Form 6-K GLOBALFOUNDRIES Inc. For: Jun 30
Tweet
Share
E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2022
Commission File Number 001-40974
400 Stonebreak Road Extension
Malta, NY 12020
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Attached hereto are the following exhibits.
Part I - Financial Information
| Exhibit 99.1 | Unaudited Interim Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2022. | ||||
| Exhibit 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and six months ended June 30, 2022. | ||||
Part II - Other Information
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GLOBALFOUNDRIES Inc. | ||||||||
Date: August 19, 2022 | By: | /s/ Dr. Thomas Caulfield | ||||||
| Name: | Dr. Thomas Caulfield | |||||||
| Title: | President & Chief Executive Officer | |||||||
Management Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Statements
This document includes “forward-looking statements” that reflect our current expectations and views of future events. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and include but are not limited to, statements regarding our financial outlook, future guidance, product development, business strategy and plans, and market trends, opportunities and positioning. These statements are based on current expectations, assumptions, estimates, forecasts, projections and limited information available at the time they are made. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” "outlook," "on track," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a broad variety of risks and uncertainties, both known and unknown. Any inaccuracy in our assumptions and estimates could affect the realization of the expectations or forecasts in these forward-looking statements. For example, our business could be impacted by the COVID-19 pandemic and supply chain disruptions due to the Russia/Ukraine conflict and actions taken in response to such events; the market for our products may develop more slowly than expected or than it has in the past; our operating results may fluctuate more than expected; there may be significant fluctuations in our results of operations and cash flows related to our revenue recognition or otherwise; a network or data security incident that allows unauthorized access to our network or data or our customers’ data could damage our reputation; we could experience interruptions or performance problems associated with our technology, including a service outage; and global economic conditions could deteriorate. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Moreover, we operate in a competitive and rapidly changing market, and new risks may emerge from time to time. You should not rely upon forward-looking statements as predictions of future events. These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them.
Although we believe that the expectations reflected in our statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we, nor any other person, assumes responsibility for the accuracy and completeness of these statements. Recipients are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements are made and should not be construed as statements of fact. Except to the extent required by federal securities laws, we undertake no obligation to update any information or any forward-looking statements as a result of new information, subsequent events, or any other circumstances after the date hereof, or to reflect the occurrence of unanticipated events. For a discussion of potential risks and uncertainties, please refer to the risk factors and cautionary statements in GLOBALFOUNDRIES’ Annual Report on Form 20-F for the year ended December 31, 2021, current reports on Form 6-K and other reports filed with the Securities and Exchange Commission (the “SEC”). Copies of our SEC filings are available on our Investor Relations website, investors.gf.com, or from the SEC website, www.sec.gov.
OPERATING AND FINANCIAL REVIEWS AND PROSPECTS
Overview
GLOBALFOUNDRIES Inc. (“We,” “GF,” or the “Company”) is one of the world’s leading semiconductor foundries. We manufacture complex, feature-rich integrated circuits (“ICs”) that enable billions of electronic devices that are pervasive throughout nearly every sector of the global economy. With our specialized foundry manufacturing processes, a library consisting of thousands of IP titles, and differentiated transistor and device technology, we serve a broad range of customers, including the global leaders in IC design, and provide optimized solutions for the function, performance and power requirements of critical applications driving key secular growth end markets.
The combination of our highly-differentiated technology and our scaled manufacturing footprint enables us to attract a large share of single-sourced products and long-term supply agreements, providing a high degree of revenue visibility and significant operating leverage, resulting in improved financial performance and bottom line growth. As of June 30, 2022, the aggregate lifetime revenue commitment reflected by these agreements amounted to $27 billion, including more than $10 billion during the period from 2022 through 2023 and more than $3.5 billion in advanced payments and capacity reservation fees. These agreements include binding, multi-year, reciprocal annual (and, in some cases, quarterly) minimum purchase and supply commitments with wafer pricing and associated mechanics outlined for the contract term. Through an intense focus on collaboration, we have built deep strategic partnerships with a broad base of more than 35 customers as of June 30, 2022, many of whom are the global leaders in their field.
