Adaptec 2007 Annual Report Download - page 17

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Table of Contents
Assembly and Test
Once our wafers are fabricated, they must be probed, or inspected, to identify which individual units, referred to as die, were properly manufactured. Most wafers
that we purchase are sent directly to an outside assembly house where the die are individually cut and packaged into semiconductor devices. The individual
devices are then run through various electrical, mechanical and visual tests before customer delivery. PMC has recently outsourced the remaining in-house
portion of its wafer probe and final test capability to several of its key subcontract test providers. With most of our products, we have the option to probe the
wafers or test the final chips in-house or subcontract the probing or testing to independent subcontractors.
Quality Assurance
The industries that we serve require high quality, reliable semiconductors for incorporation into their equipment. We pre-qualify each vendor, foundry, assembly
and test subcontractor. Wafers supplied by outside foundries must meet our incoming quality and test standards. We conduct a portion of our test operations on
advanced mixed signal and digital test equipment in our Burnaby facility. The remainder of our testing is performed predominantly by independent Asian and
U.S. companies.
Since 2006, there has been an increase in the proportion of products being produced for PMC by turnkey ASIC vendors due to the acquisitions. Although PMC
does not physically manage the bulk of this production, these products follow approved and audited flows conforming to PMC’s Quality Assurance requirements.
RESEARCHAND DEVELOPMENT
Our research and development efforts are market and customer-focused and can involve the development of both hardware and software. These devices and
reference designs are targeted for use in enterprise, storage and service provider markets. Increasingly, our OEM customers that serve these end markets are
demanding complete solutions with software support and complex feature sets and we are developing products to fill this need.
From time to time we announce new products to the public once development of the product is substantially completed, and there are no longer significant costs
to be incurred. As we have a portfolio of more than 350 products, we do not consider any individual new product or group of products released in a year to be
material, beyond our continuing development of a portfolio of products that meet our customers’ future needs.
At the end of fiscal 2007, we had design centers in the United States (California, Oregon, and Pennsylvania), Canada (British Columbia and Quebec), Israel
(Herzliya), China (Shanghai) and India (Bangalore).
Our research and development spending was $159.1 million in 2007, $158.7 million in 2006 and $118.7 million in 2005. These figures exclude in-process
research and development acquired in business combinations.
11
Source: PMC SIERRA INC, 10-K, February 22, 2008