Risk Factors Update Summary

• Increased risks in international operations due to expanded tariffs and trade barriers affecting the U.S. and China.
• Increased risk of intellectual property infringement claims may lead to substantial costs and management attention.
• Semiconductor equipment subject to rapid technological change, product introductions, and transitions, impacting inventory write-offs. This resulted in $88.6 million in research and development expenses in fiscal 2023.
• Increased erosion in mobility, automotive & industrial market sales, causing a 54% decline in mobility and 24% decline in automotive & industrial system sales.
• Potential disruptions in semiconductor chip supply chain due to geopolitical tensions in Asia, particularly in the Taiwan Strait.
• Implementation of strengthened IT infrastructure and compliance procedures to protect sensitive data.
• Potential adverse effects on business reputation and sales due to perceived risk of data theft.
• Impact of armed conflicts on energy and logistics costs, potentially causing economic conditions to deteriorate.
• Outsourcing manufacturing activities to third-party service providers may decrease control over performance, impacting operational efficiency.
• Ongoing risks related to political instability in Asia affecting demand for capital equipment and intense competition from Asian suppliers.
• Failure of critical suppliers to deliver parts timely and cost-effectively could adversely impact operations.
• Risks associated with natural disasters and climate risks in vulnerable regions like Asia, impacting operations and supply chain.
• Increased competition in the semiconductor equipment industry may hinder winning business over competitors.
• Challenges in managing geographically dispersed operations, including organizational alignment and infrastructure, pose risks.
• Reliance on a limited number of customers for a substantial percentage of net sales poses a risk.
• Risks related to changes in tax laws and regulations, potentially leading to adverse tax consequences and restrictions on repatriating earnings.
• Failure to comply with environmental laws and regulations could lead to significant fines and liabilities.