AMD 2011 Annual Report Download - page 16

enable the highest capabilities sought by enthusiasts and are only available on desktop PCs. There is also
VISION Pro Technology, which is designed for business users and extends the approach of VISION Technology
to commercial PC platforms.
We market our products through our direct marketing and co-marketing programs. In addition, we have
cooperative advertising and marketing programs with customers or third parties, including market development
programs, pursuant to which we may provide product information, training, marketing materials and funds.
Under our co-marketing development programs, eligible customers can use market development funds as partial
reimbursement for advertisements and marketing programs related to our products, subject to meeting defined
criteria. Original Equipment Manufacturers, or OEMs, customers may qualify for market development funds
based on purchases of eligible products.
Customers
Our microprocessor customers consist primarily of OEMs, original design manufacturers, or ODMs, system
builders and independent distributors in both domestic and international markets. ODMs provide design and/or
manufacturing services to branded and unbranded private label resellers, OEMs and system builders. Our
graphics products customers include the foregoing as well as AIBs, or add-in-board manufacturers.
Customers of our chipset products consist primarily of PC and server OEMs, often through ODMs or other
contract manufacturers who build the OEM motherboards, as well as desktop and server 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 our customers’ needs. 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 mobile PCs, and PC
motherboards.
In 2011, Hewlett-Packard Company accounted for more than 10% 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% of the net revenue attributable to our Computing
Solutions segment. In addition, five customers accounted for approximately 55% 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.
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