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WDC » Topics » Contractual commitments with component suppliers may result in us paying increased charges and cash advances for such components.These excerpts taken from the WDC 10-K filed Aug 20, 2008. Contractual
commitments with component suppliers may result in us paying
increased charges and cash advances for such
components.
To reduce the risk of component shortages, we attempt to provide
significant lead times when buying components. As a result, we
may be subject to cancellation charges if we cancel orders,
which may occur when we make technology transitions or when our
component needs change. In addition, we have entered into
contractual commitments with component suppliers and may enter
into contractual commitments with other component suppliers, in
an effort to increase and stabilize the supply of those
components, and enable us to purchase such components at
favorable prices. Some of these commitments require or may
require us to buy a substantial number of components from the
supplier or make significant cash advances to the supplier;
however, these commitments may not result in a satisfactory
increase or stabilization of the supply of such components.
Contractual commitments with component suppliers may result in us paying increased charges and cash advances for such components. To reduce the risk of component shortages, we attempt to provide significant lead times when buying components. As a result, we may be subject to cancellation charges if we cancel orders, which may occur when we make technology transitions or when our component needs change. In addition, we have entered into contractual commitments with component suppliers and may enter into contractual commitments with other component suppliers, in an effort to increase and stabilize the supply of those components, and enable us to purchase such components at favorable prices. Some of these commitments require or may require us to buy a substantial number of components from the supplier or make significant cash advances to the supplier; however, these commitments may not result in a satisfactory increase or stabilization of the supply of such components. This excerpt taken from the WDC 10-K filed Aug 28, 2007. Contractual
commitments with component suppliers may result in us paying
increased charges and cash advances for such
components.
To reduce the risk of component shortages, we attempt to provide
significant lead times when buying components. As a result, we
may be subject to cancellation charges if we cancel orders,
which may occur when we make technology transitions or when our
component needs change. In addition, we have entered into
contractual commitments with component suppliers, such as
suppliers of media, and may enter into contractual commitments
with other component suppliers, in an effort to increase and
stabilize the supply of those components, and enable us to
purchase such components at favorable prices. Some of these
commitments require or may require us to buy a substantial
number of components from the supplier or make significant cash
advances to the supplier, however these commitments may not
result in a satisfactory increase or stabilization of the supply
of such components.
Our
high-volume hard drive manufacturing facilities, and the
manufacturing facilities of many of our suppliers, are
concentrated in Asia, and our planned media manufacturing
facilities will be located in Asia, which subjects us to the
risk of damage or loss of any of these facilities and localized
risks to employees in these locations.
Our high-volume hard drive manufacturing facilities are in
Malaysia and Thailand and the manufacturing facilities of many
of our suppliers are in Asia. Following our planned acquisition
of Komag, we will also have media and substrate manufacturing
facilities in Malaysia. A condition or event such as political
instability, civil unrest or a power outage, or a fire, flood,
earthquake or other disaster that adversely affects any of these
facilities or our ability to manufacture could
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limit the total volume of hard drives we are able to manufacture
and result in a loss of sales and revenue and harm our operating
results. Similarly, a localized health risk affecting our
employees or the staff of our suppliers, such as a new pandemic
influenza in Asia, could impair the total volume of hard drives
that we are able to manufacture.
Our head
manufacturing operations include a single wafer fabrication
facility in Fremont, California and a single head gimbal
assembly facility in Bang Pa-In, Thailand, and our planned media
operations will include four facilities in Malaysia, which
subjects us to substantial risk of damage or loss if operations
at either of these facilities are disrupted.
As we have previously discussed in public statements, our
business plan presently contemplates that we plan to design and
manufacture approximately 70% to 80% of the heads required for
the hard drives we manufacture. We fabricate wafers in our
Fremont, California facility, and the wafers are then sent to
our Thailand facility for slider fabrication and wafer slicing
and HGA assembly and testing. Additionally, following our
planned acquisition of Komag, we will manufacture the majority
of our media and substrates in Malaysia facilities. A fire,
flood, earthquake or other disaster, condition or event such as
a power outage that adversely affects our facilities in Fremont,
California or Bang Pa-In, Thailand, or in Malaysia following our
planned acquisition of Komag, would significantly affect supply
of our heads or media, respectively, and limit our ability to
manufacture hard drives which would result in a substantial loss
of sales and revenue and a substantial harm to our operating
results.
This excerpt taken from the WDC 10-K filed Nov 20, 2006. Contractual
commitments with component suppliers may result in us paying
increased charges and cash advances for such
components.
To reduce the risk of component shortages, we attempt to provide
significant lead times when buying these components. As a
result, we may be subject to cancellation charges if we cancel
orders, which may occur when we make technology transitions or
when our component needs change. In addition, we have entered
into contractual commitments with component suppliers, such as
suppliers of media, and may enter into contractual commitments
with other
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component suppliers, in an effort to increase and stabilize the
supply of those components, and enable us to purchase such
components at favorable prices. Some of these commitments
require or may require us to buy a substantial number of
components from the supplier or make significant cash advances
to the supplier, however these commitments may not result in a
satisfactory increase or stabilization of the supply of such
components.
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