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What changed in FORMFACTOR INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FORMFACTOR INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+252 added−217 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-21)

Top changes in FORMFACTOR INC's 2025 10-K

252 paragraphs added · 217 removed · 169 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

42 edited+8 added−4 removed51 unchanged
Biggest changeOur customers use our products to test nearly all semiconductor device types, including SoCs, mobile application processors, microprocessors, microcontrollers, graphic processors, network and digital signal processing integrated circuits (ICs), radio frequency amplifiers, filters and antenna in package devices, analog, mixed signal, image sensors, electro-optical, DRAM memory (including HBM), NAND flash memory, NOR flash memory, and quantum computer processor devices. 6 Fabless semiconductor suppliers do not manufacture their own semiconductors, but they purchase our analytical probes, probe stations, and other System segment products for research and development, and device characterization.
Biggest changeOur 6 customers use our products to test nearly all semiconductor device types, including SoC devices such as high-performance computing chips (graphics processing units, central processing units, digital processing units, and other custom application-specific processing units); consumer devices (mobile application processors, microprocessors, and microcontrollers); network devices such as switches and network processing units; DRAM, including HBM; radio-frequency amplifiers and filters; antenna-in-package devices; analog and mixed-signal integrated circuits; image sensors; co-packaged optical ICs; NAND flash memory; NOR flash memory; and quantum computing processors.
These tools and processes are intended to enable the rapid and accurate customization of products required to meet customer requirements, including automated routing and trace length adjustment within our probe cards, to rapidly design complex structures. In addition, some of our customers test certain chips over a large range of operating temperatures, such as for automotive and cryogenic applications.
These tools and processes are intended to enable the rapid and accurate customization of products required to meet customer requirements, including automated routing and trace length adjustment within our probe cards, to rapidly design complex structures. 5 In addition, some of our customers test certain chips over a large range of operating temperatures, such as for automotive and cryogenic applications.
The high capital investment and other costs associated with the 8 development of MEMS probe cards and the time and high cost of the customer evaluation process represent significant barriers to entry for this type of technology. We believe that the primary competitive factors in the production probe card market depend upon the type of integrated circuit being tested.
The high capital investment and other costs associated with the development of MEMS probe cards and the time and high cost of the customer evaluation process represent significant barriers to entry for this type of technology. We believe that the primary competitive factors in the production probe card market depend upon the type of integrated circuit being tested.
We design probe cards to provide for a precise match with the thermal expansion characteristics of the wafer under test across the range of test operating temperatures. For many of our products, our customers can use the same 5 probe card for both low and high temperature testing.
We design probe cards to provide for a precise match with the thermal expansion characteristics of the wafer under test across the range of test operating temperatures. For many of our products, our customers can use the same probe card for both low and high temperature testing.
We offer a variety of benefits such as health insurance, paid and unpaid leaves, retirement, and life and disability/accident coverage as applicable to their geographic location. We also offer a variety of other benefits which allow employees to select the options which meet their needs such as for wellness, insurance and professional services.
We offer a variety of benefits such as health insurance, paid and unpaid leaves, retirement, and life and disability/accident coverage as applicable to their geographic location. We also offer a variety of other benefits which allow employees to select the options which meet their needs, such as wellness, insurance, and professional services.
This may reduce or eliminate some or all of our current products’ advantages. Semiconductor manufacturers may also increase their use of test strategies that include low performance semiconductor testers, less complex probe cards, or test procedures that do not involve our products.
This may reduce or eliminate some or all of our current products’ advantages. Semiconductor manufacturers may also increase their use of test strategies that include low performance semiconductor testers, 9 less complex probe cards, or test procedures that do not involve our products.
We are always striving to attract talented individuals from a global candidate pool. We are committed to providing a safe and healthy workplace for all employees. Our workplace health and safety programs include policies, procedures, training programs, and self-audits.
We are always striving to attract talented individuals from a global candidate pool. 10 We are committed to providing a safe and healthy workplace for all employees. Our workplace health and safety programs include policies, procedures, training programs, and self-audits.
Failure to comply with these laws could result in sanctions by the U.S. or other respective governments, including substantial monetary penalties, denial of import, export or other privileges, and debarment from government contracts.
Failure to comply with these laws could result in sanctions by the U.S. or other governments, including substantial monetary penalties, denial of import, export or other privileges, and debarment from government contracts.
Our applications engineers assist our customers in test methodologies to make advanced measurements during process and product development, and during mass production, along with offering traditional maintenance services. Customers Our customers include companies, universities and institutions that design or make semiconductor and semiconductor related products in the foundry & logic, DRAM, flash, display, sensor and quantum computer markets.
Our applications engineers assist our customers in test methodologies to make advanced measurements during process and product development, and during mass production, along with offering traditional maintenance services. Customers Our customers include companies, universities and institutions that design and develop or manufacture semiconductor and semiconductor related products in the foundry & logic, DRAM, flash, display, sensor and quantum computer markets.
As silicon photonics matures and moves to high-volume-production in the coming years, we expect that our leadership positions in combined electrical and optical test will provide new growth. Thermal Subsystems. Our thermal subsystems include thermal chucks and other test systems used in probe stations and other applications where precise temperature management is required.
As silicon photonics matures and moves to high-volume-production in the coming years, we expect that our leadership positions in combined electrical and optical test may provide new growth. Thermal Subsystems. Our thermal subsystems include thermal chucks and other test systems used in probe stations and other applications where precise temperature management is required.
In the future, we may receive notices of violations of environmental regulations, or otherwise learn of such violations. Environmental contamination or violations may negatively impact our business. Import and Export Control We manufacture, market and sell our products both inside an d outside the U.S. Certain products are subject to export control regulations.
We have received, and may receive in the future, notices of violations of environmental regulations, or otherwise learn of such violations. Environmental contamination or violations may negatively impact our business. Import and Export Control We manufacture, market and sell our products both inside an d outside the U.S. Certain products are subject to export control regulations.
We believe that we compete favorably with respect to these factors. Cryogenic Systems. In the market for cryogenic systems, we compete principally against Bluefors Oy, Lake Shore Cryotronics, Inc, Maybell Quantum Industries Inc., Montana Instruments, and Oxford Instruments. We believe the primary competitive factors in this market are cryogenic performance, reliability, throughput and application expertise.
We believe that we compete favorably with respect to these factors. Cryogenic Systems. In the market for cryogenic systems, we compete principally against Bluefors Oy, Lake Shore Cryotronics, Inc, Maybell Quantum Industries Inc., Montana Instruments, and Quantum Design. We believe the primary competitive factors in this market are cryogenic performance, reliability, throughput and application expertise.
These programs focus on compensation that we believe is market-competitive, reflects company performance, and aligns with drivers of stockholder value with differentiation based on performance, skills, geographic location, and tenure.
These programs focus on compensation that we believe is market-competitive, reflects company performance, and aligns with drivers of stockholder value with differentiation based on performance, role, geographic location, and tenure.
We offer pre-configured and customized measurement systems for production testing, power device characterization, vacuum probing, cryogenic probing, high-pressure probing, photonics testing, and a variety of other specific applications.
We offer pre-configured and customized measurement systems for production testing, power device characterization, vacuum probing, cryogenic probing, high-pressure probing, photonics testing, and a variety of other specialized applications.
For many advanced applications, our products must maintain tens of thousands of simultaneous high-fidelity low-impedance electrical contacts with the corresponding chip contacts on the wafer. Our present technologies enable probe cards with over 150,000 contact elements with spacings as small as 40 microns over geometries as large as an entire 300mm wafer.
For many advanced applications, our products must maintain tens of thousands, and sometimes even hundreds of thousands, of simultaneous high-fidelity low-impedance electrical contacts with the corresponding chip contacts on the wafer. Our present technologies enable probe cards with over 150,000 contact elements with spacings as small as 40 microns over geometries as large as an entire 300mm wafer.
Our range of capabilities enable us to rapidly produce customer-design specific probe cards that deliver leading precision, quality, reliability, and electro-mechanical performance. Our probe cards are customized for our customers’ unique wafer and chip designs by modifying and adapting our standard product architectures to meet an individual customer’s specific wafer and chip layouts and electrical test requirements.
Our range of capabilities enable us to rapidly produce customer-design specific probe cards that deliver leading precision, quality, reliability, and electro-mechanical performance. Our probe cards are customized to our customers’ unique wafer and chip designs by modifying and adapting our standard product architectures to meet each customer’s specific wafer layouts, chip layouts, and electrical test requirements.
We are in the early stages of collaborating with certain customers to transition from the lab to the fab with co-packaged optics, which is poised to revolutionize chip-to-chip communication in the data center by significantly reducing power consumption at high data rates.
We are collaborating with certain customers to transition from the lab to the fab with co-packaged optics, which is poised to revolutionize chip-to-chip communication in the data center by significantly reducing power consumption at high data rates.
These systems are marketed externally and also allow for vertical integration with our existing cryogenic wafer and chip probe stations and cryogenic probes. Services and Support. In addition to routine installation services at the time of sale, we offer services to enable our customers to maintain and more effectively utilize our products and to enhance our customer relationships.
These systems are marketed externally and designed to enable vertical integration with our existing cryogenic wafer and chip probe stations and cryogenic probes. Services and Support. In addition to routine installation services at the time of sale, we offer services to enable our customers to maintain and more effectively utilize our products and to enhance our customer relationships.
We continue to add new models of analytical probes that address measurements with higher complexities and at higher frequencies. Probe Stations. Probe stations, also referred to as probe systems, are a critical tool for the development of new generations of semiconductor and electro-optical processes and designs.
We continue to add new models of analytical probes that address measurements with increasing measurement complexity and at higher frequencies. Probe Stations. Probe stations, also referred to as probe systems, are a critical tool for the development of new generations of semiconductor and electro-optical processes and designs.
We believe that this high-frequency capability also enables us to compete favorably in high bandwidth memory (“HBM”) testing, which is a stack of eight, twelve, or even sixteen individual DRAM die assembled with advanced packaging processes like through-silcon-vias and thermo-compression bonding. Analytical Probes. Our primary competitors in the analytical probe market are GGB Industries Inc. and MPI Corporation.
We believe that this high-frequency capability also enables us to compete favorably in HBM testing, which is a stack of eight, twelve, or even sixteen individual DRAM die assembled with advanced packaging processes like through-silicon-vias and thermo-compression bonding. Analytical Probes. Our primary competitors in the analytical probe market are GGB Industries Inc. and MPI Corporation.
In addition, for high signal-fidelity devices such as wireless radio frequency transceivers and automotive radar chips, our probe card technologies are capable of testing at millimeter-wave frequencies range, currently up to 81 GHz. We have invested, and intend to continue to invest, considerable resources in proprietary probe card design tools and processes.
In addition, for high signal-fidelity devices such as wireless radio frequency transceivers and automotive radar chips, our probe card technologies are capable of testing at millimeter-wave frequencies currently exceeding 80 GHz. We have invested, and intend to continue to invest, considerable resources in proprietary probe card design tools and processes.
Critical steps in our manufacturing process are performed in a variety of clean room environments as stringent as a Class 100, depending on the requirements of the specific manufacturing processes. Our probe stations are designed to provide highly accurate electrical and optical measurements enabled by precise and reliable mechanical components and assemblies.
Critical steps in our manufacturing process are performed in a variety of clean room environments up to ISO Class 5 (Class 100), depending on the requirements of the specific manufacturing processes. Our probe stations are designed to provide highly accurate electrical and optical measurements enabled by precise and reliable mechanical components and assemblies.
As of December 28, 2024, we operate in two reportable segments consisting of the Probe Cards segment and the Systems segment. Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, thermal systems and cryogenic systems are included in the Systems segment.
As of December 27, 2025, we operate in two reportable segments consisting of the Probe Cards segment and the Systems segment. Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, thermal systems and cryogenic systems are included in the Systems segment.
We believe that we comply in all material respects with the environmental laws and regulations that apply to us as of December 28, 2024. There are no matters pending that we currently believe are reasonably possible of having a material impact to our business, consolidated financial condition, results of operations or cash flows.
We believe that we comply in all material respects with the environmental laws and regulations that apply to us as of December 27, 2025. There are no matters pending that we currently believe are reasonably likely to have a material impact to our business, consolidated financial condition, results of operations or cash flows.
We use information from outside compensation and benefits consulting firms to evaluate the competitiveness of the compensation we offer to employees in specific job types, and to evaluate the structure of our compensation programs, as a benchmark against our peers within the industry.
We use information from outside compensation and benefits consulting firms to evaluate the competitiveness of the rewards we offer to employees, and to evaluate the structure of our compensation and benefit programs, as a benchmark against our peers within the industry.
We have generated, and continue to generate and maintain, patents and other intellectual property rights covering innovations that are intended to create a competitive advantage, and to support the protection of our investments in research and development.
We have generated, and continue to generate and maintain, patents and other intellectual property rights covering innovations that are intended to create a competitive advantage, and to support the protection of our investments in research and development. We believe that we possess one of the most substantial patent portfolios relevant to our products.
The following customers represented 10% or more of our quarterly revenues for the quarters indicated: Fiscal Quarters Ended Dec. 28, 2024 Sep. 28, 2024 Jun. 29, 2024 Mar. 30, 2024 Dec. 30, 2023 Sep. 30, 2023 Jul. 1, 2023 Apr. 1, 2023 SK hynix Inc. 22.0 % 18.1 % 19.5 % 15.5 % 10.7 % * * * Intel Corporation * 17.1 % 16.7 % 15.7 % 16.7 % 17.1 % 14.2 % 20.0 % Samsung Electronics Co., LTD. * * * 12.4 % * 11.2 % * * 22.0 % 35.2 % 36.2 % 43.6 % 27.4 % 28.3 % 14.2 % 20.0 % * Less than 10% of revenues.
The following customers represented 10% or more of our quarterly revenues for the quarters indicated: Fiscal Quarters Ended Dec 27, 2025 Sep 27, 2025 Jun 28, 2025 Mar 29, 2025 Dec 28, 2024 Sep 28, 2024 Jun 29, 2024 Mar 30, 2024 SK hynix Inc. 19.2 % 24.5 % 25.0 % 23.3 % 22.0 % 18.1 % 19.5 % 15.5 % Intel Corporation * * 12.4 % 12.0 % * 17.1 % 16.7 % 15.7 % Taiwan Semiconductor Manufacturing Company Ltd. * * 10.4 % * * * * * Samsung Electronics Co., Ltd. * * * * * * * 12.4 % 19.2 % 24.5 % 47.8 % 35.3 % 22.0 % 35.2 % 36.2 % 43.6 % * Less than 10% of revenues.
Approximately 14% of our fiscal 2024 revenue and 14% of our fiscal 2023 revenue was derived from sales to customers in China, which were subject to the expanded export license requirements imposed by the United States government.
