AMD 2006 Annual Report Download - page 26

Table of Contents
manufactured using 65-nanometer technology in the fourth quarter of 2006. To the extent Intel manufactures a significantly larger portion of its microprocessor
products using smaller process technologies, we may be more vulnerable to Intel’s aggressive marketing and pricing strategies for microprocessor products,
which may result in market share gains for Intel.
Intel’s dominant position in the microprocessor market and integrated graphics chipset market, its existing relationships with top-tier OEMs and its
aggressive marketing and pricing strategies could result in lower unit sales and average selling prices for our products, which could have a material adverse effect
on us.
We may not realize all of the anticipated benefits of our acquisition of ATI.
The success of our recent acquisition of ATI depends, in part, on our ability to realize the anticipated synergies, cost savings and growth opportunities
from integrating the businesses of ATI with the businesses of AMD, and failure to realize these anticipated benefits could cause our business to be materially
adversely affected. Our success in realizing these benefits and the timing of this realization depends upon our successful integration of ATI’s operations. The
integration of two independent companies is a complex, costly, and time-consuming process. The difficulties of combining the operations of the companies
include, among others:
• retaining key employees;
• bridging possible differences in cultures and management philosophies;
• consolidating corporate and administrative infrastructures and systems;
• coordinating sales and marketing functions;
• preserving our and ATI’s customer, supplier, ecosystem partner and other important relationships;
• aligning and executing on new products roadmaps;
• minimizing the diversion of management’s attention from ongoing business concerns; and
• coordinating geographically separate organizations.
We cannot assure you that our integration of ATI will result in the realization of the full benefits that we anticipate will result from the acquisition. For
example, it is possible that as a result of the acquisition, previous ATI customers of discrete GPUs may decide to purchase products that can be used with Intel
platforms from one of our competitors or that ecosystem partners will be wary of continuing to do business with us because they view the former ATI operations
as competitive with portions of their business. Any inability to integrate successfully, or a delay in integrating, ATI could have a material adverse effect on us.
We cannot be certain that our substantial investments in research and development will lead to timely improvements in product designs or technology
used to manufacture our products or that we will have sufficient resources to invest in the level of research and development that is required to remain
competitive.
We make substantial investments in research and development for process technologies in an effort to design and manufacture leading-edge
microprocessors. We cannot be certain that we will be able to develop, obtain or successfully implement leading-edge process technologies needed to
manufacture future generations of our products profitably or on a timely basis or that our competitors will not develop new technologies, products or processes
that render our products uncompetitive or obsolete. We also make substantial investments in research and development related to product design and anticipate
that we will continue to do so in the future. For example, we recently opened a research and development facility in Shanghai and an advanced microprocessor
development facility in Fort Collins, Colorado. Similarly, in connection with the recent acquisition of ATI, we plan to continue to invest in research and
development related to our graphics and chipset products and products for consumer electronics devices, including new integrated platforms and our design
initiative called “Fusion.” Moreover, in connection with the acquisition, we committed to the Minister of Industry of Canada to increase total expenditures on
research and development in Canada when compared to
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007