First Solar (FSLR) 10-K risk factor changes: FY2023 vs FY2022

- The [added: modification,] reduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and other support for on-grid solar electricity applications, or other public policies could negatively impact demand and/or price levels for our solar modules.

The imposition of tariffs on our products [added: or their related raw materials and components] could materially increase our costs to perform under our contracts with customers, which could adversely affect our results of operations.

For example, we estimate that in [removed: 2022] [added: 2023] approximately [removed: 160 GWDC] [added: 305 GW] of capacity was added by solar module manufacturers, primarily in China.

The [added: modification,] reduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and other support for on-grid solar electricity applications, or the impact of other public policies, such as tariffs or other trade remedies imposed on solar cells and [removed: modules,] [added: modules or related raw materials,] could negatively impact demand and/or price levels for our solar modules and limit our growth or lead to a reduction in our net sales or increase our costs, thereby adversely impacting our operating results.

The current rate is [removed: 14.5%.][added: 14.25%.]

The extension measure also provides an annual tariff-rate quota, whereby tariffs apply to imported crystalline silicon solar cells above the first 5.0 [removed: GWDC] [added: GW] of imports.

- *United States — Antidumping and countervailing duties on certain imported crystalline silicon PV cells and modules.* The United States currently imposes antidumping and countervailing duties [added: (“AD/CVD”)] on certain imported crystalline silicon PV cells and modules from China and Taiwan.

Such [removed: antidumping and countervailing duties] [added: AD/CVD] can change over time pursuant to annual reviews conducted by the U.S. Department [added: of Commerce (“USDOC”),]

[removed: of Commerce (“USDOC”),] and a decline in duty rates or USDOC failure to fully enforce U.S. [removed: antidumping and countervailing duty] [added: AD/CVD] laws could have an adverse impact on our operating results.

Conversely, [removed: affirmative final circumvention determinations] [added: effective enforcement] could positively impact our operating results.

- *India — Domestic and foreign imports.* [removed: India maintains an] [added: The] Approved List of Module Manufacturers (“ALMM”), which is set by the [removed: MNRE.][added: MNRE, was introduced in 2021 as a non-tariff barrier to incentivize domestic manufacturing of PV modules.]

Our ability to sell modules in the Indian market depends on the inclusion of our modules on the ALMM, and we currently expect that we will be included in the [removed: ALMM once we begin manufacturing solar panels in India.][added: ALMM.]

[removed: However, our] [added: Our] operating results could be adversely impacted if [added: such suspension is extended in future periods or if] the ALMM restriction is significantly relaxed to allow modules to be imported from countries that are part of the Association of Southeast Asian Nations.

[removed: Because the FSR is not effective until July 2023 and the European Commission has not yet issued any application guidance, it] [added: It] is not currently clear whether, and to what extent, the FSR could impact our business, financial condition, or results of operations.

[added: While the expected potential of the markets we are targeting is significant,] policy promulgation and market development are especially vulnerable to governmental inertia, political instability, the imposition or lowering of trade remedies and other trade barriers, geopolitical risk, fossil fuel subsidization, potentially stringent localization requirements, and limited available infrastructure.

For additional information, see the Risk Factor entitled, “The [added: modification,] reduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and other support for on-grid solar electricity applications, or the impact of other public policies, such as tariffs or other trade remedies imposed on solar cells and [removed: modules,] [added: modules or related raw materials,] could negatively impact demand and/or price levels for our solar modules and limit our growth or lead to a reduction in our net sales or increase our costs, thereby adversely impacting our operating results.” In addition, we believe that a significant percentage of our customers install systems as an investment, funding the initial capital expenditure through a combination of equity and debt.

We may be unable to [removed: fully] execute on our long-term strategic plans, which could have a material adverse effect on our business, financial condition, or results of operations.

- difficulty in competing successfully with other technologies, such as [added: crystalline silicon,] hybrid perovskites, tandem solar cells, or other thin films;

Refer also to the Risk Factors entitled, “Our substantial international operations subject us to a number of risks, including unfavorable political, regulatory, labor, and tax conditions in the United States and/or foreign countries,” “The [added: modification,] reduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and other support for on-grid solar electricity applications, or the impact of other public policies, such as tariffs or other trade remedies imposed on solar cells and [removed: modules,] [added: modules or related raw materials,] could negatively impact demand and/or price levels for our solar modules and limit our growth or lead to a reduction in our net sales or increase our costs, thereby adversely impacting our operating results,” and “We may be unable to generate sufficient cash flows or have access to the sources of external financing necessary to fund planned capital investments in manufacturing capacity and product development.”

Additionally, certain module manufacturers have introduced n-type mono-crystalline modules, such as tunnel oxide passivated contact [removed: (“TOPCon”)] modules, which are expected to provide certain improvements to module efficiency, temperature coefficient, and bifacial performance, and claim to provide certain degradation advantages compared to other mono-crystalline modules.

[added: As a result, we may] be unable to sell our solar modules at attractive prices, or for a profit, during any period of excess supply of solar modules, which would reduce our net sales and adversely affect our results of operations.

In addition, if we increase the number of installations in extreme climates, we may experience increased [removed: failure rates due to deployment into such field conditions.]

We need to continue to invest significant financial resources in R&D to [removed: continue to] [added: further] improve [added: the energy yield of] our [removed: module conversion efficiencies] [added: modules] and otherwise keep pace with technological advances in the solar industry.

Furthermore, certain of our contracts with customers may include transaction price adjustments associated with future module technology improvements, including [removed: new product designs and] enhancements to certain energy related attributes.

If we are unable to pass such cost increases to our customers, a substantial increase in [added: prices or any limitations or disruptions in our supply chain could adversely impact our profitability and long-term growth objectives.]

Consequently, we may seek to raise additional funds through the issuance of equity, equity-related, or debt [removed: securities or] [added: securities,] through obtaining credit from financial institutions to fund, together with our traditional sources of liquidity, the costs of developing and manufacturing our current or future [removed: products.][added: products, or through the sale of tax credits.]

[removed: We estimate the cost of our collection and recycling obligations based on the present value of the expected future cost of collecting and recycling the solar modules, which includes estimates for the cost of packaging] materials; the cost of freight from the solar module installation sites to a recycling center; material, labor, and capital costs; by-product credits for certain materials recovered during the recycling process; the estimated useful lives of modules covered by the program; and the number of modules expected to be recycled.

[added: Our existing patents] and future patents could be challenged, invalidated, circumvented, or rendered unenforceable.

We are in the process of expanding our manufacturing capacity by approximately [removed: 11 GWDC] [added: 8 GW] including the construction of our [removed: third] [added: fourth] manufacturing facility in the United States, which [removed: commenced commercial production of modules in early 2023; our first manufacturing facility in India, which] is expected to commence operations in the second half of [removed: 2023;] [added: 2024;] our [removed: fourth] [added: fifth] manufacturing facility in the United States, which is expected to commence operations in late [removed: 2024;] [added: 2025;] and the expansion of our manufacturing footprint at our existing facilities in [removed: Ohio.][added: Ohio, which is expected to be completed in the first half of 2024.]

If we cannot successfully execute on our current capacity expansion plans, we may incur significant costs in excess of our [removed: current plans to invest approximately $2.7 billion in the aggregate] [added: expected investment] for these new facilities.

For example, we currently expect to qualify for the advanced manufacturing production credit under Section 45X of the IRC, which provides certain specified benefits for solar modules and [added: certain] solar module components manufactured in the United States and sold to third parties.

Such credit may be refundable [added: by the IRS] or transferable to a third party and is available from 2023 to 2032, subject to phase down beginning in 2030.

There are currently several critical and complex aspects of the IRA pending [added: further] technical guidance and [added: final] regulations from the [removed: Internal Revenue Service (“IRS”)] [added: IRS] and [added: the] U.S. Treasury Department, including, but not limited to, the following:

- *Total credit under Section 45X.* The [removed: guidance is] [added: final regulations are] expected to confirm that a vertically-integrated solar module manufacturer is entitled to the sum of the credit amounts for each eligible component that is integrated into the solar module, including the credit amounts for the PV wafer, cell, and module, provided such components are produced in the United States.

*•Standardization of per-watt measurements.* The [removed: guidance is] [added: final regulations are] expected to confirm and/or clarify the method by which wattage is calculated to determine the applicable credit amounts for PV cells and modules.

The [removed: guidance is] [added: final regulations are] expected to create meaningful consistency for credit calculation by standardizing the process for determining solar module nameplate capacity.

[removed: *•Direct] [added: - *Direct] payment and transfer elections.* The [removed: guidance is] [added: final regulations are] expected to clarify whether a taxpayer’s direct payment election with respect to the Section 45X credit applies only to a single 5-year period or whether the taxpayer is entitled to make a second direct payment election for a subsequent 5-year period during the 10-year credit period.

This clarification will impact whether we can monetize the credit in the form of cash payments directly from the government throughout the 10-year credit period, or whether we would be required to monetize the credit through a sale to another taxpayer or taxpayers [removed: during the subsequent] [added: after a single] 5-year [removed: period.][added: period for the direct payment.]

The [removed: guidance is] [added: final regulations are] also expected to clarify [added: the definition of a Section 45X manufacturing facility and] whether the taxpayer is entitled to make the direct payment election on a facility-by-facility basis, especially with respect to new manufacturing facilities that commence production after the taxpayer has made the initial direct payment election.

Such clarification may impact the extent to which we will be able to make additional direct payment elections across multiple [added: tax] years for multiple manufacturing facilities.

Although module average selling prices in many global markets have generally declined for several years, near-term module pricing in the United States, our primary market, remains strong primarily due to the rising demand for domestically manufactured modules as a result of the IRA.

In August 2023, the USDOC issued final affirmative circumvention rulings, finding that solar panels completed in Cambodia, Malaysia, Thailand, and Vietnam using parts and components produced in China circumvent the pre-existing AD/CVD orders on China.

Such duties are set to apply to circumventing imports on or after June 7, 2024, as well as any circumventing imports prior to that date in violation of certain requirements, including that they be imported, used, and installed by certain dates in 2024.

Our operating results could be adversely impacted if the USDOC and other U.S. government agencies do not enforce the affirmative circumvention rulings as expected or if pending litigation challenges result in a modification of the rulings.

*•United States — Antidumping and countervailing duties on certain imported aluminum extrusions.* In October 2023, a coalition of U.S. aluminum extruders and a labor union filed AD/CVD petitions with the USDOC related to aluminum extrusions from 15 countries.

The USDOC has initiated investigations based on the petitions.

First Solar imports certain items that appear to be within the scope of the investigations.

Our operating results could be adversely impacted if the USDOC imposes duties on such imports.

In March 2023, the government of India temporarily suspended the ALMM, thereby exempting solar project developers from procuring modules from companies included in the ALMM.

In May 2023, the ALMM was amended to include a new minimum module efficiency threshold of 19% for most applications and 20% for utility-scale applications.

However, our modules may be initially precluded from utility-scale applications in India until we achieve the minimum module efficiency mentioned above.

- *India — Import duty tariffs.* In April 2022, the Indian government began imposing import duty tariffs of 40% on solar modules and 25% on solar cells.

In connection with such tariffs, the Indian government has also implemented a regulation mandating that any solar project with federal utility, state utility, or commercial and industrial off-takers that interconnects through government owned transmission lines only use solar modules from manufacturers included in the ALMM, and a requirement that all federal procurement of solar modules be only from cells and modules produced domestically.

In July 2023, the FSR became effective, and the European Commission issued application guidance.

- difficulty in realizing the potential benefits of strategic acquisitions and investments;

failure rates due to deployment into such field conditions.

For example, we expect to complete our lead line implementation of the copper replacement (“CuRe”) program in the fourth quarter of 2024.

The CuRe program is intended to improve our current semiconductor structure by replacing copper with certain other elements that are expected to enhance module performance by improving its bifaciality characteristics, improving its temperature coefficient, and improving its warranted degradation.

These technology attributes must be proven to be effective in real world operating conditions.

We may encounter unanticipated challenges as we implement design and process changes in connection with the CuRe program and other technology improvements.

If there is a delay or disruption in the construction or expansion of our manufacturing facilities, we may incur costs due to the postponed production generated by these facilities.

We estimate the cost of our collection and recycling obligations based on the present value of the expected future cost of collecting and recycling the solar modules, which includes estimates for the cost of packaging

Although we have implemented policies and procedures designed to ensure compliance with the laws, regulations, and policies in each jurisdiction in which we operate, there can be no assurance that all of our employees, contractors, service providers, business partners, and agents will comply with these laws, regulations, and policies.

On May 12, 2023, the U.S. Treasury Department and the IRS issued initial guidance in the form of an IRS notice providing initial guidance on the domestic content bonus credit under Sections 45, 48, 45Y, and 48E of the IRC.

