AMD 2014 Annual Report Download - page 22

ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones we face. If any of the following risks
actually occurs, our business, financial condition or results of operations could be materially adversely affected.
In addition, you should consider the interrelationship and compounding effects of two or more risks occurring
simultaneously.
Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit
our ability to compete effectively.
Intel Corporation has been the market share leader for microprocessors for many years. Intel’s market share,
margins and significant financial resources enable it to market its products aggressively, to target our customers
and our channel partners with special incentives and to influence customers who do business with us. These
aggressive activities have in the past and are likely in the future to result in lower unit sales and a lower average
selling price for many of our products and adversely affect our margins and profitability.
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 exerts substantial influence over computer manufacturers and their channels of distribution through
various brand and other marketing programs. As a result of Intel’s position in the microprocessor market, Intel
has been able to control x86 microprocessor and computer system standards and benchmarks and to dictate the
type of products the microprocessor market requires of us. Intel also dominates the computer system platform,
which includes core logic chipsets, graphics chips, motherboards and other components necessary to assemble a
computer system. Original equipment manufacturers (OEMs) that purchase microprocessors for computer
systems are highly dependent on Intel, less innovative on their own and, to a large extent, are distributors of Intel
technology. Additionally, Intel is able to drive de facto standards and specifications for x86 microprocessors that
could cause us and other companies to have delayed access to such standards.
Intel has substantially greater financial resources than we do and accordingly spends substantially greater
amounts on marketing and research and development than we do. We expect Intel to maintain its market 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. For example, Intel recently introduced microprocessors for low-cost notebooks, similar
to products that we offer for low-cost notebooks.
Intel could also take actions that place our discrete GPUs 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.
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