Seagate 2011 Annual Report Download - page 13

Table of Contents
outsource to third parties the manufacture and assembly of the PCBAs used in our disk drives. We do not manufacture any ASICs, but we
participate in their proprietary design.
Head Disk Assembly. The head disk assembly consists of one or more disks attached to a spindle assembly powered by a spindle motor
that rotates the disks at a high constant speed around a hub. Read/write heads, mounted on an arm assembly, similar in concept to that of a record
player, fly extremely close to each disk surface and record data on and retrieve it from concentric tracks in the magnetic layers of the rotating
disks. The read/write heads are mounted vertically on an E-shaped assembly (E-block) that is actuated by a voice-coil motor to allow the heads
to move from track to track. The E-block and the recording media are mounted inside the head disk assembly. We purchase spindle motors from
outside vendors and from time to time participate in the design of the motors that go into our products. We use a combination of internally
manufactured and externally sourced head disk assemblies.
Disk Drive Assembly. Following the completion of the head disk assembly, it is mated to the PCBA, and the completed unit goes through
extensive defect mapping and testing prior to packaging and shipment. Disk drive assembly and test operations occur primarily at facilities
located in China and Thailand. We perform subassembly and component manufacturing operations at our facilities in China, Malaysia, Northern
Ireland, Singapore, Thailand and in the United States in Minnesota. In addition, third parties manufacture and assemble components and disk
drive assemblies for us in various countries worldwide.
Suppliers of Components and Industry Constraints. There are a limited number of independent suppliers of components, such as
recording heads and media, available to disk drive manufacturers. Vertically integrated disk drive manufacturers, who manufacture their own
components, are less dependent on external component suppliers than less vertically integrated disk drive manufacturers. In fiscal year 2012, the
industry experienced significant increases in the cost of components due to the severe flooding in Thailand.
Commodity and Other Manufacturing Costs. The production of disk drives requires rare earth elements, precious metals, scarce alloys
and industrial commodities, which are subject to fluctuations in prices and the supply of which has at times been constrained. For example,
during the latter part of fiscal year 2011 and continuing into fiscal year 2012, the industry experienced significant increases in the costs of rare
earth elements, which are used in magnets as well as in the process for polishing glass substrates. In addition to increased costs of components
and commodities, volatility in fuel costs may also increase our costs related to commodities, manufacturing and freight. As a result, we may
increase our use of ocean shipments to help offset any increase in freight costs.
Products
We offer a broad range of products for the enterprise, client compute and client non-compute market applications. We offer more than one
product within each product family and differentiate products on the basis of price, performance, form factor, capacity, interface, power
consumption efficiency, security features like full disk encryption and other customer integration requirements. Our industry is characterized by
continuous and significant advances in technology which contribute to rapid product life cycles. We list our main current product offerings
below.
Enterprise Storage
Cheetah SCSI/SAS/Fibre Channel Family. Our Cheetah 3.5-inch disk drives ship in 10,000 and 15,000 RPM and in storage capacities
ranging from 73GB to 600GB. Commercial uses for Cheetah disk drives include Internet and e-commerce servers, data mining and data
warehousing, mainframes and supercomputers, department/enterprise servers and workstations, transaction processing, professional video and
graphics and medical imaging.
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