AMD 2004 Annual Report Download - page 65

Table of Contents
• a merger or consolidation resulting in the transfer of more than 50% of the equity interests;
• settlement of major legal proceedings and other actions;
• approval of certain material contracts between us and Spansion;
• changes to the equity capital structure of the Spansion; and
• winding-up Spansion or one of its material subsidiaries.
There can be no guarantee that our interests and those of Fujitsu will be aligned with respect to such decisions and we may be unable to take steps that we
believe are desirable. In addition, a reduction in our percentage interest may result in our inability to appoint a majority of Spansion’s board of managers, which
could result in the loss of effective control of Spansion, although the results of operations of Spansion may continue to impact significantly our results of
operations and we still may be required to make loans to, and guarantee indebtedness of, Spansion.
Our operating results are subject to quarterly and seasonal sales patterns.
A substantial portion of our quarterly sales have historically been made in the last month of the quarter. This uneven sales pattern makes prediction of net
sales for each financial period difficult and increases the risk of unanticipated variations in quarterly results and financial condition. In addition, our operating
results tend to vary seasonally. For example, demand in the retail sector of the PC market is often stronger during the fourth quarter as a result of the winter
holiday season. European sales are often weaker during the summer months. Many of the factors that create and affect seasonal trends are beyond our control.
Manufacturing capacity constraints and manufacturing capacity utilization rates may adversely affect us.
There may be situations in which our manufacturing facilities are inadequate to meet the demand for certain of our products. Our inability to obtain
sufficient manufacturing capacity to meet demand, either in our own facilities or through foundry or similar arrangements with third parties, could have a
material adverse effect on us.
At times we may underutilize our manufacturing facilities as a result of reduced demand for certain of our products. During such times, many of our costs
remain fixed and cannot be reduced in proportion to the reduced revenues for such a period. We are substantially increasing our manufacturing capacity by
facilitizing Fab 36, transitioning to smaller manufacturing process technologies and making significant capital investments in our existing manufacturing
facilities. If the increase in demand for our products is not consistent with our expectations, we may underutilize manufacturing facilities. This has in the past
had, and in the future may have, a material adverse effect on us.
Unless we maintain manufacturing efficiency, our future profitability could be materially adversely affected.
Manufacturing our products involves highly complex processes that require advanced equipment. Our manufacturing efficiency is an important factor in
our profitability, and we cannot be sure that we will be able to maintain or increase our manufacturing efficiency to the same extent as our competitors. We
continuously modify manufacturing processes in an effort to improve yields and product performance and decrease costs. We may fail to achieve acceptable
yields or experience product delivery delays as a result of, among other things, capacity constraints, construction delays, delays in the development of new
process technologies, changes in our process technologies, upgrades or expansion of existing facilities, or impurities or other difficulties in the manufacturing
process.
We are currently completing the transition to 90-nanometer process technology for our microprocessor products. In addition, we plan to transition the
manufacture of certain Flash memory products to 90-nanometer
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005