Adaptec 2006 Annual Report Download - page 15

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Table of Contents
directly to an outside assembly house where the die are individually cut and packaged into semiconductor devices. The individual devices are then run through
various electrical, mechanical and visual tests before customer delivery. With most of our products, we have the option to probe the wafers or test the final chips
in-house or subcontract the probing or testing to independent subcontractors.
Quality Assurance
The industries that we serve require high quality, reliable semiconductors for incorporation into their equipment. We pre-qualify each vendor, foundry, assembly
and test subcontractor. Wafers supplied by outside foundries must meet our incoming quality and test standards. We conduct a portion of our test operations on
advanced mixed signal and digital test equipment in our Burnaby facility. The remainder of our testing is performed predominantly by independent Asian and
U.S. companies.
In 2006, there has been an increase in the proportion of products being produced for PMC by turnkey ASIC vendors due to the acquisitions. Although PMC does
not physically manage the bulk of this production, these products follow approved and audited flows conforming to PMC’s Quality Assurance requirements.
RESEARCH AND DEVELOPMENT
Our research and development efforts are market and customer-focused and often involve the development of both hardware and software. These devices and
reference designs are targeted for use in enterprise, storage and service provider markets. Increasingly, our OEM customers that serve these end markets are
demanding complete solutions with software support and complex feature sets.
From time to time we announce new products to the public once development of the product is substantially completed, and there are no longer significant costs
to be incurred. As we have a portfolio of approximately 270 products, we do not consider any individual new product or group of products released in a year to
be material, beyond our continuing development of a portfolio of products that meet our customers’ future needs.
At the end of fiscal 2006, we had design centers in the United States (California, Oregon, and Pennsylvania), Canada (British Columbia, Saskatchewan,
Manitoba, and Quebec), and India (Bangalore).
Our investment in research and development was $158.7 million in 2006, $118.7 million in 2005 and $120.5 million in 2004.
BACKLOG
Our sales originate from customer purchase orders. However, our customers frequently revise order quantities and shipment schedules to reflect changes in their
requirements. We believe that orders placed with delivery dates in excess of six months are not firm orders. As of December 31, 2006, our backlog of products
scheduled for shipment within six months totaled approximately $75.3 million. Unless our customers cancel or defer to a subsequent year a portion of this
backlog, we expect this entire backlog to be filled in 2007. Our backlog of products as of December 31, 2005 for shipment within six months totaled
approximately $52.6 million.
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