false2024Q30000002488December 28xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesxbrli:pureamd:joint_venture00000024882023-12-312024-09-2800000024882024-10-2300000024882024-06-302024-09-2800000024882023-07-022023-09-3000000024882023-01-012023-09-3000000024882024-09-2800000024882023-12-3000000024882022-12-3100000024882023-09-300000002488us-gaap:CommonStockMember2024-06-290000002488us-gaap:CommonStockMember2023-07-010000002488us-gaap:CommonStockMember2023-12-300000002488us-gaap:CommonStockMember2022-12-310000002488us-gaap:CommonStockMember2024-06-302024-09-280000002488us-gaap:CommonStockMember2023-07-022023-09-300000002488us-gaap:CommonStockMember2023-12-312024-09-280000002488us-gaap:CommonStockMember2023-01-012023-09-300000002488us-gaap:CommonStockMember2024-09-280000002488us-gaap:CommonStockMember2023-09-300000002488us-gaap:AdditionalPaidInCapitalMember2024-06-290000002488us-gaap:AdditionalPaidInCapitalMember2023-07-010000002488us-gaap:AdditionalPaidInCapitalMember2023-12-300000002488us-gaap:AdditionalPaidInCapitalMember2022-12-310000002488us-gaap:AdditionalPaidInCapitalMember2024-06-302024-09-280000002488us-gaap:AdditionalPaidInCapitalMember2023-07-022023-09-300000002488us-gaap:AdditionalPaidInCapitalMember2023-12-312024-09-280000002488us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300000002488us-gaap:AdditionalPaidInCapitalMember2024-09-280000002488us-gaap:AdditionalPaidInCapitalMember2023-09-300000002488us-gaap:TreasuryStockCommonMember2024-06-290000002488us-gaap:TreasuryStockCommonMember2023-07-010000002488us-gaap:TreasuryStockCommonMember2023-12-300000002488us-gaap:TreasuryStockCommonMember2022-12-310000002488us-gaap:TreasuryStockCommonMember2024-06-302024-09-280000002488us-gaap:TreasuryStockCommonMember2023-07-022023-09-300000002488us-gaap:TreasuryStockCommonMember2023-12-312024-09-280000002488us-gaap:TreasuryStockCommonMember2023-01-012023-09-300000002488us-gaap:TreasuryStockCommonMember2024-09-280000002488us-gaap:TreasuryStockCommonMember2023-09-300000002488us-gaap:RetainedEarningsMember2024-06-290000002488us-gaap:RetainedEarningsMember2023-07-010000002488us-gaap:RetainedEarningsMember2023-12-300000002488us-gaap:RetainedEarningsMember2022-12-310000002488us-gaap:RetainedEarningsMember2024-06-302024-09-280000002488us-gaap:RetainedEarningsMember2023-07-022023-09-300000002488us-gaap:RetainedEarningsMember2023-12-312024-09-280000002488us-gaap:RetainedEarningsMember2023-01-012023-09-300000002488us-gaap:RetainedEarningsMember2024-09-280000002488us-gaap:RetainedEarningsMember2023-09-300000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-290000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-010000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-300000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-302024-09-280000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-022023-09-300000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-312024-09-280000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-280000002488us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-3000000024882022-03-262024-09-280000002488us-gaap:TransferredOverTimeMember2024-06-302024-09-280000002488us-gaap:TransferredOverTimeMember2023-12-312024-09-280000002488us-gaap:TransferredOverTimeMember2023-07-022023-09-300000002488us-gaap:TransferredOverTimeMember2023-01-012023-09-300000002488amd:ClientMember2024-06-302024-09-280000002488amd:ClientMember2023-07-022023-09-300000002488amd:ClientMember2023-12-312024-09-280000002488amd:ClientMember2023-01-012023-09-300000002488amd:GamingMember2024-06-302024-09-280000002488amd:GamingMember2023-07-022023-09-300000002488amd:GamingMember2023-12-312024-09-280000002488amd:GamingMember2023-01-012023-09-300000002488amd:DataCenterMember2024-06-302024-09-280000002488amd:DataCenterMember2023-07-022023-09-300000002488amd:DataCenterMember2023-12-312024-09-280000002488amd:DataCenterMember2023-01-012023-09-300000002488amd:EmbeddedMember2024-06-302024-09-280000002488amd:EmbeddedMember2023-07-022023-09-300000002488amd:EmbeddedMember2023-12-312024-09-280000002488amd:EmbeddedMember2023-01-012023-09-300000002488us-gaap:OperatingSegmentsMemberamd:ClientMember2024-06-302024-09-280000002488us-gaap:OperatingSegmentsMemberamd:ClientMember2023-07-022023-09-300000002488us-gaap:OperatingSegmentsMemberamd:ClientMember2023-12-312024-09-280000002488us-gaap:OperatingSegmentsMemberamd:ClientMember2023-01-012023-09-300000002488us-gaap:OperatingSegmentsMemberamd:GamingMember2024-06-302024-09-280000002488us-gaap:OperatingSegmentsMemberamd:GamingMember2023-07-022023-09-300000002488us-gaap:OperatingSegmentsMemberamd:GamingMember2023-12-312024-09-280000002488us-gaap:OperatingSegmentsMemberamd:GamingMember2023-01-012023-09-300000002488us-gaap:OperatingSegmentsMemberamd:DataCenterMember2024-06-302024-09-280000002488us-gaap:OperatingSegmentsMemberamd:DataCenterMember2023-07-022023-09-300000002488us-gaap:OperatingSegmentsMemberamd:DataCenterMember2023-12-312024-09-280000002488us-gaap:OperatingSegmentsMemberamd:DataCenterMember2023-01-012023-09-300000002488us-gaap:OperatingSegmentsMemberamd:EmbeddedMember2024-06-302024-09-280000002488us-gaap:OperatingSegmentsMemberamd:EmbeddedMember2023-07-022023-09-300000002488us-gaap:OperatingSegmentsMemberamd:EmbeddedMember2023-12-312024-09-280000002488us-gaap:OperatingSegmentsMemberamd:EmbeddedMember2023-01-012023-09-300000002488us-gaap:MaterialReconcilingItemsMember2024-06-302024-09-280000002488us-gaap:MaterialReconcilingItemsMember2023-07-022023-09-300000002488us-gaap:MaterialReconcilingItemsMember2023-12-312024-09-280000002488us-gaap:MaterialReconcilingItemsMember2023-01-012023-09-300000002488us-gaap:CorporateNonSegmentMember2024-06-302024-09-280000002488us-gaap:CorporateNonSegmentMember2023-12-312024-09-280000002488us-gaap:CorporateNonSegmentMember2023-07-022023-09-300000002488us-gaap:CorporateNonSegmentMember2023-01-012023-09-300000002488amd:SiloAIMember2023-12-312024-09-280000002488amd:SiloAIMember2024-09-280000002488amd:ZTSystemsMember2023-12-312024-09-280000002488amd:ZTSystemsMember2024-09-280000002488amd:DataCenterMember2023-12-300000002488amd:DataCenterMember2024-09-280000002488amd:ClientMember2023-12-300000002488amd:ClientMember2024-09-280000002488amd:GamingMember2023-12-300000002488amd:GamingMember2024-09-280000002488amd:EmbeddedMember2023-12-300000002488amd:EmbeddedMember2024-09-280000002488us-gaap:DevelopedTechnologyRightsMember2024-09-280000002488us-gaap:DevelopedTechnologyRightsMember2023-12-300000002488us-gaap:CustomerRelationshipsMember2024-09-280000002488us-gaap:CustomerRelationshipsMember2023-12-300000002488us-gaap:CustomerContractsMember2024-09-280000002488us-gaap:CustomerContractsMember2023-12-300000002488us-gaap:TradeNamesMember2024-09-280000002488us-gaap:TradeNamesMember2023-12-300000002488us-gaap:TrademarksMember2024-09-280000002488us-gaap:TrademarksMember2023-12-300000002488us-gaap:OtherIntangibleAssetsMember2024-09-280000002488us-gaap:OtherIntangibleAssetsMember2023-12-3000000024882022-02-140000002488amd:ATMPJVMemberus-gaap:CorporateJointVentureMember2024-09-280000002488amd:ATMPJVMemberus-gaap:CorporateJointVentureMember2024-06-302024-09-280000002488amd:ATMPJVMemberus-gaap:CorporateJointVentureMember2023-12-312024-09-280000002488amd:ATMPJVMemberus-gaap:CorporateJointVentureMember2023-07-022023-09-300000002488amd:ATMPJVMemberus-gaap:CorporateJointVentureMember2023-01-012023-09-300000002488amd:ATMPJVMemberus-gaap:CorporateJointVentureMember2023-12-300000002488amd:A295SeniorNotesDue2024Memberus-gaap:SeniorNotesMember2024-09-280000002488amd:A295SeniorNotesDue2024Memberus-gaap:SeniorNotesMember2023-12-300000002488amd:A2375SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2024-09-280000002488amd:A2375SeniorNotesDue2030Memberus-gaap:SeniorNotesMember2023-12-300000002488amd:A3924SeniorNoteDue2032Memberus-gaap:SeniorNotesMember2024-09-280000002488amd:A3924SeniorNoteDue2032Memberus-gaap:SeniorNotesMember2023-12-300000002488amd:A4393SeniorNotesDue2052Memberus-gaap:SeniorNotesMember2024-09-280000002488amd:A4393SeniorNotesDue2052Memberus-gaap:SeniorNotesMember2023-12-300000002488amd:PrincipalBalanceDueMember2024-09-280000002488amd:PrincipalBalanceDueMember2023-12-300000002488amd:A295SeniorNotesDue2024Member2023-12-312024-09-280000002488amd:SecuredRevolvingCreditFacilityMemberus-gaap:RevolvingCreditFacilityMember2022-04-290000002488us-gaap:CommercialPaperMember2022-11-030000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-280000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-300000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-09-280000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-300000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentShorttermDebtSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentShorttermDebtSecuritiesMember2024-09-280000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentShorttermDebtSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentShorttermDebtSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentShorttermDebtSecuritiesMember2023-12-300000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentShorttermDebtSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-280000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-300000002488us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-09-280000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-300000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-280000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-300000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:BankTimeDepositsMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-09-280000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-300000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMember2024-09-280000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMember2023-12-300000002488us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForeignGovernmentDebtMember2023-12-300000002488us-gaap:FairValueInputsLevel1Memberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2024-09-280000002488us-gaap:FairValueInputsLevel3Memberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2024-09-280000002488us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2024-09-280000002488us-gaap:FairValueInputsLevel1Memberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2023-12-300000002488us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberamd:UsGaap_FairValueMeasurementsRecurringDefCompMember2023-12-300000002488us-gaap:FairValueInputsLevel1Member2024-09-280000002488us-gaap:FairValueInputsLevel2Member2024-09-280000002488us-gaap:FairValueInputsLevel3Member2024-09-280000002488us-gaap:FairValueMeasurementsRecurringMember2024-09-280000002488us-gaap:FairValueInputsLevel1Member2023-12-300000002488us-gaap:FairValueInputsLevel2Member2023-12-300000002488us-gaap:FairValueMeasurementsRecurringMember2023-12-300000002488us-gaap:AssetBackedSecuritiesMember2024-09-280000002488us-gaap:AssetBackedSecuritiesMember2023-12-300000002488us-gaap:CommercialPaperMember2024-09-280000002488us-gaap:CommercialPaperMember