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Corporate overview
 We own and operate semiconductor manufacturing sites in North America, Asia, Japan and Europe. These facilities include high-volume wafer fabrication plants where we manufacture wafers, each containing tens to thousands of integrated circuits, and assembly/test sites where the wafers are cut into individual chips, tested for basic functionality, encapsulated in some type of packaging, and then tested to ensure final product specifications.
To supplement this internal capacity, we also use outside suppliers, or foundries, and subcontractors. We use foundries strategically for our advanced CMOS digital requirements, which require assets that are expensive and have a relatively short-lived life. In 2012, we sourced from external foundries about 20 percent of our total wafers, which included about 75 percent of our advanced CMOS logic chips. We expect our use of external foundries to shrink as advanced digital chips become a smaller portion of our product portfolio, particularly as the legacy wireless business winds down, and Analog and Embedded Processing chips become an even greater percentage of our total revenue. However, we still have advanced digital products, such as the chips we sell into communications infrastructure, and will continue to use foundries for these types of products.
Manufacturing is a big part of what allows Analog and Embedded Processing to generate high financial returns. While the manufacturing process technologies that allow our designers to create innovative chips are highly differentiated, the factories themselves can last for decades. This allows us to get significantly longer usage from our capacity investments. Contrast that with an advanced CMOS digital factory, which might only have a shelf life of two to three years before it requires upgrading to the next-generation of process technology.
The longer lives of our factories dramatically increases our flexibility around when we buy these assets and when we put them into production. For example, over the past several years, we've been able to significantly expand our manufacturing footprint by opportunistically acquiring capacity at just a fraction of its original cost. Consequently, we have no problem buying the asset ahead of demand and our needs. These actions have provided us with manufacturing capacity to support annual revenue in excess of $18 billion.
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