increasing capital requirements for building and operating new fabrication plants and customers’ ability to raise the necessary capital, particularly when financial market conditions are difficult;

differences in growth rates among the semiconductor, display and solar industries;

the increasing importance of establishing, improving and maintaining strong relationships with customers;

changes in end demand for electronic products over time and the effect of these changes on customers’ businesses and, in turn, on demand for Applied’s products;

abrupt and unforeseen shifts in the nature and amount of customer and end-user demand;

the increasing cost and complexity for customers to move from product design to volume manufacturing, which may slow the adoption rate of new manufacturing technology;

the need to continuallymust reduce the total cost of manufacturing system ownership, due in part to greater demand for lower-cost consumer electronics compared to business information technology spending;

the heightened importance to customers of system reliability and productivity and the effect on demand for fabrication systems as a result of their increasing productivity, device yield and reliability;

the increasing importance of, and difficulties in, developing products with sufficient differentiation to influence customers’ purchasing decisions;

requirements for shorter cycle times for the development, manufacture and installation of manufacturing equipment;

price and performance trends for semiconductor devices, LCDs and solar PVs, and the corresponding effect on demand for such products;

the increasing importance of the availability of spare parts to maximize the time that customers’ systems are available for production;

the increasing role for and complexity of software in Applied products; and

the increasing focus on reducing energy usage and improving the environmental impact and sustainability associated with manufacturing operations.

the increasing cost of research and development due to many factors, including: decreasing linewidths on a chip; the use of new materials such as cobalt and yttrium; new and more complex device structures; more applications and process steps; increasing chip design costs; and the increasing cost and complexity of integrated manufacturing processes;

the cost, technical complexity and timing of a proposed industry transition from 300mm to 450mm wafers, and the resulting effect on demand for manufacturing equipment and services;

the need to reduce product development time, despite the increasing difficulty of technical challenges;

the growing number of types and varieties of semiconductors and number of applications across multiple substrate sizes;

changes in demand and differing market growth rates for (i) different electronic products, such as tablets, smartphones, and personal computers, and in turn (ii) different applications/devices, such as NAND Flash, DRAM, logic, foundry and MRAM, and the resulting effect on customers’ capital spending patterns and on Applied’s ability to compete in these market segments;

the increasing cost and complexity for semiconductor manufacturers to move more technically advanced capability and smaller linewidths to volume manufacturing, and the resulting impact on the rates of technology transition and investment in capital equipment;

challenges associated with generating organic growth in light of semiconductor manufacturers’ decreasing rate of capital expenditures as a percentage of revenue, and manufacturers’ increasing allocation of capital investment to markets that Applied does not serve, such as lithography;

the increasing frequency and complexity of technology transitions and inflections, such as ALD, 3-D transistors, advanced interconnect, wafer-level packaging, and extreme ultraviolet lithography (EUV);

shorter cycle times between customers’ order placement and product shipment, which may lead to inventory write-offs and manufacturing inefficiencies that decrease gross margin;

technology developments in related markets, such as lithography, to which Applied may need to adapt;

competitive factors that make it difficult to enhance market position;

the importance of increasing market positions in larger market segments, such as etch and inspection;

the increasing concentration of wafer starts in one country, Korea, where Applied’s service penetration and service-revenue-per-wafer-start have been lower than in other regions; and

the increasing fragmentation of semiconductor markets, leading certain markets to become too small to support the cost of a new fabrication plant, while others require less technologically advanced products.

the planned expansion of manufacturing facilities in China by Chinese display manufacturers and manufacturers from other countries, and the ability of non-Chinese manufacturers to obtain government approvals on a timely basis;

the slowing rate of transition to larger substrate sizes for LCDs and the resulting effect on capital intensity in the industry and on Applied’s product differentiation, gross margin and return on investment;

the increasing importance of new types of displays, such as low temperature polysilicon (LTPS) and OLEDs, and new touch panel films, such as anti-reflective and anti-fingerprint;

the likelihood and timing of a transition to a new CVD backplane technology, metal oxide; and

uncertainty with respect to future LCD technology end-use applications and growth drivers.

