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WDC » Topics » Dependence on a limited number of qualified suppliers of components and manufacturing equipment could lead to delays, lost revenue or increased costs.

These excerpts taken from the WDC 10-K filed Aug 20, 2008.
Dependence on a limited number of qualified suppliers of components and manufacturing equipment could lead to delays, lost revenue or increased costs.
 
Certain components are available from a limited number of suppliers, and we are sole sourced with some of these suppliers on certain products. Because we depend on a limited number of suppliers for certain hard drive components and manufacturing equipment, each of the following could significantly harm our operating results:
 
  •  an increase in the cost of such components or equipment;
 
  •  an extended shortage of required components or equipment;
 
  •  consolidation of key suppliers, such as the acquisition of Brilliant Manufacturing Limited by Nidec Corporation, the acquisition of Agere Systems Inc. by LSI Corporation, the acquisition of Infineon Technologies’ hard drive semiconductor business by LSI Corporation, the acquisition of Alps Electric Co. Ltd.’s magnetic device division’s assets and related intellectual property by TDK Corp, and the acquisition of Magnecomp Precision Technology Public Company Limited by TDK Corp;
 
  •  failure of a key supplier’s business process; or
 
  •  failure of key suppliers to remain in business, to remain independent merchant suppliers, to adjust to market conditions, or to meet our quality, yield or production requirements.


21

Table of Contents

 
Dependence
on a limited number of qualified suppliers of components and
manufacturing equipment could lead to delays, lost revenue or
increased costs.


 



Certain components are available from a limited number of
suppliers, and we are sole sourced with some of these suppliers
on certain products. Because we depend on a limited number of
suppliers for certain hard drive components and manufacturing
equipment, each of the following could significantly harm our
operating results:


 
























































  • 
an increase in the cost of such components or equipment;
 
  • 
an extended shortage of required components or equipment;
 
  • 
consolidation of key suppliers, such as the acquisition of
Brilliant Manufacturing Limited by Nidec Corporation, the
acquisition of Agere Systems Inc. by LSI Corporation, the
acquisition of Infineon Technologies’ hard drive
semiconductor business by LSI Corporation, the acquisition of
Alps Electric Co. Ltd.’s magnetic device division’s
assets and related intellectual property by TDK Corp, and the
acquisition of Magnecomp Precision Technology Public Company
Limited by TDK Corp;
 
  • 
failure of a key supplier’s business process; or
 
  • 
failure of key suppliers to remain in business, to remain
independent merchant suppliers, to adjust to market conditions,
or to meet our quality, yield or production requirements.





21




Table of Contents





 




This excerpt taken from the WDC 10-K filed Aug 28, 2007.
Dependence on a limited number of qualified suppliers of components and manufacturing equipment could lead to delays, lost revenue or increased costs.
 
Certain components are available from a limited number of suppliers. Because we depend on a limited number of suppliers for certain hard drive components and manufacturing equipment, each of the following could significantly harm our operating results:
 
  •  an increase in the cost of such components or equipment;
 
  •  an extended shortage of required components or equipment;
 
  •  consolidation of key suppliers, such as the acquisition of Brilliant Manufacturing Limited by Nidec Corporation, the acquisition of Agere Systems Inc. by LSI Logic Corporation, and the planned acquisition of Alps Electric Co. Ltd.’s magnetic device division’s assets and related intellectual property by TDK Corp;
 
  •  failure of a key supplier’s business process; or
 
  •  the failure of key suppliers to remain in business, to remain independent merchant suppliers, to adjust to market conditions, or to meet our quality, yield or production requirements.
 
Our future operating results may also depend substantially on our suppliers’ ability to timely qualify their components in our programs, and their ability to supply us with these components in sufficient volumes to meet our production requirements. A number of the components that we use are available from only a single or limited number of qualified outside suppliers, and may be used across multiple product lines. In addition, some of the components (or component types) used in our products are used in other devices, such as mobile telephones and digital cameras. If there is a significant simultaneous upswing in demand for such a component (or component type) from several high volume industries, resulting in a supply reduction, or a component is otherwise in short supply, or if a supplier fails to qualify or has a quality issue with a component, we may experience delays or increased costs in obtaining that component. For example, in the last year the hard drive industry faced a tightness in the availability of materials used in the manufacture of magnetic components, such as heads, media and magnets. If we are unable to obtain sufficient quantities of materials used in the manufacture of magnetic components, or other necessary components, we may experience production delays which could cause us loss of revenue. If a component becomes unavailable, we could suffer significant loss of revenue.
 
In addition, certain equipment we use in our manufacturing or testing processes is available only from a limited number of suppliers. Some of this equipment uses materials that at times could be in short supply. If these materials are not available, or are not available in the quantities we require for our manufacturing and testing processes, our ability to manufacture our products could be impacted, and we could suffer significant loss of revenue.
 
This excerpt taken from the WDC 10-K filed Nov 20, 2006.
Dependence on a limited number of qualified suppliers of components and manufacturing equipment could lead to delays, lost revenue or increased costs.
 
Certain components are available from a limited number of suppliers. Because we depend on a limited number of suppliers for certain hard drive components and manufacturing equipment, each of the following could significantly harm our operating results:
 
  •  an increase in the cost of such components or equipment;
 
  •  an extended shortage of required components or equipment;
 
  •  consolidation of key suppliers;
 
  •  failure of a key supplier’s business process; or
 
  •  the failure of key suppliers to remain in business, adjust to market conditions, or to meet our quality, yield or production requirements.
 
Our future operating results may also depend substantially on our suppliers’ ability to timely qualify their components in our programs, and their ability to supply us with these components in sufficient volumes to meet our production requirements. A number of the components that we use are available from only a single or limited number of qualified outside suppliers, and may be used across multiple product lines. In addition, some of the components (or component types) used in our products are used in other devices, such as mobile telephones and digital cameras. If there is a significant simultaneous upswing in demand for such a component (or component type) from several high volume industries, resulting in a supply reduction, or a component is otherwise in short supply, or if a supplier fails to qualify or has a quality issue with a component, we may experience delays or increased costs in obtaining that component. For example, the hard drive industry is currently facing a tightness in the availability of media (rotating magnetic disks) components, and there are currently only three independent suppliers of aluminum media and three independent suppliers of glass media in the market. Several of our competitors have an internal supply of media therefore allowing them to better withstand a shortage of media while, if we are unable to obtain sufficient quantities of media, or other necessary components, we may experience production delays which could cause us loss of revenue. If a component becomes unavailable, we could suffer significant loss of revenue.
 
In addition, certain equipment we use in our manufacturing or testing processes is available only from a limited number of suppliers. Some of this equipment uses materials that at times could be in short supply. If these materials are not available, or are not available in the quantities we require for our manufacturing and testing processes, our ability to manufacture our products could be impacted, and we could suffer significant loss of revenue.
 

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Aug 20, 2008
10-K
Aug 28, 2007
10-K
Nov 20, 2006

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