AMD 2011 Annual Report Download - page 26

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We are currently in the process of negotiating a second amendment to the WSA, including the pricing
methodology. If we do not successfully conclude our negotiations, it could have a material adverse impact on our
gross margins and our results of operations.
Failure to achieve expected manufacturing yields for our products could negatively impact our financial
results.
Semiconductor manufacturing yields are a result of both product design and process technology, which is
typically proprietary to the manufacturer, and low yields can result from either design or process technology
failures. Our third-party foundries are responsible for the process technologies used to fabricate silicon wafers. If
our third-party foundries experience manufacturing inefficiencies or encounter disruptions, errors or difficulties
during production, we may fail to achieve acceptable yields or experience product delivery delays. We cannot be
certain that our third-party foundries will be able to develop, obtain or successfully implement leading-edge
process technologies needed to manufacture future generations of our products profitably or on a timely basis or
that our competitors will not develop new technologies, products or processes earlier. Moreover, during periods
when foundries are implementing new process technologies, their manufacturing facilities may not be fully
productive. A substantial delay in the technology transitions to smaller process technologies could have a
material adverse effect on us, particularly if our competitors transition to more cost effective technologies before
us. Any decrease in manufacturing yields could result in an increase in per unit costs, which would adversely
impact our gross margin and/or force us to allocate our reduced product supply amongst our customers, which
could harm our relationships with our customers and reputation and materially adversely affect our business.
Global economic uncertainty may adversely impact our business and operating results.
Uncertain global economic conditions have in the past and may in the future adversely impact our business.
During challenging economic times, our current or potential future customers may experience cash flow
problems and as a result may modify, delay or cancel plans to purchase our products. Additionally, if our
customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be
able to pay, or may delay payment of, accounts receivable that they owe us. Any inability of our current or
potential future customers to pay us for our products may adversely affect our earnings and cash flow. Moreover,
our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to
manufacture our products. In addition, uncertain economic conditions may make it more difficult for us to raise
funds through borrowings or private or public sales of debt or equity securities.
Our ability to design and introduce new products in a timely manner is dependent upon third-party intellectual
property.
In the design and development of new products and product enhancements, we rely on third-party
intellectual property such as software development tools and hardware testing tools. Furthermore, certain product
features may rely on intellectual property acquired from third parties. The design requirements necessary to meet
consumer demands for more features and greater functionality from semiconductor products in the future may
exceed the capabilities of the third-party intellectual property or development tools available to us. If the third-
party intellectual property that we use becomes unavailable or fails to produce designs that meet consumer
demands, our business could be materially adversely affected.
We depend on third-party companies for the design, manufacture and supply of motherboards, BIOS software
and other computer platform components to support our microprocessor and graphics businesses.
We depend on third-party companies for the design, manufacture and supply of motherboards, BIOS
software and other components that our customers utilize to support our microprocessor and GPU offerings. We
also rely on our add-in-board partners (AIBs) to support our GPU business. In addition, our microprocessors are
not designed to function with motherboards and chipsets designed to work with Intel microprocessors. If the
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