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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
     
(Mark One)    
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the fiscal year ended January 2, 2005
 
OR
 
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-21970
 
ACTEL CORPORATION
(Exact name of Registrant as specified in its charter)
     
California
  77-0097724
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
 
2061 Stierlin Court
Mountain View, California
(Address of principal executive offices)
  94043-4655
(Zip Code)
(650) 318-4200
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Preferred Stock Purchase Rights
(Title of class)
 
     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes þ         No o
     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Annual Report on Form  10-K or any amendment to this Annual Report on Form 10-K.    þ
     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ         No o
     The aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing price for shares of the Registrant’s Common Stock on July 5, 2002, as reported by the National Market System of the National Association of Securities Dealers Automated Quotation System, was approximately $371,000,000. In calculating such aggregate market value, shares of Common Stock owned of record or beneficially by all officers, directors, and persons known to the Registrant to own more than five percent of any class of the Registrant’s voting securities were excluded because such persons may be deemed to be affiliates. The Registrant disclaims the existence of control or any admission thereof for any purpose.
     Number of shares of Common Stock outstanding as of March 3, 2005: 25,167,938.
 
     In this Annual Report on Form 10-K, Actel Corporation and its consolidated subsidiaries are referred to as “we,” “us,” “our,” or “Actel.” You should read the information in this Annual Report with the Risk Factors at the end of Item 1. Unless otherwise indicated, the information in this Annual Report is given as of March 3, 2005, and we undertake no obligation to update any of the information, including forward-looking statements. All forward-looking statements are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements containing words such as “anticipates,” “believes,” “estimates,” “expects,” intends,” “plans,” “seeks,” and variations of such words and similar expressions are intended to identify the forward-looking statements. The Risk Factors could cause actual results to differ materially from those projected in the forward-looking statements.
 
 


TABLE OF CONTENTS

PART I
ITEM 1. BUSINESS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON STOCK, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
SIGNATURES
EXHIBIT INDEX
EXHIBIT 21
EXHIBIT 23
EXHIBIT 24
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32


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PART I
ITEM 1. BUSINESS
Overview
      We design, develop, and market field programmable gate arrays (FPGAs) and supporting products and services. FPGAs are used by manufacturers of automotive, communications, computer, consumer, industrial, military and aerospace, and other electronic systems to differentiate their products and get them to market faster. We are the leading supplier of FPGAs based on Flash and antifuse technologies, and believe that we are the leading supplier of high reliability FPGAs. Our strategy is to offer innovative solutions to markets in which our technologies have a competitive advantage, including the value-based and high-reliability FPGA markets. In support of our FPGAs, we offer intellectual property (IP) products; design and development software; programming hardware; debugging tool kits and demonstration boards; a Web-based Resource Center; and system design, online prototyping, and programming services.
      We shipped our first FPGAs in 1988 and thousands of our development tools are in the hands of customers, including BAE Systems (BAE); The Boeing Company (Boeing); Cisco Systems, Inc. (Cisco); European Aeronautic Defence and Space Company N.V. (EADS); Hamilton Sundstrand; Honeywell International Inc. (Honeywell); ITT Industries, Inc. (ITT); Lockheed Martin Corporation (Lockheed Martin); Mitsubishi Corporation (Mitsubishi); Nokia; Nortel Networks Corporation (Nortel); Northrop Grumman Corporation (Northrop); Raytheon Company (Raytheon); Rockwell Collins, Inc. and Rockwell Automation, Inc. (Rockwell); Schlumberger Limited (Schlumberger); Siemens AG (Siemens); Tellabs, Inc. (Tellabs); UTStarcom Incorporated (UTStarcom); and Varian Medical Systems, Inc. (Varian).
      We have foundry relationships with Chartered Semiconductor Manufacturing Pte Ltd (Chartered) in Singapore; Infineon Technologies AG (Infineon) in Germany; Matsushita Electric Industrial Co., Ltd. (Matsushita) in Japan; United Microelectronics Corporation (UMC) in Taiwan; and Winbond Electronics Corp. (Winbond) in Taiwan. Wafers purchased from our suppliers are assembled, tested, marked, and inspected by us and/or our subcontractors before shipment to customers.
      We market our products through a worldwide, multi-tiered sales and distribution network. In 2004, sales made through distributors accounted for 67% of our net revenues. One distributor, Unique Technologies, Inc. (Unique), accounted for 33% of our net revenues in 2004. Unique has been our sole distributor in North America since March 1, 2003. Including Unique and about 15 sales representative firms, our North American sales network has about 79 offices. Including about 21 distributors and sales representative firms, our European, Pan-Asia, and Rest of World (ROW) sales network has about 58 offices. In 2004, sales to customers outside North America accounted for 46% of net revenues.
      On April 26, 2004, we announced the appointment of J. Daniel McCranie to our Board of Directors. Mr. McCranie brings more than 35 years of sales and marketing experience in the semiconductor and communications industries to our Board of Directors.
      We were incorporated in California in 1985. Our principal facilities and executive offices are located at 2061 Stierlin Court, Mountain View, California 94043-4655, and our telephone number at that address is (650) 318-4200. Our website is located at http://www.actel.com. We provide access free of charge through a link on our website to our Annual Reports on Form  10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as amendments to those reports, as soon as reasonably practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission (SEC). The Actel name and logo and Libero are registered trademarks of Actel. This Annual Report also includes unregistered trademarks of Actel as well as registered and unregistered trademarks of other companies.
Industry Background
      The three principal types of integrated circuits (ICs) used in most digital electronic systems are microprocessor, memory, and logic circuits. Microprocessors are used for control and computing tasks; memory devices are used to store program instructions and data; and logic devices are used to adapt these

