Intel 2005 Annual Report Download - page 22

Table of Contents
ITEM 1A. RISK FACTORS
Fluctuations in demand for our products may adversely affect our financial results.
If demand for our products fluctuates, our revenue and gross margin could be adversely affected. Important factors that could cause demand for our
products to fluctuate include:
If demand for our products is reduced, our manufacturing and/or assembly and test capacity could be under-utilized, and we may be required to record
an impairment on our long-
lived assets including facilities and equipment, as well as intangible assets, which would increase our expenses. In addition,
factory planning decisions may cause us to record accelerated depreciation. In the long term, if demand for our products increases, we may not be able
to add manufacturing and/or assembly and test capacity fast enough to meet market demand. These changes in demand for our products, and changes
in our customers’ product needs, could have a variety of negative effects on our competitive position and our financial results, and, in certain cases,
may reduce our revenue, increase our costs, lower our gross margin percentage, or require us to recognize and record impairments of our assets.
The semiconductor industry and our operations are characterized by a high percentage of costs that are fixed or otherwise difficult to reduce in the
short term, and by product demand that is highly variable and is subject to significant downturns that may adversely affect our business, results of
operations and financial condition.
The semiconductor industry and our operations are characterized by high costs, such as those related to facility construction and equipment, research
and development, and employment and training of a highly skilled workforce, that are either fixed or difficult to reduce in the short term. At the same
time, demand for our products is highly variable and has experienced downturns, often in connection with maturing product cycles and downturns in
general economic market conditions. These downturns have been characterized by reduced product demand, manufacturing overcapacity, high
inventory levels and decreased average selling prices. The combination of these factors may cause our revenue, gross margin, cash flow and
profitability to vary significantly both in the short term and over the long term.
We operate in intensely competitive industries, and our failure to respond quickly to technological developments and incorporate new features into
our products could have an adverse effect on our ability to compete.
We operate in intensely competitive industries that experience rapid technological developments, changes in industry standards, changes in customer
requirements, and frequent new product introductions and improvements. If we are unable to respond quickly and successfully to these developments,
we may lose our competitive position, and our products or technologies may become uncompetitive or obsolete. To compete successfully, we must
maintain a successful R&D effort, develop new products and production processes, and improve our existing products and processes at the same pace
or ahead of our competitors. We may not be able to successfully develop and market these new products; the products we invest in and develop may
not be well received by customers; and products developed and new technologies offered by others may affect the demand for our products. These
types of events could have a variety of negative effects on our competitive position and our financial results, such as reducing our revenue, increasing
our costs, lowering our gross margin percentage, and requiring us to recognize and record impairments of our assets.
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changes in customer product needs;
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changes in the level of customers
’
inventory;
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changes in business and economic conditions, including a downturn in the semiconductor industry;
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competitive pressures from companies that have competing products, chip architectures and manufacturing technologies;
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strategic actions taken by our competitors; and
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market acceptance of our products.