AMD 2007 Annual Report Download - page 30

Table of Contents
graphics and consumer electronics businesses in the future. For example, during 2007, one handset manufacturer accounted for over 30 percent of the revenue of
our Consumer Electronics segment. During this same period, three customers accounted for over 35 percent of the revenue of our Graphics segment. If one of our
top microprocessor, graphics or consumer electronics customers decided to stop buying our products, or if one of these customers were to materially reduce its
operations or its demand for our products, we would be materially adversely affected. For example, during 2007, the handset manufacturer referenced above
purchased significantly less of our products than in the previous year. This decline contributed to lower unit shipments of our products for consumer electronics
devices and negatively impacted net revenue for our Consumer Electronics segment in 2007. Moreover, this handset manufacturer is considering divesting its
handset business.
The semiconductor industry is highly cyclical and has experienced severe downturns that materially adversely affected, and may in the future
materially adversely affect, our business.
The semiconductor industry is highly cyclical and has experienced significant downturns, often in conjunction with constant and rapid technological
change, wide fluctuations in supply and demand, continuous new product introductions, price erosion and declines in general economic conditions. Our historical
financial results have also been subject to substantial fluctuations. Our financial performance has been, and may in the future be, negatively affected by these
downturns. We incurred substantial losses in recent downturns, due to:
• substantial declines in average selling prices;
• the cyclical nature of supply/demand imbalances in the semiconductor industry;
• a decline in demand for end-user products (such as PCs) that incorporate our products;
• excess inventory levels in the channels of distribution, including those of our customers; and
• excess production capacity.
For example, in 2001 and 2002 we implemented restructuring plans due to weak customer demand associated with the downturn in the semiconductor
industry. If the semiconductor industry were to experience a downturn in the future, we would be materially adversely affected.
The demand for our products depends in part on continued growth in the industries and geographies into which they are sold. Fluctuations in demand
for our products or a market decline in any of these industries or geographies would have a material adverse effect on our results of operations.
Our microprocessor business is dependent upon the market for mobile and desktop PCs and servers. Industry-wide fluctuations in the computer
marketplace have materially adversely affected us in the past and may materially adversely affect us in the future. Depending on the growth rate of computers
sold, sales of our products may not grow and may even decrease. If demand for computers is below our expectations, we could be materially adversely affected.
The business we acquired from ATI is also dependent upon the market for mobile, desktop and workstation PCs, the consumer electronics market for
digital TVs, handheld devices, such as multimedia-enabled mobile phones, and game consoles. A market decline in any of these industries could cause the
demand for our products to decrease and could have a material adverse effect on our results of operations.
The growth of our business is also dependent on continued demand for our products from high-growth global markets. If demand from these markets is
below our expectations, sales of our products may not grow, and may even decrease, which would have a material adverse effect on us.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008