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processing and storage capabilities to a specific application. Logic circuits are found in practically every electronic system.
      The logic design of competing electronic systems is often a principal area of differentiation. Unlike the microprocessor and memory markets, which are dominated by a relatively few standard designs, the logic market is highly fragmented and includes, among many other segments, low-capacity standard transistor-transistor logic circuits (TTLs) and custom-designed application specific ICs (ASICs). TTLs are standard logic circuits that can be purchased “off the shelf” and interconnected on a printed circuit board, but they tend to limit system performance and increase system size and cost compared with logic functions integrated at the circuit (rather than the printed circuit board) level. ASICs are customized circuits that offer electronic system manufacturers the benefits of increased circuit integration: improved system performance, reduced system size, and lower system cost.
      ASICs include conventional gate arrays, standard cells, and programmable logic devices (PLDs). Conventional gate arrays and standard cell circuits are customized to perform desired logical functions at the time the device is manufactured. Since they are “hard wired” at the wafer foundry by use of masks, conventional gate arrays and standard cell circuits are subject to nonrecurring engineering (NRE) charges and the time-to-market risks associated with any development cycle involving a foundry. Typically, conventional gate arrays and standard cell circuits are first delivered in production volumes months after the successful production of acceptable prototypes. In addition, hard-wired ASICs cannot be modified after they are manufactured, which subjects them to the risk of inventory obsolescence and constrains the system manufacturer’s ability to change the logic design. PLDs, on the other hand, are manufactured as standard devices and customized “in the field” by electronic system manufacturers using computer-aided engineering (CAE) design and programming systems. PLDs are being used by a growing number of electronic system manufacturers to increase product differentiation and manufacturing flexibility and speed time to market.
      PLDs include simple PLDs, complex PLDs (CPLDs), and FPGAs. CPLDs and FPGAs have gained market share because they generally offer greater capacity, lower total cost per usable logic gate and lower power consumption than TTLs and simple PLDs, and faster time to market and lower development costs than hard-wired ASICs. As mask costs and NRE charges continue to rise, CPLDs and particularly FPGAs are becoming cost-effective alternatives to hard-wired ASICs at higher volumes. Even in high volumes, the time-to-market and manufacturing-flexibility benefits of CPLDs and FPGAs often outweigh their price premium over hard-wired ASICs of comparable capacity for many electronic system manufacturers.
      Before a CPLD or FPGA can be programmed, there are various steps that must be accomplished by a designer using CAE design software. These steps include defining the function of the circuit, verifying the design, and laying out the circuit. Traditionally, logic functions were defined using schematic capture software, which permits the designer to essentially construct a circuit diagram on the computer. As CPLDs and FPGAs have increased in capacity, the time required to create schematic diagrams using schematic capture tools has often become unacceptably long, so designers are increasingly turning to hardware description languages (HDLs). HDLs permit the designer to describe the circuit functions at an abstract level and to verify the performance of logic functions at that level using a simulator. The HDL description of the desired CPLD or FPGA device can then be fed into synthesis software that automatically converts the abstract description to a gate-level representation equivalent to that produced by schematic capture tools. After a gate-level representation of the logic function has been created and verified, it must be translated or “laid out” onto the generic logic modules of the CPLD or FPGA. This is achieved by placing the logic gates and routing their interconnections, a process referred to as “place and route.” After the layout of the device has been verified by timing simulation, the CPLD or FPGA can be programmed. Multiple suppliers of electronic design automation (EDA) tools provide software to accomplish the design entry, simulation, and synthesis tasks for CPLDs and FPGAs, but the “place and route” software is generally developed and provided only by the CPLD or FPGA company.
      Electronic system manufacturers program a CPLD or FPGA to perform the desired logical functions by using a device programmer to change the state of the device’s programming elements (such as antifuses or memory cells) through the application of an electrical signal. Programmers are typically available from both

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the company supplying the device and third parties, and programming services are often available from both the company supplying the device and its distributors. Most CPLDs are programmed with erasable programmable read only memories or other nonvolatile “floating gate” memory technologies. Many FPGAs are programmed with static random access memory (SRAM) technology. Our FPGAs use Flash and antifuse programming elements. After programming, the functionality and performance of the programmed CPLD or FPGA in the electronic system must be verified.
      To a large extent, the characteristics of a CPLD or FPGA are dictated by the technology used to make the device programmable. CPLDs and FPGAs based on programming elements controlled by floating gates or SRAMs must be configured by a separate boot device, such as the nonvolatile programmable read only memory (PROM) commonly used with SRAM FPGAs. Because these devices must be booted-up, they are less reliable (in the sense of being more prone to generate system errors), less secure, not functional immediately on power-up, and require a separate boot device. In addition, SRAM FPGAs and CPLDs based on look-up tables tend to consume more power. FPGAs based on Flash and antifuse programming elements do not need to be booted-up, which makes them more reliable, more secure, “live-at-power-up” single-chip solutions, and they also tend to operate at lower power. These are all characteristics shared by hard-wired ASICs but not by CPLDs or SRAM FPGAs.
      The technology used to make a CPLD or FPGA programmable also dictates whether the device is reprogrammable and whether it is volatile. CPLDs and FPGAs based on programming elements controlled by floating gates or SRAMs are reprogrammable but lose their circuit configuration in the absence of electrical power. FPGAs based on antifuse programming elements are one-time programmable and retain their circuit configuration permanently, even in the absence of power. FPGAs based on programming elements controlled by Flash memory are reprogrammable and nonvolatile, retaining their circuit configuration in the absence of power.
      As mask and NRE costs for hard-wired ASICs continue to rise, FPGAs are increasingly used as a cost-effective alternative to ASICs for implementing complex design functions. With this increase in adoption, FPGAs have grown in size and complexity, making the security of the devices more important. More often than not, the key IP that differentiates an electronic system from competitive offerings is now implemented in programmable logic. Consequently, the vulnerability of each system’s unique value-added IP is often a direct function of the security capabilities of the system’s FPGA. Since SRAM-based FPGAs must be configured at power on, the bitstream used to configure the SRAM FPGA can be intercepted in route at the circuit level, electronically “captured,” and replicated. Alternatively, this configuration data can be read from the configuration device and manipulated or copied, or the on-board PROM can be replicated. Flash and antifuse FPGAs do not require a start-up bitstream, eliminating the possibility of configuration data being intercepted.
      SRAM FPGAs are also susceptible to being upset by neutrons and alpha particles. When SRAM memories are used for data storage, these neutron-induced errors are called “soft errors.” When SRAM memories are used to store the configuration of an FPGA, these neutron-induced errors are called “firm errors.” A firm error affects the device’s configuration, which may cause the device to malfunction. In addition, firm errors are not transient but will persist until detected and corrected. There is a significant and growing risk of functional failure in SRAM-based FPGAs due to the corruption of configuration data. Historically a concern only for military, avionics, and space applications, firm errors have become more of a problem for ground-based applications with each manufacturing process generation. Radiation testing data show that antifuse and Flash FPGAs are not subject to loss of configuration due to neutron-induced upsets.
Strategy
      Our Flash and antifuse technologies are different from, and have certain advantages over, the SRAM and other technologies used in competing PLDs. Our strategy is to offer innovative solutions to markets in which our technologies have a competitive advantage, including the value-based and high-reliability FPGA markets.
      A general competitive advantage that our technologies have is design security. Our nonvolatile, single-chip FPGAs offer practically unbreakable design security. Decapping and stripping of our Flash devices reveals only the structure of the Flash cell, not the contents. Similarly, the antifuses that form the

