29002--3/15/2006--DIODES_INC

related topics

{operation, international, foreign}

{stock, price, operating}

{acquisition, growth, future}

{customer, product, revenue}

{product, market, service}

{tax, income, asset}

{competitive, industry, competition}

{product, liability, claim}

{cost, operation, labor}

{condition, economic, financial}

{control, financial, internal}

{financial, litigation, operation}

{operation, natural, condition}

{property, intellectual, protect}

{personnel, key, retain}

{system, service, information}

{cost, regulation, environmental}

{capital, credit, financial}

{stock, price, share}

RISKS RELATED TO OUR BUSINESS Downturns in the highly cyclical semiconductor industry or changes in end-market demand could affect our operating results and financial condition. The semiconductor business is highly competitive, and increased competition may harm our business and our operating results. We receive a significant portion of our net sales from a single customer. In addition, this customer is also our largest external supplier and is a related party. The loss of this customer or supplier could harm our business and results of operations. Delays in initiation of production at new facilities, implementing new production techniques or resolving problems associated with technical equipment malfunctions could adversely affect our manufacturing efficiencies. We are and will continue to be under continuous pressure from our customers and competitors to reduce the price of our products, which could adversely affect our growth and profit margins. We are and will continue to be under continuous pressure from our customers and competitors to reduce the price of our products, which could adversely affect our growth and profit margins. We are and will continue to be under continuous pressure from our customers and competitors to reduce the price of our products, which could adversely affect our growth and profit margins. Our customer orders are subject to cancellation or modification usually with no penalty. High volumes of order cancellation or reductions in quantities ordered could adversely affect our results of operations and financial condition. New technologies could result in the development of new products by our competitors and a decrease in demand for our products, and we may not be able to develop new products to satisfy changes in demand, which could result in a decrease in net sales and loss of market share. 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 reduction in our intellectual property rights. We depend on third-party suppliers for timely deliveries of raw materials, parts and equipment, as well as finished products from other manufacturers, and our results of operations could be adversely affected if we are unable to obtain adequate supplies in a timely manner. If we do not succeed in continuing to vertically integrate our business, we will not realize the cost and other efficiencies we anticipate and our ability to compete, profit margins and results of operations may suffer. Part of our growth strategy involves identifying and acquiring companies with complementary product lines or customers. We may be unable to identify suitable acquisition candidates or consummate desired acquisitions and, if we do make any acquisitions, we may be unable to successfully integrate any acquired companies with our operations. Part of our growth strategy involves identifying and acquiring companies with complementary product lines or customers. We may be unable to identify suitable acquisition candidates or consummate desired acquisitions and, if we do make any acquisitions, we may be unable to successfully integrate any acquired companies with our operations. Part of our growth strategy involves identifying and acquiring companies with complementary product lines or customers. We may be unable to identify suitable acquisition candidates or consummate desired acquisitions and, if we do make any acquisitions, we may be unable to successfully integrate any acquired companies with our operations. We are subject to many environmental laws and regulations that could affect our operations or result in significant expenses. Our products may be found to be defective and, as a result, product liability claims may be asserted against us, which may harm our business and our reputation with our customers. Our products may be found to be defective and, as a result, product liability claims may be asserted against us, which may harm our business and our reputation with our customers. Our products may be found to be defective and, as a result, product liability claims may be asserted against us, which may harm our business and our reputation with our customers. We may fail to attract or retain the qualified technical, sales, marketing and management personnel required to operate our business successfully. We may not be able to maintain our growth or achieve future growth and such growth may place a strain on our management and on our systems and resources. Our business may be adversely affected by obsolete inventories as a result of changes in demand for our products and change in life cycles of our products. If OEMs do not design our products into their applications, a portion of our net sales may be adversely affected. If OEMs do not design our products into their applications, a portion of our net sales may be adversely affected. If OEMs do not design our products into their applications, a portion of our net sales may be adversely affected. We rely heavily on our internal electronic information and communications systems, and any system outage could adversely affect our business and results of operations. We are subject to interest rate risk that could have an adverse effect on our cost of working capital and interest expenses. If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or detect fraud, which could harm our business and the trading price of our Common Stock. Terrorist attacks, or threats or occurrences of other terrorist activities whether in the United States or internationally may affect the markets in which our Common Stock trades, the markets in which we operate and our profitability. RISKS RELATED TO OUR INTERNATIONAL OPERATIONS ernational operations subject us to risks that could adversely affect our operations. We have significant operations and assets in China, Taiwan and Hong Kong and, as a result, will be subject to risks inherent in doing business in those jurisdictions, which may adversely affect our financial performance. RISKS RELATED TO OUR INTERNATIONAL OPERATIONS ernational operations subject us to risks that could adversely affect our operations. We have significant operations and assets in China, Taiwan and Hong Kong and, as a result, will be subject to risks inherent in doing business in those jurisdictions, which may adversely affect our financial performance. RISKS RELATED TO OUR INTERNATIONAL OPERATIONS ernational operations subject us to risks that could adversely affect our operations. We have significant operations and assets in China, Taiwan and Hong Kong and, as a result, will be subject to risks inherent in doing business in those jurisdictions, which may adversely affect our financial performance. We are subject to foreign currency risk as a result of our international operations. We may not continue to receive preferential tax treatment in China, thereby increasing our income tax expense and reducing our net income. We may not continue to receive preferential tax treatment in China, thereby increasing our income tax expense and reducing our net income. We may not continue to receive preferential tax treatment in China, thereby increasing our income tax expense and reducing our net income. distribution of any earnings of our foreign subsidiaries to the United States may be subject to U.S. income taxes, thus reducing our net income. RISKS RELATED TO OUR COMMON STOCK Variations in our quarterly operating results may cause our stock price to be volatile. RISKS RELATED TO OUR COMMON STOCK Variations in our quarterly operating results may cause our stock price to be volatile. RISKS RELATED TO OUR COMMON STOCK Variations in our quarterly operating results may cause our stock price to be volatile. We may enter into future acquisitions and take certain actions in connection with such acquisitions that could affect the price of our Common Stock. We may enter into future acquisitions and take certain actions in connection with such acquisitions that could affect the price of our Common Stock. Our directors, executive officers and significant stockholders hold a substantial portion of our Common Stock, which may lead to conflicts with other stockholders over corporate transactions and other corporate matters. Our early corporate records are incomplete. As a result, we may have difficulty in assessing and defending against claims relating to rights to our Common Stock purporting to arise during periods for which our records are incomplete.

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29002--3/15/2006--DIODES_INC_/DEL/