For example, 8 approximately 7% of our fiscal 2025 revenue and 14% of our fiscal 2024 revenue was derived from sales to customers in China, which was one of the regions subject to the expanded export license requirements imposed by the United States government.
We believe that we possess one of the most substantial patent portfolios relevant to our products. 9 Although we believe that our patents and other intellectual property rights have significant value for each of our segments, we do not believe that maintaining or growing our business is materially dependent on any single patent.
Although we believe that our patents and other intellectual property rights have significant value for each of our segments, we do not believe that maintaining or growing our business is materially dependent on any single patent.
We also provide worldwide on-site probe card maintenance and service training, seminars and telephone support. In certain geographic regions, and for selected products, our manufacturers’ representatives and distributors provide additional service and support.
We assist our customers in the selection, integration and use of our products through application engineering support. We also provide worldwide on-site probe card maintenance and service training, seminars and telephone support. In certain geographic regions, and for selected products, our manufacturers’ representatives and distributors provide additional service and support.
By region, 1,663 of our employees were in North America, 314 in Asia, and 261 in Europe. As of December 28, 2024, our Probe Cards Segment had 1,674 regular full-time employees, our Systems Segment had 372 regular full-time employees, plus we had 192 regular full-time employees in corporate functions. Available Information We maintain a website at http://www.formfactor.com .
By region, 1,553 of our employees were in North America, 325 in Asia, and 275 in Europe. As of December 27, 2025, our Probe Cards Segment had 1,579 regular full-time employees, our Systems Segment had 377 regular full-time employees, plus we had 197 regular full-time employees in corporate functions. Available Information We maintain a website at http://www.formfactor.com .
We also have a network of representatives and distributors across the globe to broaden our reach. We engage sales representatives to act as independent third parties that agree to promote our products, at our prices and on terms set by us, in return for a commission based on sales.
We engage sales representatives to act as independent third parties to promote our products, at our prices and on terms set by us, in return for a commission based on sales.
We offer probe cards to test a variety of semiconductor device types, including systems on a chip (SoCs), mobile application processors, microprocessors, microcontrollers, graphic processors, network and digital signal processing integrated circuits (ICs), radio frequency amplifiers, filters and antenna in package devices, analog, mixed signal, image sensors, electro-optical, DRAM memory (including high-bandwidth memory, or “HBM”), NAND flash memory, NOR flash memory, and quantum computer processor devices.
We offer probe cards to test a wide range of semiconductor device types, including logic system-on-chip (SoC) devices such as high-performance computing chips (graphics processing units, central processing units, digital processing units, and other custom application-specific processing units); consumer devices (mobile application processors, microprocessors, and microcontrollers); network devices such as switches and network processing units; dynamic random-access memory (DRAM), including high-bandwidth memory (HBM); radio-frequency amplifiers and filters; antenna-in-package devices; analog and mixed-signal integrated circuits; image sensors; co-packaged optical integrated circuits (ICs); NAND flash memory; NOR flash memory; and quantum computing processors.
We maintain repair and service capabilities in Livermore, Carlsbad, and Baldwin Park, California and Beaverton, Oregon, United States; Thiendorf, Dresden and Munich Germany; Bundang, South Korea; Yokohama, Japan; Hsinchu, Taiwan; and Singapore. Research, Development and Engineering The semiconductor industry is subject to rapid technological change with a continuous stream of new product introductions and technology enhancements.
We maintain repair and service capabilities in Livermore, Carlsbad, and Baldwin Park, California and Beaverton, Oregon, United States; Thiendorf, Dresden and Munich Germany; Bundang, South Korea; Yokohama, Japan; Hsinchu, Taiwan; and Singapore.
We regularly assess and evaluate alternative sources of supply for all components and materials. Our primary manufacturing facilities are located in Livermore, Carlsbad, and Baldwin Park, California; Beaverton, Oregon; Boulder, Colorado; and Woburn, Massachusetts, all in the United States; and in Thiendorf and Munich, Germany. We also have smaller manufacturing operations in Yokohama, Japan.
We regularly assess and evaluate alternative sources of supply for all components and materials. Our primary manufacturing facilities for probe cards and analytical probes are located in Livermore, California and Beaverton, Oregon, United States.
Our probe stations are installed at customer sites either by us, our manufacturers’ representatives or our distributors, depending on the complexity of the installation and the customer’s geographic location. We assist our customers in the selection, integration and use of our products through application engineering support.
We consider timely service and support to be an important aspect of our relationship as our products are critical elements of high-volume manufacturing and design-specific product ramps. Our probe stations are installed at customer sites either by us, our manufacturers’ representatives or our distributors, depending on the complexity of the installation and the customer’s geographic location.
The probe card market is comprised of many domestic and foreign companies, and has historically been fragmented with many local suppliers servicing individual customers in often differentiated applications.
The probe card market is comprised of many domestic and foreign companies, and has historically been fragmented with many local suppliers servicing individual customers in often differentiated applications. Our primary competitors are Japan Electronic Materials Corporation, Korea Instrument Co., Ltd., Micronics Japan Co., Ltd., MPI Corporation, STAr Technologies, Inc., Max One, Technoprobe S.p.A, TSE Co., Ltd., among others.
We employ a highly skilled team of application and customer support engineers that support our customers as they integrate our products into their research, development and manufacturing processes. Through these customer relationships, we seek to develop a strong understanding of customer and product requirements to align our capabilities with our customers’ roadmaps and production ramps.
They work closely with customers to understand their businesses, anticipate trends and define products that will provide significant technical and economic advantages to our customers. We employ a highly skilled team of application and customer support engineers that support our customers as they integrate our products into their research, development and manufacturing processes.
We also increasingly seek to deploy our resources to solve fundamental challenges that are both common to, and provide competitive advantage across, our probe card and system product offerings and roadmaps. Sales and Marketing We sell our products worldwide through a global direct sales force and through a combination of manufacturers’ representatives and distributors.
We allocate significant resources to these efforts and prioritize those resources to prepare for our customers’ next generation electrical test and measurement challenges. We also increasingly seek to deploy our resources to solve fundamental challenges that are both common to, and provide competitive advantage across, our probe card and system product offerings and roadmaps.
We face strong competition from companies in a variety of technology fields to secure the engineering talent that we require.
We face strong competition from companies in a variety of technology fields to secure the engineering talent that we require. As of December 27, 2025, we had 2,153 regular full-time employees, including 1,298 in operations, 422 in research and development, 235 in sales and marketing and 198 in general and administrative functions.
Our direct sales and marketing staff is located in the United States, France, Germany, Italy, United Kingdom, Japan, Singapore, South Korea, and Taiwan. They work closely with customers in the effort to understand their businesses, anticipate trends and define products that will provide significant technical and economic advantages to our customers.
Sales and Marketing We sell our products worldwide through a global direct sales force and through a combination of manufacturers’ representatives and distributors. Our direct sales and marketing staff is located in the United States, France, Germany, Italy, United Kingdom, Japan, Singapore, South Korea, and Taiwan.
We believe that our continued commitment to research and development and our timely introduction of new and enhanced products and technologies are integral to maintaining and enhancing our competitive position. We allocate 7 significant resources to these efforts and prioritize those resources to prepare for our customers’ next generation electrical test and measurement challenges.
Research, Development and Engineering The semiconductor industry is subject to rapid technological change with a continuous stream of new product introductions and technology enhancements. We believe that our continued commitment to research and development and our timely introduction of new and enhanced products and technologies are integral to maintaining and enhancing our competitive position.
Removed
They also purchase, or direct their foundries or wafer test facilities to purchase, our probe cards to test wafers manufactured for them. We believe our customers consider timely service and support to be an important aspect of our relationship as our products are critical elements of high-volume manufacturing and design-specific product ramps.
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Fabless semiconductor suppliers do not manufacture their own semiconductors, but they purchase our analytical probes, probe stations, and other System segment products for research and development, and device characterization. They also purchase, or direct their foundries or wafer test facilities to purchase, our probe cards to test wafers manufactured for them.
Removed
Our primary competitors are Chungwa Precision Technology, Feinmetall GmbH, Japan Electronic Materials Corporation, Korea Instrument Co., Ltd., Microfriend Inc., Micronics Japan Co., Ltd., MPI Corporation, Soulbrain Engineering, STAr Technologies, Inc., Max One, Nidec SV TCL, Synergie CAD, Technoprobe S.p.A, TSE Co., Ltd., WinWay Technology Co., Ltd., WILL-Technology Co., Ltd., and Yokowo, among others.
Added
Our current manufacturing operations in Carlsbad and Baldwin Park, California are consolidating to other sites, which we expect to be largely completed by the end of fiscal 2026. We also have smaller manufacturing operations 7 in Yokohama, Japan.
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In addition, restrictions on immigration and skilled-worker visas in a variety of jurisdictions impacts the ease and flexibility with which we can develop these resources. 10 As of December 28, 2024, we had 2,238 regular full-time employees, including 1,352 in operations, 424 in research and development, 268 in sales and marketing and 194 in general and administrative functions.
Added
We have acquired a new manufacturing facility in Farmers Branch, Texas that is currently in the build‑out phase and is expected to support probe card production beginning in late fiscal 2026. Our primary manufacturing facilities for probe stations, thermal systems, and cryogenic systems are located in Boulder, Colorado, United States, and in Thiendorf, Munich and Karlsruhe, Germany.
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The reference to our website does not constitute incorporation by reference of the information contained at the site.
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As noted above, our repair and service capabilities in Carlsbad and Baldwin Park, California are consolidating to other sites, which we expect to be largely completed by the end of fiscal 2026, subject to execution and operational considerations.
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Through these customer relationships, we seek to develop a strong understanding of customer and product requirements to align our capabilities with our customers’ roadmaps and production ramps. We also have a network of representatives and distributors across the globe to broaden our reach.
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We also use the investor relations page on our website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding us, as well as corporate governance information, is routinely posted and accessible on the investor relations page on our website.
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We encourage investors, the media and others interested in FormFactor to review the information we make public in these locations, as such information could be deemed to be material information.
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Information on or that can be accessed through our website is not part of this Annual Report on Form 10-K, any other report or document we file with the SEC, and the inclusion of our website address is an inactive textual reference only.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+33 added−16 removed118 unchanged
Biggest changeThe circumstances which give rise to epidemics and pandemics from new or existing pathogens with similar impacts are expected to persist indefinitely. Another example of events outside of our control arises from our manufacturing facilities being located in seismically active areas in California and Oregon. The manufacturing equipment and processes that we use can be severely disrupted by seismic activity.
Biggest changeFor example, our manufacturing facilities are located in seismically active areas in California and Oregon. The manufacturing equipment and processes that we use can be severely disrupted by seismic activity. A significant seismic event in an area of our operations could have a materially negative impact on our operations, financial results or financial condition.
Successful product design, development and introduction on a timely basis require that we: 11 • collaborate with customers to understand their future requirements; • design innovative and performance-enhancing product architectures, technologies and features that differentiate our products from those of our competitors; • in some cases, engage with third parties who have particular expertise in order to complete one or more aspects of the design and manufacturing process; • qualify with customers new products, or an existing product incorporating new technology; • transition our products to new manufacturing technologies, as necessary; • offer our products for sale at competitive price levels while maintaining our gross margins within our financial model; • identify emerging technological trends in our target markets; • maintain effective marketing strategies; • obtain and maintain intellectual property rights where necessary; • hire and retain high performing engineering personnel; • respond effectively to technological changes or product announcements by others; and • adjust to changing market conditions quickly and cost-effectively.
Successful product design, development and introduction on a timely basis require that we: • collaborate with customers to understand their future requirements; • design innovative and performance-enhancing product architectures, technologies and features that differentiate our products from those of our competitors; • in some cases, engage with third parties who have particular expertise in order to complete one or more aspects of the design and manufacturing process; • qualify with customers new products, or an existing product incorporating new technology; • transition our products to new manufacturing technologies, as necessary; • offer our products for sale at competitive price levels while maintaining our gross margins within our financial model; • identify emerging technological trends in our target markets; • maintain effective marketing strategies; • obtain and maintain intellectual property rights where necessary; • hire and retain high performing engineering personnel; • respond effectively to technological changes or product announcements by others; and • adjust to changing market conditions quickly and cost-effectively.
Any errors or defects could: • cause lower than anticipated yields and lengthen delivery schedules; • cause delays in product shipments; • cause delays in new product introductions; • cause us to incur warranty expenses; • result in increased costs and diversion of development resources; • cause us to incur increased charges due to unusable inventory; • require design modifications; • have implications for timing of revenue recognition and associated costs; or 14 • decrease market acceptance or customer satisfaction with these products.
Any errors or defects could: • cause lower than anticipated yields and lengthen delivery schedules; • cause delays in product shipments; • cause delays in new product introductions; • cause us to incur warranty expenses; • result in increased costs and diversion of development resources; • cause us to incur increased charges due to unusable inventory; • require design modifications; • have implications for timing of revenue recognition and associated costs; or • decrease market acceptance or customer satisfaction with these products.
We have previously experienced disruptions to electrical power at some of our premises in California and China, especially when aging infrastructure or inadequate electric power service has been impacted by high demand, fires, and weather which may worsen over time with climate change, and other events.
We have previously experienced disruptions to electrical power at some of our premises in California, especially when aging infrastructure or inadequate electric power service has been impacted by high demand, fires, and weather which may worsen over time with climate change, and other events.
Any litigation, whether or not resolved in our favor, and whether initiated by us or by a third party, could result in significant and possibly material expenses to us and divert the efforts of our management and technical personnel. We might be subject to claims of infringement of other parties’ proprietary rights.
Any litigation, whether or not resolved in our favor, and whether initiated by us or by a third party, could result in significant and possibly material expenses to us and divert the efforts of our management and technical personnel. 19 We might be subject to claims of infringement of other parties’ proprietary rights.
Because our expense levels are based in part on 13 our expectations as to future revenues and to a large extent are fixed in the short term, we might be unable to adjust spending in time to compensate for any unexpected shortfall in revenues.
Because our expense levels are based in part on our expectations as to future revenues and to a large extent are fixed in the short term, we might be unable to adjust spending in time to compensate for any unexpected shortfall in revenues.
We, therefore, face exposure to fluctuations in currency exchange rates. Significant fluctuations in exchange rates between the U.S. dollar and foreign currencies may adversely affect our revenues and earnings, despite our hedging of a portion of our international 17 currency exposures.
We, therefore, face exposure to fluctuations in currency exchange rates. Significant fluctuations in exchange rates between the U.S. dollar and foreign currencies may adversely affect our revenues and earnings, despite our hedging of a portion of our international currency exposures.
A decline in our customers' market share and commercial success, including their ability to compete favorably within their respective end markets, could significantly impact demand for our products and reduce our revenues.