No further guidance or regulation has been issued on the domestic content bonus credit.

On June 21, 2023, the U.S. Treasury Department and the IRS issued notices of proposed rulemaking and public hearing and temporary regulations providing initial guidance on the direct payment election under Section 6417 of the IRC and the elective transfer provisions of Section 6418 of the IRC.

On December 15, 2023, the U.S. Treasury Department and the IRS issued a notice of proposed rulemaking and public hearing providing initial guidance on the Section 45X credit confirming key aspects of the credit, including (i) that a vertically-integrated solar module manufacturer is entitled to the sum of the credit amounts for each eligible component that is integrated into the solar

module, (ii) the determination of the credit amounts based on standard test conditions, and (iii) the definition of a Section 45X manufacturing facility.

The temporary or proposed regulations under Sections 45X, 6417, and 6418 of the IRC have not been finalized.

than one country, which could have a material adverse effect on our business, financial condition, cash flows, and reputation.

As such actions would be impractical, this type

Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social, and governance matters, that could expose us to numerous risks.

Companies across many industries are facing increasing scrutiny related to their environmental, social and governance (“ESG”) practices.

Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments.

While our vision is to lead the world’s sustainable energy future through solar technology that is eco-efficient and socially responsible, if our ESG practices do not meet investor or other industry stakeholder expectations, which continue to evolve, we may incur additional costs and our brand, business, and ability to attract and retain qualified employees may be harmed.

Furthermore, customer, investor, regulatory, and employee expectations in areas such as ESG have been rapidly evolving and increasing.

Specifically, regulatory bodies around the globe continue to develop ESG reporting requirements, many of which will be subject to independent audits.

For example, the SEC, the EU, and other regulators are considering rules requiring the disclosure of certain ESG matters, and California enacted new environmental disclosure laws in October 2023 that will generally require additional disclosure and reporting by 2026.

The new California laws, the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act, each impose additional climate-related reporting requirements on large companies conducting business in the state of California.

We expect we will be subject to these new laws, which impose extensive reporting obligations about greenhouse gas emissions and climate-related financial risks.

Although module average selling prices in many global markets have declined for several years, recent module spot pricing has increased, in part, due to trade measures and policies, government regulations, raw material availability, and supply chain disruptions.

In March 2022, the USDOC initiated inquiries concerning alleged circumvention of antidumping and countervailing duties on Chinese imports by crystalline silicon PV cells and module imports assembled and completed in Cambodia, Malaysia, Thailand, and Vietnam.

In June 2022, the U.S. President declared an emergency with respect to threats to electricity generation capacity and authorized the U.S. Secretary of Commerce to consider permitting the importation of crystalline silicon PV products from those four countries free of antidumping and countervailing duties for 24 months, or until the emergency has terminated.

The USDOC has issued regulations implementing that moratorium on antidumping and countervailing duties in the event that it finds circumvention with respect to crystalline silicon PV products assembled and completed in those four countries.

In December 2022, the USDOC issued affirmative preliminary determinations finding “country-wide” circumvention with respect to those four countries, but it also found that certain companies were not circumventing the antidumping and countervailing duties.

The USDOC is scheduled to issue its final circumvention determinations in May 2023, subject to possible extension.

We cannot predict what further actions the USDOC will take with respect to these circumvention inquiries.

Our operating results could be adversely impacted if the USDOC makes negative circumvention determinations or refrains from imposing antidumping and countervailing duties on imports covered by affirmative circumvention determinations.

While the expected potential of the markets we are targeting is significant,

As a result, we may

For example, the successful launch of our Series 7 module technology, which we began producing at our third manufacturing facility in the U.S. and we expect to produce at our first manufacturing facility in India, is sensitive to changes in the final product size and module mounting structure, among others.

While we believe that we will be able to manage these uncertainties, we may encounter unanticipated challenges as we implement design and process changes in connection with this new module series.

prices or any limitations or disruptions in our supply chain could adversely impact our profitability and long-term growth objectives.

Our existing patents

These clarifications may impact the timing and extent of cash benefits available to us and, if the

entities, and others (e.g., the FCPA and the U.K. Bribery Act) extend their application to activities outside their country of origin.

Examples of such regulations include the following:

- In November 2022, the government of India, through its Ministry of Environment, Forest and Climate Change and MNRE, introduced legislation intended to expand the scope of existing electronic waste (“e-waste”) regulations, including PV solar modules.

This regulation, as subsequently amended in January 2023, will also create extended producer obligations for mandatory recycling of PV solar waste at the end of its useful life.

These regulations are expected to come into effect on April 1, 2023.

At this time, the recycling targets, monitoring mechanism, and determination of who finances the recycling costs are unclear, and, depending on the final procedures and rules, such regulations could negatively impact our financial condition and results of operations in India.

The COVID-19 pandemic continues to impact various countries throughout the world, including those in which we do business or have operations, though the scope and severity of COVID-19 continues to evolve.

With the exception of certain manufacturing charges incurred in 2020 and 2021, the COVID-19 pandemic and its effects on the economy did not materially impact our business, financial condition, and/or results of operations.

- we may at any time be ordered by governmental authorities, or we may determine, based on our understanding of the recommendations or orders of governmental authorities, that we have to curtail or cease business operations or activities, including manufacturing and R&D activities; and

- the failure of our suppliers or vendors to supply materials or equipment, or the failure of our vendors to install, repair, or replace our specialized equipment, due to any public health threat and related containment measures, may idle, slowdown, shutdown, or otherwise cause us to adjust our manufacturing capacity, and the availability and cost of logistics services associated with the procurement of raw materials or equipment used in our manufacturing process and the shipping, handling, storage, and distribution of our modules may require us to adjust our module manufacturing plans or module delivery commitments, which may result in additional unplanned charges.

However, these arrangements permit the associates to terminate their employment with us upon little or no notice.

The proposed rule would make it illegal for an employer to enter into, attempt to enter into, or maintain a non-competition provision.

It would also require an employer to rescind any existing non-competition provisions.

The proposed rule is subject to a public comment period through March 10, 2023, after which the FTC may vote to implement the proposed rule or may update or revise it based on the comments received and the FTC’s further analysis of the issue.

For example, certain of our net sales in 2022 were denominated in foreign currencies, such as Japanese yen and Euro, and we expect to continue to have net sales denominated in foreign currencies in the future, such as Indian rupee.

For example, in January 2022, the U.S. government published new regulations in the U.S. Federal Register to address various aspects of foreign tax credit regimes, including, among other things, guidance related to the disallowance of credits or deductions for foreign income taxes.

These regulations, which became effective in March 2022, contain certain provisions that are applicable for periods prior to the effective date, and the final effects could result in material income tax expense in future periods.

insurance policies.

For example, the General Data Protection Regulation, a broad-based data privacy regime enacted by the European Parliament, which became effective in May 2018, imposed new requirements on how we collect, process, transfer, and store personal data, and also imposed additional obligations, potential penalties, and risk upon our business.

Additionally, the California Consumer Privacy Act, which became effective in January 2020, imposed similar data privacy requirements.

This discussion and analysis does not address certain items in respect of the year ended December 31, [removed: 2020.][added: 2021.]

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, [removed: 2021] [added: 2022] for comparative discussions of our results of operations and liquidity and capital resources for the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

Certain of our financial results and other key operational developments for the year ended December 31, [removed: 2022] [added: 2023] include the following:

The [removed: decrease] [added: increase] in net sales was primarily attributable to [removed: sales of certain projects in the United States and Japan in the prior period, the prior period settlement of] an [removed: outstanding indemnification arrangement associated with] [added: increase in] the [removed: sale of one] [added: volume] of [removed: our projects,] [added: modules sold to third parties] and [removed: a decrease] [added: an increase] in the average selling price per [removed: watt,] [added: watt sold,] partially offset by [removed: an increase in] the [removed: volume] [added: sale] of [removed: modules sold to third parties.][added: our Luz del Norte PV solar power plant in the prior year.]

[removed: -] Gross profit [removed: decreased 22.3] [added: increased 36.5] percentage points to [removed: 2.7%] [added: 39.2%] in [removed: 2022] [added: 2023] from [removed: 25.0%] [added: 2.7%] in [removed: 2021] [added: 2022] primarily due to [added: (i) the advanced manufacturing credit mentioned above, (ii)] a decrease in [added: sales freight costs, (iii) an increase in] the average selling price per watt of our modules, [removed: the volume of higher gross profit projects sold during] [added: (iv) continued module cost reductions, and (v)] the prior [removed: period, an increase in sales freight, demurrage,] [added: period sale] and [removed: detention charges, an] [added: related] impairment [removed: loss for our] [added: of the] Luz del Norte [removed: PV solar power plant, and the prior period settlement of the indemnification matter mentioned] [added: project described] above.

Such expansion plans, in combination with our previously announced expansion plans, are expected to increase our manufacturing capacity by approximately [removed: 11 GWDC] [added: 8 GW] by [removed: 2025.][added: 2026.]

[removed: Additionally, recently] [added: Recently] enacted government support programs, such as the IRA discussed [removed: above,] [added: previously,] have contributed [added: and are expected] to [added: continue to contribute to] this momentum by providing solar module manufacturers, project developers, and project owners with various incentives to accelerate the ongoing transition to clean energy.

*Supply and demand.* As a result of the market opportunities [added: and increased demand] described above, we are in the process of expanding our manufacturing capacity by approximately [removed: 11 GWDC,] [added: 8 GW,] including the construction of our [removed: third] [added: fourth] manufacturing facility in the United States, which [removed: commenced commercial production of modules in early 2023; our first manufacturing facility in India, which] is expected to commence operations in the second half of [removed: 2023;] [added: 2024;] our [removed: fourth] [added: fifth] manufacturing facility in the United States, which is expected to commence operations in late [removed: 2024;] [added: 2025;] and the expansion of our manufacturing footprint at our existing facilities in [removed: Ohio.][added: Ohio, which is expected to be completed in the first half of 2024.]

[removed: In the aggregate, we] believe manufacturers of solar cells and modules, particularly those in China, have significant installed production capacity, relative to global demand, and the ability for additional capacity expansion.

In light of such market realities, we continue to focus on our strategies and points of differentiation, which include our advanced module technology, our manufacturing [removed: process,] [added: process and distributed manufacturing presence,] our R&D capabilities, the sustainability advantage of our modules, and our financial stability.

This competition may result in an environment in which pricing falls rapidly, [removed: thereby] [added: which could] potentially [removed: increasing] [added: increase] demand for solar energy solutions but [removed: constraining] [added: constrain] the ability for project developers and module manufacturers to sustain meaningful and consistent profitability.

Our results of operations could be adversely affected if competitors reduce pricing [removed: to levels] below their costs, bid aggressively low prices for module sale agreements, or are able to operate at minimal or negative operating margins for sustained periods of time.

Solar module manufacturers compete with one another on sales price per watt, which may be influenced by several module value attributes, including [added: energy yield,] wattage (through a larger form factor or an improved conversion efficiency), [removed: energy yield,] degradation, sustainability, and reliability.

Sales price per watt may also be influenced by warranty [removed: terms and] [added: terms,] customer payment [removed: terms.][added: terms, and/or module content attributes.]

[added: - *Bifacial.*] While conventional solar modules are monofacial, meaning their ability to produce energy is a function of direct and diffuse irradiance on their front side, most module manufacturers offer bifacial modules that also capture diffuse irradiance on the back side of a module.

Bifaciality compromises nameplate efficiency, but by converting both front and rear side irradiance, such technology may improve the overall energy production of a module relative to nameplate efficiency when applied in certain applications, which could potentially lower the overall LCOE of a system when compared to systems using [removed: conventional] [added: monofacial] solar [removed: modules, including the modules we currently produce.][added: modules.]

[removed: When deployed in utility-scale applications, our modules provide energy at a lower LCOE compared] to traditional forms of energy generation, making them an attractive alternative to or replacement for aging fossil fuel-based generation resources.

[removed: This] [added: However, this] focus on utility-scale module offerings exists within a current market environment that includes rooftop and distributed generation [removed: solar.][added: solar, which may influence our future offerings.]

We believe that utility-scale solar will continue to be a compelling offering [removed: for companies with technology] and [removed: cost leadership and] will continue to represent an increasing portion of the overall electricity generation mix.

[removed: For example, we] [added: We] continue to evaluate opportunities to develop and leverage other solar cell technologies in multi-junction applications that [removed: utilize] [added: combine] our thin film PV [removed: technology.][added: technology with another high efficiency PV semiconductor, with each layer optimized for a different range of the solar spectrum.]

