8-KMaterial Agreements

WESTERN DIGITAL CORP 8-K Report, Material Agreement (Nov 16, 2011)

Filed November 16, 2011For Securities:WDC

Summary

Western Digital Corporation (WDC) has filed an 8-K report on November 15, 2011, detailing a material definitive agreement between its wholly owned subsidiary, Western Digital Technologies, Inc., and SAE Magnetics (H.K.) Ltd., a subsidiary of TDK. This agreement, effective from the first calendar quarter of 2012, solidifies a long-standing supply relationship for essential hard drive heads. The agreement includes provisions for quarterly minimum volumes, indicating a strategic commitment to securing critical components for Western Digital's manufacturing operations. This filing is significant for investors as it addresses supply chain stability for a key component in WDC's core business. The confirmed supply of heads from a reputable provider like TDK, with guaranteed minimum volumes, suggests a proactive approach by Western Digital to mitigate potential disruptions and ensure continued production capacity. The long-term nature of the relationship and the new agreement provide a degree of visibility and predictability regarding component costs and availability, which are crucial factors for assessing the company's operational efficiency and future performance.

Key Highlights

  • 1Western Digital Technologies, Inc. entered into a material definitive agreement on November 15, 2011.
  • 2The agreement is with SAE Magnetics (H.K.) Ltd., a subsidiary of TDK.
  • 3The agreement concerns the supply of hard drive heads.
  • 4The contract includes provisions for quarterly minimum volumes for multiple quarters.
  • 5The supply agreement is set to commence in the first calendar quarter of 2012.
  • 6This formalizes and extends an existing multi-year supply relationship between WDC and SAE Magnetics.
  • 7The filing indicates a strategic effort to secure critical component supply.

Frequently Asked Questions

The main purpose of this 8-K filing is to disclose a material definitive agreement entered into by Western Digital's subsidiary with SAE Magnetics (H.K.) Ltd. for the supply of hard drive heads.

The agreement will commence in the first calendar quarter of 2012 and includes quarterly minimum volumes. This formalizes and extends a long-standing supply relationship, providing Western Digital with greater certainty regarding the availability and potentially the cost of a crucial component for its hard drive manufacturing.

SAE Magnetics (H.K.) Ltd. is a subsidiary of TDK, a well-known manufacturer of electronic components. The importance of this relationship lies in securing a stable supply of essential hard drive heads, a critical component for Western Digital's business, and mitigating supply chain risks.

This agreement represents an extension and formalization of an ongoing supply relationship that has spanned several years prior to this new agreement.