AMD 2007 Annual Report Download - page 18

Table of Contents
improvements. Our ability to compete depends on our ability to develop, introduce and sell new products or enhanced versions of existing products on a timely
basis and at competitive prices, while reducing our manufacturing costs.
Competition in the Microprocessor Market
Intel Corporation has dominated the market for microprocessors for many years. Intel’s market power and significant financial resources enable it to
market its products aggressively, to target our customers and our channel partners with special incentives and to discipline customers who do business with us.
These aggressive activities have in the past and are likely in the future to result in lower unit sales and average selling prices for our products, and adversely
affect our margins and profitability. As long as Intel remains in this dominant position, we may be materially adversely affected by Intel’s:
• business practices, including rebating, and allocation strategies and pricing actions, designed to limit our market share;
• product mix and introduction schedules;
• product bundling, marketing and merchandising strategies;
• exclusivity payments to its current and potential customers;
• control over industry standards, PC manufacturers and other PC industry participants, including motherboard, memory, chipset and basic input/output
system, or BIOS, suppliers and software companies as well as the graphics interface for Intel platforms; and
• marketing and advertising expenditures in support of positioning the Intel brand over the brand of its OEM customers.
Intel exerts substantial influence over computer manufacturers and their channels of distribution through various brand and marketing programs. Because
of its dominant position in the microprocessor market, Intel has been able to control x86 microprocessor and computer system standards and to dictate the type of
products the microprocessor market requires of Intel’s competitors. Intel also dominates the computer system platform, which includes core logic chipsets,
graphics chips, motherboards and other components necessary to assemble a computer system. As a result, OEMs that purchase microprocessors for computer
systems are highly dependent on Intel, less innovative on their own and, to a large extent, are distributors of Intel technology. Additionally, Intel is able to drive
de facto standards for x86 microprocessors that could cause us and other companies to have delayed access to such standards.
We expect Intel to maintain its dominant position in the microprocessor market and to continue to invest heavily in marketing, research and development,
new manufacturing facilities and other technology companies. Intel has substantially greater financial resources than we do and accordingly spends substantially
greater amounts on research and development and production capacity than we do. We expect intense competition from Intel to continue.
Competition in the Embedded Processor Market
With respect to our embedded processors, our principal competitors are Freescale Semiconductor, Inc., Intel Corporation, NEC Corporation, Toshiba
Corporation, Broadcom Corporation, Raza Microelectronics, Inc., Applied Micro Circuits Corporation, Marvell Technology Group Ltd. and VIA Technologies,
Inc. We expect competition in the market for these devices to increase as our principal competitors focus more resources on developing low-power embedded
processor solutions.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008