AMD 2008 Annual Report Download - page 24

microprocessor market requires of us. Intel also dominates the computer system platform, which includes core
logic chipsets, integrated 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, in some cases, are essentially 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.
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 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 Intel to maintain its
dominant position and to continue to invest heavily in marketing, research and development, new manufacturing
facilities and other technology companies. To the extent Intel manufactures a significantly larger portion of its
microprocessor products using more advanced process technologies, or introduces competitive new products into
the market before we do, we may be more vulnerable to Intel’s aggressive marketing and pricing strategies for
microprocessor products. We expect intense competition from Intel to continue.
Competition in the Chipset Market
In the chipset market, our competitors include suppliers of integrated graphics chipsets. PC manufacturers
are increasingly choosing to use integrated chipsets, particularly for notebook computers, over discrete GPUs
because integrated chipsets can cost significantly less than discrete GPUs while offering acceptable graphics
performance for most mainstream PC users. Intel Corporation manufactures and sells integrated graphics chipsets
bundled with their microprocessors and is a dominant competitor in this market.
Competition in the Graphics Market
In the graphics market, our competitors include integrated graphics and discrete graphics suppliers. Intel
manufactures and sells integrated graphics chipsets bundled with their microprocessors and is a dominant
competitor with respect to this portion of our business. Intel could leverage its dominance in the microprocessor
market to sell its integrated chipsets. Moreover, computer manufacturers are increasingly using integrated
graphics chipsets, particularly for notebooks, because they cost less than traditional discrete graphics components
while offering reasonably good graphics performance for most mainstream PCs.
Also, Intel has stated that it intends to reenter the discrete GPU market. Intel could take actions that place
our discrete GPUs and integrated chipsets at a competitive disadvantage such as giving one or more of our
competitors in the graphics market, such as Nvidia Corporation, preferential access to its proprietary graphics
interface or other useful information.
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