NVIDIA 2015 Annual Report Download - page 97

17
• our introduction of new products resulting in lower demand for older products; or
• increased competition, including competitive pricing actions.
In addition, the cancellation or deferral of customer purchase orders could result in our holding excess inventory, which
could adversely affect our gross margins. In addition, because we often sell a substantial portion of our products in the last
month of each quarter, we may not be able to reduce our inventory purchase commitments in a timely manner in response
to customer cancellations or deferrals. We could be required to write-down our inventory to the lower of cost or market or
write-off excess inventory, and we could experience a reduction in average selling prices if we incorrectly forecast product
demand, any of which could harm our financial results.
Conversely, if we underestimate our customers' demand for our products, our foundry partners may not have adequate
lead-time or capacity to increase production and we may not be able to obtain sufficient inventory to fill customers' orders
on a timely basis. Even if we are able to increase production levels to meet customer demand, we may not be able to do so
in a cost-effective or timely manner. If we fail to fulfill our customers' orders on a timely basis, or at all, our customer
relationships could be damaged, we could lose revenue and market share and our reputation could be damaged.
We are subject to risks and uncertainties associated with international operations which may harm our business.
We conduct our business worldwide and we have offices in various countries outside of the United States. Our
semiconductor wafers are manufactured, assembled, tested and packaged by third parties located outside of the United
States and Other Americas. We also generate a significant portion of our revenue from sales to customers outside the United
States and Other Americas. Revenue from sales to customers outside of the United States and Other Americas accounted
for 75% of total revenue for both fiscal year 2015 and 2014 and 74% of total revenue for fiscal year 2013. The global nature
of our business subjects us to a number of risks and uncertainties, including:
• international economic and political conditions, such as political tensions between countries in which we do
business;
• unexpected changes in, or impositions of, legislative or regulatory requirements;
• differing legal standards with respect to protection of intellectual property and employment practices;
• local business and cultural factors that differ from our normal standards and practices, including business practices
that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anticorruption laws and
regulations;
• exporting or importing issues related to export or import restrictions, tariffs, quotas and other trade barriers and
restrictions;
• financial risks such as longer payment cycles, difficulty in collecting accounts receivable and foreign exchange
rate fluctuations; and
• increased costs due to imposition of climate change regulations, such as carbon taxes, fuel or energy taxes, and
pollution limits.
If sales to any of our customers outside of the United States and Other Americas are delayed or cancelled because of
any of the above factors, our revenue may be negatively impacted.