AEHR Test Systems (AEHR) risk factors, 2025 10-K

Risks Related to our Business and Industry

1. 01We generate a large portion of our sales from a small number of customers. If we were to lose one or more of our large customers, operating results could suffer dramatically
2. 02A substantial portion of our net sales is generated by relatively small volume, high value transactions
3. 03The semiconductor equipment industry is intensely competitive. In each of the markets we serve, we face competition from established competitors and potential new entrants, many of which have greater financial, engineering, manufacturing and marketing resources than us
4. 04We rely on increasing market acceptance for our FOX and Sonoma systems, and we may not be successful in attracting new customers or maintaining our existing customers
5. 05We may experience increased costs associated with new product introductions
6. 06Our industry is subject to rapid technological change, and our ability to remain competitive and enter new markets depends on our ability to introduce new products in a timely manner
7. 07We are exposed to cybersecurity threats or incidents
8. 08A decrease in customer device failure rates and future changes in semiconductor technologies may result in a decrease in demand for our products
9. 09If we fail to operate our business in accordance with our business plan, our operating results, business and stock price may be significantly and adversely impacted
10. 10We are exposed to risks related to our commercial terms and conditions, including our indemnification of third parties, as well as the performance of our products
11. 11In addition, in our commercial agreements, from time to time in the normal course of business, we indemnify third parties with whom we enter into contractual relationships, including customers, suppliers and lessors, with respect to certain matters
12. 12We may not be able to successfully integrate and manage acquired businesses
13. 13We are exposed to risks related to the use of artificial intelligence by us and our competitors

Operational and Other Risks

1. 14We purchase materials from suppliers worldwide, which subjects the Company to increased risk; tariff uncertainty, trade restrictions, and global supply chain risks could adversely affect our business
2. 15Supply chain issues, including a shortage of critical components or contract manufacturing capacity, could result in a delay in fulfillment of customer orders, or an increase in costs, resulting in an adverse impact on our business and operating results
3. 16We sell our products and services worldwide, and our business is subject to risks inherent in conducting business activities in geographic regions outside of the United States
4. 17Global unrest may impact our ability to sell our products or obtain critical materials
5. 18Geopolitical tensions and changes in government trade policies could adversely affect our operations in China and our business, results of operations and financial condition
6. 19Our dependence on subcontractors and sole source suppliers may prevent us from delivering our products on a timely basis and expose us to intellectual property infringement
7. 20Tightening of fiscal monetary policy, and periodic economic and semiconductor industry downturns could negatively affect our business, results of operations and financial condition
8. 21Our net sales are affected by the cyclicality of the semiconductor market, which may have a material adverse impact on our business performance and financial condition
9. 22We have been and may in the future be subject to litigation relating to intellectual property infringement which would be time-consuming, expensive and a distraction from our business
10. 23We cannot assure that we have complied with all applicable environmental laws, and our failure to do so could adversely affect our business as a result of having to pay substantial amounts in damages or fees
11. 24The failure to successfully implement enterprise resource planning and other information systems changes could adversely impact our business and operating results

Risks Related to Ownership of our Common Stock

1. 25Our stock price is volatile
2. 26We are exposed to risks associated with shareholder class action lawsuits, which are expensive and could divert management attention

Risks Related to our Financial/Legal/Organizational Structure

1. 27We depend on our key personnel and our success depends on our ability to attract, retain and motivate talented employees
2. 28If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected
3. 29Compliance with federal securities laws, rules and regulations, as well as NASDAQ requirements, has become increasingly complex, and the significant attention and expense we must devote to those areas may have an adverse impact on our business
4. 30A change in accounting standards or practices or a change in existing taxation rules or practices (or changes in interpretations of such standards, practices or rules) could have a significant effect on our reported results and may affect reporting of transactions completed before the change is effective