AMD 2007 Annual Report Download - page 38

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we cannot assure you that sales of those products will achieve expected levels in the current or future fiscal years. Consequently, the revenues from royalties
expected by us from these technology platforms may not be fully realized, and our operating results may be adversely affected.
Our entry into consumer markets is subject to a number of uncertainties.
We sell products for the consumer electronics market, including for digital TVs and color mobile phones. There are a significant number of competitors
targeting this market. In addition, as the telecommunications, cable and consumer electronics industries and their suppliers undergo a period of convergence, we
expect that competition will increase in these markets. Our ability to succeed in these consumer markets is subject to a number of uncertainties, including
acceptance of our graphics and multimedia processors, the development of new technologies sufficient to meet market demand, the need to develop customer
relationships, different sales strategies and channels, new and different industry standards from those in the PC market and changing strategic alliances. We
cannot assure you that we will be able to successfully compete in this market. If we are unable to successfully introduce products and compete in this market, we
could be materially adversely affected.
Our inability to continue to attract and retain qualified personnel may hinder our product development programs.
Our future success depends upon the continued service of numerous qualified engineering, manufacturing, marketing, sales and executive personnel. If we
are not able to continue to attract, retain and motivate qualified personnel necessary for our business, the progress of our product development programs could be
hindered, and we could be materially adversely affected.
We outsource to third parties certain supply-chain logistics functions, including physical distribution of our products, and co-source some information
technology services.
We rely on a third-party provider to deliver our products to our customers and to distribute materials for some of our manufacturing facilities. In addition,
we rely on a third party in India to provide certain information technology services to us, including helpdesk support, desktop application services, business and
software support applications, server and storage administration, data center operations, database administration, and voice, video and remote access. Our
relationships with these providers are governed by fixed term contracts. We cannot guarantee that these providers will fulfill their respective responsibilities in a
timely manner in accordance with the contract terms, in which case our internal operations, the distribution of our products to our customers and the distribution
of materials for some facilities could be materially adversely affected. Also, we cannot guarantee that our contracts with these third-party providers will be
renewed, in which case we would have to transition these functions in-house or secure new providers, which could have a material adverse effect on us. In
addition, we decided to outsource or co-source these functions to third parties primarily to lower our operating expenses and to create a more variable cost
structure. However, if the costs related to administration, communication and coordination of these third-party providers are greater than we expect, then we will
not realize our anticipated cost savings.
Uncertainties involving the ordering and shipment of, and payment for, our products could materially adversely affect us.
We typically sell our products pursuant to individual purchase orders. We generally do not have long-term supply arrangements with our customers or
minimum purchase requirements. Generally, our customers may cancel orders more than 30 days prior to shipment without incurring a significant penalty, while
customers of products for consumer electronics devices may cancel orders by providing 90 days prior advance notice. We base our inventory levels on
customers’ estimates of demand for their products, which may not accurately predict the quantity or type of our products that our customers will want in the
future or ultimately end up purchasing. For example, customers who are concerned about potential supply shortages may “double order” products by ordering
more product from us
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008