AMD 1998 Annual Report Download - page 226

Contingency Planning. We have not yet fully developed a comprehensive
contingency plan to address situations that may result if we are unable to
achieve Year 2000 readiness of our critical operations. Development of
contingency plans is in progress and will develop in detail and expand during
the remainder of 1999. We cannot give any assurance that we will be able to
develop a contingency plan that will adequately address all issues that may
arise in the year 2000. Our failure to develop and implement, if necessary, an
appropriate contingency plan could have a material adverse impact on our
operations. Finally, we are also vulnerable to external forces that might
generally affect industry and commerce, such as utility or transportation
company Year 2000 compliance failures and related service interruptions.
Other Risk Factors
Debt Restrictions. The Credit Agreement and the Indenture contain significant
covenants that limit our ability and our subsidiaries' ability to engage in
various transactions and require satisfaction of specified financial performance
criteria. In addition, the occurrence of certain events, including, among other
things, 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 our business.
In addition, the Dresden Loan Agreements substantially prohibit AMD Saxony from
transferring assets to us, which will prevent us from using current or future
assets of AMD Saxony other than to satisfy obligations of AMD Saxony.
Programmable Logic Software Risks. Historically, our programmable logic
subsidiary, Vantis, has depended primarily on third parties to develop and
maintain software "fitters" that allow electrical circuit designs to be
implemented using Vantis' CPLDs. Vantis has initiated efforts to manage and
control the development and maintenance of software fitters for Vantis' products
internally. More specifically, Vantis acquired rights to MINC, Inc.'s (MINC)
software and hired selected MINC development personnel. Accordingly, MINC no
longer supplies software development services to Vantis. Vantis' efforts to
develop and maintain internally the software needed to sell and support its
products may or may not be successful. If Vantis is unable to successfully
develop and maintain software internally in a cost-effective manner, Vantis'
business could be materially and adversely affected.
If the existing software were subject to errors or "bugs," or if the internally
developed software is subject to delays in development, errors, or "bugs" or is
not accepted by the market, then Vantis would need to find another vendor for
such services. It is possible that Vantis could be unable to locate additional
software development tool vendors with the available capacity and technology
necessary for the development and maintenance of software fitter tools. Even if
an additional vendor or vendors were identified, Vantis may still be unable to
enter into contracts with those vendors on terms acceptable to Vantis. Vantis'
inability to find an acceptable alternative vendor for software services in a
timely manner could materially and adversely affect Vantis' business.
Introduction of Vantis' FPGA Products. In January 1998, Vantis announced its
intention to introduce its first FPGA products, which it currently intends to
introduce under the VF1 name during the second half of 1999. The market for
FPGAs is highly competitive. The design, marketing and sale of FPGA products is
subject to many risks, including risks of delays, errors and customer resistance
to change. Vantis does not anticipate significant sales of the VF1 family of
products until 2000. Vantis' VF1 FPGA products may or may not be available as
scheduled or gain market acceptance. Inadequate forecasts of customer demand,
delays in responding to technological advances or to limitations of the VF1 FPGA
products, and delays in commencing volume shipments of the VF1 FPGA products
each could have a material adverse effect on Vantis. Failure to compete
successfully in this highly competitive FPGA market would restrict Vantis'
ability to offer products across all major segments of the PLD market and could
have a material adverse effect on Vantis.
In addition, Vantis has contracted with several developers of FPGA software
tools, including AutoGate Logic, Inc. (AGL), to develop and maintain software
for Vantis' VF1 family of FPGAs. If any of these developers were to stop
developing and maintaining software for the VF1 family, or if the software
developed by these developers were subject to delays, errors or "bugs," Vantis
would need to find an alternative developer or developers for these services or
rely on its own internal software development efforts to address this need. It
is possible that Vantis' internal development efforts may be unsatisfactory or
that Vantis may be unable to locate available and acceptable alternative
software developers. Any interruption in the timely development of FPGA software
for the VF1 family could have a material adverse effect on Vantis.
Technological Change and Industry Standards. The market for our products is
generally characterized by rapid technological developments, evolving industry
standards, changes in customer requirements, frequent
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Source: ADVANCED MICRO DEVIC, 10-K, March 29, 1999