AMD 1997 Annual Report Download - page 31

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.
OTHER RISK FACTORS
Debt Restrictions. The Credit Agreement and the Indenture for the Senior
Secured Notes contain significant covenants that limit the Company's and its
subsidiaries' ability to engage in various transactions and require
satisfaction of specified financial performance criteria. In addition, the
occurrence of certain events (including, without limitation, failure to comply
with the foregoing covenants, material inaccuracies of representations and
warranties, certain defaults under or acceleration of other indebtedness and
events of bankruptcy or insolvency) would, in certain cases after notice and
grace periods, constitute events of default permitting acceleration of
indebtedness. The limitations imposed by the Credit Agreement and the
Indenture are substantial, and failure to comply with such limitations could
have a material adverse effect on the Company.
In addition, the agreements entered into by AMD Saxony in connection with
the Dresden Fab 30 loan substantially prohibit the transfer of assets from AMD
Saxony to the Company, which will prevent the Company from using current or
future assets of AMD Saxony other than to satisfy obligations of AMD Saxony.
Programmable Logic Software Risks. Historically, the Company's programmable
logic subsidiary, Vantis, has depended on third parties to develop and
maintain software "fitters" that allow electrical circuit designs to be
implemented using Vantis' complex programmable logic devices. Currently,
Vantis has contracted with MINC, Inc. (MINC), a vendor of complex programmable
logic device software development tools, to develop and maintain software
fitters for Vantis' products. If MINC were to stop developing and maintaining
software fitters for Vantis' products, or if the software developed by MINC
was subject to delays, errors or "bugs," and Vantis was not able to internally
develop and maintain such software fitters, then Vantis would need to find
another vendor for such services. No assurance can be given that Vantis would
be able to locate additional software development tool vendors with the
available capacity and technology necessary for the development and
maintenance of software fitter tools, or, if an additional vendor or vendors
were identified, that Vantis would be able to enter into contracts with such
vendors on terms acceptable to Vantis. Any interruption in the MINC services,
or Vantis' inability to find an acceptable alternative vendor for software
services in a timely manner, could have a material adverse effect on Vantis.
Vantis recently initiated efforts to manage and control the development and
maintenance of software fitters for Vantis' products internally. Undertaking
significant software development projects is a new effort for Vantis and is
subject to many risks, including risks of delays, errors and "bugs," and
customer resistance to change. If Vantis' internally-developed software is not
available as scheduled or fails to gain market acceptance, Vantis would need
to contract on acceptable terms with vendors having the available capacity and
technology to develop and maintain such software. No assurance can be given
that Vantis' efforts to internally develop and maintain the software needed to
sell and support its products will be successful. Any inability of Vantis to
successfully develop and maintain software internally in a cost-effective
manner could have a material adverse effect on Vantis.
Vantis' Dependence on Effective Deployment and Management of Newly-Created
FAE Staff. Vantis' major competitors each have a well established network of
field application engineers (FAEs). In comparison, Vantis has only recently
created its own network of FAEs in order to support its products more
effectively and to enhance customer satisfaction with those products. FAEs
service larger customer accounts by consulting with customers on specific
product issues and providing feedback to Vantis as to customer needs. The
future success of Vantis may be affected by its ability to deploy and manage
such FAEs and to continue to attract and retain qualified technical personnel
to fill these positions. Currently, availability of such qualified technical
personnel is limited, and competition among companies for experienced FAEs is
intense. During strong business cycles,
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Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998