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interconnections within our antifuse FPGAs do not leave a signature that can be electrically probed or visually inspected. In addition, special security fuses are hidden throughout the fabric of our Flash and antifuse devices. These FlashLock and FuseLock security fuses cannot be accessed or bypassed without destroying the rest of the device, making both invasive and noninvasive attacks ineffective.
Value-Based Market
      Much of the logic market is driven by cost. We address this value-based market, which we believe represents the fastest growing segment of the FPGA market, with our Flash FPGAs and our general-purpose antifuse FPGAs. In addition to low cost, our FPGAs add the value of hard-wired ASICs to the benefits provided by other PLDs. Like other PLDs, our FPGAs reduce design risk, inventory investment, and time to market. Unlike other PLDs, our FPGAs are nonvolatile, “live-at-power-up,” low-power, single-chip solutions. In addition, logic designers can choose to use either hard-wired ASIC or FPGA software tools and design methodologies, and the architectures of our FPGAs enable the utilization of predefined IP cores, which can be reused across multiple designs or product versions. We also offer our customers a wide selection of cost-sensitive and small form-factor packages.
      On March 29, 2004, we announced the shipment of the one-millionth unit of our Flash-based ProASIC PLUS FPGA family, which was introduced in 2002. With well over 1,000 design starts worldwide, this product has the fastest customer acceptance rate in our history, providing evidence that the nonvolatility and reprogrammability of these single-chip devices, coupled with their firm-error immunity, low power, and inherent security, make them a cost-effective solution for the value-based FPGA market. On January 24, 2005, we announced the ProASIC3 and ProASIC3E FPGA families, which are targeted specifically at the value-based FGPA market.
High-Reliability Market
      Much of the logic market for military and aerospace applications is driven by reliability, nonvolatility, security, and resistance to radiation effects. We address this market with our military, avionics, and space-grade FPGAs. Our antifuse and Flash FPGAs are reliable, nonvolatile, secure, and not susceptible to configuration corruption caused by radiation. During 2004, we completed the introduction of our antifuse-based RTAX-S FPGA family, with densities up to 2,000,000 gates, which was designed specifically for space applications. The density and performance characteristics of our RTAX-S FPGAs make them a radiation-tolerant alternative to hard-wired ASICs in many additional satellite applications. Much of the market for automotive applications is driven by cost as well as reliability, nonvolatility, and security. We address this market with our automotive line of FPGAs. With the addition of the Flash-based ProASIC PLUS devices to our automotive FPGA product portfolio in 2004, we believe that we have the PLD industry’s broadest automotive offering.
Products and Services
      Our product line consists of FPGAs, including
  •  reprogrammable FPGAs based on Flash technology,
 
  •  one-time programmable FPGAs based on antifuse technology, and
 
  •  high-reliability (HiRel) FPGAs.
      In 2004, FPGAs accounted for 96% of our net revenues, most of which was derived from the sale of antifuse FPGAs. In support of our FPGAs, we offer IP products; design and development software; programming hardware; debugging tool kits and demonstration boards; a Web-based Resource Center; and system design, online prototyping, and volume programming services.

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FPGAs
      FPGAs are used by manufacturers of automotive, communications, computer, consumer, industrial, military and aerospace, and other electronic systems to differentiate their products and get them to market faster. We are the leading supplier of FPGAs based on Flash and antifuse technologies.
      To meet the diverse requirements of our customers, we offer all of our FPGAs (except the two radiation-hardened devices) in a variety of speed grades, package types, and/or ambient (environmental) temperature tolerances. Commercial devices are qualified to operate at ambient temperatures ranging from zero degrees Celsius (0°C) to +70°C. Industrial devices are qualified to operate at ambient temperatures ranging from - -40°C to +85°C. Automotive devices are qualified to operate at ambient temperatures ranging from -40°C to +125°C with junction temperatures up to 125°C for Flash devices and up to 150°C for antifuse devices. Military devices are qualified to operate at ambient temperatures ranging from -55°C to +125°C. “High reliability” or “HiRel” devices are qualified to automotive or military temperature specifications. We believe that we are the leading supplier of high reliability FPGAs.
      The capacity of FPGAs is measured in “gates,” which traditionally meant four transistors. As FPGAs grew larger and more complex, no standard technique emerged for counting FPGA gates. The appearance of FPGAs with memory further complicated matters because memory gates cannot be counted in the same way as logic gates. When we use “gate” or “gates” to describe the capacity of FPGAs, we mean “maximum system equivalent gates” unless otherwise indicated.
  Flash FPGAs
        Our Flash-based FPGAs include the ProASIC3, ProASIC3E, ProASIC PLUS, and ProASIC families. The combination of a fine-grained, single-chip ASIC-like architecture and nonvolatile Flash configuration memory makes our Flash-based FPGAs economical alternatives to ASICs for low- and medium-speed applications. Unlike other FPGAs available on the market today, which are either volatile or non-reprogrammable, our Flash devices are nonvolatile and reprogrammable.
  ProASIC3/E
        On January 24, 2005, we announced the ProASIC3 and ProASIC3E families, our third generation of Flash-based programmable logic solutions. The ProASIC3/E families were designed to address the market demand for full-featured, cost-effective FPGAs in consumer, automotive, and other price-sensitive applications. Ranging in density from 30,000 to 3,000,000 gates, the new ProASIC3/E families offer integrated secure in-system programmability (ISP) using Advanced Encryption Standard (AES) encryption, 64-bit 66 MHz Peripheral Component Interconnect (PCI) performance, and the FPGA industry’s first on-chip user Flash memory. We market the ProASIC3/E families as the world’s lowest cost FPGAs. Samples are available through our early access program, with production quantities scheduled for the end of 2005.
  ProASIC PLUS
        The ProASIC PLUS family of FPGAs, which was first shipped for revenue in 2002, consists of seven devices: the 75,000-gate APA075; the 150,000-gate APA150; the 300,000-gate APA300; the 450,000-gate APA450; the 600,000-gate APA600; the 750,000-gate APA750; and the 1,000,000-gate APA1000. As our second-generation Flash family, ProASIC PLUS devices offer added features and improved user-configurable inputs and outputs (I/Os) and ISP compared with the first-generation ProASIC family. Manufactured on a 0.22-micron embedded Flash process at UMC, the ProASIC PLUS family can be ordered in approximately 136 speed, package, and temperature variations.
  ProASIC
        The ProASIC family of FPGAs, which was first shipped for revenue in 1999, consists of four products: the 100,000-gate A500K050; the 290,000-gate A500K130; the 370,000-gate A500K180; and the 475,000-gate A500K270. Manufactured on a 0.25-micron embedded Flash process at Infineon, the family can be ordered in approximately 30 speed, package, and temperature variations.

