AMD 2007 Annual Report Download - page 37

Table of Contents
If we are unable to comply with the covenants in the subsidy grant documents that we receive from the State of Saxony, the Federal Republic of
Germany and/or the European Union for Fab 30, Fab 36 or other research and development projects we may undertake in Germany, we may forfeit or
have to repay our subsidies, which could materially adversely affect us.
We receive capital investment grants and allowances from the State of Saxony and the Federal Republic of Germany for Fab 36. We have also received
capital investment grants and allowances as well as interest subsidies from these governmental entities for Fab 30. From time to time, we also apply for and
obtain subsidies from the State of Saxony, the Federal Republic of Germany and the European Union for certain research and development projects. The subsidy
grant documents typically contain covenants that must be complied with, and noncompliance with the conditions of the grants, allowances and subsidies could
result in the forfeiture of all or a portion of any future amounts to be received, as well as the repayment of all or a portion of amounts received to date. If we are
unable to comply with any of the covenants in the grant documents, we could be materially adversely affected.
If our products are not compatible with some or all industry-standard software and hardware, we could be materially adversely affected.
Our products may not be fully compatible with some or all industry-standard software and hardware. Further, we may be unsuccessful in correcting any
such compatibility problems in a timely manner. If our customers are unable to achieve compatibility with software or hardware after our products are shipped in
volume, we could be materially adversely affected. In addition, the mere announcement of an incompatibility problem relating to our products could have a
material adverse effect on us.
Costs related to defective products could have a material adverse effect on us.
Products as complex as those we offer may contain defects or failures when first introduced or when new versions or enhancements to existing products
are released. We cannot assure you that, despite our testing procedures, errors will not be found in new products or releases after commencement of commercial
shipments in the future, which could result in loss of or delay in market acceptance of our products, material recall and replacement costs, delay in recognition or
loss of revenues, writing down the inventory of defective products, the diversion of the attention of our engineering personnel from product development efforts,
defending against litigation related to defective products or related property damage or personal injury, and damage to our reputation in the industry and could
adversely affect our relationships with our customers. In addition, we may have difficulty identifying the end customers of the defective products in the field. As
a result, we could incur substantial costs to implement modifications to correct defects. Any of these problems could materially adversely affect us.
In addition, because we sell directly to consumers, we could be subject to potential product liability claims if one of our products causes, or merely appears
to have caused, an injury. Claims may be made by consumers or others selling our products, and we may be subject to claims against us even if an alleged injury
is due to the actions of others. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities
could have a material adverse effect on our business.
Our receipt of royalty revenues is dependent upon the success of third-party products.
Our graphics technology for the game console market is being used in the Nintendo GameCube, Nintendo Wii and Microsoft® Xbox 360™ game consoles.
The only revenues that we receive from these technology platforms are in the form of non-recurring engineering revenues, as well as royalties paid to us by
Nintendo and Microsoft based upon the market success of their products. Accordingly, our royalty revenues will be directly related to the sales of these products.
We anticipate royalties in future years resulting from our agreements with Nintendo and Microsoft. However, we have no control over the marketing efforts of
Nintendo and Microsoft and
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008