AMD 2006 Annual Report Download - page 20

Table of Contents
design and to developing and improving manufacturing process technologies and plan to do so in the future. We also work with other industry leaders, public
foundations, universities and industry consortia to conduct early stage research and development.
With respect to graphics and chipsets and products for consumer electronics devices, our primary research and development objective is to develop
products and technologies that meet the ever-changing demands of the PC and consumer electronics industries on a timely basis so as to meet market windows.
We are also focusing on delivering a range of integrated platforms to serve key markets, including commercial clients, mobile computing, and gaming and media
computing. We believe that these integrated platforms will bring customers improved system stability, better time-to-market and increased performance and
energy efficiency. Longer-term, our research and development efforts are focused on developing monolithic silicon solutions for specialized uses that are
comprised of microprocessors, graphics processors and video processors.
Our research and development expenses for 2006, 2005, and 2004 were $1,205 million, $1,144 million and $934 million. Research and development
expenses for 2006 included ATI’s research and development expenses from October 25, 2006 through December 31, 2006. For more information, see “Part II,
Item 7, MD&A.”
We conduct product and system research and development activities for our microprocessor products in the United States with additional design and
development engineering teams located in Germany, Singapore, China, Japan, Penang, Taiwan and India. In August 2006 we announced the opening of a new
research and development facility in Shanghai, China. Also, in September 2006 we announced the opening of a new advanced microprocessor development
facility in Fort Collins, Colorado.
We conduct our microprocessor manufacturing process development activities primarily through our joint development agreement with IBM. Under this
agreement, we jointly develop new process technologies, including 45-nanometer, 32-nanometer, 22-nanometer and certain other advanced technologies, to be
implemented on silicon wafers. Our relationship also includes laboratory-based research of emerging technologies such as new transistor, interconnect,
lithography and die-to-package connection technologies. We pay fees to IBM for joint development projects. The actual amounts we pay to IBM are dependent
upon the number of partners, including us and IBM, engaged in related development projects under the agreement. In addition, we agreed to pay IBM specified
royalties upon the occurrence of specified events, including in the event that we sublicense the jointly developed process technologies to specified third parties or
if we bump wafers for a third party. For more information on the fees paid or payable to IBM, see “Part II, Item 7, Contractual Cash Obligations and
Guarantees—Unconditional Purchase Commitments,” and “Part I, Item 1A, Risk Factors—We cannot be certain that our substantial investments in research and
development will lead to timely improvements in product designs or technology used to manufacture our products or that we will have sufficient resources to
invest in the level of research and development that is required to remain competitive.”
Under the agreement, our joint development relationship continues through December 31, 2011. However, the continuation of capital purchases by IBM
necessary for process development projects under the agreement past December 31, 2008 is conditioned upon the approval of IBM’s board of directors. If IBM’s
board of directors does not approve our agreement by September 30, 2007, either party has the right to terminate the agreement effective December 31, 2008
without liability. In addition, our agreement with IBM may be extended further by the mutual agreement of the parties and can also be terminated immediately by
either party if the other party permanently ceases doing business, becomes bankrupt or insolvent, liquidates or undergoes a change of control or can be terminated
by either party upon 30 days written notice upon a failure of the other party to perform a material obligation thereunder. Under our agreement, research and
development takes place in IBM’s Watson Research Center in Yorktown Heights, N.Y., the Center for Semiconductor Research at Albany NanoTech, and at
IBM’s 300-millimeter manufacturing facility in East Fishkill, N.Y.
We conduct research and development activities for our graphics and chipset products and products for consumer electronics devices at design centers
located throughout the world, including in the United States,
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007