AMD 2011 Annual Report Download - page 56

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microprocessor products increased due to a favorable shift in our product mix to higher end microprocessors,
especially for servers, as customers continued to transition to our AMD Opteron™ 6000 series server platforms.
Average selling price of our chipset products increased primarily due to a shift in product mix.
Computing Solutions operating income was $556 million in 2011 compared to $529 million in 2010. The
improvement in operating results was primarily due to the increase in net revenue referenced above, partially
offset by a $70 million increase in cost of sales, a $45 million increase in research and development expenses and
a $42 million increase in marketing, general and administrative expenses. Cost of sales increased primarily due to
higher microprocessor and chipsets unit shipments and the absence of a one-time benefit related to the
deconsolidation of GF in 2010. Research and development expenses and marketing, general and administrative
expenses increased for the reasons set forth under “Expenses,” below.
Computing Solutions operating income was $529 million in 2010 compared to $142 million in 2009. The
improvement was primarily due to the increase in net revenue referenced above and a $25 million decrease in
cost of sales, partially offset by a $224 million increase in research and development expenses and a $61 million
increase in marketing, general and administrative expenses. Cost of sales decreased due to reductions in
manufacturing costs and a one-time benefit related to the deconsolidation of GF in 2010. Research and
development expenses and marketing, general and administrative expenses increased for the reasons set forth
under “Expenses,” below.
Graphics
Graphics net revenue of $1.6 billion in 2011 decreased by 6% compared to net revenue of $1.7 billion in
2010. The decrease was due to a 6% decrease in net revenue from sales of GPU products. Net revenue from sales
of GPU products decreased primarily due to a decrease in both GPU unit shipments and average selling price.
The decrease in GPU unit shipments was primarily due to lower customer demand which we believe was due in
part to the disruption in the supply of hard disk drives caused by the flooding in Thailand at the beginning of
2011. GPU average selling price decreased due to a shift in our product mix to lower end GPU products.
Graphics net revenue of $1.7 billion in 2010 increased 43% compared to net revenue of $1.2 billion in 2009.
The increase was due to a 49% increase in net revenue from sales of GPU products. Net revenue from sales of
GPU products increased primarily due to an increase in both GPU unit shipments and average selling price. Unit
shipments increased due to strong demand for our DX 11䉸—ATI Radeon™ products. However, the increase
was limited by supply constraints primarily related to constrained wafer foundry capacity in the first half of 2010.
Supply constraints improved in the third quarter of 2010, and we did not experience any supply constraints
during the fourth quarter of 2010. GPU average selling price increased due to a shift in our product mix to higher
end GPU products.
Graphics operating income was $51 million in 2011 compared to $149 million in 2010. The decline in
operating results was primarily due to the decrease in net revenue referenced above and a $20 million increase in
marketing, general and administrative expenses, partially offset by a $25 million decrease in cost of sales.
Marketing, general and administrative expenses increased for the reasons set forth under “Expenses,” below.
Cost of sales decreased primarily due to lower GPU shipments and correspondingly lower manufacturing costs.
Graphics operating income was $149 million in 2010 compared to $35 million in 2009. The improvement
was primarily due to the increase in net revenue referenced above, partially offset by a $345 million increase in
cost of sales due to higher GPU unit shipments, a $22 million increase in research and development expenses and
a $15 million increase in marketing, general and administrative expenses. Research and development expenses
and marketing, general and administrative expenses increased for the reasons set forth under “Expenses,” below.
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