclude:customerrelationships;earlyengagementwithcustomers;largeandexperiencedengineeringstaff;design-to-deliverycycletimes;andflexiblemanufacturingcapabilities.7Weexpectourcompetitorstocontinuetoimprovetheperformanceofthei

101、rcurrentproductsandtointroducenewproductsornewtechnologiesthatcouldadverselyaffectsalesofourcurrentandfutureproducts.Inaddition,thelimitednumberofpotentialcustomersinourindustryfurtherintensifiescompetition.Weanticipatethatincreasedcompetitivepressuresmaycauseintensifiedprice-basedcompetitionandwema

102、yhavetoreducethepricesofourproducts.Inaddition,weexpecttofacenewcompetitorsasweenternewmarkets.IntellectualPropertyOursuccessdepends,inpart,uponourabilitytodevelop,maintain,andprotectourtechnologyandproductsandtoconductourbusinesswithoutinfringingtheproprietaryrightsofothers.Wecontinuetoinvestinsecu

103、ringintellectualpropertyprotectionforourtechnologyandproductsandprotectourtechnologyby,amongotherthings,filingpatentapplications.Wealsorelyonacombinationoftradesecretsandconfidentialityprovisions,andtoamuchlesserextent,copyrightsandtrademarks,toprotectourproprietaryrights.Wehavehistoricallyfocusedou

104、rpatentprotectioneffortsintheUnitedStates.AsofDecember27,2019,weheld47patents,21ofwhichwereU.S.patentsand17ofwhichwereacquiredaspartofourIPpurchaseofdevelopedflowcontrollertechnologyinMay2019.Whileweconsiderourpatentstobevaluableassets,wedonotbelievethesuccessofourbusinessorouroveralloperationsarede

105、pendentuponanysinglepatentorgroupofrelatedpatents.Inaddition,wedonotbelievethatthelossorexpirationofanysinglepatentorgroupofrelatedpatentswouldmateriallyaffectourbusiness.Intellectualpropertythatwedeveloponbehalfofourcustomersisgenerallyownedexclusivelybythosecustomers.Inaddition,wehaveagreedtoindem

106、nifycertainofourcustomersagainstclaimsofinfringementoftheintellectualpropertyrightsofotherswithrespecttoourproducts.Historically,wehavenotpaidanyclaimsundertheseindemnificationobligations,andwedonothaveanypendingindemnificationclaimsagainstus.EmployeesandLaborRelationsAsofDecember27,2019,wehadapprox

107、imately1,355fulltimeemployeesand360contractortemporaryworkers,whichallowflexibilityasbusinessconditionsandgeographicdemandchange.Ofourtotalemployees,approximately95areengineers,70areengagedinsalesandmarketing,1,440areengagedinmanufacturing,and110performexecutiveandadministrativefunctions.Noneofourem

108、ployeesareunionized,butinvariouscountries,locallawrequiresourparticipationinworkscouncils.Wehavenotexperiencedanymaterialworkstoppagesatanyofourfacilities.Weconsiderourrelationshipwithouremployeestobegood.Environmental,Health,andSafetyRegulationsOuroperationsandfacilitiesaresubjecttofederal,state,an

109、dlocalregulatoryrequirementsandforeignlawsandregulations,relatingtoenvironmental,wastemanagement,andhealthandsafetymatters,includingthoserelatingtotherelease,use,storage,treatment,transportation,discharge,disposal,andremediationofcontaminants,hazardoussubstances,andwastes,aswellaspracticesandprocedu

110、resapplicabletotheconstructionandoperationofourfacilities.Webelievethatourbusinessisoperatedinsubstantialcompliancewithapplicableregulations.However,inthefuturewecouldincursubstantialcosts,includingcleanupcosts,finesorcivilorcriminalsanctions,orthird-partypropertydamage,orpersonalinjuryclaims,inthee

111、ventofviolationsorliabilitiesundertheselawsandregulations,ornon-compliancewiththeenvironmentalpermitsrequiredatourfacilities.Potentiallysignificantexpenditurescouldberequiredinordertocomplywithenvironmentallawsthatmaybeadoptedorimposedinthefuture.Wearenotawareofanythreatenedorpendingenvironmentalinv

112、estigations,lawsuits,orclaimsinvolvingus,ouroperations,orourcurrentorformerfacilities.AvailableInformationO.Wemakeavarietyofinformationavailable,freeofcharge,atourInvestorRelationswebsite,.ThisinformationincludesourAnnualReportsonForm10K,ourQuarterlyReportsonForm10Q,ourCurrentReportsonForm8K,andanya

113、mendmentstothosereportsassoonasreasonablypracticableafterweelectronicallyfilethosereportswithorfurnishthemtotheSecuritiesandExchangeCommission(“SEC”),aswellasourCodeofBusinessEthicsandConductandothergovernancedocuments.TheSECmaintainsaninternetsitethatcontainsreports,proxyandinformationstatements,an

114、dotherinformationregardingissuersthatfiledocumentselectronicallywiththeSECatsec.gov.Thecontentsofthesewebsites,ortheinformationconnectedtothosewebsites,arenotincorporatedintothisreport.Referencestowebsitesinthisreportareprovidedasaconvenienceanddonotconstitute,andshouldnotbeviewedas,incorporationbyr

115、eferenceoftheinformationcontainedon,oravailablethrough,thewebsite.8ITEM1A.RISKFACTORSThere are many factors that affect our business and the results of operations,some of which are beyond our control.The following is a description of someimportant factors that may cause the actual results of operati

116、ons in future periods to differ materially from those currently expected or desired.RisksRelatedtoOurBusinessOurbusinessdependssignificantlyonexpendituresbymanufacturersinthesemiconductorcapitalequipmentindustry,which,inturn,isdependentuponthesemiconductordeviceindustry.Whenthatindustryexperiencescy

117、clicaldownturns,demandforourproductsandservicesislikelytodecrease,whichwouldlikelyresultindecreasedsales.Wemayalsobeforcedtoreduceourpricesduringcyclicaldownturnswithoutbeingabletoproportionallyreducecosts.Ourbusiness,financialconditionandresultsofoperationsdependsignificantlyonexpendituresbymanufac

118、turersinthesemiconductorcapitalequipmentindustry.Inturn,thesemiconductorcapitalequipmentindustrydependsuponthecurrentandanticipatedmarketdemandforsemiconductordevices.Thesemiconductordeviceindustryissubjecttocyclicalandvolatilefluctuationsinsupplyanddemandandinthepasthasperiodicallyexperiencedsignif

119、icantdownturns,whichoftenoccurinconnectionwithdeclinesingeneraleconomicconditions,andwhichhaveresultedinsignificantvolatilityinthesemiconductorcapitalequipmentindustry.Thesemiconductordeviceindustryhasalsoexperiencedrecurringperiodsofover-supplyofproductsthathavehadaseverenegativeeffectonthedemandfo

120、rcapitalequipmentusedtomanufacturesuchproducts.Wehaveexperienced,andanticipatethatwewillcontinuetoexperience,significantfluctuationsincustomerordersforourproductsandservicesasaresultofsuchfluctuationsandcycles.Anydownturnsinthesemiconductordeviceindustrycouldhaveamaterialadverseeffectonourbusiness,f

121、inancialconditionandresultsofoperations.Inaddition,wemustbeabletoappropriatelyalignourcoststructurewithprevailingmarketconditions,effectivelymanageoursupplychainandmotivateandretainemployees,particularlyduringperiodsofdecreasingdemandforourproducts.Wemaybeforcedtoreduceourpricesduringperiodsofdecrea

122、singdemand.Whileweoperateunderalowfixedcostmodel,wemaynotbeabletoproportionallyreduceallofourcostsifwearerequiredtoreduceourprices.Ifwearenotabletotimelyandappropriatelyadapttothechangesinourbusinessenvironment,ourbusiness,financialconditionandresultsofoperationswillbemateriallyadverselyaffected.The

123、cyclicalandvolatilenatureofthesemiconductordeviceindustryandtheabsenceoflong-termfixedorminimumvolumecontractsmakeanyefforttoprojectamaterialreductioninfuturesalesvolumedifficult.WerelyonaverysmallnumberofOEMcustomersforasignificantportionofoursales.Anyadversechangeinourrelationshipswiththesecustome

124、rscouldmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.Thesemiconductorcapitalequipmentindustryishighlyconcentratedandhasexperiencedsignificantconsolidationinrecentyears.Asaresult,arelativelysmallnumberofOEMcustomershavehistoricallyaccountedforasignificantportionofoursa

125、les,andweexpectthistrendtocontinuefortheforeseeablefuture.For2019,ourtoptwocustomersaccountedforapproximately51%and33%,respectively,ofsales,andweexpectthatoursaleswillcontinuetobeconcentratedamongaverysmallnumberofcustomers.Wedonothaveanylong-termcontractsthatrequirecustomerstoplaceorderswithusinfix

126、edorminimumvolumes.Accordingly,thesuccessofourbusinessdependsonthesuccessofourcustomersandthosecustomersandotherOEMscontinuingtooutsourcethemanufacturingofcriticalsubsystemsandprocesssolutionstous.BecauseofthesmallnumberofOEMsinthemarketsweserve,anumberofwhicharealreadyourcustomers,itwouldbedifficul

127、ttoreplacelostsalesresultingfromthelossof,orthereduction,cancellationordelayinpurchaseordersby,anyoneofthesecustomers,whetherduetoareductionintheamountofoutsourcingtheydo,theirgivingorderstoourcompetitors,theiracquisitionbyanOEMwhoisnotacustomerorwithwhomwedolessbusiness,orotherwise.Wehaveinthepastl

128、ostbusinessfromcustomersforanumberofthesereasons.Ifweareunabletoreplacesalesfromcustomerswhoreducethevolumeofproductsandservicestheypurchasefromusorterminatetheirrelationshipwithusentirely,sucheventscouldhaveamaterialadverseimpactonourbusiness,financialconditionandresultsofoperations.Additionally,if

129、oneormoreofthelargestOEMsweretodecidetosingle-orsole-sourceallorasignificantportionofmanufacturingandassemblyworktoasingleequipmentmanufacturer,suchadevelopmentwouldheightentherisksdiscussedabove.9Ourcustomersexertasignificantamountofnegotiatingleverageoverus,whichmayrequireustoacceptlowerpricesandg

130、rossmarginsorincreasedliabilityriskinordertoretainorexpandourmarketsharewiththem.Byvirtueofourlargestcustomerssizeandthesignificantportionofoursalesthatisderivedfromthem,aswellasthecompetitivelandscape,ourcustomersareabletoexertsignificantinfluenceandpricingpressureinthenegotiationofourcommercialarr

131、angementsandtheconductofourbusinesswiththem.Ourcustomersoftenrequirereducedpricesorotherpricing,qualityordeliverycommitmentsasaconditiontotheirpurchasingfromusinanygivenperiodorincreasingtheirpurchasevolume,whichcan,amongotherthings,resultinreducedgrossmarginsinordertomaintainorexpandourmarketshare.

