AMD 1994 Annual Report Download - page 10

international sales operations entail political and economic risks, including
expropriation, currency controls, exchange fluctuations, changes in freight
rates, and changes in rates and exemptions for taxes and tariffs. The
Corporation has not experienced any material adverse effects associated with
such risks. (For more information, see Item 7, Management's Discussion.)
BACKLOG
AMD manufactures and markets a standard or catalog line of products.
Consequently, a significant portion of its sales are made from inventory on a
current basis. Sales are made primarily pursuant to (1) purchase orders for
current delivery of standard items, or (2) agreements covering purchases over a
period of time, which are frequently subject to revision and cancellation.
Generally, in light of current industry practice and experience, the Corporation
does not believe that such agreements provide meaningful backlog figures or are
necessarily indicative of actual sales for any succeeding period.
COMPETITION
Historically, the semiconductor industry has experienced rapid
technological advances together with substantial price reductions in maturing
products. After a product is introduced, prices normally decrease over time as
production efficiency and competition increase, and a successive generation of
products is developed and introduced for sale. Competitive factors in the
semiconductor industry center primarily around market acceptance, timing of new
products and a product's performance, price and availability.
Numerous firms compete with AMD in the manufacture and sale of integrated
circuits. Some of these firms have resources greater than those of the
Corporation and do not depend upon integrated circuits as their principal source
of revenue. There is also significant captive production by certain large users
of integrated circuits, such as manufacturers of computers, telecommunications
equipment and consumer electronics products.
AMD competes for integrated circuit market share with Texas Instruments,
Motorola, National Semiconductor, Intel, North American Philips, and with
several prominent Japanese firms. These firms include Nippon Electric Co.,
Hitachi, Toshiba, Fujitsu, Matsushita and Mitsubishi, all of whom are making
active efforts to increase their respective and collective worldwide market
shares. (For more information concerning Fujitsu, see the discussion on the
joint venture with Fujitsu above.)
All of the above-mentioned competitors are either substantially larger in
both gross sales and total assets than AMD or are part of larger corporate
enterprises to whose resources, financial and other, the competitors have
access. In addition to the above, many other companies dedicated to only one or
two process technologies and product types compete with the Corporation in those
technologies and product types.
RESEARCH AND DEVELOPMENT
The Corporation's expenses for research and development in 1992, 1993 and
1994, were $227,860,000, $262,802,000, and $279,984,000, respectively. Such
expenses represented 15.0%, 16.0% and 13% of sales in 1992, 1993 and 1994,
respectively. AMD's research and development expenses are charged to operations
as incurred. Most of the research and development personnel are integrated into
the engineering staff.
MANUFACTURING
Product design and development, and wafer fabrication activities are
currently conducted at AMD's facilities in California and in Texas. A
subsidiary of Sony
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 1995