Crucial 2011 Annual Report Download - page 15

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 in recent years
as noted in the table below. In some prior periods, average selling prices for our memory products have been below our manufacturing costs.
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, 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.
An adverse outcome relating to allegations of anticompetitive conduct could materially adversely affect our business, results of operations
or financial condition.
On May 5, 2004, Rambus, Inc. ("Rambus") filed a complaint in the Superior Court of the State of California (San Francisco County) against
us and other DRAM suppliers alleging that the defendants harmed Rambus by engaging in concerted and unlawful efforts affecting Rambus
DRAM ("RDRAM") by eliminating competition and stifling innovation in the market for computer memory technology and computer memory
chips. Rambus' complaint alleges various causes of action under California state law including, among other things, a conspiracy to restrict output
and fix prices, a conspiracy to monopolize, intentional interference with prospective economic advantage, and unfair competition. Rambus is
seeking a judgment for damages of approximately $3.9 billion, joint and several liability, trebling of damages awarded, punitive damages, a
permanent injunction enjoining the defendants from the conduct alleged in the complaint, interest, and attorneys' fees and costs. Trial began on
June 20, 2011, and the case went to the jury on September 21, 2011. At the time of this filing, a jury verdict is pending. We cannot predict when a
verdict will be reached or when a formal judgment would be entered by the Court subsequent to a verdict. In the event of an adverse judgment,
we would anticipate filing appropriate post-judgment motions and appeals. We may be required to post a bond or other security to stay
enforcement of an adverse judgment pending appeal. Depending on the amount required, we cannot assure you we would be able to obtain
sufficient security to pursue an appeal. We are unable to predict the outcome of this lawsuit and therefore cannot determine the likelihood of loss
nor estimate a range of possible loss. Accordingly, we have not provided an accrual for an adverse judgment in the September 1, 2011, financial
statements. However, we have accrued a liability and charged operations for estimated costs to successfully defend the matter. An adverse
judgment may have a material impact on our business, results of operations and financial condition, including liquidity.
14
DRAM NAND Flash
(percentage change in average selling prices)
2011 from 2010
(39
)%
(17
)%
2010 from 2009
28
%
*
(18
)%
2009 from 2008
(52
)%
(56
)%
2008 from 2007
(51
)%
(67
)%
2007 from 2006
(23
)%
(56
)%
* Only increase in DRAM pricing since 2004.