Advanced Micro Devices Inc's Comment on Sales, Marketing and Customers
We sell our products through our direct sales force and through independent
distributors and sales representatives in both domestic and international markets.
Our sales arrangements generally operate on the basis of product forecasts provided
by the particular customer, but do not typically include any commitment or requirement
for minimum product purchases. We primarily use purchase orders, sales order
acknowledgments and contractual agreements as evidence of our sales arrangements.
Our agreements typically contain standard terms and conditions covering matters
such as payment terms, warranties and indemnities for issues specific to our
We generally warrant that our products sold to our customers will conform to
our approved specifications and be free from defects in material and workmanship
under normal use and service for one year. Subject to certain exceptions, we
also offer a three-year limited warranty to end users for only those CPU and
AMD A-Series APU products that are commonly referred to as “processors
in a box” and for PC workstation products. We have also offered extended
limited warranties to certain customers of “tray” microprocessor
products and/or workstation graphics products who have written agreements with
us and target their computer systems at the commercial and/or embedded markets.
We market and sell our products under the AMD trademark. Our desktop PC product
brands for microprocessors are AMD A-Series, AMD E-Series, AMD FX, AMD Athlon
and AMD Sempron. Our notebook and tablet brands for microprocessors are AMD
A-Series A, AMD E-Series, AMD C-Series, AMD Z-Series, AMD Phenom, AMD Athlon,
AMD Turion and AMD Sempron. Our server brand for microprocessors is AMD Opteron.
We sell dense server systems products under the SeaMicro brand, including the
SM15000 series and Freedom Fabric Storage series for storage systems. We also
sell low-power versions of our AMD Opteron, AMD Athlon and AMD Sempron, as well
as AMD Geode, AMD R-Series and G-Series processors as embedded processor solutions.
Our product brand for the consumer graphics market is AMD Radeon. Our product
brand for professional graphics products is AMD FirePro. We also market and
sell our chipsets under the AMD trademark.
We market our products through our direct marketing and co-marketing programs.
In addition, we have cooperative advertising and marketing programs with customers
and third parties, including market development programs, pursuant to which
we may provide product information, training, marketing materials and funds.
Under our co-marketing development programs, eligible customers can use market
development funds as partial reimbursement for advertisements and marketing
programs related to our products and third-party systems integrating our products,
subject to meeting defined criteria.
Our microprocessor customers consist primarily of original equipment manufacturers,
or OEMs, original design manufacturers, or ODMs, system builders and independent
distributors in both domestic and international markets. ODMs provide design
and/or manufacturing services to branded and unbranded private label resellers,
OEMs and system builders. Our graphics products customers include the foregoing
as well as add-in-board manufacturers, or AIBs.
Customers of our chipset products consist primarily of PC and server OEMs,
often through ODMs or other contract manufacturers, who build the OEM motherboards,
as well as desktop and server motherboard manufacturers who incorporate chipsets
into their channel motherboards.
Our sales and marketing teams work closely with our customers to define product
features, performance and timing of new products so that the products we are
developing meet our customers’ needs. We also employ application engineers
to assist our customers in designing, testing and qualifying system designs
that incorporate our products in order to assist in optimizing product compatibility.
We believe that our commitment to customer service and design support improves
our customers’ time-to-market and fosters relationships that encourage
customers to use the next generation of our products.
We work closely with our customers to create differentiated products that
leverage our CPU, GPU and APU technology. Customers pay us non-recurring engineering
fees for design and development services and a purchase price for our semi-custom
Collectively, our top five customers accounted for approximately 54% of our
net revenue, Hewlett-Packard Company, Microsoft Corporation and Sony Corporation
each accounted for more than 10% of our consolidated net revenues. Sales to
Hewlett-Packard consisted primarily of products from our Computing Solutions
segment. Sales to Microsoft and Sony consisted primarily of products from our
Graphics and Visual Solutions segment. Five customers, including Hewlett-Packard
Company, accounted for approximately 58% of the net revenue attributable to
our Computing Solutions segment. In addition, five customers, including Hewlett-Packard,
Microsoft and Sony, accounted for approximately 70% of the net revenue attributable
to our Graphics and Visual Solutions segment. A loss of any of these customers
could have a material adverse effect on our business.
Original Equipment Manufacturers
We focus on three types of OEMs: multi-nationals, selected regional accounts
and target market customers. Large multi-nationals and regional accounts are
our core OEM customers. Our OEM customers include numerous foreign and domestic
manufacturers of servers and workstations, desktops, notebooks and PC motherboards.
Our authorized distributors resell to sub-distributors and mid-sized and smaller
OEMs and ODMs. Typically, distributors handle a wide variety of products, including
those that compete with our products. Distributors typically maintain an inventory
of our products. In most instances, our agreements with distributors protect
their inventory of our products against price reductions and provide return
rights with respect to any product that we have removed from our price book
that is not more than 12 months older than the manufacturing code date. In addition,
some agreements with our distributors may contain standard stock rotation provisions
permitting limited levels of product returns.