AMD 2009 Annual Report Download - page 27

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Intel also manufactures and sells integrated graphics chipsets bundled with their microprocessors and is a
dominant competitor with respect to this portion of our business. Intel leverages its dominance in the
microprocessor market to sell its integrated chipsets. Moreover, computer manufacturers are increasingly using
integrated graphics chipsets rather than discrete graphics components, particularly for notebooks, because they
cost less than traditional discrete graphics components while offering satisfactory graphics performance for most
mainstream PCs. Intel could also take actions that place our discrete GPUs and integrated chipsets at a
competitive disadvantage, including giving one or more of our competitors in the graphics market, such as
Nvidia Corporation, preferential access to its proprietary graphics interface or other useful information.
As long as Intel remains in this dominant position, we may be materially adversely affected by Intel’s:
• business practices, including rebating and allocation strategies and pricing actions, designed to limit
our market share and margins;
• product mix and introduction schedules;
• product bundling, marketing and merchandising strategies;
• exclusivity payments to its current and potential customers and channel partners;
• control over industry standards, PC manufacturers and other PC industry participants, including
motherboard, memory, chipset and basic input/output system, or BIOS, suppliers and software
companies as well as the graphics interface for Intel platforms; and
• marketing and advertising expenditures in support of positioning the Intel brand over the brand of its
OEM customers.
Intel has substantially greater financial resources than we do and accordingly spends substantially greater
amounts on research and development and production capacity than we do. We expect Intel to maintain its
dominant position and to continue to invest heavily in marketing, research and development, new manufacturing
facilities and other technology companies. To the extent Intel manufactures a significantly larger portion of its
microprocessor products using more advanced process technologies, or introduces competitive new products into
the market before we do, we may be more vulnerable to Intel’s aggressive marketing and pricing strategies for
microprocessor products.
Intel’s dominant position in the microprocessor market and integrated graphics chipset market, its existing
relationships with top-tier OEMs and its aggressive marketing and pricing strategies could result in lower unit
sales and a lower average selling price for our products, which could have a material adverse effect on us.
The success of our business is dependent upon our ability to introduce products on a timely basis with
required features and performance levels that provide value to our customers and support and coincide
with significant industry transitions.
Our success depends to a significant extent on the development, qualification, implementation and
acceptance of new product designs and improvements that provide value to our customers. Our ability to develop
and qualify new products and related technologies to meet evolving industry requirements, at prices acceptable to
our customers and on a timely basis are significant factors in determining our competitiveness in our target
markets. For example, computer systems with our first AMD Fusion product, codenamed “Llano,” are expected
to be available in 2011. The “Llano” platform will embody a new processor architecture which integrates the
CPU and GPU on a single die. We anticipate that our “Llano” products will deliver improvements in power
efficiency. If we fail to or are delayed in developing or qualifying new products or technologies, such as “Llano”
we may lose competitive positioning, which could cause us to lose market share and require us to discount the
selling prices of our products.
Delays in developing or qualifying new products can also cause us to miss our customers’ product design
windows. If our customers do not include our products in the initial design of their computer systems, they will
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