2023-12-300000002488us-gaap:MoneyMarketFundsMember2024-09-280000002488us-gaap:MoneyMarketFundsMember2023-12-300000002488us-gaap:BankTimeDepositsMember2024-09-280000002488us-gaap:BankTimeDepositsMember2023-12-300000002488us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-09-280000002488us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-300000002488us-gaap:ForeignGovernmentDebtMember2024-09-280000002488us-gaap:ForeignGovernmentDebtMember2023-12-300000002488amd:AvailableForSaleSecuritiesMaturingInFiveYearsAndLaterMember2024-09-280000002488amd:AvailableForSaleSecuritiesMaturingInFiveYearsAndLaterMember2023-12-300000002488us-gaap:ShortTermInvestmentsMember2024-09-280000002488us-gaap:ShortTermInvestmentsMember2023-12-300000002488us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-09-280000002488us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-09-280000002488us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-300000002488us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-300000002488us-gaap:ForeignExchangeContractMemberus-gaap:CashFlowHedgingMember2023-12-312024-09-280000002488us-gaap:ForeignExchangeContractMemberus-gaap:CashFlowHedgingMember2024-09-280000002488us-gaap:ForeignExchangeContractMemberus-gaap:CashFlowHedgingMember2023-12-300000002488us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2023-12-312024-09-280000002488us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2024-09-280000002488us-gaap:ForeignExchangeContractMemberus-gaap:NondesignatedMember2023-12-300000002488us-gaap:CommonStockMember2024-06-290000002488us-gaap:CommonStockMember2023-07-010000002488us-gaap:CommonStockMember2023-12-300000002488us-gaap:CommonStockMember2022-12-310000002488us-gaap:CommonStockMember2024-06-302024-09-280000002488us-gaap:CommonStockMember2023-07-022023-09-300000002488us-gaap:CommonStockMember2023-12-312024-09-280000002488us-gaap:CommonStockMember2023-01-012023-09-300000002488us-gaap:CommonStockMember2024-09-280000002488us-gaap:CommonStockMember2023-09-300000002488us-gaap:CostOfSalesMember2024-06-302024-09-280000002488us-gaap:CostOfSalesMember2023-07-022023-09-300000002488us-gaap:CostOfSalesMember2023-12-312024-09-280000002488us-gaap:CostOfSalesMember2023-01-012023-09-300000002488us-gaap:ResearchAndDevelopmentExpenseMember2024-06-302024-09-280000002488us-gaap:ResearchAndDevelopmentExpenseMember2023-07-022023-09-300000002488us-gaap:ResearchAndDevelopmentExpenseMember2023-12-312024-09-280000002488us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300000002488us-gaap:SellingGeneralAndAdministrativeExpensesMember2024-06-302024-09-280000002488us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-07-022023-09-300000002488us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-12-312024-09-280000002488us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-09-300000002488amd:ATMPJVMemberus-gaap:SubsequentEventMember2024-10-09
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 28, 2024
OR
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-07882
ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | |
Delaware | | | 94-1692300 |
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) |
2485 Augustine Drive
Santa Clara, California 95054
(Address of principal executive offices)(Zip Code)
(408) 749-4000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value per share | AMD | The Nasdaq Global Select Market |
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 (the Exchange Act) 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 ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large accelerated filer | | ☑ | | Accelerated filer | | ☐ | Non-accelerated filer | | ☐ |
Smaller reporting company | | ☐ | | Emerging growth company | | ☐ | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value per share, as of October 23, 2024: 1,622,807,346
INDEX
PART I. FINANCIAL INFORMATION
| | | | | |
ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions, except per share amounts) |
Net revenue | $ | 6,819 | | | $ | 5,800 | | | $ | 18,127 | | | $ | 16,512 | |
Cost of sales | 3,167 | | | 2,843 | | | 8,590 | | | 8,236 | |
Amortization of acquisition-related intangibles | 233 | | | 210 | | | 694 | | | 727 | |
Total cost of sales | 3,400 | | | 3,053 | | | 9,284 | | | 8,963 | |
Gross profit | 3,419 | | | 2,747 | | | 8,843 | | | 7,549 | |
| | | | | | | |
Research and development | 1,636 | | | 1,507 | | | 4,744 | | | 4,361 | |
Marketing, general and administrative | 721 | | | 576 | | | 1,991 | | | 1,708 | |
Amortization of acquisition-related intangibles | 352 | | | 450 | | | 1,116 | | | 1,449 | |
Licensing gain | (14) | | | (10) | | | (37) | | | (28) | |
Operating income | 724 | | | 224 | | | 1,029 | | | 59 | |
| | | | | | | |
Interest expense | (23) | | | (26) | | | (73) | | | (79) | |
Other income (expense), net | 36 | | | 59 | | | 144 | | | 148 | |
Income before income taxes and equity income | 737 | | | 257 | | | 1,100 | | | 128 | |
| | | | | | | |
Income tax (benefit) | (27) | | | (39) | | | (38) | | | (49) | |
Equity income in investee | 7 | | | 3 | | | 21 | | | 10 | |
Net income | $ | 771 | | | $ | 299 | | | $ | 1,159 | | | $ | 187 | |
| | | | | | | |
Earnings per share | | | | | | | |
Basic | $ | 0.48 | | | $ | 0.18 | | | $ | 0.72 | | | $ | 0.12 | |
Diluted | $ | 0.47 | | | $ | 0.18 | | | $ | 0.71 | | | $ | 0.11 | |
Shares used in per share calculation | | | | | | | |
Basic | 1,620 | | | 1,616 | | | 1,619 | | | 1,613 | |
Diluted | 1,636 | | | 1,629 | | | 1,638 | | | 1,625 | |
See accompanying notes.
