Crucial 2012 Annual Report Download - page 12

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ITEM 1A. RISK FACTORS
In addition to the factors discussed elsewhere in this Form 10-K, the following are important factors which could cause
actual results or events to differ materially from those contained in any forward-looking statements made by or on behalf of us.
We have experienced dramatic declines in average selling prices for our semiconductor memory products which have
adversely affected our business.
If average selling prices for our memory products decrease faster than we can decrease per gigabit costs, our business,
results of operations or financial condition could be materially adversely affected. We have experienced significant decreases
in our average selling prices per gigabit in recent years as noted in the table below and may continue to experience such
decreases in the future. In some prior periods, average selling prices for our memory products have been below our
manufacturing costs and we may experience such circumstances in the future.
DRAM Trade NAND
Flash*
(percentage change in average selling prices)
2012 from 2011 (45)% (55)%
2011 from 2010 (39)% (12)%
2010 from 2009 28 % 26 %
2009 from 2008 (52)% (52)%
2008 from 2007 (51)% (68)%
* Trade NAND Flash excludes sales to Intel from IM Flash.
We may be unable to reduce our per gigabit manufacturing costs at the rate average selling prices decline.
Our gross margins are dependent upon continuing decreases in per gigabit manufacturing costs achieved through
improvements in our manufacturing processes, including reducing the die size of our existing products. In future periods, we
may be unable to reduce our per gigabit manufacturing costs at sufficient levels to improve or maintain gross margins. Factors
that may limit our ability to reduce costs include, but are not limited to, strategic product diversification decisions affecting
product mix, the increasing complexity of manufacturing processes, difficulty in transitioning to smaller line-width process
technologies, technological barriers and changes in process technologies or products that may require relatively larger die sizes.
Per gigabit manufacturing costs may also be affected by the relatively smaller production quantities and shorter product
lifecycles of certain specialty memory products.
The semiconductor memory industry is highly competitive.
We face intense competition in the semiconductor memory market from a number of companies, including Elpida Memory,
Inc.; Samsung Electronics Co., Ltd.; SanDisk Corporation; SK Hynix Inc.; Spansion Inc. and Toshiba Corporation. Some of
our competitors are large corporations or conglomerates that may have greater resources to withstand downturns in the
semiconductor markets in which we compete, invest in technology and capitalize on growth opportunities. Our competitors
seek to increase silicon capacity, improve yields, reduce die size and minimize mask levels in their product designs. Transitions
to smaller line-width process technologies and product and process improvements have resulted in significant increases in the
worldwide supply of semiconductor memory. Increases in worldwide supply of semiconductor memory also result from
semiconductor memory fab capacity expansions, either by way of new facilities, increased capacity utilization or reallocation of
other semiconductor production to semiconductor memory production. Our competitors may increase capital expenditures
resulting in future increases in worldwide supply. Increases in worldwide supply of semiconductor memory, if not
accompanied with commensurate increases in demand, would lead to further declines in average selling prices for our products
and would materially adversely affect our business, results of operations or financial condition.