Western Digital 2012 Annual Report Download - page 18

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Seasonality
We have historically experienced seasonal fluctuations in our business with higher levels of demand in the first
and second quarters of our fiscal year. This seasonality is a result of consumer spending at the beginning of the school
year and during the holiday season. Seasonality can also be impacted by the growth in emerging markets and macro-
economic conditions. For a discussion of risks related to seasonality in our business, see Item 1A of this Annual Report
on Form 10-K.
Service and Warranty
We generally warrant our newly manufactured products against defects in materials and workmanship from one
to five years from the date of manufacture depending on the type of product. Our warranty obligation is generally
limited to repair or replacement. We have engaged third parties in various countries in multiple regions to provide
various levels of testing, processing and/or recertification of returned products for our customers. For a further dis-
cussion of our service and warranty policy, see Part II, Item 8, Note 1 of the Notes to Consolidated Financial State-
ments included in this Annual Report on Form 10-K.
Manufacturing
We believe that we have significant know-how, unique product manufacturing processes, test and tooling,
execution skills and human resources to continue to be successful and be able to grow, as necessary, our manufacturing
operations. We strive to maintain manufacturing flexibility, high manufacturing yields, reliable products, and high-
quality components. The critical elements of our hard drive production are high volume and utilization, low cost
assembly and testing, and maintaining close relationships with our strategic component suppliers to access
best-of-class technology and manufacturing quality.
Hard drive manufacturing is a complex process involving the production and assembly of precision components
with narrow tolerances and thorough testing. The assembly process occurs in a “clean room” environment that
demands skill in process engineering and efficient space utilization to control the operating costs of this manufactur-
ing environment. Our clean room manufacturing process consists of modular production units, each of which contains
a number of work cells.
We continually evaluate our manufacturing processes in an effort to increase productivity, sustain and improve
quality and decrease manufacturing costs. We continually evaluate which steps in the manufacturing process would
benefit from automation and how automated manufacturing processes can improve productivity and reduce manu-
facturing costs. For our non-hard drive products, we leverage the efficiencies of contract manufacturers when strategi-
cally advantageous. For a discussion of risks related to manufacturing, see Item 1A of this Annual Report on
Form 10-K.
Materials and Supplies
We use a number of components, equipment, goods and services in the manufacturing of our products. The key
components of our hard drives are: magnetic heads; magnetic media; suspensions with related head gimbal assemblies
(“HGAs”) and HSAs; spindle motors; custom and standard electronics such as system-on-chip, magnetic media, motor
controllers, pre-amps and printed circuit boards; base and top covers; and magnets and related voice coil motors.
We design and manufacture a substantial portion of the heads and magnetic media required for our hard drives.
We acquire all of the remaining components for our products from third party suppliers. The major components used
in the manufacture of our solid-state drives (the semiconductor media and system-on-chip) and in our media players
(the controller) are also acquired from third party suppliers. We believe that our sourcing strategy currently enables us
to have the business flexibility needed to select the highest quality, low cost of ownership suppliers as product designs
and technologies evolve.
We generally retain multiple suppliers for each of our component requirements but in some instances use sole
sources for business reasons. Currently, we believe that there are no major issues with component availability. For a
discussion of risks related to our component supplies, see Item 1A of this Annual Report on Form 10-K.
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