56978--12/11/2007--KULICKE_&_SOFFA_INDUSTRIES

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{product, market, service}

{customer, product, revenue}

{stock, price, share}

{property, intellectual, protect}

{operation, international, foreign}

{provision, law, control}

{condition, economic, financial}

{cost, operation, labor}

{operation, natural, condition}

{cost, regulation, environmental}

{personnel, key, retain}

{stock, price, operating}

{debt, indebtedness, cash}

{acquisition, growth, future}

{control, financial, internal}

{cost, contract, operation}

Risks Related to Our Business and Industry The semiconductor industry is volatile with sharp periodic downturns and slowdowns. We may experience increasing price pressure. Our quarterly operating results fluctuate significantly and may continue to do so in the future. We may not be able to rapidly develop, manufacture and gain market acceptance of new and enhanced products required to maintain or expand our business. Substantially all of our sales and manufacturing operations are located outside of the United States, and we rely on independent foreign distribution channels for certain product lines; all of which subject us to risks, including risks from changes in trade regulations, currency fluctuations, political instability and war. We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows. Rising gold prices increase our working capital requirements. We may not be able to consolidate manufacturing facilities without incurring unanticipated costs and disruptions to our business. Our business depends on attracting and retaining management, marketing and technical employees. Difficulties in forecasting demand for our product lines may lead to periodic inventory shortages or excesses. Alternative packaging technologies other than wire bonding may render some of our products obsolete. Because a small number of customers account for most of our sales, our revenues could decline if we lose a significant customer. We depend on a small number of suppliers for raw materials, components and subassemblies. If our suppliers do not deliver their products to us, we would be unable to deliver our products to our customers. We may acquire or divest businesses or enter into joint ventures or strategic alliances, which may materially affect our business, financial condition and operating results. We may be unable to continue to compete successfully in the highly competitive semiconductor equipment and packaging materials industries. Our success depends in part on our intellectual property, which we may be unable to protect. Third parties may claim we are infringing on their intellectual property, which could cause us to incur significant litigation costs or other expenses, or prevent us from selling some of our products. We may be materially and adversely affected by environmental and safety laws and regulations. We may be unable to generate enough cash to repay our debt. We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding common stock. Weaknesses in our internal controls and procedures could result in material misstatements in our financial statements. Accounting methods, including but not limited to the accounting method for convertible debt securities with net share settlement, such as our 0.875% Subordinated Convertible Notes, may be subject to change. Anti-takeover provisions in our articles of incorporation and bylaws, and under Pennsylvania law may discourage other companies from attempting to acquire us. Terrorist attacks, or other acts of violence or war may affect the markets in which we operate and our profitability. Provisions of our Subordinated Convertible Notes could discourage an acquisition of us by a third party.

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56978--12/11/2007--KULICKE_&_SOFFA_INDUSTRIES_INC