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions) |
Net income | $ | 771 | | | $ | 299 | | | $ | 1,159 | | | $ | 187 | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Net change in unrealized gains (losses) on cash flow hedges | 31 | | | (18) | | | 12 | | | (9) | |
Total comprehensive income | $ | 802 | | | $ | 281 | | | $ | 1,171 | | | $ | 178 | |
See accompanying notes.
Advanced Micro Devices, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
| (In millions, except par value amounts) |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 3,897 | | | $ | 3,933 | |
Short-term investments | 647 | | | 1,840 | |
Accounts receivable, net | 7,241 | | | 5,376 | |
Inventories | 5,374 | | | 4,351 | |
Receivables from related parties | 29 | | | 9 | |
Prepaid expenses and other current assets | 1,547 | | | 1,259 | |
Total current assets | 18,735 | | | 16,768 | |
Property and equipment, net | 1,669 | | | 1,589 | |
Operating lease right-of-use assets | 647 | | | 633 | |
Goodwill | 24,839 | | | 24,262 | |
Acquisition-related intangibles, net | 19,572 | | | 21,363 | |
Investment: equity method | 137 | | | 99 | |
Deferred tax assets | 1,183 | | | 366 | |
Other non-current assets | 2,854 | | | 2,805 | |
Total assets | $ | 69,636 | | | $ | 67,885 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 2,530 | | | $ | 2,055 | |
Payables to related parties | 461 | | | 363 | |
Accrued liabilities | 4,120 | | | 3,082 | |
Current portion of long-term debt, net | — | | | 751 | |
Other current liabilities | 389 | | | 438 | |
Total current liabilities | 7,500 | | | 6,689 | |
Long-term debt, net of current portion | 1,720 | | | 1,717 | |
Long-term operating lease liabilities | 518 | | | 535 | |
Deferred tax liabilities | 1,162 | | | 1,202 | |
Other long-term liabilities | 1,751 | | | 1,850 | |
Commitments and contingencies (See Note 13) | | | |
Stockholders’ equity: | | | |
Capital stock: | | | |
Common stock, par value $0.01; shares authorized: 2,250; shares issued: 1,678 and 1,663; shares outstanding: 1,623 and 1,616 | 17 | | | 17 | |
Additional paid-in capital | 60,896 | | | 59,676 | |
Treasury stock, at cost (shares held: 55 and 47) | (5,812) | | | (4,514) | |
Retained earnings | 1,882 | | | 723 | |
Accumulated other comprehensive income (loss) | 2 | | | (10) | |
Total stockholders’ equity | 56,985 | | | 55,892 | |
Total liabilities and stockholders’ equity | $ | 69,636 | | | $ | 67,885 | |
See accompanying notes.
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 28, 2024 | | September 30, 2023 |
| (In millions) |
Cash flows from operating activities: | | | |
Net income | $ | 1,159 | | | $ | 187 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 2,309 | | | 2,654 | |
Stock-based compensation | 1,068 | | | 1,010 | |
Deferred income taxes | (863) | | | (800) | |
Amortization of operating lease right-of-use assets | 82 | | | 73 | |
Inventory loss at contract manufacturer | 65 | | | — | |
Other | (50) | | | (31) | |
Changes in operating assets and liabilities | | | |
Accounts receivable, net | (1,862) | | | (929) | |
Inventories | (1,096) | | | (674) | |
Prepaid expenses and other assets | (250) | | | (380) | |
Receivables from and payables to related parties, net | 78 | | | (136) | |
Accounts payable | 476 | | | (238) | |
Accrued and other liabilities | 626 | | | 550 | |
Net cash provided by operating activities | 1,742 | | | 1,286 | |
Cash flows from investing activities: | | | |
Purchases of property and equipment | (428) | | | (407) | |
Purchases of short-term investments | (707) | | | (3,312) | |
Proceeds from maturity of short-term investments | 1,351 | | | 1,917 | |
Proceeds from sale of short-term investments | 591 | | | 248 | |
Acquisitions, net of cash acquired | (548) | | | (14) | |
Related party equity method investment | (17) | | | — | |
Other | (129) | | | (5) | |
Net cash provided by (used in) investing activities | 113 | | | (1,573) | |
Cash flows from financing activities: | | | |
Repayment of debt | (750) | | | — | |
Proceeds from sales of common stock through employee equity plans | 152 | | | 148 | |
Repurchases of common stock | (606) | | | (752) | |
Common stock repurchases for tax withholding on employee equity plans | (686) | | | (382) | |
Other | (1) | | | (1) | |
Net cash used in financing activities | (1,891) | | | (987) | |
Net decrease in cash and cash equivalents | (36) | | | (1,274) | |
Cash and cash equivalents at beginning of period | 3,933 | | | 4,835 | |
Cash and cash equivalents at end of period | $ | 3,897 | | | $ | 3,561 | |
| | | |
| | | |
| | | |
| | | |
| | | | | | | | | | | |
Advanced Micro Devices, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) |
| Nine Months Ended |
| September 28, 2024 | | September 30, 2023 |
| (In millions) |
Supplemental cash flow information: | | | |
Cash paid for taxes, net of refunds | $ | 1,011 | | | $ | 34 | |
Non-cash investing activities: | | | |
Purchases of property and equipment, accrued but not paid | $ | 99 | | | $ | 113 | |
Non-cash activities for leases: | | | |
Operating lease right-of-use assets acquired by assuming related liabilities | $ | 95 | | | $ | 121 | |
See accompanying notes.