132、Ourcustomersnegotiatingleveragealsocanresultincustomerarrangementsthatmaycontainsignificantliabilityrisktous.Forexample,someofourcustomersrequirethatweprovidethemindemnificationagainstcertainliabilitiesinourarrangementswiththem,includingclaimsoflossesbytheircustomerscausedbyourproducts.Anyincreasein

133、ourcustomersnegotiatingleveragemayexposeustoincreasedliabilityriskinourarrangementswiththem,which,ifrealized,mayhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Inaddition,newproductsoftencarrylowergrossmarginsthanexistingproductsforseveralquartersfollowingtheirintrod

134、uction.Ifweareunabletoretainandexpandourbusinesswithourcustomersonfavorableterms,orifweareunabletoachievegrossmarginsonnewproductsthataresimilartoormorefavorablethanthegrossmarginswehavehistoricallyachieved,ourbusiness,financialconditionandresultsofoperationsmaybemateriallyadverselyaffected.Theindus

135、triesinwhichweparticipatearehighlycompetitiveandrapidlyevolving,andifweareunabletocompeteeffectively,ourbusiness,financialconditionandresultsofoperationscouldbemateriallyadverselyaffected.Wefaceintensecompetitionfromothersuppliersofgasorchemicaldeliverysubsystems,aswellastheinternalmanufacturinggrou

136、psofOEMs.Increasedcompetitionhasinthepastresulted,andcouldinthefutureresult,inpricereductions,reducedgrossmarginsorlossofmarketshare,anyofwhichwouldmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.Wearesubjecttosignificantpricingpressureasweattempttomaintainandincreasema

137、rketsharewithourexistingcustomers.Ourcompetitorsmayofferreducedpricesorintroducenewproductsorservicesforthemarketscurrentlyservedbyourproductsandservices.Theseproductsmayhavebetterperformance,lowerpricesandachievebroadermarketacceptancethanourproducts.OEMsalsotypicallyownthedesignrightstotheirproduc

138、ts.Further,ifourcompetitorsobtainproprietaryrightstothesedesignssuchthatweareunabletoobtainthedesignsnecessarytomanufactureproductsforourOEMcustomers,ourbusiness,financialconditionandresultsofoperationscouldbemateriallyadverselyaffected.Certainofourcompetitorsmayhaveormaydevelopgreaterfinancial,tech

139、nical,manufacturingandmarketingresourcesthanwedo.Asaresult,theymaybeabletorespondmorequicklytoneworemergingtechnologiesandchangesincustomerrequirements,devotegreaterresourcestothedevelopment,promotion,saleandsupportoftheirproductsandservices,andreducepricestoincreasemarketshare.Inadditiontoorganicgr

140、owthbyourcompetitors,theremaybemergerandacquisitionactivityamongourcompetitorsandpotentialcompetitorsthatmayprovideourcompetitorsandpotentialcompetitorswithanadvantageoverusbyenablingthemtoexpandtheirproductofferingsandservicecapabilitiestomeetabroaderrangeofcustomerneeds.Theintroductionofnewtechnol

141、ogiesandnewmarketentrantsmayalsoincreasecompetitivepressures.Weareexposedtorisksassociatedwithweaknessintheglobaleconomyandgeopoliticalinstability.Ourbusinessisdependentuponmanufacturersofsemiconductorcapitalequipment,whosebusinessesinturnultimatelydependlargelyonconsumerspendingonsemiconductordevic

142、es.Continuinguncertaintyregardingtheglobaleconomycontinuestoposechallengestoourbusiness.Economicuncertaintyandrelatedfactors,includingcurrentunemploymentlevels,uncertaintyinEuropeandebtmarkets,geopoliticalinstabilityinvariouspartsoftheworld,fiscaluncertaintyintheU.S.economy,marketvolatilityandtheslo

143、wrateofrecoveryofmanycountriesfromrecentrecessions,exacerbatenegativetrendsinbusinessandconsumerspendingandmaycausecertainofourcustomerstopushout,cancelorrefrainfromplacingordersforproductsorservices,whichmayreducesalesandmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.

144、Difficultiesinobtainingcapital,uncertainmarketconditionsorreducedprofitabilitymayalsocausesomecustomerstoscalebackoperations,exitbusinesses,mergewithothermanufacturers,orfileforbankruptcyprotectionandpotentiallyceaseoperations,leadingtocustomersreducedresearchanddevelopmentfundingand/orcapitalexpend

145、ituresand,inturn,lowerordersfromourcustomersand/oradditionalslowmovingorobsoleteinventoryorbaddebtexpenseforus.Theseconditionsmayalsosimilarlyaffectourkeysuppliers,whichcouldimpairtheirabilitytodeliverpartsandresultindelaysforourproductsorrequireustoeitherprocureproductsfromhigher-costsuppliers,orif

146、noadditionalsuppliersexist,toreconfigurethedesignandmanufactureofourproducts,andwemaybeunabletofulfillsomecustomerorders.Anyoftheseconditionsoreventscouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.10In2016,theUnitedKingdomvotedtoleavetheEuropeanUnion(“EU”)(commo

147、nlyreferredtoas“Brexit”).Asaresultofthereferendum,acomplexanduncertainprocessofnegotiationhastakenplacewhichtodatehasnotresultedinadefinitiveagreementtoestablishthefuturetermsoftheUKsrelationshipwiththeEUorothercountries.Notwithstanding,theUKexitedtheEUonJanuary31,2020underatransitionalarrangementsc

148、heduledtoremaininplaceuntiltheendof2020.ThetransitionalarrangementisintendedprimarilytomaintainthestatusquowithrespecttoUK-EUtradeandadherencetoEUruleswhileadefinitiveexitagreementisnegotiated.Thelong-termnatureoftheUKsrelationshipwiththeEUisunclearandthereisconsiderableuncertaintywhen,orif,anywithd

149、rawalagreementorlong-termrelationshipstrategy,includingtradedeals,willbeagreedtoandimplementedbytheUKandtheEU.BrexitcouldadverselyaffectEuropeanorworldwidepolitical,regulatory,economicormarketconditionsandcouldcontributetoinstabilityinpoliticalinstitutionsandregulatoryagencies.Brexitcouldalsohavethe

150、effectofdisruptingthefreemovementofgoods,services,andpeoplebetweentheUK,theEUandelsewhere.Therecanbenoassurancethatanyoralloftheseevents,orothersthatwecannotanticipateatthistime,willnothaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Anoutbreakofdisease,globalorlocali

151、zedhealthpandemicorepidemicorasimilarpublichealththreat,orthefearofsuchaneventmayimpacteconomicactivity,including,butnotlimitedtodemandforourproducts,workforceavailability,andcoststomanufactureourproducts.InDecember2019,anovelstrainofcoronavirus(“COVID19”)wasreportedinWuhan,China.TheWorldHealthOrgan

152、izationhasdeclaredCOVID19toconstitutea“PublicHealthEmergencyofInternationalConcern.”OnJanuary30,2020,theU.S.DepartmentofStateissuedaLevel4“donottravel”advisoryforChina.TheU.S.governmenthasalsoimplementedenhancedscreenings,quarantinerequirements,andtravelrestrictionsinconnectionwiththeCOVID19outbreak

153、.Thedisruptiontoglobalmarketsthathasoccurredduetotheepidemichasincreaseduncertaintyforsemi-conductordemand.Inaddition,manysuppliersinthesemi-conductorindustryhavehadworkforcesdisruptedduetothequarantinerequirementsandrestrictedtravel.TheextentoftheimpactofCOVID19onouroperationalandfinancialperforman

154、cewilldependonfuturedevelopments,including,butnotlimitedto,thedurationandspreadoftheoutbreakandrelatedtraveladvisoriesandrestrictions,allofwhicharehighlyuncertainandcannotbepredicted.Preventingtheeffectsfromandrespondingtothismarketdisruptionifanyotherpublichealththreat,relatedorotherwise,mayfurther

155、increasecostsofourbusinessandmayhaveamaterialadverseeffectonourbusiness,financialcondition,andresultsofoperations.Ifwedonotkeeppacewithdevelopmentsintheindustriesweserveandwithtechnologicalinnovationgenerally,ourproductsandservicesmaynotbecompetitive.Rapidtechnologicalinnovationinthemarketsweservere

156、quiresustoanticipateandrespondquicklytoevolvingcustomerrequirementsandcouldrenderourcurrentproductofferings,servicesandtechnologiesobsolete.Inparticular,thedesignandmanufacturingofsemiconductorsisconstantlyevolvingandbecomingmorecomplexinordertoachievegreaterpower,performanceandefficiencywithsmaller

157、devices.Capitalequipmentmanufacturersneedtokeeppacewiththesechangesbyrefiningtheirexistingproductsanddevelopingnewproducts.Webelievethatourfuturesuccesswilldependuponourabilitytodesign,engineerandmanufactureproductsthatmeetthechangingneedsofourcustomers.Thisrequiresthatwesuccessfullyanticipateandres

158、pondtotechnologicalchangesindesign,engineeringandmanufacturingprocessesinacost-effectiveandtimelymanner.Ifweareunabletointegratenewtechnicalspecificationsintocompetitiveproductdesigns,developthetechnicalcapabilitiesnecessarytomanufacturenewproductsormakenecessarymodificationsorenhancementstoexisting