Among other things, the financial incentives provided by the IRA [removed: are expected to] [added: have] significantly [removed: increase] [added: increased] demand for modules manufactured in the United States.

The financial incentives provided by the IRA [removed: are] [added: have] also [removed: expected to significantly increase] [added: increased] demand for solar modules in general due to the incremental tax credit available for the qualified production of clean hydrogen that is powered by renewable resources.

Given the complexities of the IRA, [removed: which is pending technical guidance and regulations from the IRS and U.S. Treasury Department,] we continue to evaluate the extent of benefits available to us, which we expect will favorably impact our results of operations in future periods.

For example, we currently expect to qualify for the advanced manufacturing production credit under Section 45X of the IRC, which provides certain specified [added: benefits for solar modules and solar module components manufactured in the United States and sold to third parties.]

[added: For example, we currently expect to qualify for the advanced manufacturing production credit under Section 45X of the IRC, which provides certain specified] benefits for solar modules and [added: certain] solar module components manufactured in the United States and sold to third parties.

Such [removed: credit, which] [added: credit] may be refundable [removed: to us] [added: by the IRS] or transferable to a third [removed: party,] [added: party and] is available [removed: through] [added: from 2023 to] 2032, subject to phase down beginning in 2030.

If these expected financial benefits vary significantly from our assumptions, our business, financial condition, and results of operations could be adversely affected.” [added: See Note 9.]

[removed: - *India.* In September 2022, the government of India approved an expansion to its] [added: The] PLI scheme [added: is expected] to [added: provide aggregate funding of] INR [removed: 195] [added: 185] billion [removed: ($2.5] [added: ($2.3] billion), [added: of] which [removed: is intended] [added: INR 11.8 billion ($143 million) was allocated] to [added: First Solar, to] promote the manufacturing of high efficiency solar modules in India and to reduce India’s dependency on foreign imports of solar modules.

Under the PLI scheme, manufacturers [removed: are] [added: were] selected through a competitive bid process and [added: may be entitled to] receive certain cash incentives over a five-year period following the commissioning of their manufacturing facilities.

At this time, it is uncertain [removed: whether and] to what extent we may qualify for such incentives.

“Risk Factors – The [added: modification,] reduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and other support for on-grid solar electricity applications, or the impact of other public policies, such as tariffs or other trade remedies imposed on solar cells and [removed: modules,] [added: modules or related raw materials,] could negatively impact demand and/or price levels for our solar modules and limit our growth or lead to a reduction in our net sales or increase our costs, thereby adversely impacting our operating results.” [removed: Separately, the U.S. President also authorized the use of the Defense Production Act to expand domestic production of clean energy technologies.]

“Risk Factors – The [added: modification,] reduction, elimination, or expiration of government subsidies, economic incentives, tax incentives, renewable energy targets, and other support for on-grid solar electricity applications, or the impact of other public policies, such as tariffs or other trade remedies imposed on solar cells and [removed: modules,] [added: modules or related raw materials,] could negatively impact demand and/or price levels for our solar [added: modules and limit our growth or lead to a reduction in our net sales or increase our costs, thereby adversely impacting our operating results.”]

[removed: To mitigate such costs and better meet our customer commitments, we] [added: We] may [added: also] adjust our shipping plans to include additional lead times for module deliveries and/or utilize our network of U.S. distribution centers.

[removed: We are also employing] [added: To mitigate certain logistics costs, we employ] module contract structures that provide additional consideration to us if the cost of logistics services, excluding demurrage and detention, exceeds a defined threshold.

As of December 31, [removed: 2022,] [added: 2023,] we had entered into contracts with customers for the future sale of [removed: 61.4 GWDC] [added: 78.3 GW] of solar modules for an aggregate transaction price of [removed: $17.7] [added: $23.3] billion, which we expect to recognize as revenue through [removed: 2029] [added: 2030] as we transfer control of the modules to the customers.

Such volume includes contracts for the sale of [removed: 31.5 GWDC] [added: 39.1 GW] of solar modules that include transaction price adjustments associated with future module technology improvements, including [removed: new product designs and] enhancements to certain energy related attributes.

Based on these potential technology improvements, the contracted module volumes as of December 31, [removed: 2022,] [added: 2023,] the expected timing such technology improvements are incorporated into our manufacturing process, and the expected timing of module deliveries, such adjustments, if realized, could result in additional revenue of up to $0.5 billion, the majority of which would be recognized in 2025, 2026, and 2027.

In addition to these price adjustments, certain of our contracts with customers may include favorable price adjustments associated [removed: with the extension of the ITC and/or sales freight in excess of a defined threshold.]

Additionally, we [added: recently commenced production of Series 7 modules at our third manufacturing facility in Ohio and our first manufacturing facility in India, and we] are in the process of expanding our manufacturing capacity by approximately [removed: 11 GWDC,] [added: 8 GW,] including the construction of our [removed: third] [added: fourth] manufacturing facility in the United States, which [removed: commenced commercial production of modules in early 2023; our first manufacturing facility in India, which] is expected to commence operations in the second half of [removed: 2023;] [added: 2024;] our [removed: fourth] [added: fifth] manufacturing facility in the United States, which is expected to commence operations in late [removed: 2024;] [added: 2025;] and the expansion of our manufacturing footprint at our existing facilities in [removed: Ohio.][added: Ohio, which is expected to be completed in the first half of 2024.]

The following table sets forth our consolidated statements of operations as a percentage of net sales for the years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020:][added: 2021:]

- Net sales for 2023 increased by 27% to $3.3 billion compared to $2.6 billion in 2022.

- Gross profit increased 36.5 percentage points to 39.2% in 2023 from 2.7% in 2022 primarily due to the recognition of the advanced manufacturing production credit under Section 45X of the IRC, reductions to sales freight costs, an increase in the average selling price per watt of our modules, continued module cost reductions, and the prior period sale and related impairment of the Luz del Norte PV solar power plant.

- During 2023, we commenced production of Series 7 modules at our third manufacturing facility in Ohio and our first manufacturing facility in India, bringing our total installed nameplate production capacity across all our facilities to approximately 16.6 GW.

During 2023, we produced 12.1 GW and sold 11.4 GW of solar modules.

During 2024, we expect to produce between 15.6 GW and 16.0 GW and sell between 15.6 GW and 16.3 GW.

- In June 2023, we entered into a credit agreement with several financial institutions, which provides us with a senior secured revolving credit facility (the “Revolving Credit Facility”) with an aggregate borrowing capacity of $1.0 billion.

The facility, which is undrawn as of December 31, 2023, matures in 2028.

“Debt” to our consolidated financial statements for more information about the Revolving Credit Facility.

- In July 2023, we announced plans to expand our manufacturing capacity by an additional 3.5 GW by constructing our fifth manufacturing facility in the United States.

This facility, which will be located in Iberia Parish, Louisiana, is expected to commence operations in late 2025.

- In October 2023, we began commercial production of our bifacial Series 6 Plus modules at certain manufacturing facilities in the U.S. Our bifacial module features an innovative transparent back contact which, in addition to converting both front and rear side irradiance, allows infrared light to pass through rather than be absorbed as heat.

This design lowers the operational temperature of the module, resulting in a higher energy yield.

- In December 2023, we entered into an agreement with Fiserv, Inc. (“Fiserv”) for the sale of $687.2 million of Section 45X tax credits we generated during 2023 for aggregate cash proceeds of $659.7 million.

We received initial cash proceeds of $336.0 million in January 2024 and expect to receive the remaining cash proceeds during the first half of 2024.

Other technological developments in the industry, such as the advancement of energy storage capabilities, have further enhanced the prospects of solar energy as an alternative to traditional forms of energy generation.

In addition to these economic benefits, solar energy has substantial environmental benefits.

For example, PV solar power systems generate no greenhouse gas or other emissions and use minimal amounts of water compared to traditional energy generation assets.

As a result of these and other factors, worldwide solar markets continue to develop and expand.

We continue to evaluate opportunities for future expansion worldwide.

In the aggregate, we

As a result of this focus, we recently commenced production of Series 7 modules at our third manufacturing facility in Ohio and our first manufacturing facility in India.

Although module average selling prices in many global markets have generally declined for several years, near-term module pricing in the United States, our primary market, remains strong primarily due to the rising demand for domestically manufactured modules as a result of the IRA.

We continue to devote significant resources to support the implementation of our technology roadmap and improve the energy output of our modules.

In the course of our R&D activities, we explore various technologies in our efforts to sustain competitive differentiation of our modules.

Such technologies include the development of bifacial modules, the implementation of our CuRe program, and ongoing research and development of multi-junction solar modules.

We recently began commercial production of bifacial solar modules at certain of our manufacturing facilities in Ohio.

Our bifacial module features an innovative transparent back contact which, in addition to converting both front and rear side irradiance, allows infrared light to pass through rather than be absorbed as heat.

This design lowers the operational temperature of the module, resulting in a higher energy yield.

- *CuRe*.

Our CuRe program is intended to improve our current semiconductor structure by replacing copper with certain other elements that are expected to enhance module performance by improving its bifaciality characteristics, improving its temperature coefficient, and improving its warranted degradation.

As a result of these performance improvements, our PV solar modules are expected to produce more energy in real world operating conditions over their estimated useful lives than crystalline silicon modules with the same

nameplate capacity.

In September 2023 and January 2024, we established new world record CdTe research cell conversion efficiencies of 22.4% and 22.6%, respectively, which were based on our CuRe program and certified by the U.S. Department of Energy’s National Renewable Energy Laboratory.

We currently expect to complete our lead line implementation of CuRe in the fourth quarter of 2024.

- *Multi-junction*.

We believe such applications, which are expected to utilize at least one thin-film semiconductor, have the potential to significantly increase the efficiency of PV modules beyond the limits of traditional single-junction devices.

Our recent acquisition of Evolar is expected to accelerate the development of high efficiency multi-junction devices by integrating Evolar’s know-how with First Solar’s existing R&D capabilities.

When deployed in utility-scale applications, our modules provide energy at a lower LCOE compared

Several aspects of the IRA are pending technical guidance and regulations from the IRS and U.S. Treasury Department, which earlier this year released a notice of intent to issue proposed regulations for the domestic content bonus tax credit and notices of proposed rulemaking and temporary regulations for the direct payment election and the tax credit transfer election.

This initial guidance is subject to revision prior to the publishing of final regulations by the IRS and U.S. Treasury Department.

- Net sales for 2022 decreased by 10% to $2.6 billion compared to $2.9 billion in 2021.

These decreases to gross profit were partially offset by the higher volume of modules sold and continued module cost reductions.

- As of December 31, 2022, we had approximately 9.8 GWDC of total installed nameplate module production capacity across all our facilities.

We produced 9.1 GWDC of solar modules during 2022, which represented a 15% increase in module production from 2021.

The increase in production was primarily driven by higher throughput at our manufacturing facilities.

We expect to produce between 11.5 GWDC and 12.2 GWDC of solar modules during 2023.

- During 2022, we announced plans to expand our manufacturing capacity by an additional 4.4 GWDC by constructing our fourth manufacturing facility in the United States and increasing our manufacturing footprint at our existing facilities in Ohio.

- In May 2022, we entered into various agreements with certain subsidiaries of PAG Real Assets (“PAG”), a private investment firm, for the sale of our Japan project development business.

In June 2022, we completed the sale and, following certain customary post-closing adjustments, received total consideration of ¥66.4 billion ($490.8 million) and transferred cash and restricted cash of ¥8.4 billion ($61.9 million) to PAG.

As a result of this transaction, we recognized a gain of $245.2 million, net of transaction costs, which was included in “Gain on sales of businesses, net” in our consolidated statements of operations for the year ended December 31, 2022.

In September 2022, we also completed the sale of our Japanese O&M operations to a subsidiary of PAG and, following certain customary post-closing adjustments, received total consideration of ¥692.7 million ($4.8 million).

As a result of this transaction, we recognized a gain of $1.4 million, net of transaction costs and post-closing adjustments, which was included in “Gain on sales of businesses, net” in our consolidated statements of operations for the year ended December 31, 2022.

Although module average selling prices in many global markets have declined for several years, recent module spot pricing has increased, in part, due to trade measures and policies, government regulations, raw material availability, and supply chain disruptions.

For example, module spot pricing in the United States has increased, in part, due to elevated commodity and logistics costs and, more recently, due to the rising demand for modules manufactured in the United States as a result of the IRA.

The duration of this elevated period of pricing is uncertain.

We currently produce monofacial solar modules and, based on recent R&D activities, expect to produce bifacial solar modules in the near term.

Additionally, certain module manufacturers have introduced n-type mono-crystalline modules, such as TOPCon modules, which are expected to provide certain improvements to module efficiency, temperature coefficient, and bifacial performance, and claim to provide certain degradation advantages compared to other mono-crystalline modules.