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions) |
Capital stock: | | | | | | | |
Common stock, par value | | | | | | | |
Balance, beginning of period | $ | 17 | | | $ | 16 | | | $ | 17 | | | $ | 16 | |
Common stock issued under employee equity plans | — | | | 1 | | | — | | | 1 | |
Balance, end of period | $ | 17 | | | $ | 17 | | | $ | 17 | | | $ | 17 | |
Additional paid-in capital | | | | | | | |
Balance, beginning of period | $ | 60,542 | | | $ | 58,825 | | | $ | 59,676 | | | $ | 58,005 | |
Common stock issued under employee equity plans | 3 | | | 4 | | | 152 | | | 153 | |
Stock-based compensation | 351 | | | 353 | | | 1,068 | | | 1,010 | |
Issuance of common stock to settle convertible debt | — | | | — | | | — | | | 1 | |
Issuance of common stock warrants | — | | | — | | | — | | | 13 | |
Balance, end of period | $ | 60,896 | | | $ | 59,182 | | | $ | 60,896 | | | $ | 59,182 | |
Treasury stock | | | | | | | |
Balance, beginning of period | $ | (5,103) | | | $ | (3,430) | | | $ | (4,514) | | | $ | (3,099) | |
Repurchases of common stock | (250) | | | (511) | | | (606) | | | (752) | |
Common stock repurchases for tax withholding on employee equity plans | (459) | | | (294) | | | (692) | | | (384) | |
Balance, end of period | $ | (5,812) | | | $ | (4,235) | | | $ | (5,812) | | | $ | (4,235) | |
| | | | | | | |
Retained earnings (Accumulated deficit): | | | | | | | |
Balance, beginning of period | $ | 1,111 | | | $ | (243) | | | $ | 723 | | | $ | (131) | |
Net income | 771 | | | 299 | | | 1,159 | | | 187 | |
Balance, end of period | $ | 1,882 | | | $ | 56 | | | $ | 1,882 | | | $ | 56 | |
| | | | | | | |
Accumulated other comprehensive income (loss): | | | | | | | |
Balance, beginning of period | $ | (29) | | | $ | (32) | | | $ | (10) | | | $ | (41) | |
Other comprehensive income (loss) | 31 | | | (18) | | | 12 | | | (9) | |
Balance, end of period | $ | 2 | | | $ | (50) | | | $ | 2 | | | $ | (50) | |
| | | | | | | |
Total stockholders' equity | $ | 56,985 | | | $ | 54,970 | | | $ | 56,985 | | | $ | 54,970 | |
See accompanying notes.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its consolidated subsidiaries. AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) Accelerators and Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of AMD have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the three and nine months ended September 28, 2024 shown in this report are not necessarily indicative of results to be expected for the full year ending December 28, 2024 or any other future period. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity. All such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023. Certain immaterial prior period amounts have been reclassified to conform to current period presentation.
The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. The three and nine months ended September 28, 2024 and September 30, 2023 each consisted of 13 weeks and 26 weeks, respectively.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those estimates, and such differences may be material to the financial statements. Areas where management uses judgment include, but are not limited to, revenue allowances, inventory valuation, valuation of goodwill, long-lived and intangible assets, and income taxes.
Significant Accounting Policies. There have been no material changes to the Company’s significant accounting policies in Note 2 - Basis of Presentation and Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
Recently Issued Accounting Standards Not Yet Adopted. In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses. This ASU is effective for the Company’s fiscal year 2024 and interim periods in fiscal year 2025. Early adoption is permitted. The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.
NOTE 3 – Supplemental Financial Statement Information
Accounts Receivable, net
As of September 28, 2024 and December 30, 2023, Accounts receivable, net included unbilled accounts receivable of $937 million and $1.1 billion, respectively. Unbilled accounts receivable primarily represent work completed on development services and on custom products for which revenue has been recognized but not yet invoiced. Unbilled accounts receivable that are included in Accounts receivable, net are expected to be billed and collected within 12 months.