159、products,ourbusiness,financialconditionandresultsofoperationscouldbemateriallyadverselyaffected.Thetimelydevelopmentofneworenhancedproductsisacomplexanduncertainprocesswhichrequiresthatwe:designinnovativeandperformance-enhancingfeaturesthatdifferentiateourproductsfromthoseofourcompetitors;identifyem

160、ergingtechnologicaltrendsintheindustriesweserve,includingnewstandardsforourproducts;accuratelyidentifyanddesignnewproductstomeetmarketneeds;collaboratewithOEMstodesignanddevelopproductsonatimelyandcost-effectivebasis;ramp-upproductionofnewproducts,especiallynewsubsystems,inatimelymannerandwithaccept

161、ableyields;manageourcostsofproductdevelopmentandthecostsofproducingtheproductsthatwesell;successfullymanagedevelopmentproductioncycles;andrespondquicklyandeffectivelytotechnologicalchangesorproductannouncementsbyothers.Ifweareunsuccessfulinkeepingpacewithtechnologicaldevelopmentsforthereasonsaboveor

162、otherreasons,ourbusiness,financialconditionandresultsofoperationscouldbemateriallyadverselyaffected.11Wemustdesign,developandintroducenewproductsthatareacceptedbyOEMsinordertoretainourexistingcustomersandobtainnewcustomers.Theintroductionofnewproductsisinherentlyriskybecauseitisdifficulttoforeseethe

163、adoptionofnewstandards,coordinateourtechnicalpersonnelandstrategicrelationshipsandwinacceptanceofnewproductsbyOEMs.Weattempttomitigatethisriskbycollaboratingwithourcustomersduringtheirdesignanddevelopmentprocesses.Wecannot,however,assureyouthatwewillbeabletosuccessfullyintroduce,marketandcost-effect

164、ivelymanufacturenewproducts,orthatwewillbeabletodevelopneworenhancedproductsandprocessesthatsatisfycustomerneeds.Inaddition,newcapitalequipmenttypicallyhasalifespanoffivetotenyears,andOEMsfrequentlyspecifywhichsystems,subsystems,componentsandinstrumentsaretobeusedintheirequipment.Onceaspecificsystem

165、,subsystem,componentorinstrumentisincorporatedintoapieceofcapitalequipment,itwilloftencontinuetobepurchasedforthatpieceofequipmentonanexclusivebasisfor18to24monthsbeforetheOEMgeneratesenoughsalesvolumetoconsideraddingalternativesuppliers.Accordingly,itisimportantthatourproductsaredesignedintothenews

166、ystemsintroducedbytheOEMs.Ifanyofthenewproductswedeveloparenotlaunchedorsuccessfulinthemarket,ourbusiness,financialconditionandresultsofoperationscouldbemateriallyadverselyaffected.Themanufacturingofourproductsishighlycomplex,andifwearenotabletomanageourmanufacturingandprocurementprocesseffectively,

167、ourbusiness,financialconditionandresultsofoperationsmaybemateriallyadverselyaffected.Themanufacturingofourproductsisahighlycomplexprocessthatinvolvestheintegrationofmultiplecomponentsandrequireseffectivemanagementofoursupplychainwhilemeetingourcustomersdesign-to-deliverycycletimerequirements.Through

168、thecourseofthemanufacturingprocess,ourcustomersmaymodifydesignandsystemconfigurationsinresponsetochangesintheirowncustomersrequirements.Inordertorapidlyrespondtothesemodificationsanddeliverourproductstoourcustomersinatimelymanner,wemusteffectivelymanageourmanufacturingandprocurementprocess.Ifwefailt

169、omanagethisprocesseffectively,werisklosingcustomersanddamagingourreputation.Wemayalsobesubjecttoliabilityunderouragreementswithourcustomersifweoroursuppliersfailtore-configuremanufacturingprocessesorcomponentsinresponsetothesemodifications.Inaddition,ifweacquireinventoryinexcessofdemandorthatdoesnot

170、meetcustomerspecifications,wecouldincurexcessorobsoleteinventorycharges.Wehavefromtimetotimeexperiencedbottlenecksandproductiondifficultiesthathavecauseddeliverydelaysandqualitycontrolproblems.Theserisksareevengreaterasweseektoexpandourbusinessintonewsubsystems.Inaddition,certainofoursuppliershavebe

171、en,andmayinthefuturebe,forcedoutofbusinessasaresultoftheeconomicenvironment.Insuchcases,wemayberequiredtoprocureproductsfromhigher-costsuppliersor,ifnoadditionalsuppliersexist,reconfigurethedesignandmanufactureofourproducts.Thiscouldmateriallylimitourgrowth,adverselyimpactourabilitytowinfuturebusine

172、ssandhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Defectsinourproductscoulddamageourreputation,decreasemarketacceptanceofourproductsandresultinpotentiallycostlylitigation.Anumberoffactors,includingdesignflaws,materialandcomponentfailures,contaminationinthemanufact

173、uringenvironment,impuritiesinthematerialsusedandunknownsensitivitiestoprocessconditions,suchastemperatureandhumidity,aswellasequipmentfailures,maycauseourproductstocontainundetectederrorsordefects.Errors,defectsorotherproblemswithourproductsmay:causedelaysinproductintroductionsandshipments;resultini

174、ncreasedcostsanddiversionofdevelopmentresources;causeustoincurincreasedchargesduetounusableinventory;requiredesignmodifications;resultinliabilityfortheunintendedreleaseofhazardousmaterials;createclaimsforrework,replacementand/ordamagesunderourcontractswithcustomers,aswellasindemnificationclaimsfromc

175、ustomers;decreasemarketacceptanceof,orcustomersatisfactionwith,ourproducts,whichcouldresultindecreasedsalesandincreasedproductreturns;orresultinloweryieldsforsemiconductormanufacturers.12Ifanyofourproductscontaindefectsorhavereliability,qualityorcompatibilityproblems,ourreputationmaybedamagedandcust

176、omersmaybereluctanttobuyourproducts.Wemayalsofaceahigherrateofproductdefectsasweincreaseourproductionlevelsinperiodsofsignificantgrowth.Productdefectscouldresultinwarrantyandindemnificationliabilityorthelossofexistingcustomersorimpairourabilitytoattractnewcustomers.Inaddition,wemaynotfinddefectsorfa

177、iluresinourproductsuntilaftertheyareinstalledinamanufacturersfabricationfacility.Wemayhavetoinvestsignificantcapitalandotherresourcestocorrecttheseproblems.Ourcurrentorpotentialcustomersalsomightseektorecoverfromusanylossesresultingfromdefectsorfailuresinourproducts.Inaddition,hazardousmaterialsflow

178、throughandarecontrolledbycertainofourproductsandanunintendedreleaseofthesematerialscouldresultinseriousinjuryordeath.Liabilityclaimscouldrequireustospendsignificanttimeandmoneyinlitigationorpaysignificantdamages.Wemayincurunexpectedwarrantyandperformanceguaranteeclaimsthatcouldmateriallyadverselyaff

179、ectourbusiness,financialconditionandresultsofoperations.Inconnectionwithourproductsandservices,weprovidevariousproductwarranties,performanceguaranteesandindemnificationrights.Warrantyorotherperformanceguaranteeorindemnificationclaimsagainstuscouldcauseustoincursignificantexpensetorepairorreplacedefe

180、ctiveproductsorindemnifytheaffectedcustomerforlosses.Inaddition,qualityissuescanhavevariousotherramifications,includingdelaysintherecognitionofsales,lossofsales,lossoffuturesalesopportunities,increasedcostsassociatedwithrepairingorreplacingproducts,andanegativeimpactonourreputation,allofwhichcouldma

181、teriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.Ourdependenceonalimitednumberofsuppliersmayharmourproductionoutputandincreaseourcosts,andmaypreventusfromdeliveringacceptableproductsonatimelybasis.Ourabilitytomeetourcustomersdemandforourproductsdependsuponobtainingadequate

182、suppliesofqualitycomponentsandotherrawmaterialsonatimelybasis.Inaddition,ourcustomersoftenspecifycomponentsfromparticularsuppliersthatwemustincorporateintoourproducts.Wealsouseconsignmentandjust-in-timestockingprograms,whichmeanswecarryverylittleinventoryofcomponentsorotherrawmaterials,andwerelyonou

183、rsupplierstodelivernecessarycomponentsandrawmaterialsinatimelymanner.However,oursuppliersareundernoobligationtoprovideuswithcomponentsorotherrawmaterials.Asaresult,thelossoforfailuretoperformbyanyofourkeysupplierscouldmateriallyadverselyaffectourabilitytodeliverproductsonatimelybasis.Inaddition,ifas

184、upplierwasunabletoprovidethevolumeofcomponentswerequireonatimelybasisandatacceptablepricesandquality,wewouldhavetoidentifyandqualifyreplacementsfromalternativesourcesofsupply.However,theprocessofqualifyingnewsuppliersforcomplexcomponentsisalsolengthyandcoulddelayourproduction.Wemayalsoexperiencediff

185、icultyinobtainingsufficientsuppliesofcomponentsandrawmaterialsintimesofsignificantgrowthinourbusiness.Ifweareunabletoprocuresufficientquantitiesofcomponentsorrawmaterialsfromsuppliers,ourcustomersmayelecttodelayorcancelexistingordersornotplacefutureorders,whichcouldhaveamaterialadverseeffectonourbus

186、iness,financialconditionandresultsofoperations.Wearesubjecttoorderandshipmentuncertainties,andanysignificantreductions,cancellationsordelaysincustomerorderscouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Oursalesaredifficulttoforecastbecausewegenerallydonothavea

187、materialbacklogofunfilledordersandbecauseoftheshorttimeframewithinwhichweareoftenrequiredtomanufactureanddeliverproductstoourcustomers.Mostofoursalesforaparticularquarterdependoncustomerordersplacedduringthatquarterorshortlybeforeitcommences.Ourcontractsgenerallydonotrequireourcustomerstocommittomin

