Risks

Risk Mitigation

Markets and customers

Macro economic uncertainties, slow demand and disruption by natural disasters, could impact our business and customer demand. This may lead to lower volumes and decreased profitability.

• No single customer accounts for double digit percentage of u‑blox’s revenue
• Continual expansion of the customer base
• Continuous monitoring and assessment of market developments and needs
• Focus on most promising market sectors

Competition

Our markets are highly competitive in terms of pricing, product features, and service quality. In many sectors we face price pressures that could negatively impact our results.

• Review and replan R&D activities every 6 months
• Foster a high level of innovation
• Maintain high technical support capabilities globally
• Product range well structured to provide customers with solutions tailored to their needs

Intellectual property

Competitors or other parties in our industry may seek to yield benefits from our technical innovations by duplicating our products.

• Maintain a high level of trade secrecy
• Protect our current business and IP from being copied or used by others by appropriate use of patents, copyrights, and trade secrets on a global basis
• Accelerate the innovation rate
• Manage third party licenses

Product quality

Poor product quality may result in reputational and brand damage, resulting in lower volumes and financial claims.

• Continual expansion of the quality management system and laboratory capabilities
• Thorough testing and qualification at our own laboratory facilities
• Maintain high technical support level globally
• Excellent long-term manufacturing partners
• Guide and manage the quality systems of our suppliers

 Innovation

u‑blox's competitive position, sales and earnings depend significantly on the development of new products and technologies. Failure to achieve our aggressive R&D and innovation goals could negatively impact our ability to grow.

• Continual stream of new products launched yearly with targeted features to several markets
• Expensed CHF 87.1 million, or 26.1% of revenues in R&D in 2020
• Early engagement of lead customers
• Intensive market communication

Personnel

Skilled and dedicated employees are essential for the success of our growth- oriented corporate strategy. The loss of these individuals could disrupt the company’s operations.

• Globally positioning the company as an attractive employer
• Develop careers and increase knowledge and talent
• Regular employee satisfaction survey
• Maintain attractive employment conditions and compensation packages plus a stock option plan
• Offer career path opportunities group wide

Suppliers

u‑blox outsources its capital-intensive production to leading production suppliers around the world. Rising raw material prices, capacity constraints, or business interruption could lead to a shortage of supply with negative consequences for our business.

• Lean supply base with few key suppliers
• Long-term relationships with suppliers and close interaction to plan and manage capacity
• Inventory buffers to respond to unplanned demand fluctuations
• Close contact with customers to predict demands

Compliance

Non-compliant or unethical behavior could lead to reputational damage, fines, and liability claims.

• Active fostering of high ethical standards and membership in the UN Global Compact
• u‑blox Code of Conduct
• Anti-bribery policy
• Speak-up culture, formal compliance process and sanctions
• Sustainable supplier program containing regular risk assessments and inspections of production suppliers’ operations

Currency fluctuations

The majority of u‑blox's revenue material costs and R&D expenses are in US dollar currency.

• Foster natural hedging by matching revenue currency amounts with expense currency amounts

Credit

Credit risks arising from financial institutions and from customers could have a negative impact on u‑blox's financial performance.

• Individual risk assessment of customers and definition of appropriate credit lines
• Insurance for all customer credit lines
• Frequent and thorough follow-up on late payments
• Cash flow program to optimize liquidity and cash flow management

Liquidity

Failure in liquidity management may have a negative effect on u‑blox's financial performance.

• Monitor our liquidity continually
• Cash flow program to optimize liquidity and cash flow management
• Efficient use of available cash through cash pooling
• Manage OPEX tightly to achieve positive free cash flow