AMD 2015 Annual Report Download - page 35

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If essential equipment, materials or manufacturing processes are not available to manufacture our products,
we could be materially adversely affected.
We purchase equipment and materials for our internal back-end manufacturing operations from a number of
suppliers and our operations depend upon obtaining deliveries of adequate supplies of equipment and materials
on a timely basis. Our third-party suppliers also depend on the same timely delivery of adequate quantities of
equipment and materials in the manufacture of our products. In addition, as many of our products increase in
technical complexity, we rely on our third-party suppliers to update their processes in order to continue meeting
our back-end manufacturing needs. Certain equipment and materials that are used in the manufacture of our
products are available only from a limited number of suppliers, or in some cases, a sole supplier. We also depend
on a limited number of suppliers to provide the majority of certain types of integrated circuit packages for our
microprocessors, including our APU products. Similarly, certain non-proprietary materials or components such
as memory, printed circuit boards (PCBs), interposers, substrates and capacitors used in the manufacture of our
products are currently available from only a limited number of sources. Because some of the equipment and
materials that we and our third-party manufacturing suppliers purchase are complex, it is sometimes difficult to
substitute one supplier for another.
From time to time, suppliers may extend lead times, limit supply or increase prices due to capacity
constraints or other factors. Also, some of these materials and components may be subject to rapid changes in
price and availability. Interruption of supply or increased demand in the industry could cause shortages and price
increases in various essential materials. Dependence on a sole supplier or a limited number of suppliers
exacerbates these risks. If we are unable to procure certain of these materials for our back-end manufacturing
operations, or our third-party foundries or manufacturing suppliers are unable to procure materials for
manufacturing our products, our business would be materially adversely affected.
If our products are not compatible with some or all industry-standard software and hardware, we could be
materially adversely affected.
Our products may not be fully compatible with some or all industry-standard software and hardware.
Further, we may be unsuccessful in correcting any such compatibility problems in a timely manner. If our
customers are unable to achieve compatibility with software or hardware, we could be materially adversely
affected. In addition, the mere announcement of an incompatibility problem relating to our products could have a
material adverse effect on our business.
Costs related to defective products could have a material adverse effect on us.
Products as complex as those we offer may contain defects or failures when first introduced or when new
versions or enhancements to existing products are released. We cannot assure you that, despite our testing
procedures, errors will not be found in new products or releases after commencement of commercial shipments
in the future, which could result in loss of or delay in market acceptance of our products, material recall and
replacement costs, delay in recognition or loss of revenue, writing down the inventory of defective products, the
diversion of the attention of our engineering personnel from product development efforts, defending against
litigation related to defective products or related property damage or personal injury and damage to our
reputation in the industry and could adversely affect our relationships with our customers. In addition, we may
have difficulty identifying the end customers of the defective products in the field. As a result, we could incur
substantial costs to implement modifications to correct defects. Any of these problems could materially adversely
affect our business.
We could be subject to potential product liability claims if one of our products causes, or merely appears to
have caused, an injury. Claims may be made by consumers or others selling our products, and we may be subject
to claims against us even if an alleged injury is due to the actions of others. A product liability claim, recall or
other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a
material adverse effect on our business.
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