Adaptec 2011 Annual Report Download - page 9

Table of Contents
Our sales outside of the United States, based on customer billing location, accounted for 83%, 85% and 87% of total revenue in 2011, 2010 and 2009,
respectively. Our sales to customers in Asia, including Japan and China, were 73%, 77% and 84% of total revenues in 2011, 2010, and 2009, respectively.
See Item 1A. Risk Factors for further information on risks related to our foreign operations and dependence.
MANUFACTURING
PMC-Sierra is a fabless company, meaning that we do not own or operate foundries for the production of the silicon wafers from which our products
are made. Instead, we work with independent merchant foundries and chip assemblers for the manufacture of our products. We believe our fabless approach
to manufacturing provides us with the benefit of superior manufacturing capability, scalability, as well as the flexibility to move wafer manufacture, assembly
and test of our products to the vendors that offer the best technology and service at a competitive price.
Our lead-time, or the time required to manufacture our devices, is typically 12 to 18 weeks. Based on this lead-time, our team of production planners
initiates purchase orders with our wafer suppliers and with our chip assemblers for the assembly and test of our parts so that, to the best of our ability, our
products are available to meet customer demand.
Wafer Fabrication
We manufacture our products at independent foundries using standard Complementary Metal Oxide Semiconductor process techniques. We have in the
past purchased silicon wafers from which we manufacture our products from Globalfoundries Inc., Taiwan Semiconductor Manufacturing Corporation
("TSMC"), Texas Instruments Incorporated and United Microelectronics Corporation ("UMC"). These independent foundries produce the wafers for our
networking semiconductor products ranging in sizes from 0.18 micron to 40 nanometer. By using independent foundries to fabricate our wafers, we are better
able to concentrate our resources on designing, developing and testing of new products. In addition, we avoid the fixed costs associated with owning and
operating fabrication and chip assembly facilities and the costs associated with updating these facilities to manage constantly evolving process technologies.
We have existing supply agreements with UMC and TSMC. Generally, terms include but are not limited to, supply terms without minimum unit
volume requirements for PMC, indemnification and warranty provisions, quality assurances and termination conditions.
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 outsources all of its wafer probe and
final 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. The testing function is performed
predominantly by independent Asian and U.S. companies.
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