Credo Technology Group Holding (CRDO) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We depend on a limited number of customers for a substantial portion of our revenue. The loss of, or a significant reduction in sales to, one or more of our major customers could negatively impact our revenue and operating results
2. 02We do not have long-term purchase commitments from our customers, and if our customers cancel or change their purchase orders, our revenue and operating results could suffer
3. 03We face macroeconomic risks, including, but not limited to, recessions, inflation, stagflation and other economic conditions
4. 04Changes in global trade policies could have a material adverse effect on our business
5. 05Although we continue to evaluate the impact of these tariffs on our business, these tariffs may result in significantly higher costs to acquire the materials and components used in our products. These tariffs and other trade restrictions could also limit the availability of components and raw materials
6. 06We have incurred net losses in prior periods and have an accumulated deficit, and we may incur additional net losses in the future
7. 07We are subject to order and shipment uncertainties, and differences between our estimates of customer demand and product mix and our actual results could negatively affect our business, financial condition and results of operations
8. 08We face intense competition and expect competition to increase in the future
9. 09We may incur substantial expenses to develop, market and qualify products that may not generate any revenue
10. 10We rely on a limited number of third parties to manufacture, assemble and test our products, and the failure to successfully manage our relationships with such third-party contractors could adversely affect our revenue and operating results
11. 11The success of our products is dependent in part on our customers’ ability to develop products that achieve market acceptance, and our customers may fail to do so
12. 12unexpected expenses and loss of market share, and our product liability insurance may not adequately cover our costs arising from product defects or otherwise
13. 13We generally do not maintain long-term supply contracts with TSMC or other third-party manufacturers or suppliers, and any disruption in our supply of products or materials, including raw material price fluctuations could have a material adverse effect on our business, financial condition and results of operations
14. 14We rely on the ability to use and the success of third-party technologies to develop our products, and our inability to use such technologies in the future would harm our ability to remain competitive
15. 15We may not be able to meet manufacturing yields that allow us to meet customer demand and maintain our gross margins
16. 16We may be unable to develop or maintain our relationships with industry and technology leaders to enhance our product offerings
17. 17Average selling prices of our products generally decrease over time, which could negatively impact our revenue and gross margins
18. 18Our gross margins may fluctuate due to a variety of factors
19. 19We may not receive timely payments from our customers, which could adversely affect our business, financial condition and results of operations
20. 20We may not be able to accurately predict our future capital needs, and we may not be able to obtain additional financing to fund our operations
21. 21We may not be able to effectively manage our growth without incurring significant expenditures necessary to address the additional operational and control requirements of our growth
22. 22If we fail to retain any distributors upon which we rely to assist in selling our products, or if any of these parties fail to perform as expected, it could reduce our future sales
23. 23Our compliance with applicable environmental, health and safety laws, as well as sustainability initiatives and climate change regulations, could increase our costs, restrict our operations and require expenditures that could negatively affect our results of operations and financial condition
24. 24Changes in our tax rates or exposure to additional tax liabilities or assessments could affect our profitability, and audits by tax authorities could result in additional tax payments
25. 25Cybersecurity breaches, cyberattacks and other disruptions to information technology systems could disrupt our operations, compromise the confidentiality of our data or our intellectual property, and adversely affect our business, reputation, operations and financial results
26. 26Our business may be impacted by information technology system failures or network disruptions, and lack of redundancy

Risks Related to Our Industry

1. 27Our target customer and product markets may not grow or develop as we currently expect
2. 28The market demand for 100G/200G/400G/800G/I.6T solutions may not sufficiently develop or may develop more slowly than expected
3. 29Our business is dependent on continued capital expenditures by data centers and service providers, and any downturn that such centers or providers experience could negatively impact our business, financial condition and results of operations
4. 30We may be unable to make the substantial and productive research and development investments, which are required for our business to remain competitive
5. 31The general compute and Artificial Intelligence and Machine Learning (AI/ML) infrastructure market is an emerging market that will depend on the success of generative AI technologies, and this market may not develop as we currently expect, including due to regulatory uncertainty
6. 32We are subject to the cyclical nature of the semiconductor industry
7. 33Social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands, may make our supply chain more complex and may adversely affect our relationships with customers and investors
8. 34which would harm our revenue and results of operations, or such investors may sell their shares, which could cause the trading price of our ordinary shares to decline

