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WDC » Topics » Shortages of commodity materials, price volatility, or use by other industries of materials used in the hard drive industry, may increase our cost structure.These excerpts taken from the WDC 10-K filed Aug 20, 2008. Shortages
of commodity materials, price volatility, 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 of
which increases our costs of manufacturing and transporting hard
drives and key components. Shortages of materials such as
stainless steel, aluminum, nickel, neodymium, ruthenium or
platinum increase our costs and may result in lower operating
margins if we are unable to find ways to mitigate these
increased costs. For example, in advance of the 2008 Beijing
Summer Olympics, in seeking to minimize pollution, the
People’s Republic of China shut down factories within a
specified radius of Beijing. These factory shut-downs may cause
a future shortage in materials we use in nickel plating of
magnetic media, causing prices to increase and adversely
affecting our nickel plating costs. Additionally, perpendicular
recording technology requires increased usage of precious metals
such as ruthenium and platinum, the price of which may continue
to be volatile, which
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could adversely affect our operating margins. Furthermore, if
other high volume industries increase their demand for materials
such as these, our costs may further increase which could have
an adverse effect on our operating margins. The volatility in
the cost of oil also affects our transportation costs and may
result in lower operating margins if we are unable to pass these
increased costs through to our customers.
Shortages of commodity materials, price volatility, 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 of which increases our costs of manufacturing and transporting hard drives and key components. Shortages of materials such as stainless steel, aluminum, nickel, neodymium, ruthenium or platinum increase our costs and may result in lower operating margins if we are unable to find ways to mitigate these increased costs. For example, in advance of the 2008 Beijing Summer Olympics, in seeking to minimize pollution, the People’s Republic of China shut down factories within a specified radius of Beijing. These factory shut-downs may cause a future shortage in materials we use in nickel plating of magnetic media, causing prices to increase and adversely affecting our nickel plating costs. Additionally, perpendicular recording technology requires increased usage of precious metals such as ruthenium and platinum, the price of which may continue to be volatile, which
Table of Contentscould adversely affect our operating margins. Furthermore, if other high volume industries increase their demand for materials such as these, our costs may further increase which could have an adverse effect on our operating margins. The volatility in the cost of oil also affects our transportation costs and may result in lower operating margins if we are unable to pass these increased costs through to our customers. | EXCERPTS ON THIS PAGE:
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