A decline in our 12 customers' market share and commercial success, including their ability to compete favorably within their respective end markets, could significantly impact demand for our products and reduce our revenues.
Our business depends heavily upon the development and manufacture of new semiconductors, the rate at which semiconductor manufacturers make transitions to smaller nanometer technology nodes and implement tooling cycles, the volume of production by semiconductor manufacturers, and the overall financial strength of our customers, which, in turn, depend upon the current and anticipated market demand for semiconductors and products that use semiconductors, such as servers, personal computers, automobiles and cell phones.
Our business depends heavily upon the development 13 and manufacture of new semiconductors, the rate at which semiconductor manufacturers make transitions to smaller nanometer technology nodes and implement tooling cycles, the volume of production by semiconductor manufacturers, and the overall financial strength of our customers, which, in turn, depend upon the current and anticipated market demand for semiconductors and products that use semiconductors, such as servers, artificial intelligence, personal computers, automobiles and cell phones.
In reaction to U.S. trade regulations, governments and private businesses outside the United States, particularly in China, may implement retaliatory controls and preferences for non-U.S. or local suppliers, which can increase our manufacturing costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers, limit our ability to procure components or raw materials, or impede or slow the movement of our goods across borders.
In reaction to U.S. trade regulations, governments and private businesses outside the United States may implement retaliatory controls and preferences for non-U.S. or local suppliers, which can increase our manufacturing and transaction costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers, limit our ability to procure components or raw materials, or impede or slow the movement of our goods across borders.
Factors affecting the trading price of our common stock could include: • variations in our operating results; • our forecasts and financial guidance for future periods; • announcements of technological innovations, new products or product enhancements, new product adoptions at semiconductor customers or significant agreements by us or by our competitors; • reports regarding our ability to bring new products into volume production efficiently; • the gain or loss of significant orders or customers; • changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock; • rulings on litigation and proceedings; 20 • seasonality, principally due to our customers' purchasing cycles; • market and competitive conditions in our industry, the entire semiconductor industry and the economy as a whole; • recruitment or departure of key personnel; • announcements of mergers and acquisition transactions and the ability to successfully integrate the business activities of the acquired/merged company; and • political and global economic instability, including as a result of trade barriers, natural disasters, epidemics and pandemics, military conflicts, climate change, and other factors acting alone or in combination.
Factors affecting the trading price of our common stock could include: • variations in our operating results; • our forecasts and financial guidance for future periods; • announcements of technological innovations, new products or product enhancements, new product adoptions at semiconductor customers or significant agreements by us or by our competitors; • changes, including delays or declines, in investment in artificial intelligence infrastructure; • reports regarding our ability to bring new products into volume production efficiently; • the gain or loss of significant orders or customers; • changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock; • rulings on litigation and proceedings; • seasonality, principally due to our customers' purchasing cycles; • market and competitive conditions in our industry, the entire semiconductor industry and the economy as a whole; • recruitment or departure of key personnel; • announcements of mergers and acquisition transactions and the ability to successfully integrate the business activities of the acquired/merged company; and • political and global economic instability, including as a result of trade barriers, natural disasters, epidemics and pandemics, military conflicts, climate change, and other factors acting alone or in combination.
These and other regulatory and policy changes, and the reactions of customers to such changes, in the U.S. and elsewhere, could materially and negatively affect our future sales and operating results. If we fail to protect our proprietary rights, our competitors might gain access to our technology, which could adversely affect our ability to compete successfully in our markets.
These and other regulatory and policy changes, and the reactions of customers to such changes, in the United States and elsewhere, could materially and negatively affect our future sales and operating results. If we fail to protect our proprietary rights, our competitors might gain access to our technology, which could adversely affect our ability to compete successfully in our markets.
Our international sales as a percentage of our revenues were 76%, 74% and 83% for fiscal 2024, 2023 and 2022, respectively. Certain of our non-U.S. based customers also purchase through their subsidiaries in the United States. In the future we expect international sales to continue to account for a significant percentage of our revenues.
Our international sales as a percentage of our revenues were 81%, 76% and 74% for fiscal 2025, 2024 and 2023, respectively. Certain of our non-U.S. based customers also purchase through their subsidiaries in the United States. In the future we expect international sales to continue to account for a significant percentage of our revenues.
These risks and challenges include: • compliance with a wide variety of foreign laws and regulations, including social, political, immigration, and tax and trade policies; • legal uncertainties regarding taxes, tariffs, quotas, export controls, export licenses and other trade barriers; • political and economic instability or foreign conflicts, including trade wars, that involve or affect the countries of our customers; • government restrictions on, or nationalization of, our operations in any country, or restrictions on our ability to repatriate earnings from or distribute compensation or other funds in a particular country; • adverse changes relating to government grants, tax credits, or other government incentives, including more favorable incentives provided to competitors; • difficulties in collecting accounts receivable and longer accounts receivable payment cycles; • difficulties in staffing and managing personnel, distributors and representatives; • reduced protection for intellectual property rights in some countries; • currency exchange rate fluctuations, which could affect the value of our assets denominated in local currency, as well as the price of our products relative to locally produced products; • global, regional and national geopolitical or other events, such as political instability, acts of war or terrorism, regional tensions, health crises and natural disasters; • seasonal fluctuations in purchasing patterns in other countries; and • fluctuations in freight rates and transportation disruptions.
These risks and challenges include: • compliance with a wide variety of foreign laws and regulations, including social, political, immigration, and tax and trade policies; • legal uncertainties regarding taxes, tariffs, quotas, export controls, export licenses and other trade barriers; • political and economic instability or foreign conflicts, including trade wars, that involve or affect the countries of our customers; • government restrictions on, or nationalization of, our operations in any country, or restrictions on our ability to repatriate earnings from or distribute compensation or other funds in a particular country; • adverse changes relating to government grants, tax credits, or other government incentives, including more favorable incentives provided to competitors; • difficulties in collecting accounts receivable and longer accounts receivable payment cycles; • difficulties in staffing and managing personnel, distributors and representatives; • reduced protection for intellectual property rights in some countries; • currency exchange rate fluctuations, which could affect the value of our assets denominated in local currency, as well as the price of our products relative to locally produced products; • global, regional and national geopolitical or other events, such as political instability, acts of war or terrorism, regional tensions, health crises and natural disasters; • seasonal fluctuations in purchasing patterns in other countries; and • fluctuations in freight rates and transportation disruptions. 18 Any of these factors could harm our existing international operations, impair our ability to continue expanding into international markets or materially adversely affect our operating results.
We believe our ability to manage successfully and grow our business and to develop new products depends, in large part, on our ability to recruit and retain qualified employees, particularly highly skilled technical, sales, management, and other key personnel. Competition for qualified resources is intense.
We may not be able to recruit or retain qualified personnel. We believe our ability to manage successfully and grow our business and to develop new products depends, in large part, on our ability to recruit and retain qualified employees, particularly highly skilled technical, sales, management, and other key personnel. Competition for qualified resources is intense.
Cancellations, reductions, deferrals or non-payment of invoices could result from downturns in the semiconductor industry, including the cyclical downturn we have been experiencing, manufacturing delays, quality or reliability issues with our products, or from interruptions to our customers’ operations due to fire, natural disasters or other events, or other issues with the financial stability of our customers.
Cancellations, reductions, deferrals or non-payment of invoices could result from downturns in the semiconductor industry, manufacturing delays, quality or reliability issues with our products, or from interruptions to our customers’ operations due to fire, natural disasters or other events, or other issues with the financial stability of our customers.
A relatively small number of customers account for a significant portion of our revenues. Two customers represented a combined 33.5% of total revenues in fiscal 2024, one customer represented 17.1% of total revenues in fiscal 2023 and one customer represented 19.0% of total revenues in fiscal 2022.
A relatively small number of customers account for a significant portion of our revenues. One customer represented 22.9% of total revenues in fiscal 2025, two customers represented a combined 33.5% of total revenues in fiscal 2024 and one customer represented 17.1% of total revenues in fiscal 2023.
In fiscal 2024 and 2023, we observed a continuing trend of increasing risks and challenges in the conduct of our international business activities, including expanded tariffs and other trade barriers affecting the United States and China, and currently there are rising trade tensions and conflicts (including proposed tariffs) between the United States and other countries, such as China.
In fiscal years 2025, 2024 and 2023, we observed a continuing trend of increasing risks and challenges in the conduct of our international business activities, including expanded tariffs and other trade barriers affecting the United States and China, and trade tensions and conflicts (including proposed tariffs) between the United States and other countries.
Global economic stability can be negatively affected by a variety of factors and interrelationships, including the impacts of epidemics and pandemics, military conflicts or regional tensions, climate change, trade tensions, barriers and conflicts (such as the U.S.-China trade restrictions implemented since fiscal 2022 and those proposed to be implemented by the new U.S. presidential administration) and other factors acting alone or in combination.
Global economic stability can be negatively affected by a variety of factors and interrelationships, including the impacts of epidemics and pandemics, military conflicts or regional tensions, climate change, trade tensions, barriers and conflicts (such as U.S.-China trade restrictions) and other factors acting alone or in combination.
Any such additional charges, whether related to restructuring, asset impairment or factory underutilization, may have a material negative impact on our operating results and related financial statements. We may not be able to recruit or retain qualified personnel.
Any such additional charges, whether related to restructuring, asset impairment or factory underutilization, may have a material negative impact on our operating results and related financial statements.
We have also experienced, and may experience in the future, difficulties in manufacturing our complex products in volume, on time, and at acceptable yields and cost, and/or have installation issues in the field, due to the complexity of customer requirements.
Our operating results and liquidity have been and may in the future be negatively impacted by these factors. 14 We have also experienced, and may experience in the future, difficulties in manufacturing our complex products in volume, on time, and at acceptable yields and cost, and/or have installation issues in the field, due to the complexity of customer requirements.
Any of the foregoing could have a material adverse effect on our business, operating results and financial condition. Because we conduct most of our business internationally, we are subject to operational, economic, financial and political risks abroad. Sales of our products to customers outside of the United States represent a significant part of our past and anticipated revenues.
Because we conduct most of our business internationally, we are subject to operational, economic, financial and political risks abroad. Sales of our products to customers outside of the United States represent a significant part of our past and anticipated revenues.
We are dependent on the availability of certain key raw materials and natural resources used in our products and various manufacturing processes, and we rely on third parties to supply us with these materials in a cost-effective and timely manner.
The occurrence of any of these risks could adversely impact our business, results of operations and financial condition. 15 We are dependent on the availability of certain key raw materials and natural resources used in our products and various manufacturing processes, and we rely on third parties to supply us with these materials in a cost-effective and timely manner.
Our efforts to mitigate the effects on us from interruptions in the 15 availability of electric power, or other infrastructure, may not adequately prevent materially negative impacts on our operations, and in turn our financial results. Climate change, or legal, regulatory or market measures to address climate change, may negatively affect our business and operations.
Our efforts to mitigate the effects on us from interruptions in the availability of electric power, or other infrastructure, may not adequately prevent materially negative impacts on our operations, and in turn our financial results.
This could be exacerbated by certain events outside the control of either the supplier or us, such as global, regional or national health crises, armed conflicts, increased tariffs and trade barriers, regional tensions or other adverse global, regional and national events. The occurrence of any of these risks could adversely impact our business, results of operations and financial condition.
This could be exacerbated by certain events outside the control of either the supplier or us, such as global, regional or national health crises, armed conflicts, increased tariffs and trade barriers, regional tensions or other adverse global, regional and national events.
Additionally, hedging programs are inherently risky and could expose us to additional costs and risks that could adversely affect our financial condition and results of operations. Increasingly restrictive export regulations and other trade barriers may materially harm our business.
Additionally, hedging programs are inherently risky and could expose us to additional costs and risks that could adversely affect our financial condition and results of operations. Increasingly restrictive export regulations and other trade barriers may materially harm our business. Sales of our products to customers outside of the United States represent a significant part of our past and anticipated revenues.
During fiscal 2024, our stock price (Nasdaq Global Select Market close price) ranged from $37.66 per share to $62.22 per share. The trading price of our common stock is likely to continue to be subject to wide fluctuations.
During fiscal 2025, our stock price (Nasdaq Global Select Market close price) ranged from $23.18 per share to $59.25 per share. The trading price of our common 21 stock is likely to continue to be subject to wide fluctuations.
Many of our customers are large companies that place significant orders with us, and the consequences of deterioration in our relationship with any of these companies could be significant due to the competitiveness of our industry and the significant influence that these companies exert in our market. 12 Consolidation in the semiconductor industry and within the semiconductor test equipment market could adversely affect the market for our products and negatively impact our ability to compete.
Many of our customers are large companies that place significant orders with us, and the consequences of deterioration in our relationship with any of these companies could be significant due to the competitiveness of our industry and the significant influence that these companies exert in our market.
These activities can substantially affect our financial resources, could cause delays in product delivery and might not be successful. Acquisitions and investments can divert management’s attention and expose our business to new liabilities or risks associated with entering into new business activities. In addition, we might lose key employees while integrating new organizations.
Acquisitions and investments can divert management’s attention and expose our business to new liabilities or risks associated with entering into new or expanded business activities. In addition, we might lose key employees or have difficulty finding adequate talent while integrating new organizations or expanding our business activities.
In addition, certain of our customer contracts contain provisions that require us to defend or indemnify our customers for third party intellectual property infringement claims, which could increase the costs and negative impacts of intellectual property claims. 18 We have recorded restructuring, inventory write-offs and asset impairment charges in the past, and may do so again in the future, which could have a material negative impact on our business.
In addition, certain of our customer contracts contain provisions that require us to defend or indemnify our customers for third party intellectual property infringement claims, which could increase the costs and negative impacts of intellectual property claims.
We might not be successful in integrating any acquired businesses, products or technologies, and might not achieve anticipated revenues and cost benefits. Investments that we make may not result in a return consistent with our projections upon which such investments are made, or may require additional investment that we did not originally anticipate.
Investments, including investments in capital projects, that we make may not result in a return consistent with our projections upon which such investments are made, or may require additional investment that we did not originally anticipate.
We have been and may again be subject to negative responses from certain stakeholders regarding our selection of certain goals and our strategic choices regarding related matters due to anti-ESG sentiment, which could negatively impact our reputation, business and financial results. 19 Risks Relating to Our Acquisitions We have made acquisitions and investments, and may make additional acquisitions or investments in the future, which could put a strain on our resources, cause ownership dilution to our stockholders, or adversely affect our financial results.
Additionally, anti-ESG sentiment exists among certain stakeholders. We have been and may again be subject to negative responses from certain stakeholders regarding our selection of certain goals and our strategic choices regarding related matters due to anti-ESG sentiment, which could negatively impact our reputation, business and financial results.
