AMD 2001 Annual Report Download - page 14

Our current assembly and test facilities are described in the chart set
forth below:
Approximate
Assembly & Test
Facility Location Square Footage Activity
----------------- --------------- ---------------
Penang, Malaysia....................... 377,000 Assembly & Test
Bangkok, Thailand...................... 78,000 Assembly & Test
Singapore.............................. 162,000 Test
Suzhou, China.......................... 30,250 Assembly & Test
As set forth above, nearly all product assembly and final testing of our
products are performed at our manufacturing facilities in Penang, Malaysia;
Bangkok, Thailand; Suzhou, China; and Singapore; or by subcontractors in the
United States and Asia. We also depend on foreign foundry suppliers and joint
ventures for the manufacture of a portion of our finished silicon wafers and
have international sales operations. The political and economic risks
associated with our manufacturing facilities and other operations in foreign
countries include:
. expropriation;
. changes in a specific country's or region's political or economic
conditions;
. trade protection measures and import or export licensing requirements;
. difficulty in protecting our intellectual property;
. changes in foreign currency exchange rates and currency controls;
. changes in freight and interest rates;
. disruption in air transportation between the United States and our
overseas facilities; and
. loss or modification of exemptions for taxes and tariffs.
Certain Material Agreements. Descriptions of certain material contractual
relationships we have relating to FASL, Dresden Fab 30, Motorola and UMC are
set forth below:
FASL. In 1993, we formed FASL, a joint venture with Fujitsu, for the
development and manufacture of non-volatile memory devices. FASL operates
advanced IC manufacturing facilities in Aizu-Wakamatsu, Japan (FASL JV1, FASL
JV2 and FASL JV3), for the production of Flash memory devices, which are sold
to us and Fujitsu. FASL is continuing the facilitization of FASL JV2 and FASL
JV3.
We expect FASL JV2 and FASL JV3, including equipment, to cost approximately
$2.4 billion when fully equipped. As of December 30, 2001, approximately $1.5
billion of these costs had been funded by cash generated from FASL operations.
However, to the extent that additional funds are required for the full
facilitization of FASL JV2 and FASL JV3, we will be required to contribute cash
or guarantee third-party loans in proportion to our 49.992 percent interest in
FASL, up to 25 billion yen ($192 million). As of December 30, 2001, we had
$148 million in loan guarantees outstanding with respect to FASL third-party
loans. These costs are incurred in Japanese yen and are, therefore, subject to
change due to foreign exchange rate fluctuations. On December 30, 2001, the
exchange rate was 128.02 yen to one U.S. dollar, the rate we used to translate
the amounts denominated in yen into U.S. dollars.
In 2000, FASL further expanded its production capacity through a foundry
arrangement with Fujitsu Microelectronics, Inc. (FMI), a wholly owned
subsidiary of Fujitsu Limited. In connection with FMI equipping its wafer
fabrication facility in Gresham, Oregon (the Gresham Facility) to produce flash
memory devices for sale to FASL, we agreed to guarantee the repayment of up to
$125 million of Fujitsu's obligations as a co-signer with FMI under its global
multicurrency revolving credit facility (the Credit Facility) with a
third-party bank (the Guarantee). On November 30, 2001, Fujitsu announced that
it was closing the Gresham Facility, due to the downturn of the flash memory
market. To date, we have not received notice from Fujitsu that FMI has defaulted
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002