Crucial 2013 Annual Report Download - page 22

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• we may be required to compensate customers for costs incurred or damages caused by defective or incompatible
product or replace products;
• we could incur a decrease in revenue or adjustment to pricing commensurate with the reimbursement of such costs or
alleged damages; and
• we may encounter adverse publicity, which could cause a decrease in sales of our products.
New product development may be unsuccessful.
We are developing new products that complement our traditional memory products or leverage their underlying design or
process technology. We have made significant investments in product and process technologies and anticipate expending
significant resources for new semiconductor product development over the next several years. The process to develop DRAM,
NAND Flash, NOR Flash and certain specialty memory products requires us to demonstrate advanced functionality and
performance, many times well in advance of a planned ramp of production, in order to secure design wins with our customers.
There can be no assurance that our product development efforts will be successful, that we will be able to cost-effectively
manufacture new products, that we will be able to successfully market these products or that margins generated from sales of
these products will allow us to recover costs of development efforts.
If our manufacturing process is disrupted, our business, results of operations or financial condition could be materially
adversely affected.
We manufacture products using highly complex processes that require technologically advanced equipment and continuous
modification to improve yields and performance. Difficulties in the manufacturing process or the effects from a shift in product
mix can reduce yields or disrupt production and may increase our per gigabit manufacturing costs. We maintain operations and
continuously implement new product and process technology at our manufacturing operations which are widely dispersed in
multiple locations in several countries including the U.S., Singapore, Taiwan, Japan, Israel and China. Additionally, our control
over operations at our IMFT, Inotera and MP Mask and Tera Probe joint ventures is limited by our agreements with our
partners. From time to time, we have experienced disruptions in our manufacturing process as a result of power outages,
improperly functioning equipment and equipment failures. If production at a fabrication facility is disrupted for any reason,
manufacturing yields may be adversely affected or we may be unable to meet our customers' requirements and they may
purchase products from other suppliers. This could result in a significant increase in manufacturing costs or loss of revenues or
damage to customer relationships, which could materially adversely affect our business, results of operations or financial
condition.
Consolidation of industry participants and governmental assistance to some of our competitors may contribute to
uncertainty in the semiconductor memory industry and negatively impact our ability to compete.
In recent years, supply of memory products has significantly exceeded customer demand resulting in significant declines in
average selling prices of DRAM, NAND Flash and NOR Flash products and substantial operating losses by us and our
competitors. The operating losses as well as limited access to sources of financing have led to the deterioration in the financial
condition of a number of industry participants and significant recent consolidation and, in certain cases, liquidation. Some of
our competitors may try to enhance their capacity and lower their cost structure through consolidation. In addition, some
governments have provided, and may be considering providing, significant financial assistance to some of our competitors.
Consolidation of industry competitors could put us at a competitive disadvantage.
The limited availability of raw materials, supplies or capital equipment could materially adversely affect our business,
results of operations or financial condition.
Our operations require raw materials that meet exacting standards. We generally have multiple sources of supply for our
raw materials. However, only a limited number of suppliers are capable of delivering certain raw materials that meet our
standards. In some cases, materials are provided by a single supplier. Various factors could reduce the availability of raw
materials such as silicon wafers, photomasks, chemicals, gases including helium, photoresist, lead frames and molding
compound. Shortages may occur from time to time in the future. In addition, disruptions in transportation lines could delay our
receipt of raw materials. Lead times for the supply of raw materials have been extended in the past. If our supply of raw
materials is disrupted or our lead times extended, our business, results of operations or financial condition could be materially
adversely affected.