Consolidation in the semiconductor industry may reduce our customer base and could adversely affect the market for our products, which could negatively impact our revenues. With consolidation, the number of actual and potential customers for our products has decreased in recent years.
Consolidation in the semiconductor industry and within the semiconductor test equipment market could adversely affect the market for our products and negatively impact our ability to compete. Consolidation in the semiconductor industry may reduce our customer base and could adversely affect the market for our products, which could negatively impact our revenues.
Our acquisitions or investments may subject us to new or heightened risks. Integrating any newly acquired businesses, products or technologies into our company draws upon our resources in ways that can be expensive and time consuming, particularly when we conduct these activities internationally.
Integrating any newly acquired businesses, property, manufacturing facilities, products or technologies into our company draws upon our resources in ways that can be expensive and time consuming, particularly when we conduct these activities internationally. These activities can substantially affect our financial resources, could cause delays in product delivery and might not be successful.
We may be further impacted by the adoption and evolution of ESG-related regulation and legislation in the jurisdictions in which we do business, which could result in increased compliance, operational, and other costs.
We may be further impacted by the adoption and evolution of ESG-related regulation and legislation in the jurisdictions in which we do business, which could result in increased compliance, operational, and other costs. 20 In addition, we have provided voluntary disclosures on ESG matters, including energy usage, greenhouse gas emissions, health and safety, diversity and inclusion, and labor and human rights.
A significant seismic event in an area of our operations could have a materially negative impact on our operations, financial results or financial condition. Much of the infrastructure on which we rely for our operations is outside of our control, such as electric power infrastructure.
Much of the infrastructure on which we rely for our operations is outside of our control, such as electric power infrastructure.
In addition, new competitors, including test equipment manufacturers, may offer comparable or new technologies that reduce the value of our products. Also, semiconductor manufacturers may implement chip designs or methodologies that increase test throughput, reduce test content, or change their test procedures, thereby eliminating some or all of our current product advantages.
In addition, new competitors, including test equipment manufacturers, may offer comparable or new technologies that reduce the value of our products.
Further, these investments may consume available cash in the short term for anticipated benefit that may or may not occur. Our operating results and liquidity have been and may in the future be negatively impacted by these factors.
These delays and other inefficiencies may arise from a variety of factors. Further, these investments may consume available cash in the short term for anticipated benefit that may or may not occur.
Our current or potential competitors may have larger customer bases, more established customer relationships or greater financial, technical, manufacturing, marketing and other resources than we do.
Also, semiconductor manufacturers may implement chip designs or methodologies that increase test throughput, reduce test content, or change their test procedures, thereby eliminating some or all of our current product advantages. 11 Our current or potential competitors may have larger customer bases, more established customer relationships or greater financial, technical, manufacturing, marketing and other resources than we do.
We may fail, or be perceived to fail, in attaining or maintaining our ESG-related initiatives. These events or perceptions may expose us to additional reputational and operational risks. Additionally, anti-ESG sentiment exists among certain stakeholders.
Such disclosures are aspirational and based on frameworks and standards for such initiatives and progress that are still developing, assumptions that may change, and disclosure control and procedures that continue to evolve. We may fail, or be perceived to fail, in attaining or maintaining our ESG-related initiatives. These events or perceptions may expose us to additional reputational and operational risks.
We have experienced, and may experience in the future, manufacturing delays and other inefficiencies in connection with implementation of these improvements and customer qualifications of new processes or products. These delays and other inefficiencies may arise from a variety of factors.
Further, rapid production ramps or process changes may negatively impact product quality, reliability or consistency, which could result in increased warranty claims, field failures, returns, rework costs or customer dissatisfaction. We have experienced, and may experience in the future, manufacturing delays and other inefficiencies in connection with implementation of these improvements and customer qualifications of new processes or products.
Removed
For example, the semiconductor industry in general experienced a cyclical downturn beginning the second half of fiscal 2022 that extended through at least fiscal 2024, resulting in a significant decline in demand for foundry & logic and DRAM products over the same period.
Added
For example, in June 2025, we purchased a manufacturing site in Farmers Branch, Texas, which is being built out for an expected production ramp beginning late in the fourth quarter of fiscal 2026.
Removed
For example, the COVID-19 pandemic showed the extent to which new pathogens are capable of disrupting business operations and economic activity locally and worldwide. Health crises can severely disrupt global supply chains, including for parts and materials that we use to manufacture our products, and affect economic conditions in the markets for our products.
Added
The successful ramp of this facility is subject to numerous risks and uncertainties, including delays in construction, equipment delivery or installation, challenges in achieving planned production capacity, yields or cost targets, difficulties recruiting, retaining and training qualified personnel, delays in obtaining customer qualifications or regulatory approvals, supply chain constraints, and integration challenges with our existing operations.
Removed
The physical impacts of climate change could adversely impact our costs and operations. There has been public discussion that climate change may be associated with rising sea levels as well as extreme weather conditions such as more intense hurricanes, thunderstorms, tornadoes, drought, and snow or ice storms.
Added
If we are unable to increase capacity at our Farmers Branch site in a timely and cost-effective manner, or if the site does not perform as expected, we may be unable to meet customer demand, which could result in lost sales opportunities, reduced market share, damage to customer relationships and our reputation, and potential contractual penalties.
Removed
Extreme weather conditions may increase our costs or cause damage to our facilities, and any damage resulting from extreme weather may not be fully insured, and may also limit our ability to fully insure facilities on a cost-effective basis in the future. Periods of extended inclement weather may inhibit construction of our capital improvement projects.
Added
In addition, if actual costs to build out and operate the facility exceed our estimates, or if production volumes or yields are lower than anticipated, our margins and operating results could be adversely affected.
Removed
Any such events could adversely impact our costs or results of operations. Concerns relating to climate change have led to a range of local, state, federal, and international regulatory and policy efforts to seek to address greenhouse gas (“GHG”) emissions.
Added
Any of the foregoing could have a material adverse effect on our business, operating results and financial condition. Our business is subject to complex and evolving data privacy and security laws, regulations, and industry standards, and our failure to comply could materially and adversely affect our business, financial condition, and results of operations.
Removed
In the U.S., various approaches are being proposed or adopted at the federal, state, and local government levels, such as recent legislation enacted in California. These efforts could lead to additional costs on the Company now or in the future, including increased energy and other capital or operational costs, or additional legal requirements on the Company.
Added
We collect, process, store, and transmit large amounts of sensitive and confidential data, including personal data of our customers, employees, and third parties. This activity subjects us to a complex and continually evolving landscape of U.S. federal and state laws, foreign laws, and industry standards regarding data privacy and security.
Removed
These efforts could also materially increase our costs of evaluating potential manufacturing sites, or in some cases eliminate some potential locations as feasible sites. In addition to the potential for additional GHG regulation or incentives, enhanced corporate, public, and stakeholder awareness of climate change could affect the Company's reputation or customer demand.
Added
These include, but are not limited to, the General Data Protection Regulation in the European Union, the California Consumer Privacy Act as amended by the California Privacy Rights Act, and other state-specific privacy laws in the United States, as well as contractual obligations and industry-specific requirements.
Removed
Climate change concerns and GHG regulatory efforts could also affect the Company's customers themselves. We could also face pressure from these groups to adapt our physical facilities for alternative sources of energy, which may be less cost-effective than current sources.
Added
These laws and standards are subject to varying interpretations and can be inconsistent across jurisdictions, creating compliance challenges and increasing our legal and operational exposure. Compliance with these laws and regulations requires significant investment in personnel, technology, and process changes, and these costs are likely to increase as new requirements emerge.
Removed
Any of these factors, individually or combined with one or more factors, or other unforeseen factors or other impacts of climate change, could affect the Company and adversely impact our business, operations, or financial condition.
Added
Our efforts to comply may not be successful, and any failure or perceived failure to comply, whether intentional or inadvertent, could result in governmental investigations, inquiries, enforcement actions, fines, civil penalties, litigation, private rights of action, or other liabilities.
Removed
Any of these factors could harm our existing international operations, impair our ability to continue expanding into international markets or materially adversely affect our operating results.
Added
Such events could lead to significant financial costs, reputational damage, loss of customer trust, and restrictions on our ability to process data, which could materially and adversely affect our business, financial condition, and results of operations.
Removed
Sales of our products to customers outside of the United States represent a significant part of our past and anticipated revenues, including sales involving exports from the United States to China.
Added
Failures in our information technology systems, including those incorporating artificial intelligence, or our inability to adapt to technological advancements, could disrupt our operations and harm our business. Our operations rely significantly on the continuous and secure operation of our information technology systems, networks, and infrastructure, including those of our third-party service providers.
Removed
Geopolitical and trade tensions between the United States and China, one of our largest markets, have led to increased tariffs and trade restrictions and have affected customer ordering patterns, and this dynamic between the countries may persist or increase for the foreseeable future. For example, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”), has amended the U.S.
Added
These systems are critical for managing our internal operations, processing transactions, communicating with customers and suppliers, and protecting sensitive data.
Removed
Export Administration Regulations to expand license requirements on exports to entities in China that may support military end uses. These rules expand export license requirements on a broader set of items from the U.S., including many of our products, and for a broader set of customers in China and elsewhere.
Added
Despite our efforts to maintain the security and integrity of our IT environment, our systems are subject to inherent risks, including natural disasters, power outages, telecommunications failures, malicious cyberattacks (such as ransomware, phishing, and denial-of-service attacks), computer viruses, or human error.
Removed
The BIS has also broadened the application of U.S. export controls to certain items which may be subject to Foreign Direct Product Rules (“FDPR”). There is no assurance that we will obtain any export licenses on a timely basis or at all. There also remains considerable uncertainty regarding the interpretation and implementation of new regulations.
Added
Any significant disruption, security breach, or unauthorized access to or disclosure of confidential information could lead to significant financial losses, reputational damage, regulatory penalties, legal liabilities, and operational disruptions, which could materially and adversely affect our business. Furthermore, we utilize artificial intelligence (“AI”) technologies in various aspects of our operations, which introduces novel and evolving risks.
Removed
For example, China has restricted U.S. access to certain minerals and has blocked certain companies that provide products to Taiwan's military from selling products in China. Also, in China, we are observing stronger preferences for non-U.S. suppliers in general, and in favor of new and existing local suppliers in particular.
Added
AI models can produce inaccurate, biased, or unpredictable outputs, potentially leading to flawed decision-making, operational inefficiencies, or customer dissatisfaction. The use of AI also raises complex legal and ethical questions, including those related to intellectual property ownership of AI-generated content, the privacy and security of data used to train AI models, and accountability for AI system failures.
Removed
In addition, the Company has provided voluntary disclosures on ESG matters, including energy usage, greenhouse gas emissions, health and safety, diversity and inclusion, and labor and human rights. Such disclosures are aspirational and based on frameworks and standards for such initiatives and progress that are still developing, assumptions that may change, and disclosure control and procedures that continue to evolve.
Added
The regulatory landscape governing AI is rapidly developing, and new laws or interpretations could impose significant compliance costs, restrict our use of AI, or expose us to unforeseen liabilities. These risks, individually or in the aggregate, could materially and adversely affect our business, financial condition, and results of operations.
Added
Our reliance on third-party data and open-source software components could expose us to intellectual property, security, and accuracy risks. We incorporate research, published data, and open-source software components into our products, services, and internal operations. While these resources can enhance our capabilities and efficiency, they also introduce significant risks.
Added
The use of third-party data may expose us to risks of data inaccuracy, incompleteness, or misinterpretation, which could lead to flawed analyses, erroneous business decisions, and reputational harm.
Added
We may also inadvertently infringe upon the intellectual property rights of others if the data we use is not properly licensed or if its use violates existing copyrights, patents, or trade secrets. 17 Moreover, the use of open-source software components carries inherent risks.
Added
Open-source licenses may contain terms that require us to disclose our proprietary source code, grant licenses to our intellectual property, or incur significant costs to re-engineer our solutions if we are unable to comply with such terms.
Added
Additionally, open-source software is often maintained by a community of developers and may not be subject to the same rigorous security and quality assurance processes as commercial software. This can result in undiscovered vulnerabilities, security flaws, or bugs that could be exploited by malicious actors, leading to data breaches, system outages, or other security incidents.
Added
Any of these risks could result in significant legal liabilities, enforcement actions, operational disruptions, and reputational damage, which could materially and adversely affect our business, financial condition, and results of operations. Geopolitical tensions, particularly between the U.S. and China, and the Chinese data regulatory regime, could materially and adversely affect our operations in China and globally.
Added
Our operations, including data processing and transfer activities, are subject to the evolving geopolitical landscape and the increasingly stringent regulatory environment in jurisdictions where we operate or from which we process data.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOversee Third-party Risk We are aware of and have processes in place to manage and mitigate the risks associated with third-party service providers. As needed in connection with certain third-party providers, we conduct risk-based diligence and assessment before engagement, implement contractual security provisions and maintain ongoing monitoring to ensure compliance with applicable cybersecurity standards or requirements.
Biggest changeAs needed in connection with certain third-party providers, we conduct risk-based diligence and assessment before engagement, implement contractual security provisions and maintain ongoing monitoring intended for compliance with applicable cybersecurity standards or requirements. Risks from Cybersecurity Threats We have not experienced any material cybersecurity incidents, and the expenses we have incurred from cybersecurity incidents were immaterial.
These briefings encompass a broad range of topics as discussed in Reporting to Board of Directors below. In addition, the IT team maintains an ongoing dialog with our management team regarding emerging or potential cybersecurity risks. The management team receives updates on any significant developments in the cybersecurity domain, ensuring oversight 22 is proactive and responsive.
These briefings encompass a broad range of topics as discussed in Reporting to Board of Directors below. In addition, the IT team maintains an ongoing dialog with our management team regarding emerging or potential cybersecurity risks. The management team receives updates on any significant developments in the cybersecurity domain, ensuring oversight is proactive and responsive.
Item 1C: Cybersecurity Risk Management and Strategy We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to our employees or customers; violation of applicable privacy or security laws and other litigation and legal risk; and reputational risks.
Item 1C: Cybersecurity Risk Management and Strategy 22 We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to our employees or customers; violation of applicable privacy or security laws and other litigation and legal risk; and reputational risks.
We have implemented several cybersecurity 21 processes, technologies, and controls to aid in our efforts to identify, assess, and manage material risks, as well as to test and improve our incident response plan.
We have implemented several cybersecurity processes, technologies, and controls to aid in our efforts to identify, assess, and manage material risks, as well as to test and improve our incident response plan.
These approaches vary in maturity across the business, and we work continually to improve them. Engage Third Parties on Risk Management Recognizing the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts, including cybersecurity assessors, consultants, and auditors in evaluating and testing our cybersecurity environment.