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  Antifuse FPGAs
        Our antifuse-based FPGAs include the Axcelerator, eX, SX-A, SX, MX, and legacy families, all of which are nonvolatile, secure, reliable, live at power-up, single-chip solutions. Our antifuse FPGA devices span six process generations, with each offering higher performance, lower power consumption, and improved economies of scale.
  Axcelerator
        The Axcelerator family of FPGAs, which was first shipped for revenue in 2002, consists of five devices: the 125,000-gate AX125; the 250,000-gate AX250; the 500,000-gate AX500; the 1,000,000-gate AX1000; and the 2,000,000-gate AX2000. Manufactured on a 0.15-micron, seven-layer metal antifuse process at UMC, the family can be ordered in approximately 204 speed, package, and temperature variations. The Axcelerator family was targeted at high-speed communications and bridging applications and designed to deliver high performance, logic utilization, and design security with low power consumption.
  eX
        The eX family of FPGAs, which was first shipped for revenue in 2001, consists of three devices: the 3,000-gate eX64; the 6,000-gate eX128; and the 12,000-gate eX256. Manufactured on a 0.25-micron antifuse process at UMC, the family can be ordered in approximately 66 speed, package, and temperature variations. The eX family was designed for the e-appliance market of internet-related consumer electronics and includes a sleep mode to conserve battery power. eX devices also provide a small form factor, high design security, and a straightforward design process. We market the eX family as high-performance single-chip programmable replacements for low-capacity ASICs.
  SX-A and SX
        The SX-A family of FPGAs, which was first shipped for revenue in 1999, consists of four products: the 12,000-gate A54SX08A; the 24,000-gate A54SX16A; the 48,000-gate A54SX32A; and the 108,000-gate A54SX72A. Manufactured on a 0.22-micron antifuse process at UMC and on a 0.25-micron antifuse process at Matsushita, the family can be ordered in approximately 253 speed, package, and temperature variations.
 
        The SX family of FPGAs, which was first shipped for revenue in 1998, consists of four products: the 12,000-gate A54SX08; the 24,000-gate A54SX16 and A54SX16P; and the 48,000-gate A54SX32. Manufactured on a 0.35-micron antifuse process at Chartered, the family can be ordered in approximately 200 speed, package, and temperature variations.
 
        SX was the first family to be built on our fine-grained, “sea of modules” metal-to-metal architecture. We market the SX-A and SX families as programmable devices with ASIC-like speed, power consumption, and pricing in volume production. In addition, the SX-A family offers I/ O capabilities that provide full support for “hot-swapping.” Hot swapping allows system boards to be exchanged while systems are running, a capability important to many portable, consumer, networking, telecommunication, and fault-tolerant computing applications.
  MX
        The MX family of FPGAs, which was first shipped for revenue in 1997, consists of six products: the 3,000-gate A40MX02; the 6,000-gate A40MX04; the 14,000-gate A42MX09; the 24,000-gate A42MX16; the 36,000-gate A42MX24; and the 54,000-gate A42MX36. Manufactured on 0.45-micron antifuse processes at Chartered and Winbond, the family can be ordered in approximately 330 speed, package, and temperature variations. We market the MX family as a line of low-cost, single-chip, mixed-voltage programmable ASICs for 5.0-volt applications.

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  Legacy Products
        The MX family incorporates the best features of our legacy FPGAs and over time should replace those earlier products in new 5.0-volt commercial designs. Legacy products include the DX, XL, ACT 3, ACT 2, and ACT 1 families.
  DX and XL
        The 3200DX family of FPGAs, which was first shipped for revenue in 1995, consists of five products: the 12,000-gate A3265DX; the 20,000-gate A32100DX; the 24,000-gate A32140DX; the 36,000-gate A32200DX; and the 52,000-gate A32300DX. Manufactured on a 0.6-micron antifuse process at Chartered, the family can be ordered in approximately 171 speed, package, and temperature variations.
 
        The 1200XL family of FPGAs, which was first shipped for revenue in 1995, consists of three products: the 6,000-gate A1225XL; the 9,000-gate A1240XL; and the 16,000-gate A1280XL. Manufactured on a 0.6-micron antifuse process at Chartered, the family can be ordered in approximately 126 speed, package, and temperature variations.
 
        The DX and XL families were designed to integrate system logic previously implemented in multiple programmable logic circuits. The DX family also offers fast dual-port SRAM, which is typically used for high-speed buffering.
  ACT 3
        The ACT 3 family of FPGAs, which was first shipped for revenue in 1993, consists of five products: the 3,000-gate A1415; the 6,000-gate A1425; the 9,000-gate A1440; the 11,000-gate A1460; and the 20,000-gate A14100. Manufactured on a 0.6-micron antifuse process at Chartered and a 0.8-micron antifuse process at Winbond, the family can be ordered in approximately 189 speed, package, and temperature variations. The family was designed for applications requiring high speed and a high number of I/Os.
  ACT 2
        The ACT 2 family of FPGAs, which was first shipped for revenue in 1991, consists of three products: the 6,000-gate A1225; the 9,000-gate A1240; and the 16,000-gate A1280. Manufactured on 1.0- and 0.9-micron antifuse processes at Matsushita, the family can be ordered in approximately 73 speed, package, and temperature variations. ACT 2 was our second-generation FPGA family and featured a two-module architecture optimized for combinatorial and sequential logic designs.
  ACT 1
        The ACT 1 family of FPGAs, which was first shipped for revenue in 1988, consists of two products: the 2,000-gate A1010 and the 4,000-gate A1020. Manufactured on 1.0- and 0.9-micron antifuse processes at Matsushita, the family can be ordered in approximately 95 speed, package, and temperature variations. ACT 1 was the original family of antifuse FPGAs.
  HiRel FPGAs
        Our HiRel FPGAs include automotive products, which are offered in plastic packages; military/avionics (Mil/Av) products, which are offered in plastic or ceramic (hermetic) packages; and radiation tolerant (Rad Tolerant) and radiation hardened (Rad Hard) products, which are offered in hermetic packages. We believe that we are the leading supplier of high reliability FPGAs. Our FPGAs have been designed into numerous military and aerospace applications, including command and data handling, attitude reference and control, communication payload, and scientific instrument interfaces. Our space-qualified FPGAs have been on board more than 100 launches and accepted for flight-unit applications on more than 300 satellites.

