MKS INC

Below is a summary of the principal factors that make an investment in MKS speculative or risky. This summary does not contain all of the information that may be important to you, and you should read the below summary in conjunction with the more detailed discussion of risks set forth under the heading “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Strategic Transaction Risks

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As part of our business strategy, we have consummated and may continue to pursue acquisitions and other strategic transactions, which may be challenging and costly to identify and complete, disruptive to our business and our management, and/or dilutive to stockholder value.

Financial Risks

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Our substantial consolidated indebtedness could adversely affect us, including by increasing our interest expense and decreasing our business flexibility.

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The terms of our Term Loan Facility, Revolving Facility and 2034 Notes (each as defined below) impose significant financial obligations and risks upon us, limit our ability to take certain actions, and could discourage a change in control.

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A material amount of our assets represents goodwill and intangible assets, against which we have recorded impairments in the past, and our net income may be significantly reduced by future impairments of these assets.

Risks Related to Cybersecurity, Data Privacy and Intellectual Property Protection

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We are exposed to risks related to cybersecurity and data privacy threats and incidents, such as the ransomware event we identified in February 2023, and we are subject to restrictions and changes in laws and regulations governing data privacy and data protection, any of which could have a material adverse effect on our business.

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Our proprietary technology is important to the continued success of our business. Our failure to protect this proprietary technology may significantly impair our competitive position.

Risks Related to Our Operations

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Supply chain disruptions and other manufacturing interruptions or delays have affected our ability to meet customer demand and have led to higher costs, while the failure to estimate customer demand accurately has resulted in excess or obsolete inventory, all of which has negatively impacted, and could in the future negatively impact, our business.

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Our dependence on sole and limited source suppliers and international suppliers has negatively impacted, and could continue to impact, our ability to manufacture products and systems.

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Our failure to successfully manage the transition of certain of our products to other manufacturing locations, the transition of certain of our products to or from contract manufacturers, and the transition of certain functions to centralized locations would likely harm our business, financial condition and operating results.

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Our products could contain defects, which would increase our costs and seriously harm our business, financial condition, operating results and customer relationships.

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Chemical manufacturing is inherently hazardous and could result in accidents that disrupt our operations or expose us to significant losses or liabilities.

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We outsource a number of services to third-party service providers, which decreases our control over the performance of these functions. Disruptions or delays at our third-party service providers could adversely impact our operations.

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The loss of net revenues from any of our major customers would likely have a material adverse effect on us.

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Key personnel have been, and may continue to be, difficult to attract and retain.

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Emerging issues related to the development, deployment, and use of AI, including generative AI, in our business could give rise to competitive disadvantages, reputational harm, legal or regulatory action, or other adverse impacts on our business.

Risks Related to Our Industries and Markets

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The semiconductor, electronics manufacturing and automotive industries we serve are characterized by periodic fluctuations in business activity that may cause a reduction in demand for our products.

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Many of the markets and industries we serve are highly competitive, are subject to rapid technological advancement, and have narrow design windows, and if we fail to introduce new and innovative products or improve our existing products, or if our products or the applications we invest in do not achieve widespread adoption, our business, financial condition and operating results will be harmed.

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We offer products for multiple markets and must face the challenges of supporting the distinct needs of each of the markets we serve.

Risks Related to Operating a Global Business

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We face significant risks associated with doing business internationally.

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We face significant risks associated with doing business in China in particular.

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Unfavorable currency exchange rate fluctuations may lead to lower operating results or may cause us to change customer pricing, which could result in reduced sales and losses.

Legal, Tax, Regulatory and Compliance Risks

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We are obligated to develop and maintain proper and effective internal control over financial reporting, and we previously identified a material weakness in our internal control over financial reporting and may discover additional material weaknesses in the future. Any failure to maintain the adequacy of this internal control may adversely affect our operating results, our stock price and investor confidence in our Company.

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If significant trade restrictions or tariffs on our products or components that are imported from or exported to certain countries, including, but not limited to, China, are initiated, continue or are expanded, our business, financial condition and operating results may be materially harmed.

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We are subject to international trade compliance regulations, and violations of those regulations could result in fines or trade restrictions, which could have a material adverse effect on us.

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Changes in tax rates or tax regulation or the termination of tax incentives could affect our operating results.

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Many of our products and customers are subject to numerous laws regulating the production and use of chemical substances, and some of our products may need to be reformulated or discontinued to comply with these laws and regulations.

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We are subject to environmental regulations. If we fail to comply with these regulations, our business could be harmed.

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We are exposed to various risks related to legal proceedings, including, for example, product liability claims, intellectual property infringement claims, regulatory claims, contractual claims and class action litigation, which if successful, could have a material adverse effect on our commercial relationships, business, financial condition and operating results.

Risks Related to Owning Our Common Stock

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Our quarterly operating results have fluctuated, and are likely to continue to vary significantly, which may result in volatility in the market price of our common stock.

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The market price of our common stock has fluctuated and may continue to fluctuate for reasons over which we have no control.