These approaches vary in maturity across our risk management processes, and we work continually to improve them. Engage Third Parties on Risk Management Recognizing the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts, including cybersecurity assessors, consultants, and auditors in evaluating and testing our cybersecurity environment.
The Board has established oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the potential significance of these threats to our operational integrity and financial condition. Board of Directors' Oversight The Governance and Nominating Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
The Board has established oversight mechanisms designed for effective governance in managing risks associated with cybersecurity threats because we recognize the potential significance of these threats to our operational integrity and financial condition. 23 Board of Directors' Oversight The Governance and Nominating Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
Manage Material Risks & Integrated Overall Risks We maintain an incident response plan to coordinate the activities we take to protect against, detect, respond to, mitigate the impact of, and remediate cybersecurity incidents, as well as to comply with applicable legal obligations and mitigate reputational damage.
Manage Material Risks & Integrated Overall Risks We maintain an incident response plan to coordinate the activities we take to protect against, detect, respond to, mitigate the impact of and remediate cybersecurity incidents, and in an effort to comply with applicable legal obligations and mitigate reputational damage.
This involvement ensures that cybersecurity considerations are integrated into our broader strategic objectives. Risk Management Personnel Our Chief Information Officer is primarily responsible for the overall assessment, monitoring, and management of our cybersecurity risks. Our Chief Information Officer has over 20 years of experience in information technology and holds a B.S. in accounting and management information systems.
This involvement allows for cybersecurity considerations to be integrated into our broader strategic objectives. Risk Management Personnel Our Chief Information Officer is primarily responsible for the overall assessment, monitoring, and management of our cybersecurity risks. Our Chief Information Officer has over 20 years of experience in information technology and holds a B.S. in accounting and management information systems.
We have strategically integrated cybersecurity risk management into our broader risk management framework to promote company-wide awareness of the importance of cybersecurity risk management. This integration ensures that cybersecurity considerations are incorporated in our strategic and operational decision-making processes.
We have strategically integrated cybersecurity risk management into our broader risk management framework to promote company-wide awareness of the importance of cybersecurity risk management. This integration incorporates cybersecurity considerations into our strategic and operational decision-making processes.
Our management team works closely with our Information Technology (“IT”) team to continuously evaluate and address cybersecurity risks to ensure these efforts are in alignment with our business objectives and operational needs.
Our management team works closely with our Information Technology (“IT”) team to continuously evaluate and address cybersecurity risks in an effort to align with our business objectives and operational needs.
This ensures that the highest levels of management are kept abreast of the Company’s cybersecurity posture and potential risks.
This allows for the highest levels of management to be kept abreast of the Company’s cybersecurity posture and potential risks.
These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes are responsive to our identified risks. Our collaboration with these third parties include regular audits, threat assessments, and consultation on security enhancements.
These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes are responsive to our identified risks. Our collaboration with these third parties include audits, threat assessments, and consultation on security enhancements. Oversee Third-party Risk We are aware of and have processes in place to manage and mitigate the risks associated with third-party service providers.
Risks from Cybersecurity Threats We have not experienced any material cybersecurity incidents, and the expenses we have incurred from cybersecurity incidents were immaterial. Governance The Board is acutely aware of the critical nature of managing risks associated with cybersecurity threats.
Governance The Board is acutely aware of the critical nature of managing risks associated with cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our existing and planned facilities are suitable for our current needs. 23 Information concerning our properties as of December 28, 2024 is set forth below: Location Principal Use Segment Square Footage Ownership Livermore, California, United States Manufacturing Probe Cards 90,508 Owned Livermore, California, United States Corporate headquarters, sales, marketing, administration, product design, manufacturing, service and repair, distribution, research and development All 168,636 Leased Thiendorf, Germany Sales, marketing, administration, manufacturing, service and repair, distribution, research and development Systems 101,291 Leased Beaverton, Oregon, United States Sales, marketing, administration, product design, manufacturing, service and repair, distribution, research and development Probe Cards 101,205 Leased Baldwin Park, California, United States Manufacturing, service and repair, distribution, research and development Probe Cards 44,000 Leased Boulder, Colorado, United States Sales, marketing, administration, manufacturing, distribution, research and development Systems 34,133 Leased Carlsbad, California, United States Sales, product design, administration, manufacturing, service and repair, distribution, research and development Probe Cards 42,080 Leased Woburn, Massachusetts, United States Sales, marketing, administration, manufacturing, distribution, research and development Systems 26,070 Leased Zhubei City, Hsinchu, Taiwan Sales, administration, product design, field service and repair center All 34,892 Leased Singapore Sales, administration, product design, service, and field service All 24,413 Leased San Jose, California, United States Sales, marketing, and distribution Systems 21,489 Leased Bundang, South Korea Sales, administration, product design, field service, and repair center All 17,161 Leased Yokohama City, Japan Sales, marketing, administration, product design, manufacturing, service and repair, distribution, research and development All 16,150 Leased Munich, Germany Sales, manufacturing, administration, service and repair, distribution, research and development Systems 18,786 Leased Dresden, Germany Sales and service All 2,960 Leased
Biggest changeInformation concerning our properties as of December 27, 2025 is set forth below: Location Principal Use Segment Square Footage Ownership Livermore, California, United States Manufacturing Probe Cards 90,508 Owned Farmers Branch, Texas, United States Build-out construction for manufacturing expected to begin late in the fourth quarter of fiscal 2026 Probe Cards 283,495 Owned Livermore, California, United States Corporate headquarters, sales, marketing, administration, product design, manufacturing, service and repair, distribution, research and development All 168,636 Leased Thiendorf, Germany Sales, marketing, administration, manufacturing, service and repair, distribution, research and development Systems 101,291 Leased Beaverton, Oregon, United States Sales, marketing, administration, product design, manufacturing, service and repair, distribution, research and development Probe Cards 101,205 Leased Baldwin Park, California, United States Manufacturing, service and repair, distribution, research and development Probe Cards 44,000 Leased Carlsbad, California, United States Sales, product design, administration, manufacturing, service and repair, distribution, research and development Probe Cards 42,080 Leased Zhubei City, Hsinchu, Taiwan Sales, administration, product design, field service and repair center All 34,892 Leased Boulder, Colorado, United States Sales, marketing, administration, manufacturing, distribution, research and development Systems 34,133 Leased Singapore Sales, administration, product design, service, and field service All 24,413 Leased Bundang, South Korea Sales, administration, product design, field service, and repair center All 19,037 Leased Yokohama City, Japan Sales, marketing, administration, product design, manufacturing, service and repair, distribution, research and development All 16,618 Leased Munich, Germany Sales, manufacturing, administration, service and repair, distribution, research and development Systems 23,199 Leased Karlsruhe, Germany Sales, manufacturing, administration, distribution, research and development Systems 5,843 Leased Dresden, Germany Sales and service All 2,960 Leased Tsukuba, Japan Sales and service All 868 Leased Hiroshima, Japan Sales and service All 468 Leased
Adjacent to our campus we own approximately 6 acres of vacant land for future expansion. In addition, we lease office, repair and service, manufacturing and/or research and development space both inside and outside of the United States. The leases expire at various times through 2034.
In addition, we lease office, repair and service, manufacturing and/or research and development space both inside and outside of the United States. The leases expire at various times through 2034. We believe that our existing and planned facilities are suitable for our current needs.
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Adjacent to our campus we own approximately 6 acres of vacant land for future expansion. In June 2025, we purchased a manufacturing site in Farmers Branch, Texas, United States which is being built-out for an expected production 24 ramp beginning late in the fourth quarter of fiscal 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3: Legal Proceedings Information with respect to this item may be found under the caption “Legal Matters” in Note 11, Commitments and Contingencies, to our consolidated financial statements included herein, which information is incorporated into this Item 3 by reference. Item 4: Mine Safety Disclosures Not applicable. PART II
Biggest changeItem 3: Legal Proceedings Information with respect to this item may be found under the caption “Legal Matters” in Note 12, Commitments and Contingencies, to our consolidated financial statements included herein, which information is incorporated into this Item 3 by reference. Item 4: Mine Safety Disclosures Not applicable. PART II 25

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod (fiscal months) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Amount that May Yet Be Purchased Under the Plans or Programs September 29, 2024 - October 26, 2024 — $ — — $ 36,623,543 October 27, 2024 - November 23, 2024 419,952 38.50 419,952 20,455,378 November 24, 2024 - December 28, 2024 — — — 20,455,378 419,952 $ 38.50 419,952 25 Stock Price Performance Graph The following graph shows the total stockholder return of an investment of $100 in cash on December 28, 2019 through December 28, 2024 for (1) our common stock, (2) the S&P 500 Index, and (3) the S&P Semiconductors Select Industry Index.
Biggest changeRecent Sales of Unregistered Equity Securities Not applicable. 26 Stock Price Performance Graph The following graph shows the total stockholder return of an investment of $100 in cash on December 26, 2020 through December 27, 2025 for (1) our common stock, (2) the S&P 500 Index, and (3) the S&P Semiconductors Select Industry Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among FormFactor, Inc., the S&P 500 Index, and the S&P Semiconductors Select Industry Index *$100 invested on December 28, 2019 in stock or index, including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among FormFactor, Inc., the S&P 500 Index, and the S&P Semiconductors Select Industry Index *$100 invested on December 26, 2020 in stock or index, including reinvestment of dividends.
Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Information Our common stock is listed on The Nasdaq Global Select Market under the symbol “FORM.” As of February 14, 2025, there were 105 registered holders of record of our common stock, which does not include beneficial owners of stock held in street name (i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization). 24 Dividends No cash dividends have been declared on shares of our common stock, and the Company currently does not intend to pay dividends in the future.
Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Stock Information Our common stock is listed on The Nasdaq Global Select Market under the symbol “FORM.” As of February 13, 2026, there were 95 registered holders of record of our common stock, which does not include beneficial owners of stock held in street name (i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization).
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Repurchases of Common Stock In October 2023, our Board of Directors authorized a program to repurchase up to $75.0 million of outstanding common stock to offset potential dilution from issuances of our common stock under our employee stock purchase plan and equity incentive plan.
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Dividends No cash dividends have been declared on shares of our common stock, and the Company currently does not intend to pay dividends in the future. Repurchases of Common Stock We did not repurchase any shares of our common stock during the fourth quarter of fiscal 2025.
Removed
Under the stock repurchase program, we may repurchase shares from time to time on the open market. The pace of repurchase activity will depend on levels of cash generation, the Company's current stock price, and other factors. The program may be modified or discontinued at any time. The current share repurchase program will expire October 2025.
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Cumulative Total Return December 26, 2020 December 25, 2021 December 31, 2022 December 30, 2023 December 28, 2024 December 27, 2025 FormFactor, Inc. $ 100.00 $ 104.53 $ 52.21 $ 97.96 $ 107.84 $ 136.36 S&P 500 Index 100.00 129.44 106.92 135.03 171.36 201.43 S&P Semiconductors Select Industry Index 100.00 143.66 100.47 135.97 155.88 200.70 This performance graph shall not be deemed “soliciting material” or to be “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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The following table provides information as of December 28, 2024 with respect to the shares of common stock repurchased during the fourth quarter of fiscal 2024 pursuant to the foregoing Board authorization.
Removed
Cumulative Total Return December 28, 2019 December 26, 2020 December 25, 2021 December 31, 2022 December 30, 2023 December 28, 2024 FormFactor, Inc. $ 100.00 $ 163.52 $ 170.93 $ 85.37 $ 160.18 $ 176.34 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 S&P Semiconductors Select Industry Index 100.00 162.36 232.31 160.97 217.85 242.18 Item 6: [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth our operating results as a percentage of revenues: Fiscal 2024 Fiscal 2023 Fiscal 2022 Revenues 100.0 % 100.0 % 100.0 % Cost of revenues 59.7 61.0 60.4 Gross profit 40.3 39.0 39.6 Operating expenses: Research and development 16.0 17.5 14.6 Selling, general and administrative 18.5 20.1 17.6 Total operating expenses 34.5 37.6 32.2 Gain on sale of business 2.7 11.0 — Operating income 8.5 12.4 7.4 Interest income 1.8 1.1 0.3 Interest expense — (0.1) (0.1) Other income (expense), net 0.1 — 0.2 Income before income taxes 10.4 13.4 7.8 Provision for income taxes 1.3 1.0 1.0 Net income 9.1 % 12.4 % 6.8 % Revenues by Segment Fiscal 2024 Fiscal 2023 Fiscal 2022 (In thousands) Probe Cards $ 625,960 $ 497,903 $ 591,422 Systems (1) 137,639 165,199 156,515 Total $ 763,599 $ 663,102 $ 747,937 (1) During the fourth quarter of fiscal 2023, we completed the sale of our FRT business.
Biggest changeFor a discussion of the year ended December 28, 2024 compared to the year ended December 30, 2023, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 28, 2024. 30 The following table sets forth our operating results as a percentage of revenues: Fiscal 2025 Fiscal 2024 Fiscal 2023 Revenues 100.0 % 100.0 % 100.0 % Cost of revenues 60.7 59.7 61.0 Gross profit 39.3 40.3 39.0 Operating expenses: Research and development 14.7 16.0 17.5 Selling, general and administrative 17.0 18.5 20.1 Factory start-up costs 0.4 — — Total operating expenses 32.1 34.5 37.6 Gain on sale of business — 2.7 11.0 Operating income 7.2 8.5 12.4 Interest income, net 1.3 1.8 1.1 Other income (expense), net 0.3 0.1 (0.1) Income before income taxes and equity investment 8.8 10.4 13.4 Provision for income taxes 1.6 1.3 1.0 Loss from equity investment 0.3 — — Net income 6.9 % 9.1 % 12.4 % Revenues by Segment Fiscal 2025 Fiscal 2024 Fiscal 2023 (In thousands) Probe Cards $ 637,898 $ 625,960 $ 497,903 Systems (1) 147,095 137,639 165,199 Total $ 784,993 $ 763,599 $ 663,102 (1) During the fourth quarter of fiscal 2023, we completed the sale of our FRT business.
On May 20, 2022, our Board of Directors authorized a two-year program to repurchase up to $75 million of outstanding common stock to offset potential dilution from issuance of common stock under our stock-based compensation programs.
Stock Repurchase Programs On May 20, 2022, our Board of Directors authorized a two-year program to repurchase up to $75 million of outstanding common stock to offset potential dilution from issuance of common stock under our stock-based compensation programs.
Our actual results could differ materially from those 26 anticipated by these forward-looking statements as a result of many factors, including those discussed under “Item 1A: Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors, including those discussed under “Item 1A: Risk Factors” and elsewhere in this Annual Report on Form 10-K.
In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions as described under the “Note Regarding Forward-Looking Statements” that appears earlier in this Annual Report on Form 10-K.
In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions as described under the “Note Regarding Forward-Looking 27 Statements” that appears earlier in this Annual Report on Form 10-K.
