Western Digital 2010 Annual Report Download - page 35

• 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 outside the U.S. and marketing our products globally subjects us to numerous risks.
We are subject to risks associated with our global manufacturing operations and global 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 or taxes imposed in European and other countries;
• exchange, currency and tax controls and reallocations;
• increasing labor and overhead costs; and
• loss or non-renewal of favorable tax treatment under agreements or treaties with foreign tax authorities.
Terrorist attacks may adversely affect our business and operating results.
The continued threat of terrorist activity and other acts of war or hostility have created uncertainty in the financial
and insurance markets and have significantly increased the political, economic and social instability in some of the
geographic areas in which we operate. Additionally, it is uncertain what impact the reactions to such acts by various
governmental agencies and security regulators worldwide will have on shipping costs. Acts of terrorism, either
domestically or abroad, could create further uncertainties and instability. To the extent this results in disruption or
delays of our manufacturing capabilities or shipments of our products, our business, operating results and financial
condition could be adversely affected.
Sudden disruptions to the availability of freight lanes could have an impact on our operations.
We generally ship our products to our customers, and receive shipments from our suppliers, via air or ocean freight.
The sudden unavailability or disruption of cargo operations or freight lanes, such as due to labor difficulties or disputes,
severe weather patterns or other natural disasters, or political instability or civil unrest, could impact our operating
results by impairing our ability to timely and efficiently deliver our products.
We are vulnerable to system failures or attacks, which could harm our business.
We are heavily dependent on our technology infrastructure, among other functions, to operate our factories, sell our
products, fulfill orders, manage inventory and bill, collect and make payments. Our systems are vulnerable to damage or
interruption from natural disasters, power loss, telecommunication failures, computer viruses, computer denial-of-ser-
vice attacks and other events. Our business is also subject to break-ins, sabotage and intentional acts of vandalism by third
parties as well as employees. Despite any precautions we may take, such problems could result in, among other
consequences, interruptions in our business, which could harm our reputation and financial condition.
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