188、imumpurchasevolumes.Whilemostofourcustomersprovideperiodicrollingforecastsforproductorders,thoseforecastsdonotbecomebindinguntilaformalpurchaseorderissubmitted,whichgenerallyoccursonlyashorttimepriortoshipment.Asaresultoftheforegoingandthecyclicalityandvolatilityoftheindustriesweserve,itisdifficultt

189、opredictfutureorderswithprecision.Occasionally,weordercomponentinventoryandbuildproductsinadvanceofthereceiptofactualcustomerorders.Customersmaycancelorderforecasts,changeproductionquantitiesfromforecastedvolumesordelayproductionforreasonsbeyondourcontrol.Furthermore,reductions,cancellationsordelays

190、incustomerorderforecastsusuallyoccurwithoutpenaltyto,orcompensationfrom,thecustomer.Reductions,cancellationsordelaysinforecastedorderscouldcauseustoholdinventorylongerthananticipated,whichcouldreduceourgrossprofit,restrictourabilitytofundouroperationsandresultinunanticipatedreductionsordelaysinsales

191、.Ifwedonotobtainordersasweanticipate,wecouldhaveexcesscomponentsforaspecificproductand/orfinishedgoodsinventorythatwewouldnotbeabletoselltoanothercustomer,likelyresultingininventorywrite-offs,whichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.13Becauseourcusto

192、mersgenerallyrequirethattheyqualifyourengineering,documentation,manufacturingandqualitycontrolprocedures,ourabilitytoaddnewcustomersquicklyislimited.Wearegenerallyrequiredtoqualifyandmaintainourstatusasasupplierforeachofourcustomers.Thisisatime-consumingprocessthatinvolvestheinspectionandapprovalbya

193、customerofourengineering,documentation,manufacturingandqualitycontrolproceduresbeforethatcustomerwillplaceorderswithus.Ourabilitytolessentheadverseeffectofanylossof,orreductioninsalesto,anexistingcustomerthroughtherapidadditionofoneormorenewcustomersislimitedinpartbecauseofthesequalificationrequirem

194、ents.Consequently,theriskthatourbusiness,financialconditionandresultsofoperationswouldbemateriallyadverselyaffectedbythelossof,oranyreductioninordersby,anyofoursignificantcustomersisincreased.Moreover,ifwelostourexistingstatusasaqualifiedsuppliertoanyofourcustomers,suchcustomercouldcancelitsordersfr

195、omusorotherwiseterminateitsrelationshipwithus,whichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Wemaybesubjecttointerruptionsorfailuresinourinformationtechnologysystems.Werelyonourinformationtechnologysystemstoprocesstransactions,summarizeouroperatingresultsa

196、ndmanageourbusiness.Ourinformationtechnologysystemsaresubjecttodamageorinterruptionfrompoweroutages,computerandtelecommunicationsfailures,computerviruses,cyber-attackorothersecuritybreaches,catastrophicevents,suchasfires,floods,earthquakes,tornadoes,hurricanes,actsofwarorterrorism,andusageerrorsbyou

197、remployees.Ifourinformationtechnologysystemsaredamagedorceasetofunctionproperly,wemayhavetomakeasignificantinvestmenttofixorreplacethem,andwemaysufferlossofcriticaldataandinterruptionsordelaysinouroperations.Wemaybethetargetofattemptedcyber-attacks,computerviruses,maliciouscode,phishingattacks,denia

198、lofserviceattacksandotherinformationsecuritythreats.Todate,cyber-attackshavenothadamaterialimpactonourfinancialcondition,resultsorbusiness;however,wecouldsuffermaterialfinancialorotherlossesinthefutureandwearenotabletopredicttheseverityoftheseattacks.Ourriskandexposuretothesemattersremainsheightened

199、becauseof,amongotherthings,theevolvingnatureofthesethreats,thecurrentglobaleconomicandpoliticalenvironment,ourprominentsizeandscaleandourroleinthefinancialservicesindustry,theoutsourcingofsomeofourbusinessoperations,theongoingshortageofqualifiedcyber-securityprofessionals,andtheinterconnectivityandi

200、nterdependenceofthirdpartiestooursystems.Theoccurrenceofacyber-attack,breach,unauthorizedaccess,misuse,computervirusorothermaliciouscodeorothercyber-securityeventcouldjeopardizeorresultintheunauthorizeddisclosure,gathering,monitoring,misuse,corruption,lossordestructionofconfidentialandotherinformati

201、onthatbelongstous,ourcustomers,ourcounterparties,third-partyserviceprovidersorborrowersthatisprocessedandstoredin,andtransmittedthrough,ourcomputersystemsandnetworks.Theoccurrenceofsuchaneventcouldalsoresultindamagetooursoftware,computersorsystems,orotherwisecauseinterruptionsormalfunctionsinour,our

202、customers,ourcounterpartiesorthirdpartiesoperations.Thiscouldresultinsignificantlosses,lossofcustomersandbusinessopportunities,reputationaldamage,litigation,regulatoryfines,penaltiesorintervention,reimbursementorothercompensatorycosts,orotherwiseadverselyaffectourbusiness,financialconditionorresults

203、ofoperations.Thereliabilityandcapacityofourinformationtechnologysystemsiscriticaltoouroperationsandtheimplementationofourgrowthinitiatives.Anymaterialdisruptioninourinformationtechnologysystems,ordelaysordifficultiesinimplementingorintegratingnewsystemsorenhancingcurrentsystems,couldhaveanadverseeff

204、ectonourbusiness,andresultsofoperations.OurbusinessissubjecttoavarietyofU.S.andinternationallaws,rules,policies,andotherobligationsregardingprivacy,dataprotection,andothermatters.Wearesubjecttofederal,state,andinternationallawsrelatingtothecollection,use,retention,security,andtransferofcustomer,empl

205、oyee,andbusinesspartnerpersonallyidentifiableinformation(“PII”),includingtheEuropeanUnionsGeneralDataProtectionRegulation(“GDPR”),whichcameintoeffectinMay2018andtheCaliforniaConsumerPrivacyAct(“CCPA”),whichcameintoeffectonJanuary1,2020.Inmanycases,theselawsapplynotonlytothird-partytransactions,butal

206、sototransfersofinformationbetweenonecompanyanditssubsidiaries,andamongthesubsidiariesandotherpartieswithwhichwehavecommercialrelations.Theintroductionofnewproductsorexpansionofouractivitiesincertainjurisdictionsmaysubjectustoadditionallawsandregulations.Foreigndataprotection,privacy,andotherlawsandr

207、egulations,includingGDPR,canbemorerestrictivethanthoseintheUnitedStates.TheseU.S.federalandstateandforeignlawsandregulations,includingGDPRwhichcanbeenforcedbyprivatepartiesorgovernmententities,areconstantlyevolvingandcanbesubjecttosignificantchange.Inaddition,theapplicationandinterpretationofthesela

208、wsandregulations,includingGDPR,areoftenuncertain,particularlyinthenewandrapidlyevolvingindustryinwhichweoperate,andmaybeinterpretedandappliedinconsistentlyfromcountrytocountryandinconsistentlywithourcurrentpoliciesandpractices.Theseexistingandproposedlawsandregulationscanbecostlytocomplywithandcande

209、layorimpedethedevelopmentofnewproducts,resultinnegativepublicity,increaseouroperatingcosts,requiresignificantmanagementtimeandattention,andsubjectustoinquiriesorinvestigations,claimsorotherremedies,includingfines,whichmaybesignificant,ordemandsthatwemodifyorceaseexistingbusinesspractices.14Afailureb

210、yus,oursuppliers,orotherpartieswithwhomwedobusinesstocomplywithpostedprivacypoliciesorwithotherfederal,state,orinternationalprivacy-relatedordataprotectionlawsandregulations,includingGDPRandCCPA,couldresultinproceedingsagainstusbygovernmentalentitiesorothers,whichcouldhaveamaterialadverseeffectonour

211、business,resultsofoperations,andfinancialcondition.RestrictivecovenantsunderourCreditFacilitiesmaylimitourcurrentandfutureoperations.Ifwefailtocomplywiththosecovenants,thelenderscouldcauseoutstandingamounts,whicharecurrentlysubstantial,tobecomeimmediatelydueandpayable,andwemightnothavesufficientfund

212、sandassetstopaysuchloans.AsofDecember27,2019,wehad$161.9millionofindebtednessoutstandingunderourtermloanfacilityand$19.2millionofindebtednessoutstandingunderourrevolvingcreditfacility(our“CreditFacilities”).TheoutstandingamountofourCreditFacilitiesreflectedinourconsolidatedfinancialstatementsinclude

213、delsewhereinthisreportisnetof$3.0millionofdebtissuancecosts.Wemayincuradditionalindebtednessinthefuture.OurCreditFacilitiescontaincertainrestrictivecovenantsandconditions,includinglimitationsonourabilityto,amongotherthings:incuradditionalindebtednessorcontingentobligations;createorincurliens,negativ

214、epledgesorguarantees;makeinvestments;makeloans;sellorotherwisedisposeofassets;merge,consolidateorsellsubstantiallyallofourassets;makecertainpaymentsonindebtedness;paydividendsonormakedistributionsinrespectofcapitalstockormakecertainotherrestrictedpaymentsorinvestments;enterintocertainagreementsthatr

215、estrictdistributionsfromrestrictedsubsidiaries;enterintotransactionswithaffiliates;changethenatureofourbusiness;andamendthetermsofourorganizationaldocuments.Asaresultofthesecovenants,wemayberestrictedinourabilitytopursuenewbusinessopportunitiesorstrategiesortorespondquicklytochangesintheindustriesth

216、atweserve.AviolationofanyofthesecovenantswouldbedeemedaneventofdefaultunderourCreditFacilities.Insuchevent,upontheelectionofthelenders,theloancommitmentsunderourCreditFacilitieswouldterminateandtheprincipalamountoftheloansandaccruedinterestthenoutstandingwouldbedueandpayableimmediately.Adefaultmayal

217、soresultintheaccelerationofanyotherdebttowhichacross-accelerationorcross-defaultprovisionapplies.Intheeventourlendersacceleratetherepaymentofourborrowings,wecannotassureyouthatweandoursubsidiarieswouldhavesufficientfundstorepaysuchindebtednessorbeabletoobtainreplacementfinancingonatimelybasisoratall

