AMD 2004 Annual Report Download - page 60

Table of Contents
estimated the release date for this software would be in late 2004. This delay could adversely impact the timing of development of 64-bit applications by
independent software providers and the adoption of 64-bit computing by end users. As a result, this delay could have a material adverse effect on our ability to
sell our AMD 64-based processors.
We must achieve further market acceptance of our 64-bit technology, AMD64, or we will be materially adversely affected.
We designed our AMD64-based processors to provide users with the ability to take advantage of 64-bit applications while preserving their ability to run
existing 32-bit applications on servers and workstations and on desktop and mobile PCs. Market acceptance of these processors is subject to risks and
uncertainties including:
• the support of operating system and application program providers for our 64-bit instruction set, including timely development of 64-bit applications;
• the willingness of users to purchase products with 64-bit capability prior to the availability of operating systems and software applications that take full
advantage of our AMD64 technology;
• our ability to produce these processors in a timely manner on advanced process technologies, in the volume and with the performance and feature set
required by customers; and
• the availability, performance and feature set of motherboards, memory and chipsets designed for these processors.
If we are unable to achieve further market acceptance of our AMD64 technology, we will be materially adversely affected.
We cannot be certain that our substantial investments in research and development of process technologies will lead to timely improvements in technology
and equipment used to fabricate our products or that we will have sufficient resources to invest in the level of research and development that is required to
remain competitive.
We make substantial investments in research and development for process technologies in an effort to design and manufacture leading-edge
microprocessors. We cannot be certain that we will be able to develop, or obtain or successfully implement leading-edge process technologies needed to
manufacture future generations of our products profitably or on a timely basis. Furthermore, we cannot assure you that we will have sufficient resources to
maintain the level of investment in research and development that is required for us to remain competitive.
For example, we have a joint development agreement with IBM, pursuant to which we work together to develop new process technologies. In September
2004, we amended this agreement and extended its termination date from December 2005 to December 2008. Under this amended agreement, we anticipate that
from December 26, 2004 through December 2008, we would pay fees to IBM of between approximately $220 million and $250 million in connection with joint
development projects. In addition, from the beginning of 2002 through December 26, 2004, we paid approximately $247 million to IBM in connection with
agreements and services related to license grants and research and development activities.
If this agreement were to be terminated, we would either have to resume research and development activities for microprocessors internally or find an
alternative partner. In either case, our research and development costs could increase, and we could experience delays or other setbacks in the development of
new process technologies, any of which could materially adversely affect us. Moreover, the successful and timely development and implementation of
silicon-on-insulator technology and the achievement of other milestones set forth in the joint development agreement are critical to our AMD64-based processors
and to our ability to commence operations at Fab 36 in accordance with our planned schedule.
55
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005