However, our module offerings in certain markets may be driven, in part, by future demand for rooftop and distributed generation solar solutions.

We believe such applications have the potential to enable our module conversion efficiency to reach 28% by 2030.

The provisions of the IRA are generally effective for tax years beginning after 2022.

Among other things, such incentives are based on the efficiency and temperature coefficient of the modules produced, the proportion of raw materials sourced from the domestic market, the extent to which the manufacturer’s operations are fully integrated within India, and the quantity of modules sold from such manufacturing operations.

At this time, it is uncertain what impact, if any, these developments will have on future investments in solar module manufacturing in the United States.

- *United States.* In June 2022, the U.S. Supreme Court issued a ruling in West Virginia, et al.

v.

Environmental Protection Agency, et al., which limited the Environmental Protection Agency’s (“EPA”) ability to regulate greenhouse gas (“GHG”) emissions under the Clean Air Act using a “generation shifting” approach from coal-fired power plants to renewable energy sources over time.

At this time, it is unclear what effect this ruling will have on future EPA regulation of GHG emissions, the U.S. President’s climate change initiatives, internationally agreed-upon climate goals, the extent and timing of future coal plant retirements in the United States, and/or future investments in renewable energy.

modules and limit our growth or lead to a reduction in our net sales or increase our costs, thereby adversely impacting our operating results.”

For example, although the cost of ocean freight throughout many parts of the world has recently decreased, such costs remain at elevated levels relative to pre-COVID-19 pandemic rates.

Such factors may disrupt our supply chain and adversely impact our manufacturing operations as several of our key raw materials and components are either single-sourced or sourced from a limited number of international suppliers.

We may also incur additional logistics costs, such as demurrage and detention, to the extent we are unable to retrieve or return our shipping containers in a timely manner.

While it is currently unclear how long these issues will persist, they may be further exacerbated by the disruption of major shipping routes or other economic disruptions.

Net sales from our residual business operations decreased by $401.0 million in 2022 primarily due to sales of certain projects in the United States and Japan in the prior period and the settlement of an outstanding indemnification arrangement associated with the sale of one of our projects.

Under the terms of the indemnification arrangement, we received $65.1 million for our portion of the settlement payment, which we recorded as revenue in the prior period.

“Commitments and Contingencies” to our consolidated financial statements for discussion of our indemnification arrangements.

- a reduction to our product warranty liability of $33.1 million in 2021 due to reductions to our projected module return rates; partially offset by

- manufacturing charges of $15.7 million in the prior period associated with the COVID-19 pandemic;

- an increase to our module collection and recycling liability of $10.8 million in 2021 due to lower estimated by-product credits for certain semiconductor materials recovered during the recycling process and updates to certain valuation assumptions;

- a reduction to our product warranty liability of $10.2 million in 2022 due to reductions to our projected module return rates; and

- a reduction to our module collection and recycling liability of $7.5 million in 2022 due to lower estimated capital and chemical costs resulting from improvements to our module recycling technology.

Gross profit decreased 22.3 percentage points to 2.7% in 2022 from 25.0% in 2021 primarily due to a decrease in the average selling price per watt of our modules, the volume of higher gross profit projects sold during the prior period, an increase in sales freight, demurrage, and detention charges, the impairment loss in the current period for our Luz del Norte PV solar power plant described above, and the prior period indemnification matter descried above.

Accordingly, [added: from time to time] we [added: may] enter into foreign exchange forward contracts to hedge a portion of these forecasted cash flows.

These foreign exchange forward contracts qualify for accounting as cash flow hedges in accordance with [removed: ASC] [added: Accounting Standards Codification (“ASC”)] 815 and we [removed: designated] [added: designate] them as such.

We [removed: initially] report unrealized gains or losses [removed: for] [added: on] such contracts in “Accumulated other comprehensive loss” and subsequently reclassify [added: applicable] amounts into earnings when the hedged transaction occurs and impacts earnings.

For additional details on our derivative hedging instruments and activities, see Note [removed: 8.][added: 10.]

*Transaction Exposure.* Many of our subsidiaries have assets and liabilities (primarily cash, receivables, deferred taxes, payables, accrued expenses, [removed: long-term] [added: lease liabilities,] debt, and solar module collection and recycling liabilities) that are denominated in currencies other than the subsidiaries’ functional currencies.

[added: Changes in] the [added: exchange rates between the] functional currencies of our subsidiaries and the other currencies in which these assets and liabilities are denominated will create fluctuations in our reported consolidated statements of [removed: operations and cash flows.][added: operations.]

For additional details on our economic hedging instruments and activities, see Note [removed: 8.][added: 10.]

As of December 31, [removed: 2022,] [added: 2023,] a 10% change in the U.S. dollar relative to our primary foreign currency exposures would not have had a significant impact to our net foreign currency income or loss, including the effect of our hedging activities.

For the year ended December 31, [removed: 2022,] [added: 2023,] our marketable securities earned a return of [removed: 2%,] [added: 5%,] including the impact of fluctuations in the price of the underlying securities, and had a weighted-average maturity of [removed: 6 months] [added: 1 month] as of the end of the period.

Based on our investment positions as of December 31, [removed: 2022,] [added: 2023,] a hypothetical 100 basis point change in interest rates would have resulted in a [removed: $0.5] [added: $0.4] million change in the market value of our marketable securities investment portfolio.

For the year ended December 31, [removed: 2022,] [added: 2023,] our restricted marketable securities incurred a loss of [removed: 22%,] [added: 8%,] including the impact of fluctuations in the price of the underlying securities, and had a weighted-average maturity of approximately [removed: 12] [added: 11] years as of the end of the period.

Based on our restricted marketable securities positions as of December 31, [removed: 2022,] [added: 2023,] a hypothetical 100 basis point change in interest rates would have resulted in a [removed: $17.6] [added: $17.4] million change in the market value of our restricted marketable securities portfolio.

Although we may enter into long-term supply contracts for certain raw materials and components, we may be exposed to price changes for certain raw materials and components used to manufacture our solar modules for which we are unable to secure long-term supply contracts or [removed: if] [added: for which] our demand exceeds our committed supply.

To mitigate such price changes, we have [removed: used] [added: used,] and expect to continue [removed: using] [added: using,] module contract structures that provide additional consideration to us if the cost of certain raw materials or logistics services [added: exceeds a defined threshold.]

*Variable Rate Debt Exposure.* We are exposed to interest rate risk as certain of our debt arrangements have variable interest rates, exposing us to variability in interest expense and cash flows.

See Note 13.

“Debt” to our consolidated financial statements for additional information on our debt borrowing rates.

An increase in relevant interest rates would increase the cost of borrowing under certain of our debt arrangements.

For the year ended December 31, 2023, a 100 basis point change in such variable interest rates would not have had a significant impact to our interest expense.

For the year ended December 31, 2022, 5% of our net sales were denominated in foreign currencies, including Japanese yen and Euro.

As a result, we may, from time to time, have exposure to foreign currencies with respect to our net sales, which has historically represented one of our primary foreign currency exchange risks.

A 10% change in the U.S. dollar to Japanese yen and Euro exchange rates would have had an aggregate impact on our net sales of $9.1 million, excluding the effect of our hedging activities.

Changes in the exchange rates between

exceeds a defined threshold.

In addressing the overall global demand for electricity, [removed: our] [added: PV solar] modules provide energy at a lower levelized cost of electricity (“LCOE”), meaning the net present value of a system’s total life cycle costs divided by the quantity of energy that is expected to be produced over the system’s life, when compared to traditional forms of energy generation.

Manufacturing [removed: Process][added: Process and Distributed Manufacturing Presence]

With more than [removed: 50 GWDC] [added: 60 GW] of modules sold worldwide, we have a demonstrated history of manufacturing success and innovation.

Our global manufacturing footprint includes facilities in the United States, Malaysia, [added: Vietnam,] and [removed: Vietnam.][added: India.]

[removed: We] [added: As a result of such market opportunities and renewable targets, we] are in the process of expanding our [added: U.S.] manufacturing capacity by approximately [removed: 11 GWDC,] [added: 8 GW,] including the construction of our [removed: third] [added: fourth] manufacturing facility in the United States, which [removed: commenced commercial production of modules in early 2023; our first manufacturing facility in India, which] is expected to commence operations in the second half of [removed: 2023;] [added: 2024;] our [removed: fourth] [added: fifth] manufacturing facility in the United States, which is expected to commence operations in late [removed: 2024;] [added: 2025;] and the expansion of our manufacturing footprint at our existing facilities in [removed: Ohio.][added: Ohio, which is expected to be completed in the first half of 2024.]

[removed: Our newest factory] [added: During 2023, we commenced production of our Series 7TM (“Series 7”) modules at our third manufacturing facility] in [removed: the United States began producing] [added: Ohio] and our [removed: newest factory] [added: first manufacturing facility] in [removed: India is expected to produce our next generation Series 7 modules,] [added: India,] which combine our thin film CdTe technology with a larger form factor and an innovative steel back rail mounting structure that reduces module installation time.

[removed: Such] [added: This] process eliminates the multiple supply chain operators and resource-intensive batch processing steps that are used to produce crystalline silicon modules, which typically occur over several days and across multiple factories.

In this stage, we also treat the semiconductor film using certain chemistries and processes to improve the device’s performance and apply a [removed: metal sputtered] back contact.

We continue to invest significant financial resources in such initiatives, including [removed: approximately $0.3 billion for] [added: the construction of] a dedicated [removed: R&D facility in the United States to support] [added: perovskite development line and] the [added: construction of a dedicated]

[added: R&D facility in the United States to support the] implementation of our technology roadmap.

We expect [removed: such] [added: this] R&D facility to [added: be completed in 2024 and to] feature a high-tech pilot manufacturing line, [removed: allowing for the] [added: enabling] production of full-sized prototypes of thin film and tandem PV modules.

We believe [removed: that] our systematic approach to technology change management enables continuous improvements and ensures uniform adoption across our production lines.

Cell efficiency measures the proportion of light converted to electricity in a single solar cell [removed: at] [added: under] standard test conditions.

Our module conversion efficiency has improved on average more than half a percent every year for the last [removed: ten] [added: 10] years.

We currently hold two world records for CdTe PV cell efficiency, achieving an independently certified research cell efficiency of [removed: 22.1%] [added: 22.6%] and a module aperture area efficiency of [removed: 19.7%.][added: 19.9%.]

[removed: On a lifecycle basis, our] [added: Our] thin film module technology has the fastest energy payback time, smallest carbon footprint, and lowest water use of any competing PV solar [removed: technology.][added: technology, measured on a lifecycle basis that accounts for the energy, raw materials, water usage, and transportation across the supply chain, manufacturing process, and end-of-life module recycling.]

[removed: Our module energy payback time is approximately four months, which represents] [added: This corresponds to] a [removed: 90-fold] [added: 180-fold] energy return on investment over a [removed: theoretical] 30-year [removed: system lifetime and] [added: project lifetime, providing] an abundant net energy gain to the electricity grid.

Our Series 6TM (“Series 6”) and Series 6 PlusTM (“Series 6 Plus”) modules are the world’s first and only PV products to be included in the Electronic Product Environmental Assessment Tool (“EPEAT”) Registry’s Photovoltaic Modules and Inverters product [removed: category.][added: category, and we expect to register our Series 7 modules in the EPEAT Registry in the near term.]

The EPEAT Registry enables the identification of credible sustainable electronic products from a broad range of manufacturers based on several factors, including the management of substances in the product, manufacturing energy, water use, product packaging, end-of-life recycling, corporate [added: responsibility, and human rights.]

We have set science-based targets to reduce our absolute direct (scope 1) and indirect (scope 2) greenhouse gas [added: (“GHG”)] emissions by 34% by [removed: 2028, from a 2020 baseline,] [added: 2028] and achieve [removed: net zero] [added: net-zero GHG] emissions by [removed: 2050.][added: 2050, each relative to 2020.]

[removed: In light of such regulatory] developments, we have [added: recently] commenced [added: or completed] certain manufacturing expansion activities [added: in the United States] and [added: India and] continue to evaluate opportunities for future [removed: expansion, particularly within the United States,] [added: expansion worldwide,] as described below under “Global Markets.” For more information about certain risks associated with the IRA, see Item 1A.

In light of such market realities, we continue to focus on our strategies and points of differentiation, which include our advanced module technology, our manufacturing [removed: process,] [added: process and distributed manufacturing presence,] our R&D capabilities, the sustainability advantage of our modules, and our financial stability.

Energy markets are, by their nature, localized, with different [removed: drivers and market forces] [added: factors] impacting electricity generation and demand in a particular region or for a particular application.

