AMD 2008 Annual Report Download - page 30

ITEM 1A. RISK FACTORS
Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may
limit our ability to compete effectively.
Intel Corporation has dominated the market for microprocessors for many years. Intel’s 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.
Intel exerts substantial influence over computer manufacturers and their channels of distribution through
various brand and other 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 us. 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.
Intel also 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.
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.
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