Crucial 2013 Annual Report Download - page 10

9
To compete in the semiconductor memory industry, we must continue to develop technologically advanced products and
processes. We believe that expansion of our semiconductor product offerings is necessary to meet expected market demand for
specific memory solutions. Our process, design and package development efforts occur at multiple locations across the world,
with our largest R&D centers located in Boise, Idaho and Hiroshima, Japan. Our largest design center is also located at our
corporate headquarters in Boise, Idaho. We have several additional product design centers in other strategic locations around
the world. In 2012, we commenced operation of our new R&D facility in Boise, which was designed to accommodate 450mm
wafer manufacturing. In addition, we develop photolithography mask technology at our MP Mask joint venture facility in
Boise.
R&D expenses vary primarily with the number of development wafers processed, the cost of advanced equipment
dedicated to new product and process development, and personnel costs. Because of the lead times necessary to manufacture
our products, we typically begin to process wafers before completion of performance and reliability testing. We deem
development of a product complete once the product has been thoroughly reviewed and tested for performance and reliability.
R&D expenses can vary significantly depending on the timing of product qualification.
Geographic Information
Sales to customers outside the United States totaled $7.6 billion for 2013 and included $3.8 billion in sales in China, $980
million in sales in Taiwan, $820 million in sales in Europe, $193 million in sales in Malaysia and $1.3 billion in sales in the rest
of the Asia Pacific region (excluding China, Malaysia and Taiwan). Sales to customers outside the United States totaled $7.0
billion for 2012 and $7.4 billion for 2011. As of August 29, 2013, we had net property, plant and equipment of $3.2 billion in
Singapore, $3.0 billion in the United States, $615 million in Japan, $350 million in China, $307 million in Taiwan, $28 million
in Israel, $18 million in Italy and $42 million in other countries. (See "Item 8. Financial Statements and Supplementary Data –
Notes to Consolidated Financial Statements – Geographic Information" note and "Item 1A. Risk Factors.")
Patents and Licenses
In recent years, we have been recognized as a leader in per capita and quality of patents issued. As of August 29, 2013, we
owned approximately 16,200 U.S. patents and 3,700 foreign patents. In addition, we have numerous U.S. and foreign patent
applications pending. Our patents have various terms expiring through 2032.
We have a number of patent and intellectual property license agreements and have from time to time licensed or sold our
intellectual property to third parties. Some of these license agreements require us to make one-time or periodic payments while
others have resulted in us receiving payments. We may need to obtain additional patent licenses or renew existing license
agreements in the future and we may enter into additional sales or licenses of intellectual property and potential partnering
arrangements. We are unable to predict whether these license agreements can be obtained or renewed on acceptable terms.
Employees
As of August 29, 2013, we had approximately 30,900 employees, of which approximately 19,600 were outside the United
States, including approximately 7,500 in Singapore, 3,700 in Japan, 2,700 in China, 2,100 in Taiwan, 1,100 in Italy, 1,000 in
Israel and 1,000 in Malaysia. Our employees include approximately 1,700 in our IMFT joint venture, primarily located in the
United States and 5,700 from our acquisition of Elpida and Rexchip, primarily located in Japan and Taiwan. In September
2013, we entered into an agreement to sell our 200mm wafer fabrication equipment in Kiryat Gat, Israel to Intel and to
terminate the related facility lease with Intel. If this transaction is completed, most of our employees in Israel will terminate
their employment with us and be transferred to Intel. As of August 29, 2013, we do not anticipate incurring any significant
additional costs for this restructure activity. Our employment levels can vary depending on market conditions and the level of
our production, research and product and process development. Many of our employees are highly skilled and our continued
success depends in part upon our ability to attract and retain such employees. The loss of key personnel could have a material
adverse effect on our business, results of operations or financial condition.