AMD 2015 Annual Report Download - page 17

Download and view the complete annual report

Please find page 17 of the 2015 AMD annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

products, and increased product capabilities that may result in significant performance improvements. Our ability
to compete depends on our ability to develop, introduce and sell new products or enhanced versions of existing
products on a timely basis and at competitive prices, with competitive costs.
Competition in the Microprocessor and Chipset Market
Intel Corporation has been the market share leader for microprocessors for many years. Intel’s market share,
margins and significant financial resources enable it to market its products aggressively, to target our customers
and our channel partners with special incentives and to influence customers who do business with us. These
aggressive activities have in the past and are likely in the future to result in lower unit sales and a lower average
selling price for many of our products and adversely affect our margins and profitability.
Intel exerts substantial influence over computer manufacturers and their channels of distribution through
various brand and other marketing programs. As a result of Intel’s position in the microprocessor market, Intel
has been able to control x86 microprocessor and computer system standards and benchmarks and to dictate the
type of products the microprocessor market requires of us. Intel also dominates the computer system platform,
which includes core logic chipsets, graphics chips, motherboards and other components necessary to assemble a
computer system. OEMs that purchase microprocessors for computer systems are highly dependent on Intel,
which can make them less innovative on their own and, to a large extent, can become distributors of Intel
technology. Additionally, Intel is able to drive de facto standards and specifications for x86 microprocessors that
could cause us and other companies to have delayed access to such standards.
As long as Intel remains in this dominant position, we may be materially adversely affected by Intel’s:
• business practices, including rebating and allocation strategies and pricing actions which may limit our
market share and margins;
• product mix and introduction schedules;
• product bundling, marketing and merchandising strategies;
• exclusivity payments to its current and potential customers and channel partners that require or result in
exclusive product arrangements;
• de facto control over industry standards, and heavy influence on PC manufacturers and other PC
industry participants, including motherboard, memory, chipset and basic input/output system, or BIOS,
suppliers and software companies as well as the graphics interface for Intel platforms; and
• marketing and advertising expenditures in support of positioning the Intel brand over the brand of its
OEM customers.
Intel has substantially greater financial resources than we do and accordingly spends substantially greater
amounts on marketing and research and development than we do. We expect Intel to maintain its market position
and to continue to invest heavily in marketing, research and development, new manufacturing facilities and other
technology companies. To the extent Intel manufactures a significantly larger portion of its microprocessor
products using more advanced process technologies, or introduces competitive new products into the market
before we do, we may be more vulnerable to Intel’s aggressive marketing and pricing strategies for
microprocessor products. For example, Intel has introduced microprocessors for low-cost notebooks, similar to
products that we offer for low-cost notebooks.
Intel could also take actions that place our discrete GPUs at a competitive disadvantage, including giving
one or more of our competitors in the graphics market, such as Nvidia Corporation, preferential access to its
proprietary graphics interface or other useful information. Intel’s position in the microprocessor market and
integrated graphics chipset market, its introduction of competitive new products, 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.
11