| | | | | | | | | | | |
Inventories | September 28, 2024 | | December 30, 2023 |
| (In millions) |
Raw materials | $ | 412 | | | $ | 279 | |
Work in process | 3,999 | | | 3,260 | |
Finished goods | 963 | | | 812 | |
Total inventories | $ | 5,374 | | | $ | 4,351 | |
| | | | | | | | | | | |
Property and Equipment, net | September 28, 2024 | | December 30, 2023 |
| (In millions) |
Land, building and leasehold improvements | $ | 844 | | | $ | 821 | |
Equipment | 2,669 | | | 2,346 | |
Construction in progress | 228 | | | 209 | |
Property and equipment, gross | 3,741 | | | 3,376 | |
Accumulated depreciation | (2,072) | | | (1,787) | |
Total property and equipment, net | $ | 1,669 | | | $ | 1,589 | |
| | | | | | | | | | | |
Accrued Liabilities | September 28, 2024 | | December 30, 2023 |
| (In millions) |
Customer-related liabilities | $ | 1,405 | | | $ | 788 | |
Accrued marketing programs | 1,001 | | | 827 | |
Accrued compensation and benefits | 1,048 | | | 884 | |
Other accrued liabilities | 666 | | | 583 | |
Total accrued liabilities | $ | 4,120 | | | $ | 3,082 | |
Revenue
Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of September 28, 2024, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $86 million, of which $49 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for 5% and 10% of the Company’s revenue for the three and nine months ended September 28, 2024, respectively and 25% and 27% of the Company’s revenue for the three and nine months ended September 30, 2023, respectively.
NOTE 4 – Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the reportable segments based on management’s judgment.
The Company’s four reportable segments are:
•the Data Center segment, which primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers;
•the Client segment, which primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers;
•the Gaming segment, which primarily includes discrete GPUs, and semi-custom SoC products and development services; and
•the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation expense, inventory loss at contract manufacturer, acquisition-related and other costs, and licensing gain. Acquisition-related and other costs primarily include transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.
The following table provides a summary of net revenue and operating income (loss) by segment:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions) |
Net revenue: | | | | | | | |
Data Center | $ | 3,549 | | | $ | 1,598 | | | $ | 8,720 | | | $ | 4,214 | |
Client | 1,881 | | | 1,453 | | | 4,741 | | | 3,190 | |
Gaming | 462 | | | 1,506 | | | 2,032 | | | 4,844 | |
Embedded | 927 | | | 1,243 | | | 2,634 | | | 4,264 | |
Total net revenue | $ | 6,819 | | | $ | 5,800 | | | $ | 18,127 | | | $ | 16,512 | |
Operating income (loss): | | | | | | | |
Data Center | $ | 1,041 | | | $ | 306 | | | $ | 2,325 | | | $ | 601 | |
Client | 276 | | | 140 | | | 451 | | | (101) | |
Gaming | 12 | | | 208 | | | 240 | | | 747 | |
Embedded | 372 | | | 612 | | | 1,059 | | | 2,167 | |
All Other(1) | (977) | | | (1,042) | | | (3,046) | | | (3,355) | |
Total operating income | $ | 724 | | | $ | 224 | | | $ | 1,029 | | | $ | 59 | |
| | | | | |
(1) | For the three and nine months ended September 28, 2024, all other operating losses primarily included $585 million and $1.8 billion of amortization of acquisition-related intangibles, and $351 million and $1.1 billion of stock-based compensation expense, respectively.
For the three and nine months ended September 30, 2023, all other operating losses primarily included $660 million and $2.2 billion of amortization of acquisition-related intangibles, and $353 million and $1.0 billion of stock-based compensation expense, respectively. |
NOTE 5 – Business Combinations
Acquisition of Silo AI
On August 9, 2024, the Company completed the acquisition of Silo AI Oy (Silo AI), an AI lab based in Finland in an all-cash transaction of $665 million. Net of closing adjustments, transaction costs and deferred cash compensation, the purchase consideration of $553 million was allocated to $19 million of identifiable intangible assets, $43 million of net liabilities assumed, and $577 million to goodwill. Goodwill was attributed to Silo AI’s workforce who will help the Company accelerate the deployment and development of AI models and software solutions on AMD hardware. Silo AI financial results, which were not material, were included in the Company's statement of operations from the date of acquisition primarily within the Data Center segment.
Pending Acquisition of ZT Systems
On August 17, 2024, the Company entered into an agreement (the Agreement) to acquire ZT Group Int’l, Inc. (ZT Systems), a provider of AI and general purpose compute infrastructure for hyperscale computing companies, in a cash and stock transaction valued at approximately $4.9 billion (the Acquisition). The aggregate closing consideration payable by the Company consists of 8,335,852 shares of the Company’s common stock and $3.4 billion in cash. Contingent consideration of up to 740,964 shares of the Company’s common stock and up to $300 million of cash is payable by the Company to the extent certain conditions are met. The Agreement provides that if the Acquisition is not completed by August 17, 2025, subject to two automatic extensions until February 17, 2026, the Company will pay a termination fee of $300 million. The Acquisition is expected to close in the first half of 2025, subject to certain regulatory approvals and other customary closing conditions. The Company intends to seek a strategic partner to acquire ZT Systems' manufacturing business.
