AMD 2000 Annual Report Download - page 6

The Microprocessor Market
The microprocessor market is comprised of two broad categories, which are
based on the function of the products. A microprocessor that performs computing
tasks is known as the Central Processing Unit (CPU) of a computer system.
Microprocessors used for control applications are often referred to as embedded
processors. AMD participates primarily in the CPU category, which is the largest
category within the microprocessor market.
A CPU processor is an IC generally consisting of millions of transistors
that serves as the brain of a computer system such as a PC. 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 has been dominated by Intel since IBM's introduction
of the PC.
The x86 microprocessor market is characterized by intense competition,
short product life cycles, and rapid advances in product design and process
technology. Today, the greatest demand for microprocessors is from PC
manufacturers. With few exceptions, PC manufacturers require x86 microprocessors
which are Microsoft Windows(R) compatible. 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 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 and chipsets. 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,
motherboards and complementary chipset devices 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 instructions, 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 and functionality of cellular phones;
. increasing use of PCs to perform memory-intensive graphics and
multimedia functions;
. volume of memory required to support faster microprocessors;
. proliferation of increasingly complex PC software; and
. increasing performance requirements of workstations, servers and
networking and telecommunications equipment.
Flash memory devices are being utilized for an expanding range of uses.
Flash memory devices have a size and cost advantage over EEPROM devices, and the
ability of Flash memory devices to be electrically rewritten to update
parameters or
Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001