Xilinx,'Inc. (Xilinx or the Company) designs, develops and markets complete programmable
logic solutions, including advanced integrated circuits (ICs), software design
tools, predefined system functions delivered as intellectual property (IP) cores,
design services, customer training, field engineering and technical support. The
programmable logic devices (PLDs) include field programmable gate arrays (FPGAs)
and complex programmable logic devices (CPLDs).
These devices are standard products that our customers program to perform desired
logic functions.
Our products are designed to provide high integration and quick time-to-market
for electronic equipment manufacturers primarily in the communications, storage,
server, consumer, industrial and other markets. We sell our products globally
through independent domestic and foreign distributors, through direct sales
to original equipment manufacturers (OEMs) by a network of independent sales
representative firms and through a direct sales management organization.
There are three principal types of ICs used in most digital electronic systems:
processors, which generally are utilized for control and computing tasks; memory
devices, which are used for storing program instructions and data; and logic
devices, which generally are used to manage the interchange and manipulation
of digital signals within a system. Almost every electronic system contains
application specific integrated circuits (ASICs), which include custom gate
arrays, standard cells and programmable logic.
These devices all compete with each other since they may be utilized in the
same types of applications within electronic systems. However, variables in
pricing, product performance, reliability, power consumption, density, adaptability,
ease of use and time-to-market determine the degree to which the devices compete
for specific applications.
Programmable logic has a primary advantage over custom gate arrays and standard
cells in that it enables faster time-to-market with shorter design cycles. Users
of PLDs can program their design directly into the PLD, using software, thereby
allowing customers to revise their designs relatively quickly with lower development
costs. Since PLDs are programmable, they typically have a larger die size resulting
in higher costs per unit compared to custom gate arrays and standard cells,
which are customized with a fixed function during wafer fabrication. Custom
gate arrays and standard cells, however, generally require longer fabrication
lead times and higher up-front costs than PLDs.
PLDs are standard components. This means that the same device type can be sold
to many different customers for many different applications. As a result, the
development cost of PLDs can be spread over a large number of customers. Custom
gate arrays and standard cells, on the other hand, are custom chips for an individual
customer for use in a specific application. This involves a high up-front cost
to customers. Technology advances are enabling PLD companies to reduce costs
considerably, making PLDs an increasingly attractive alternative to custom gate
arrays and standard cells.
Competition
Our PLDs compete in the logic industry, an industry that is intensely competitive
and characterized by rapid technological change, increasing levels of integration,
product obsolescence and continuous price erosion. We expect increased competition
from our primary PLD competitors, Altera Corporation (Altera) and Lattice Semiconductor
Corporation (Lattice), from the ASIC market, which has been an ongoing competitor
since the inception of FPGAs, and from new companies that may enter the traditional
programmable logic market segment.
We could also face competition from our licensees. Under a license from us,
Lucent Technologies (Lucent) had rights to manufacture and market our XC3000
FPGA products and to employ that technology to provide additional high-density
FPGA products. In 2001, Lucent assigned its rights to Agere Systems'Inc. (Agere).
Agere has subsequently sold a portion of its programmable logic business to
Lattice. Under the terms of the Xilinx license grant, no rights of Agere are
transferable to Lattice.
Seiko has rights to manufacture some of our older products and market them
in Japan and Europe, but is not currently doing so. We granted a license to
use some of our patents to Advanced Micro Devices (AMD). AMD produced certain
PLDs under that license through its wholly-owned subsidiary, Vantis. In June'
1999, AMD sold the Vantis subsidiary to Lattice.