Intel 2008 Annual Report Download - page 23

Table of Contents
Fluctuations in the mix of products sold may harm our financial results.
Because of the wide price differences among and within mobile, desktop, and server microprocessors, the mix and types of
performance capabilities of microprocessors sold affect the average selling price of our products and have a substantial impact
on our revenue and gross margin. Our financial results also depend in part on the mix of other products that we sell, such as
chipsets, flash memory, and other semiconductor products. In addition, more recently introduced products tend to have higher
associated costs because of initial overall development and production ramp. Fluctuations in the mix and types of our products
may also affect the extent to which we are able to recover the fixed costs and investments associated with a particular product,
and as a result can harm our financial results.
Our global operations subject us to risks that may harm our results of operations and financial condition.
We have sales offices, R&D, manufacturing, and assembly and test facilities in many countries, and as a result, we are subject
to risks associated with doing business globally. Our global operations may be subject to risks that may limit our ability to
manufacture, assemble and test, design, develop, or sell products in particular countries, which could, in turn, harm our results
of operations and financial condition, including:
In addition, although most of our products are sold in U.S. dollars, we incur a significant amount of certain types of expenses,
such as payroll, utilities, tax, and marketing expenses, as well as certain investing and financing activities, in local currencies.
Our hedging programs reduce, but do not entirely eliminate, the impact of currency exchange rate movements, and therefore
fluctuations in exchange rates could harm our business operating results and financial condition. In addition, changes in tariff
and import regulations and in U.S. and non-U.S. monetary policies may harm our operating results and financial condition by
increasing our expenses and reducing our revenue. Varying tax rates in different jurisdictions could harm our operating results
and financial condition by increasing our overall tax rate.
We maintain a program of insurance coverage for various types of property, casualty, and other risks. We place our insurance
coverage with various carriers in numerous jurisdictions. The types and amounts of insurance that we obtain vary from time to
time and from location to location, depending on availability, cost, and our decisions with respect to risk retention. The
policies are subject to deductibles and exclusions that result in our retention of a level of risk on a self-insurance basis. Losses
not covered by insurance may be substantial and may increase our expenses, which could harm our results of operations and
financial condition. In addition, the recent financial crisis could pose solvency risks for our insurers, which could reduce our
coverage if one or more of our insurance providers is unable to pay a claim.
Failure to meet our production targets, resulting in undersupply or oversupply of products, may harm our business and
results of operations.
Production of integrated circuits is a complex process. Disruptions in this process can result from interruptions in our
processes, errors, and difficulties in our development and implementation of new processes; defects in materials; disruptions in
our supply of materials or resources; and disruptions at our fabrication and assembly and test facilities due to, for example,
accidents, maintenance issues, or unsafe working conditions—all of which could affect the timing of production ramps and
yields. We may not be successful or efficient in developing or implementing new production processes. The occurrence of any
of the foregoing may result in our failure to meet or increase production as desired, resulting in higher costs or substantial
decreases in yields, which could affect our ability to produce sufficient volume to meet specific product demand. The
unavailability or reduced availability of certain products could make it more difficult to implement our platform strategy. We
may also experience increases in yields. A substantial increase in yields could result in higher inventory levels and the
possibility of resulting excess capacity charges as we slow production to reduce inventory levels. The occurrence of any of
these events could harm our business and results of operations.
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security concerns, such as armed conflict and civil or military unrest, crime, political instability, and terrorist activity;
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health concerns;
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natural disasters;
• inefficient and limited infrastructure and disruptions, such as large-scale outages or interruptions of service from
utilities or telecommunications providers and supply chain interruptions;
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differing employment practices and labor issues;
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local business and cultural factors that differ from our normal standards and practices;
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regulatory requirements and prohibitions that differ between jurisdictions; and
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restrictions on our operations by governments seeking to support local industries, nationalization of our operations, and
restrictions on our ability to repatriate earnings.