High-tech companies worry about supply chain risk

U.S.-based technology companies are increasingly anxious about their supply chains—so much so, in fact, that they publicly disclose those concerns in the annual financial reports they file with the U.S. Securities and Exchange Commission (SEC).

To find out what challenges high-tech companies are dealing with, the accounting and consulting firm BDO USA LLP examined the risk factors listed in the most recent SEC 10- K reports filed by the 100 largest, publicly traded U.S. technology companies. Those reports include such information as company history, organizational structure, executive compensation, and audited financial statements, among others.

As outlined in 2011 BDO Risk Factor Report on Technology Businesses, 86 percent of the studied companies cited supply chain concerns, including supplier relations, distribution, and material costs, as top risk factors. In a similar study conducted a year earlier, 75 percent of the technology companies had cited supply chain issues as a top risk. That works out to a 15-percent, year-onyear increase, the largest among all of the risk factors cited in the filings.

The most frequently mentioned risk in the survey, cited by 97 percent of the companies in their 10-K filings, was the combination of pricing pressures and consolidation in the technology sector. In second place, reported by 96 percent of the companies, was the U.S. economy.

Source: 2011 BDO Risk Factor Report or Technology Businesses, BDO USA (May 2011)