Installation services are a distinct performance obligation apart from the systems and are recognized in the period they are performed. Service contracts, which include repair 28 and maintenance service contracts, and extended warranty contracts are also distinct performance obligations and are recognized over the contractual service period, which ranges from one to three years.
Installation services are a distinct performance obligation apart from the systems and are recognized in the period they are performed. Service contracts, which include repair and maintenance service contracts, and extended warranty contracts are also distinct performance obligations and are recognized over the contractual service period, which ranges from one to three years.
The decrease in net income in fiscal 2024 compared to fiscal 2023 was primarily due to a reduced gain on sale of business with the fiscal 2024 gain from the China Transaction being less than the fiscal 2023 gain from the sale of our FRT business further described below.
The decrease in net income in fiscal 2024 compared to fiscal 2023 was primarily due to a reduced gain on sale of business with the fiscal 2024 gain from the sale of our China operations being less than the fiscal 2023 gain from the sale of our FRT business further described below.
During fiscal 2022 and 2023, we repurchased and retired 1,700,893 shares of common stock for $56.4 million and 504,352 shares of common stock for $18.6 million, respectively, utilizing the remaining shares available for repurchase under the program.
During fiscal 2022 and 2023, we repurchased and retired 1,700,893 shares of common stock for $56.4 million and 504,352 shares of common stock for $18.6 million, respectively, utilizing all of the shares available for repurchase under the program.
The deferred grant was $18.0 million as of December 28, 2024, and consists of cash received from a California Competes Grant awarded from the California Governor's Office of Business and Economic Development. The timing of any potential repayments is dependent upon a number of factors, including the number of employees and capital investments within California over the 5-year term.
The deferred grant was $18.0 million as of December 27, 2025, and consists of cash received from a California Competes Grant awarded from the California Governor's Office of Business and Economic Development. The timing of any potential repayments is dependent upon a number of factors, including the number of employees and capital investments within California over the 5-year term.
Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, and the cash we expect to generate from operations, will be sufficient to fund, through at least the next 12 months, our liquidity requirements including those arising from: research and development, capital expenditures, working capital, outstanding commitments, and other liquidity requirements associated with existing operations.
Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, the cash we expect to generate from operations, and the available capacity under our revolving credit facility will be sufficient to fund, through at least the next 12 months, our liquidity requirements including those arising from: research and development, capital expenditures, working capital, outstanding commitments, and other liquidity requirements associated with existing operations.
We have not had any material requests for indemnification under these arrangements. We have not recorded any liabilities for these indemnification arrangements on our Consolidated Balance Sheets as of December 28, 2024 or December 30, 2023. New Accounting Pronouncements See Note 17, Recent Accounting Pronouncements , of Notes to Consolidated Financial Statements.
We have not had any material requests for indemnification under these arrangements. We have not recorded any liabilities for these indemnification arrangements on our Consolidated Balance Sheets as of December 27, 2025 or December 28, 2024. New Accounting Pronouncements See Note 18, Recent Accounting Pronouncements , of Notes to Consolidated Financial Statements.
We typically invest in highly-rated securities with low probabilities of default. Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment. Our cash, cash equivalents and marketable securities totaled approximately $360.0 million at December 28, 2024 compared to $328.3 million at December 30, 2023.
We typically invest in highly-rated securities with low probabilities of default. Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment. Our cash, cash equivalents and marketable securities totaled approximately $275.2 million at December 27, 2025 compared to $360.0 million at December 28, 2024.
Provision for income taxes Fiscal Year Ended December 28, 2024 December 30, 2023 December 31, 2022 (Dollars in thousands) Provision for income taxes $ 9,798 $ 6,880 $ 7,132 Effective tax rate 12.3 % 7.7 % 12.3 % 34 Provision for income taxes reflects the tax provision on our operations in foreign and U.S. jurisdictions, offset by tax benefits from tax credits and the foreign-derived intangible income deduction.
Provision for income taxes Fiscal Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (Dollars in thousands) Provision for income taxes $ 13,004 $ 9,798 $ 6,880 Effective tax rate 18.7 % 12.3 % 7.7 % Provision for income taxes reflects the tax provision on our operations in foreign and U.S. jurisdictions, offset by tax benefits from tax credits and the foreign-derived intangible income deduction.
Results of Operations In this section, we discuss the results of our operations for the year ended December 28, 2024 compared to the year ended December 30, 2023.
Results of Operations In this section, we discuss the results of our operations for the year ended December 27, 2025 compared to the year ended December 28, 2024.
Liquidity and Capital Resources Capital Resources Our working capital increased to $473.8 million at December 28, 2024 compared to $442.7 million at December 30, 2023. Cash and cash equivalents primarily consist of deposits held at banks and money market funds. Marketable securities primarily consist of corporate bonds, U.S. treasuries and agency securities, and commercial paper.
Liquidity and Capital Resources Capital Resources Our working capital decreased to $433.2 million at December 27, 2025 compared to $473.8 million at December 28, 2024. Cash and cash equivalents primarily consist of deposits held at banks and money market funds. Marketable securities primarily consist of U.S. treasuries, corporate bonds, U.S. agency securities, and commercial paper.
We generated net income of $69.6 million in fiscal 2024 compared to net income of $82.4 million in fiscal 2023 and net income of $50.7 million in fiscal 2022.
We generated net income of $54.4 million in fiscal 2025 compared to net income of $69.6 million in fiscal 2024 and net income of $82.4 million in fiscal 2023.
Foreign exchange gains for fiscal 2024 and fiscal 2023 were $1.0 million and $0.6 million, respectively.
Foreign exchange gains for fiscal 2025 and fiscal 2024 were $1.8 million and $1.0 million, respectively.
Performance obligations that are not distinct at contract inception are combined and accounted for as one unit of account. Generally, the performance obligations in a contract are considered distinct within the context of the contract and are accounted for as separate units of account.
Generally, the performance obligations in a contract are considered distinct within the context of the contract and are accounted for as separate units of account.
On October 30, 2023, our Board of Directors authorized an additional program to repurchase up to $75 million of outstanding common stock, also with the primary purpose of offsetting potential dilution from issuance of common stock under our stock-based compensation programs. This share repurchase program will expire on October 30, 2025.
On October 30, 2023, our Board of Directors authorized a two-year program to repurchase up to $75 million of outstanding common stock, with the primary purpose of offsetting potential dilution from issuance of common stock under our stock-based compensation programs.
To the extent necessary, we may consider entering into short and long-term debt obligations, raising cash through a stock issuance, or obtaining new financing facilities, which may not be available on terms favorable to us.
In addition, any future strategic investments and significant acquisitions may require additional cash and capital resources. To the extent necessary, we may consider entering into short and long-term debt obligations, raising cash through a stock issuance, or obtaining new financing facilities, which may not be 36 available on terms favorable to us.
The components of this increase were as follows (in thousands): Fiscal 2024 compared to Fiscal 2023 Employee compensation costs $ 3,956 General operational costs 2,169 Depreciation (380) Project material costs 359 Stock-based compensation expense 69 $ 6,173 Stock-based compensation expense included within research and development in fiscal 2024 and 2023 was relatively flat at $10.7 million in both periods.
The components of this increase were as follows (in thousands): Fiscal 2025 compared to Fiscal 2024 General operational costs $ (3,388) Project material costs (2,091) Stock-based compensation expense (428) Employee compensation costs (349) $ (6,256) Stock-based compensation expense included within research and development in fiscal 2025 and 2024 was relatively flat at $10.3 million and $10.7 million, respectively.
Interest Income and Interest Expense Fiscal Year Ended December 28, 2024 December 30, 2023 (Dollars in thousands) Interest Income $ 14,111 $ 7,217 Weighted average balance of cash and investments $ 353,191 $ 248,728 Weighted average yield on cash and investments 4.56 % 3.44 % Interest Expense $ 418 $ 421 Average debt outstanding $ 13,785 $ 14,848 Weighted average interest rate on debt 2.75 % 2.75 % Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities.
Interest Income and Interest Expense Fiscal Year Ended December 27, 2025 December 28, 2024 (Dollars in thousands) Interest Income $ 10,640 $ 14,111 Weighted average balance of cash and investments $ 294,196 $ 353,191 Weighted average yield on cash and investments 4.14 % 4.56 % Interest Expense $ 521 $ 418 Average debt outstanding $ 12,690 $ 13,785 Weighted average interest rate on debt 2.75 % 2.75 % Interest income is earned on our cash, cash equivalents, restricted cash and marketable securities.
Accordingly, the timing of any repayment cannot be estimated. 37 Indemnification Arrangements We have entered, and may from time to time in the ordinary course of our business enter, into contractual arrangements with third parties that include indemnification obligations. Under these contractual arrangements, we have agreed to defend, indemnify and/or hold the third party harmless from and against certain liabilities.
Accordingly, the extent and timing of any potential repayment cannot be estimated. Indemnification Arrangements We have entered, and may from time to time in the ordinary course of our business enter, into contractual arrangements with third parties that include indemnification obligations.
In connection with the acquisition, we obtained a 20% equity interest in FICT, in exchange for funding $59.6 million of the purchase price. Headquartered in Nagano, Japan, FICT is a provider of semiconductor test and high-performance computing industries with complex multi-layer organic substrates, printed circuit boards, and related leading-edge technologies and services.
Investment Acquisition — In February 2025, we acquired a 20% equity interest in FICT Limited (“FICT”). Headquartered in Nagano, Japan, FICT is a provider of semiconductor test and high-performance computing industries with complex multi-layer organic substrates, printed circuit boards, and related leading-edge technologies and services.
Net cash provided by operating activities in fiscal 2024 was primarily attributable to net income of $69.6 million and net non-cash items of $56.6 million, partially offset by the increase in net working capital of $8.7 million.
Net cash provided by operating activities in fiscal 2025 was primarily attributable to net income of $54.4 million and net non-cash items of $104.0 million, partially offset by the increase in net working capital of $43.0 million.
Debt On June 22, 2020, we entered into an $18.0 million 15-year credit facility loan agreement (the “Building Term Loan”) with MUFG Union Bank, National Association (“Union Bank”). The proceeds of the Building Term Loan were used to purchase a building adjacent to our leased facilities in Livermore, California.
Building Term Loan and Interest Rate Swap On June 22, 2020, we entered into an $18.0 million 15-year credit facility loan agreement (the “Building Term Loan”). Proceeds from the Building Term Loan were used to acquire a building adjacent to our leased facilities in Livermore, California.
Changes in revenue by geographic region in fiscal 2024 compared to fiscal 2023 were primarily attributable to changes in customer demand, shifts in customer regional manufacturing strategies, particularly with our large multinational customers, product sales mix, and impacts from trade restrictions.
Changes in revenue by geographic region in fiscal 2025 compared to fiscal 2024 were primarily attributable to changes in customer demand, impacts from trade restrictions, and product sales mix.
During fiscal 2022, we repurchased and retired 676,408 shares of common stock for $26.0 million, utilizing the remaining shares available for repurchase under the program.
During fiscal 2025, we repurchased and retired 665,000 shares of common stock for $22.1 million, utilizing the remaining shares available for repurchase under the program.
Excluding the impact of the sale of our FRT Metrology business, Systems revenue decreased by $6.3 million, or 4.4%, primarily due to a decline in sales of thermal systems and probe stations. 30 Revenues by Geographic Region Fiscal 2024 % of Revenues Fiscal 2023 % of Revenues Fiscal 2022 % of Revenues (In thousands, except percentages) South Korea $ 184,528 24.2 % $ 117,747 17.8 % $ 111,419 14.9 % United States 183,716 24.1 171,781 25.9 127,730 17.1 Taiwan 173,515 22.7 147,842 22.3 169,789 22.7 China 102,982 13.5 91,736 13.8 160,668 21.5 Europe 34,803 4.6 38,858 5.9 39,246 5.2 Japan 33,946 4.4 36,791 5.5 38,419 5.1 Singapore 20,186 2.6 18,335 2.8 39,388 5.3 Malaysia 18,240 2.4 26,601 4.0 50,067 6.7 Rest of World 11,683 1.5 13,411 2.0 11,211 1.5 Total revenues $ 763,599 100.0 % $ 663,102 100.0 % $ 747,937 100.0 % Geographic revenue information is based on the location to which we ship the product.
Revenues by Geographic Region Fiscal 2025 % of Revenues Fiscal 2024 % of Revenues Fiscal 2023 % of Revenues (In thousands, except percentages) South Korea $ 237,717 30.3 % $ 184,528 24.2 % $ 117,747 17.8 % Taiwan 202,738 25.8 173,515 22.7 147,842 22.3 United States 152,152 19.4 183,716 24.1 171,781 25.9 China 57,965 7.4 102,982 13.5 91,736 13.8 Japan 43,216 5.5 33,946 4.4 36,791 5.5 Singapore 32,973 4.2 20,186 2.6 18,335 2.8 Europe 28,779 3.7 34,803 4.6 38,858 5.9 Malaysia 19,211 2.4 18,240 2.4 26,601 4.0 Rest of World 10,242 1.3 11,683 1.5 13,411 2.0 Total revenues $ 784,993 100.0 % $ 763,599 100.0 % $ 663,102 100.0 % Geographic revenue information is based on the location to which we ship the product.
For fiscal 2024 compared to fiscal 2023, DRAM revenue was up from 22.9% of Probe Card sales to 36.3% of Probe Card sales, and Foundry & Logic revenue was down from 73.0% of Probe Card sales to 60.9% of Probe Card sales. In general, our DRAM products have lower margins than our Foundry & Logic products.
For fiscal 2025 compared to fiscal 2024, DRAM revenue was up from 36.3% of Probe Card sales to 38.8% of Probe Card sales, and Foundry & Logic revenue was down from 60.9% of Probe Card sales to 58.0% of Probe Card sales.
As a result, we generated no metrology systems revenue during fiscal 2024, compared to $21.2 million and $29.0 million, during fiscal 2023 and fiscal 2022, respectively. 29 Revenues by Market Fiscal % of Fiscal % of Change 2024 Revenues 2023 Revenues $ % (In thousands, except percentages) Probe Cards Markets: Foundry & Logic $ 381,182 49.9 % $ 363,539 54.8 % $ 17,643 4.9 % DRAM 227,422 29.8 113,779 17.2 113,643 99.9 Flash 17,356 2.3 20,585 3.1 (3,229) (15.7) Systems Market: Systems (1) 137,639 18.0 165,199 24.9 (27,560) (16.7) Total revenues $ 763,599 100.0 % $ 663,102 100.0 % $ 100,497 15.2 % Fiscal % of Fiscal % of Change 2023 Revenues 2022 Revenues $ % (In thousands, except percentages) Probe Cards Markets: Foundry & Logic $ 363,539 54.8 % $ 409,196 54.7 % $ (45,657) (11.2) % DRAM 113,779 17.2 133,446 17.8 (19,667) (14.7) Flash 20,585 3.1 48,780 6.5 (28,195) (57.8) Systems Market: Systems (1) 165,199 24.9 156,515 21.0 8,684 5.5 Total revenues $ 663,102 100.0 % $ 747,937 100.0 % $ (84,835) (11.3) % (1) During the fourth quarter of fiscal 2023, we completed the sale of our FRT business.
