Super Micro Computer, Inc. Common StockSMCI

Economic and market conditions · Economic recession and downturns

Customer demand for our products may be impacted by weak macroeconomic conditions, inflation, stagflation, recessionary or lower-growth environments, high or rising interest rates, equity market volatility or other negative economic factors in the U.S. or other nations. For example, under these conditions or expectation of such conditions, our customers may cancel orders, delay purchasing decisions or reduce their use of our services.

Legal and litigation · Intellectual property disputes

From time to time, we are involved in lawsuits or other legal proceedings alleging patent infringement or other IP rights violations by us, our employees or parties that we have agreed to indemnify. An unfavorable ruling could include significant damages, invalidation of one or more patents, indemnification of third parties, payment of lost profits, or injunctive relief.

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

We derive significant tax benefits from non‑U.S. operations under current tax laws and incentives. Legislative changes, such as the Organization for Economic Co-operation and Development (the 'OECD') Pillar Two (15% minimum tax) framework, could reduce these benefits. Malaysia joined Pillar Two effective January 1, 2025.

Core operations · Capacity utilization and efficiency

We typically sell products pursuant to purchase orders rather than long-term purchase commitments. Some of our customers have, and others may in the future, cancel or defer purchase orders on short notice without incurring a significant penalty. If we overestimate customer demand, our excess or obsolete inventory may increase significantly, which would reduce our gross margin and adversely affect our financial results.

Core operations · Operational disruption and business continuity

Any failure, disruption or security breach or incident of or impacting our IT infrastructure or information management systems could have an adverse impact on our business and operations. Our business depends significantly on effective and efficient information management systems, and the reliability and security of our IT infrastructure are essential to the operation, health and expansion of our business.

Supply chain and procurement · Supplier financial distress and capability

In the event of a recession or threat of a recession our manufacturing partners, suppliers, distributors, and other third-party partners may suffer their own financial and economic challenges and as a result they may demand pricing accommodations, delay payment, or become insolvent, which could harm our ability to meet our customer demands or generate revenue.

Cybersecurity and data protection · Third party data security and vendors

In some cases, we may rely upon third-party providers of hosting, support and other services to meet our IT requirements. Any failure to manage, expand and update our IT infrastructure, including our enterprise resource planning ('ERP') system and other applications, any failure in the extension implementation or operation of this infrastructure, or any failure by our hosting and support partners or other third-party service providers in the performance of their services could materially harm our business.

Information management · Technology vendor dependence

In some cases, we may rely upon third-party providers of hosting, support and other services to meet our IT requirements. Any failure by our hosting and support partners or other third-party service providers in the performance of their services could materially harm our business.

Cybersecurity and data protection · Insider threats and access controls

Our systems may also be accessed by contractors, consultants, or other third-party vendors in connection with their services to us, and inconsistent screening, onboarding, or monitoring of such access could increase the risk of unauthorized access to our systems or data compromise. In addition, actions by our employees, service providers, partners, contractors, or others, whether malicious or in error, could affect the security of our systems and information.

Market position and competition · Pricing pressure and margin compression

Historically, these pricing pressures have led to a continued decline of average selling prices across our business and we expect that these historical trends will continue. Large orders are generally subject to intense competition and pricing pressure which can have an adverse impact on our margins and results of operations.

Strategic execution · Geographic expansion and market entry

Our international expansion efforts may not be successful. Our international operations expose us to risks and challenges that we would otherwise not face if we conducted our business only in the United States, such as localization of our systems and components, compliance with multiple, conflicting and changing governmental laws and regulations, and difficulties in staffing and the costs of managing foreign operations.

Customer and revenue · Customer retention and subscription renewal

We typically sell products pursuant to purchase orders rather than long-term purchase commitments. Some of our customers have, and others may in the future, cancel or defer purchase orders on short notice without incurring a significant penalty.

Customer and revenue · Changing customer preferences and behavior

Failure to meet the evolving needs of our industry and markets may adversely impact our financial results. Our products experience rapid changes in technology, customer requirements, competitive products, and industry standards.

Innovation and product development · Time to market and commercialization risks

The development of new, technologically advanced products is a complex and uncertain process requiring high levels of innovation and the accurate prediction of technology and market trends. The introduction of new products also often requires significant investment to ramp up production capacity, the benefit of which may not be realized if we are not successful in the production of such products or if customer demand does not develop as expected.

Strategic execution · Joint venture and partnership risks

Conflicts of interest may arise with Ablecom and Compuware, and they may adversely affect our operations. We may not negotiate or enforce contractual terms as aggressively with Ablecom or Compuware as we might with an unrelated party, and the commercial terms of our agreements may be less favorable than we might obtain in negotiations with third parties.

International and currency · Foreign exchange and currency exposure

Our growth into markets outside the United States exposes us to risks inherent in international business operations, such as foreign currency fluctuations and inflation, which could limit our future international sales or otherwise adversely impact our operations or our results of operations.

Capital structure and performance · Financial reporting and accounting risks

We have concluded that our internal control over financial reporting was not effective as of June 30, 2026 due to the existence of a material weakness in such controls. If we are unable to provide reliable and timely financial reports in the future or if our financial statements are restated, our business and reputation may be further harmed.

Market and investment · Market volatility and economic cycles

We believe that our financial and operating results will continue to be subject to fluctuation due to various factors, many of which are beyond our control. Revenue and margin variability due to potential volatility in emergent and rapidly evolving markets (such as AI), increased competition, challenging and inconsistent global macroeconomic environment.

Credit and liquidity · Credit risk and customer defaults

Our extended payment term arrangements with certain customers, the inability of some customers to make required payments, our ability to obtain credit insurance for customers with extended payment terms, and customer bad debt write-offs may affect our operating results.

Stakeholder relations · Investor relations and market confidence

Failure to meet our expectations or the expectations of our investors or security analysts is likely to cause our stock price to decline, as it has in the past, or substantial price volatility. Failure to timely file our SEC reports and make our current financial information available in the past has placed downward pressure on our stock price.