We are currently focusing on markets, including those listed below, in which our CdTe solar modules provide certain advantages over conventional crystalline silicon solar modules, including high insolation climates in which our modules provide a superior temperature coefficient, humid environments in which our modules provide a superior spectral response, markets that favor the superior sustainability profile of our PV solar technology, [removed: and] markets that value responsible sourcing through transparent supply chain reporting and ethical business [removed: practices.][added: practices, and markets that promote renewable energy investments through supportive policy environments.]

*United States.* Multiple markets within the United States, which accounted for [removed: 84%] [added: 96%] of our [removed: 2022] [added: 2023] net sales, exemplify favorable characteristics for a solar market, including (i) sizeable electricity demand, particularly around growing population centers and industrial areas; (ii) strong demand for renewable energy generation; [removed: and] (iii) abundant solar [removed: resources.][added: resources; and (iv) demand for domestically manufactured modules.]

The market penetration of PV solar is also impacted by certain federal and state support programs described below under “Support Programs.” The United States currently has an installed solar generation capacity of approximately [removed: 140 GWDC,] [added: 160 GW,] which is expected to double by 2027 due, in part, to the economic incentives provided by the IRA.

[removed: As a result of such market opportunities and renewable targets,] [added: Additionally,] we are in the process of expanding our [removed: U.S.] manufacturing capacity by approximately [removed: 7.7 GWDC,] [added: 8 GW,] including the construction of our [removed: third] [added: fourth U.S.] manufacturing facility in [removed: the U.S.,] [added: Alabama,] which [removed: commenced commercial production of modules] [added: is expected to commence operations] in [removed: early 2023,] [added: the second half of 2024;] our [removed: fourth] [added: fifth U.S.] manufacturing facility in [removed: the U.S.,] [added: Louisiana,] which is expected to commence operations in late [removed: 2024,] [added: 2025;] and the expansion of our manufacturing footprint at our existing facilities in [removed: Ohio.][added: Ohio, which is expected to be completed in the first half of 2024.]

*India.* India continues to represent one of the largest and fastest growing markets for PV solar energy with an installed [added: solar] generation capacity of approximately [removed: 63 GWAC, approximately 30 GWAC of projects under various stages of construction, and over 19 GWAC of new projects being contracted under active procurement programs.][added: 72 GW.]

In addition, the government has established aggressive renewable energy targets, which include increasing the country’s overall renewable energy capacity to 500 [removed: GWAC] [added: GW] by [removed: 2030] [added: 2030, becoming energy independent by 2047,] and establishing a net-zero carbon emissions target by 2070.

Based on these targets, it is projected that the installed solar energy generation capacity will be 350 [removed: GWAC] [added: GW] by 2030.

During [removed: 2022,] [added: 2023,] European Union (“EU”) member states added a combined [removed: 41 GWDC] [added: 56 GW] of solar capacity, representing the largest annual solar deployment in the [removed: region in the last 10 years.][added: region.]

Such expansion, which was primarily driven by solar capacity additions in Germany, Spain, [added: Italy,] Poland, the Netherlands, and France, brings the region’s installed generation capacity to approximately [removed: 209 GWDC.][added: 263 GW.]

Although we compete in markets that do not require solar-specific government subsidies or support programs, our net sales and profits remain subject to variability based on the scope of tax and production incentives, renewable portfolio standards, tendering systems, and other [removed: policies or] support programs intended to stimulate economies, achieve decarbonization initiatives, and/or establish greater energy independence.

As discussed above, the IRA offers various tax credits, including the advanced manufacturing production credit, pursuant to Section 45X of the Internal Revenue Code (the “IRC”), for solar modules and [added: certain] solar module components manufactured in the United States and sold to third parties.

Such credit, which may be refundable [added: by the Internal Revenue Service (“IRS”)] or transferable to a third party, is available through 2032, subject to phase down beginning in 2030.

*•Investment [added: and Production] Tax [removed: Credit.*] [added: Credits.*] At the federal level, investment [added: and production] tax credits for business and residential solar systems have gone through several cycles of enactment and expiration [removed: since the 1980s.][added: over several decades.]

In 2020, the U.S. Congress extended the 26% ITC through 2022 as part of its COVID-19 relief [removed: efforts, and such credit was scheduled to step down to 22% for projects that commence construction in 2023.][added: efforts.]

[removed: However, during] [added: In] 2022, the U.S. Congress reinstated the 30% ITC [removed: through 2032] as part of the IRA discussed above.

The positive impact of the ITC [added: and PTC] depends on the availability of tax equity for project financing or the ability to transfer [removed: the ITC] [added: such credits] to other taxpayers.

In July 2022, the U.S. Department of Energy Solar Energy Technologies Office [added: (“SETO”)] announced the 2022 Solar Manufacturing Incubator Funding Opportunity, which [removed: provides] [added: provided] up to [removed: $27] [added: $24] million for qualifying solar R&D projects, [removed: particularly] [added: including] those related to CdTe.

For example, during 2023 we acquired Evolar AB (“Evolar”), a European developer of perovskite technology.

This acquisition is expected to accelerate the development of high efficiency multi-junction devices by integrating Evolar’s know-how with First Solar’s existing R&D capabilities, intellectual property portfolio, and expertise in developing and commercially scaling thin film PV products.

We believe such multi-junction applications have the potential to significantly increase the efficiency of PV modules beyond the limits of traditional single-junction devices.

Our Series 7 module is our most eco-efficient product to date, with a carbon and water footprint that is approximately four times lower than conventional crystalline silicon modules manufactured in China and an energy payback time that is approximately five times faster.

In just two months under high irradiation conditions, our Series 7 modules produce more energy than was required to create them.

Our Series 7 modules are also made of approximately 16% recycled content.

First Solar modules are designed for high-value recycling to maximize material recovery.

Our recycling process recovers more than 90% of module materials for reuse, providing high quality secondary resources for new solar modules and other glass, rubber, and aluminum products.

First Solar has a unique and long-standing leadership position in PV recycling, having established the industry’s first global recycling program in 2005 and recycled over 300,000 metric tons of PV modules to date.

We are also currently working towards meeting the new ultra low-carbon solar criteria published by the Global Electronics Council in 2023.

In 2023, we became the first of the world’s largest solar manufacturers to have our science-based and net zero targets validated by the Science Based Targets Initiative.

In light of such regulatory

Although module average selling prices in many global markets have generally declined for several years, near-term module pricing in the United States, our primary market, remains strong primarily due to the rising demand for domestically manufactured modules as a result of the IRA.

As a result of

such market opportunities and renewable targets, we recently commenced production of Series 7 modules at our first manufacturing facility in India, bringing our total installed nameplate production capacity in the country to 3.2 GW.

Similarly, the IRA extended the renewable electricity PTC, which provides a tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operations.

Both the ITC and PTC are available until a four-year phase down is triggered, which occurs at the later of 2032 or the year in which power-sector emissions are 25% of 2022 levels.

The ITC and PTC have been an important economic driver of

solar installations and qualifying procurement activities in the United States.

In April 2023, SETO announced the award recipients for this funding opportunity, which included one of First Solar’s R&D projects.

In September 2023, SETO announced the Advancing U.S. Thin-Film Solar Photovoltaics Funding Opportunity, which provides up to $36 million for qualifying solar R&D projects relating to CdTe development and the manufacturing of perovskite tandem PV products.

Award recipients for this funding opportunity are expected to be announced in the first half of 2024.

- *Production Linked Incentive.* In March 2023, the government of India allocated financial incentives under the Production Linked Incentive (“PLI”) scheme to certain PV module manufacturers, including First Solar.

For more information about pending and ongoing developments related to the PLI, see Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Trends and Uncertainties.”

*•Net-Zero Industry Act.* In February 2024, the European Commission, the European Council, and the European Parliament set forth the Net-Zero Industry Act (“NZIA”), which is designed to bring 40% of Europe’s demand for clean technologies back to local supply chains.

Among other things, the NZIA provides for accelerated permitting, funding, and certain market access rules for public procurement and renewable auctions, such as the introduction of mandatory environmental criteria or, under certain conditions, local content requirements for public procurement or renewable auctions.

The NZIA is currently pending adoption.

If the NZIA is adopted, additional EU member states may introduce sustainability and resilience criteria as requirements for public tenders of PV solar power systems.

For example, in January 2024, Spain adopted a law that its public tenders of PV solar power systems must include sustainability and resilience criteria weighting at least 30% of the pricing.

Our differentiated technology,

We expect to begin recycling activities at our India manufacturing facility in the first half of 2024.

Our associates in Vietnam are represented by the Vietnam General Confederation of Labor.

Our associates in Sweden are represented by the Engineers of Sweden.

Business Unit Chief Financial Officer for NCR from November 2002 to his appointment as Controller.

In February 2024, Mr. Widmar was appointed to the board of directors of the American Clean Power Association.

He is a Master Black Belt in Six Sigma/Lean Manufacturing with an expert certification in Taguchi

He oversees First Solar’s legal department worldwide, including its transactional, trade, intellectual property, compliance, and corporate governance functions.

In addition to his duties as General Counsel and Secretary, Mr. Dymbort directs the Company’s advocacy strategies, defining its responses to challenges and opportunities in areas such as trade and industrial policy.

With over 15 years at First Solar, Mr. Dymbort’s experience covers every aspect of the solar value chain, from developing and constructing solar projects to marketing and selling utility-scale solar assets to manufacturing and supply chains.

Such R&D facility is expected to be completed in 2024.

We believe such applications have the potential to enable our module conversion efficiency to reach 28% by 2030.

The energy payback time of our module technology, which is the amount of time a module must operate to generate the energy required to produce it, is facilitated by our proprietary and resource efficient production process.

Furthermore, our modules have a carbon footprint that is 2.5 times lower and a water footprint that is three times lower than conventional crystalline silicon modules, measured on a lifecycle basis that accounts for the energy and water used for the raw materials, throughout our manufacturing process, and during end-of-life module recycling.

In addition, our industry-leading PV solar module recycling process further enhances our sustainability advantage by recovering approximately 90% of the glass for reuse in new glass container products and over 90% of the semiconductor material for reuse in new modules.

The module frame is removed and recycled for reuse in aluminum products, and in Malaysia, the recovered laminate material is reused in rubber products.

We are the only PV solar module manufacturer with global in-house recycling capabilities.

responsibility, and human rights.

The provisions of the IRA are generally effective for tax years beginning after 2022 and, based on recent U.S. Treasury Department estimates, are expected to provide aggregate funding of $369 billion to address climate change, of which $270 billion is expected in the form of various tax incentives.

Although module average selling prices in many global markets have declined for several years, recent module spot pricing has increased, in part, due to trade measures and policies, government regulations, raw material availability, and supply chain disruptions.

For example, module spot pricing in the United States has increased, in part, due to elevated commodity and logistics costs and, more recently, due to the rising demand for modules manufactured in the United States as a result of the IRA described above.

The duration of this elevated period of pricing is uncertain.

We have established and continue to develop a global business presence.

As a result of such market opportunities, we are in the process of expanding our manufacturing capacity by an additional 3.3 GWDC by constructing our first manufacturing facility in India, which is expected to commence operations in the second half of 2023.

Such expansion builds upon our existing presence of approximately 2.2 GWDC of modules sold in India.

Such credit is currently scheduled to step down to 26% for projects that commence construction in 2033, 22% for projects that commence construction in 2034, and will expire thereafter.

The ITC has been an important economic driver of solar installations and qualifying procurement activities in the United States, and its extension is expected to contribute to greater long-term demand.

Award recipients are expected to be announced in early 2023.

Under the PLI scheme, manufacturers are selected through a competitive bid process and receive certain cash incentives over a five-year period following the commissioning of their manufacturing facilities.

Among other things, such incentives are based on the efficiency and temperature coefficient of the modules produced, the proportion of raw materials sourced from the domestic market, the extent to which the manufacturer’s operations are fully integrated within India, and the quantity of modules sold from such manufacturing operations.

- *Import duty tariffs.* In April 2022, the Indian government began imposing import duty tariffs of 40% on solar modules and 25% on solar cells.

In connection with such tariffs, the Indian government has also implemented a regulation mandating that any solar project with federal utility, state utility, or commercial and industrial off-takers that interconnects through government owned transmission lines only use solar modules from an approved list of module manufacturers, and a requirement that all federal procurement of solar modules be only from cells and modules produced domestically.

suppliers, and their failure to perform could cause manufacturing delays and impair our ability to deliver solar modules to customers in the required quality and quantities and at a price that is profitable to us.”

We also require our customers and business partners to enter into confidentiality agreements before we disclose sensitive aspects of our modules, technology, or business plans.

incur material expenditures for environmental and occupational health and safety controls in the foreseeable future.

