Nokia 2005 Annual Report Download - page 18

manufacturing and delivery processes, resulting in our products and solutions not meeting our
and our customers’ quality, safety, security and other requirements, or being delivered late
compared to our own estimates or customer requirements, which could have a material adverse
effect on our sales, our results of operations and reputation, and the value of the Nokia brand.
We depend on a limited number of suppliers for the timely delivery of components and for
their compliance with our supplier requirements, such as our and our customers’ product
quality, safety, security and other standards. Their failure to do so could materially adversely
affect our ability to deliver our products and solutions successfully and on time.
Our manufacturing operations depend to a certain extent on obtaining adequate supplies of fully
functional components on a timely basis. Our principal supply requirements are for electronic
components, mechanical components and software, which all have a wide range of applications in
our products. Electronic components include integrated circuits, microprocessors, standard
components, memory devices, cameras, displays, batteries and chargers while mechanical
components include covers, connectors, key mats and antennas. Software includes various third-
party software that enables various new features and applications to be added, like third-party
e-mail, into our products.
In addition, a particular component may be available only from a limited number of suppliers.
Suppliers may from time to time extend lead times, limit supplies or increase prices due to
capacity constraints or other factors, which could adversely affect our ability to deliver our
products and solutions on a timely basis. Moreover, a component supplier may fail to meet our
supplier requirements, such as, most notably, our and our customers’ product quality, safety,
security and other standards, and consequently some of our products may be unacceptable to us
and our customers, or may fail to meet our own quality controls. In addition, a component
supplier may experience delays or disruption to its manufacturing processes or financial
difficulties. Any of these events could delay our successful delivery of products and solutions that
meet our and our customers’ quality, safety, security and other requirements, or otherwise
materially adversely affect our sales and our results of operations. Also, our reputation and brand
value may be materially adversely affected due to real or merely alleged failures in our products
and solutions.
Possible consolidation among our suppliers could potentially result in larger suppliers with
stronger bargaining power and limit the choice of alternative suppliers, which could lead to an
increase in the cost, or limit the availability, of components that may materially adversely affect
our sales and profitability.
Many of the production sites of our suppliers are geographically concentrated. In the event that
any of these geographic areas is generally affected by adverse conditions that disrupt production
and/or deliveries from any of our suppliers, this could adversely affect our ability to deliver our
products and solutions on a timely basis, which may materially adversely affect our sales and
profitability.
We are developing a number of our new products and solutions together with other
companies. If any of these companies were to fail to perform, we may not be able to bring
our products and solutions to market successfully or in a timely way and this could have a
material adverse impact on our sales and profitability.
We invite the providers of technology, components or software to work with us to develop
technologies or new products and solutions. These arrangements involve the commitment by each
company of various resources, including technology, research and development efforts, and
personnel. Although the objective of these arrangements is a mutually beneficial outcome for each
party, our ability to introduce new products and solutions that meet our and our customers’
16