AMD 2010 Annual Report Download - page 33

We expect that competition will continue to be intense due to rapid technological changes, frequent product
introductions by our competitors of products that provide better performance or include additional features that
render our products uncompetitive and aggressive pricing by competitors, especially during challenging
economic times. For example, since their introduction, tablets have experienced increasing adoption by
consumers. Tablet sales could negatively impact sales of PCs to consumers, which could adversely impact our
business. Also, Intel has transitioned to 32nm process technology and is transitioning to 28nm process
technology before us. Using a more advanced process technology can contribute to lower product manufacturing
costs and improve a product’s performance and power efficiency. Some competitors may have greater access or
rights to companion technologies, including interface, processor and memory technical information. Competitive
pressures could adversely impact the demand for our products, which could harm our business.
Our operating results are subject to quarterly and seasonal sales patterns.
A substantial portion of our quarterly sales have historically been made in the last month of the quarter. This
uneven sales pattern makes prediction of revenues for each financial period difficult and increases the risk of
unanticipated variations in quarterly results and financial condition. In addition, our operating results tend to vary
seasonally. For example, historically, demand in the retail sector of the PC market is often stronger during the
fourth quarter as a result of the winter holiday season and weaker in the first quarter. European sales have also
been historically weaker during the summer months. Many of the factors that create and affect seasonal trends
are beyond our control.
If essential equipment or materials are not available to manufacture our products, we could be materially
adversely affected.
We purchase equipment and materials for our internal back-end manufacturing operations from a number of
suppliers and our operations depend upon obtaining deliveries of adequate supplies of equipment and materials
on a timely basis. Our third party manufacturing suppliers also depend on the same timely delivery of adequate
quantities of equipment and materials in the manufacture of our products. Certain equipment and materials that
are used in the manufacture of our products are available only from a limited number of suppliers. For example,
in manufacturing our microprocessor and APU products, GF is largely dependent on one supplier of our
silicon-on-insulator (SOI) wafers. We also depend on a limited number of suppliers to provide the majority of
certain types of integrated circuit packages for our microprocessor and APU products. Similarly, certain
non-proprietary materials or components such as memory, PCBs, substrates and capacitors used in the
manufacture of our graphics products are currently available from only a limited number of sources. Because
some of the equipment and materials that we and our third party manufacturing suppliers purchase are complex,
it is sometimes difficult to substitute one supplier for another.
From time to time, suppliers may extend lead times, limit supply or increase prices due to capacity
constraints or other factors. Also, some of these materials and components may be subject to rapid changes in
price and availability. Interruption of supply or increased demand in the industry could cause shortages and price
increases in various essential materials. Dependence on a sole supplier or a limited number of suppliers
exacerbates these risks. If we and our third party manufacturing suppliers are unable to procure certain of these
materials, or our foundries are unable to procure materials for manufacturing our products, our business would be
materially adversely affected.
Our issuance to WCH of warrants to purchase 35,000,000 shares of our common stock, if and when
exercised by WCH, will dilute the ownership interests of our existing stockholders, and the conversion of
the remainder of our 5.75% Notes and 6.00% Notes may dilute the ownership interest of our existing
stockholders.
The warrants issued to WCH became exercisable in July 2009. Any issuance by us of additional shares to
WCH upon exercise of the warrants will dilute the ownership interests of our existing stockholders. Any sales in
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