AMD CEO HECTOR RUIZ: TIME FOR A NEW BUSINESS MODEL IN
THE SEMICONDUCTOR INDUSTRY
-FEI FORUM ON FINANCE AND TECHNOLOGY, LAS VEGAS-
SUNNYVALE, CA -SEPTEMBER 23, 2002- In a keynote address
to financial leaders at the FEI Forum on Finance and Technology Friday, Hector
Ruiz, AMD president and Chief Executive Officer, asserted that, in order to
succeed, semiconductor manufacturers must reinvent their business models to
forge tight connections and collaborations with end-users, customers and
partners.
"In traditional relationships between suppliers and
customers, the lines that define where one company begins and the other ends are
very clear - and can be very disruptive," said Ruiz. "I believe this old model
is broken. To be successful, we believe that semiconductor companies must build
relationships with customers and partners that truly blur the lines, and create
a 'complementor' relationship where the companies are connected and invested in
each other's success." Ruiz highlighted aspects of AMD's "connected business
model" which is focused on forging extremely connected relationships with
partners, customers and end-users.
"Our industry is in the midst of a fundamental change
that will redefine the classic definition of a semiconductor company and rewrite
the metrics used to evaluate its success," said Ruiz. "Changes in end-user
expectations, increased dependence on silicon to define and differentiate
products, the adoption of external value chain integration, and an increasing
focus of intellectual property (IP) development based on customer needs rather
than manufacturing efficiencies are changing the way AMD does business."
Metcalfe's Law, which says the overall value of a network increases
exponentially as devices are added to it, is a guiding principle behind AMD's
business model. "Just as the value of a physical network like the Internet
increases as more users have access, AMD's value and strength will be enhanced
by the number of relationships we forge with companies that we will work with to
share in a common success."
He cited AMD's collaboration with UMC on cost-effective,
high-volume manufacturing of leading-edge microprocessors as an example of a "complementor"
relationship where the two companies are connected and invested in each other's
success. Ruiz also stressed that semiconductor manufacturers should not stop
investing in improving manufacturing capabilities, but rather that companies
need to focus on high-impact areas such as transistor development, advanced
process control (APC), and silicon-on-insulator (SOI) technology where the IP
investment can be directly linked to specific customer needs.
"The ability to lower the intensity of capital
expenditures, share success with customers and partners, and continue to deliver
innovative solutions will be the metrics by which we need to judge semiconductor
companies in the coming years," Ruiz continued.
Ruiz's presentation is available in AMD's virtual
pressroom at
www.amd.com/virtualpress/speeches.
About AMD
AMD is a global supplier of integrated circuits for the
personal and networked computer and communications markets with manufacturing
facilities in the United States, Europe, Japan, and Asia. AMD, a Fortune 500 and
Standard & Poor's 500 company, produces microprocessors, Flash memory devices,
and support circuitry for communications and networking applications. Founded in
1969 and based in Sunnyvale, California, AMD had revenues of $3.9 billion in
2001. (NYSE: AMD).
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