The remainder of our associates are in R&D, sales and marketing, and general and administrative positions.

We recognize that

See Note [removed: 12.][added: 14.]

For the fiscal year ended December 31, [removed: 2022][added: 2023]

[removed: ][added: ]

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, [removed: 2022,] [added: 2023,] the last business day of the registrant’s most recently completed second fiscal quarter, was approximately [removed: $7.2] [added: $20.2] billion (based on the closing price of the registrant’s common stock on that date).

As of February [removed: 24, 2023, 106,609,094] [added: 23, 2024, 106,848,929] shares of the registrant’s common stock, $0.001 par value per share, were outstanding.

The information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in [removed: 2023,] [added: 2024,] which will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Form 10-K relates.

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, [removed: 2022][added: 2023]

| Item 1. | | | [removed: [Business](#i161bcb9dee5c411eae8920ab3a8dda3e_16)] [added: [Business](#ia9b5ec4bae954b8eabe33fd55732085e_16)] | | | [removed: [3](#i161bcb9dee5c411eae8920ab3a8dda3e_16)] [added: [3](#ia9b5ec4bae954b8eabe33fd55732085e_16)] | | |

| | | | [Information about Our Executive [removed: Officers](#i161bcb9dee5c411eae8920ab3a8dda3e_46)] [added: Officers](#ia9b5ec4bae954b8eabe33fd55732085e_49)] | | | [removed: [15](#i161bcb9dee5c411eae8920ab3a8dda3e_46)] [added: [15](#ia9b5ec4bae954b8eabe33fd55732085e_49)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i161bcb9dee5c411eae8920ab3a8dda3e_49)] [added: Factors](#ia9b5ec4bae954b8eabe33fd55732085e_52)] | | | [removed: [18](#i161bcb9dee5c411eae8920ab3a8dda3e_49)] [added: [18](#ia9b5ec4bae954b8eabe33fd55732085e_52)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i161bcb9dee5c411eae8920ab3a8dda3e_52)] [added: Comments](#ia9b5ec4bae954b8eabe33fd55732085e_55)] | | | [removed: [40](#i161bcb9dee5c411eae8920ab3a8dda3e_52)] [added: [42](#ia9b5ec4bae954b8eabe33fd55732085e_55)] | | |

| Item 2. | | | [removed: [Properties](#i161bcb9dee5c411eae8920ab3a8dda3e_55)] [added: [Properties](#ia9b5ec4bae954b8eabe33fd55732085e_58)] | | | [removed: [40](#i161bcb9dee5c411eae8920ab3a8dda3e_55)] [added: [44](#ia9b5ec4bae954b8eabe33fd55732085e_58)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i161bcb9dee5c411eae8920ab3a8dda3e_58)] [added: Proceedings](#ia9b5ec4bae954b8eabe33fd55732085e_61)] | | | [removed: [40](#i161bcb9dee5c411eae8920ab3a8dda3e_58)] [added: [44](#ia9b5ec4bae954b8eabe33fd55732085e_61)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i161bcb9dee5c411eae8920ab3a8dda3e_61)] [added: Disclosures](#ia9b5ec4bae954b8eabe33fd55732085e_64)] | | | [removed: [40](#i161bcb9dee5c411eae8920ab3a8dda3e_61)] [added: [44](#ia9b5ec4bae954b8eabe33fd55732085e_64)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#i161bcb9dee5c411eae8920ab3a8dda3e_67)] [added: Securities](#ia9b5ec4bae954b8eabe33fd55732085e_70)] | | | [removed: [41](#i161bcb9dee5c411eae8920ab3a8dda3e_67)] [added: [45](#ia9b5ec4bae954b8eabe33fd55732085e_70)] | | |

| Item 6. | | | [removed: [Reserved](#i161bcb9dee5c411eae8920ab3a8dda3e_70)] [added: [Reserved](#ia9b5ec4bae954b8eabe33fd55732085e_73)] | | | [removed: [42](#i161bcb9dee5c411eae8920ab3a8dda3e_70)] [added: [46](#ia9b5ec4bae954b8eabe33fd55732085e_73)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i161bcb9dee5c411eae8920ab3a8dda3e_73)] [added: Operations](#ia9b5ec4bae954b8eabe33fd55732085e_76)] | | | [removed: [42](#i161bcb9dee5c411eae8920ab3a8dda3e_73)] [added: [46](#ia9b5ec4bae954b8eabe33fd55732085e_76)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#i161bcb9dee5c411eae8920ab3a8dda3e_97)] [added: Risk](#ia9b5ec4bae954b8eabe33fd55732085e_100)] | | | [removed: [59](#i161bcb9dee5c411eae8920ab3a8dda3e_97)] [added: [64](#ia9b5ec4bae954b8eabe33fd55732085e_100)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i161bcb9dee5c411eae8920ab3a8dda3e_100)] [added: Data](#ia9b5ec4bae954b8eabe33fd55732085e_103)] | | | [removed: [61](#i161bcb9dee5c411eae8920ab3a8dda3e_100)] [added: [66](#ia9b5ec4bae954b8eabe33fd55732085e_103)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i161bcb9dee5c411eae8920ab3a8dda3e_103)] [added: Disclosure](#ia9b5ec4bae954b8eabe33fd55732085e_106)] | | | [removed: [61](#i161bcb9dee5c411eae8920ab3a8dda3e_103)] [added: [66](#ia9b5ec4bae954b8eabe33fd55732085e_106)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i161bcb9dee5c411eae8920ab3a8dda3e_106)] [added: Procedures](#ia9b5ec4bae954b8eabe33fd55732085e_109)] | | | [removed: [61](#i161bcb9dee5c411eae8920ab3a8dda3e_106)] [added: [66](#ia9b5ec4bae954b8eabe33fd55732085e_109)] | | |

| Item 9B. | | | [Other [removed: Information](#i161bcb9dee5c411eae8920ab3a8dda3e_109)] [added: Information](#ia9b5ec4bae954b8eabe33fd55732085e_112)] | | | [removed: [62](#i161bcb9dee5c411eae8920ab3a8dda3e_109)] [added: [67](#ia9b5ec4bae954b8eabe33fd55732085e_112)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i161bcb9dee5c411eae8920ab3a8dda3e_112)] [added: Inspections](#ia9b5ec4bae954b8eabe33fd55732085e_115)] | | | [removed: [62](#i161bcb9dee5c411eae8920ab3a8dda3e_112)] [added: [67](#ia9b5ec4bae954b8eabe33fd55732085e_115)] | | |

| Item 10. | | | [Directors, Executive Officers, and Corporate [removed: Governance](#i161bcb9dee5c411eae8920ab3a8dda3e_118)] [added: Governance](#ia9b5ec4bae954b8eabe33fd55732085e_121)] | | | [removed: [63](#i161bcb9dee5c411eae8920ab3a8dda3e_118)] [added: [67](#ia9b5ec4bae954b8eabe33fd55732085e_121)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i161bcb9dee5c411eae8920ab3a8dda3e_121)] [added: Compensation](#ia9b5ec4bae954b8eabe33fd55732085e_124)] | | | [removed: [63](#i161bcb9dee5c411eae8920ab3a8dda3e_121)] [added: [67](#ia9b5ec4bae954b8eabe33fd55732085e_124)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i161bcb9dee5c411eae8920ab3a8dda3e_124)] [added: Matters](#ia9b5ec4bae954b8eabe33fd55732085e_127)] | | | [removed: [63](#i161bcb9dee5c411eae8920ab3a8dda3e_124)] [added: [68](#ia9b5ec4bae954b8eabe33fd55732085e_127)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i161bcb9dee5c411eae8920ab3a8dda3e_127)] [added: Independence](#ia9b5ec4bae954b8eabe33fd55732085e_130)] | | | [removed: [64](#i161bcb9dee5c411eae8920ab3a8dda3e_127)] [added: [68](#ia9b5ec4bae954b8eabe33fd55732085e_130)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i161bcb9dee5c411eae8920ab3a8dda3e_130)] [added: Services](#ia9b5ec4bae954b8eabe33fd55732085e_133)] | | | [removed: [64](#i161bcb9dee5c411eae8920ab3a8dda3e_130)] [added: [68](#ia9b5ec4bae954b8eabe33fd55732085e_133)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i161bcb9dee5c411eae8920ab3a8dda3e_136)] [added: Schedules](#ia9b5ec4bae954b8eabe33fd55732085e_139)] | | | [removed: [65](#i161bcb9dee5c411eae8920ab3a8dda3e_136)] [added: [69](#ia9b5ec4bae954b8eabe33fd55732085e_139)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i161bcb9dee5c411eae8920ab3a8dda3e_241)] [added: Summary](#ia9b5ec4bae954b8eabe33fd55732085e_241)] | | | [removed: [124](#i161bcb9dee5c411eae8920ab3a8dda3e_241)] [added: [124](#ia9b5ec4bae954b8eabe33fd55732085e_241)] | | |

| [removed: [Signatures](#i161bcb9dee5c411eae8920ab3a8dda3e_244)] [added: [Signatures](#ia9b5ec4bae954b8eabe33fd55732085e_244)] | | | | | | [removed: [125](#i161bcb9dee5c411eae8920ab3a8dda3e_244)] [added: [125](#ia9b5ec4bae954b8eabe33fd55732085e_244)] | | |

Throughout this Annual Report on Form 10-K, we refer to First Solar, Inc. and its consolidated subsidiaries as “First Solar,” “the Company,” “we,” “us,” and “our.” [removed: When referring to our manufacturing capacity, total sales, and solar module sales, the unit] [added: Units] of electricity [added: are typically stated] in [removed: watts for] megawatts (“MW”) and gigawatts [removed: (“GW”) is direct current (“DC” or “DC”) unless otherwise noted.][added: (“GW”).]

The forward-looking statements include statements, among other things, concerning: effects resulting from certain module manufacturing changes; our business strategy, including anticipated trends and developments in and management plans for our business and the markets in which we operate; future financial results, operating results, [added: module volumes produced, module volumes sold,] revenues, gross margin, operating expenses, products, projected costs (including estimated future module collection and recycling costs), warranties, solar module technology and cost reduction roadmaps, restructuring, product reliability, investments, and capital expenditures; our ability to [added: successfully integrate an acquired business; our ability to] continue to reduce the cost per watt of our solar modules; the impact of public policies; the potential impact of legislation intended to encourage renewable energy investments through tax credits; our ability to expand manufacturing capacity [removed: worldwide;] [added: worldwide, including our plans to construct new manufacturing facilities in] the [added: United States and related increases in manufacturing capacity; the] impact of supply chain disruptions, which may affect the procurement of raw materials used in our manufacturing process and the distribution of our modules; research and development programs and our ability to improve the wattage of our solar modules; sales and marketing initiatives; and competition.

- our ability to execute on our long-term strategic plans, including our ability to secure [removed: financing;][added: financing and realize the potential benefits of strategic acquisitions and investments;]

- our ability to incorporate technology improvements into our manufacturing process, including the [removed: production] [added: implementation] of [removed: bifacial solar modules and next generation Series 7 modules;][added: our copper replacement program;]

- the severity and duration of public health [removed: threats (including pandemics such as COVID-19),] [added: threats,] including [removed: its] [added: the] potential impact on the Company’s business, financial condition, and results of operations;

- our ability to prevent and/or minimize the impact of [removed: cyber-attacks] [added: cybersecurity incidents] or [removed: other breaches of our] information [removed: systems;][added: or security breaches;]

- our ability to [removed: attract] [added: attract, train, retain,] and [removed: retain] [added: successfully integrate] key [removed: executive officers and associates;] [added: talent into our team;] and

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| Item 1C. | | | [Cybersecurity](#ia9b5ec4bae954b8eabe33fd55732085e_2199023257636) | | | [43](#ia9b5ec4bae954b8eabe33fd55732085e_2199023257636) | | |

- our ability to avoid manufacturing interruptions, including during the ramp of our Series 7 modules manufacturing facilities;

- evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social, and governance matters;

The following discussion and analysis of our business, financial condition, and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto included in this Annual Report on Form 10-K.

When referring to projects or systems, the unit of electricity in watts for MW and GW is alternating current (“AC” or “AC”) unless otherwise noted.

- the market for renewable energy, including solar energy;

- the satisfaction of conditions precedent in our sales agreements;

First Solar maintains a cyber risk management program designed to identify, assess, and manage cybersecurity risks.

The underlying controls of the cyber risk management program incorporate recognized best practices and standards for cybersecurity, including guidance from the National Institute of Standards and Technology (“NIST”) cybersecurity framework.