Revenues by Market Fiscal % of Fiscal % of Change 2025 Revenues 2024 Revenues $ % (In thousands, except percentages) Probe Cards Markets: Foundry & Logic $ 369,897 47.1 % $ 381,182 49.9 % $ (11,285) (3.0) % DRAM 247,397 31.6 227,422 29.8 19,975 8.8 Flash 20,604 2.6 17,356 2.3 3,248 18.7 Systems Market: Systems 147,095 18.7 137,639 18.0 9,456 6.9 Total revenues $ 784,993 100.0 % $ 763,599 100.0 % $ 21,394 2.8 % 31 Fiscal % of Fiscal % of Change 2024 Revenues 2023 Revenues $ % (In thousands, except percentages) Probe Cards Markets: Foundry & Logic $ 381,182 49.9 % $ 363,539 54.8 % $ 17,643 4.9 % DRAM 227,422 29.8 113,779 17.2 113,643 99.9 Flash 17,356 2.3 20,585 3.1 (3,229) (15.7) Systems Market: Systems (1) 137,639 18.0 165,199 24.9 (27,560) (16.7) Total revenues $ 763,599 100.0 % $ 663,102 100.0 % $ 100,497 15.2 % (1) During the fourth quarter of fiscal 2023, we completed the sale of our FRT business.
The table above excludes our gross liability for unrecognized tax benefits and our deferred grant. The gross liability for unrecognized tax benefits was $48.4 million as of December 28, 2024. The timing of any payments which could result from these unrecognized tax benefits will depend upon a number of factors and, accordingly, the timing of payment cannot be estimated.
The timing of any payments which could result from these unrecognized tax benefits will depend upon a number of factors and, accordingly, the timing of payment cannot be estimated.
Revenue Recognition Revenue is recognized upon transferring control of products and services, and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. An arrangement may include some or all of the following products and services: probe cards, systems, accessories, engineering services, installation services, service contracts and extended warranty contracts.
Revenue Recognition Revenue is recognized upon transferring control of products and services, and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services.
DRAM — The increase in DRAM product revenues in fiscal 2024 compared to fiscal 2023 was driven by increased demand for HBM designs utilized in generative artificial intelligence applications as well as increased demand for other non-HBM DRAM designs, particularly DDR5.
DRAM — The increase in DRAM product revenues in fiscal 2025 compared to fiscal 2024 was primarily driven by increased demand for HBM designs utilized in generative artificial intelligence applications. Flash — The increase in Flash product revenue in fiscal 2025 compared to fiscal 2024 was primarily driven by increased customer production activity and demand for our products.
Should we require additional capital in the United States, we may elect to repatriate indefinitely-reinvested foreign funds or raise capital in the United States. 35 Cash Flows Fiscal Year Ended December 28, 2024 December 30, 2023 December 31, 2022 (Dollars in thousands) Net cash provided by operating activities $ 117,534 $ 64,602 $ 131,786 Net cash provided by (used in) investing activities (33,480) 29,049 (75,704) Net cash used in financing activities (64,612) (22,711) (95,932) Operating Activities Net cash provided by operating activities consists of net income for the period, adjusted for certain non-cash items and changes in certain operating assets and liabilities.
Cash Flows Fiscal Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (Dollars in thousands) Net cash provided by operating activities $ 115,398 $ 117,534 $ 64,602 Net cash provided by (used in) investing activities (191,468) (33,480) 29,049 Net cash used in financing activities (13,633) (64,612) (22,711) Operating Activities Net cash provided by operating activities consists of net income for the period, adjusted for certain non-cash items and changes in certain operating assets and liabilities.
Fiscal Year We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December.
Fiscal Year We operate on a 52/53 week fiscal year, whereby the fiscal year ends on the last Saturday of December. The fiscal years ended December 27, 2025, December 28, 2024 and December 30, 2023 each included 52 weeks.
On May 19, 2023, we amended the Building Term Loan, replacing the benchmark reference rate LIBOR with SOFR, with no change to the amount or timing of contractual cash flows. The Building Term Loan bears interest at a rate equal to the applicable SOFR rate, plus 0.1145%, plus 1.75% per annum.
On May 19, 2023, we amended the Building Term Loan, to replace the benchmark reference rate London Interbank Offered Rate (“LIBOR”) with term SOFR, with no change to the contractual amount or timing of cash flows.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception.
In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined and accounted for as one unit of account.
However, we cannot be certain that our cash, cash equivalents, and marketable securities on hand, and cash generated from operations, will be available in the future to fund all of our capital and operating requirements. In addition, any future strategic investments and significant acquisitions may require additional cash and capital resources.
This includes consideration of estimated capital expenditures of $140.0 million to $170.0 million for the ramp of the Farmers Branch manufacturing site. However, we cannot be certain that our cash, cash equivalents, and marketable securities on hand, and cash generated from operations, will be available in the future to fund all of our capital and operating requirements.
The increase in interest income in fiscal 2024 compared to fiscal 2023 was attributable to higher invested balances and higher weighted average yield on cash and investments. Interest expense primarily includes interest on our term loan, interest rate swap derivative contract, and term loan issuance costs amortization charges.
Interest expense primarily includes interest on our term loan, interest rate swap derivative contract, commitment fee on our revolving credit facility, term loan issuance costs amortization charges, and our revolving credit facility issuance costs 35 amortization charges. The increase in interest expense for fiscal 2025 compared to fiscal 2024 was due to fees for our undrawn revolving credit facility.
The cash used in net working capital is related to an increase of inventories of $8.3 million, a decrease in accounts payable of $8.2 million, and decreased operating lease liabilities of $7.3 million, partially offset by an increase of other liabilities of $9.8 million, accrued liabilities of $3.7 million, and deferred revenue of $2.7 million.
The cash used in net working capital is related to higher inventory balances of $20.7 million and an increase in accounts receivable of $20.2 million, reflecting higher sales volumes. In addition, operating lease liabilities decreased by $8.1 million and accounts payable declined by $5.7 million.
The fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022 included 52 weeks, 52 weeks, and 53 weeks (with 14 weeks in the fourth quarter), respectively. 27 Use of Estimates Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Use of Estimates Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
We expense all warranty costs, inventory provisions and amortization of certain intangible assets as cost of revenues. 31 Gross profit and gross margin by segment were as follows (dollars in thousands): Fiscal 2024 Probe Cards Systems Corporate and Other Total Gross profit $ 259,007 $ 59,511 $ (10,595) $ 307,923 Gross margin 41.4 % 43.2 % 40.3 % Fiscal 2023 Probe Cards Systems Corporate and Other Total Gross profit $ 185,392 $ 84,735 $ (11,547) $ 258,580 Gross margin 37.2 % 51.3 % 39.0 % Fiscal 2022 Probe Cards Systems Corporate and Other Total Gross profit $ 235,562 $ 80,937 $ (20,490) $ 296,009 Gross margin 39.8 % 51.7 % 39.6 % Probe Cards — Gross profit and gross margin in the Probe Cards segment increased in fiscal 2024 compared to fiscal 2023, primarily due to greater revenues and more favorable absorption of costs on higher production volumes.
Gross profit and gross margin by segment were as follows (dollars in thousands): Fiscal 2025 Probe Cards Systems Corporate and Other Total Gross profit $ 258,500 $ 61,553 $ (11,202) $ 308,851 Gross margin 40.5 % 41.8 % 39.3 % Fiscal 2024 Probe Cards Systems Corporate and Other Total Gross profit $ 259,007 $ 59,511 $ (10,595) $ 307,923 Gross margin 41.4 % 43.2 % 40.3 % Fiscal 2023 Probe Cards Systems Corporate and Other Total Gross profit $ 185,392 $ 84,735 $ (11,547) $ 258,580 Gross margin 37.2 % 51.3 % 39.0 % Probe Cards — Gross profit and gross margin in the Probe Cards segment decreased in fiscal 2025 compared to fiscal 2024, despite the record revenue levels primarily due to higher manufacturing costs, which included increased costs for tariffs, partially offset by a favorable product mix and favorable factory utilization with the increased volumes.
The increase of stock-based compensation in fiscal 2024 compared to fiscal 2023 was driven by an increase in weighted average fair value of awards outstanding. 32 Research and Development Fiscal Year Ended December 28, 2024 December 30, 2023 $ Change % Change (Dollars in thousands) Research and development $ 121,938 $ 115,765 $ 6,173 5.3 % % of revenues 16.0 % 17.5 % Fiscal Year Ended December 30, 2023 December 31, 2022 $ Change % Change (Dollars in thousands) Research and development $ 115,765 $ 109,222 $ 6,543 6.0 % % of revenues 17.5 % 14.6 % The increase in research and development expense in fiscal 2024 compared to fiscal 2023 was primarily driven by an increase in employee compensation costs from higher performance-based compensation and general operational costs.
Stock-based compensation expense included in cost of revenues for fiscal 2025 and 2024 was $7.4 million and $7.7 million, respectively. 33 Research and Development Fiscal Year Ended December 27, 2025 December 28, 2024 $ Change % Change (Dollars in thousands) Research and development $ 115,682 $ 121,938 $ (6,256) (5.1) % % of revenues 14.7 % 16.0 % Fiscal Year Ended December 28, 2024 December 30, 2023 $ Change % Change (Dollars in thousands) Research and development $ 121,938 $ 115,765 $ 6,173 5.3 % % of revenues 16.0 % 17.5 % The decrease in research and development expense in fiscal 2025 compared to fiscal 2024 was primarily driven by a decrease in general operational costs, which includes the benefit of a German government grant earned in fiscal 2025 that partially offset expenses, lower project material costs, lower stock based compensation and decreased employee compensation costs from lower performance-based compensation.
The increase in net income in fiscal 2023 compared to fiscal 2022 was primarily due to a gain recognized from the sale of our FRT business of $73.0 million.
The decrease in net income in fiscal 2025 compared to fiscal 2024 was primarily due to the gain on sale of business recognized in fiscal 2024 from the sale of our China operations that did not repeat in fiscal 2025.
As a result, we generated no metrology systems revenue during fiscal 2024, compared to $21.2 million and $29.0 million, during fiscal 2023 and fiscal 2022, respectively. Foundry & Logic — The increase in Foundry & Logic product revenue in fiscal 2024 compared to fiscal 2023 was driven by the ramp of new mobile application processor designs.
As a result, we generated no metrology systems revenue during fiscal 2025 and fiscal 2024, compared to $21.2 million during fiscal 2023.
The Corporate and Other gross loss decreased in fiscal 2024 compared to fiscal 2023, primarily due to the absence of amortization expense associated with our FRT Metrology business, which was sold during the fourth quarter of fiscal 2023. Overall — Gross profit and gross margin fluctuate with revenue levels, product mix, selling prices, factory loading and material costs.
Corporate and Other expenses increased in fiscal 2025 compared to fiscal 2024 primarily due to higher restructuring charges, which were partially offset by lower stock-based compensation and lower amortization. Overall — Gross profit and gross margin fluctuate with revenue levels, product mix, selling prices, factory loading and material costs.
Selling, General and Administrative Fiscal Year Ended December 28, 2024 December 30, 2023 $ Change % Change (Dollars in thousands) Selling, general and administrative $ 141,786 $ 133,012 $ 8,774 6.6 % % of revenues 18.5 % 20.1 % Fiscal Year Ended December 30, 2023 December 31, 2022 $ Change % Change (Dollars in thousands) Selling, general and administrative $ 133,012 $ 131,875 $ 1,137 0.9 % % of revenues 20.1 % 17.6 % The increase in selling, general and administrative expense in fiscal 2024 compared to fiscal 2023 was primarily driven by increased employee compensation from higher performance-based compensation and increased commissions expense from increased revenues, partially offset by lower amortization of intangibles. 33 The components of this overall increase were as follows (in thousands): Fiscal 2024 compared to Fiscal 2023 Employee compensation costs $ 8,303 Amortization of intangibles (3,005) Commission expenses 2,431 Consulting fees 753 Stock-based compensation expense 194 General operating expenses 98 $ 8,774 Stock-based compensation expense included within selling, general and administrative in fiscal 2024 and 2023 was $21.3 million and $21.1 million, respectively.
Selling, General and Administrative Fiscal Year Ended December 27, 2025 December 28, 2024 $ Change % Change (Dollars in thousands) Selling, general and administrative $ 133,074 $ 141,786 $ (8,712) (6.1) % % of revenues 17.0 % 18.5 % Fiscal Year Ended December 28, 2024 December 30, 2023 $ Change % Change (Dollars in thousands) Selling, general and administrative $ 141,786 $ 133,012 $ 8,774 6.6 % % of revenues 18.5 % 20.1 % The decrease in selling, general and administrative expense in fiscal 2025 compared to fiscal 2024 was primarily driven by initiatives to further control operating expenses, resulting in lower general operating costs.
Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, thermal systems and cryogenic systems are included in the Systems segment. Our fiscal 2024 financial results reflected our strengthening momentum driven by increasing demand for high bandwidth memory (“HBM”) chips utilized in generative artificial intelligence applications.
Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, thermal systems and cryogenic systems are included in the Systems segment.
During fiscal 2023 and 2024, we repurchased and retired 32,020 shares of common stock for $1.2 million and 1,309,635 shares of common stock for $53.3 million, respectively, and as of December 28, 2024, $20.5 million remained available for future repurchases.
During fiscal 2023 and 2024, we purchased and retired 32,020 shares of common stock for $1.2 million and 1,309,635 shares of common stock for $53.3 million, respectively. On March 29, 2025, our Board of Directors approved an increase to the repurchase program, authorizing the repurchase of an additional $1.6 million in shares of common stock.
Contractual Obligations and Commitments The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of December 28, 2024 (in thousands): Payments Due In Fiscal Year 2025 2026 2027 2028 2029 2030 and thereafter Total Operating leases $ 9,080 $ 7,610 $ 7,181 $ 3,872 $ 232 $ 1,118 $ 29,093 Term loan - principal payments 1,111 1,142 1,175 1,208 1,242 7,490 13,368 Term loan - interest payments (1) 835 764 688 613 534 1,393 4,827 Total $ 11,026 $ 9,516 $ 9,044 $ 5,693 $ 2,008 $ 10,001 $ 47,288 (1) Represents our minimum interest payment commitments at 6.42% per annum, excluding the interest rate swap described in Debt, above.
