KLA (KLAC) risk factors, FY2026 10-K

Macroeconomic, International Trade, Operational and Regulatory Risks

1. 01We are exposed to risks associated with a weakening in the condition of the financial markets and the global economyNew
2. 02If we are unable to timely and appropriately adapt to changes resulting from difficult macroeconomic conditions, our business, financial condition or results of operations may be materially and adversely affected
3. 03Any of the factors above could have a significant negative impact on our business and results of operations100% rewritten
4. 04China, and may significantly harm our business, results of operations, financial condition and cash flows, unless we are able to obtain required licensesNew
5. 05Additionally, the Chinese government has adopted, and may further adopt, new regulations, in response to U.S. government actions, which could adversely affect our ability to do business in China41% rewritten
6. 06Recently announced and future U.S. tariffs, retaliatory trade measures and other trade restrictions, as well as uncertainty regarding tariff authority, implementation and refund processes, may have a material adverse impact on our results of operationsNew
7. 07Our efforts to address these risks, such as through operational adjustments and pricing strategies, may not be successful. Such efforts may need time to take effect and may have an adverse impact on our results of operationsNew
8. 08We might be involved in claims or disputes related to IP or other confidential information that may be costly to resolve, prevent us from selling or using the challenged technology and seriously harm our operating results and financial condition
9. 09We are exposed to various risks related to the legal, regulatory and tax environments in which we perform our operations and conduct our business
10. 10Differing expectations, requirements and attention to ESG matters from our stakeholders, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business
11. 11We depend on key personnel to manage our business effectively, and if we are unable to attract, retain and motivate our key employees, our sales and product development could be harmed
12. 12We outsource a number of services to third-party service providers, which decreases our control over the performance of these functions. Disruptions or delays at our third-party service providers could adversely impact our operations
13. 13We depend on information technology for our business and are exposed to risks related to cybersecurity threats and cyber incidents affecting our, our customers ’ , suppliers ’ and other service providers ’ systems and networks
14. 14We rely upon critical information systems, including our ERP system, for daily business operations and financial reporting, and system failures, implementation issues, or limited access to critical information could adversely affect our business operationsNew
15. 15We cannot provide any assurance that alternate means of conducting our operations (whether through alternate production capacity or service providers or otherwise) would be available if a major disruption were to occur or that, if such alternate means were available, they could be obtained on favorable terms
16. 16We are predominantly uninsured for losses and interruptions caused by terrorist acts and acts of war. If international political instability or geopolitical tensions continue or increase, our business and results of operations could be harmed53% rewritten
17. 17We self-insure certain risks including earthquake risk. If one or more of the uninsured events occurs, we could suffer major financial loss
18. 18We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency risks, we may still be adversely affected by changes in foreign currency exchange rates or declining economic conditions in these countries
19. 19We are exposed to fluctuations in interest rates and the market values of our portfolio investments, and an impairment of our investments could harm our earnings. In addition, we and our stockholders are exposed to risks related to the volatility of the market for our common stock
20. 20We are exposed to risks associated with our interest rate hedging activitiesNew
21. 21We are exposed to risks in connection with tax and regulatory compliance audits in various jurisdictions
22. 22A change in our effective tax rate can have a significant adverse impact on our business
23. 23Compliance 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
24. 24A 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) can have a significant effect on our reported results and may even affect reporting of transactions completed before the change is effective

Industry and Technology Risks

1. 25Ongoing changes in the technology industry, including AI-related developments and changes in semiconductor manufacturing processes, customer investment patterns and end-market demand, could expose our business to significant risksNew
2. 26We are exposed to risks associated with a highly concentrated customer base
3. 27Any of these factors could have a material adverse effect on our business, financial condition and operating results41% rewritten
4. 28We are exposed to risks related to the development, adoption, governance and use of AI by us, our competitors and other third parties56% rewritten

Business Model and Capital Structure Risks

1. 29If we do not develop and introduce new products and technologies in a timely manner in response to changing market conditions or customer requirements, our business could be seriously harmed70% rewritten
2. 30standards and develop as well as offer competitive technology solutions in a timely manner with cost-effective products could result in loss of market share, unanticipated costs and inventory obsolescence, which would adversely impact our business, operating results and financial conditionNew
3. 31Our success is dependent in part on our technology and other proprietary rights. If we are unable to maintain our lead or protect our proprietary technology, we may lose valuable assets
4. 32We also maintain trademarks on certain of our products and services and claim copyright protection for certain proprietary software and documentation. However, we can give no assurance that our trademarks and copyrights will be upheld or successfully deter infringement by third parties
5. 33Our future performance depends, in part, upon our ability to continue to compete successfully worldwide
6. 34Our business would be harmed if we do not receive parts, materials and subassemblies sufficient in number and performance to meet our production requirements and product specifications in a timely, cost-effective and compliant manner35% rewritten
7. 35If 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
8. 36We have a leveraged capital structure
9. 37Our leveraged capital structure may adversely affect our financial condition, results of operations and net income per share
10. 38There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts
11. 39We 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
12. 40There are risks associated with our receipt of government funding
13. 41We have recorded significant asset impairment, restructuring and inventory write-off charges and may do so again in the future, which could have a material negative impact on our results of operationsNew
14. 42We are exposed to risks related to our receivables factoring and banking arrangements
15. 43We are subject to the risks of additional government actions in the event we were to breach the terms of any settlement arrangement into which we have entered
16. 44Our Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings, which could limit the ability of our stockholders to obtain a judicial forum of their choice for disputes with the Company or its directors, officers or employees