AMD 2001 Annual Report Download - page 200

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
unit shipments of our PC processors, and increasing market acceptance of the
newest versions of the AMD Athlon and AMD Duron microprocessors.
Memory products net sales of $1,133 million decreased by 28 percent in 2001
compared to 2000. The decrease was primarily due to continuing weakness in the
communications and networking equipment industries and excess inventories held
by major customers. Although we expect shipments to remain flat, we expect a
decline in revenues from memory products in the first quarter of 2002, as
compared to the fourth quarter of 2001, primarily due to continuing pricing
pressures.
Other IC products net sales of $242 million decreased by 47 percent in 2001
compared to 2000. The decrease was due to decreased net sales of platform
products, embedded processors and networking products as a result of the
sustained market declines in the communications and networking equipment
industries. We expect Other IC revenues in the first quarter of 2002 to remain
relatively flat as compared to the fourth quarter of 2001.
The Foundry Services segment service fees of $98 million decreased by 31 percent
in 2001 compared to 2000. The decrease was primarily due to a significant
reduction in demand for wafer fabrication services from Vantis, partially offset
by an increase in overall service fees from Legerity. We expect that service
fees will continue to decline in the first quarter of 2002 due to our plan to
discontinue these services in 2002. Other than the restructuring and other
special charges recorded in the third quarter of 2001, we do not expect to have
any termination liabilities associated with our plan to discontinue these
services.
There were no sales from the Voice Communications segment in our 2001 net sales.
Voice Communications products contributed $140 million to our 2000 net sales,
prior to our sale of Legerity, effective July 31, 2000.
There were no sales from the Vantis segment in our 2001 and 2000 net sales.
Net Sales Comparison for Years Ended December 31, 2000 and December 26, 1999
Total net sales increased by $1,786 million in 2000, or 62 percent, to $4,644
million from $2,858 million in 1999.
PC processors net sales of $2,337 million increased by 68 percent in 2000
compared to 1999. This increase was primarily due to a strong increase in net
sales of our seventh-generation microprocessors, the AMD Athlon and AMD Duron
microprocessors. The AMD Duron microprocessor, a derivative of the AMD Athlon
microprocessor designed to provide a solution for value conscious PC buyers,
became available in June 2000. The strong increase in unit sales of our
seventh-generation microprocessors more than offset the decline in average
selling prices. The increase was partially offset by a decrease in net sales of
AMD-K6(TM) family microprocessors as a result of the market shift toward our
seventh-generation microprocessors.
Memory products net sales of $1,567 million increased by 103 percent in 2000
compared to 1999 primarily due to growth in sales volume, higher average selling
prices and a rich product mix of Flash memory devices, which was slightly offset
by a decline in net sales of EPROMs.
Other IC products net sales of $457 million increased by 14 percent in 2000
compared to 1999. The increase was primarily due to increased net sales from our
platform and networking products.
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002