AMD 2007 Annual Report Download - page 20

Table of Contents
Research and Development
We focus our microprocessor research and development activities on product design and system and manufacturing process development. One main area
of focus is on delivering the next generation of microprocessors with improved system performance and performance-per-watt characteristics. We have devoted
significant resources to product design and to developing and improving manufacturing process technologies and plan to continue 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 2007, 2006, and 2005 were approximately $1.8 billion, $1.2 billion and $1.1 billion, respectively. Research
and development expenses for 2006 and 2007 included ATI’s research and development expenses from October 25, 2006 through December 29, 2007. For more
information, see Part II, Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or 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, Malaysia, Taiwan and India.
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. Bumping wafers is one of the final stages of the manufacturing process in which wafers are prepared for assembly and test.
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. 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.
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Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008