AMD 2015 Annual Report Download - page 54

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Computing and Graphics
Computing and Graphics net revenue of $1.8 billion in 2015 decreased by 42% compared to $3.1 billion in
2014 as a result of a 44% decrease in unit shipments, partially offset by a 3% increase in average selling price.
Unit shipments of all our Computing and Graphics products decreased. The decrease in unit shipments of all
categories of products was due to lower demand caused by challenging global macro economic conditions,
especially in the Greater China region, in addition to increased competitive pressures and reduced demand from
our OEM customers in advance of the Microsoft Windows®10 operating system. The increase in average selling
price was primarily attributable to an increase in average selling price of our notebook GPU products and AIB
products due to a favorable shift in our product mix, partially offset by a decrease in average selling price of our
notebook microprocessor products and chipset products.
Computing and Graphics net revenue of $3.1 billion in 2014 decreased by 16% compared to $3.7 billion in
2013 as a result of a 27% decrease in unit shipments, partially offset by a 15% increase in average selling price.
The decrease in unit shipments was primarily attributable to lower unit shipments of our microprocessor products
for desktop and notebook PCs and chipsets due to challenging consumer PC market conditions and our chipsets
being integrated into our APU products. The increase in average selling price was primarily attributable to an
increase in average selling price of our microprocessor products due to improved product mix of our
microprocessor products for desktop and notebook PCs.
Computing and Graphics operating loss was $502 million in 2015 compared to $76 million in 2014. The
decline in operating results was primarily due to the decrease in net revenue referenced above, partially offset by
a $696 million decrease in cost of sales, a $120 million decrease in research and development expenses and an
$84 million decrease in marketing, general and administrative expenses. Cost of sales decreased primarily due to
lower unit shipments in 2015 compared to 2014, partially offset by an inventory write-down of $52 million as a
result of lower anticipated demand for primarily older-generation APU products. Operating loss in 2014 included
a $19 million benefit from technology licensing revenue. Research and development expenses and marketing,
general and administrative expenses decreased for the reasons set forth under “Expenses,” below.
Computing and Graphics operating loss was $76 million in 2014 compared to an operating loss of $101
million in 2013. The improvement in operating results was primarily due to a $323 million decrease in cost of
sales, a $201 million decrease in research and development expenses and an $89 million decrease in marketing,
general and administrative expenses, partially offset by the decrease in net revenue referenced above. Cost of
sales decreased primarily due to lower unit shipments in 2014 compared to 2013. Operating loss in 2014 included
a $19 million benefit from technology licensing revenue. In addition, operating loss in 2013 included a $57
million benefit from sales of inventory that had been previously reserved in the third quarter of 2012, as
compared to a similar $8 million benefit in 2014. Research and development expenses and marketing, general
and administrative expenses decreased for the reasons set forth under “Expenses,” below.
Enterprise, Embedded and Semi-Custom
Enterprise, Embedded and Semi-Custom net revenue of $2.2 billion in 2015 decreased by 8% compared to
net revenue of $2.4 billion in 2014. The decrease was primarily due to a decrease in net revenue received in
connection with lower unit shipments of our server and embedded products due primarily to increased
competitive pressures, as well as due to the decrease in net revenue from certain royalty arrangements and a
decrease in non-recurring engineering (NRE) revenue. The decrease in net revenue was partially offset by an
increase in net revenue received in connection with higher unit shipments of our semi-custom SoC products.
Enterprise, Embedded and Semi-Custom net revenue of $2.4 billion in 2014 increased by 51% compared to
net revenue of $1.6 billion in 2013. The increase was primarily due to an increase in net revenue received in
connection with higher unit shipments of our semi-custom SoC products, which we began shipping in the second
quarter of 2013.
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