AMD 1997 Annual Report Download - page 14

The Company's current assembly and test facilities are described in the
chart set forth below:
APPROX.
ASSEMBLY & TEST
FACILITY LOCATION SQUARE FOOTAGE ACTIVITY
----------------- ---------------- ---------------
Penang, Malaysia........................... 377,000 Assembly & Test
Bangkok, Thailand.......................... 77,000 Assembly & Test
Singapore.................................. 62,500 Test
In addition to the assembly and test facilities described above, AMD has a
50-year land lease in Suzhou, China, and is constructing an additional
assembly and test facility there. Foreign manufacturing and construction of
foreign facilities entails political and economic risks, including political
instability, expropriation, currency controls and fluctuations, changes in
freight and interest rates, and loss or modification of exemptions for taxes
and tariffs. For example, if AMD were unable to assemble and test its products
abroad, or if air transportation between the United States and the Company's
overseas facilities were disrupted, there could be a material adverse effect
on the Company.
Certain Material Agreements. Set forth below are descriptions of certain
material contractual relationships of the Company relating to FASL and the
Company's Dresden Fab 30.
FASL. In 1993, the Company and Fujitsu Limited (Fujitsu) formed a joint
venture, FASL, for the development and manufacture of non-volatile memory
devices. Through FASL, the two companies have constructed and are operating an
advanced integrated circuit manufacturing facility in Aizu-Wakamatsu, Japan,
to produce Flash memory devices. The facility began volume production in the
first quarter of 1995, and utilizes eight-inch wafer processing technologies
capable of producing products with geometrics of 0.5 micron or smaller.
Pursuant to the terms of the joint venture, the Company and Fujitsu have each
agreed not to independently produce Flash memory devices with geometrics of
0.5 micron or smaller outside of the joint venture.
In the third quarter of 1997, FASL completed construction of the building
for a second Flash memory device wafer fabrication facility, FASL II, at a
site contiguous to the existing FASL facility. Equipment installation is in
progress and the facility is expected to cost approximately $1.1 billion when
fully equipped, which is anticipated in the second quarter of 2000. Capital
expenditures for FASL II construction to date have been funded by cash
generated from FASL operations and borrowings by FASL. To the extent that FASL
is unable to secure the necessary funds for FASL II, the Company may be
required to contribute cash or guarantee third-party loans in proportion to
its 49.992 percent interest in FASL. As of December 28, 1997, the Company had
loan guarantees of $48 million outstanding with respect to such loans. The
planned FASL II costs are denominated in yen and are therefore subject to
change due to foreign exchange rate fluctuations.
In connection with FASL, the Company and Fujitsu have entered into various
joint development, cross-license and investment arrangements. Accordingly, the
Company and Fujitsu are providing their product designs and process and
manufacturing technologies to FASL. In addition, both companies are
collaborating in developing manufacturing processes and designing integrated
circuits for FASL. The right of each company to use the licensed intellectual
property of the other with respect to certain products is limited to certain
geographic areas. Consequently, the Company's ability to sell Flash memory
products incorporating Fujitsu intellectual property, whether or not produced
by FASL, is also limited in certain territories, including the United Kingdom
and Japan. Fujitsu is likewise limited in its ability to sell Flash memory
devices incorporating the Company's intellectual property, whether or not
produced by FASL, in certain territories including the United States and
Europe, other than the United Kingdom and Ireland.
Dresden Fab 30. AMD Saxony Manufacturing GmbH (AMD Saxony), an indirect
wholly owned German subsidiary of the Company, is building a 900,000-square-
foot submicron integrated circuit manufacturing and design facility in
Dresden, in the State of Saxony, Germany over the next four years at a
presently estimated cost of approximately $1.9 billion. The Federal Republic
of Germany and the State of Saxony have agreed to
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Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998