Our cyber risk management program includes various risk assessments that are completed on a regular basis, including (i) information security controls assessments with internal and external audit partners, (ii) architectural and technical assessments with third-party experts, (iii) internal and external penetration testing with third-party service providers, (iv) continuous cyber risk register reviews, and (v) risk prioritization with our executive officers.

The identification of cybersecurity risks is aided by a technical toolset as well as threat hunting and counterintelligence services provided by third-party service providers.

These risk assessments and the technical toolset inform our information security roadmap, which allocates resources toward strategic initiatives to mitigate, transfer, and/or reduce cybersecurity risks.

Our associates engage in annual cybersecurity training and periodic phishing simulation exercises with targeted training.

Additionally, confidential information protection training is regularly provided to associates who have access to personally identifiable information, reside in certain jurisdictions, or have privileged access.

Third-party risk management at First Solar includes screening processes to evaluate the information security programs and capabilities of our vendors, including periodic reviews of vendor control assessments, such as System and Organization Controls (“SOC”) 2 Type 2 reports, which are supplemented by end-user controls performed by First Solar associates.

These processes enable us to oversee and identify potentially material risks from cybersecurity threats associated with our use of third-party service providers.

The Head of Information Security oversees the Information Security team, which assesses and manages cybersecurity risks at First Solar as part of our information security program.

The Head of Information Security and our Information Security team members collectively hold certifications in cyber-risk oversight from the National Association of Corporate Directors, Certified Systems Security Officer and Certified Information Systems Manager credentials, and Certified Information Systems Security Professional and Systems Security Certified Practitioner credentials.

The Head of Information Security, who has over 20 years of information technology experience, including over 10 years in leadership roles at First Solar, reports to the Chief Information Officer and regularly briefs the Chief Financial Officer and the audit committee of the board of directors on cybersecurity matters.

The cybersecurity risks identified as part of our information security program are integrated into our enterprise risk management program.

The audit committee reviews the integration of our cybersecurity controls and procedures with our overall risk management systems and processes, and reviews and discusses with management First Solar’s major information security risks (including cybersecurity) and the steps management has taken to monitor, control, and limit such exposures and risks.

An Information Security Steering Committee, which is comprised of senior management from various departments, serves in an advisory capacity regarding the implementation, support, and management of the information security program and compliance with applicable state and federal laws and regulations.

This committee aligns business initiatives, material digital risks, risk tolerance levels, and security requirements with the information security roadmap.

The Information Security team actively manages cybersecurity threats and incidents through comprehensive technical tooling, reporting, partnerships, and processes.

Intrusion prevention, detection, and response systems, access management systems, and incident and vulnerability management systems are all examples of technical tools employed by First Solar’s Information Security team to protect our information technology environment.

Our incident response plan includes specific criteria for determining the potential impact of an identified cybersecurity incident and defined escalation protocols to determine which internal and external stakeholders should be involved and the appropriate communication channels, including considerations of any reporting based on regulatory requirements.

Cybersecurity incidents are evaluated on a case-by-case basis and are categorized as low, moderate, or high impact incidents depending on qualitative and quantitative factors, including, but not limited to, their operational impact, degree of compromise, legal or regulatory impacts, and data disclosure impacts.

The audit committee of the board of directors is notified if a potentially material incident is identified and reviews our

response to material cybersecurity incidents, including disclosure considerations and the engagement of forensic and other technology experts to ascertain the extent of the incident, remediation actions, and responsive measures to prevent or mitigate future incidents.

As a result of ongoing monitoring, we have not identified any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, financial condition, or results of operations.

Notwithstanding the cybersecurity processes and procedures described above, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on our business, financial condition, or results of operations.

While we maintain cybersecurity insurance, the costs related to cybersecurity incidents, including information and security breaches, or other disruptions may not be fully insured.

For further information regarding the risks to us associated with cybersecurity incidents and other events, including information and security breaches, and how such risks may affect the Company, see the Risk Factor entitled, “Cybersecurity incidents or information or security breaches, or those of third parties with which we do business, could have a material adverse effect on our business, financial condition, and results of operations.”

As of December 31, [removed: 2022,] [added: 2023,] our principal properties consisted of the following:

| Manufacturing plant [removed: (1)] | | | | | | Modules | | | | | | Tamil Nadu, India | | | | | | Lease land, own buildings | | |

| Manufacturing plant [removed: (2)] [added: (3)] | | | | | | Modules | | | | | | Frankfurt/Oder, Germany | | | | | | Own | | |

| Manufacturing plant [removed: (3)] [added: (1)] | | | | | | Modules | | | | | | Trinity, Alabama, United States | | | | | | Own | | |

(1)Manufacturing plant currently under construction; operations are expected to commence in the second half of [removed: 2023.][added: 2024.]

[removed: (2)In] [added: (3)In] December 2012, we ceased manufacturing at our German plant.

[removed: (3)Manufacturing] [added: (2)Manufacturing] plant currently under construction; operations are expected to commence in late [removed: 2024.][added: 2025.]

| R&D facility | | | | | | Modules | | | | | | Uppsala, Sweden | | | | | | Lease | | |

| Manufacturing plant (2) | | | | | | Modules | | | | | | Iberia Parish, Louisiana, United States | | | | | | Lease land, own buildings | | |

As of February [removed: 24, 2023,] [added: 23, 2024,] there were [removed: 44] [added: 41] record holders of our common stock, which does not reflect beneficial owners of our shares.

For purposes of the graph, an investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, the S&P 500 Index, and the Invesco Solar ETF on December 31, [removed: 2017,] [added: 2018,] and its relative performance is tracked through December 31, [removed: 2022.][added: 2023.]

[removed: ][added: ]

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, [removed: 2022] [added: 2023] our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We also carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2022] [added: 2023] based on the criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on such evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2022.][added: 2023.]

[added: The] effectiveness of our internal control over financial reporting as of December 31, [removed: 2022] [added: 2023] has also been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its [removed: report] [added: report,] which appears herein.

We also carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of our “internal control over financial reporting” to determine whether any changes in our internal control over financial reporting occurred during the quarter ended December 31, [removed: 2022] [added: 2023] that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Based on that evaluation, there were no such changes in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2022.][added: 2023.]

The

Insider Trading Arrangements

From time to time, our directors and officers may adopt plans for the purchase or sale of our securities.

Such plans may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

During the three months ended December 31, 2023, none of our officers or directors adopted or terminated Rule 10b5-1 trading arrangements or adopted or terminated non-Rule 10b5-1 trading arrangements.

None.

“Business – Information about Our Executive Officers.” Information concerning our board of directors and audit committee of our board of directors will appear in our [removed: 2023] [added: 2024] Proxy Statement, under the sections “Directors” and “Corporate Governance,” and information concerning Section 16(a) beneficial ownership reporting compliance will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Section 16(a) Beneficial Ownership Reporting Compliance.” We have adopted a code of business conduct and ethics that applies to all directors, officers, and associates of First Solar.

Information concerning this code will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Corporate Governance.” The information in such sections of the Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.

Information concerning executive compensation and related information will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Executive Compensation,” and information concerning the compensation committee of our board of directors (the “compensation committee”) will appear under the sections “Corporate Governance” and “Compensation Committee Report.” The information in such sections of the [removed: 2023] [added: 2024] Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.

Information concerning the security ownership of certain beneficial owners and management and related stockholder matters, including certain information regarding our equity compensation plans, will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” The information in such section of the Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.

The following table sets forth certain information as of December 31, [removed: 2022] [added: 2023] concerning securities authorized for issuance under our equity compensation plans:

(1)Includes [removed: 1,310,887] [added: 960,448] shares issuable upon vesting of restricted stock units [removed: (“RSUs”)] granted under our 2020 Omnibus Incentive Compensation Plan (“2020 Omnibus Plan”).

These [removed: RSUs] [added: restricted stock units] include the maximum amount of performance units available for issuance under our long-term incentive program for key executive officers and associates.

(2)The weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding [removed: RSUs,] [added: restricted stock units,] which have no exercise price.

See Note [removed: 15.][added: 17.]

| Equity compensation plans approved by stockholders | | | | | | 960,448 | | | | | | $ | — | | | | | 6,581,106 | | |

| Total | | | | | | 960,448 | | | | | | $ | — | | | | | 6,581,106 | | |

| Equity compensation plans approved by stockholders | | | | | | 1,310,887 | | | | | | $ | — | | | | | 6,500,832 | | |

| Total | | | | | | 1,310,887 | | | | | | $ | — | | | | | 6,500,832 | | |

Information concerning certain relationships and related party transactions will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Certain Relationships and Related Party Transactions,” and information concerning director independence will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Corporate Governance.” The information in such sections of the Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.

Information concerning principal accounting fees and services and the audit committee of our board of directors’ pre-approval policies and procedures for these items will appear in our [removed: 2023] [added: 2024] Proxy Statement under the section “Principal Accountant Fees and Services.” The information in such section of the Proxy Statement is incorporated by reference into this Annual Report on Form 10-K.

We have audited the accompanying consolidated balance sheets of First Solar, Inc. and its subsidiaries [removed: (“the Company”)] [added: (the “Company”)] as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control – Integrated Framework* *(2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022] [added: 2023] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the COSO.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission [removed: (“SEC”)] and the PCAOB.

[removed: *Product Warranty Liability*][added: | Product warranty liability (1) | | | | | | 5,920 | | | | | | 10,660 | | |]

The principal considerations for our determination that performing procedures relating to the [removed: product warranty liability] [added: accounting for certain tax credits under the IRA] is a critical audit matter are (i) the significant judgment by management in [removed: estimating] [added: determining] the [removed: projections of warranty claims and] [added: applicable accounting model related to the Section 45X tax credits;] (ii) a high degree of auditor [removed: judgment, subjectivity,] [added: judgment] and [removed: effort] [added: subjectivity] in performing procedures [added: and evaluating audit evidence related] to [removed: evaluate the projections] [added: management’s assessment] of [removed: warranty claims and] [added: the accounting model] related [added: to the Section 45X tax credits; and (iii) the] audit [removed: evidence.][added: effort involved the use of professionals with specialized skill and knowledge.]

| | | | | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Cash and cash equivalents | | | | | | $ | [removed: 1,481,269] [added: 1,946,994] | | | | | $ | [removed: 1,450,654] [added: 1,481,269] | |

| Marketable securities | | | | | | [removed: 1,096,712] [added: 155,495] | | | | | | [removed: 375,389] [added: 1,096,712] | | |

| Accounts receivable trade, net | | | | | | [removed: 324,337] [added: 660,776] | | | | | | [removed: 429,436] [added: 324,337] | | |

| Inventories | | | | | | [removed: 621,376] [added: 819,899] | | | | | | [removed: 666,299] [added: 621,376] | | |

| Total current assets | | | | | | [removed: 3,791,421] [added: 4,634,809] | | | | | | [removed: 3,191,243] [added: 3,791,421] | | |

| Property, plant and equipment, net | | | | | | [removed: 3,536,902] [added: 4,397,285] | | | | | | [removed: 2,649,587] [added: 3,536,902] | | |

| Project assets | | | | | | [removed: 30,108] [added: 28,430] | | | | | | [removed: 315,488] [added: 30,108] | | |

| Deferred tax assets, net | | | | | | [removed: 78,680] [added: 142,819] | | | | | | [removed: 59,162] [added: 78,680] | | |

| Restricted marketable securities | | | | | | [removed: 182,070] [added: 198,310] | | | | | | [removed: 244,726] [added: 182,070] | | |

| Goodwill | | | | | | [removed: 14,462] [added: 29,687] | | | | | | 14,462 | | |

| Intangible assets, net | | | | | | [removed: 31,106] [added: 64,511] | | | | | | [removed: 45,509] [added: 31,106] | | |

| Inventories | | | | | | [removed: 260,395] [added: 266,899] | | | | | | [removed: 237,512] [added: 260,395] | | |

| Total assets | | | | | | $ | [removed: 8,251,228] [added: 10,365,132] | | | | | $ | [removed: 7,413,746] [added: 8,251,228] | |

| Accounts payable | | | | | | $ | [removed: 341,409] [added: 207,178] | | | | | $ | [removed: 193,374] [added: 341,409] | |

| Income taxes payable | | | | | | [removed: 29,397] [added: 22,134] | | | | | | [removed: 4,543] [added: 29,397] | | |

| Accrued expenses | | | | | | [removed: 382,782] [added: 524,829] | | | | | | [removed: 288,450] [added: 382,782] | | |

| Current portion of [removed: long-term] debt | | | | | | [removed: —] [added: 96,238] | | | | | | [removed: 3,896] [added: —] | | |

| Deferred revenue | | | | | | [removed: 263,215] [added: 413,579] | | | | | | [removed: 201,868] [added: 263,215] | | |