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  Automotive
        To address the rapidly growing and cost-sensitive automotive electronics market, we introduced in 2003 an automotive line of FPGAs covering a wide range of densities, voltages, and features. We offer extended automotive temperature versions of all members of our eX, SX-A, and MX antifuse families. On February 9, 2004, we announced the availability of our Flash-based ProASIC PLUS FPGAs, with densities up to 1,000,000 gates, in extended automotive temperature range versions. Our ProASIC PLUS automotive devices are suitable for telematics and other in-cab applications that require flexible, high-reliability solutions, including navigation, speech recognition, passenger control and comfort systems, intelligent occupant sensors, and heads-up displays. Due to the tamper-resistant nature of our Flash and antifuse technologies, our automotive line is also appropriate for occupant safety systems, electronic engine control modules, and other under-the-hood powertrain management systems. We market our automotive line as the FPGA industry’s broadest automotive product portfolio that addresses the unique needs of vehicle designers.
  Mil/Av
        Our Mil/Av devices are offered in three packaging and screening options: military-temperature plastic (MTP), military-temperature hermetic (MTH), and MIL-STD 883 Class B hermetic (Class B). MTP devices are offered in plastic packages and screened to military temperature specifications. MTH devices are offered in hermetic packages and screened to military temperature specifications. Class B devices are offered in hermetic packages and screened to MIL-STD 883 Class B specifications.
 
        All members of our antifuse FPGAs families (except for the AX125 and the three eX devices) are offered in MTP packaging and screening. We have received complete Qualified Manufacturers Listing (QML) certification for the full line of MTP antifuse FPGAs, which can be integrated into design applications that would otherwise require higher-cost ceramic-packaged devices. The QML plastic certification also permits customers to integrate commercial and military production without compromising quality or reliability.
 
        We offer 22 devices in MTH or Class B packaging and screening: the 2,000-gate A1010B; the 4,000-gate A1020B; the 6,000-gate A1425A; the 9,000-gate A1240A; the 11,000-gate A1460A; the 16,000-gate A1280A and A1280XL; the 20,000-gate A14100A and A32100DX; the 24,000-gate A54SX16; the 36,000-gate A32200DX; the 48,000-gate A54SX32 and A54SX32A; the 54,000-gate A42MX36; the 108,000-gate A54SX72A; the 250,000-gate AX250; the 300,000-gate APA300; the 500,000-gate AX500; the 600,000-gate APA600; the 1,000,000-gate APA1000 and AX1000; and the 2,000,000-gate AX2000. Hermetic-packaged Mil/ Av devices are appropriate for avionics, munitions, harsh industrial environments, and ground-based equipment when radiation survivability is not critical.
  Rad Tolerant
        On February 11, 2004, we announced the introduction of the RTAX250S FPGA, extending our RTAX-S family to three devices. On July 6, 2004, we announced the availability of engineering samples for all three devices, which have features optimized for space applications, including hardened registers that offer practical immunity to single-event upsets and usable error-corrected onboard random access memory (RAM). We believe that these features, in combination with proven reliability at extreme temperatures, live-at-power-up functionality on a single chip, and an expanded set of I/O standards, enable the RTAX-S family to meet the density, performance, and radiation-resistance requirements of many satellite bus and payload applications, including command and data handling, attitude and orbit control, and spacecraft power and environmental controls. We market the RTAX-S family as a radiation-tolerant alternative to hard-wired ASICs for bus and payload applications in low-, mid-, and geosynchronous-earth orbit satellites.
 
        On June 21, 2004, we announced the availability of our radiation-tolerant RTSX-S family of FPGAs from UMC’s wafer foundry. The new family provided customers with an alternate source for

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  our 0.25-micron devices, which have been widely adopted for radiation-intensive space-flight applications. To help assure that the devices from UMC meet the stringent requirements of space-flight systems, the parts have been subjected to numerous qualification, reliability, and radiation tests. See the Risk Factors set forth at the end of Item 1 of this Annual Report on Form 10-K for more information.
 
        Our Rad Tolerant family of FPGAs consists of ten products: the 4,000-gate RT1020; the 6,000-gate RT1425A; the 11,000-gate RT1460A; the 16,000-gate RT1280A; the 20,000-gate RT14100A; the 48,000-gate RT54SX32S; the 108,000-gate RT54SX72S; the 250,000-gate RTAX250S; the 1,000,000-gate RTAX1000S; and the 2,000,000-gate RTAX2000S. These Rad Tolerant FPGAs are offered with Class B or Class E (extended flow/space) qualification and total dose radiation test reports are provided on each segregated lot of devices. The RT54SX32S is also offered in a chip carrier land grid package small enough to enable the assembly of tested and programmed FPGAs into multi-chip modules for space applications.
 
        Rad Tolerant FPGAs are designed to meet the logic requirements for all types of military, commercial, and civilian space applications, including satellites, launch vehicles, and deep-space probes. They provide cost-effective alternatives to radiation-hardened devices when radiation survivability is important but not essential. In addition, Rad Tolerant devices have design- and pin-compatible commercial versions for prototyping.

