AMD 2009 Annual Report Download - page 20

services to branded and unbranded private label resellers and OEMs. Our graphics products customers include
the foregoing as well as add-in-board manufacturers, or AIB manufacturers.
Customers of our chipset products consist of PC OEMs, often through ODMs or other contract
manufacturers who build the OEM motherboards, as well as desktop motherboard manufacturers who
incorporate chipsets into their channel motherboards.
Our sales and marketing teams work closely with our customers to define product features, performance and
timing of new products so that the products we are developing meet the needs of our customers. We also employ
application engineers to assist our customers in designing, testing and qualifying system designs that incorporate
our products in order to assist in optimizing product compatibility. We believe that our commitment to customer
service and design support improves our customers’ time-to-market and fosters relationships that encourage
customers to use the next generation of our products.
Original Equipment Manufacturers
We focus on three types of OEMs: multi-nationals, selected regional accounts and target market customers.
Large multi-nationals and regional accounts are our core OEM customers. Our OEM customers include
numerous foreign and domestic manufacturers of servers and workstations, desktop and notebook PCs, and PC
motherboards. Under our standard terms and conditions, OEMs do not have a right to return our products other
than pursuant to the standard limited warranty.
In 2009, Hewlett-Packard Company accounted for more than 10 percent of our consolidated net revenues.
Sales to Hewlett-Packard consisted primarily of products from our Computing Solutions segment. Five
customers, including Hewlett-Packard, accounted for approximately 56 percent of the net revenue attributable to
our Computing Solutions segment. In addition, five customers accounted for approximately 52 percent of the net
revenue attributable to our Graphics segment. A loss of any of these customers could have a material adverse
effect on our business.
Third-Party Distributors
Our authorized distributors resell to sub-distributors and mid-sized and smaller OEMs and ODMs.
Typically, distributors handle a wide variety of products, including those that compete with our products.
Distributors typically maintain an inventory of our products. In most instances, our agreements with distributors
protect their inventory of our products against price reductions and provide return rights with respect to any
product that we have removed from our price book that is not more than twelve months older than the
manufacturing code date. In addition, some agreements with our distributors may contain standard stock rotation
provisions permitting limited levels of product returns.
AIB Manufacturers and System Integrators
We strive to establish and broaden our relationships with AIB manufacturers. We offer component-level
graphics and chipset products to AIB manufacturers who in turn build and sell board-level products using our
technology to system integrators, or SIs, and at retail. We also sell directly to our SI customers. SIs typically sell
from positions of regional or product-based strength in the market. They usually operate on short design cycles
and can respond quickly with new technologies. SIs often use discrete graphics solutions as a means to
differentiate their products and add value to their customers.
Competition
Generally, the IC industry is intensely competitive. Products typically compete on product quality, power
consumption, reliability, performance, size (or form factor), cost, selling price, adherence to industry standards,
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