Western Digital (WDC) risk factors, FY2026 10-K

Western Digital's FY2026 10-K, filed Aug 14, 2026, lists 27 risk factors in 4 groups. Against the prior year's 25: 6 new, 4 dropped, 9 substantially reworded.

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Risk factors listed
274 groups
New this year
6vs 25 last year
Dropped
4since the prior 10-K
Substantially reworded
9of those kept
Section length
13k wordsItem 1A

What the changes say

  • Cloud revenue concentration rose to 89% and top-10 customer concentration to 73%, with three customers each contributing at least 10%.
  • AI risks now cover internal deployment, flawed outputs, compliance, liability and reputation, alongside uncertainty in customer AI infrastructure spending.
  • The completed Sandisk separation shifts emphasis from execution risks to potential tax liabilities if the transaction is not tax-free.
  • New disclosures highlight fixed-price long-term customer commitments, tariff cost exposure and federal forum requirements for Securities Act claims.

What changed since the prior 10-K

New

  • NewBUSINESS AND OPERATIONAL RISKS

    Loss of revenue from Cloud or other key customers could harm our operating results

    Cloud represented 89% of revenue and top customers 73%; weaker hyperscaler or AI infrastructure demand could materially reduce sales.

  • NewBUSINESS AND OPERATIONAL RISKS

    Long-term agreements expose us to certain execution, financial, and market risks, which could be significant

    Multi-year volume and formula-priced commitments may force sales below prevailing prices, preventing Western Digital from benefiting from stronger demand or shortages.

  • NewMACROECONOMIC AND INDUSTRY RISKS

    Our industry is subject to variations in demand, pricing and competitive factors, which can negatively impact our business

    Storage demand and pricing can weaken from hyperscaler spending changes, flash competition, technology shifts or excess capacity, causing underutilization charges and write-downs.

  • NewMACROECONOMIC AND INDUSTRY RISKS

    We may be adversely affected by the risks, challenges, and evolving regulatory landscape associated with the use of AI in our operations, product development, and business practices

    Internal AI tools may produce inaccurate, biased or noncompliant outputs, creating operational, regulatory, legal, competitive and reputational harm.

  • NewFINANCIAL RISKS

    If the completed Separation of Sandisk were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilities

    If the Sandisk spin-off is not tax-free, Western Digital, Sandisk or stockholders could face significant tax liabilities.

  • NewLEGAL AND COMPLIANCE RISKS

    U.S. will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action under the Securities Act of 1933, as amended (the “Federal Forum Provision”)

    Securities Act claims must generally be brought in U.S. federal courts under the new Federal Forum Provision.

Dropped

  • DroppedBUSINESS AND STRATEGIC RISKS

    We are subject to risks related to the separation of Sandisk, our former Flash business, into an independent public company

  • DroppedBUSINESS AND STRATEGIC RISKS

    We participate in a highly competitive industry that is subject to variations in average selling prices (“ASPs”) and demand, technological change and lengthy product qualifications, all of which can negatively impact our business

  • DroppedBUSINESS AND STRATEGIC RISKS

    Loss of revenue from the Cloud end market or a key customer, or consolidation among our customer base, could harm our operating results

  • DroppedBUSINESS AND STRATEGIC RISKS

    Our control over the operations of our business ventures may be limited, and our interests could diverge from our strategic partners’ interests regarding ongoing and future activities

Reworded

  • 76% rewrittenLEGAL AND COMPLIANCE RISKS

    The exclusive forum provisions in our Bylaws could limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with the company or its directors, officers or other employees

    The forum disclosure now adds a federal forum provision for Securities Act claims, alongside the Delaware forum provision.

  • 69% rewrittenFINANCIAL RISKS

    Our incurrence of additional debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions

    The risk now identifies the January 2027 revolving facility maturity, substantial past debt levels and convertible debt.

    Was: Our level of debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions

  • 63% rewrittenBUSINESS AND OPERATIONAL RISKS

    Our strategic relationships subject us to risks and uncertainties that could harm our business

    The strategic-relationships risk is substantively unchanged, continuing to cover partner effects on investments, costs, technology and growth.

  • 54% rewrittenBUSINESS AND OPERATIONAL RISKS

    If we do not properly manage technology transitions and product development and introduction, our competitiveness and operating results may be negatively affected

    The risk now adds that entering new product areas may increase complexity, R&D spending and manufacturing, technology and go-to-market investments.

  • 47% rewrittenMACROECONOMIC AND INDUSTRY RISKS

    Adverse global or regional conditions could harm our business

    The excerpt is substantively unchanged, continuing to cover international exposure and adverse economic, geopolitical, trade and regulatory conditions.

  • 40% rewrittenFINANCIAL RISKS

    Tax matters may materially affect our financial position and results of operations

    The discussion adds OECD global minimum-tax rules enacted in several jurisdictions and removes the prior detailed TCJA and IRA references.

