SanDisk 2011 Annual Report Download - page 77

This is a TAB type table. Insert
conts here. Annual Report
ITEM 1A. RISK FACTORS
Our operating results may fluctuate significantly, which may harm our financial condition and our stock
price. Our quarterly and annual operating results have fluctuated significantly in the past and we expect that they
will continue to fluctuate in the future. Our results of operations are subject to fluctuations and other risks,
including, among others:
• competitive pricing pressures, resulting in lower average selling prices and lower or negative product
gross margins;
• unpredictable or changing demand for our products, particularly for certain form factors or capacities,
or the mix of X2 and X3 technologies;
• excess captive memory output or capacity, which could result in write-downs for excess inventory,
lower of cost or market charges, lower average selling prices, fixed costs associated with under-utilized
capacity or other consequences;
• increased memory component and other costs as a result of currency exchange rate fluctuations for the
U.S. dollar, particularly with respect to the Japanese yen;
• lower than anticipated demand, including due to general economic weakness in our markets;
• expansion of industry supply, including low-grade supply useable in limited markets, creating excess
supply of flash products in the market, causing our average selling prices to decline faster than our
costs;
• timing, volume and cost of wafer production from Flash Ventures as impacted by fab start-up delays
and costs, technology transitions, lower than expected yields or production interruptions;
• insufficient or mis-matched supply from captive memory sources, inability to obtain non-captive
memory supply of the right product mix and quality in the time frame necessary to meet demand, or
inability to realize an adequate margin on non-captive purchases;
• our license and royalty revenues may fluctuate or decline significantly in the future due to license
agreement renewals on different terms, non-renewals, business performance of our licensees, or if
licensees or we fail to perform on contractual obligations;
• potential delays in product development or lack of customer acceptance of our client or enterprise SSD
products;
• inability to develop, or unexpected difficulties or delays in developing or ramping with acceptable
yields new technologies such as 19-nanometer or subsequent process technologies, X3 NAND memory
architecture, 3D ReRAM, extreme ultraviolet, or EUV, lithography, BiCS technology or other
advanced alternative technologies;
• failure to adequately invest in future technologies, manufacturing capacity and products;
• insufficient non-memory materials or capacity from our suppliers and contract manufacturers to meet
demand or increases in the cost of non-memory materials or capacity;
• loss of branded product sales due to our sales of non-branded products, wafers and components;
• insufficient assembly and test or retail packaging and shipping capacity from our Shanghai, China
facility or our contract manufacturers, or labor unrest, strikes or other disruptions in operations at any
of these facilities;
• difficulty in forecasting and managing inventory levels due to non-cancelable contractual obligations to
purchase materials, such as custom non-memory materials, and the need to build finished product in
advance of customer purchase orders;
• inability to enhance current products or develop new products on a timely basis;
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