Adaptec 2005 Annual Report Download - page 23

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Table of Contents
We earned a substantial portion of our FTTH revenues in Japan in 2007. We procure substantially all of our wafers from Taiwan and use assemblers
throughout Asia.
Given the depth of our sales and operations in Asia, we face these additional risks that could negatively impact our results of operations, including
economic sanctions imposed by the U.S. government, imposition of tariffs and other potential trade barriers or regulations, uncertain protection for intellectual
property rights and generally longer receivable collection periods.
We are subject to the risks of conducting business outside North America, which may impair our sales, development or manufacturing of our products.
In addition to selling our products in a number of countries, an increasing portion of our research and development and manufacturing is conducted outside
North America, in particular, India and China. The geographic diversity of our business operations could hinder our ability to coordinate design, manufacturing
and sales activities. If we are unable to develop systems and communication processes to support our geographic diversity, we may suffer product development
delays or strained customer relationships.
Hostilities in the Middle East may have a significant impact on our Israeli subsidiary’s ability to conduct its business.
One of our research and development facilities is located in Israel, and employs approximately 176 people. On an on-going basis, some of our Israeli
employees are periodically called into active military duty. In the event of severe hostilities breaking out, a significant number of our Israeli employees may be
called into active military duty, resulting in delays, including product development schedules.
Our revenues may decline if we do not maintain a competitive portfolio of products.
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, enterprise storage, customer premise equipment, and generic microprocessor markets, which
have established incumbents with substantial financial and technological resources. We expect more intense competition than that which we have traditionally
faced as some of these incumbents derive a majority of their earnings from these markets.
We typically face competition at the design stage, where customers evaluate alternative design approaches requiring integrated circuits. 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, reducing our future revenues. With the shortening product life and design-in cycles in many of our
customers’ products, our competitors may have more opportunities to supplant our products in next generation systems.
17
Source: PMC SIERRA INC, 10-K, February 22, 2008