  • 40% rewrittenMACROECONOMIC AND INDUSTRY RISKS

    We have historically experienced variability in our sales and cyclicality in our industry, which could cause our operating results to fluctuate. In addition, accurately forecasting demand is difficult, which could harm our business

    The excerpt is substantively unchanged, continuing to emphasize Cloud customer buying patterns, cyclicality and difficulty forecasting demand.

    Was: We experience variability in our sales and cyclicality in our industry, which could cause our operating results to fluctuate. In addition, accurately forecasting demand is difficult, which could harm our business

  • 31% rewrittenMACROECONOMIC AND INDUSTRY RISKS

    Changes in U.S. trade policy and the impact of tariffs and retaliatory actions may have a material adverse effect on our business and results of operations

    The tariff risk now details higher import and input costs plus mitigation through exemptions, supply-chain changes, alternative suppliers or customer surcharges.

  • 30% rewrittenLEGAL AND COMPLIANCE RISKS

    Our aspirations, disclosures and actions related to environmental, social and governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance

All 27 risk factors

Headings as the filing states them, in filing order.

BUSINESS AND OPERATIONAL RISKS

  1. 01Loss of revenue from Cloud or other key customers could harm our operating resultsNew
  2. 02If we do not properly manage technology transitions and product development and introduction, our competitiveness and operating results may be negatively affected54% rewritten
  3. 03We are dependent on a limited number of qualified suppliers who provide critical services, materials or components, and a disruption in our supply chain could negatively affect our business
  4. 04Long-term agreements expose us to certain execution, financial, and market risks, which could be significantNew
  5. 05We are subject to risks related to product defects, which could result in product recalls or epidemic failures and could subject us to warranty, litigation or indemnification claims that exceed our expectations or estimates
  6. 06The loss of our key management, staff and skilled employees or the inability to hire and develop new employees could negatively impact our business prospects
  7. 07Failure to successfully execute on strategic initiatives including acquisitions, divestitures or cost saving measures may negatively impact our future results
  8. 08Our strategic relationships subject us to risks and uncertainties that could harm our business63% rewritten

MACROECONOMIC AND INDUSTRY RISKS

  1. 09Adverse global or regional conditions could harm our business47% rewritten
  2. 10Changes in U.S. trade policy and the impact of tariffs and retaliatory actions may have a material adverse effect on our business and results of operations31% rewritten
  3. 11Our industry is subject to variations in demand, pricing and competitive factors, which can negatively impact our businessNew
  4. 12Our operations, and those of certain of our suppliers and customers, are subject to substantial risk of damage or disruption
  5. 13We may be adversely affected by the risks, challenges, and evolving regulatory landscape associated with the use of AI in our operations, product development, and business practicesNew
  6. 14We have historically experienced variability in our sales and cyclicality in our industry, which could cause our operating results to fluctuate. In addition, accurately forecasting demand is difficult, which could harm our business40% rewritten
  7. 15The compromise, damage or interruption of our technology infrastructure, information systems or products by cybersecurity incidents, data security breaches, other security problems, design defects, information system failures or other events could have a material negative impact on our business

FINANCIAL RISKS

  1. 16Our incurrence of additional debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions69% rewritten
  2. 17Tax matters may materially affect our financial position and results of operations40% rewritten
  3. 18If the completed Separation of Sandisk were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilitiesNew
  4. 19Any decisions to reduce or discontinue paying cash dividends to our stockholders or the repurchase of our shares of common stock pursuant to our previously announced share repurchase program could cause the market price for our common stock to decline
  5. 20Fluctuations in currency exchange rates as a result of our international operations may negatively affect our operating results
  6. 21Increases in our customers’ credit risk could result in credit losses and term extensions under existing contracts with customers with credit losses could result in an increase in our operating costs

LEGAL AND COMPLIANCE RISKS

  1. 22We are and may continue to be involved in litigation, investigations and governmental proceedings, which may be costly, may divert the efforts of our key personnel and could result in adverse court rulings, fines or penalties, which could materially harm our business
  2. 23The nature of our industry and its reliance on IP and other proprietary information subjects us and our suppliers, customers and partners to the risk of significant litigation
  3. 24Our reliance on IP and other proprietary information subjects us to the risk that these key components of our business could be copied by competitors
  4. 25Our aspirations, disclosures and actions related to environmental, social and governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance30% rewritten
  5. 26The exclusive forum provisions in our Bylaws could limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with the company or its directors, officers or other employees76% rewritten
  6. 27U.S. will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action under the Securities Act of 1933, as amended (the “Federal Forum Provision”)New

Other Western Digital 10-Ks

  • FY2025 10-K risk factors
    27 risks

    Cloud customers dominate revenue, with the Cloud end market at 88% and top 10 customers at 68% after the Sandisk separation.

    Filed Aug 14, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.