Components of Results of Operations
Net Revenue
We generate the majority of our revenue from volume production and sales of semiconductor wafers, which are priced on a per-wafer basis for the applicable design. We also generate revenue from pre-fabrication services such as rendering of non-recurring engineering (“NRE”) services, mask production and post-fabrication services such as bump, test, and packaging. Pricing is typically agreed prior to production and then updated based on subsequent period negotiations.
Cost of Revenue
Cost of revenue consists primarily of material expenses, depreciation and amortization, employee-related expenses, facility costs and costs of fixed assets, including maintenance and spare parts. Material expenses primarily include the costs of raw wafers, test wafers, photomasks, resists, process gases, process chemicals, other operating supplies and external service costs for wafer manufacturing. Costs related to NRE services are also included within the cost of revenue. We expect cost of revenue to grow at a pace lower than our revenue growth. As it pertains to inflation and inflationary-headwinds we are facing within our business, while we have experienced an increase in costs for materials and energy in the current period, we continue to estimate the impact of these inflationary costs to our current year financial results to not be material.
Depreciation and amortization charges primarily include the depreciation of clean room production equipment. We depreciate equipment on a straight-line basis over a two-to-ten-year period and buildings on a straight-line basis up to 26 years (or the remaining lease term of related land on which the buildings are erected, if shorter).
Operating Expenses
Our operating expenses consist of research and development ("R&D") and selling, general and administrative expenses. Personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, bonuses, share-based compensation, and commissions.
Research and Development (“R&D”)
Our R&D efforts are focused on developing highly-differentiated process technologies and solutions. As part of our strategic repositioning, we focus our efforts on technologies where we can deliver a highly-differentiated solution. Our R&D expense includes personnel costs, material costs, software license and intellectual property expenses, facility costs, supplies, professional and consulting fees, and depreciation on equipment used in R&D activities. Our
development roadmap includes new platform investments, platform features and extensions, and investments in emerging technology capabilities and solutions. We expense R&D costs as incurred and we believe that continued investment in our technology portfolio is important for our future growth and acquisition of new customers.
Selling, General and Administrative (“SG&A”)
SG&A expenses consist primarily of personnel-related costs, including sales commissions to independent sales representatives and professional fees, including the costs of audit, accounting, information technology, legal, regulatory and tax compliance. Additionally, costs related to advertising, trade shows, corporate marketing and allocated overhead costs are also included in SG&A expenses. We anticipate that we will incur increased audit, accounting, legal, information technology, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.
Finance Expenses, net
Finance expenses, net consist primarily of interest on borrowings, amortization of debt issuance costs under our term loans, revolving credit facility, finance leases and the other credit facilities we maintain with various financial institutions, net of interest income related to investing activities.
Share of Profit from Joint Ventures
Share of profit from joint ventures relates to our portion of profit and loss in investments that we do not consolidate.
Other Income (Expense), net
Other income (expense), net consists of one-time gains and losses and other miscellaneous income and expense items unrelated to our core operations.
Income Tax Expense
Income tax expense consists primarily of income taxes in jurisdictions in which we conduct business, which mainly include Germany, Singapore and the United States.
The following is a summary of certain interim condensed consolidated statement of operations data for the three and six months ended June 30, 2022 and 2021.