NOTE 6 – Goodwill and Acquisition-related Intangibles, net
Goodwill
The carrying amount of goodwill was assigned to reporting units within the following reportable segments:
| | | | | | | | | | | | | | | | | |
| December 30, 2023 | | Acquisitions | | September 28, 2024 |
| (In millions) |
Data Center | $ | 2,942 | | | $ | 461 | | | $ | 3,403 | |
Client | 18 | | | 108 | | | 126 | |
Gaming | 238 | | | — | | | 238 | |
Embedded | 21,064 | | | 8 | | | 21,072 | |
Total | $ | 24,262 | | | $ | 577 | | | $ | 24,839 | |
Acquisition-related Intangibles, net
Acquisition-related intangibles, net were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
| (In millions) | | (In millions) |
Developed technology | $ | 13,409 | | | $ | (2,279) | | | $ | 11,130 | | | $ | 13,390 | | | $ | (1,583) | | | $ | 11,807 | |
Customer relationships | 12,324 | | | (4,811) | | | 7,513 | | | 12,324 | | | (3,755) | | | 8,569 | |
Customer backlog | 809 | | | (809) | | | — | | | 809 | | | (809) | | | — | |
Corporate trade name | 65 | | | (65) | | | — | | | 65 | | | (65) | | | — | |
Product trademarks | 914 | | | (205) | | | 709 | | | 914 | | | (147) | | | 767 | |
Acquisition-related intangible assets subject to amortization | 27,521 | | | (8,169) | | | 19,352 | | | 27,502 | | | (6,359) | | | 21,143 | |
In-process research and development (IPR&D) not subject to amortization | 220 | | | — | | | 220 | | | 220 | | | — | | | 220 | |
Total acquisition-related intangible assets, net | $ | 27,741 | | | $ | (8,169) | | | $ | 19,572 | | | $ | 27,722 | | | $ | (6,359) | | | $ | 21,363 | |
Acquisition-related intangible amortization expense was $585 million and $1.8 billion for the three and nine months ended September 28, 2024, and $660 million and $2.2 billion for the three and nine months ended September 30, 2023, respectively.
Based on the carrying value of acquisition-related intangibles recorded as of September 28, 2024, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:
| | | | | |
Fiscal Year | (In millions) |
Remainder of 2024 | $ | 565 | |
2025 | 2,154 | |
2026 | 2,040 | |
2027 | 1,922 | |
2028 | 1,846 | |
2029 and thereafter | 10,825 | |
Total | $ | 19,352 | |
NOTE 7 – Related Parties — Equity Joint Ventures
ATMP Joint Ventures
The Company holds a 15% equity interest in two joint ventures (collectively, the ATMP JV) with affiliates of Tongfu Microelectronics Co., Ltd, a Chinese joint stock company. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV.
The ATMP JV provides assembly, testing, marking and packaging (ATMP) services to the Company. The Company assists the ATMP JV in its management of certain raw material inventory. The purchases from and resales to the ATMP JV of inventory under the Company’s inventory management program are reported within purchases and resales with the ATMP JV and do not impact the Company’s condensed consolidated statements of operations.
The Company’s purchases from the ATMP JV during the three and nine months ended September 28, 2024 were $407 million and $1.2 billion, respectively. The Company’s purchases from the ATMP JV during the three and nine months ended September 30, 2023 were $448 million and $1.2 billion, respectively. As of September 28, 2024 and December 30, 2023, the amounts payable to the ATMP JV were $461 million and $363 million, respectively, and are reflected as Payables to related parties on the Company’s condensed consolidated balance sheets. The Company’s resales to the ATMP JV during the three and nine months ended September 28, 2024 were $33 million and $103 million, respectively. The Company’s resales to the ATMP JV during the three and nine months ended September 30, 2023 were $2 million and $5 million, respectively. As of September 28, 2024 and December 30, 2023, the Company’s receivables from the ATMP JV were $29 million and $9 million, respectively, and are reflected as Receivables from related parties on the Company’s balance sheet.
During the three and nine months ended September 28, 2024, the Company recorded a gain of $7 million and $21 million, in Equity income in investee on its statements of operations, respectively. During the three and nine months ended September 30, 2023, the Company recorded a gain of $3 million and $10 million, in Equity income in investee on its statements of operations, respectively.
On August 8, 2024, the Company contributed $17 million to the ATMP JV, representing additional equity that is in proportion to the Company’s existing 15% equity interest. As of September 28, 2024 and December 30, 2023, the carrying value of the Company’s investment in the ATMP JV was $137 million and $99 million, respectively.
THATIC Joint Ventures
The Company holds equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. As of both September 28, 2024 and December 30, 2023, the carrying value of the investment was zero. The Company licenses certain of its intellectual property (Licensed IP) to the THATIC JV and receives royalties based on sales of the THATIC JV’s products, which is recorded within operating income as licensing gain. During the three and nine months ended September 28, 2024, the Company recognized $14 million and $37 million of licensing gain from royalties associated with Licensed IP, respectively. During the three and nine months ended September 30, 2023, the Company recognized $10 million and $28 million of licensing gain from royalties associated with Licensed IP, respectively. As of September 28, 2024 and December 30, 2023, the Company had no receivables from the THATIC JV. In June 2019, the Bureau of Industry and Security of the United States Department of Commerce added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. The Company is complying with U.S. law pertaining to the Entity List designation.
NOTE 8 – Debt, Revolving Credit Facility and Commercial Paper Program
Debt
The Company’s total debt as of September 28, 2024 and December 30, 2023 consisted of the following:
| | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
| (In millions) |
2.95% Senior Notes Due 2024 (2.95% Notes) | $ | — | | | $ | 750 | |
| | | |
2.375% Senior Notes Due 2030 (2.375% Notes) | 750 | | | 750 | |
3.924% Senior Notes Due 2032 (3.924% Notes) | 500 | | | 500 | |
4.393% Senior Notes Due 2052 (4.393% Notes) | 500 | | | 500 | |
Total debt (principal amount) | 1,750 | | | 2,500 | |
Unamortized debt discount and issuance costs | (30) | | | (32) | |
Total debt (net) | 1,720 | | | 2,468 | |
Less: current portion of long-term debt and related unamortized debt premium and issuance costs | — | | | (751) | |
Total long-term debt | $ | 1,720 | | | $ | 1,717 | |
2.95% Senior Notes Due 2024
The 2.95% Notes with a principal amount of $750 million were repaid in June 2024.