  Rad Hard
        The Rad Hard family of FPGAs, which was first shipped for revenue in 1996, consists of two products: the 4,000-gate RH1020 and the 16,000-gate RH1280. The two products were manufactured on a radiation-hardened 0.8-micron antifuse process by BAE and are shipped with full QML Class V screening. The Rad Hard family was designed to meet the demands of applications requiring guaranteed levels of radiation survivability. Rad Hard FPGAs are appropriate for military and civilian satellites, deep space probes, planetary missions, and other applications in which radiation survivability is essential.
Supporting Products and Services
      In support of our FPGAs, we offer IP products; design and development software; programming hardware; debugging tool kits and demonstration boards; a Web-based Resource Center; and system design, online prototyping, and volume programming services.
  IP Products
        IP products allow system designers to leverage proven, pre-built IP cores optimized for our devices, which streamlines their design process, shortens time to market, and reduces design cost and risk. Targeting the aerospace, automotive, communications, consumer, industrial, and military markets, our IP cores complement the nonvolatile, secure, and low-power characteristics of our Flash and antifuse FPGAs. Our offering includes approximately 34 bus interface, 23 communications, 12 data security, five memory control, 16 multimedia and error correction, and 27 processor and peripheral IP cores. The IP cores are available in evaluation, register transfer language (RTL), or netlist formats.
 
        Data security is an integral part of our leading solutions for secure semiconductor devices. We have industry-standard data encryption IP cores and partnerships that meet the stringent needs of the security marketplace. Our security IP portfolio includes Data Encryption Standard (DES), Triple DES, and AES cores designed and targeted to work with our Flash and antifuse FPGAs. We are partnering with experts in the area of data security who offer their services to integrate these cores into our devices.
 
        On January 24, 2005, we announced the availability of more than 90 IP cores to support our new ProASIC3 and ProASIC3E device families. The ported cores leverage the advanced features of the ProASIC3/E devices, including enhanced I/O and memory. Delivering a broad IP library at the time of

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  product introduction allows our customers to begin designing complete systems with the ProASIC3/ E devices.

  DirectCores
        We design, verify, support, and maintain DirectCore IP products, which are optimized for use with our devices. These cores come complete as pre-implemented, synthesizable building blocks that have been thoroughly tested and verified in our FPGAs. A number of them are certified for operation to a standard, such as PCI or MIL-STD-1553. Approximately 23 DirectCore IP cores are available from us or through our distributors or sales representatives. We offer evaluation, single-use, and unlimited-use licenses for our IP cores, which are delivered with full documentation and support. On October 25, 2004, we announced a new Web-based IP evaluation program that allows customers to access and download free evaluation versions of DirectCore IP products from our Web site.
  CompanionCores
        Our CompanionCore Alliance Program is a cooperative effort between us and independent third-party IP core developers to produce and provide a wide selection of proven, pre-built synthesizable semiconductor IP cores optimized for use in our FPGAs and compatible with our suite of design and development tools. These CompanionCore IP cores are licensed, supported, and maintained directly by the partners.
 
        On February 9, 2004, we announced that a new CompanionCore Alliance Program partner, Intelliga Integrated Design, had optimized its local interconnect network and controller area network (CAN) cores to support our automotive- and industrial-temperature grade devices. We now offer more than 30 IP cores specifically designed and optimized for in-cab and under-the-hood automotive applications.
 
        Approximately 92 CompanionCore IP cores are available from our CompanionCore Alliance Program partners, including ten from 4i2i Communications Ltd; six from CAST, Inc.; five from Eureka Technology Inc.; nine from Helion Technology Ltd.; two from Intelliga Integrated Design; 26 from Inicore, Inc. (Inicore); 25 from Memec Design; and nine from MorethanIP GmbH. A number of licensing models are available from our CompanionCore Alliance partners, including single-use, multiple-use, and evaluation licenses.
  Design and Development Software
        Our software strategy is to provide our customers with all of the tools necessary for them to define, verify, and implement their designs in our FPGAs by combining tools from leading EDA vendors with our custom developed tools into a single FPGA integrated design environment (IDE). We also work closely with our EDA partners to ensure that new releases of our custom developed tools are supported in their software and design flows. Our EDA partners include Aldec, Inc.; Cadence Design Systems, Inc. (Cadence); Celoxica Limited; Magma Design Automation, Inc. (Magma); Mentor Graphics Corporation (Mentor Graphics); SynaptiCAD, Inc. (SynaptiCAD); Synopsys, Inc. (Synopsys); and Synplicity, Inc. (Synplicity).
  Libero
        Our Libero IDE is a comprehensive FPGA design and development software suite that supports all of our Flash and antifuse FPGA families and provides users with start-to-finish design flow guidance and control. The Libero IDE provides complete tool interoperability; a streamlined design flow; management of all design, run, and log files; seamless passing of all design data between tools from schematic/HDL entry through place-and-route; and device programming. The entire design can be created and managed through the Libero IDE’s user interface, which provides a step-by-step graphical illustration of the design flow process.
 
        Running on Microsoft Windows operating systems, the Libero IDE is available in several editions. The Libero IDE Silver edition, which we offer for free, contains our Designer physical

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  design implementation tool suite and a project manager as well as Actel Edition (AE) versions of the following third party tools: Mentor Graphics’ ViewDraw AE schematic capture; SynaptiCAD’s Waveformer Lite AE testbench generator; and Synplicity’s Synplify AE synthesis tools. The Libero IDE Gold edition also includes Mentor Graphics’ ModelSim AE simulator. The Libero IDE Silver and Gold editions support our FPGAs through 300,000 gates as well as the new A3PE600 ProASIC3E device. The most comprehensive edition, Libero IDE Platinum, also includes Magma’s PALACE AE physical synthesis tools and supports all of our currently released devices.
 
        On January 24, 2005, we announced that our Libero 6.1 IDE provides complete support for our new Flash-based ProASIC3 and ProASIC3E devices. The software is optimized for the architectural features of the ProASIC3 and ProASIC3E devices, including the on-chip FlashROM, which can be programmed independently of the FPGA core. In addition, the Libero 6.1 IDE includes Synplicity’s Synplify Pro AE, which offers many features beyond Synplify AE to improve device performance and design time. Synplify Pro AE requires a separate license and can be used with any Libero IDE edition.