A. Results of Operations
The following table sets forth our consolidated statements of operations data for the periods indicated:
| (in millions) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net revenue | $ | 1,993 | $ | 1,620 | $ | 3,933 | $ | 3,038 | |||||||||||||||
| Cost of revenue | 1,455 | 1,389 | 2,926 | 2,708 | |||||||||||||||||||
| Gross profit | 538 | 231 | 1,007 | 330 | |||||||||||||||||||
| Research and development expenses | 120 | 132 | 248 | 235 | |||||||||||||||||||
| Selling, general and administrative expenses | 121 | 202 | 237 | 293 | |||||||||||||||||||
| Operating expenses | 241 | 334 | 485 | 528 | |||||||||||||||||||
| Income (Loss) from operations | 297 | (103) | 522 | (198) | |||||||||||||||||||
| Finance expenses, net | (19) | (28) | (47) | (55) | |||||||||||||||||||
| Share of profit of joint ventures and associates | 1 | 1 | 2 | 2 | |||||||||||||||||||
| Other income (expense), net | 15 | (24) | 24 | (20) | |||||||||||||||||||
| Income (Loss) before income taxes | 294 | (154) | 501 | (271) | |||||||||||||||||||
| Income tax expense | (30) | (20) | (59) | (30) | |||||||||||||||||||
| Net income (loss) for the period | $ | 264 | $ | (174) | $ | 442 | $ | (301) | |||||||||||||||
Comparison of Three Months Ended June 30, 2022 and 2021
Net Revenue
| (in millions) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||||||||||||||||
| Net revenue | $ | 1,993 | $ | 1,620 | $ | 373 | 23.0 | % | ||||||||||||||||||
Net revenue increased by $373 million, or 23.0%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily a result of higher wafer shipment volumes and average selling prices ("ASP"). For the three months ended June 30, 2022, wafer shipments were 630 thousand (300mm equivalent), a 6% increase from the prior year. ASP per wafer increased 16% for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The increase was driven by ramping long-term customer agreements with better pricing, and continued improvement in product mix.
Cost of Revenue
| (in millions) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||||||||||||||||
| Cost of revenue | $ | 1,455 | $ | 1,389 | $ | 66 | 4.8 | % | ||||||||||||||||||
| Gross margin | 27.0 | % | 14.3 | % | +1270bps | |||||||||||||||||||||
Cost of revenue increased by $66 million, or 4.8%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was driven primarily by a 6% increase in wafer shipments offset by increased fixed cost absorption from higher factory utilization. The associated gross margin improvements for the three months ended June 30, 2022 were driven by better fixed cost absorption, higher ASPs, and improved product mix.
Operating Expenses
Research and Development Expenses
| (in millions) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Research and development expenses | $ | 120 | $ | 132 | $ | (12) | (9.1) | % | ||||||||||||||||||
| As a % of revenue | 6.0 | % | 8.1 | % | ||||||||||||||||||||||
Research and development expenses decreased by $12 million, or 9.1%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The decrease was driven by a $10 million reduction in R&D pre-production costs.
Selling, General and Administrative Expenses
| (in millions) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 121 | $ | 202 | $ | (81) | (40.1) | % | ||||||||||||||||||
| As a % of revenue | 6.1 | % | 12.5 | % | ||||||||||||||||||||||
Selling, general and administrative expenses decreased by $81 million, or 40.1%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The decrease was primarily driven by $73 million reduction in share-based compensation expense from 2021 when an IPO was deemed probable and the Company recognized share-based compensation expense of $97 million. The decrease was also attributable to lower employee-related expenses of $13 million.
Finance expense, net
| (in millions of dollars) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Finance expense, net | $ | (19) | $ | (28) | $ | 9 | (32.1) | % | ||||||||||||||||||
Finance expense, net decreased by $9 million, or 32.1%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The decrease was due to higher interest income generated from money market funds and investments in marketable securities.
Other income (expense), net
| (in millions) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Other income (expense), net | $ | 15 | $ | (24) | $ | 39 | NM | |||||||||||||||||||
Other income (expense), net increased by $39 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The increase was primarily driven by a $34 million provision for settlement with our previous joint venture in China in 2021.
Income Tax Expense
| (in millions) | Three Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Income tax (expense) | $ | (30) | $ | (20) | $ | (10) | 50.0 | % | ||||||||||||||||||
Income tax expense increased by $10 million, or 50.0%, for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily due to a higher mix of income in jurisdictions with higher tax rates and additional withholding tax accrued in the United States.
Comparison of Six Months Ended June 30, 2022 and 2021
Net Revenue
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||||||||||||||||
| Net revenue | $ | 3,933 | $ | 3,038 | $ | 895 | 29.5 | % | ||||||||||||||||||
Net revenue increased by $895 million, or 29.5%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily a result of higher wafer shipment volumes and ASP. For the six months ended June 30, 2022, wafer shipments were approximately 1.3 million (300mm equivalent), a 10% increase from the prior year. ASP per wafer increased 17% year over year, driven by ramping long-term customer agreements with better pricing, and improved mix.