Risks Related to Our International Operations

1. 35Our business, financial condition and results of operations could be adversely affected by worldwide economic conditions, as well as political and economic conditions in the countries in which we conduct business
2. 36Our global operations expose us to numerous legal and regulatory requirements and failure to comply with such requirements, including unexpected changes to such requirements, could adversely affect our results of operations
3. 37We are subject to government regulation, including import, export and economic sanctions laws and regulations that may expose us to liability and increase our costs
4. 38Our business is affected by new U.S. government regulations restricting outbound investments in China
5. 39As implemented by the Outbound Investment Rule, the new framework imposes notification requirements and prohibitions on specified investments by U.S. persons in the semiconductor and microelectronics sector, quantum information technologies, and artificial intelligence (AI) systems
6. 40We face significant economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and mainland China, that could negatively affect our business and the trading price of our ordinary shares
7. 41We generated 56% of our revenue in Hong Kong in fiscal 2025, and 43% of our assets (by book value) were held in Hong Kong as of fiscal 2025. Accordingly, political and economic conditions in Hong Kong and the surrounding region may directly affect our business
8. 42We could be adversely affected by violations of applicable anti-corruption laws or violations of our internal policies designed to ensure ethical business practices
9. 43Any failure to comply with foreign exchange registration requirements may expose us or our PRC resident beneficial owners or PRC participants of employee stock incentive plans to liability and penalties under PRC law
10. 44We are subject to fluctuations in exchange rates between and among the currencies of the countries in which we do business

Risks Related to Our Intellectual Property

1. 45We may face claims of intellectual property infringement, misappropriation or other violations, which could be time-consuming or costly to defend or settle, result in the loss of significant rights or harm our relationships with our customers or reputation in the industry
2. 46Any potential dispute involving patents or other intellectual property could affect our customers and vendors which could trigger our indemnification obligations to them and result in substantial expense to us
3. 47sale of our products to decrease. Any of the foregoing could harm our business, financial condition and results of operations
4. 48agreements or restrict our ability to develop and market our current or new products and services. Any of these events could negatively impact our business, financial condition and results of operations
5. 49A breach of our information technology systems or physical security systems, or any actual or perceived violation of privacy, data protection or cybersecurity laws, could harm our business and operating results
6. 50We use certain software governed by open-source licenses, which under certain circumstances could materially adversely affect our business, financial condition, operating results and cash flow

Risks Relating to Investments in Cayman Islands Companies

1. 51(a) shares of a surviving or consolidated company, or depository receipts in respect thereof; or
2. 52As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a corporation incorporated in a jurisdiction in the United States
3. 53(ii) in original actions brought in the Cayman Islands, to impose liabilities against the Company predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as liabilities imposed by those provisions are penal in nature
4. 54Provisions in our amended and restated memorandum and articles of association may have the effect of discouraging lawsuits against our directors and officers

Risks Related to Ownership of Our Ordinary Shares

1. 55Our share price may be volatile and may decline, resulting in a loss of some or all of your investment
2. 56Substantial future sales of our ordinary shares could cause the market price of our ordinary shares to decline
3. 57Our actual operating results may not meet our guidance and investor expectations, which would likely cause our share price to decline
4. 58If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares
5. 59Our executive officers, directors and their affiliates, if they choose to act together, have the ability to control or significantly influence all matters submitted to shareholders for approval
6. 60Anti-takeover provisions in our organizational documents may discourage our acquisition by a third party, which could limit shareholders’ opportunity to sell their ordinary shares at a premium
7. 61If a United States person is treated as owning 10% or more of our outstanding equity, such holder may be subject to adverse U.S. federal income tax consequences
8. 62We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract or retain highly skilled employees could adversely affect our business
9. 63Catastrophic events may disrupt our business
10. 64Litigation and other legal proceedings may adversely affect our business
11. 65Market conditions and changing circumstances, some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to timely pay key vendors and others
12. 66If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired