Credo Technology Group Holding Ltd Ordinary Shares

Credit and liquidity · Liquidity and cash flow constraints

Market conditions and changing circumstances, some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to timely pay key vendors and others. For example, on March 10, 2023, Silicon Valley Bank (SVB) was placed into receivership with the Federal Deposit Insurance Corporation (FDIC).

Credit and liquidity · Access to capital and financing

We may not be able to accurately predict our future capital needs, and we may not be able to obtain additional financing to fund our operations. Any required additional financing may not be available on terms acceptable to us, or at all.

International and currency · International operations and emerging markets

Our business, financial condition and results of operations could be adversely affected by worldwide economic conditions, as well as political and economic conditions in the countries in which we conduct business. We outsource the fabrication and assembly of all of our products to third parties that are primarily located in Asia.

International and currency · Foreign exchange and currency exposure

We are subject to fluctuations in exchange rates between and among the currencies of the countries in which we do business. Our sales have been historically denominated in U.S. dollars and, in mainland China, the Renminbi. An increase in the value of the U.S. dollar or of the Renminbi relative to the currencies of the countries in which our customers operate could impair the ability of our customers to cost-effectively purchase our solutions.

Supply chain and procurement · Supplier operation and dependance

We rely on a limited number of third parties to manufacture, assemble and test our products, and the failure to successfully manage our relationships with such third-party contractors could adversely affect our revenue and operating results. We currently outsource all of our IC manufacturing to TSMC, with the assembly and testing processes outsourced to other subcontractors primarily in Asia.

Supply chain and procurement · Raw material availability and cost volatility

We generally do not maintain long-term supply contracts with TSMC or other third-party manufacturers or suppliers, and any disruption in our supply of products or materials, including raw material price fluctuations could have a material adverse effect on our business, financial condition and results of operations.

Core operations · Quality control and product defects

The complexity of our products could result in undetected defects; we may be subject to warranty claims and product liability, which could result in a decrease in customers and revenue, unexpected expenses and loss of market share. Highly complex products such as ours may contain defects, errors and bugs when they are first introduced or as new versions are released.

Innovation and product development · Product development and randd investment risks

We may incur substantial expenses to develop, market and qualify products that may not generate any revenue. We are focused on securing design wins that enable us to sell our products and solutions. We may not win the competitive selection process and may never generate any revenue despite incurring significant design and development expenditures.

Market position and competition · Market cyclicality and demand volatility

We are subject to the cyclical nature of the semiconductor industry which is undergoing significant change due to artificial intelligence. The semiconductor industry is highly cyclical and is subject to rapid price erosion, wide fluctuations in product supply and demand, constant and rapid technological change.

Stakeholder relations · Supplier and vendor relationships

If we fail to retain any distributors upon which we rely to assist in selling our products, or if any of these parties fail to perform as expected, it could reduce our future sales. To the extent we rely on distributors, we may be unable to predict the extent to which these distributors will be successful in marketing and selling our products.

Corporate governance · Ethics and compliance culture

We could be adversely affected by violations of applicable anti-corruption laws or violations of our internal policies designed to ensure ethical business practices. We are subject to the risk that we, our U.S. employees or our employees located in other jurisdictions may take action determined to be in violation of anti-corruption laws.

Industry regulation · Regulatory compliance and changes

Changes in environmental laws or regulations, as well as sustainability initiatives, could impose substantial costs and may adversely affect our business. Our product or manufacturing standards could be impacted by new or revised environmental rules and regulations or other social initiatives.

Tax and financial reporting · Tax compliance and changes in tax law

There is a risk that we will be a passive foreign investment company for the current or any future taxable year, which generally would result in adverse U.S. federal income tax consequences to U.S. investors in our ordinary shares.

Tax and financial reporting · Tax compliance and changes in tax law

Changes in taxation, our tax rates or exposure to additional tax liabilities or assessments could affect our profitability, and audits by tax authorities could result in additional tax payments. We are affected by various taxes imposed in different jurisdictions, including direct and indirect taxes imposed on our global activities.

Technology infrastructure · Technology systems and infrastructure failure

Our business may be impacted by information technology system failures or network disruptions, and lack of redundancy. Our ability to operate our business depends on the efficient operation of internal and third-party information technology systems, including cloud computing, data centers, hardware, software, and applications, to manage our company.

Geopolitical and trade · Regulatory and policy uncertainty

Our global operations expose us to numerous legal and regulatory requirements and failure to comply with such requirements, including unexpected changes to such requirements, could adversely affect our results of operations. We service our customers around the world and are subject to numerous, and sometimes conflicting, legal regimes.

Geopolitical and trade · Trade policies tariffs and sanctions

We are subject to government regulation, including import, export and economic sanctions (Trade Controls) laws and regulations that may expose us to liability and could increase our costs of doing business. The export or reexport of certain products, software and other technology may require export authorizations.

Geopolitical and trade · Regulatory and policy uncertainty

Our business is affected by new U.S. government regulations restricting outbound investments in China. On November 15, 2024, the Office of Investment Security of the U.S. Department of the Treasury published in the Federal Register a final rule to implement President Biden's August 2023 Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.

Geopolitical and trade · Political instability and government changes

We face significant economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and mainland China, that could negatively affect our business and the trading price of our ordinary shares. We conduct a portion of our business in Taiwan, and our Taiwanese suppliers are critical within our supply chain.

Geopolitical and trade · Political instability and government changes

We are subject to potential political, legal and economic instability in Hong Kong. We generated 28% of our revenue in Hong Kong in fiscal 2026. On June 30, 2020, The Law of the People's Republic of China on Safeguarding National Security Law in the Hong Kong Special Administrative Region (the Hong Kong National Security Law) became effective.