AMD 2001 Annual Report Download - page 216

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RISK FACTORS
We Depend Upon Market Demand for Our Flash Memory Products. The demand for Flash
memory devices continues to be weak due to the sustained downturn in the
communications and networking equipment industries and excess inventories held
by our customers. In addition, we expect competition in the market for Flash
memory devices to increase in 2002 and beyond as competing manufacturers
introduce new products and industry-wide production capacity increases. We may
be unable to maintain or increase our market share in Flash memory devices as
the market develops and Intel and other competitors introduce competitive
products. A decline in sales of our Flash memory devices and/or lower average
selling prices could have a material adverse effect on us.
In 2001, we announced a new memory cell architecture, our MirrorBit(TM)
technology that enables Flash memory products to hold twice as much data as
standard Flash memory devices. MirrorBit technology is expected to result in
reduced cost of our products. We plan to produce our first products with
MirrorBit technology in the second half of 2002. Any delay in our transition to
MirrorBit technology, or failure to achieve the cost savings we expect, could
reduce our ability to be competitive in the market and could have a material
adverse effect on us.
We Depend on the Commercial Success of Our Microprocessor Products. The
microprocessor market is characterized by short product life cycles and
migration to ever-higher performance microprocessors. To compete successfully
against Intel in this market, we must transition to new process technologies at
a fast pace and offer higher-performance microprocessors in significantly
greater volumes. If we fail to achieve yield and volume goals or to offer
higher-performance microprocessors in significant volume on a timely basis, we
could be materially adversely affected.
We must continue to market successfully our seventh-generation Microsoft Windows
compatible microprocessors, the AMD Athlon and AMD Duron microprocessors. To
sell the volume of AMD Athlon and AMD Duron microprocessors we currently plan to
manufacture through 2002, we must increase sales to existing customers and
develop new customers in both consumer and commercial markets. Our production
and sales plans for microprocessors are subject to other risks and
uncertainties, including:
o our ability to achieve a successful marketing position for the AMD Athlon
XP microprocessor, which relies on market acceptance of a metric based on
overall processor performance versus processor speed;
o our ability to maintain average selling prices of microprocessors despite
increasingly aggressive Intel pricing strategies, marketing programs, new
product introductions and product bundling of microprocessors,
motherboards, chipsets and combinations thereof;
o our ability to continue offering new higher performance microprocessors
competitive with Intel's Pentium 4 processor;
o our ability, on a timely basis, to produce microprocessors in the volume
and with the performance and feature set required by customers;
o the pace at which we are able to ramp production in Dresden Fab 30 on 0.13
micron copper interconnect process technology;
o our ability to expand our chipset and system design capabilities;
o the availability and acceptance of motherboards and chipsets designed for
our microprocessors; and
o the use and market acceptance of a non-Intel processor bus, adapted by us
from Digital Equipment Corporation's EV6 bus, in the design of our
seventh-generation and future generation microprocessors, and the
availability of chipsets from vendors who will develop, manufacture and
sell chipsets with the EV6 interface in volumes required by us.
Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002