AMD 2004 Annual Report Download - page 66

Table of Contents
process technology in the second half of 2005. During periods when we are implementing new process technologies, manufacturing facilities may not be fully
productive. A substantial delay in the technology transitions to smaller process technologies could have a material adverse effect on us, particularly if our
competitors transition to more cost effective technologies earlier than we do. Our results of operations could also be adversely affected by the increase in fixed
costs and operating expenses related to increases in production capacity if revenues do not increase proportionately.
If our microprocessors are not compatible with some or all industry-standard software and hardware, we could be materially adversely affected.
Our microprocessors may not be fully compatible with some or all industry-standard software and hardware. Further, we may be unsuccessful in correcting
any such compatibility problems in a timely manner. If our customers are unable to achieve compatibility with software or hardware after our products are
shipped in volume, we could be materially adversely affected. In addition, the mere announcement of an incompatibility problem relating to our products could
have a material adverse effect on us.
Costs related to defective products could have a material adverse effect on us.
One or more of our products may be found to be defective after the product has been shipped to customers in volume. The cost of a recall, software fix,
product replacements and/or product returns may be substantial and could have a material adverse effect on us. In addition, modifications needed to fix the defect
may impede performance of the product.
If essential equipment or materials are not available to manufacture our products, we could be materially adversely affected.
Our manufacturing operations depend upon obtaining deliveries of equipment and adequate supplies of materials on a timely basis. We purchase
equipment and materials from a number of suppliers. From time to time, suppliers may extend lead times, limit supply to us or increase prices due to capacity
constraints or other factors. Because some equipment and material that we purchase is complex, it is sometimes difficult for us to substitute one supplier for
another or one piece of equipment for another. In addition, certain raw materials we use in the manufacture of our products are available from a limited number
of suppliers.
For example, we are largely dependent on one supplier for our 200-millimeter and 300-millimeter silicon-on-insulator (SOI) wafers. Although there are
alternative sources available, we have not qualified these sources and we do not believe that they currently have sufficient capacity to meet our requirements for
SOI wafers. We are also dependent on key chemicals from a limited number of suppliers and rely on a limited number of foreign companies to supply the
majority of certain types of IC packages we purchase. Similarly, we purchase commercial non-Flash memory die, such as SRAM and pSRAM, from third-party
suppliers and incorporate these die into Spansion MCP products. Some of these suppliers are also our competitors in the Flash memory market. Interruption of
supply or increased demand in the industry could cause shortages and price increases in various essential materials. If we are unable to procure certain of these
materials, we may have to reduce our manufacturing operations. Such a reduction could have a material adverse effect on us.
Our inability to continue to attract and retain qualified personnel may hinder our product development programs.
Our future success depends upon the continued service of numerous qualified engineering, manufacturing, marketing, sales and executive personnel. If we
are not able to continue to attract, retain and motivate qualified personnel necessary for our business, the progress of our product development programs could be
hindered, and we could be materially adversely affected.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005