Entegris (ENTG) Risk Analysis

We are subject to export control and economic sanctions laws and regulations that restrict the delivery of some of our products and services to certain countries (and nationals thereof), to certain end users, and for certain end uses. These restrictions may prohibit the sale of certain of our products, services and technologies, and they may require us to obtain a license from the U.S. government and/or other governments before delivering the controlled item or service. Obtaining export licenses may be difficult, costly and time-consuming, and we may fail to receive licenses that we apply for on a timely basis or at all. Even where a license is ultimately granted, the licensing process may result in extended delivery timelines, increased administrative burden, and customer uncertainty, any of which could cause customers to delay, reduce, or cancel orders, shift purchases to competitors, or redesign processes around non-U.S. alternatives. In addition, export controls and sanctions regimes are dynamic and may be expanded to cover additional products, technology, end uses, end users, or jurisdictions (including through restrictions applicable to non-U.S. persons or foreign subsidiaries), which could further limit our ability to sell or support products and services in certain markets. We must also comply with export control and economic sanctions laws and regulations imposed by other countries. Although we maintain an export and trade control compliance program, it may not be fully effective or may be circumvented, exposing us to legal liabilities. Compliance with these laws could significantly limit our sales in the future. Changes in, or responses to, U.S. or other countries' trade controls could reduce the competitiveness of our products and cause our sales to decline, which could have a material adverse effect on our business, financial condition and results of operations. Over the last several years, the U.S. and other governments have significantly expanded export controls on certain technologies and commodities to certain markets, particularly with respect to semiconductor and other high technology exports to China, a market which represented approximately 21% of our sales in 2025. These and other regulations have reduced our ability to sell our products to customers in China and it is possible future regulation could further reduce demand for our products. As a result of these restrictive measures, certain of our customers have made efforts to source products domestically in order to mitigate perceived risks to their supply chain. Furthermore, these restrictive measures have incentivized Chinese domestic semiconductor companies to work more closely with local Chinese companies and companies headquartered outside of the U.S. in an effort to enable these companies to enhance the technology-level and quality of their products and, as a result, to better compete with our products. We may be unable to continue to compete favorably against these local and foreign competitors. If these efforts are successful, are widespread amongst our customers and expand to our products and solutions broadly, overall global demand for our products may be reduced, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, government authorities may take retaliatory actions, impose conditions that require the use of local suppliers or partnerships with local companies, increase tariff and other customs costs, impose export restrictions on raw materials and components, such as the restrictions imposed on critical materials and minerals by China in 2025, or require the license or other transfer of intellectual property, which could have a significant adverse impact on our business. These measures could also increase our costs (including logistics, compliance, and supplier qualification costs), disrupt our sourcing and manufacturing plans, and adversely affect our ability to meet customer requirements or contractual commitments.

We operate in many foreign countries and are subject to taxation at various rates and audit by multiple taxing authorities. Our results of operations could be affected by tax audits, changes in tax rates, changes in laws and regulations governing the calculation, location and taxation of earned profit, changes in laws and regulations affecting our ability to realize deferred tax assets on our balance sheet and changes in laws and regulations relating to the repatriation of cash into the U.S. Each quarter, we forecast our tax liability based on our forecast of our performance for the year in each tax jurisdiction. If our performance forecast changes, our forecasted tax liability would also likely change, perhaps materially. We have undertaken, and expect to continue to undertake, complex internal reorganizations of our foreign subsidiaries in order to rationalize and streamline our foreign operations, focus our management efforts on certain local opportunities and take advantage of favorable business conditions in certain localities. These or any future reorganizations could result in adverse tax consequences in one or more jurisdictions, which could adversely impact our profitability from foreign operations and result in a material reduction in our results of operations. Various jurisdictions in which we operate are considering changes to, or have already changed, their tax laws. For example, the OECD introduced the Base Erosion and Profit Shifting 2.0 project that seeks to impose a global minimum income tax rate of 15%. Any tax reform adopted in any foreign jurisdiction may exacerbate the risks described above and cause our corporate tax rate to increase.

Our operations involve, and we are exposed to the risks associated with, the use and manufacture of hazardous materials. In particular, we manufacture specialty chemicals, which is an inherently hazardous process that may result in accidents, and store and transport hazardous raw materials, products and waste in, to and from various facilities. Potential risks that may disrupt our operations or expose us to significant losses and liabilities include explosions and fires, chemical spills and other discharges, releases of toxic or hazardous substances or gases, and pipeline and storage tank leaks and ruptures. These and other hazards may result in (1) liability for personal injury, death, damage to property and contamination of the environment; (2) suspension of operations; (3) the imposition of civil or criminal fines, penalties and other sanctions; (4) cleanup costs; (5) claims by governmental entities or third parties; (6) reputational harm; (7) increases in our insurance costs; and (8) other adverse impacts on our results of operations. Moreover, a failure of one of our products at a customer site could interrupt the business operations of the customer. For example, while we believe that our SDS and VAC delivery systems are safe to transport, store and deliver toxic gases, any leakage could cause serious damage, including injury or death, to any person exposed to those toxic gases,potentially creating significant product liability exposure for us. Our insurance coverage may be inadequate to satisfy any such liabilities, and our financial results or financial condition could be adversely affected.

