Fabrinet (FN) risk factors, FY2025 10-K

Other

1. 01Company and Operational Risks
2. 02Our sales depend on a small number of customers. A reduction in orders from any of these customers, the loss of any of these customers, or a customer exerting significant pricing and margin pressures on us could harm our business, financial condition and operating results
3. 03Consolidation in the markets we serve could harm our business, financial condition and operating results
4. 04If the optical communications market does not expand as we expect, our business may not grow as fast as we expect, which could adversely impact our business, financial condition and operating results
5. 05Our quarterly revenues, gross profit margins and operating results have fluctuated significantly and may continue to do so in the future, which may cause the market price of our ordinary shares to decline or be volatile
6. 06We face significant competition in our business. If we are unable to compete successfully against our current and future competitors, our business, financial condition and operating results could be harmed
7. 07Cancellations, delays or reductions of customer orders and the relatively short-term nature of the commitments of our customers could harm our business, financial condition and operating results
8. 08Our exposure to financially troubled customers or suppliers could harm our business, financial condition and operating results
9. 09Managing our inventory is complex and may require write-downs due to excess or obsolete inventory, which could cause our operating results to decrease significantly in a given fiscal period
10. 10We may experience manufacturing yields that are lower than expected, potentially resulting in increased costs, which could harm our business, operating results and customer relations
11. 11If the products that we manufacture contain defects, we could incur significant correction costs, demand for our services may decline and we may be exposed to product liability and product warranty claims, which could harm our business, financial condition, operating results and customer relations
12. 12type of defects exceeds certain percentage limitations contained in our contractual arrangements, we may be required to conduct extensive failure analysis, re-qualify for production or cease production of the specified products
13. 13If we fail to attract additional skilled employees or retain key personnel, our business, financial condition and operating results could suffer

Risks Related to Our International Operations

1. 14Fluctuations in foreign currency exchange rates and changes in governmental policies regarding foreign currencies could increase our operating costs, which would adversely affect our operating results
2. 15We conduct operations in a number of countries, which creates logistical and communications challenges for us and exposes us to other risks and challenges that could harm our business, financial condition and operating results
3. 16We are subject to governmental export and import controls in several jurisdictions that subject us to a variety of risks, including liability, impairment of our ability to compete in international markets, and decreased sales and customer orders
4. 17We are subject to risks related to changes in U.S. and international trade policies, including new or increased tariffs on materials that we use in manufacturing, which could adversely affect our business, financial condition and operating results
5. 18Political unrest and demonstrations, as well as changes in the political, social, business or economic conditions in Thailand, could harm our business, financial condition and operating results
6. 19We expect to continue to invest in our manufacturing operations in the PRC, which will continue to expose us to risks inherent in doing business in the PRC, any of which risks could harm our business, financial condition and operating results
7. 20Natural disasters, epidemics, acts of terrorism and political and economic developments could harm our business, financial condition and operating results

Financial Risks

1. 21Unfavorable worldwide economic conditions (including inflation and supply chain disruptions) may negatively affect our business, financial condition and operating results
2. 22We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our shareholders
3. 23Our investment portfolio may become impaired by deterioration of the capital markets
4. 24We are not fully insured against all potential losses. Natural disasters or other catastrophes could adversely affect our business, financial condition and operating results
5. 25Our business and operations would be adversely impacted in the event of a failure of our information technology infrastructure and/or cyber security attacks
6. 26Our services involve the creation and use of intellectual property rights, which subject us to the risk of intellectual property infringement claims from third parties and claims arising from the allocation of intellectual property rights among us and our customers
7. 27Any failure to protect our customers’ intellectual property that we use in the products we manufacture for them could harm our customer relationships and subject us to liability

Tax, Compliance and Regulatory Risks

1. 28We are subject to the risk of increased income taxes, which could harm our business, financial condition and operating results
2. 29tax years 2018 through 2024. The results of audits and examinations of previously filed tax returns and continuing assessments of our tax exposures may have an adverse effect on our provision for income taxes and tax liability
3. 30We have incurred and will continue to incur significant increased costs as a result of operating as a public company, and our management will be required to continue to devote substantial time to various compliance initiatives
4. 31If we are unable to meet regulatory quality standards applicable to our manufacturing and quality processes for the products we manufacture, our business, financial condition and operating results could be harmed
5. 32Failure to comply with applicable environmental laws and regulations could have a material adverse effect on our business, financial condition and operating results

Risks Related to Ownership of Our Ordinary Shares

1. 33Our share price may be volatile due to fluctuations in our operating results and other factors, including the activities and operating results of our customers or competitors, any of which could cause our share price to decline
2. 34If securities or industry analysts do not publish research or if they publish misleading or unfavorable research about our business, the market price and trading volume of our ordinary shares could decline
3. 35Our business and share price could be negatively affected as a result of activist shareholders
4. 36Certain provisions in our constitutional documents may discourage our acquisition by a third party, which could limit our shareholders' opportunity to sell shares at a premium
5. 37Our shareholders may face difficulties in protecting their interests because we are incorporated under Cayman Islands law
6. 38Certain judgments obtained against us by our shareholders may not be enforceable

General Risks

1. 39Energy price volatility may negatively impact our business, financial condition and operating results