Super Micro Computer (SMCI) risk factors, FY2025 10-K

Risks Related to Previous Delinquent SEC Reporting Obligations

1. 01We face risks related to previously being delinquent in our SEC reporting obligations
2. 02We have identified material weaknesses in our internal control over financial reporting, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner

Risks Related to our Global Operating Business and Industry

1. 03Our operating results have in the past fluctuated and will likely fluctuate in the future, and if our operating results are below the expectations of securities analysts or investors, our stock price could decline
2. 04SMCI | 2025 Form 10-K | 14
3. 05If we fail to meet any publicly announced financial guidance or other expectations about our business, it could cause our stock to decline in value
4. 06Failure to meet the evolving needs of our industry and markets may adversely impact our financial results
5. 07SMCI | 2025 Form 10-K | 15
6. 08We may be unable to secure additional financing on favorable terms, or at all, which in turn could impair the rate of our growth
7. 09SMCI | 2025 Form 10-K | 16
8. 10Our cost structure, ability to deliver server solutions to customers, and ability to resolve warranty claims in a timely manner may be adversely affected by volatility of the market for core components and certain materials for our products
9. 11SMCI | 2025 Form 10-K | 17
10. 12We face risks related to recessions, inflation, stagflation, and other macroeconomic conditions
11. 13Changes in U.S. or foreign policies, geopolitical conditions, general economic conditions, and other factors beyond our control may adversely impact our business and operating results
12. 14SMCI | 2025 Form 10-K | 18
13. 15Any failure, disruption or security breach or incident of or impacting our information technology infrastructure or information management systems could have an adverse impact on our business and operations
14. 16SMCI | 2025 Form 10-K | 19
15. 17We may be unable to attract, retain, and motivate our executives and key employees
16. 18Conflicts of interest may arise with Ablecom and Compuware, and they may adversely affect our operations
17. 19Bill Liang, a brother of both Charles Liang and Steve Liang, is also a member of the Board of Directors of Ablecom. In addition, Bill Liang is the Chief Executive Officer of Compuware, Chairman of Compuware’s Board of Directors and a holder of equity interest in Compuware
18. 20In addition, a sibling of Yih-Shyan (Wally) Liaw, who is our Senior Vice President, Business Development and a director on our Board, owns approximately 11.7% of Ablecom’s capital stock and 8.7% of Compuware’s capital stock
19. 21SMCI | 2025 Form 10-K | 21
20. 22Our reliance on Ablecom and Compuware could be subject to risks associated with our reliance on a limited source of contract manufacturing services and inventory warehousing
21. 23If we lose Charles Liang, our President, Chief Executive Officer and Chairman, or any other key employee or are unable to attract additional key employees, we may not be able to implement our business strategy in a timely manner
22. 24If negative publicity arises with respect to us, our employees, our third-party service providers or our partners, our business and operating results could be adversely affected, regardless of whether the negative publicity is true
23. 25We rely on a limited number of suppliers for certain components used to manufacture our products
24. 26Changing technology and intense competition require us to continuously innovate while controlling product costs, and our failure to do so may result in decreased revenues and profitability
25. 27SMCI | 2025 Form 10-K | 24
26. 28The AI industry has driven a portion of our recent success. The AI industry involves significant risks and uncertainties, and the use of AI by our workforce may present risks to our business
27. 29Our results of operations may be subject to fluctuations based upon certain investments we make
28. 30Our growth into markets outside the United States exposes us to risks inherent in international business operations
29. 31SMCI | 2025 Form 10-K | 25

Risks Related to Regulatory, Legal, Our Stock, and Other Matters

1. 32SMCI | 2025 Form 10-K | 26
2. 33Our operations are impacted by complex laws, rules and regulations related to import and export controls to which our business is subject, and rapid changes in such laws, rules, and regulations as well as political and other actions related thereto may adversely impact our business
3. 34Moreover, the increasing focus on the risks and strategic importance of AI technologies has resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI and may in the future result in additional restrictions impacting some or all of our product and service offerings
4. 35SMCI | 2025 Form 10-K | 27
5. 36SMCI | 2025 Form 10-K | 28
6. 37Finally, our business depends on our ability to receive consistent and reliable supplies from our overseas partners, especially in Taiwan. Any new restrictions that negatively impact our ability to receive supply of components, parts, or services from Taiwan, would negatively impact our business and financial results
7. 38Because our products and services may store, process and use data, some of which contains personal information, we are subject to complex and evolving domestic and international laws and regulations regarding privacy, data protection and other matters, which are subject to change
8. 39SMCI | 2025 Form 10-K | 29
9. 40Adequately protecting our intellectual property rights could be costly, and our ability to compete could be harmed if we are unsuccessful or if we are prohibited from making or selling our products
10. 41Failure to comply with the U.S. Foreign Corrupt Practices Act, other applicable anti-corruption and anti-bribery laws, and applicable trade control laws could subject us to penalties and other adverse consequences
11. 42Provisions of our certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, as a result, depress the trading price of our common stock
12. 43The concentration of our capital stock ownership may limit your ability to influence corporate matters

Financial Risks

1. 44Our indebtedness, liabilities, and other contractual obligations could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to meet those obligations
2. 45Provisions in the 2029 Convertible Notes Indenture, the 2028 Convertible Notes Indenture, and the 2030 Convertible Notes Indenture could delay or prevent an otherwise beneficial takeover of us, may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock
3. 46The capped call transactions entered into in connection with the issuance of the 2029 Convertible Notes and the 2030 Convertible Notes subject us to counterparty risk and may affect our common stock
4. 47Our future effective income tax rates could be affected by changes in the relative mix of our operations, our relative income among different geographic regions and domestic and foreign income tax laws, which could affect our future operating results, financial condition and cash flows
5. 48SMCI | 2025 Form 10-K | 33
6. 49We do not expect to pay any cash dividends in the foreseeable future

General Risks

1. 50Our products may not be viewed as supporting climate change mitigation in the IT sector
2. 51Expectations and evolving laws and regulations relating to environmental, social and governance considerations expose us to potential liabilities, reputational harm and other unforeseen adverse effects on our business