218、.Theseeventscouldforceusintobankruptcyorliquidation,whichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.WealsomayneedtonegotiatechangestothecovenantsintheagreementsgoverningourCreditFacilitiesinthefutureiftherearematerialchangesinourbusiness,financialconditiono

219、rresultsofoperations,butwecannotassureyouthatwewillbeabletodosoontermsfavorabletousoratall.TheinterestratesonourcreditagreementmightchangebasedonchangestothemethodinwhichLIBORoritsreplacementrateisdetermined.InJuly2017,theFinancialConductAuthority(“FCA”)thatregulatesLIBORannounceditintendstostopcomp

220、ellingbankstosubmitratesforthecalculationofLIBORafter2021.Asaresult,theFederalReserveBoardandtheFederalReserveBankofNewYorkorganizedtheAlternativeReferenceRatesCommittee(“ARRC”)whichidentifiedtheSecuredOvernightFinancingRate(“SOFR”)asitspreferredalternativetoUSD-LIBORinderivativesandotherfinancialco

221、ntracts.WearenotabletopredictwhenLIBORwillceasetobeavailableorwhentherewillbesufficientliquidityintheSOFRmarkets.AnychangesadoptedbyFCAorothergoverningbodiesinthemethodusedfordeterminingLIBORmayresultinasuddenorprolongedincreaseordecreaseinreportedLIBOR.Ifthatweretooccur,ourinterestpaymentscouldchan

222、ge.Inaddition,uncertaintyabouttheextentandmanneroffuturechangesmayresultininterestratesand/orpaymentsthatarehigherorlowerthanifLIBORweretoremainavailableinitscurrentform.15WehaveagreementsthatareindexedtoLIBOR,includingourcreditagreement.Wearemonitoringandevaluatingtherelatedrisksthatariseinconnecti

223、onwithtransitioningcontractstoanewalternativerate,includinganyresultingvaluetransferthatmayoccur.Thevalueofloans,securities,orderivativeinstrumentstiedtoLIBORcouldalsobeimpactedifLIBORislimitedordiscontinued.Forsomeinstruments,themethodoftransitioningtoanalternativeratemaybechallenging,astheymayrequ

224、irenegotiationwiththerespectivecounterparty.IfanagreementisnottransitionedtoanalternativerateandLIBORisdiscontinued,theimpactislikelytovarybyagreement.IfLIBORisdiscontinuedorifthemethodsofcalculatingLIBORchangefromtheircurrentform,interestratesonourcurrentorfutureindebtednessandrelatedinterestratesw

225、apsmaybeadverselyaffected.WhileweexpectLIBORtobeavailableinsubstantiallyitscurrentformuntiltheendof2021,itispossiblethatLIBORwillbecomeunavailablepriortothatpoint.Thiscouldresult,forexample,ifsufficientbanksdeclinetomakesubmissionstotheLIBORadministrator.Inthatcase,therisksassociatedwiththetransitio

226、ntoanalternativereferenceratewillbeacceleratedandmagnified.Certainofourcustomersrequirethatweconsultwiththeminconnectionwithspecifiedfundamentalchangesinourbusiness,andaddressanyconcernsorrequestssuchcustomermayhaveinconnectionwithafundamentalchange.Whilethosecustomersdonothavecontractualapprovalorv

227、etorightswithrespecttofundamentalchanges,ourfailuretoconsultwithsuchcustomersortosatisfactorilyrespondtotheirrequestsinconnectionwithanysuchfundamentalchangecouldconstituteabreachofcontractorotherwisebedetrimentaltoourrelationshipswithsuchcustomers.Certainofourkeycustomersrequirethatweconsultwiththe

228、minconnectionwithspecifiedfundamentalchangesinourbusiness,including,amongotherthings:enteringintoanynewlineofbusiness;amendingormodifyingourorganizationaldocuments;sellingallorsubstantiallyallofourassets,ormergingoramalgamatingwithathirdparty;incurborrowingsinexcessofaspecificamount;makingseniormana

229、gementchanges;enteringintoanyjointventurearrangement;andeffectinganinitialpublicoffering.Thesecustomersdonothavecontractualapprovalorvetorightswithrespecttoanyfundamentalchangesinourbusiness.However,ourfailuretoconsultwithsuchcustomersortosatisfactorilyrespondtotheirrequestsinconnectionwithanysuchfu

230、ndamentalchangecouldconstituteabreachofcontractorotherwisebedetrimentaltoourrelationshipswithsuchcustomers,whichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Wemaynotbeabletogeneratesufficientcashtoserviceallofourindebtedness,includingunderourCreditFacilities,

231、andmaybeforcedtotakeotheractionstosatisfyourobligationsunderourindebtedness,whichmaynotbesuccessful.Ourabilitytomakescheduledpaymentsonortorefinanceourindebtedness,includingunderourCreditFacilities,dependsonourfinancialconditionandresultsofoperations,whicharesubjecttoprevailingeconomicandcompetitive

232、conditionsandotherfactorsbeyondourcontrol.Wemaybeunabletomaintainalevelofcashflowsfromoperatingactivitiessufficienttopermitustofundourday-to-dayoperationsortopaytheprincipal,premium,ifany,andinterestonourindebtedness.Ifourcashflowsandcapitalresourcesareinsufficienttofundourdebtserviceobligations,wec

233、ouldfacesubstantialliquidityproblemsandcouldbeforcedtoreduceordelayinvestmentsandcapitalexpendituresortosellassetsoroperations,seekadditionalcapitalorrestructureorrefinanceourindebtedness.Ifwecannotmakescheduledpaymentsonourdebt,wewillbeindefaultand,asaresult,thelendersunderourCreditFacilitiescouldt

234、erminatetheircommitmentstoloanmoney,orforecloseagainsttheassetssecuringsuchborrowings,andwecouldbeforcedintobankruptcyorliquidation,ineachcase,whichwouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.16Ourbusinessislargelydependentontheknow-howofouremployees,andwege

235、nerallydonothaveanintellectualpropertypositionthatisprotectedbypatents.Webelievethatthesuccessofourbusinessdependsinpartonourproprietarytechnology,information,processesandknow-howandonourabilitytooperatewithoutinfringingontheproprietaryrightsofthirdparties.Werelyonacombinationoftradesecretsandcontra

236、ctualconfidentialityprovisionsand,toamuchlesserextent,patents,copyrightsandtrademarkstoprotectourproprietaryrights.Accordingly,ourintellectualpropertypositionismorevulnerablethanitwouldbeifitwereprotectedprimarilybypatents.Wecannotassureyouthatwehaveadequatelyprotectedorwillbeabletoadequatelyprotect

237、ourtechnology,thatourcompetitorswillnotbeabletoutilizeourexistingtechnologyordevelopsimilartechnologyindependently,thattheclaimsallowedwithrespecttoanypatentsheldbyuswillbebroadenoughtoprotectourtechnologyorthatforeignintellectualpropertylawswilladequatelyprotectourintellectualpropertyrights.Ifwefai

238、ltoprotectourproprietaryrightssuccessfully,ourcompetitivepositioncouldsuffer.Anyfuturelitigationtoenforcepatentsissuedtous,toprotecttradesecretsorknow-howpossessedbyusortodefendourselvesortoindemnifyothersagainstclaimedinfringementoftherightsofotherscouldhaveamaterialadverseeffectonourbusiness,finan

239、cialconditionandresultsofoperations.Thirdpartieshaveclaimedandmayinthefutureclaimweareinfringingtheirintellectualproperty,whichcouldsubjectustolitigationorlicensingexpenses,andwemaybepreventedfromsellingourproductsifanysuchclaimsprovesuccessful.Wemayinthefuturereceiveclaimsthatourproducts,processeso

240、rtechnologiesinfringethepatentsorotherproprietaryrightsofthirdparties.Inaddition,wemaybeunawareofintellectualpropertyrightsofothersthatmaybeapplicabletoourproducts.Anylitigationregardingourpatentsorotherintellectualpropertycouldbecostlyandtime-consuminganddivertourmanagementandkeypersonnelfromourbus

241、inessoperations,anyofwhichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Thecomplexityofthetechnologyinvolvedinourproductsandtheuncertaintyofintellectualpropertylitigationincreasetheserisks.Claimsofintellectualpropertyinfringementmayalsorequireustoenterintocost

242、lylicenseagreements.However,wemaynotbeabletoobtainlicensesontermsacceptabletous,oratall.Wealsomaybesubjecttosignificantdamagesorinjunctionsagainstthedevelopment,manufactureandsaleofcertainofourproductsifanysuchclaimsprovesuccessful.Wealsorelyondesignspecificationsandotherintellectualpropertyofourcus

243、tomersinthemanufactureofproductsforsuchcustomers.Whileourcustomeragreementsgenerallyprovideforindemnificationofusbyacustomerifwearesubjectedtolitigationforthird-partyclaimsofinfringementofsuchcustomersintellectualproperty,suchindemnificationprovisionsmaynotbesufficienttofullyprotectusfromsuchclaims,

244、orourcustomersmaybreachsuchindemnificationobligationstous,whichcouldresultincostlylitigationtodefendagainstsuchclaimsorenforceourcontractualrightstosuchindemnification.Fromtimetotime,wemaybecomeinvolvedinotherlitigationandregulatoryproceedings,whichcouldrequiresignificantattentionfromourmanagementan

245、dresultinsignificantexpensetousanddisruptionsinourbusiness.Inadditiontoanylitigationrelatedtoourintellectualpropertyrights,wemayinthefuturebenamedasadefendantfromtimetotimeinotherlawsuitsandregulatoryactionsrelatingtoourbusiness,suchascommercialcontractclaims,employmentclaimsandtaxexaminations,someo

246、fwhichmayclaimsignificantdamagesorcauseusreputationalharm.Duetotheinherentuncertaintiesoflitigationandregulatoryproceedings,wecannotpredicttheultimateoutcomeofanysuchproceeding.Anunfavorableoutcomecouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperationsorlimitourabilityt

