AMD 1999 Annual Report Download - page 7

The Microprocessor Market
The microprocessor, an IC generally consisting of millions of transistors,
serves as the central processing unit, or brain, of a computer system. The
microprocessor is typically the most critical component to the performance and
efficiency of a PC. The microprocessor controls data flowing through the
electronic system and manipulates such data as specified by the hardware or
software which controls the system. In 1981, IBM introduced its first PC
containing a microprocessor based upon the x86 instruction set developed by
Intel Corporation and utilizing the Microsoft(R) Corporation MS-DOS(R)
operating system. As circuit design and very large scale integration process
technology have evolved, performance and functionality of each new generation
of x86 microprocessors have increased.
The x86 microprocessor market is characterized by short product life cycles,
intense price competition and rapid advances in product design and process
technology. Today, the greatest demand for microprocessors is from PC
manufacturers. In particular, PC manufacturers require microprocessors which
are Microsoft Windows(R) compatible and are based on the x86 instruction set.
Improvements in the performance characteristics of microprocessors and
decreases in production costs resulting from advances in process technology
have broadened the market for PCs and increased the demand for
microprocessors. The microprocessor market has been dominated by Intel for
many years.
The PC original equipment manufacturer (OEM) market is highly competitive.
Most PC suppliers have evolved from fully integrated manufacturers with
proprietary system designs to vendors focused on building brand recognition
and distribution capabilities. Almost all of these suppliers now rely on Intel
or on third-party manufacturers for the major subsystems of their PCs, such as
the motherboard. These suppliers are also increasingly outsourcing the design
and manufacture of complete systems. The third-party manufacturers of these
subsystems, based primarily in Asia, are focused on providing PCs and
motherboards that incorporate the latest trends in features and performance at
low prices. Increasingly, these third-party manufacturers are also supplying
fully configured PC systems through alternative distribution channels.
Embedded processors are also an important part of the microprocessor market.
Embedded processors are general purpose devices used to carry out a single
application with limited user interface and programmability. A system designed
around an embedded processor usually cannot be programmed by an end user
because the system is preprogrammed to execute a specific task. Key markets
for embedded processors include telecommunications, networking, office
automation, storage, automotive applications and industrial control.
The Memory Market
Memory ICs store data and programs, and are characterized as either volatile
or non-volatile. Volatile devices lose their stored information after
electrical power is shut off, while non-volatile devices retain their stored
information. The three most significant categories of semiconductor memory are
(1) Dynamic Random Access Memory (DRAM) and (2) Static Random Access Memory
(SRAM), both of which are volatile memories, and (3) non-volatile memory,
which includes Read-Only Memory (ROM), Erasable Programmable Read-Only Memory
(EPROM), Electrically Erasable Electrically Programmable Read-Only Memory
(EEPROM) and Flash memory devices. DRAM provides large capacity main memory,
and SRAM provides specialized high-speed memory. We do not produce any DRAM
products, which are the largest part of the memory market, or SRAM products.
Flash and other non-volatile memory devices are used in applications in which
data must be retained after power is turned off. However, ROM cannot be
rewritten, EPROM requires ultraviolet light as part of an erasure step before
it can be rewritten, and EEPROM utilizes a larger, more expensive, memory
cell.
Several factors have contributed to an increasing demand for memory devices
in recent years, including the:
. expanding unit sales of PCs in the business and consumer markets;
. increasing use of cellular phones;
. increasing use of PCs to perform memory-intensive graphics and
multimedia functions;
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Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000