Adaptec 2002 Annual Report Download - page 35

Restructuring plans require significant management resources to execute and we may fail to achieve our
targeted goals and our expected annualized savings. We may have incorrectly anticipated the demand for our
products, we may be forced to restructure further or may incur further operating charges due to poor
business conditions and some of our product development initiatives may be delayed due to the reduction in
our development resources.
Our revenues may decline if our customers use our competitors' products instead of ours, suffer further
reductions in demand for their products or are acquired or sold.
We are experiencing significantly greater competition from many different market participants as the market
in which we participate matures. In addition, we are expanding into markets, such as the wireless
infrastructure and generic microprocessor markets, which have established incumbents with substantial
financial and technological resources. We expect fiercer competition than that which we have traditionally
faced as some of these incumbents derive a majority of their earnings from these markets.
All of our competitors pose the following threats to us:
As our customers design next generation systems and select the chips
for those new systems, our competitors have an opportunity to convince
our customers to use their products, which may cause our revenues to
decline.
We typically face competition at the design stage, where customers evaluate alternative design approaches
requiring integrated circuits. Our competitors may have more opportunities to supplant our products in next
generation systems because of the shortening product life and design−in cycles in many of our customers'
products.
In addition, as a result of the industry downturn, and as semiconductors sourced from third party suppliers
comprise a greater portion of the total materials cost in OEM equipment, OEMs are becoming more price
conscious than in the past. We have also experienced increased price aggressiveness from some competitors
that wish to enter into the market segments in which we participate. These circumstances may make some of
our products price−uncompetitive or force us to match low prices. We may lose design opportunities or may
experience overall declines in gross margins as a result of increased price competition.
The markets for our products are intensely competitive and subject to rapid technological advancement in
design tools, wafer manufacturing techniques, process tools and alternate networking technologies. We may
not be able to develop new products at competitive pricing and performance levels. Even if we are able to do
so, we may not complete a new product and introduce it to market in a timely manner. Our customers may
substitute use of our products in their next generation equipment with those of current or future
competitors.
Increasing competition in our industry will make it more difficult to
achieve design wins.
We face significant competition from three major fronts. First, we compete against established peer−group
semiconductor companies that focus on the communications semiconductor business. These companies include
Agere Systems, Applied Micro Circuits Corporation, Broadcom, Exar Corporation, Conexant Systems, Marvell
Technology Group, Multilink Technology Corporation, Silicon Image, Transwitch and Vitesse Semiconductor.
These companies are well financed, have significant communications semiconductor technology assets, have
established sales channels, and are dependent on the market in which we participate for the bulk of their
revenues.
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