Crucial 2014 Annual Report Download - page 17

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Products that fail to meet specifications, are defective or that are otherwise incompatible with end uses could impose
significant costs on us.
Products that do not meet specifications or that contain, or are perceived by our customers to contain, defects or that are
otherwise incompatible with end uses could impose significant costs on us or otherwise materially adversely affect our
business, results of operations or financial condition. From time to time we experience problems with nonconforming,
defective or incompatible products after we have shipped such products. In recent periods we have further diversified and
expanded our product offerings which could potentially increase the chance that one or more of our products could fail to meet
specifications in a particular application. As a result of these problems we could be adversely affected in several ways,
including the following:
• 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.
A determination that our products or manufacturing processes infringe the intellectual property rights of others or
entering into a license agreement covering such intellectual property could materially adversely affect our business,
results of operations or financial condition.
As is typical in the semiconductor and other high technology industries, from time to time others have asserted, and may in
the future assert, that our products or manufacturing processes infringe their intellectual property rights. We are unable to
predict the outcome of assertions of infringement made against us. A court determination that our products or manufacturing
processes infringe the intellectual property rights of others could result in significant liability and/or require us to make material
changes to our products and/or manufacturing processes. Any of the foregoing results could have a material adverse effect on
our business, results of operations or financial condition. (See "Item 1. Legal Proceedings.")
We have a number of intellectual property license agreements. Some of these license agreements require us to make one
time or periodic payments. We may need to obtain additional patent licenses or renew existing license agreements in the future.
We are unable to predict whether these license agreements can be obtained or renewed on acceptable terms.
Our joint ventures and strategic relationships involve numerous risks.
We have entered into strategic relationships to manufacture products and develop new manufacturing process technologies
and products. These relationships include our IMFT NAND Flash joint venture with Intel, our Inotera DRAM joint venture
with Nanya and our MP Mask joint venture with Photronics. These joint ventures and strategic relationships are subject to
various risks that could adversely affect the value of our investments and our results of operations. These risks include the
following:
• our interests could diverge from our partners or we may not be able to agree with partners on ongoing manufacturing
and operational activities, or on the amount, timing or nature of further investments in our joint venture;
• we may experience difficulties in transferring technology to joint ventures;
• we may experience difficulties and delays in ramping production at joint ventures;
• our control over the operations of our joint ventures is limited;
• we may recognize losses from our equity method investments in future periods;
• due to financial constraints, our joint venture partners may be unable to meet their commitments to us or our joint
ventures and may pose credit risks for our transactions with them;
• due to differing business models or long-term business goals, our partners may decide not to join us in funding capital
investment by our joint ventures, which may result in higher levels of cash expenditures by us;
• cash flows may be inadequate to fund increased capital requirements;
• we may experience difficulties or delays in collecting amounts due to us from our joint ventures and partners;
• the terms of our partnering arrangements may turn out to be unfavorable; and
• changes in tax, legal or regulatory requirements may necessitate changes in the agreements with our partners.
If our joint ventures and strategic relationships are unsuccessful, our business, results of operations or financial condition
may be materially adversely affected.