247、oengageincertainofourbusinessactivities.Inaddition,regardlessoftheoutcomeofanylitigationorregulatoryproceeding,suchproceedingsareoftenexpensive,time-consuminganddisruptivetonormalbusinessoperationsandrequiresignificantattentionfromourmanagement.Asaresult,anysuchlawsuitsorproceedingscouldmateriallyad

248、verselyaffectourbusiness,financialconditionandresultsofoperations.Thetechnologylabormarketisverycompetitive,andourbusinesswillsufferifweareunabletohireandretainkeypersonnel.Ourfuturesuccessdependsinpartonthecontinuedserviceofourkeyexecutiveofficers,aswellasourresearch,engineering,salesandmanufacturi

249、ngpersonnel,mostofwhomarenotsubjecttoemploymentornon-competitionagreements.Competitionforqualifiedpersonnelinthetechnologyindustryisparticularlyintense,andweoperateingeographiclocationsinwhichlabormarketsarecompetitive.Ourmanagementteamhassignificantindustryexperienceanddeepcustomerrelationships,and

250、thereforewouldbedifficulttoreplace.Inaddition,ourbusinessisdependenttoasignificantdegreeontheexpertiseandrelationshipswhichonlyalimitednumberofengineerspossess.Manyoftheseengineersoftenworkatourcustomerssitesandserveasanextensionofourcustomersproductdesignteams.Thelossofanyofourkeyexecutiveofficerso

251、rkeyengineersandotherpersonnel,includingourengineersworkingatourcustomerssites,orthefailuretoattractadditionalpersonnelasneeded,couldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperationsandcouldleadtohigherlaborcosts,theuseofless-qualifiedpersonnelandthelossofcustomers.Ina

252、ddition,ifanyofourkeyexecutiveofficersorotherkeyemployeesweretojoinacompetitororformacompetingcompany,wecouldlosecustomers,suppliers,know-howandkeypersonnel.17Wedonotmaintainkey-manlifeinsurancewithrespecttoanyofouremployees.Ourbusinesswillsufferifweareunabletoattract,employandretainhighlyskilledper

253、sonnel.Futureacquisitionsmaypresentintegrationchallenges,andifthegoodwill,indefinite-livedintangibleassetsandotherlong-termassetsrecordedinconnectionwithsuchacquisitionsbecomeimpaired,wewouldberequiredtorecordimpairmentcharges,whichmaybesignificant.Wehaveacquiredstrategicbusinessesinthepastandifwefi

254、ndappropriateopportunitiesinthefuture,wemayacquirebusinesses,productsortechnologiesthatwebelievearestrategic.Theprocessofintegratinganacquiredbusiness,productortechnologymayproduceunforeseenoperatingdifficultiesandexpenditures,failtoresultinexpectedsynergiesorotherbenefitsandabsorbsignificantattenti

255、onofourmanagementthatwouldotherwisebeavailablefortheongoingdevelopmentofourbusiness.Inaddition,wemayrecordaportionoftheassetsweacquireasgoodwill,otherindefinite-livedintangibleassetsorfinite-livedintangibleassets.Wedonotamortizegoodwillandindefinite-livedintangibleassets,butratherreviewthemforimpair

256、mentonanannualbasisorwhenevereventsorchangesincircumstancesindicatethattheircarryingvaluemaynotberecoverable.Therecoverabilityofgoodwillandindefinite-livedintangibleassetsisdependentonourabilitytogeneratesufficientfutureearningsandcashflows.Changesinestimates,circumstancesorconditions,resultingfromb

257、othinternalandexternalfactors,couldhaveasignificantimpactonourfairvaluationdetermination,whichcouldthenhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Ourquarterlysalesandoperatingresultsfluctuatesignificantlyfromperiodtoperiod,andthismaycausevolatilityinoursharepric

258、e.Ourquarterlysalesandoperatingresultshavefluctuatedsignificantlyinthepast,andweexpectthemtocontinuetofluctuateinthefutureforavarietyofreasons,includingthefollowing:demandforandmarketacceptanceofourproductsasaresultofthecyclicalnatureoftheindustriesweserveorotherwise,oftenresultinginreducedsalesduri

259、ngindustrydownturnsandincreasedsalesduringperiodsofindustryrecoveryorgrowth;overalleconomicconditions;changesinthetimingandsizeofordersbyourcustomers;strategicdecisionsbyourcustomerstoterminatetheiroutsourcingrelationshipwithusorgivemarketsharetoourcompetitors;consolidationbyourcustomers;cancellatio

260、nsandpostponementsofpreviouslyplacedorders;pricingpressurefromeitherourcompetitorsorourcustomers,resultinginthereductionofourproductpricesorlossofmarketshare;disruptionsordelaysinthemanufacturingofourproductsorinthesupplyofcomponentsorrawmaterialsthatareincorporatedintoorusedtomanufactureourproducts

261、,therebycausingustodelaytheshipmentofproducts;decreasedmarginsforseveralormorequartersfollowingtheintroductionofnewproducts,especiallyasweintroducenewsubsystemsorotherproductsorservices;changesindesign-to-deliverycycletimes;inabilitytoreduceourcostsquicklyinstepwithreductionsinourpricesorinresponset

262、odecreaseddemandforourproducts;changesinourmixofproductssold;write-offsofexcessorobsoleteinventory;one-timeexpensesorcharges;andannouncementsbyourcompetitorsofnewproducts,servicesortechnologicalinnovations,whichmay,amongotherthings,renderourproductslesscompetitive.18Asaresultoftheforegoing,webelieve

263、thatquarter-to-quartercomparisonsofoursalesandresultsofoperationsmaynotbemeaningfulandthatthesecomparisonsmaynotbeanaccurateindicatorofourfutureperformance.Changesinthetimingortermsofasmallnumberoftransactionscoulddisproportionatelyaffectourresultsofoperationsinanyparticularquarter.Moreover,ourresul

264、tsofoperationsinoneormorefuturequartersmayfailtomeetourguidanceortheexpectationsofsecuritiesanalystsorinvestors.Ifthisoccurs,wewouldexpecttoexperienceanimmediateandsignificantdeclineinthetradingpriceofourordinaryshares.Labordisruptionscouldmateriallyadverselyaffectourbusiness,financialconditionandre

265、sultsofoperations.AsofDecember27,2019,wehadapproximately1,355fulltimeemployeesand360contractortemporaryworkersworldwide.Noneofouremployeesareunionized,butinvariouscountries,locallawrequiresourparticipationinworkscouncils.Whilewehavenotexperiencedanymaterialworkstoppagesatanyofourfacilities,anystoppa

266、georslowdowncouldcausematerialinterruptionsinmanufacturing,andwecannotassureyouthatalternatequalifiedcapacitywouldbeavailableonatimelybasis,oratall.Asaresult,labordisruptionsatanyofourfacilitiescouldmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.Asaglobalcompany,weares

267、ubjecttotherisksofdoingbusinessinternationally,includingperiodicforeigneconomicdownturnsandpoliticalinstability,whichmayadverselyaffectoursalesandcostofdoingbusinessinthoseregionsoftheworld.Foreigneconomicdownturnshaveadverselyaffectedourbusinessandresultsofoperationsinthepastandcouldadverselyaffect

268、ourbusinessandresultsofoperationsinthefuture.Inaddition,otherfactorsrelatingtotheoperationofourbusinessoutsideoftheUnitedStatesmayhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperationsinthefuture,including:theimpositionofgovernmentalcontrolsorchangesingovernmentregulations,

269、includingtaxregulations;difficultiesinenforcingourintellectualpropertyrights;difficultiesindevelopingrelationshipswithlocalsuppliers;difficultiesinattractingnewinternationalcustomers;difficultiesincomplyingwithforeignandinternationallawsandtreaties;restrictionsontheexportoftechnology;compliancewithU

270、.S.andinternationallawsinvolvinginternationaloperations,includingtheForeignCorruptPracticesAct,exportcontrollawsandexportlicenserequirements;difficultiesinachievingheadcountreductionsduetounionizedlaborandworkscouncils;restrictionsontransfersoffundsandassetsbetweenjurisdictions;geo-politicalinstabil

271、ity;andtraderestrictionsandchangesintaxesandtariffs.Inthefuture,wemayseektoexpandourpresenceincertainforeignmarketsorenteremergingmarkets.Evaluatingorenteringintoanemergingmarketmayrequireconsiderablemanagementtime,aswellasstart-upexpensesformarketdevelopmentbeforeanysignificantsalesandearningsarege

272、nerated.Operationsinnewforeignmarketsmayachievelowmarginsormaybeunprofitable,andexpansioninexistingmarketsmaybeaffectedbylocalpolitical,economicandmarketconditions.Aswecontinuetooperateourbusinessglobally,oursuccesswilldepend,inpart,onourabilitytoanticipateandeffectivelymanagetheseandtheotherrisksno

273、tedabove.Theimpactofanyoneormoreofthesefactorscouldmateriallyadverselyaffectourbusiness,financialconditionandresultsofoperations.19ChangesinU.S.tradepolicy,tariffandimport/exportregulationsmayhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Ourinternationaloperationsa

274、ndtransactionsalsodependuponfavorabletraderelationsbetweentheUnitedStatesandtheforeigncountriesinwhichourcustomersandsuppliershaveoperations.ChangesinU.S.orinternationalsocial,political,regulatoryandeconomicconditionsorinlawsandpoliciesgoverningforeigntrade,manufacturing,developmentandinvestmentinth

275、eterritoriesorcountrieswherewecurrentlysellourproductsorconductourbusiness,aswellasanynegativesentimenttowardtheU.S.asaresultofsuchchanges,couldadverselyaffectourbusiness.ThecurrentU.S.presidentialadministrationhasinstitutedorproposedchangesintradepoliciesthatincludethenegotiationorterminationoftrad

276、eagreements,theimpositionofhighertariffsonimportsintotheU.S.,economicsanctionsonindividuals,corporationsorcountries,andothergovernmentregulationsaffectingtradebetweentheU.S.andothercountrieswhereweconductourbusiness.Itmaybetime-consumingandexpensiveforustoalterourbusinessoperationsinordertoadapttoor

