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May 8, 1988

ADVANCED MICRO PITCHES FOR TWO BILLION DOLLARS IN 1992 – OR EVEN 1990

By CBR Staff Writer

With 1987 losses of $48m on turnover of $997m, Advanced Micro Devices Inc founder, chairman and chief executive Jerry Sanders is looking forward, not back. I think we will reach the two billion dollar level in sales in three to five years, Sanders told the Hambrecht & Quist Technology Conference in San Francisco last week. In the next three to five yeasr, we can gain market share while servng exclusively the computation and communications markets, he elaborated. The frenetic pace of change and advance in technology means that Advanced Micro has to spend a daunting proportion of annual sales on research and development, but after investing $250m, 25% of sales, last year, the company will reduce the percentage to about 20% this year. That should still mean an increase in absolute terms, because the company will be hoping for better than 20% sales growth this year. We recognise that this is high, commented Sanders, but to be a player and to make sure you will be a contender for the long term, you have to spend money. However there shouldn’t be any need for an immediate investment in capacity: the Texas plants in Austin and San Antonio are running at only 58% capacity at present. I feel very good about having 90% operating margin at low capacity utilisation and high research and development spending, declared the ebullient Sanders. Through cost reduction, we have become a leaner company, but we are smart enough not to be starving because you cannot be a competitor when you are starving. Last year, Advanced Micro almost doubled its size when it acquired the complementary Monolithic Memories Inc.

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