AMD 1998 Annual Report Download - page 207

By the end of 1998 - and the expiration of our initial 1,000-day campaign -
the beachhead was ours. The AMD-K6-2 processor with 3DNow! technology and a low-
cost infrastructure supported by independent chipset and motherboard suppliers
throughout the world have established AMD and our AMD-K6 processor family as the
only real alternative to the Intel monopoly. With a 16 percent market share, we
are just over halfway toward our long-term goal. Let's review the progress we
have made and the challenges we must meet to achieve that goal.
Our "P3 Strategy" Execution of our "P3 Strategy" continues to be the key to
success: first, we must be the nucleating point for platforms based on processor
products that offer compelling features within the Microsoft Windows standard;
second, we must have leading-edge process technology that will enable us to
deliver high-performance processors at competitive cost; and finally, we must
have production capacity to manufacture processors using that technology in
volume to support our customers as they come to depend upon AMD for a growing
percentage of their requirements.
During the past three years we have made extraordinary progress in creating
these wealth-producing assets.
PROCESS TECHNOLOGY. Today all of our microprocessor production is on
leading-edge 0.25-micron (250-nanometer) technology. We have successfully
developed 180-nanometer, six-layer, aluminum interconnect technology to remain
at the leading edge and have produced advanced processors using this technology
both in our development facility in Sunnyvale, California, and in Fab 25 in
Austin, Texas. We are on schedule to introduce 180-nanometer technology into
high-volume production in the third quarter of 1999.
The next step in the continuing evolution of process technology will employ
the use of copper interconnect technology to achieve even higher-performance
devices and lower-cost production. During 1998, we entered into a seven-year
agreement with Motorola to collaborate on the development of process technology,
including copper interconnect technology. This alliance with another of the
world's premier semiconductor manufacturers has increased our confidence that we
will meet our schedule for introduction of copper interconnect technology into
production at Fab 30 in Dresden, Germany. We have commenced process integration
wafer starts that will utilize copper interconnect technology resulting from
this alliance, and we plan to qualify the process for production by the end of
this year in order to generate revenues from Fab 30 in the first quarter of
2000.
Production Capacity. We have completed the outfitting of Fab 25. This
facility is now equipped to produce 5,000 wafers per week - 250,000 wafers per
year - employing technologies with geometries of 250 nanometers and finer. Fab
25 is currently operating at approximately 80 percent of capacity.
We have completed construction of Fab 30, and are in the process of
installing equipment and qualifying the facility to commence commercial
production by the end of this year. When fully equipped, Fab 30 will also be
capable of producing 250,000 wafers per year employing technologies of 180
nanometers and finer with copper interconnects.
Platforms/Products. The AMD-K6-2 processor with 3DNow! technology enabled
AMD to gain a substantial share of the mainstream PC market, reaching a 37
percent share of the market in December for desktop systems in the North
American retail channel, which is frequently a bellwether for trends in the PC
industry. In January of this year, we were #1 in the channel with a 43.9 percent
market share versus Intel's 40.3 percent! I believe a growing installed base of
PC systems with 3DNow! technology establishes a strong platform for software
developers, which should enhance opportunities for even broader acceptance of
AMD processors going forward. All AMD processors for the PC market incorporate
3DNow! technology, which is supported by Microsoft Windows Direct X.
The AMD-K6-III processor with 3DNow! technology, our latest offering for
the mainstream PC market, features a unique performance-enhancing tri-level
cache memory design with more on-system
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Source: ADVANCED MICRO DEVIC, 10-K, March 29, 1999