AMD 2010 Annual Report Download - page 25

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the Democratic Republic of Congo (DRC). As a result, the SEC is required to promulgate by April 15, 2011, new
annual disclosure and reporting requirements for those companies who use “conflict” minerals mined from the
DRC and adjoining countries in their products. The implementation of these requirements could affect the
sourcing and availability of minerals used in the manufacture of semiconductor devices. As a result, there may
only be a limited pool of suppliers who provide conflict free metals, and we cannot assure you that we will be
able to obtain products in sufficient quantities or at competitive prices. Also, since our supply chain is complex,
we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently
verify the origins for all metals used in our products through the due diligence procedures that we implement.
Other regulatory requirements potentially affecting our back-end manufacturing processes and the design
and marketing of our products are in development throughout the world. In addition, a number of jurisdictions
including the EU, Australia and China are considering market entry requirements for computers based on the
ENERGY STAR specification (Version 5.0) as well as additional limits. The proposed requirements, which have
not yet been finalized, could potentially be approved and implemented as early as the fourth quarter of 2011. If
such requirements are implemented in the proposed time frame and to the proposed specification there is the
potential for certain of our microprocessor, chipset and GPU products, as incorporated in desktop and mobile
PCs, being excluded from these markets. We have management systems in place to identify and ensure
compliance with such requirements and have budgeted for foreseeable associated expenditures. However, 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.
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones we face. If any of the following risks
actually occurs, our business, financial condition or results of operations could be materially adversely affected.
In addition, you should consider the interrelationship and compounding effects of two or more risks occurring
simultaneously.
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 market share,
margins and 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 a lower average
selling price for our products and adversely affect our margins and profitability.
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 and margins;
• product mix and introduction schedules;
• product bundling, marketing and merchandising strategies;
• exclusivity payments to its current and potential customers and channel partners;
• 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.
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