AMD 2005 Annual Report Download - page 14

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Table of Contents
party. We also have various channel marketing programs pursuant to which we may provide product information, training, marketing materials and funds.
We market and sell our products under the AMD trademark. Our product brands for microprocessors include AMD Athlon 64, AMD Athlon 64 FX and
AMD Sempron processor brands for desktop PCs, the AMD Opteron processor brand for servers and workstations and the AMD Turion 64 mobile technology
and AMD Sempron and AMD Athlon 64 processor brands for notebook PCs. Our product brands for our embedded processors include AMD Alchemy solutions
and AMD Geode processors. We market our products through our direct marketing and co-marketing programs. Our direct marketing activities include print and
Web-based advertising as well as consumer and trade events and other industry and consumer communications. We also sponsor teams such as the Discovery
Channel Pro Cycling Team and the Scuderia Formula One, and we also have established relationships with associations such as NASCAR, each of who is a
leader in their domain of expertise. We work with these groups to determine their technology needs and how our AMD64 technology can help support those
needs. The goal of these sponsorships is to increase awareness of our brand and technology. In addition, we have cooperative advertising and marketing
programs with customers or third parties, including market development programs. Under our marketing development programs, eligible customers can use
market development funds as partial reimbursement for advertisements and marketing programs related to our products, subject to meeting defined criteria.
Market development funds are earned by customers based on purchases of our products.
We also have the AMD LIVE! brand, through which we promote film, broadcast and music professional artists that use AMD64 technology. In January
2006 we announced our intention to extend the AMD LIVE! professional brand to consumers through multimedia desktop and notebook PCs. We expect these
PCs to be available in mid-2006 and to offer users enhanced digital entertainment experiences, including the ability to connect, store, distribute and access digital
media content throughout their home.
Spansion markets and sells its Flash memory products under the Spansion trademark. Fujitsu acts as the sole distributor of Spansion Flash memory
products in Japan and also as a distributor throughout the rest of the world, other than Europe and the Americas, with limited exceptions. Our sales force
responsible for selling Spansion Flash memory products and related personnel was transferred to Spansion in the second quarter of 2005. The transition of some
related support functions, including booking and billing is still underway. Therefore, we currently continue to provide support to Spansion for incremental
administrative services related to sales of Spansion Flash memory products. In addition, because Spansion does not yet have the capability to ship products and
invoice customers, we continue to act as Spansion’s agent to provide logistical support services in connection with the sale of Spansion Flash memory products.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Financial Matters—Spansion Agency Agreement.”
Customers
Our customers consist primarily of original equipment manufacturers, or OEMs, original design manufacturers, or ODMs, and third-party distributors in
both domestic and international markets. ODMs provide design and/or manufacturing services to branded and unbranded private label resellers. We generally
warrant that products sold to our customers will, at the time of shipment, be free from defects in workmanship and materials and conform to our approved
specifications. Subject to certain exceptions, we offer a three-year limited warranty to end users for microprocessor products that are commonly referred to as
“processors in a box” and a one-year limited warranty to direct purchasers of all other microprocessor and embedded processor products. Under limited
circumstances, we may offer an extended limited warranty to direct purchasers of microprocessor products that are intended for systems targeted at the
commercial end markets. Generally, our customers may cancel orders 30 days prior to shipment without incurring a penalty.
Original Equipment Manufacturers
We focus on three types of OEMs: multi-nationals, selected regional accounts and target market customers. Large multi-nationals and regional accounts
are our core OEM customers. Our OEM customers for
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Source: ADVANCED MICRO DEVIC, 10-K, February 27, 2006