Intel 2013 Annual Report Download - page 23

18
Changes in the mix of products sold may harm our financial results.
Because of the wide price differences of platform average selling prices among our data center, PC client, and
Other IA platforms, a change in the mix of platforms among these market segments may impact our revenue and
gross margin. For example, our PC client platforms that are incorporated in notebook and desktop computers tend
to have lower average selling prices and gross margin than our data center platforms that are incorporated in
servers, workstations and storage products. Therefore, if there is less demand for our data center platforms, and a
resulting mix shift to our PC client platforms, our gross margins and revenue would decrease. Also, more recently
introduced products tend to have higher costs because of initial development costs and lower production volumes
relative to the previous product generation, which can impact gross margin.
Our global operations subject us to risks that may harm our results of operations and financial condition.
We have sales offices, R&D, manufacturing, assembly and test facilities, and other facilities in many countries, and
some business activities may be concentrated in one or more geographic areas. As a result, our ability to
manufacture, assemble and test, design, develop, or sell products may be affected by:
• security concerns, such as armed conflict and civil or military unrest, crime, political instability, and terrorist
activity;
• natural disasters and health concerns;
• inefficient and limited infrastructure and disruptions, such as supply chain interruptions and large-scale outages
or interruptions of service from utilities, transportation, or telecommunications providers;
• restrictions on our operations by governments seeking to support local industries, nationalization of our
operations, and restrictions on our ability to repatriate earnings;
• differing employment practices and labor issues; and
• local business and cultural factors that differ from our normal standards and practices, including business
practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act (FCPA) and other anti-
corruption laws and regulations.
Legal and regulatory requirements differ among jurisdictions worldwide. Violations of these laws and regulations
could result in fines; criminal sanctions against us, our officers, or our employees; prohibitions on the conduct of our
business; and damage to our reputation. Although we have policies, controls, and procedures designed to ensure
compliance with these laws, our employees, contractors, or agents may violate our policies.
Although most of our sales occur in U.S. dollars, expenses such as payroll, utilities, tax, and marketing expenses
may be paid in local currencies. We also conduct certain investing and financing activities in local currencies. Our
hedging programs reduce, but do not eliminate, the impact of currency exchange rate movements; therefore,
changes in exchange rates could harm our results of operations and financial condition. Changes in tariff and import
regulations and in U.S. and non-U.S. monetary policies may harm our results of operations and financial condition
by increasing our expenses and reducing revenue. Differing tax rates in various jurisdictions could harm our results
of operations and financial condition by increasing our overall tax rate.
We maintain a program of insurance coverage for a variety of property, casualty, and other risks. We place our
insurance coverage with multiple carriers in numerous jurisdictions. However, one or more of our insurance
providers may be unable or unwilling to pay a claim. The types and amounts of insurance we obtain vary depending
on availability, cost, and decisions with respect to risk retention. The policies have deductibles and exclusions that
result in us retaining a level of self-insurance. Losses not covered by insurance may be large, which could harm our
results of operations and financial condition.
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 errors, 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 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. Production
issues may result in our failure to meet or increase production as desired, resulting in higher costs or large
decreases in yields, which could affect our ability to produce sufficient volume to meet product demand. The
unavailability or reduced availability of products could make it more difficult to deliver computing platforms. The
occurrence of these events could harm our business and results of operations.
Table of Contents