AMD 2011 Annual Report Download - page 38

we could be named a potentially responsible party at other Superfund or contaminated sites in the future. In
addition, contamination that has not yet been identified could exist at our other facilities.
Environmental laws are complex, change frequently and have tended to become more stringent over time.
We face increasing complexity in our product design and procurement operations as we adjust to new and future
requirements relating to the chemical and material composition of our products. For example, the European
Union (EU) 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 with other countries implementing
similar restrictions. These regulations affect semiconductor devices and packaging. There is a risk that the cost,
quality and manufacturing yields of products that are required to be lead-free, as defined by these regulations, or
that are subject to other chemical restrictions, may be less favorable compared to products that are not subject to
chemical restrictions, or that the transition to products subject to lead-free or other chemical restrictions may
produce sudden changes in demand, which may result in excess inventory.
In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to establish
new disclosure and reporting requirements for those companies who use “conflict” minerals mined from the
Democratic Republic of Congo and adjoining countries in their products, whether or not these products are
manufactured by third parties. When these new requirements are implemented, they could affect the sourcing and
availability of minerals used in the manufacture of semiconductor devices, and there will be additional costs
associated with complying with the disclosure requirements, such as costs related to determining the source of
any conflicting minerals used in our products. Also, since our supply chain is complex, we may face reputational
challenges if we are unable to sufficiently verify the origins for all metals used in our products through the due
diligence procedures that we implement. Moreover, we may encounter challenges to satisfy those customers who
require that all of the components of our products are certified as conflict free.
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 developing or finalizing market entry requirements or public
procurement for computers and servers based on ENERGY STAR specification as well as additional energy
consumption limits. Some of these regulations are expected to be approved and implemented by the end of 2012.
If such requirements are implemented in the proposed time frame and do not contain recommended
modifications as proposed by industry associations, there is the potential for certain of our microprocessor,
chipset and GPU products, as incorporated in desktop and mobile PCs, workstations, servers and other
information and communications technology products being excluded from these markets which could materially
adversely affect us. 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 business is subject to potential tax liabilities.
We are subject to income taxes in the United States, Canada 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 adverse effect on our cash, income tax provision and net income in the period or periods for which that
determination is made.
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