AMD 1996 Annual Report Download - page 219

International Manufacturing. Nearly all product assembly and final testing of
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the Company's products are performed at the Company's manufacturing facilities
in Penang, Malaysia; Bangkok, Thailand; and Singapore; or by subcontractors in
Asia. AMD has a 50-year land lease in Suzhou, China, to be used for the
construction and operation of an additional assembly and test facility. Foreign
manufacturing and construction of foreign facilities entail political and
economic risks, including political instability, expropriation, currency
controls and fluctuations, changes in freight and interest rates, and loss or
modification of exemptions for taxes and tariffs. For example, if AMD were
unable to assemble and test its products abroad, or if air transportation
between the United States and the Company's overseas facilities were disrupted,
there could be a material adverse effect on the Company.
OTHER RISK FACTORS
Debt Restrictions. The Credit Agreement and the Indenture related to the
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Senior Secured Notes contain significant covenants that limit the Company's and
its subsidiaries' ability to engage in various transactions and require
satisfaction of specified financial performance criteria. In addition, the
occurrence of certain events (including, without limitation, failure to comply
with the foregoing covenants, material inaccuracies of representations and
warranties, certain defaults under or acceleration of other indebtedness and
events of bankruptcy or insolvency) would, in certain cases after notice and
grace periods, constitute events of default permitting acceleration of
indebtedness. The limitations imposed by the Credit Agreement and the Indenture
are substantial, and failure to comply with such limitations could have a
material adverse effect on the Company.
Dependence on Third Parties for Programmable Logic Software. Customers utilizing
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programmable logic devices must use special software packages, generally
provided by the suppliers of the programmable logic devices, to program these
devices. AMD provides its programmable logic device customers with software
which it licenses from third parties and is dependent upon third parties for
the software and continuing improvements in the quality of the software. No
assurance can be made that the Company will be able to maintain its existing
relationships with these third parties. An inability of AMD to continue to
obtain appropriate software and improvements from third parties or to develop
its own software internally could materially adversely affect the Company's
Vantis business, including the timing of new or improved product introductions,
which could have a material adverse effect on the Company.
Technological Change and Industry Standards. The market for the Company's
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products is generally characterized by rapid technological developments,
evolving industry standards, changes in customer requirements, frequent new
product introductions and enhancements, short product life cycles and severe
price competition. The establishment of industry standards is a function of
market acceptance. Currently accepted industry standards may change. The
Company's success depends substantially upon its ability, on a cost-effective
and timely basis, to continue to enhance its existing products and to develop
and introduce new products that take advantage of technological advances and
adhere to evolving industry standards. An unexpected change in one or more of
the technologies related to its products, in market demand for products based on
a particular technology or on accepted industry standards could have a material
adverse effect on the Company. There can be no assurance that AMD will be able
to develop new products in a timely and satisfactory manner to address new
industry standards and technological changes, or to respond to new product
announcements by others, or that any such new products will achieve market
acceptance.
Product Incompatibility. While AMD submits its products to rigorous internal and
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external testing, there can be no assurance that the Company's products will be
compatible with all industry-standard software and hardware. Any inability of
the Company's customers to achieve such compatibility or compatibility with
other software or hardware after the Company's products are shipped in volume
could have a material adverse effect on the Company. There can be no assurance
that AMD will be successful in correcting any such compatibility problems that
are discovered or that such corrections will be acceptable to customers or made
in a timely manner. In addition, the mere announcement of an incompatibility
problem relating to the Company's products could have a material adverse effect
on the Company.
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Source: ADVANCED MICRO DEVIC, 10-K, March 20, 1997