AI technology is complex and rapidly evolving, as are the operational, competitive, legal and regulatory environments in which it exists. We are increasingly incorporating AI capabilities into our business operations and our ways of working, which can be both challenging and costly. For example, we may experience difficulty in effectively using, or be unable to use, AI in a manner that benefits our business operations, enhances our efficiency and enables us to improve our products and services more rapidly. AI algorithms or training methodologies may also be flawed, and datasets may contain irrelevant, insufficient or biased information, which can cause errors in outputs. This may give rise to legal liability, reputational damage and other adverse effects. Our business may be further negatively impacted if our competitors are more successful than we are in executing their AI strategies and developing superior products and services with the aid of AI technology. In addition, the use of AI in the development of our products and services could cause the loss of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity. Countries may also adopt laws and regulations related to AI that could cause us to incur greater compliance costs or limit the use of AI in our business. Any failure or perceived failure by us to comply with such legal or regulatory requirements could subject us to legal liabilities, damage our reputation, or otherwise have a material and adverse impact on our business.

Our revenue is primarily dependent upon demand from the global semiconductor ecosystem. The semiconductor industry has historically been, and is likely to continue to be, cyclical with periodic downturns, resulting in decreased demand for our products, which has negatively impacted our results of operations in the past and could do so again in the future. Our revenues and operating results may fluctuate significantly from quarter-to-quarter or year-to-year due to a number of factors, many of which are outside our control. A lower volume of sales can have a large and disproportionate impact on our profitability because some of our expenses are fixed in the short term. Factors that may negatively impact the demand for our solutions or cause our financial results to fluctuate unpredictably include, but are not limited to: - decreased consumer spending or changes in purchasing habits related to (1) macroeconomic uncertainty, market conditions, slow or negative economic growth or uncertainty about economic and other policies; or (2) geopolitical instability, including the Russian invasion of Ukraine and conflicts in the Middle East;- trends in the semiconductor industry and demand trends for different types of electronic devices such as logic versus memory integrated circuit ("IC") devices, or digital versus analog IC devices, and the various technology nodes at which those products are manufactured;- customer considerations, which may impact their future purchasing decisions, including (1) the size and timing of customer orders; (2) customers' decisions to accelerate, decelerate or delay shipments; (3) customer inventory management and corrections; (4) customers' rate of use and replacement of our consumable products; (5) customers' decisions to delay expansion projects; (6) customers' device architectures and specific manufacturing processes; (7) consolidation of our customers; and (8) the relative success of our customers vis-à-vis each other;- the short order-to-delivery time for our products; market share and competitive losses; and pricing changes by us and our competitors;- legal, tax, accounting or regulatory changes (including changes in import/export regulations and tariffs, such as regulations imposed by the U.S. government restricting exports to China or regulations imposed by other countries restricting the export of certain materials or the re-export of products containing such materials, or potential additional tariffs on imports, and tariffs imposed by other countries) or changes in the interpretation or enforcement of existing requirements;- procurement shortages and related increased prices, and the failure of suppliers to perform their obligations;- changes in our capital expenditure requirements to meet demand for our solutions, and the schedule and timing, including potential delays, thereof;- unanticipated manufacturing difficulties;- changes in average selling prices, customer mix and product mix;- our ability to develop, introduce and market new, enhanced and competitive products in a timely and cost-effective manner;- our competitors' introduction of new products;- disruptions in transportation, communication, demand, IT or supply resulting from factors outside of our control, including strikes, acts of God, wars, terrorist activities, international conflict and natural or man-made disasters; and - foreign currency exchange rate fluctuations. During downturns in the semiconductor industry, which can occur suddenly, we typically experience greater pricing pressure and shifts in product and customer mix, which can adversely affect our gross margin and net income. The semiconductor industry is also affected by seasonal shifts in demand, and as a result, we have in the past experienced and may experience in the future short-term fluctuation in our results of operations from one period to the next. We are unable to predict the timing, duration or severity of any current or future downturns in the semiconductor industry and cost control or other measures we implement to maintain profitability during such downturns or periods of limited growth may constrain or limit our ability to capitalize on subsequent industry recoveries. Furthermore, the semiconductor industry is subject to rapid advancements and demand for new and emerging technologies, such as AI. If we do not have, or are unable to develop, products and solutions that are utilized to manufacture semiconductors that enable new end-user demand trends, we may not be able to grow our revenue as fast as anticipated and our results of operations may be impacted. Furthermore, our performance is dependent, in large part, on our exposure to certain market trends and the growth of certain segments of the semiconductor ecosystem. For example, we have less exposure to the market for back-end assembly and testing. If certain markets in which we have limited or no exposure grow more rapidly than the markets we serve, our growth relative to our competitors may lag. To remain competitive in the semiconductor industry, we have in the past, and will likely in the future, maintain or increase our ER&D activity and invest in our infrastructure, even during downturns and periods of slower demand. Additionally, if we do not, or are unable to, adequately anticipate changes in our business environment, we may lack the infrastructure, manufacturing capacity and resources to scale up our business to meet customer expectations and compete successfully during a period of growth. Conversely, we may expand our capacity too rapidly, resulting in excess fixed costs and lower profitability.