106040--8/13/2010--WESTERN_DIGITAL

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If our long-lived assets or goodwill become impaired, it may adversely affect our operating results. Our failure to accurately forecast market and customer demand for our products could adversely affect our business and financial results or operating efficiencies. Expansion into new hard drive markets may cause our capital expenditures to increase, and if we do not successfully expand into new markets, our business may suffer. Selling to the retail market is an important part of our business, and if consumer spending decreases, or if we fail to maintain and grow our market share or gain market acceptance of our branded products, our operating results could suffer. Current or future competitors may gain a technology advantage or develop an advantageous cost structure that we cannot match. We are subject to risks related to product defects, which could result in product recalls or epidemic failures and could subject us to warranty claims in excess of our warranty provisions or which are greater than anticipated. Violation of applicable laws, including labor or environmental laws, and certain other practices by our suppliers could harm our business. Contractual commitments with component suppliers may result in us paying increased charges and cash advances for such components or may cause us to have inadequate or excess component inventory. If we are unable to timely and cost-effectively develop heads and magnetic media with leading technology and overall quality, our ability to sell our products may be significantly diminished, which could materially and adversely affect our business and financial results. The difficulty of introducing hard drives with higher levels of areal density and the challenges of reducing other costs may impact our ability to achieve historical levels of cost reduction. Spending to improve our technology and develop new technology to remain competitive may negatively impact our financial results. Manufacturing outside the U.S. and marketing our products globally subjects us to numerous risks. If we fail to identify, manage, complete and integrate acquisitions, investment opportunities or other significant transactions, it may adversely affect our future results. The costs of compliance with state, federal and international legal and regulatory requirements, such as environmental, labor, trade and tax regulations, and customers standards of corporate citizenship could cause an increase in our operating costs. Increases in our customers credit risk could result in credit losses and an increase in our operating costs. The market price of our common stock is volatile.

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106040--8/13/2010--WESTERN_DIGITAL_CORP