277、complywithanysuchchanges.AsaresultofrecentpolicychangesoftheU.S.presidentialadministrationandrecentU.S.governmentproposals,theremaybegreaterrestrictionsandeconomicdisincentivesoninternationaltrade.ThenewtariffsandotherchangesinU.S.tradepolicycouldtriggerretaliatoryactionsbyaffectedcountries,andcerta

278、inforeigngovernmentshaveinstitutedorareconsideringimposingtradesanctionsoncertainU.S.goods.WedoasignificantamountofbusinessthatwouldbeimpactedbychangestothetradepoliciesoftheU.S.andforeigncountries(includinggovernmentalactionrelatedtotariffs,internationaltradeagreements,oreconomicsanctions).Suchchan

279、geshavethepotentialtoadverselyimpacttheU.S.economyorcertainsectorsthereof,ourindustryandtheglobaldemandforourproducts.Wemaynotsucceedindevelopingandimplementingpoliciesandstrategiestocountertheforegoingfactorseffectivelyineachlocationwherewedobusinessandtheforegoingfactorsmaycauseareductioninoursale

280、s,profitabilityorcashflows,orcauseanincreaseinourliabilities.Wearesubjecttofluctuationsinforeigncurrencyexchangerateswhichcouldcauseoperatingresultsandreportedfinancialresultstovarysignificantlyfromperiodtoperiod.ThevastmajorityofoursalesaredenominatedinU.S.Dollars.Manyofthecostsandexpensesassociate

281、dwithourSingapore,MalaysianandU.K.operationsarepaidinSingaporeDollars,MalaysianRinggitorBritishPounds(orEuros),respectively,andweexpectourexposuretothesecurrenciestoincreaseasweincreaseouroperationsinthosecountries.Asaresult,ourriskexposurefromtransactionsdenominatedinnon-U.S.currenciesisprimarilyre

282、latedtotheSingaporeDollar,MalaysianRinggit,BritishPoundandEuro.Inaddition,becausethemajorityofoursalesaredenominatedintheU.S.Dollar,ifoneormoreofourcompetitorssellstoourcustomersinadifferentcurrencythantheU.S.Dollar,wearesubjecttotheriskthatthecompetitorsproductswillberelativelylessexpensivethanourp

283、roductsduetoexchangerateeffects.Wehavenothistoricallyestablishedtransaction-basedhedgingprograms.Foreigncurrencyexchangerisksinherentindoingbusinessinforeigncountriescouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Wearesubjecttonumerousenvironmentallawsandregula

284、tions,whichcouldrequireustoincurenvironmentalliabilities,increaseourmanufacturingandrelatedcompliancecostsorotherwiseadverselyaffectourbusiness.Wearesubjecttoavarietyoffederal,state,localandforeignlawsandregulationsgoverningtheprotectionoftheenvironment.Theseenvironmentallawsandregulationsincludetho

285、serelatingtotheuse,storage,handling,discharge,emission,disposalandreportingoftoxic,volatileorotherwisehazardousmaterialsusedinourmanufacturingprocesses.Thesematerialsmayhavebeenorcouldbereleasedintotheenvironmentatpropertiescurrentlyorpreviouslyownedoroperatedbyus,atotherlocationsduringthetransporto

286、fmaterialsoratpropertiestowhichwesendsubstancesfortreatmentordisposal.Inaddition,wemaynotbeawareofallenvironmentallawsorregulationsthatcouldsubjectustoliabilityintheUnitedStatesorinternationally.Ifweweretoviolateorbecomeliableunderenvironmentallawsandregulationsorbecomenon-compliantwithpermitsrequir

287、edatsomeofourfacilities,wecouldbeheldfinanciallyresponsibleandincursubstantialcosts,includingcleanupcosts,finesandcivilorcriminalsanctions,third-partypropertydamageorpersonalinjuryclaims.FailuretomaintaineffectiveinternalcontrolsinaccordancewithSection404oftheSarbanes-OxleyActcouldhaveamaterialadver

288、seeffectonourbusinessandstockprice.Asapubliclytradedcompany,wearerequiredtocomplywiththeSECsrulesimplementingSection302and404oftheSarbanes-OxleyAct,whichrequiremanagementtocertifyfinancialandotherinformationinourquarterlyandannualreportsandprovideanannualmanagementreportontheeffectivenessofcontrolso

289、verfinancialreporting.PursuanttotheJOBSAct,ourindependentregisteredpublicaccountingfirmwillnotberequiredtoattesttotheeffectivenessofourinternalcontroloverfinancialreportinguntilthelateroftheyearfollowingourfirstannualreportrequiredtobefiledwiththeSECorthedatewearenolongeranemerginggrowthcompany,whic

290、hmaybeuptofivefullfiscalyearsfollowingourinitialpublicofferinginDecember2016.20Ifweidentifyweaknessesinourinternalcontroloverfinancialreporting,areunabletocomplywiththerequirementsofSection404inatimelymannerortoassertthatourinternalcontroloverfinancialreportingiseffective,orifourindependentregistere

291、dpublicaccountingfirmisunabletoexpressanopinionastotheeffectivenessofourinternalcontroloverfinancialreporting,investorsmayloseconfidenceintheaccuracyandcompletenessofourfinancialreportsandthemarketpriceofourcommonstockcouldbenegativelyaffected,andwecouldbecomesubjecttoinvestigationsbyNASDAQ,theSECor

292、otherregulatoryauthorities,whichcouldrequireadditionalfinancialandmanagementresources.Inthethirdquarterof2019,weidentifiedmaterialweaknessesinourinternalcontroloverfinancialreportingandmayidentifyadditionalmaterialweaknessesinthefuturethatmaycauseustofailtomeetourreportingobligationsorresultinmateri

293、almisstatementsofourfinancialstatements.Ifourinternalcontroloverfinancialreportingorourdisclosurecontrolsandproceduresarenoteffective,wemaynotbeabletoaccuratelyreportourfinancialresults,preventfraudorfileourperiodicreportsinatimelymanner,whichmaycauseinvestorstoloseconfidenceinourreportedfinancialin

294、formationandmayleadtoadeclineinourshareprice.Duringthethirdquarterof2019,weidentifiedamaterialweaknessinourcontrolsrelatedtothepreventionandtimelydetectionoffundstransferstounauthorizedaccounts.Wewerethetargetofcriminalfraudbypersonsimpersonatingoneofoursuppliers,whichresultedinthetransferoffundstou

295、nauthorizedbankaccounts.Thefrauddidnotrepresentabreachofourinformationsystems,asconfirmedbyanexternalforensicexamination,butratheritwasatargetedphishingscam.Althoughourinternalcontrolswerenotproperlydesignedtopreventandtimelydetectthetransferoffundstounauthorizedaccounts,asecondarycontrolwasproperly

296、designedandoperatedeffectively,whichaidedinafullrecoveryofallfundsthatweretransferred.Accordingly,therewasnofinanciallosstorecordinourfinancialstatements.Wedeterminedthatcertaininternalcontrolsrequiredforsafeguardingourcashassetswerenotproperlydesignedduetoinsufficientspecificityregardingourpolicies

297、andproceduressurroundingsupplierbankinginformationchanges,notidentifyingsegregationofduties,andinsufficienttrainingonexercisingprofessionalskepticism.Weinitiatedaremediationplanduringthethirdquarterof2019andhavecompletedthefollowingactions:enhancedtheapprovalprocessforaddingormodifyingsupplierbankin

298、ginformation;increasedthelevelofsegregationofdutiessurroundingthosewhohavetheabilitytomodifysupplierinformation,and;increasedcommunicationofourinternalcontrolsandprocessesandemphasizedsecurityawarenessandtheimportanceofexercisingprofessionalskepticismWeconsiderthematerialweaknessremediatedasofDecemb

299、er27,2019,astheremedialcontrolshaveoperatedforasufficientperiodoftimeandwehaveconcluded,throughtesting,thatthesecontrolsareoperatingeffectively.Therearelimitationsontheeffectivenessofcontrols,andthefailureofourcontrolsystemsmaymateriallyandadverselyimpactus.Wedonotexpectthatdisclosurecontrolsorinter

300、nalcontrolsoverfinancialreportingwillpreventallerrorsandallfraud.Acontrolsystem,nomatterhowwelldesignedandoperated,canprovideonlyreasonable,notabsolute,assurancethatthecontrolsystemsobjectiveswillbemet.Further,thedesignofacontrolsystemmustreflectthefactthatthereareresourceconstraintsandthebenefitsof

301、controlsmustbeconsideredrelativetotheircosts.Becauseoftheinherentlimitationsinallcontrolsystems,noevaluationofcontrolscanprovideabsoluteassurancethatallcontrolissuesandinstancesoffraud,ifany,havebeendetected.Failureofourcontrolsystemstopreventerrororfraudcouldhaveamaterialadverseeffectonourbusiness,

302、financialconditionandresultsofoperations.21CompliancewithSECrulesrelatingto“conflictminerals”mayrequireusandoursupplierstoincursubstantialexpenseandmayresultindisclosurebyusthatcertainmineralsusedinproductswemanufacturearenot“DRCconflictfree.”Section1502oftheDodd-FrankWallStreetReformandConsumerProt

303、ectionAct,ortheDodd-FrankAct,requiredtheSECtopromulgaterulesrequiringdisclosurebyapubliccompanyofany“conflictminerals”(tin,tungsten,tantalumandgold)necessarytothefunctionalityorproductionofaproductmanufacturedorcontractedtobemanufacturedbysuchcompany.TheSECadoptedfinalrulesin2012whichtookeffectatthe

304、endofJanuary2013.Becausewemanufactureproductswhichmaycontaintin,tungsten,tantalumorgold,wewillberequiredundertheserulestodeterminewhetherthosemineralsarenecessarytothefunctionalityorproductionofourproductsand,ifso,conductacountryoforigininquirywithrespecttoallsuchminerals.Ifanysuchmineralsmayhaveori

305、ginatedintheDemocraticRepublicoftheCongo,ortheDRC,oranyofitsadjoiningcountries,orthe“coveredcountries,”thenweandoursuppliersmustconductdiligenceonthesourceandchainofcustodyoftheconflictmineralstodetermineiftheydidoriginateinoneofthecoveredcountriesand,ifso,whethertheyfinancedorbenefitedarmedgroupsin