the need to continually decrease the cost-per-watt of electricity produced by solar PV products to at or below grid parity by, among other things, reducing operating costs and increasing throughputs for solar PV manufacturing,align its cost structure with prevailing market conditions; effectively manage its supply chain; and improving the conversion efficiency of solar PVs;

the impact on demand for solar PV products arising from the cost of electricity generated by solar PVs compared to the cost of electricity from the existing grid or other energy sources;

the varying energy policies of governments around the worldmotivate and their effect in influencing the rate of growth of the solar PV market, including the availability and amount of government incentives for solar power such as tax credits, feed-in tariffs, rebates, renewable portfolio standards that require electricity providers to sell a targeted amount of energy from renewable sources, and goals for solar installations on government facilities;

the filing by U.S. solar manufacturers of a regulatory unfair trade action against solar PVs from China, where most of Applied’s solar equipment sales are concentrated, which could result in the U.S. government’s assessment of duties on solar cells and modules imported from China or other outcomes and, in turn, adversely impact demand for Applied’s products;

the varying levels of operating and industry experience among solar PV manufacturers and the resulting differences in the nature and extent of customer support services requested from Applied;

challenges associated with marketing and selling manufacturing equipment and services to a diverse and diffuse customer base;

the growth of market segments in which Applied does not participate, such as passivation and furnaces;

the increasing number of government-affiliated entities in China that are becoming customers;

the cost of polysilicon and other materials; and

access to affordable financing and capital by customers and end-users.

the need to devote additional resources to develop new products for, and operate in, new markets;

the need to develop new sales and marketing strategies and cultivate relationships with new customers;

differing rates of profitability and growth among multiple businesses;

Applied’s ability to anticipate demand, capitalize on opportunities, and avoid or minimize risks;

the complexity of managing multiple businesses with variations in production planning, execution, supply chain management and logistics;

the adoption of new business models;

the need to undertake activities to grow demand for end-products;

the need to develop and successfully implement adequate new business processes and systems;

Applied’s ability to rapidly expand its operations to meet increased demand and the associated effect on working capital;

new materials, processes and technologies;

the need to attract, motivate and retain employees with skills and expertise in these new areas;

new and more diverse customers and suppliers, including some with limited operating histories, uncertain and/or limited funding, evolving business models and/or locations in regions where Applied does not have, or has limited, operations;

different customer service requirements;

new or different competitors with potentially more financialoccasion receive, pricing, payment, intellectual property-related, or other resources, industry experience and/or established customer relationships;

entry into new industries and countries, with differing levels of government involvement, laws and regulations, and business, employment and safety practices;

third parties’ intellectual property rights; and

the needcommercial terms that are less favorable to comply with, or work to establish, industry standards and practices.

the need for an effective business continuity plan if a disaster or other event occurs that could disrupt business operations;

the need to continually improve the Company’s operating cost structure;

difficulties and uncertainties associated with the entry into new countries;

requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and/or restrictions on the conduct of Applied’s existing business or the acquired business;

ineffective integration of operations, systems, technologies, products or employees of an acquired business;

inability to realize anticipated synergies or other benefits;

failure to commercialize purchased technologies;

initial dependence on unfamiliar supply chains or relatively small supply partners;

inability to capitalize on characteristics of new markets that may be significantly different from Applied’s existing markets and where competitors may have stronger market positions and customer relationships;

failure to attract, retain and motivate key employees from the acquired business;

exposure to new operational risks, rules, regulations, worker expectations, customs and practices to the extent acquired businesses are located in regions where Applied has not historically conducted business;

challenges associated with managing new, more diverse and more widespread operations, projects and people;

inability to obtain and protect intellectual property rights in key technologies;

inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, and/or environmental, health and safety, anti-corruption, human resource, or other policies or practices;

impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance of the segment;

the risk of litigation or claims associated with a proposed or completed transaction;

unknown, underestimated and/or undisclosed commitments or liabilities; and

the inappropriate scale of acquired entities’ critical resources or facilities for business needs.