Adam Parker (Sanford Bernstein): Intel confidently stated that they''re going to gain some market share back. Have you noticed signs of Intel getting more aggressive at all in pricing? Would your pricing have gone up more without some action from them?

Hector Ruiz: First of all, the market continues to be very competitive. Anyone that thinks that pricing competition doesn''t exist is dreaming. It is very competitive but we are very competitive in cost and therefore for us it''s the cost issue that drives us.

Adam Parker (Sanford Bernstein): Can you give more detail on your processor road map in 2007 so that we can get a bit more look into how we should think about your competitiveness in the major product areas next year?

Hector Ruiz: We''re dealing with a much complex and broader range than we''ve ever had in the history of the microprocessor industry. On one end you have the very high performance, high volume, feature-rich products in the server space, in the gaming space, etc., where people want those features. They want that performance and they are looking for that particular thing in those products. It''s not an issue of pricing. As a matter of fact, we know some cases where some customers have turned down products because they don''t need them. They really want the performance, the features, etc. that we are offering. On the other hand when you go back to the other extreme, when you get to the value platform from the very low end of this space, which is more commoditized, the pricings are low enough and currently there''s very little room for price improvement. We''re dealing with a scenario where it''s the demand for our products that is driving what we see as the healthy outlook for us going forward. As far as what we''ll do in 2006 and beyond, we have a business model that we believe that in the 2008 to 2009 timeframe we should aim to achieve 25% to 30% of the market. We still have that as our goal and as a business model and we believe we''re steadily making progress, quarter by quarter.
On our products road map, we rely heavily on the input of our customers. Our customers tell us whether the road maps we have are appropriate for them and we''re getting very strong inputs and strong encouragement that if we stay in our road maps and execute in 2006, we have an excellent outlook to continue to grow and gain share as we did in 2005.

Mark Edelstone (Morgan Stanley): Can you provide guidance for Q1 depreciation?

Bob Rivet: It would probably be 10% more in the first half of the year than the second half of the year but not a lot of difference.

Mark Edelstone (Morgan Stanley): What''s your sense of how gross margins trend as you go through the year?

Bob Rivet: There''s more of a challenge in the first half of the year than in the second half of the year; lets call it a lot of capacity and capability but obviously we have to ramp into it. Depreciation comes on by tool and not by wafer start. We''ll have a little bit of challenge in the first half of the year, less in the second half of the year; but we think the ASP can offset that issue as we continue to improve our ASP quarter-on-quarter as we''ve demonstrated for many quarters in a row. The challenge is more upfront right now in the first quarter as we''re just starting to see output from that facility.

Joseph Osha (Merrill Lynch): Can I get detail as to mobile products outlook in 2006 and particularly when 65 nanometer products come onto the market?

Hector Ruiz: We have an introduction of our Dual Core in the mobile space in conjunction with the move to our platform to DDR 2. This will happen in the middle of the year.

Ben Lynch (Deustche Bank): Are you able to comment, without naming specific names, on whether there were particular customers where you had very significant increases in your penetration in Q4 versus Q3?

Hector Ruiz: Across the board, our customers are increasingly showing interest in our products.

Tim Luke (Lehman Brothers): What are the increases in capacity now targeted to be through the year as you bring on FAB 36 and to what extent are you seeing visibility in terms of your order flow to fill that capacity?

Hector Ruiz: We are ramping FAB 36 as rapidly as we can. In addition to that, we are bringing on board the capability of our foundry for the second half of the year. Those things will complete. In terms of the contribution they make, the FAB 36 will meet full capacity sometime in the 2008 time frame. Someday we''ll be building hard core and that will have an impact on units. In today''s mix, I can see our unit capability being able to grow 40% up this year. This will continue to go up so that when we get to the 2008 time frame, we''re talking about a 100 million-unit capability for us.

Tim Luke (Lehman Brothers): On the bonus payments, it seems they would have been fairly significant going into the fourth quarter and less significant in 2006 given the planning that you have. What is your comment?

Hector Ruiz: Every year bonus targets get reset. We''re no different than anybody. Clearly this year we believe the team did an outstanding job and they deserve to be rewarded. But of course, the payments get reset as we start 2006.

Glen Yeung (Citigroup Investment Research): Can you give us a sense of where you think the opportunities were greatest during the quarter and for 2006?

Hector Ruiz: The server business continues to be our engine of growth. We have a lot of opportunities there. We have gained significant share in this fourth quarter and there''s an underestimation in the market on the momentum of the Opteron platform and its adoption in Fortune 500 companies. Bear in mind that we are going to increase the number of platforms in the marketplace and broadening the spectrum of solutions based on the Opteron platform. That''s going continue to grow very quickly for us.
Mobile is doing extremely well. That''s driven by the fact that the market is growing; but also increasingly customers are looking for differentiation and Turion 64 platforms provide that to them. But interestingly, we''re also doing extremely well in desktop and in particular in the mainstream and high performance segment where the supremacy of our Dual Core technology is clear and where the demand for the Athlon 64 X2 and the Athlon 64 FX continues to surprise us on the positive side.
Thus for Q1, across all of the segments, we are very positive. On the overall, we still have an enormous opportunity to tap in on the high-growth markets of the world. We''ve have made great progress in China but there''s a lot of other places where we have plans to execute and we have the right product mix and people in place to go and seize those opportunities. Thus first quarter is much more of the same; for the rest of the year, expect to see us continue to show great progress in commercial and in high-growth markets.

Glen Yeung (Citigroup Investment Research): Can you give us the trends in terms of the emerging market mix?

Hector Ruiz: The answer on emerging markets is unfortunately not in homogeneous stream; it''s very different. When you look at the emerging market growth in Latin America and in Mexico, it''s heavily influenced by global players and tier one customers who are very strongly present there. In Brazil, there are a lot of local players who are very strong. It''s therefore very two different scenarios. There is also India, where at this point in time, some of the strongest driving forces in India tend to be consumer oriented. It''s a country with a very strong appetite for the consumption of content for consumers and there you''re looking at a very different picture. The good news is that collectively, we see a very healthy demand across a very broad spectrum of products which we offer. We feel very bullish about our ability to be able to serve those markets.

Henri Richard: Our largest improvement in AFC was in one of the high-growth markets in the world. There are clearly a lot of opportunities for AMD in the mainstream in the high performance segments in these markets. It so happens that in the past year, our marketing was our focus at those segments; also our lower-end products were sold in those markets but we''re finding great success in the positioning of our new Turion, Athlon 64 and Opteron brands.

Joanne Feeney (Punk Ziegel & Company): On the manufacturing side, do you have a yield timetable for FAS 36?

Hector Ruiz: When we moved from 250 nanometers to 180, it look us a certain amount of time to reach maturity in yields. Then when we went from 180 to 130, we were able to cut that in about half of that same time. Then when we went to 130 to 190, the time that it took to get there was significantly shorter. Our goal now as we go from 90 to 65 is that by the time we start shipping product we would like to be at mature yields. That''s almost like saying zero time. It''s aggressive and where our manufacturing team feels up to the challenge of stretching for such an aggressive ball.