  Designer
        For customers who want to us their own design and verification tools, our Designer software is available as a standalone interactive design implementation tool suite. It is compatible with the most popular design entry and verification packages, including those from Cadence, Mentor Graphics, Synopsys, and Synplicity. The Designer software includes all of the tools required for a complete physical design implementation system, from importing a netlist through place-and-route, timing and physical constraints entry, timing and power analysis, and programming file generation. In addition to a step-by-step design flow, the tool suite also provides access to many features that streamline or facilitate completion of the design, including floorplanning tools. Running on Microsoft Windows, Sun Solaris, or Red Hat Linux operating systems, the Designer software is offered in a Platinum edition that supports all of our devices, including the new ProASIC3/ E Flash families, and a free Gold edition that supports all devices up to 300,000 gates as well as the smallest member of each family.
  Programming Hardware
        Programmers execute instructions included in files obtained from the Designer tool suite to program our FPGAs. In addition to programmers, we offer adapter modules, which must be used with the Silicon Sculptor II programmer; surface-mount sockets and prototyping adapter boards, which make it easier to prototype designs using our antifuse FPGAs; and accessories. In addition, we support programmers offered by BP Microsystems, Inc.
  Silicon Sculptor II
        All of our FPGAs can be programmed by the Silicon Sculptor II programmer. The Silicon Sculptor II programmer is a compact, single-device programmer with stand-alone software for the personal computer (PC). Silicon Sculptor II was designed to allow concurrent programming of multiple units from the same PC. The Silicon Sculptor II is manufactured for us by BP Microsystems.
  FlashPro
        Our family of FlashPro device programmers provides ISP support for the ProASIC3/E, ProASIC PLUS, and ProASIC FPGA families. The ISP feature permits devices to be programmed after they are mounted on a printed circuit board. Running on Microsoft Windows operating systems, all FlashPro programmers permit multiple Flash devices to be programmed in a Joint Test Action Group (JTAG) chain. Since any nonprogrammable devices in the JTAG chain are automatically skipped, a single JTAG chain can be used for all JTAG devices, which increases flexibility for post-production and field upgrades. All FlashPro programmers also use industry-standard test and programming language files, so there is no delay between product release and

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  programming support. In addition, the same graphical user interface (GUI) is used for all FlashPro series programmers, which are manufactured for us by First Silicon Solutions, Inc. (FS2).

  FlashPro3
        The FlashPro3 programmer is targeted at the ProASIC3 and ProASIC3E families, our latest generation of Flash devices. This newest programmer offers high-speed performance through the use of Universal Serial Bus (USB) 2.0 and is compliant for full use of the 480 Mbps bandwidth. The FlashPro3 programmer can connect to any PC with a USB port and can operate either with USB 1.1 (full-speed) or USB 2.0 (both high-speed and full-speed modes). By using USB hubs, multiple FlashPro3 programmers can be connected to a single PC, enabling the end-user to set up a small-scale production environment with concurrent ISP occurring across multiple boards.
  FlashPro Lite
        The FlashPro Lite programmer is used exclusively with the ProASIC PLUS family and connects to a PC by means of the parallel port. A replaceable programming cable connects the FlashPro Lite to the target board, which powers the programmer. This portable, low-cost programmer permits customers to program ProASIC PLUS devices at almost any location using a laptop computer.
  FlashPro
        The FlashPro programmer can be used with both the ProASIC PLUS and Pro ASIC families. The choice of USB port or parallel port is made in the FlashPro software GUI. The FlashPro programmer has its own power supply, so the target board does not need to be powered up to support ISP. Like FlashPro3 programmers, multiple FlashPro programmers can be connected by USB hubs to a single PC.
  Debugging Tool Kits and Demonstration Boards
        Our design diagnostics and debugging tool kits and accessories permit designers to improve productivity and reduce time to market by removing the guesswork typically associated with the process of system verification. We offer different tools kits for our Flash and antifuse products. Our development kits and demonstration boards and accessories permit users to evaluate particular products.
  Design Diagnostics and Debugging Tool Kits
        Our antifuse FPGAs contain internal circuitry that provides built-in access to every node in a design, enabling real-time observation and analysis of a device’s internal logic nodes. Silicon Explorer II is an integrated verification and logic analysis tool kit for the PC that accesses the probe circuitry. Silicon Explorer II Lite is a less expensive version of Silicon Explorer II for customers who have a logic analysis system.
 
        The FS2 CLAM (Configurable Logic Analyzer Module) System provides logic analyzer capabilities for our Flash-based FPGAs. Embedded in our Flash devices, the CLAM System can simultaneously trace and trigger on up to 256 channels from an available 1024 predefined signals in the FPGA. The FS2 CLAM hardware probe is offered by FS2.
  Development Kits and Demonstration Boards
        On November 1, 2004, we announced the availability of a starter kit for our antifuse-based Axcelerator FPGA. Available in both a basic evaluation and an advanced prototyping version, the starter kit features an evaluation board with an Axcelerator device, the Libero Gold IDE, tutorials, and support documentation. In addition, users can submit custom Axcelerator designs and receive free, programmed samples through our new Online Prototyping Service. The advanced prototyping kit includes a programming socket module adapter and a six-month loaner program certificate for our Silicon Sculptor II programmer.

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        During 2004, we also announced the availability of an enhanced starter kit for our Flash-based ProASIC PLUS FPGAs. In addition, we offer ProASIC PLUS and Axcelerator evaluation platforms; a ProASIC PLUS ISP demonstration evaluation platform; CorePCI, Core1553, and CorePCIX evaluation boards; and Core1553BRM, Core 429, and Platform8051 development kits.
 
