AMD 2013 Annual Report Download - page 27

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If we cannot generate sufficient revenues and operating cash flow or obtain external financing, we may face a
cash shortfall and be unable to make all of our planned investments in research and development or other
strategic investments.
Our ability to fund research and development expenditures depends on generating sufficient cash flow from
operations and the availability of external financing, if necessary. Our research and development expenditures,
together with ongoing operating expenses, will be a substantial drain on our cash flow and may decrease our cash
balances. If new competitors, technological advances by existing competitors or other competitive factors require
us to invest significantly greater resources than anticipated in our research and development efforts, our operating
expenses would increase. If we are required to invest significantly greater resources than anticipated in research
and development efforts without an increase in revenue, our operating results could decline.
We regularly assess markets for external financing opportunities, including debt and equity financing.
Additional debt or equity financing may not be available when needed or, if available, may not be available on
satisfactory terms. The health of the credit markets may adversely impact our ability to obtain financing when
needed. Any downgrades from credit rating agencies such as Moody’s or Standard & Poor’s may adversely
impact our ability to obtain external financing or the terms of such financing. In addition, credit agency
downgrades or concerns regarding our credit worthiness may impact relationships with our suppliers, who may
limit our credit lines. For example, in the first quarter of 2013, Moody’s lowered our senior unsecured debt rating
to B2 from B1 and Standard & Poor lowered our senior unsecured debt rating to B from BB. Our inability to
obtain needed financing or to generate sufficient cash from operations may require us to abandon projects or
curtail planned investments in research and development or other strategic initiatives. If we curtail planned
investments in research and development or abandon projects, our products may fail to remain competitive and
our business would be materially adversely affected.
We rely on GF to manufacture most of our microprocessor and APU products. If GF is not able to satisfy our
manufacturing requirements, our business could be adversely impacted.
The WSA governs the terms by which we purchase products manufactured by GF. Pursuant to the WSA, we
are required to purchase all of our microprocessor and APU product requirements from GF with limited
exceptions. If GF is unable to achieve anticipated manufacturing yields, remain competitive using or
implementing advanced leading-edge process technologies needed to manufacture future generations of our
products, manufacture our products on a timely basis at competitive prices, or meet our capacity requirements,
then we may experience delays in product launches, supply shortages for certain products or increased costs, and
our business could be materially adversely affected.
In addition, if our requirements are less than the fixed number of wafers that we agreed to purchase, we
could have excess inventory or higher inventory unit costs, both of which will adversely impact our gross margin
and our results of operations.
We are currently in the process of negotiating a fourth amendment to the WSA, and we expect that our future
purchases from GF will continue to be material. If we do not successfully conclude our negotiations, it could have a
material adverse impact on our gross margin and our results of operations.
In addition, GF has relied on Advanced Technology Investment Company (ATIC) for its funding needs. If
ATIC fails to adequately fund GF on a timely basis, or at all, GF’s ability to manufacture products for us could
be materially adversely affected.
We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in
sufficient quantities and using competitive technologies, our business could be materially adversely affected.
We rely on third-party wafer foundries to fabricate the silicon wafers for all of our products. We also rely on
third-party providers to assemble, test, mark and pack certain of our products. It is important to have reliable
relationships with all of these third-party manufacturing suppliers to ensure adequate product supply to respond
to customer demand.
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