Advanced Micro Devices



Table of Contents

Table of Contents 1
Corporate Overview 2
Company History 2
Products 3
Financial Information 4
Market Conditions and Competition 5
Strategies & Goals 6
Foreign Operations 6
International Production Facilities 6
Fujitsu Alliance 7
Foreign Currency Translations 8
Hedging 8
Problematic Issues & Their Solutions 9
Lawsuits 9
Taiwan Earthquake 9
Outlook 10
Appendix A – Balance Sheets 11
Appendix B – Income Statements 12
Appendix C – Foreign Subsidiaries 13































Corporate Overview
Company History

Advanced Micro Devices (AMD), founded May 1st, 1969 and headquartered in Sunnyvale, California, is one of the largest manufacturers of integrated circuits in the world. Founded originally by Jerry Sanders and seven others in a single room in 1969 with only $100,000, AMD now employs approximately 13,000 people worldwide and has annual revenues in excess of $2.4 billion.

In 1978, AMD opened up international assembly facilities in Manila, Philippines, and expanded the Penang, Malaysia factory that they originally opened in 1973 as their first overseas manufacturing base. By the end of 1981, the company had more than doubled its sales over 1979. Plants and facilities expanded with an emphasis on building in Texas. New production facilities were built in San Antonio, and more fabrication space was added to their Austin, Texas facilities as well.

In the years following 1981, AMD expanded its global operations tremendously with the incorporation of AMD Singapore in 1983; as well as by building a facility in Bangkok, Thailand. By 1994, AMD had become a supplier of flash memory, networking, EPROM, telecommunications and programmable logic chips. In more recent years, AMD’s sixth and seventh generation chips, including the new Athlon processor have been, and will continue to be one of the leading chipsets available worldwide. Their international sales operations entail exchange rate fluctuations, political and economic risks, including expropriation, currency controls, changes in freight rates and changes in rates and exemptions for taxes and tariffs.

Products

The company’s first products were products that they redesigned from other companies for greater speed and efficiency. Now AMD produces processors, flash memories, programmable logic devices, and products for communications and networking applications.

Their processors, the K6 and Athlon, are being used by IBM, Compaq and other computer manufacturers around the world. On November 29, 1999, a 750MHz Athlon (see front cover for photograph) processor was brought to market, making it the fastest processor available in home computers. The 750MHz Athlon processor is priced at $799 in 1,000 unit quantities.

The 750MHz AMD Athlon processor is the first processor that is built using AMD\'s aluminum 0.18-micron manufacturing process, and new AMD Athlon processors are now being built using that advanced technology. The 0.18-micron manufacturing process shrinks the size of the AMD Athlon processor die, enabling faster processor speeds and lowering power consumption.


AMD is moving away from only supplying low-end chips, to supplying high-end high performance chips using their 0.18-micron manufacturing process. The Athlon is currently being manufactured in the Austin, Texas facility, and is expected to begin featuring copper interconnect technology later this year in its newest facility, Fab 30 in Dresden, Germany.

Aside from the numerous processors that AMD produces, they also produce flash memory. It does simultaneous read/write and is the first hardware capable of reading data during programming or erasing operations. Programmable logic devices, communications and networking applications are also among the products made by AMD.

The company has sales offices worldwide and has manufacturing facilities in Sunnyvale, California; Austin, Texas; Bangkok, Thailand; Penang, Malaysia; Singapore; Suzhou, China and Aizu-Wakamatsu, Japan. A wafer fabrication facility in Dresden, Germany is scheduled to begin commercial production in 2000.

Financial Information

The balance sheets and income statements for AMD are provided in Appendices A & B. Total net sales increased by $186 million, or 8 percent, to $2.542 billion in 1998 from $2.356 billion in 1997. Although sales grew, net loss also grew by $83 million dollars to $103 million in 1998. AMD blames the net loss due to the general downturn in the worldwide semiconductor market and the current economic conditions in Asia, which negatively impacted their results of operations. Closing share price for AMD on the NYSE as of Wednesday, December 1, 1999 was $27.50 US, which gave it a market capitalization of $4.064 billion.

Market Conditions & Competition

The processor market is characterized by short product life cycles and rapid change. To compete successfully against Intel, AMD’s largest competitor, in this market, AMD must be able to develop and bring new products to market quickly and in high volume. Intel has dominated the market for microprocessors used in