Crucial 2011 Annual Report Download - page 17

The acquisition of our ownership interest in Inotera from Qimonda has been legally challenged by the administrator of the insolvency
proceedings for Qimonda.
On January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda AG ("Qimonda") insolvency proceedings, filed suit against us and
Micron Semiconductor B.V., our Netherlands subsidiary, in the District Court of Munich, Civil Chamber. The complaint seeks to void under
Section 133 of the German Insolvency Act a share purchase agreement between us and Qimonda in fall 2008 pursuant to which we purchased all
of Qimonda's shares of Inotera Memories, Inc. and seeks an order requiring us to retransfer the Inotera shares to the Qimonda estate. The
complaint also seeks to terminate under Sections 103 or 133 of the German Insolvency Code a patent cross license between us and Qimonda
entered into at the same time as the share purchase agreement. A hearing is scheduled to begin on November 9, 2011. We are unable to predict the
outcome of this lawsuit. The final resolution of this lawsuit could result in the loss of the Inotera shares or equivalent monetary damages and the
termination of the patent cross license, which could have a material adverse effect on our business, results of operation or financial condition.
Our future success may depend on our ability to develop and produce competitive new memory technologies.
Our key semiconductor memory technologies of DRAM, NAND Flash and NOR Flash face technological barriers to continue to meet long-
term customer needs. These barriers include potential limitations on the ability to shrink products in order to reduce costs, meet higher density
requirements, and improve power consumption and reliability. To meet these requirements, we expect that new memory technologies will be
developed by the semiconductor memory industry. Our competitors are working to develop new memory technologies that may offer performance
and/or cost advantages to our existing memory technologies and render existing technologies obsolete. Accordingly, our future success may
depend on our ability to develop and produce viable and competitive new memory technologies . There can be no assurance of the following:
If our efforts to develop new semiconductor memory technologies are unsuccessful, our business results of operations or financial condition
may be adversely affected.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our operations and make
adequate capital investments.
Our cash flows from operations depend primarily on the volume of semiconductor memory sold, average selling prices and per unit
manufacturing costs. To develop new product and process technologies, support future growth, achieve operating efficiencies and maintain
product quality, we must make significant capital investments in manufacturing technology, capital equipment, facilities, research and
development, and product and process technology. We estimate that capital spending for 2012 will be approximately $2 billion. The actual
amounts for 2012 will vary depending on funding participation by joint venture partners and market conditions. As of September 1, 2011 , we had
cash and equivalents of $2,160 million , of which $ 327 million consisted of cash and investments of IM Flash that is generally not available to
finance our other operations. In the past we have utilized external sources of financing when needed . As a result of the downturn in general
economic conditions and the adverse conditions in the credit markets , it may be difficult for us to obtain financing on terms acceptable to us. We
cannot assure you that we will be able to generate sufficient cash flows or find other sources of financing to fund our operations, make adequate
capital investments to remain competitive in terms of technology development and cost efficiency, or access capital markets. Our inability to do
the foregoing could have a material adverse effect on our business and results of operations.
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• difficulties in obtaining high yield and throughput due to differences in Inotera's manufacturing processes from our other fabrication
facilities;
• uncertainties around the timing and amount of wafer supply we will receive under the supply agreement; and
• the cost of our product obtained from Inotera is impacted by Nanya's revenue and back-end manufacturing costs for product obtained
from Inotera.
• that we will be successful in developing competitive new semiconductor memory technologies;
• that we will be able to cost-effectively manufacture new products;
• that we will be able to successfully market these technologies; and
• that margins generated from sales of these products will allow us to recover costs of development efforts.