AMD 1999 Annual Report Download - page 143

Competition in the sale of ICs is based on:
. performance;
. product quality and reliability;
. price;
. adherence to industry standards;
. software and hardware compatibility;
. marketing and distribution capability;
. brand recognition;
. financial strength; and
. ability to deliver in large volumes on a timely basis.
Order Revision and Cancellation Policies. We manufacture and market standard
lines of products. Sales are made primarily pursuant to purchase orders for
current delivery or agreements covering purchases over a period of time, which
may be revised or canceled without penalty. As a result, we must commit
resources to the production of products without any advance purchase commitments
from customers. Our inability to sell products after we devoted significant
resources to them could have a material adverse effect on our business.
Distributors typically maintain an inventory of our products. In most
instances, our agreements with distributors protect their inventory of our
products against price reductions, as well as products that are slow moving or
have been discontinued. These agreements, which may be canceled by either party
on a specified notice, generally allow for the return of our products if the
agreement with the distributor is terminated. The market for our products is
generally characterized by, among other things, severe price competition. The
price protection and return rights we offer to our distributors could materially
and adversely affect us if there is an unexpected significant decline in the
price of our products.
Intellectual Property Rights; Potential Litigation. It is possible that:
. we will be unable to protect our technology or other intellectual property
adequately through patents, copyrights, trade secrets, trademarks and other
measures;
. patent applications that we may file will not be issued;
. foreign intellectual property laws will not protect our intellectual
property rights;
. any patent licensed by or issued to us will be challenged, invalidated or
circumvented or that the rights granted thereunder will not provide competitive
advantages to us; and
. others will independently develop similar products, duplicate our products
or design around our patents and other rights.
From time to time, we have been notified that we may be infringing
intellectual property rights of others. If any such claims are asserted against
us, we may seek to obtain a license under the third party's intellectual
property rights. We could decide, in the alternative, to resort to litigation to
challenge such claims. Such challenges could be extremely expensive and time-
consuming and could have a material adverse effect on our business. We cannot
give any assurance that all necessary licenses can be obtained on satisfactory
terms, or whether litigation may always be avoided or successfully concluded.
Environmental Regulations. We could possibly be subject to fines, suspension of
production, alteration of our manufacturing processes or cessation of our
operations if we fail to comply with present or future governmental regulations
related to the use, storage, handling, discharge or disposal of toxic, volatile
or otherwise hazardous chemicals used in the manufacturing process. Such
regulations could require us to acquire expensive remediation equipment or to
incur other expenses to comply with environmental regulations. Our failure to
control the use of, disposal or storage of, or adequately restrict the discharge
of, hazardous substances could subject us to future liabilities and could have a
material adverse effect on our business.
Year 2000. We have previously discussed the nature and progress of our plans to
become Year 2000 ready. Pursuant to our plans, we completed our remediation and
testing of systems. We have not experienced any material system failures,
disruptions of operations or interruptions of our ability to process
transactions, send invoices or engage in other normal business activities as a
result of Year 2000 issues. In addition, we are not aware of any material
problems resulting from Year 2000 issues with our products and services.
Although we have not experienced any material problems related to the Year 2000,
we cannot give any assurance that issues will not arise in the future or that we
will be able to adequately address any issues that may arise. We will continue
to monitor our critical computer applications in the year 2000 to ensure that
Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000