        On January 24, 2005, we announced a starter kit to support our new Flash-based ProASIC3 and ProASIC3E FPGA families. Expected to be available in the second quarter of 2005, the starter kit includes an evaluation board with a ProASIC3E device, the Libero Gold 6.1 IDE, a FlashPro3 programmer, USB cable, programming cable, power supply, tutorials, and support documentation.
  Resource Center
        Launched in 2002, our Web-based Resource Center is intended to provide information on a variety of industry-wide issues related to the continued displacement of hard-wired ASICs by FPGAs. Targeted at FPGA and ASIC designers and system architects, the website includes technology tutorials, frequently-asked questions, market overviews, application notes, white papers, extensive glossaries of industry terms, and links to other relevant articles and third-party resources. Additional topics will be added as appropriate.
  Power
        The Power Resource Center provides design engineers with information about the power characteristics of FPGAs as well as tools to estimate and design for low-power applications. The four basic power components that need to be examined when evaluating the power consumption of different FPGA technologies are static power, dynamic power, in-rush (or power-up) power, and configuration power. While the three primary FPGA technologies differ widely in their power consumption characteristics, only Flash and antifuse are (like ASICs) true live-at-power-up technologies that do not exhibit power-up current spikes.
  Packaging
        Our Packaging Resource Center contains technical package details, discussions on the latest environmental issues, related industry articles and links, and design implementation tools. This portal was created as the primary source for technical information about our FPGA packaging solutions, but also serves as an industry reference for IC packaging issues and topics that impact the FPGA design community. Our objective is to consistently deliver packages that provide the necessary mechanical and environmental protection to ensure consistent reliability and performance. On March 22, 2004, we announced the availability of “green” and lead-free packaging options for all of our antifuse- and Flash-based FPGA product families.
  Soft/Firm Errors
        On April 19, 2004, we announced the results of a comprehensive third-party investigation verifying that FPGAs based on Flash and antifuse technologies are immune to configuration upsets caused by high-energy neutrons naturally generated in the earth’s atmosphere. The study also determined that SRAM-based FPGAs are vulnerable to neutron-induced configuration loss not only under high-altitude conditions, as traditionally believed, but also in ground-based applications, including automotive, medical, telecommunications, data storage, and communications. A neutron-induced functional failure in an SRAM-based FPGA can result in a complete system failure. The tests followed the industry-prescribed test methodology and were conducted at the Los Alamos National Laboratory in New Mexico. The results of the independent study are documented in a report (“Radiation Results of SER [Soft-Error Rate] Test of Actel, Xilinx, and Altera FPGA Instances”) that is available in our Soft/ Firm Errors Resource Center. This website also contains technology tutorials, white papers, a comprehensive glossary, and relevant links.

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  Embedded Design Security
        Secure systems and ultimately the underlying silicon technologies are becoming increasingly vital in protecting valuable IP. Without taking the necessary precautions, corporations may experience major security breaches, resulting in design theft and other malicious damage. But assessing security risks and the potential associated loss can be difficult. The purpose of our Embedded Design Security Resource Center is to provide semiconductor and design professionals with a database of information about these vulnerabilities. Organizations concerned with security can now access detailed information and links about design security, security countermeasures, affected systems, and solutions to defeat unfriendly attacks. Our solution is a range of nonvolatile, single-chip FPGAs that offer practically unbreakable design security.
  Services
        In addition to the system design, online protyping, and volume programming services that we offer, our Solution Partners Program provides customers with access to a broad range of design resources, application expertise, and products from strategic partners worldwide that complement our products and services.
  Protocol Design Services
        With our acquisition of the Protocol Design Services Group from GateField Corporation (GateField) in August 1998, we became the first FPGA provider to offer system-level design expertise. The Design Services organization operates out of a secure facility located in Mt. Arlington, New Jersey, and is certified to handle government, military, and proprietary designs. The organization provides varying levels of design services to customers, including FPGA, ASIC, and system design; software development and implementation; and development of prototypes, first articles, and production units. Our Protocol Design Services team has participated in the development of a wide range of applications, including optical networks, routers, cellular phones, digital cameras, embedded DSP systems, automotive electronics, navigation systems, compilers, custom processors, and avionics systems.
  Online Prototyping
        On November 1, 2004, we announced our new Online Protoyping Service, a Web-based sample delivery program. Intended to make it easy for designers to evaluate and prototype with no up-front investment, the new program allows them to request free samples of programmed FPGAs through a Web-based interface. The program currently supports our antifuse-based Axcelerator, SX-A, eX and MX families.
  Volume Programming
        We offer high-volume programming for all device and package types in our programming center, which is located at our factory in Mountain View, California. Our facility is ISO 9001:2000, PURE, QML, and STACK certified (see “BUSINESS — Manufacturing and Assembly). As part of the programming process, we offer ink marking for customer-specific marking needs. Volume programming charges are based on the type of device and quantity per order.
  Solution Partners
        On July 12, 2004, we announced the addition of five new members to our Solution Partners Program, which is a cooperative effort between us and third-party providers of FPGA design services, embedded software, and hardware products. The Solution Partners Program is intended to help accelerate the time to market for designs based on our devices by enabling designers to leverage FPGA design expertise and products tailored specifically for our devices. Solution Partner products and services are available directly from the partners, who are responsible for pricing, warranty, and technical support. Joining the Program were Barco-Silex, Capitol Automation, Comit Systems, Intrinsix Corporation, and Silicon Interfaces, all of whom develop customer-specific electronic

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  products for the wired and wireless communications and networking markets. On February 14, 2005, we announced that four more new partners had joined the Solution Partners Program: Altium Limited, Data I/O Corporation, Device Engineering Inc., and GAO Research Inc. The Program currently has 22 members.

Markets and Applications
      FPGAs can be used in a broad range of applications across nearly all electronic system market segments. Most customers use FPGAs in low to medium volumes in the final production form of their products. Some high-volume electronic system manufacturers use FPGAs as a prototyping vehicle and convert production to lower-cost hard-wired ASICs, while others with time-to-market constraints use FPGAs in the initial production and then convert to lower-cost ASICs. For electronic systems that have shortened product life cycles, system manufacturers are finding that the cost difference between hard-wired ASICs and FPGAs begins to shrink and that manufacturing flexibility becomes a more important element in the semiconductor decision process. In addition, as new chip interface standards emerge (which also puts a premium on flexibility), more high-volume electronic system manufacturers are electing to retain FPGAs in volume production.
Military and Aerospace
      In 2004, military and aerospace applications accounted for an estimated 36% of our net revenues. Rigorous quality and reliability standards and the need for design security are the primary product characteristics of the military and aerospace market. Our FPGAs have high quality and reliability and are almost impossible to copy or reverse engineer, making them appropriate for many military and aerospace applications. We believe that we are the world’s leading supplier of military and aerospace PLDs. Our customers in the military and aerospace market include: BAE, Boeing, EADS, Hamilton Sundstrand, Honeywell, ITT, Lockheed Martin, Northrop, Raytheon, and Rockwell.
      Our antifuse FPGAs are especially well suited for space applications due to the high radiation tolerance of the antifuse and our FPGA architecture. Thousands of our FPGAs have performed flight-critical functions aboard manned space vehicles, earth observation satellites,