AMD 2000 Annual Report Download - page 392

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
technological advances and adhere to evolving industry standards. An unexpected
change in one or more of the technologies related to our products, in market
demand for products based on a particular technology or of accepted industry
standards could materially and adversely affect our business. We may or may not
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. In addition, new products may or may not achieve market
acceptance.
Competition. The integrated circuit industry is intensely competitive and,
historically, has experienced rapid technological advances in product and system
technologies. After a product is introduced, costs and average selling prices
normally decrease over time as production efficiency and competition increase,
and as successive generations of products are developed and introduced for sale.
Technological advances in the industry result in frequent product introductions,
regular price reductions, short product life cycles and increased product
capabilities that may result in significant performance improvements.
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. Our current patent license
agreement with Intel expired at the end of 2000. We are currently negotiating a
new agreement with Intel but
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001