| Other current liabilities | | | | | | [removed: 21,245] [added: 42,200] | | | | | | [removed: 34,747] [added: 21,245] | | |

| Total current liabilities | | | | | | [removed: 1,038,048] [added: 1,306,158] | | | | | | [removed: 726,878] [added: 1,038,048] | | |

| Accrued solar module collection and recycling liability | | | | | | [removed: 128,114] [added: 135,123] | | | | | | [removed: 139,145] [added: 128,114] | | |

| Long-term debt | | | | | | [removed: 184,349] [added: 464,068] | | | | | | [removed: 236,005] [added: 184,349] | | |

| Deferred revenue | | | | | | [removed: 944,725] [added: 1,591,604] | | | | | | [removed: 95,943] [added: 944,725] | | |

| Other liabilities | | | | | | [removed: 119,937] [added: 180,710] | | | | | | [removed: 256,224] [added: 119,937] | | |

| Total liabilities | | | | | | [removed: 2,415,173] [added: 3,677,663] | | | | | | [removed: 1,454,195] [added: 2,415,173] | | |

| Common stock, $0.001 par value per share; 500,000,000 shares authorized; [removed: 106,609,094] [added: 106,847,475] and [removed: 106,332,315] [added: 106,609,094] shares issued and outstanding at December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] respectively | | | | | | 107 | | | | | | [removed: 106] [added: 107] | | |

| Additional paid-in capital | | | | | | [removed: 2,887,476] [added: 2,890,427] | | | | | | [removed: 2,871,352] [added: 2,887,476] | | |

| Accumulated earnings | | | | | | [removed: 3,140,289] [added: 3,971,066] | | | | | | [removed: 3,184,455] [added: 3,140,289] | | |

| Accumulated other comprehensive loss | | | | | | [removed: (191,817)] [added: (174,131)] | | | | | | [removed: (96,362)] [added: (191,817)] | | |

| Total stockholders’ equity | | | | | | [removed: 5,836,055] [added: 6,687,469] | | | | | | [removed: 5,959,551] [added: 5,836,055] | | |

| Total liabilities and stockholders’ equity | | | | | | $ | [removed: 8,251,228] [added: 10,365,132] | | | | | $ | [removed: 7,413,746] [added: 8,251,228] | |

| | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

*Accounting for Certain Tax Credits Under the Inflation Reduction Act*

As described in Note 2 to the consolidated financial statements, management accounts for government assistance that is not subject to income tax accounting using a grant accounting model, by analogy to international accounting standards for government grants and disclosure of government assistance.

Management recognizes such grants when there is reasonable assurance that the Company will comply with the grant’s conditions and that the grant will be received.

Government grants not related to long-lived assets are considered income-based grants, which are initially recognized as government grants receivable and as a reduction to the related cost of activities that generated the benefit.

As described in Note 9 to the consolidated financial statements, in August 2022, the U.S. President signed into law the Inflation Reduction Act (IRA).

Among other things, the IRA offers a tax credit, pursuant to Section 45X of the Internal Revenue Code (IRC), for solar modules and solar module components manufactured in the United States and sold to third parties.

Such credit may be refundable by the IRS or transferable to a third party and is available from 2023 to 2032, subject to phase down beginning in 2030.

Management expects to qualify for a credit of approximately 17 cents per watt for each module produced in the United States and sold to a third party.

Management recognizes the credit as a reduction to cost of sales in the period the modules are sold to customers, with a corresponding government grants receivable.

The Company recognized a benefit to cost of sales of $659.7 million for the year ended December 31, 2023 and a government grants receivable, net of $659.7 million as of December 31, 2023.

These procedures included testing the effectiveness of controls relating to management’s assessment of the applicable accounting model related to the laws and regulations related to the IRA.

These procedures also included, among others, (i) reading management’s assessment of (a) the models used to account for government assistance; (b) key considerations in determining the accounting model applicable to transferable credits; (c) the financial statement disclosures; and (d) potential alternative accounting views considered; and (ii) evaluating whether management’s assessment is consistent with applicable laws and regulations, as well as the presentation of the Section 45X tax credits within the financial statements, including the recognition of the tax credit as a reduction to cost of sales in the period the modules are sold to customers and as a government grants receivable.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management's assessment of applicable laws and regulations.

February 27, 2024

| Government grants receivable, net | | | | | | 659,745 | | | | | | — | | |

| Other current assets | | | | | | 391,900 | | | | | | 267,727 | | |

| Government grants receivable | | | | | | 152,208 | | | | | | — | | |

| Other assets | | | | | | 478,604 | | | | | | 356,192 | | |

| Net income (loss) | | | | | | $ | 830,777 | | | | | $ | (44,166) | | | | | $ | 468,693 | |

| Net income | | | | | | — | | | | | | — | | | | | | — | | | | | | 830,777 | | | | | | — | | | | | | 830,777 | | |

| Balance at December 31, 2023 | | | | | | 106,847 | | | | | | $ | 107 | | | | | $ | 2,890,427 | | | | | $ | 3,971,066 | | | | | $ | (174,131) | | | | | $ | 6,687,469 | |

| Net income (loss) | | | | | | $ | 830,777 | | | | | $ | (44,166) | | | | | $ | 468,693 | |

| Government grants receivable | | | | | | (659,745) | | | | | | — | | | | | | — | | |

| Acquisitions, net of cash acquired | | | | | | (35,739) | | | | | | — | | | | | | — | | |

| Proceeds to be received from asset-based government grants | | | | | | $ | 152,208 | | | | | $ | — | | | | | $ | — | |

| Acquisitions funded by contingent consideration | | | | | | $ | 18,500 | | | | | $ | — | | | | | $ | — | |

We recognize grants

expected to be received directly from a government entity at their stated value.

When we expect to transfer grants to a third party, we recognize the grants at, or adjust their carrying value to, the amount expected to be received from the transaction.

IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and periodically assessed for impairment.

When the IPR&D project is complete, it is reclassified as a finite-lived intangible asset.

We subsequently recognize the cost of operating leases on a straight-line basis over the lease term.

Finance lease right-of-use assets are amortized over the shorter of the estimated useful life of the underlying assets or the lease term, and interest expense on a finance lease liability is recognized using the effective interest method over the lease term.

For certain contracts, we may also be required to make liquidated damage payments if we fail to deliver modules that meet certain U.S. domestic content requirements.

Business Acquisitions

In May 2023, we acquired 100% of the shares of Evolar, a developer of perovskite technology, for cash payments of $35.5 million, net of cash acquired of $0.5 million, and a promise to pay additional consideration of up to $42.5 million contingent on the achievement of certain technical milestones.

The fair value of such contingent consideration was determined to be $18.5 million at the acquisition date.

In connection with applying the acquisition method of accounting, $47.0 million of the purchase price consideration was assigned to an IPR&D intangible asset to be amortized over its useful life upon successful completion of the underlying project, $15.0 million was assigned to goodwill, $9.2 million was assigned to a deferred tax liability, and $2.0 million was assigned to property, plant and equipment.

The acquired IPR&D includes technical information, know-how, and other proprietary information associated with certain production capabilities for perovskite technology.

The acquisition is expected to accelerate the development of high efficiency multi-junction devices by integrating Evolar’s know-how with First Solar’s existing R&D capabilities, intellectual property portfolio, and expertise in developing and commercially scaling thin film PV products.

[Table of Content](#i161bcb9dee5c411eae8920ab3a8dda3e_7)[s](#i161bcb9dee5c411eae8920ab3a8dda3e_7)

As described in Notes 2 and 12 to the consolidated financial statements, the Company provides a limited PV solar module warranty which covers defects in materials and workmanship for up to 12.5 years and warrants that modules will produce at least a specified minimum percentage of their labeled power output rating, on either an individual module or system-level basis, for up to 30 years.

The Company’s product warranty liability was $33.8 million as of December 31, 2022.

Product warranty estimates are based primarily on the number of solar modules under warranty installed at customer locations, historical experience with and projections of warranty claims, and estimated per-module replacement costs.

These procedures included testing the effectiveness of controls relating to valuation of the product warranty liability.

These procedures also included, among others, testing the appropriateness of the methodology used and the reasonableness of the significant assumptions used by management in developing these estimates related to projections of warranty claims.

Evaluating whether the significant assumptions relating to the product warranty liability were reasonable involved (i) testing historical warranty claims and settlements, (ii) evaluating the reasonableness and appropriateness of factors considered by management in estimating the final settlement of open customer claims, and (iii) evaluating the reasonableness and appropriateness of the methodology used by management to determine return rates used in the valuation of the product warranty liability.

February 28, 2023

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Accounts receivable unbilled, net | | | | | | 30,654 | | | | | | 25,273 | | |

| Other current assets | | | | | | 237,073 | | | | | | 244,192 | | |

| PV solar power systems, net | | | | | | 6,242 | | | | | | 217,293 | | |

| Other assets | | | | | | 319,842 | | | | | | 438,764 | | |

| Equity in earnings, net of tax | | | | | | — | | | | | | — | | | | | | (2,129) | | |

| Balance at December 31, 2019 | | | | | | 105,449 | | | | | | $ | 105 | | | | | $ | 2,849,376 | | | | | $ | 2,326,620 | | | | | $ | (79,334) | | | | | $ | 5,096,767 | |

| Cumulative-effect adjustment for the adoption of ASU 2016-13 | | | | | | — | | | | | | — | | | | | | — | | | | | | (9,213) | | | | | | — | | | | | | (9,213) | | |

| Net income | | | | | | — | | | | | | — | | | | | | — | | | | | | 398,355 | | | | | | — | | | | | | 398,355 | | |

| Other financing activities | | | | | | — | | | | | | — | | | | | | (804) | | |

*Accounts Receivable Unbilled*.

Accounts receivable unbilled represents a contract asset for revenue that has been recognized in advance of billing the customer, which was common for our project-related sales contracts.

Revenue may be recognized in advance of billing the customer, resulting in an amount recorded to “Accounts receivable unbilled, net” or “Other assets” depending on the expected timing of payment for such unbilled receivables.

Once we have an unconditional right to consideration, we typically bill our customer and reclassify the “Accounts receivable unbilled, net” to “Accounts receivable trade, net.” Billing requirements vary by contract but are generally structured around the completion of certain development, construction, or other specified milestones.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

*PV Solar Power Systems.* PV solar power systems represent project assets that we may temporarily own and operate after being placed in service.

We report our PV solar power systems at cost, less accumulated depreciation.

We begin depreciation for PV solar power systems when they are placed in service.

We compute depreciation expense for the systems using the straight-line method over the shorter of the term of the related PPA or 25 years.

*Project Assets.* Project assets primarily consist of costs related to solar power projects in various stages of development that are capitalized prior to the completion of the sale of the projects.

These project related costs include costs for land, development, and construction of a PV solar power system.

Development costs may include legal, consulting, permitting, transmission upgrade, interconnection, and other similar costs.

We typically classify project assets as noncurrent due to the nature of solar power projects (as long-lived assets) and the time required to complete all activities to develop, construct, and sell projects, which is typically longer than 12 months.

We present all expenditures related to the development and construction of project assets as a component of cash flows from operating activities.

Our modules business represents our only reporting unit.

Among other things, our solar module warranty also covers the resulting power output loss from cell cracking.

In resolving claims under both the limited defect and power output warranties, we typically have the option of either repairing or replacing the covered modules or, under the limited power output warranty, providing additional modules to remedy the power shortfall.

Our limited module warranties also include an option for us to remedy claims under such warranties, generally exercisable only after the second year of the warranty period, by making certain cash payments.

Under the limited workmanship warranty, the optional cash payment will be equal to the prevailing market price of the module, reduced by a degradation factor, and under the limited power output warranty, the cash payment will be equal to the shortfall in power output.

Such limited module warranties are standard for module sales and may be transferred from the original purchasers of the solar modules to subsequent purchasers upon resale.

| Date: February [removed: 28, 2023] [added: 27, 2024] | | | By: | | | | | | /s/ BYRON JEFFERS | | |

| /s/ MARK R. WIDMAR | | | | | | Chief Executive Officer and Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ ALEXANDER R. BRADLEY | | | | | | Chief Financial Officer | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ MICHAEL J. AHEARN | | | | | | [removed: Chairman] [added: Chair] of the Board of Directors | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ RICHARD D. CHAPMAN | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ ANITA MARANGOLY GEORGE | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ GEORGE A. HAMBRO | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ MOLLY E. JOSEPH | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ CRAIG KENNEDY | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ LISA A. KRO | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ WILLIAM J. POST | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ PAUL H. STEBBINS | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ MICHAEL SWEENEY | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |

| /s/ NORMAN L. WRIGHT | | | | | | Director | | | | | | February [removed: 28, 2023] [added: 27, 2024] | | |