AMD 2004 Annual Report Download - page 8

Table of Contents
semiconductors, including PCs and related peripherals, wired and wireless voice and data communications and networking products including mobile telephones,
facsimile and photocopy machines, home entertainment equipment, industrial control equipment and automobiles.
Within the global semiconductor industry, we primarily participate in two markets:
• microprocessors, which are used for control and computing tasks, and complementary chipset components, which perform essential logic functions that
support the microprocessors; and
• Flash memory devices, which are used to store data and programming instructions.
In addition, we offer embedded microprocessors for personal connectivity devices and specific consumer markets.
Computation Products
The Microprocessor Market
A microprocessor is an IC that serves as the central processing unit, or CPU, of a computer. It generally consists of millions of transistors that process data
and control other devices in the system, acting as the brain of the computer. The performance of a microprocessor is a critical factor impacting the performance
of a PC and other similar devices. The principal indicators of microprocessor performance are work-per-cycle, or how many instructions are executed per cycle,
and clock speed, representing the rate at which its internal logic operates, measured in units of hertz, or cycles processed per second. Other factors impacting
microprocessor performance include memory size, data access speed and power consumption. Developments in circuit design and manufacturing process
technologies have resulted in significant advances in microprocessor performance over the past two decades. We market our processors based on overall
performance, which is a function of both architecture and clock speed. We believe overall performance is a better indicator of CPU capability than simply clock
speed.
The microprocessor market is characterized by short product life cycles and migration to ever-higher-performance microprocessors. To compete
successfully in this market, microprocessor manufacturers must transition to new process technologies at a fast pace and offer higher-performance
microprocessors in significantly greater volumes. They also must achieve manufacturing yield and volume goals in order to sell microprocessors at competitive
prices.
A factor driving change in the microprocessor industry is the introduction of 64-bit computing. The bit rating of a microprocessor generally denotes the
largest amount of numerical data that a microprocessor can handle in a single clock cycle. For approximately the last ten years, microprocessors have had 32-bit
computing capabilities. While 32-bit processors have historically been sufficient, we believe that they will face challenges as new data and memory-intensive
consumer and enterprise software applications gain popularity. Microprocessors with 64-bit processing capabilities enable systems to have greater performance
by allowing software applications and operating systems to access more memory and process more data. From applications for multimedia and gaming, to grid
computing and extensive enterprise databases, we believe the demand for 64-bit computing will increase across the computing industry. Additionally, we believe
that the introduction of advanced operating systems, such as Microsoft®Windows®64, and software applications designed to take advantage of the 64-bit
platform, will drive further adoption of 64-bit processors.
Another emerging trend in the microprocessor industry is the introduction of dual-core processors, which consist of two processor cores on one
semiconductor die. Over the last ten years as microprocessors have increased in transistor density and overall performance capabilities, they have increasingly
faced power consumption challenges. By enabling numerous operations to be executed simultaneously across two processor cores, we believe dual-core
processors will increase processor performance with a minimal increase in power consumption.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005