1272547--2/13/2006--FREESCALE_SEMICONDUCTOR

related topics

{customer, product, revenue}

{product, market, service}

{property, intellectual, protect}

{competitive, industry, competition}

{personnel, key, retain}

{operation, international, foreign}

{tax, income, asset}

{cost, regulation, environmental}

{acquisition, growth, future}

{product, liability, claim}

{condition, economic, financial}

The loss of one or more of our significant customers may adversely affect our business. We operate in the highly cyclical semiconductor industry, which is subject to significant downturns. Winning business is subject to a competitive selection process that can be lengthy and requires us to incur significant expense, and we may not be selected. Even after we win and begin a product design, a customer may decide to cancel or change its product plans, which could cause us to generate no sales from a product and adversely affect our results of operations. We have become increasingly dependent on third party foundry relationships as part of our asset light strategy. If our production or manufacturing capacity at one of these facilities is delayed, interrupted or eliminated, we may not be able to satisfy customer demand. If we fail to keep pace with technological advances in our industry or if we pursue technologies that do not become commercially accepted, customers may not buy our products and our business, financial condition and results of operations may be adversely affected. If we cannot maintain our strategic relationships or if our strategic relationships fail to meet their goals of developing technologies or processes, we may lose our investment, and we may fail to keep pace with the rapid technological developments in our industry. The demand for our products depends in large part on continued growth in the industries into which they are sold. A market decline in any of these industries could have a material adverse effect on our results of operations. We may be subject to claims of infringement of third-party intellectual property rights or demands that we license third-party technology, which could result in significant expense and loss of our intellectual property rights. We may not be successful in protecting our intellectual property rights or developing or licensing new intellectual property, which may harm our ability to compete and may have a material adverse effect on our results of operations. Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business, fluctuations in currency exchange rates and other factors related to our international operations. Our ability to meet customer demand depends, in part, on obtaining supplies and a reduction in supplies could negatively impact our business. We intend to engage in acquisitions, joint ventures and other transactions that may complement or expand our business. We may not be able to complete such transactions and such transactions, if executed, pose significant risks and could have a negative effect on our operations. We are subject to environmental, health and safety laws, which could increase our costs and restrict our operations in the future. Our products may be subject to product liability claims, which could be expensive and could divert management s attention. Our industry is highly capital intensive and, if we are unable to obtain the necessary capital, we may not remain competitive. Loss of our key management and other personnel, or an inability to attract such management and other personnel, could impact our business. We have recorded significant reorganization of business charges in the past and may do so again in the future, which could materially adversely affect our business.

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1272547--2/13/2006--FREESCALE_SEMICONDUCTOR_INC