Advanced Micro Devices Inc's Comment on Competitors and Industry Peers
Generally, the IC industry is intensely competitive. Products typically compete
on product quality, power consumption (including battery life), reliability,
speed, performance, size (or form factor), cost, selling price, adherence to
industry standards (and the creation of open industry standards), software and
hardware compatibility and stability, brand recognition, timely product introductions
and availability. Technological advances in the industry result in frequent
product introductions, regular price reductions, short product life cycles 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, while reducing our costs.
Competition in the Microprocessor Market
Intel Corporation has dominated the market 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 discipline 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 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 dominant 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, less innovative on their own and, to a large extent,
are distributors of Intel technology. Additionally, Intel is able to drive de
facto standards for x86 microprocessors that could cause us and other companies
to have delayed access to such standards.
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 dominant 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 recently
introduced microprocessors for low-cost notebooks, similar to products that
we offer for low-cost notebooks.
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, designed to 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;
control over industry standards, 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
marketing and advertising expenditures in support of positioning the Intel brand
over the brand of its OEM customers.
Intel’s dominant position in the microprocessor 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.
Other competitors include a variety of companies providing or developing ARM-based
designs at relatively low cost and low power processors for the computing market
including netbooks, tablets and thin-client form factors, as well as dense servers,
set-top boxes and gaming consoles. ARM Holdings designs and licenses its ARM
architecture to third parties, including AMD, and offers supporting software
and services. Our ability to compete with companies who use ARM-based solutions
depends on our ability to design energy-efficient, high-performing products
at an attractive price point.
Competition in the Chipset Market
In the chipset market, our competitors include suppliers of integrated graphics
chipsets. PC manufacturers use integrated chipsets because they cost less than
traditional discrete GPUs while offering acceptable graphics performance for
most mainstream PC users. Intel also leverages its dominance in the microprocessor
market to sell its integrated graphics chipsets. Intel manufactures and sells
integrated graphics chipsets bundled with their microprocessors and is a dominant
competitor in this market.
Competition in the Graphics and Visual Solutions Market
In the graphics and visual solutions market, our competitors include suppliers
of discrete graphics, embedded graphics processors and IGPs. Intel manufactures
and sells embedded graphics processors and IGP chipsets, and is a dominant competitor
with respect to this portion of our business. The continued improvement of the
quality of Intel’s integrated graphics, along with higher unit shipments
of our APUs, may drive computer manufacturers to reduce the number of systems
they build paired with discrete graphics components, particularly for notebooks,
because they may offer satisfactory graphics performance for most mainstream
PC users, at a lower cost. Intel could take actions that place our discrete
GPUs and integrated chipsets at a competitive disadvantage such as giving one
or more of our competitors in the graphics and visual solutions market, such
as Nvidia Corporation, preferential access to its proprietary graphics interface
or other useful information.
Other than Intel, our principal competitor in the graphics and visual solutions
market is Nvidia. AMD and Nvidia are the two principal players offering discrete
graphics solutions. Other competitors include a number of smaller companies,
which may have greater flexibility to address specific market needs, but less
financial resources to do so, especially as we believe that the growing complexity
of visual processors and the associated research and development costs represent
an increasingly higher barrier to entry in this market.
With respect to our game console products, we compete primarily against Nvidia.
Other competitors include Intel, ARM Holdings and Imagination Technology Group.
<< See the full list of AMD competitors