AMD 2002 Annual Report Download - page 22

Table of Contents
Results of Operations
In 2002, we operated in two reportable segments: the Core Products segment, which reflects the aggregation of the PC processor, memory products and
Other IC products operating segments, and the Foundry Services segment. Our Core Products segment includes our PC processor products, Memory products
and Other IC products. PC processor products include our seventh-generation microprocessors, the AMD Athlon and AMD Duron microprocessors. Memory
products include Flash memory devices and Erasable Programmable Read-Only Memory (EPROM) devices. Other IC products include platform products, which
primarily consist of chipsets, embedded processors, networking products and personal connectivity solutions products. Our Foundry Services segment consists of
fees from Legerity, Inc. and Vantis Corporation. In 2000, our Voice Communications segment consisted of our voice communications products subsidiary,
Legerity.
The following is a summary of net sales by segment for 2002, 2001 and 2000.
2002 2001 2000
(Millions)
Core Products segment:
PC Processors $ 1,746 $ 2,419 $ 2,337
Memory Products 741 1,133 1,567
Other IC Products 176 242 457
2,663 3,794 4,361
Foundry Services segment 34 98 143
Voice Communications segment — — 140
Total $ 2,697 $ 3,892 $ 4,644
Net Sales Comparison for Years Ended December 29, 2002 and December 30, 2001
Total net sales of $2,697 million decreased by 31 percent in 2002 compared to 2001.
PC processors net sales of $1,746 million decreased by 28 percent in 2002 compared to 2001. This decrease was primarily due to a decrease in both unit
sales and average selling prices, reflecting industry-wide weakness in PC sales. The decrease in unit sales also reflected the execution of our plan to align AMD
PC Processor inventory in the supply chain with forecasted customer demand, reflecting our decision to limit shipments and accept receipt of product returns
from certain customers. We expect PC processor sales in the first quarter of 2003 to increase as compared to the fourth quarter of 2002 based on sales of higher
performance and higher priced products. Increasing PC processor sales levels in 2003 depends on our ability to maintain or increase average selling prices for our
microprocessors, growth in unit shipments of our PC processors, our ability to introduce in a timely manner and market our AMD Opteron and AMD Athlon 64
processors and increasing market acceptance of the newest versions of the AMD Athlon processors.
Memory products net sales of $741 million decreased by 35 percent in 2002 compared to 2001. The decrease was primarily due to a decrease in average
selling prices reflecting continued weakness in the telecommunications and networking equipment industries. We expect memory products net sales in the first
quarter of 2003 to remain flat as compared to the fourth quarter of 2002. Increasing memory products sales levels in 2003 depends on the degree of recovery of
the telecommunications and networking equipment industries, continued growth in the mobile phone market, especially in high end mobile phones which require
larger amounts of Flash memory, further penetration of the mobile phone market, and increased market acceptance of our MirrorBit Flash memory products.
Other IC products net sales of $176 million decreased by 27 percent in 2002 compared to 2001. 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
17
Source: ADVANCED MICRO DEVIC, 10-K, March 14, 2003