This excerpt taken from the WDC 10-K filed Aug 28, 2007.
Shortages of commodity materials, or use by other industries of materials used in the hard drive industry, may increase our cost structure.
There are costs for certain commodity materials, an increase in which increases our costs of manufacturing and transporting hard drives and key components. For example, shortages of materials such as steel, aluminum and precious metals increase our costs and may result in lower operating margins if we are unable to find ways to mitigate these increased costs. The variability in the cost of oil also affects our costs and may result in lower operating margins if we are unable to pass increased costs through to our customers.
Additionally, there are certain limited supply materials, such as raw materials like nickel and steel as well as metals like neodymium and ruthenium, which are used in the manufacturing of hard drive components. If other high volume industry demands for any of these materials increase, our costs may increase which could have an adverse affect on our operating margins.