NVIDIA 2013 Annual Report Download - page 166

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We may not be able to attract and retain qualified employees which could negatively impact our business.
Our future success and ability to compete are substantially dependent on our ability to identify, hire, train and retain
highly qualified key personnel. The market for key employees in the technology industry can be competitive. None of our
key employees is bound by an employment agreement, meaning our relationships with all of our key employees are at will.
The loss of the services of any of our key employees could delay our product development efforts, harm our ability to sell
our products or otherwise negatively impact our business.
We are dependent on third parties for assembly, testing and packaging of our products, which reduces our control
over our product delivery schedule, product quantity or product quality.
Our products are assembled, tested and packaged by independent subcontractors, such as Advanced Semiconductor
Engineering, Inc., ChipPAC, JSI Logistics, Ltd., King Yuan Electronics Co. and Siliconware Precision Industries Co. Ltd.
As a result, we do not directly control our product delivery schedules, product quantity, or product quality. All of these
subcontractors assemble, test and package products for other companies, including some of our competitors. Because we
do not have long-term agreements with our subcontractors, when demand for subcontractors to assemble, test or package
products is high, our subcontractors may decide to prioritize the orders of other customers over our orders. Because the
time required to qualify a different subcontractor to assemble, test or package our products can be lengthy, if we have to
find a replacement subcontractor we could experience significant delays in shipments of our products, product shortages,
a decrease in the quality of our products, or an increase in product cost. Any product shortages or quality assurance problems
could increase the costs of manufacture, assembly or testing of our products, which could cause our gross margin to decline.
We rely on third-party vendors to supply software development tools to us for the development of our new products
and we may be unable to obtain the tools necessary to develop or enhance new or existing products.
We rely on third-party software development tools to assist us in the design, simulation and verification of new products
or product enhancements. To bring new products or product enhancements to market in a timely manner, or at all, we need
software development tools that are sophisticated enough or technologically advanced enough to complete our design,
simulations and verifications. In the past, we have experienced delays in the introduction of products as a result of the
inability of then available software development tools to fully simulate the complex features and functionalities of our
products. In the future, the design requirements necessary to meet consumer demands for more features and greater
functionality from our products may exceed the capabilities of available software development tools. Unavailability of
software development tools may result in our missing design cycles or losing design wins, either of which could result in
a loss of market share or negatively impact our operating results.
Because of the importance of software development tools to the development and enhancement of our products, a
critical component of our product development efforts is our partnerships with leaders in the computer-aided design industry,
including Cadence Design Systems, Inc. and Synopsys, Inc. We have invested significant resources to develop relationships
with these industry leaders and have often assisted them in the development of their new products. We believe that forming
these relationships and utilizing next-generation development tools to design, simulate and verify our products will help us
remain at the forefront of the 3D graphics, communications and networking segments and develop products that utilize
leading-edge technology on a rapid basis. If these relationships are not successful, we may be unable to develop new products
or product enhancements in a timely manner, which could result in a loss of market share, a decrease in revenue or a negative
impact on our operating results.
If our products contain significant defects, our financial results could be negatively impacted, our reputation could
be damaged and we could lose market share.
Our products are complex and may contain defects or experience failures due to any number of issues in design,
fabrication, packaging, materials and/or use within a system. If any of our products or technologies contains a defect,
compatibility issue or other error, we may have to invest additional research and development efforts to find and correct
the issue. Such efforts could divert our engineers' attention from the development of new products and technologies and