AMD 2003 Annual Report Download - page 19

Table of Contents
Raw Materials
Certain raw materials we use in the manufacture of our products and FASL LLC uses in the manufacture of its products are available from a limited
number of suppliers. For example, we are dependent on key chemicals from a limited number of suppliers and rely on a few foreign companies to supply the
majority of certain types of the integrated circuit packages we purchase. Similarly, FASL LLC purchases commercial non-Flash memory die, such as SRAM,
from third-party suppliers and incorporates these die into its MCP products. Interruption of supply or increased demand in the industry could cause shortages and
price increases in various essential materials. If we or FASL LLC were unable to procure certain of these materials, we or FASL LLC might have to reduce
manufacturing operations. Such a reduction could have a material adverse effect on us. To date, neither we nor FASL LLC have experienced significant
difficulty in obtaining the raw materials required for our manufacturing operations.
In June 2002, we formed Advanced Mask Technology Center GmbH and Co., KG (AMTC) and Maskhouse Building Administration GmbH and Co., KG,
(BAC), two joint ventures with Infineon Technologies AG and Dupont Photomasks, Inc., for the purpose of constructing and operating an advanced photomask
facility in Dresden, Germany. Photomasks are used during the production of integrated circuits. The purpose of the AMTC is to conduct research, development
and pilot production of optical photomasks for advanced lithography technology. In October 2003, the AMTC announced the official commencement of pilot
production of optical photomasks. In 2004, we intend to procure advanced photomasks from the AMTC pursuant to the terms of our joint venture arrangement
and use these photomasks in the manufacture of certain of our microprocessor products.
Environmental Regulations
Many aspects of our and FASL LLC’s business operations and products are regulated by domestic and international environmental regulations. These
regulations include limitations on discharges to air and water; remediation requirements; product chemical content limitations; chemical use and handling
restrictions; pollution control requirements; waste minimization considerations; and hazardous materials transportation, treatment and disposal restrictions. If we
or FASL LLC fail to comply with any of the applicable environmental regulations we may be subject to fines, suspension of production, alteration of our
manufacturing processes, sales limitations, and criminal and civil liabilities. Existing or future regulations could require us or FASL LLC to procure expensive
pollution abatement or remediation equipment, to modify product designs or to incur other expenses to comply with environmental regulations. Any failure to
control the use, disposal or storage, or adequately restrict the discharge of hazardous substances could subject us to future liabilities and could have a material
adverse effect on our business.
Intellectual Property and Licensing
As of March 1, 2004, we had over 5,900 United States patents and had over two thousand patent applications pending in the United States. In certain cases,
we have filed corresponding applications in foreign jurisdictions. We expect to file future patent applications in both the United States and abroad on significant
inventions, as we deem appropriate. FASL LLC also has patents and pending patent applications in the United States and Japan. In certain cases, FASL LLC
filed corresponding applications in foreign jurisdictions. We expect FASL LLC to file future patent applications in both the United States and abroad on
significant inventions, as it deems appropriate.
In May 2001, we signed a ten-year cross-license agreement with Intel Corporation. In addition, we have entered into numerous cross-licensing and
technology exchange agreements with other companies under which we both transfer and receive technology and intellectual property rights. As part of the
FASL LLC transaction we entered into a patent cross-license agreement with FASL LLC whereby each party has been granted a non-exclusive license under the
other party’s respective licensed patents for the manufacture and sale of
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Source: ADVANCED MICRO DEVIC, 10-K, March 09, 2004