During fiscal 2025, we repurchased and retired 135,000 shares of common stock for $4.1 million, and as of December 27, 2025, $70.9 million remained available for future repurchases. 38 Contractual Obligations and Commitments The following table summarizes our significant contractual obligations and commitments to make future payments in cash as of December 27, 2025 (in thousands): Payments Due In Fiscal Year 2026 2027 2028 2029 2030 2031 and thereafter Total Operating leases $ 8,926 $ 8,421 $ 4,736 $ 510 $ 461 $ 993 $ 24,047 Term loan - principal payments 1,142 1,175 1,208 1,242 1,278 6,213 12,258 Term loan - interest payments (1) 683 615 548 477 400 845 3,568 Revolver - commitment fee (2) 228 228 232 228 131 — 1,047 Total $ 10,979 $ 10,439 $ 6,724 $ 2,457 $ 2,270 $ 8,051 $ 40,920 (1) Represents our minimum interest payment commitments at 5.74% per annum, excluding the interest rate swap described in Debt, above.
The non-cash expenses consisted of depreciation, amortization, stock-based compensation, and the provision for excess and obsolete inventories, partially offset by the $20.6 million gain on sale of business and deferred income tax benefits.
These uses of cash were partially offset by increases in accrued liabilities of $4.6 million, deferred revenue of $4.5 million, and other liabilities of $2.3 million. The non-cash adjustments primarily consisted of depreciation and amortization, stock-based compensation expense, provision for excess and obsolete inventories, and the reduction in the carrying amount of right-of-use-assets.
For fiscal 2024 compared to fiscal 2023, gross profit and gross margins have increased primarily as a result of more favorable absorption of costs on higher revenues, partially offset by an unfavorable product mix, as described above. Stock-based compensation expense included in cost of revenues for fiscal 2024 and 2023 was $7.7 million and $6.9 million, respectively.
For fiscal 2025 compared to fiscal 2024, gross profit increased and gross margins decreased as a result of greater revenues and a favorable product mix, that was offset by higher manufacturing costs, which included a 1.4% gross margin impact from increased costs for tariffs.
Cost of Revenues and Gross Margins Cost of revenues consists primarily of manufacturing materials, compensation and benefits, shipping and handling costs, manufacturing-related overhead (including equipment costs, related occupancy, and computer services), warranty cost, inventory adjustments (including write-downs for inventory obsolescence), and amortization of certain intangible assets.
Specifically, the changes in revenue by geographic region was attributable to the following: • Increased demand for our DRAM probe card products, including those for HBM, contributed to the increase in revenue for South Korea in fiscal 2025 compared to fiscal 2024. • Increased demand for our Foundry & Logic probe card products contributed to the increase in revenue for Taiwan in fiscal 2025 compared to fiscal 2024. • Trade restrictions for the export of advanced U.S. semiconductor technology to China has caused decreasing demand from Chinese customers. 32 Cost of Revenues and Gross Margins Cost of revenues consists primarily of manufacturing materials, compensation and benefits, shipping and handling costs, manufacturing-related overhead (including equipment costs, related occupancy, and computer services), warranty cost, inventory adjustments (including write-downs for inventory obsolescence), and amortization of certain intangible assets.
Flash — The decrease in Flash product revenue in fiscal 2024 compared to fiscal 2023 was driven by lower customer production activity and demand for our products.
Foundry & Logic — The decrease in Foundry & Logic product revenue in fiscal 2025 compared to fiscal 2024 was primarily driven by weaker demand for probe cards associated with client PC and server microprocessor designs, reflecting reduced customer production levels during the year.
Financing Activities Net cash used in financing activities in fiscal 2024 primarily related to $53.3 million used to purchase common stock under our stock repurchase program, $20.0 million used to pay tax withholdings for net share settlements of employee equity awards, and $1.1 million of principal payments made towards the repayment of our term loan, partially offset by $9.7 million of proceeds received from issuances of common stock under our employee stock purchase plan.
Financing Activities Net cash used in financing activities in fiscal 2025 was primarily attributable to $26.2 million of common stock repurchases under the Company's stock repurchase program and $12.4 million paid for tax withholdings associated with net share settlements of employee equity awards.
Interest payments are payable in monthly installments over a fifteen-year period. The interest rate at December 28, 2024, before consideration of the interest rate swap, was 6.42%. On March 17, 2020, we entered into an interest rate swap agreement with Union Bank to hedge the interest payments on the Building Term Loan for the notional amount of $18.0 million.
As of December 27, 2025, the outstanding principal balance under the Building Term Loan was $12.3 million, and we were in compliance with all covenants under the agreement. On March 17, 2020, we entered into an interest rate swap agreement to hedge the variable interest payments on the Building Term Loan.
Systems — Gross profit and gross margin in the Systems segment decreased fiscal 2024 compared to fiscal 2023, primarily as a result of lower revenues, less favorable absorption of costs on lower production volumes, and a less favorable product mix, in part related to the divestiture of the FRT Metrology business, which was completed during the fourth quarter of fiscal 2023.
Systems — Gross profit in the Systems segment increased while gross margin decreased in fiscal 2025 compared to fiscal 2024, primarily as a result of greater revenues that was offset by an increase in manufacturing spending and an unfavorable product mix as a greater percentage of Systems segment revenues were from lower margin products.
As of December 28, 2024, the balance outstanding pursuant to the Building Term Loan was $13.4 million, and we were in compliance with all covenants under the agreement. 36 Stock Repurchase Programs On October 26, 2020, our Board of Directors authorized a two-year program to repurchase up to $50 million of outstanding common stock to offset potential dilution from issuances of common stock under our stock-based compensation programs.
On April 24, 2025, our Board of Directors authorized a new two-year program to repurchase up to $75.0 million of outstanding common stock to offset potential dilution from issuance of common stock under our stock-based compensation programs. This share repurchase program will expire on April 24, 2027.
As future levels of LIBOR over the life of the loan were uncertain, we entered into this interest-rate swap agreement to hedge the exposure in interest rate risks associated with movement in LIBOR rates. This agreement was amended on May 19, 2023 to replace the benchmark reference rate LIBOR with SOFR to match the Building Term Loan agreement (as amended).
On May 19, 2023, we amended the interest rate swap to replace LIBOR with SOFR, consistent with the amendment to the Building Term Loan. Following this amendment, the interest rate swap continues to convert our floating-rate interest into a fixed-rate at 2.75%.
Systems — The decrease in Systems product revenue in fiscal 2024 compared to fiscal 2023 was primarily driven by the absence of metrology systems revenue due to the sale of our FRT Metrology business during the fourth quarter of fiscal 2023.
Systems — The increase in Systems product revenue in fiscal 2025 compared to fiscal 2024 was driven by increased sales of thermal systems, probe stations, and cryogenic systems.
After the amendment, the interest rate swap continues to convert our floating-rate interest into a fixed-rate of 2.75%. As of December 28, 2024, the notional amount of the loan that is subject to this interest rate swap was $13.4 million. See Note 9, Fair Value , for additional information.
As of December 27, 2025, the notional amount of the loan that is subject to this interest rate swap is $12.3 million.
The increase in our effective tax rate for fiscal 2024, when compared to the corresponding period in the prior year, was primarily driven by the sale of our FRT business and the related capital gain exclusion for German tax purposes that impacted fiscal year ended December 30, 2023, that did not repeat in the current year.
The increase in our effective tax rate for fiscal 2025, when compared to the prior year, was primarily driven by the impact of implementing the One Big Beautiful Bill Act (“OBBBA”) tax law changes.
Removed
On February 26, 2024, we completed the sale of our China operations, resulting in net consideration received of $21.4 million and a pre-tax gain of $20.3 million. With this transaction, we established an exclusive distribution and partnership agreement to continue sales and support of our products in the region (the “China Transaction”).
Added
Highlights during fiscal year 2025 include the following: • Achieved record annual revenue of $785.0 million. • Purchased a manufacturing site in Texas, which is expected to begin ramping production in late fiscal 2026. • Benefited from growth driven by exposure to end markets supporting artificial intelligence–related infrastructure, including HBM. • Made meaningful progress in establishing customer engagements to further diversify our customer base.
Removed
Apart from this gain, the semiconductor industry weakness that began in the third quarter of fiscal 2022 continued into fiscal 2023, impacting our Probe Cards segment with a $93.5 million reduction in revenue and the associated decline in gross margins from the lower operating levels.
Added
Excluding the impact from the fiscal 2024 gain, our financial performance was driven by record revenue levels led by strong growth in our DRAM product segment, particularly with demand for HBM chips utilized in generative artificial intelligence applications.
Removed
Systems segment showed strength in fiscal 2023 with revenue increasing $8.7 million, or about 5.6%, compared to fiscal 2022, driven by our customers' spending on research and development of next-generation innovation. Recent Development In February 2025, we, together with MBK Partners, a private equity firm, acquired FICT Limited (“FICT”) from Advantage Partners Inc.
Added
Despite this revenue growth, gross margins declined year over year, though third and fourth quarters have shown meaningful improvement in gross margins compared to the first half of fiscal 2025 and second half of fiscal 2024.
Removed
Under the equity method, upon closing this investment, the investment will be included as a separate item in our Consolidated Balance Sheets and we will record our proportionate share of FICT’s net income or loss as a separate item in our Consolidated Statements of Operations.
Added
Recent Developments Restructure — In January 2026, we adopted restructuring plans that are intended to better align cost structure and support gross margin improvement to our target financial model, while also aligning manufacturing capabilities with current and anticipated business needs and our strategic priorities.
Removed
For a discussion of the year ended December 30, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 30, 2023.
Added
As part of this restructuring plan, we are consolidating the manufacturing facilities located in Carlsbad and Baldwin Park, California to other sites. The Baldwin Park site manufactured through January 2026 and the Carlsbad site is expected to manufacture through December 2026. Acquisition — In December 2025, we acquired Keystone Photonics.
Removed
Specifically, the changes in revenue by geographic region was attributable to the following: • Increased demand for our DRAM probe card products, including those for HBM, contributed to the increase in revenue for South Korea in fiscal 2024 compared to fiscal 2023. • A single large U.S.-based company shifted shipments from Malaysia and China to the United States that contributed to the fluctuations in revenue for those regions in fiscal 2024 compared to fiscal 2023. • Increased demand from a large Chinese DRAM integrated device manufacturer contributed to the increase in revenue for China in fiscal 2024 compared to fiscal 2023. • Expanded export license requirements for the export of advanced U.S. semiconductor technology to China that was imposed by the U.S. government beginning the fourth quarter of fiscal 2022 have caused volatility in the Chinese region over the last two fiscal years, negatively impacting our revenue compared to fiscal 2022.
Added
This acquisition strengthened our position at the forefront of AI infrastructure demand, and strengthened our position at the forefront of the explosive market growth in silicon photonics (“SiPh”), extending our integrated test system leadership and leveraging our unique lab-to-fab position as SiPh and co-packaged optics manufacturers leap from concept to high-volume production. 28 Factory Expansion — In June 2025, we purchased a manufacturing site in Farmers Branch, Texas, which comprises four structures and includes 50,000 square feet of existing clean room space.
Removed
These requirements have restricted our ability to ship products to the region, decreasing demand from domestic China customers. Additionally, these requirements have caused, and continue to drive, some of our multinational customers to concentrate operations in regions other than China, lowering overall demand for those customers within the region.
Added
This manufacturing facility enabled us to acquire a scarce, fit-for-purpose asset that aligned with our strategic roadmap and provides significant operational flexibility. Located in a lower-operating cost region, it was one of a handful of existing available facilities in the U.S. that had a clean room and came equipped with the infrastructure to meet our future manufacturing needs.
Removed
We anticipate a further reduction in demand in fiscal 2025 due to additional tightening of export controls, which will limit our ability to ship advanced probe cards in the region.
Added
An arrangement may include some or all of the following products and services: probe cards, systems, accessories, engineering services, installation services, service contracts and extended warranty contracts. 29 A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.
Removed
These increases were partially offset by an unfavorable product mix with a higher concentration of lower-margin DRAM product sales and a lower concentration of higher-margin Foundry & Logic product sales.
Added
As a result, we generated no metrology systems revenue during fiscal 2025 and fiscal 2024, compared to $21.2 million during fiscal 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−0 removed3 unchanged
Biggest changeWe use interest rate derivative instruments to manage certain interest rate exposures. We do not use derivative instruments for trading or speculative purposes. The fair market value of our fixed rate securities may be adversely impacted by increases in interest rates while income earned on floating rate securities may decline as a result of decreases in interest rates.
Biggest changeThe fair market value of our fixed rate securities may be adversely impacted by increases in interest rates while income earned on floating rate securities may decline as a result of decreases in interest rates.
We do not use derivative financial instruments for trading or speculative purposes. We recognized a net gain from foreign exchange of $1.0 million, $0.6 million, and $1.1 million in fiscal 2024, 2023, and 2022, respectively. Interest Rate Sensitivity Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio.
We do not use derivative financial instruments for trading or speculative purposes. We recognized a net gain from foreign exchange of $1.8 million, $1.0 million, and $0.6 million in fiscal 2025, 2024, and 2023, respectively. Interest Rate Sensitivity Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio.
Because the effect of movements in currency exchange rates on the currency forward exchange contracts generally offsets the related effect on the underlying items being hedged, these financial instruments are not expected to subject us to risks that would otherwise result from changes in currency exchange rates as of December 28, 2024.
Because the effect of movements in currency exchange rates on the currency forward exchange contracts generally offsets the related effect on the underlying items being hedged, 39 these financial instruments are not expected to subject us to risks that would otherwise result from changes in currency exchange rates as of December 27, 2025.
A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at December 28, 2024 and December 30, 2023 would have affected the fair value of our investment portfolio by $3.4 million and $2.5 million, respectively. 38
A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at December 27, 2025 and December 28, 2024 would have affected the fair value of our investment portfolio by $2.4 million and $3.4 million, respectively.
Our exposure to interest rate risk arising from our Term Loan (see Note 6, Debt , of Notes to Consolidated Financial Statements) is insignificant as a result of the interest-rate swap agreement (see Note 8, Derivative Financial Instruments , of Notes to Consolidated Financial Statements) that we entered into with Union Bank to hedge the interest payments on our Building Term Loan.
Our exposure to interest rate risk arising from our Term Loan (see Note 6, Debt , of Notes to Consolidated Financial Statements) is insignificant as a result of the interest-rate swap agreement (see Note 9, Derivative Financial Instruments , of Notes to Consolidated Financial Statements) that we entered into with U.S.
Added
Bank National Association (successor to MUFG Union Bank, N.A.) to hedge the interest payments on our Building Term Loan. We use interest rate derivative instruments to manage certain interest rate exposures. We do not use derivative instruments for trading or speculative purposes.

Other FORM 10-K year-over-year comparisons