Cost of Revenue
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||||||||||||||||
| Cost of revenue | $ | 2,926 | $ | 2,708 | $ | 218 | 8.1 | % | ||||||||||||||||||
| Gross margin | 25.6 | % | 10.9 | % | +1470bps | |||||||||||||||||||||
Cost of revenue increased by $218 million, or 8.1%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. This increase was due to a 10% increase in wafer shipments offset by increased fixed cost absorption from higher factory utilization.The associated gross margin improvements for the six months ended June 30, 2022 were driven by higher ASPs, improved product mix and fixed cost absorption.
Research and development
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Research and development expenses | $ | 248 | $ | 235 | $ | 13 | 5.5 | % | ||||||||||||||||||
| As a % of revenue | 6.3 | % | 7.7 | % | ||||||||||||||||||||||
Research and development expenses increased by $13 million, or 5.5%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily due to a $9 million increase in R&D technology portfolio investments and a $10 million increase in employee-related expenses, partially offset by a $9 million reduction in R&D pre-production costs.
Selling, general, and administrative
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Selling, general and administrative expenses | $ | 237 | $ | 293 | $ | (56) | (19.1) | % | ||||||||||||||||||
| As a % of revenue | 6.0 | % | 9.7 | % | ||||||||||||||||||||||
Selling, general and administrative expenses decreased by $56 million, or 19.1%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The period-over-period change was primarily attributable to a decrease in share-based compensation expense of $46 million and lower employee-related expenses of $35 million, offset by a $23 million increase in costs associated with operating as public company.
Finance expenses, net
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Finance expenses, net | $ | (47) | $ | (55) | $ | 8 | (14.5) | % | ||||||||||||||||||
Finance expenses, net decreased by $8 million, or 14.5%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The decrease was due to higher interest income generated from money market funds and investments in marketable securities.
Other income (expense), net
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Other income (expense), net | $ | 24 | $ | (20) | $ | 44 | NM | |||||||||||||||||||
Other income (expense), net increased by $44 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase was primarily driven by a $34 million provision for settlement with our previous joint venture in China in 2021.
Income tax benefit (expense)
| (in millions) | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change | Change % | |||||||||||||||||||||||
| Income tax expense | $ | (59) | $ | (30) | $ | (29) | 96.7 | % | ||||||||||||||||||
Income tax expense increased by $29 million, or 96.7%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase was primarily due to a higher mix of income in jurisdictions with higher tax rates and additional withholding tax accrued in the United States.
B. Liquidity and Capital Resources
We have financed operations primarily through cash and cash equivalents, marketable securities, as well as cash generated from our business operations, including customers' prepayments under long term agreements, debt and government funding. As of June 30, 2022, our cash, cash equivalent and marketable securities balances of $3,262 million included $2,474 million of cash and cash equivalent and $788 million of marketable securities.
As of June 30, 2022 and December 31, 2021, we had an undrawn revolving credit facility of $1,000 million. In addition to our available revolvers, which were undrawn as of June 30, 2022 and December 31, 2021, we had $2,170 million and $2,013 million of debt outstanding as of June 30, 2022 and December 31, 2021, respectively, which was primarily comprised of multiple term loans in various currencies. Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount we receive from customers, the timing and extent of spending to support development efforts, the introduction of new and enhanced products and solutions, and the continuing market adoption of our platform. We may from time to time seek to raise additional capital to support our growth. As of June 30, 2022, we believe that our existing cash, cash equivalents, investment in marketable securities, credit under our revolving credit facility, and expected cash generated from operations are sufficient to meet our capital requirements.
Cash Flows
The following table shows a summary of our cash flows for the periods presented:
| Six Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net cash provided by operating activities | $ | 1,454 | $ | 582 | |||||||
| Net cash used in investing activities | (2,243) | (462) | |||||||||
| Net cash provided by (used in) by financing activities | 325 | (224) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | $ | (1) | $ | 1 | |||||||
| Net decrease in cash and cash equivalents | $ | (465) | $ | (103) | |||||||
Operating Activities
Net cash provided by operating activities was $1,454 million for the six months ended June 30, 2022, an increase of $872 million compared to $582 million for the six months ended June 30, 2021. The increase was primarily related to net income of $442 million, $819 million of depreciation and amortization and $104 million of share-based compensation expense. Favorable changes in working capital of $127 million included a decrease in receivables, prepayments and other of $212 million, which was driven principally by customer prepayments. This increase was partially offset by a $55 million increase in inventories.
