AMD 2014 Annual Report Download - page 16

microprocessors is AMD Opteron. We sell dense server systems products under the SeaMicro brand, including
the SM15000 series and Freedom Fabric Storage series for storage systems. We also sell low-power versions of
our AMD Opteron, AMD Athlon and AMD Sempron, as well as AMD Geode, AMD R-Series and G-Series
processors as embedded processor solutions. Our product brand for the consumer graphics market is AMD
Radeon. Our product brand for professional graphics products is AMD FirePro. We also market and sell our
chipsets under the AMD trademark.
We market our products through our direct marketing and co-marketing programs. In addition, we have
cooperative advertising and marketing programs with customers and third parties, including market development
programs, pursuant to which we may provide product information, training, marketing materials and funds.
Under our co-marketing development programs, eligible customers can use market development funds as
reimbursement for advertisements and marketing programs related to our products and third-party systems
integrating our products, subject to meeting defined criteria.
Customers
Our microprocessor customers consist primarily of original equipment manufacturers (OEMs), original
design manufacturers (ODMs), system builders and independent distributors in both domestic and international
markets. ODMs provide design and/or manufacturing services to branded and unbranded private label resellers,
OEMs and system builders. Our graphics product customers include the foregoing as well as add-in-board
manufacturers (AIBs).
Customers of our chipset products consist primarily of PC and server OEMs, often through ODMs or other
contract manufacturers, who build the OEM motherboards, as well as desktop and server motherboard
manufacturers who incorporate chipsets into their channel motherboards.
We work closely with our customers to define product features, performance and timing of new products so
that the products we are developing meet our customers’ needs. We also employ application engineers to assist
our customers in designing, testing and qualifying system designs that incorporate our products. We believe that
our commitment to customer service and design support improves our customers’ time-to-market and fosters
relationships that encourage customers to use the next generation of our products.
We work closely with our customers to create differentiated products that leverage our CPU, GPU and APU
technology. In some cases, customers of our semi-custom products pay us non-recurring engineering fees for
design and development services and a purchase price for the resulting semi-custom products.
Collectively, our top five customers accounted for approximately 61% of our net revenue during the year
ended 2014. In 2014, Hewlett-Packard Company, Microsoft Corporation and Sony Corporation each accounted
for more than 13% of our consolidated net revenues. Sales to Hewlett-Packard consisted primarily of products
from our Computing and Graphics segment. Sales to Microsoft and Sony consisted primarily of products from
our Enterprise, Embedded and Semi-Custom segment. Five customers, including Hewlett-Packard, accounted for
approximately 54% of the net revenue attributable to our Computing and Graphics segment. In addition, five
customers, including Sony, Microsoft and Hewlett-Packard, accounted for approximately 90% of the net revenue
attributable to our Enterprise, Embedded and Semi-Custom segment. A loss of any of these customers would
have a material adverse effect on our business.
Original Equipment Manufacturers
We focus on three types of OEM customers: multi-nationals, selected regional accounts and target market
customers. Large multi-nationals and regional accounts are our core OEM customers. Our OEM customers
include numerous foreign and domestic manufacturers of servers and workstations, desktops, notebooks, PC
motherboards and game consoles.
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