306、thecoveredcountries.Disclosuresrelatingtotheproductswhichmaycontainconflictminerals,thecountryoforiginofthosemineralsandwhethertheyare“DRCconflictfree”mustbeprovidedinaFormSD(andaccompanyingconflictmineralsreportifoneisrequiredtodisclosethediligenceundertakenbyusinsourcingthemineralsandourconclusion

307、srelatingtosuchdiligence).Ifwearerequiredtosubmitaconflictmineralsreport,thatreportmustbeauditedbyanindependentauditorpursuanttoexistinggovernmentauditingstandards,unless(forthefirsttwoyears)weareunabletodeterminewhetherthemineralsare“DRCconflictfree.”Compliancewiththisdisclosurerulemaybeverytimecon

308、sumingformanagementandoursupplychainpersonnel(aswellastimeconsumingforoursuppliers)andcouldinvolvetheexpenditureofsignificantamountsofmoneyandresourcesbyusandthem.Disclosuresbyusmandatedbytheruleswhichareperceivedbythemarkettobe“negative”maycausecustomerstorefusetopurchaseourproducts.Wearecurrentlyu

309、nabletoassessthecostofcompliancewiththisrule,andwecannotassureyouthatsuchcostwillnothaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Ourbusinessissubjecttotherisksofearthquakes,fire,poweroutages,floods,andothercatastrophicevents,andtointerruptionbyman-madedisruptions,

310、suchasterrorism.Ourfacilitiescouldbesubjecttoacatastrophiclosscausedbynaturaldisasters,includingfiresandearthquakes.Ifanyofourfacilitiesweretoexperienceacatastrophicloss,itcoulddisruptouroperations,delayproductionandshipments,reducesalesandresultinlargeexpensestorepairorreplacethefacility.Inaddition

311、,wemayexperienceextendedpoweroutagesatourfacilities.Disruptioninsupplyresultingfromnaturaldisastersorothercausalitiesorcatastrophiceventsmayresultincertainofoursuppliersbeingunabletodeliversufficientquantitiesofcomponentsorrawmaterialsatallorinatimelymanner,disruptionsinouroperationsordisruptionsino

312、urcustomersoperations.Totheextentthatnaturaldisastersorothercalamitiesorcausalitiesshouldresultindelaysorcancellationsofcustomerorders,orthedelayinthemanufactureorshipmentofourproducts,ourbusiness,financialconditionandresultsofoperationswouldbeadverselyaffected.Changesintaxlaws,taxratesortaxassetsan

313、dliabilitiescouldmateriallyadverselyaffectourfinancialconditionandresultsofoperations.Asaglobalcompany,wearesubjecttotaxationintheUnitedStatesandvariousothercountries.Significantjudgmentisrequiredtodetermineandestimateworldwidetaxliabilities.Ourfutureannualandquarterlytaxratescouldbeaffectedbynumero

314、usfactors,includingchangesinapplicabletaxlaws,theamountandcompositionofpre-taxincomeincountrieswithdifferingtaxratesorvaluationofourdeferredtaxassetsandliabilities.WehavesignificantoperationsintheUnitedStatesandourholdingcompanystructureincludesentitiesorganizedintheCaymanIslands,Netherlands,Singapo

315、reandScotland.Asaresult,changesinapplicabletaxlawsinthesejurisdictionscouldhaveamaterialadverseeffectonourfinancialconditionandresultsofoperations.WearealsosubjecttoregularexaminationbytheInternalRevenueServiceandothertaxauthorities,andfromtimetotimeweinitiateamendmentstopreviouslyfiledtaxreturns.We

316、regularlyassessthelikelihoodoffavorableorunfavorableoutcomesresultingfromtheseexaminationsandamendmentstodeterminetheadequacyofourprovisionforincometaxes,whichrequiresestimatesandjudgments.Althoughwebelieveourtaxestimatesarereasonable,wecannotassureyouthatthetaxauthoritieswillagreewithsuchestimates.

317、Wemayhavetoengageinlitigationtoachievetheresultsreflectedintheestimates,whichmaybetime-consumingandexpensive.Wecannotassureyouthatwewillbesuccessfulorthatanyfinaldeterminationwillnotbemateriallydifferentfromthetreatmentreflectedinourhistoricalincometaxprovisionsandaccruals,whichcouldmateriallyandadv

318、erselyaffectourfinancialconditionandresultsofoperations.22Ouroperationsmightbeaffectedbytheoccurrenceofanaturaldisasterorothercatastrophicevent.Wedependonourcustomersandfacilitiesforthecontinuedoperationofourbusiness.Whilewemaintaindisasterrecoveryplans,theymightnotadequatelyprotectus.Despiteanyprec

319、autionswetakefornaturaldisastersorothercatastrophicevents,theseevents,includingterroristattack,apandemic,epidemicoroutbreakofadisease(includingtheCOVID-19coronavirus),hurricanes,fire,floodsandiceandsnowstorms,couldresultindamagetoandclosureofourorourcustomersfacilitiesortheinfrastructureonwhichsuchf

320、acilitiesrely.Suchdisruptionscouldsignificantdelaysintheshipmentsofourproducts,reduceourcapacitytoprovideservices,eradicateuniquemanufacturingcapabilities,resultinourcustomersinabilitytopayforourproductsorservicesand,ultimately,resultinthelossofrevenueandclients.Althoughwecarrybusinessinterruptionin

321、surancepoliciesandtypicallyhaveprovisionsinourcontractsthatprotectusincertainevents,ourcoveragemightnotbeadequatetocompensateusforalllossesthatmayoccur.Anynaturaldisasterorcatastrophiceventaffectingusorourcustomerscouldhaveasignificantnegativeimpactonouroperationsandfinancialperformance.RisksRelated

322、toOwnershipofOurOrdinarySharesThepriceofourordinarysharesmayfluctuatesubstantially.Youshouldconsideraninvestmentinourordinarysharestoberisky,andyoushouldinvestinourordinarysharesonlyifyoucanwithstandasignificantlossandwidefluctuationsinthemarketvalueofyourinvestment.Somefactorsthatmaycausethemarketp

323、riceofourordinarysharestofluctuate,inadditiontotheotherrisksmentionedinthisreport,are:ourannouncementsorourcompetitorsannouncementsregardingnewproductsorservices,enhancements,significantcontracts,acquisitionsorstrategicinvestments;changesinearningsestimatesorrecommendationsbysecuritiesanalysts,ifany

324、,whocoverourordinaryshares;speculationaboutourbusinessinthepressorinvestmentcommunity;failurestomeetexternalexpectationsormanagementguidance;fluctuationsinourquarterlyfinancialresultsorthequarterlyfinancialresultsofcompaniesperceivedtobesimilartous;changesinourcapitalstructureordividendpolicy,future

325、issuancesofsecurities,salesoflargeblocksofordinarysharesbyourshareholders,ourincurrenceofadditionaldebtorourfailuretocomplywiththeagreementsgoverningourCreditFacilities;ourdecisiontoenternewmarkets;reputationalissues;changesingeneraleconomicandmarketconditionsinanyoftheregionsinwhichweconductourbusi

326、ness;materiallitigationorgovernmentinvestigations;changesinindustryconditionsorperceptions;andchangesinapplicablelaws,rulesorregulations.Inaddition,ifthemarketforstocksinourindustryorindustriesrelatedtoourindustry,orthestockmarketingeneral,experiencesalossofinvestorconfidence,thetradingpriceofourord

327、inarysharescoulddeclineforreasonsunrelatedtoourbusiness,financialconditionandresultsofoperations.Ifanyoftheforegoingoccurs,itcouldcauseoursharepricetofallandmayexposeustolawsuitsthat,evenifunsuccessful,couldbecostlytodefendandadistractiontomanagement.Futuresalesofourordinaryshares,ortheperceptionint

328、hepublicmarketsthatthesesalesmayoccur,maydepressourshareprice.Wemayseektoraiseadditionalcapitalfromtimetotimeinthefuture,whichmayinvolvetheissuanceofadditionalordinaryshares,orsecuritiesconvertibleintoordinaryshares.Salesofsubstantialamountsofourordinarysharesinthepublicmarket,ortheperceptionthatthe

329、sesalescouldoccur,couldadverselyaffectthepriceofourordinarysharesandcouldimpairourabilitytoraisecapitalthroughthesaleofadditionalshares.23Wearean“emerginggrowthcompany”andhaveelectedtocomplywithreducedpubliccompanyreportingrequirements,whichcouldmakeourordinaryshareslessattractivetoinvestors.Wearean

330、emerginggrowthcompany,asdefinedintheJOBSAct.Foraslongaswecontinuetobeanemerginggrowthcompany,wemaychoosetotakeadvantageofexemptionsfromvariouspubliccompanyreportingrequirements.Theseexemptionsinclude,butarenotlimitedto,(i)notbeingrequiredtocomplywiththeauditorattestationrequirementsofSection404ofthe

331、SarbanesOxleyAct,(ii)reduceddisclosureobligationsregardingexecutivecompensationinourperiodicreports,proxystatementsandregistrationstatements,and(iii)exemptionsfromtherequirementsofholdinganonbindingadvisoryvoteonexecutivecompensationandshareholderapprovalofanygoldenparachutepaymentsnotpreviouslyappr

332、oved.WecouldbeanemerginggrowthcompanyforuptofiveyearsafterthefirstsaleofourordinarysharespursuanttoaneffectiveregistrationstatementundertheSecuritiesAct,whichfifthanniversarywilloccurinDecember2021.However,ifcertaineventsoccurpriortotheendofsuchfiveyearperiod,includingifwebecomea“largeacceleratedfil

333、er,”ourannualgrossrevenueexceeds$1.0billionorweissuemorethan$1.0billionofnonconvertibledebtinanythreeyearperiod,wewouldceasetobeanemerginggrowthcompanypriortotheendofsuchfiveyearperiod.WehavetakenadvantageofcertainofthereduceddisclosureobligationsregardingexecutivecompensationandmayelecttotakeadvantageofotherreduceddisclosureobligationsinourSECfilings.Asaresult,theinformationthatweprovidetoholders