AMD 2008 Annual Report Download - page 47

Environmental laws are complex, change frequently and have tended to become more stringent over time.
For example, the European Union and China are two among a growing number of jurisdictions that have enacted
in recent years restrictions on the use of lead, among other chemicals, in electronic products. These regulations
affect semiconductor packaging. There is a risk that the cost, quality and manufacturing yields of lead-free
products may be less favorable compared to lead-based products or that the transition to lead-free products may
produce sudden changes in demand, which may result in excess inventory. Other regulatory requirements
potentially affecting our manufacturing processes and the design and marketing of our products are in
development throughout the world. While we have budgeted for foreseeable associated expenditures, we cannot
assure you that future environmental legal requirements will not become more stringent or costly in the future.
Therefore, we cannot assure you that our costs of complying with current and future environmental and health
and safety laws, and our liabilities arising from past and future releases of, or exposure to, hazardous substances
will not have a material adverse effect on us.
Our worldwide operations could be subject to natural disasters and other business disruptions, which
could harm our future revenue and financial condition and increase our costs and expenses.
All of our wafer fabrication capacity for microprocessors is located in Germany. Nearly all product assembly
and final testing of our microprocessor products is performed at manufacturing facilities in China, Malaysia and
Singapore. The independent foundries we use to manufacture our graphics and chipset products are located in the
Asia-Pacific region and inventory is stored there, particularly in Taiwan. Many of our assembly, testing and
packaging suppliers for our graphics products are also located in southern Taiwan. On September 22, 1999, Taiwan
suffered a major earthquake that measured 7.6 on the Richter scale and disrupted the operations of these
manufacturing suppliers and contributed to a temporary shortage of graphics processors. Additional earthquakes,
fires or other occurrences that disrupt our manufacturing suppliers may occur in the future. To the extent that the
supply from our independent foundries or suppliers is interrupted for a prolonged period of time or terminated for
any reason, we may not have sufficient time to replace our supply of products manufactured by those foundries.
Moreover, our corporate headquarters are located near major earthquake fault lines in California. In the
event of a major earthquake, or other natural or manmade disaster, we could experience loss of life of our
employees, destruction of facilities or business interruptions, any of which could materially adversely affect us.
Our business is subject to potential tax liabilities.
We are subject to income taxes in the United States, Canada, Germany and other foreign jurisdictions.
Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course
of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
Although we believe our tax estimates are reasonable, we cannot assure you that the final determination of any
tax audits and litigation will not be materially different from that which is reflected in historical income tax
provisions and accruals. Should additional taxes be assessed as a result of an audit or litigation, there could be a
material effect on our cash, goodwill recorded as a result of our acquisition of ATI, income tax provision and net
income in the period or periods for which that determination is made.
For example, the Canadian Revenue Agency, or CRA, is auditing ATI for the years 2000-2004 with respect
to transactions between ATI and its subsidiaries. The audit has been completed and we have responded to the
CRA’s letter of proposed adjustments in July 2008. We could be subject to significant tax liability as well as a
loss of certain tax credits and other tax attributes as a result of the CRA audit.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We have not received any written comments that were issued more than 180 days before December 27,
2008, the end of the fiscal year covered by this report, from the Securities and Exchange Commission staff
regarding our periodic or current reports under the Securities Exchange Act of 1934 that remain unresolved.
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