AMD 2000 Annual Report Download - page 8

system software provides greater flexibility and ease of use than other non-
volatile memory devices, such as ROM or EPROM devices. Flash memory devices can
store control programs and system-critical data in communication devices such as
cellular telephones and routers (devices used to transfer data between local
area networks). Another common application for Flash memory product is in PC
cards, which are inserted into notebook and subnotebook computers or personal
digital assistants to provide added data storage.
The Logic Market
Logic devices consist of structurally interconnected groupings of simple
logical "AND" and logical "OR" functions, commonly described as "gates."
Typically, complex combinations of individual gates are required to implement
the specialized logic functions required for system applications. The greater
the number of gates on a logic device, the higher that logic device's density
and, in general, device cost (for a particular process and architecture). Logic
devices are generally grouped into five families of products (from lowest
density to highest density):
. standard logic devices;
. programmable logic devices (PLDs);
. conventional gate-arrays;
. standard cells; and
. full custom ICs.
Conventional gate-arrays, standard cells and full-custom ICs are often referred
to as application-specific ICs (ASICs).
Many manufacturers of electronic systems are striving to develop new and
increasingly complex products to address evolving market opportunities rapidly.
Achievement of this goal often precludes the use of standard logic ICs and
ASICs. Standard logic ICs generally perform simple functions and are not
customizable, limiting a manufacturer's ability to adequately tailor an end-
product system. Although ASICs can be manufactured to perform customized
functions, they generally involve relatively high initial design, engineering
and manufacturing costs, significant design risks, and may increase an end-
product's time to market. As a result, ASICs are generally limited to high-
volume products and products for which time to market may be less critical.
A growing category of the full custom IC market is Application Specific
Standard Products (ASSPs). In this category, a full custom design, such as an
Ethernet controller, is used to implement a particular function and is sold to
multiple customers. Because the market requirements for these products have
become increasingly standard, they can achieve the cost advantages of full
custom design with the time to market advantages of a standard product. Almost
all of our networking products are a part of the ASSP category.
Unlike ASICs and standard logic ICs, PLDs are standard products,
purchased by system manufacturers in an unprogrammed or blank state. Each
system manufacturer may then program the PLDs to perform a variety of specific
logic functions. Certain PLDs are reprogrammable. Compared to standard logic
ICs and ASICs, PLDs allow system designers to design and implement custom
logic more quickly. On June 15, 1999, we sold Vantis Corporation (Vantis), our
PLD subsidiary, to Lattice Semiconductor Corporation (Lattice), and we now
function as a foundry and provide administrative services to Vantis.
Product Segments
In 2000, we participated in all three technology areas within the IC
market--microprocessors, memory circuits and logic circuits--through our Core
Products, Voice Communications and Foundry Services segments. Our Core Products
segment includes our PC processors, Memory products and Other IC products. PC
processors include AMD seventh-generation microprocessors and AMD-K6(R)
microprocessors. Memory products include Flash memory devices and EPROM devices.
Other IC products include embedded processors, platform products and networking
products. Our Voice Communications segment consisted of our voice communications
products subsidiary, Legerity, Inc. (Legerity), until July 31, 2000, the
effective date of its sale. Our Foundry Services segment consists of fees for
services that we provide to Legerity and Vantis, our former PLD subsidiary.
On August 4, 2000, we completed the sale of 90 percent of Legerity for
approximately $375 million in cash, effective July 31, 2000. We retained a ten
percent ownership interest in Legerity and a warrant to acquire approximately an
additional ten percent. As part of the transaction, we entered into various
service contracts with Legerity to continue to provide, among other things,
wafer fabrication and assembly, test, mark and pack services to Legerity.
Core Products
Core Products ($4.361 billion, or 94 percent, of our 2000 net sales)
include PC processor, memory and other IC products, with the majority of the
Core Products segment's net sales being derived from PC processors and Flash
memory devices.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 20, 2001