Western Digital 2008 Annual Report Download - page 31

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Our head manufacturing operations include a single wafer fabrication facility in California and a single head gimbal
assembly facility in Thailand, and our media operations include four facilities in Malaysia, which subjects us to substantial
risk of damage or loss if operations at any of these facilities are disrupted.
As we have previously discussed in public statements, our business plan presently contemplates that we will design
and manufacture a substantial portion of the heads and media required for the hard drives we manufacture. We fabricate
wafers in our Fremont, California facility, and the wafers are then sent to our Thailand facility for slider fabrication and
wafer slicing and HGA assembly and testing. Additionally, we manufacture the majority of our media and substrates in
four facilities in Penang, Johor and Sarawak, Malaysia. A fire, flood, earthquake or other disaster, condition or event such
as a power outage that adversely affects any of these facilities would significantly affect supply of our heads or media, and
limit our ability to manufacture hard drives which would result in a substantial loss of sales and revenue and a substantial
harm to our operating results.
Our operating results will be adversely affected if we fail to optimize the overall quality, time-to-market and time-to-volume
of new and established products.
To achieve consistent success with our customers, we must balance several key attributes such as time-to-market,
time-to-volume, quality, cost, service, price and a broad product portfolio. Our operating results will be adversely
affected if we fail to:
• maintain overall quality of products in new and established programs;
• produce sufficient quantities of products at the capacities our customers demand while managing the integration
of new and established technologies;
• develop and qualify new products that have changes in overall specifications or features that our customers may
require for their business needs;
• obtain commitments from our customers to qualify new products, redesigns of current products, or new
components in our existing products;
• obtain customer qualification of these products on a timely basis by meeting all of our customers’ needs for
performance, quality and features;
• maintain an adequate supply of components required to manufacture our products; or
• maintain the manufacturing capability to quickly change our product mix between different capacities, form
factors and spin speeds in response to changes in customers’ product demands.
Manufacturing and marketing our products abroad subjects us to numerous risks.
We are subject to risks associated with our foreign manufacturing operations and foreign marketing efforts,
including:
• obtaining requisite U.S. and foreign governmental permits and approvals;
• currency exchange rate fluctuations or restrictions;
• political instability and civil unrest;
• limited transportation availability, delays, and extended time required for shipping, which risks may be
compounded in periods of price declines;
• higher freight rates;
• labor problems;
• trade restrictions or higher tariffs;
• copyright levies or similar fees imposed in European and other countries:
• exchange, currency and tax controls and reallocations;
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