ONTO Innovation (ONTO) risk factors, FY2025 10-K

Risks Related to Our Operations

1. 01If we deliver systems with defects, our credibility will be harmed, and the sales and market acceptance of our systems will decrease
2. 02Our integrated metrology systems are integrated with systems sold independently by wafer fabrication equipment suppliers, and a decrease in sales by these suppliers, or the development of competing systems by these suppliers, could harm our business
3. 03Any prolonged disruption in the operations of our manufacturing facilities could have a material adverse effect on our revenue48% rewritten
4. 11If we do not manage our supply chain effectively, our operating results may be adversely affected, and any increases in material, labor, supplier, logistics and other operating costs, or supply chain delays and shortages, could lower our margins or result in lost sales35% rewritten
5. 12Variations in the amount of time it takes for us to sell our systems may cause fluctuations in our operating results, which could cause our stock price to decline
6. 13the quality and sophistication of the customer’s current metrology, inspection or lithography equipment
7. 14We are subject to order and shipment uncertainties. Our profitability will decline if we fail to accurately forecast customer demand when managing inventory
8. 15We must attract and retain experienced senior executives and other key personnel with knowledge of semiconductor device manufacturing and inspection, metrology or lithography equipment and related software to help support our future growth, and competition for such personnel in our industry is high
9. 16We outsource select manufacturing activities to third-party service providers, which decreases our control over the performance of these functions, may result in lower quality and functionality of our products, and exposes us to additional supply chain risks
10. 17Our ability to fulfill our backlog may have an effect on our long-term ability to procure contracts and fulfill current contracts
11. 18We recently implemented a new enterprise resource planning system. Our failure to effectively operate and maintain the new system could have a material adverse effect on usNew
12. 19The use or anticipated use of new and evolving technologies, such as AI, by us or third parties may increase or create new operational risksNew

Risks Related to Intellectual Property and Data Security

1. 04We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage99% rewritten
2. 05If our network security measures are breached and unauthorized access is obtained to a customer’s data, to our data, or to our information technology systems, we may incur significant legal and financial exposure and liabilities and may experience disruptions in our operations
3. 25We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage98% rewritten
4. 26Compliance with data protection laws may be costly and may impede development of new products, and any failure to comply with, or inquiries under, these laws could have a material adverse effect on our business, results of operations, and financial condition

Risks Related to Our International Operations

1. 06Tariffs, export regulations, and other market barriers have impacted and may continue to impact our ability to compete for the business of domestic customers in China and other jurisdictions which has adversely affected and may continue to adversely affect our, business, financial condition and results of operations100% rewritten
2. 07Currency fluctuations may impact our international sales or expose us to exchange rate risk
3. 29Tariffs, export regulations, and other market barriers have impacted and may continue to impact our ability to compete for the business of domestic customers in China and other jurisdictions, which has adversely affected and may continue to adversely affect our, business, financial condition and results of operations99% rewritten
4. 30We are subject to compliance with domestic and foreign laws and regulations, and the burden of complying with such laws and regulations, or any failure to comply, has adversely affected and may continue to adversely affect our business, financial condition and results of operations
5. 31Political and economic instability may result in reduced demand for our products
6. 32Natural disasters, changes in climate, public health crises, and geo-political conflicts could materially adversely affect our worldwide operations (or those of our business partners)24% rewritten
7. 33We may face difficulties in staffing and managing foreign branch operations due to political tensions or cultural differences
8. 34Our internal controls with respect to anti-corruption laws may not be effective, and any failure to comply with such laws may result in severe sanctions and liabilities, which may negatively affect our business, operating results and financial condition

Risks Related to Laws, Legal Proceedings, Financial Markets and the Environment

1. 08Changes in tax rates or tax liabilities could affect results100% rewritten
2. 09Turmoil or fluctuations in the credit markets and the financial services industry may negatively impact our business, results of operations, financial condition or liquidity, and our factoring arrangements may expose us to additional risks
3. 35Changes in tax rates or tax liabilities could affect results100% rewritten
4. 36We are subject to various environmental laws and regulations that could impose substantial costs upon us, and failure to comply with such laws and regulations may impact our business, operating results and financial condition
5. 37Legal proceedings, claims and investigations may expose us to increased costs and may negatively affect our business and results of operations

Risks Related to Growth and Acquisitions

1. 10Integrating Semilab USA’s business may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the acquisition, which may adversely affect our business results and negatively affect the value of our common stockNew
2. 38Integrating Semilab USA’s business may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the acquisition, which may adversely affect our business results and negatively affect the value of our common stockNew
3. 39We may choose to acquire new and complementary businesses, products or technologies instead of developing them ourselves, and we may be unable to complete these acquisitions or may not be able to successfully integrate an acquired business in a cost-effective and non-disruptive manner
4. 40unexpected reduction of sales of existing products as a result of the introduction of new products
5. 41If we cannot effectively manage growth, our business may suffer
6. 42administer appropriate financial and administrative control procedures

Risks Related to Our Customers

1. 20Our largest customers account for a substantial portion of our revenue, and our revenue and cash flows could decline considerably if one or more of these customers were to purchase significantly fewer of our systems or delay or cancel a large order

Risks Related to Product Development

1. 21If we are not successful in developing new and enhanced products for the semiconductor device manufacturing industry, we will lose sales and market share to our competitors34% rewritten
2. 22If new products developed by us do not gain general market acceptance, we will be unable to generate revenue and recover our investments, which may result in a write down of inventory
3. 23Even if we are able to develop new products that gain market acceptance, sales of these new products could impair our ability to sell existing products
4. 24If our relationships with our large customers deteriorate, our product development activities could be adversely affected

Risks Related to Competition

1. 27Some of our current and potential competitors have significantly greater resources than we do, and increased competition could impair sales of our products or cause us to reduce our prices
2. 28Because of the high cost of switching equipment vendors in our markets, it is sometimes difficult for us to win new customers from our competitors even if our systems are superior to theirs

Risks Related to the Global Economy and the Semiconductor Industry

1. 43Cyclicality in the semiconductor device industry has led to substantial decreases in demand for our systems in the past and may, from time to time, continue to do so29% rewritten
2. 44Our future rate of growth is highly dependent on the development and growth of the market for microelectronic device inspection, lithography and metrology equipment29% rewritten
3. 45Provisions of our charter documents and of Delaware law could discourage potential acquisition proposals and/or delay, deter or prevent a change in control of our company
4. 46Our stock price is volatile
5. 47the number of firms making a market in our common stock