AMD 2012 Annual Report Download - page 27

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Intel’s dominant position in the microprocessor market and integrated graphics chipset market, its existing
relationships with top-tier OEMs and its aggressive marketing and pricing strategies could result in lower unit
sales and a lower average selling price for our products, which could have a material adverse effect on us.
The success of our business is dependent upon our ability to introduce products on a timely basis with features
and performance levels that provide value to our customers while supporting and coinciding with significant
industry transitions.
Our success depends to a significant extent on the development, qualification, implementation and
acceptance of new product designs and improvements that provide value to our customers. Our ability to
develop, qualify and distribute new products and related technologies to meet evolving industry requirements, at
prices acceptable to our customers and on a timely basis are significant factors in determining our
competitiveness in our target markets. For example, form factors have increasingly shifted from desktop PCs to
mobile PCs, and tablets have been one of the fastest growing form factors. Also, ARM-based processors are
being used in mobile and embedded electronics products as relatively low cost and small microprocessors and
also in form factors such as laptops, tablets and smartphones. Historically, a significant portion of our Computing
Solutions revenue has been related to desktop PCs. Currently, approximately 85% of our business is focused on
the legacy PC portions of the market, projected to have slowing growth over the next several years. To the extent
consumers adopt new form factors and have different requirements than those consumers in the PC market, PC
sales could be negatively impacted, which could negatively impact our business. If we fail to or are delayed in
developing, qualifying or shipping new products or technologies that provide value to our customers and address
these new trends, we may lose competitive positioning, which could cause us to lose market share and require us
to discount the selling prices of our products. Although we make substantial investments in research and
development, we cannot be certain that we will be able to develop, obtain or successfully implement new
products and technologies on a timely basis.
Delays in developing, qualifying or shipping new products can also cause us to miss our customers’ product
design windows. If our customers do not include our products in the initial design of their computer systems,
they will typically not use our products in their systems until at least the next design configuration. The process
of being qualified for inclusion in a customer’s system can be lengthy and could cause us to further miss a cycle
in the demand of end-users, which also could result in a loss of market share and harm our business.
Moreover, market demand requires that products incorporate new features and performance standards on an
industry-wide basis. Over the life of a specific product, the average selling price undergoes regular price
reductions. The introduction of new products and enhancements to existing products is necessary to maintain an
overall corporate average selling price. If we are unable to introduce new products with sufficient increases in
average selling price or increased unit sales volumes capable of offsetting the reductions in the average selling
price of existing products, our business could be materially adversely affected.
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.
Uncertainty in the worldwide economic environment may negatively impact consumer confidence and spending
causing our customers to postpone purchases. For example, our revenue in the second half of 2012 was adversely
affected, in part, by the overall weakness in the global economy and weak consumer demand for end-user PC
products, which impacted sales. We do not expect PC market conditions to improve during the first half of 2013.
In addition, 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,
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