AMD 2006 Annual Report Download - page 22

Table of Contents
Development Corporation d/b/a Empire State Development Corporation, or ESDC, in connection with a potential new 300-millimeter wafer fabrication facility
on the Luther Forest Technology Campus in Saratoga County, New York. Under the agreement, AMD would be able to construct a new facility designed to
produce 300-millimeter wafers using 32-nanometer process technology between July 2007 and July 2009. However, we are not obligated to commence
construction, and our decision regarding proceeding with the construction is dependent on business conditions and market demand. Should we choose to build
the facility, the State of New York is required to issue bonds or otherwise fund the project and related research and development in the amount of $650 million.
Actual disbursement of funds occurs as we submit appropriate documentation verifying that expenditures on the project have been incurred. If we move forward
with the project, we must complete the construction of the facility in accordance with the final plans and specifications approved in writing by ESDC and must
maintain business operations on the Luther Forest Technology Campus for a minimum of seven years after the date full employment at the facility is first
achieved. Funds disbursed to us may be subject to repayment, in whole or part, if we do not attain and or maintain certain levels of employment for specified
periods of time.
Our current microprocessor assembly and test facilities are described in the chart set forth below:
Facility Location
Approximate
Manufacturing
Area Square
Footage Activity
Penang, Malaysia 206,000 Assembly
Singapore 194,000 Test, Mark & Packaging
Suzhou, China 44,310 Test, Mark & Packaging
Some assembly and final testing of our microprocessor and embedded processor products is performed by subcontractors in the United States and Asia.
With respect to our graphics and chipset products and products for consumer electronics devices, we have strategic relationships with three semiconductor
foundries, Taiwan Semiconductor Manufacturing Company, United Microelectronics Corp. and Chartered. Currently, we are in volume production in TSMC’s
and UMC’s 300-millimeter fabrication facilities. As of December 31, 2006, our graphics and chipset products and products for consumer electronics devices
were manufactured on 80-, 90-, 110-, 130-, 150 or 180-nanometer process technologies at third party foundries. Smaller process geometries can lead to gains in
graphics processing performance, lower power consumption and lower per unit manufacturing costs. We intend to transition to 65-nanometer process technology
for some of these products in 2007.
From the foundry, wafers for our graphics products are delivered to our test, assembly and packaging partners including Advanced Semiconductor
Engineering Group, Amkor, King Yuan Electronics, Siliconware Precision Industries and STATS-Chippac, who package and test the final application-specific
integrated circuit.
We outsource board-level graphics product manufacturing to third-party manufacturers. These include Celestica, Fairway and PC Partner with locations in
China. Our facility in Markham, Ontario, Canada is primarily devoted to prototyping and trial runs for new graphics product introductions.
Raw Materials
Our manufacturing processes require many raw materials, such as silicon wafers, IC packages, mold compound, substrates and various chemicals and
gases, and the necessary equipment for manufacturing. We obtain these materials and equipment from a large number of suppliers located throughout the world.
Certain raw materials we use in manufacturing our microprocessor products or that are used in the manufacture of our graphics products are available only from a
limited number of suppliers. Interruption of supply or increased demand in the industry could cause shortages and price increases in various essential materials.
17
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007