AMD 2001 Annual Report Download - page 12

design interface specifications for these products to third-party manufacturers
to facilitate the sale of our microprocessors. It is possible that from time to
time a third-party manufacturer will be unable to make chipset products
available to the market at the same time our microprocessor products are
introduced. Since the lack of availability of these third-party chipsets could
impact our ability to sell our microprocessors, we manufacture a quantity of
chipsets within our own fabrication facilities or our authorized foundries on a
limited basis. We are then able to have a supply of products available for
sale, should the need exist, until they are available from the third-party
manufacturers.
Networking Products. Our networking products include logic devices that are
used in the data communication and networking industry to establish and manage
connectivity.
Our product portfolio encompasses the following local area network (LAN)
products:
. home networking controllers and physical layer products;
. Ethernet controllers supporting the enterprise and small business
networking areas;
. Ethernet physical layer and repeater products which are used in enterprise
and small business systems solutions; and
. Ethernet physical layer and switch products which are used in enterprise,
small business and telecommunication systems.
Foundry Services
Our Foundry Services segment ($98 million, or 3 percent of our 2001 net
sales) includes fees for services provided to Vantis and Legerity. We will no
longer function as a foundry to Legerity after June 2002, in connection with
the closure of Fabs 14 and 15 as detailed below under "Manufacturing
Facilities." We plan to continue to provide foundry services to Vantis through
October 2002.
Acquisition of Alchemy Semiconductor
On February 19, 2002, we acquired Alchemy Semiconductor, Inc., a privately
held company that designs, develops and markets low power, high performance
microprocessors for personal connectivity devices such as personal digital
assistants, web tablets, and portable and wired Internet access devices and
gateways. Employees of Alchemy will be part of our new Personal Connectivity
Solutions group, which will be dedicated to delivering connectivity solutions
for the non-PC devices listed above.
Research and Development; Manufacturing Technology
Our expenses for research and development were $651 million in 2001, $642
million in 2000 and $636 million in 1999. These expenses represented 17 percent
of net sales in 2001, 14 percent of net sales in 2000 and 22 percent of net
sales in 1999.
Our research and development expenses are charged to operating expenses as
they are incurred. Most of our research and development personnel are
integrated into our engineering staff.
Manufacturing technology is the key determinant in the improvement of most
semiconductor products. Each new generation of process technology has resulted
in products with greater performance produced at lower cost. We continue to
make significant infrastructure investments to enable us to continue to achieve
high volume, high reliability and low cost production using leading edge
process technology.
Our efforts concerning process technologies are focused in two major areas:
logic technology used by our microprocessors and embedded processors and
non-volatile memory technology used by Flash memory products. Our goals are to
improve product performance, increase manufacturing volumes and reduce unit
costs.
8
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002