Investing Activities
Net cash used in investing activities was $2,243 million for the six months ended June 30, 2022, an increase of $1,781 million from a use of $462 million for the six months ended June 30, 2021. The period-over-period change was primarily attributable to capital expenditures of $1,455 million, an increase of $730 million from prior period, principally associated with activities to expand capacity within certain of our fabrication facilities, as well as the purchase of marketable securities of $790 million.
Financing Activities
Net cash provided by financing activities was $325 million for the six months ended June 30, 2022, an increase of $549 million from a use of $224 million for the six months ended June 30, 2021. The period-over-period change was primarily attributable to $443 million of proceeds from borrowings and $82 million of proceeds from the issuance of equity instruments from options exercised, partially offset by the shareholder loan and debt repayments compared to the prior year.
Other Information
The information presented below updates, and should be read in conjunction with, the risks described under Item 3.D. “Key Information - Risk Factors,” in our Annual Report on From 20-F for the fiscal year ended December 31, 2021. Except as set forth below, there have been no material changes to the Company’s risk factors as disclosed in Item 3.D, “Key Information - Risk Factors,” in such Annual Report. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements”.
If we are unable to obtain adequate supplies of raw materials in a timely manner and at commercially reasonable prices our revenue and profitability may decline.
Our production operations require that we obtain adequate supplies of raw materials, such as silicon wafers, gases, chemicals and photoresist, on a timely basis and at commercially reasonable prices, many of which are not commodities easily replaced with substitutions. In the past, shortages in the supply of some materials, whether by specific vendors or by the industry generally, have resulted in occasional industry-wide price adjustments and delivery delays. Moreover, major natural disasters, trade barriers and political or economic turmoil occurring within the country of origin of such raw materials may also significantly disrupt the availability of such raw materials or increase their prices. Further, since we procure some of our raw materials from sole-sourced suppliers, there is a risk that our need for such raw materials may not be met or that back-up supplies may not be readily available. In addition, recent trade tensions between the United States and China, and the conflict in Ukraine, have resulted in pricing pressure and reduced availability of raw materials, including rare earth metals used in our products. Furthermore, sanctions imposed on Russia as a result of the conflict in Ukraine, as well as geopolitical tensions, have resulted in the reduction of availability of natural gas to Germany, where we operate some of our fabs. Tariffs, export control or other non-tariff barriers, due to global or local economic conditions could also affect material cost and availability.
Certain raw materials and other inputs, such as electricity and water, necessary for our production operations may experience substantial price volatility. Hedging transactions for many of those raw materials and other inputs are not available to us, or are not available on terms we believe are commercially acceptable. Economic and financial hedges that we enter into with respect to certain inputs, such as electricity, or alternative energy supplies we may seek to secure, may not be effective to avoid disruptions to our manufacturing operations. Additionally, once our prices with a customer are negotiated, we are generally unable to revise pricing with that customer until our next regularly scheduled price adjustment. As a result, if market prices for essential components increase, we will often be unable to pass the price increases through to our customers for products purchased under an existing agreement. Consequently, we are exposed to the risks associated with the volatility of prices for these components and our cost of revenue could increase and our gross margins could decrease in the event of price increases. Recently, as a result of demand driven by the semiconductor supply shortage, the costs of raw wafers as well as certain other raw materials are relatively high. Failure to obtain adequate supplies could result in our being unable to meet commitments under our contracts with customers, which could expose us to substantial liquidated damages and other claims, which could materially and adversely affect our results of operations, financial condition, business and prospects.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- GlobalFoundries Commits to Achieving Net Zero Emissions and Carbon-Neutral Power by 2050
- Hartford HealthCare hospitals make top 20% nationwide for safety, price transparency
- Helium Evolution Announces Filing of Annual 2023 Financial Results and Provides Operations Update
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
