AMD 2000 Annual Report Download - page 384

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
. the use and market acceptance of a non-Intel processor bus (adapted by
us from Digital Equipment Corporation's EV6 bus) in the design of our
seventh-generation microprocessors, and the availability of chipsets
from vendors who will develop, manufacture and sell chipsets with the
EV6 interface in volumes required by us.
If we fail to achieve continued market acceptance of our seventh-generation
microprocessors our business will be materially and adversely affected.
Investment in and Dependence on AMD Microprocessor Products. Our microprocessor
product revenues have and will continue in 2001 and 2002 to make significant
contributions to our overall revenues, profit margins and operating results. We
plan to continue to make significant capital expenditures to support our
microprocessor products both in the near and long term. These capital
expenditures will be a substantial drain on our cash flow and possibly on our
cash balances as well.
Our ability to increase microprocessor product revenues, and benefit fully from
the substantial financial investments and commitments we have made and continue
to make related to microprocessors, depends upon success of the AMD Athlon and
AMD Duron microprocessors, which are our seventh-generation Microsoft Windows
compatible microprocessors, and future generations of microprocessors beginning
with the "Hammer" family of microprocessors that we plan to introduce in 2002.
The Hammer processors will be our first processors capable of 64-bit operation,
and are being designed to deliver leading-edge performance on both the 64-bit
software used by high-end workstations and servers and the 32-bit software used
by the majority of desktop users.
The microprocessor market is characterized by short product life cycles and
migration to ever-higher performance microprocessors. To compete successfully
against Intel in this market, we must transition to new process technologies at
a fast pace and offer higher performance microprocessors in significantly
greater volumes. We must achieve acceptable yields while producing
microprocessors at higher speeds. Any significant difficulty in achieving
microprocessor yield and volume plans may adversely affect our results of
operations and liquidity. If we fail to offer higher performance microprocessors
in significant volume on a timely basis in the future, our business could be
materially and adversely affected. We may not achieve the production ramp
necessary to meet our customers' volume requirements for higher performance
microprocessors. It is also possible that we may not increase our microprocessor
revenues enough to achieve sustained profitability.
To sell the volume of AMD Athlon and AMD Duron microprocessors we currently plan
to make in 2001 and 2002, we must increase sales to existing customers and
develop new customers in both consumer and commercial markets. If we lose any
current top tier OEM customers, or if we fail to attract additional customers
through direct sales and through our distributors, we may not be able to sell
the volume of units planned. This result could have a material adverse effect on
our business.
Our production and sales plans for microprocessors are subject to other risks
and uncertainties, including:
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001