2.375% Senior Notes Due 2030, 3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052
The 2.375% Notes, 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.
As of September 28, 2024, the Company was in compliance with the covenants associated with its debt.
Revolving Credit Facility
The Company has $3.0 billion available under an unsecured revolving credit facility that expires on April 29, 2027. During the three and nine months ended September 28, 2024, the Company did not borrow under the revolving credit facility and as of September 28, 2024 and December 30, 2023, the Company had no outstanding borrowings under the revolving credit facility. As of September 28, 2024, the Company was in compliance with the covenants under the revolving credit facility.
Commercial Paper Program
The Company has a commercial paper program under which it can issue unsecured commercial paper notes up to $3.0 billion. During the three and nine months ended September 28, 2024, the Company did not issue any commercial paper under the program and as of September 28, 2024 and December 30, 2023, the Company had no commercial paper outstanding.
NOTE 9 – Financial Instruments
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred.
Financial Instruments Recorded at Fair Value on a Recurring Basis
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
(In millions) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Total |
Cash equivalents | | | | | | | | | | | | | |
Money market funds | $ | 1,879 | | | $ | — | | | $ | — | | | $ | 1,879 | | | $ | 969 | | | $ | — | | | $ | 969 | |
Corporate debt securities | — | | | 642 | | | — | | | 642 | | | — | | | 753 | | | 753 | |
U.S. government and agency securities | 330 | | | — | | | — | | | 330 | | | 1,252 | | | — | | | 1,252 | |
Non-U.S. government and agency securities | — | | | — | | | — | | | — | | | — | | | 135 | | | 135 | |
Time deposits and certificates of deposits | — | | | 132 | | | — | | | 132 | | | — | | | 205 | | | 205 | |
Short-term investments | | | | | | | | | | | | | |
Corporate debt securities | — | | | 271 | | | — | | | 271 | | | — | | | 506 | | | 506 | |
Time deposits and certificates of deposits | — | | | 10 | | | — | | | 10 | | | — | | | 9 | | | 9 | |
Asset-backed and mortgage-backed securities | — | | | 30 | | | — | | | 30 | | | — | | | 34 | | | 34 | |
U.S. government and agency securities | 275 | | | 40 | | | — | | | 315 | | | 1,209 | | | 28 | | | 1,237 | |
Non-U.S. government and agency securities | — | | | 21 | | | — | | | 21 | | | — | | | 54 | | | 54 | |
Other non-current assets | | | | | | | | | | | | | |
Deferred compensation plan and other investments | 162 | | | — | | | 25 | | | 187 | | | 133 | | | — | | | 133 | |
Total assets measured at fair value | $ | 2,646 | | | $ | 1,146 | | | $ | 25 | | | $ | 3,817 | | | $ | 3,563 | | | $ | 1,724 | | | $ | 5,287 | |
Deferred compensation plan and other investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan.
The following is a summary of cash equivalents and short-term investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
| Cost/ Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value | | Cost/ Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
| (in millions) | | (in millions) |
Asset-backed and mortgage-backed securities | $ | 32 | | | $ | — | | | $ | (2) | | | $ | 30 | | | $ | 35 | | | $ | — | | | $ | (2) | | | $ | 33 | |
Corporate debt securities | 912 | | | 1 | | | — | | | 913 | | | 1,259 | | | — | | | — | | | 1,259 | |
Money market funds | 1,879 | | | — | | | — | | | 1,879 | | | 969 | | | — | | | — | | | 969 | |
Time deposits and certificates of deposits | 142 | | | — | | | — | | | 142 | | | 214 | | | — | | | — | | | 214 | |
U.S. government and agency securities | 643 | | | 2 | | | — | | | 645 | | | 2,487 | | | 3 | | | — | | | 2,490 | |
Non-U.S. government and agency securities | 21 | | | — | | | — | | | 21 | | | 189 | | | — | | | — | | | 189 | |
| $ | 3,629 | | | $ | 3 | | | $ | (2) | | | $ | 3,630 | | | $ | 5,153 | | | $ | 3 | | | $ | (2) | | | $ | 5,154 | |
As of September 28, 2024 and December 30, 2023, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.
The contractual maturities of cash equivalents and investments classified as available-for-sale are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
| Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value |
| (In millions) | | (In millions) |
Due within 1 year | $ | 1,472 | | | $ | 1,473 | | | $ | 3,792 | | | $ | 3,792 | |
Due in 1 year through 5 years | 250 | | | 252 | | | 361 | | | 364 | |
Due in 5 years and later | 28 | | | 26 | | | 32 | | | 30 | |
| $ | 1,750 | | | $ | 1,751 | | | $ | 4,185 | | | $ | 4,186 | |
Financial Instruments Not Recorded at Fair Value
The Company carries its financial instruments at fair value except for its debt. The carrying amounts and estimated fair values of the Company’s debt are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 28, 2024 | | December 30, 2023 |
| Carrying Amount | | Estimated Fair Value | | Carrying Amount | | Estimated Fair Value |
| (In millions) | | (In millions) |
Current portion of long-term debt, net | $ | — | | | $ | — | | | $ | 751 | | | $ | 741 | |
| | | | | | | |
Long-term debt, net of current portion | $ | 1,720 | | | $ | 1,644 | | | $ | 1,717 | | | $ | 1,630 | |
The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets.
The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Financial Instruments Measured at Fair Value on a Non-Recurring Basis
The Company’s investments in non-marketable securities in privately-held companies are recorded using a measurement alternative that adjusts the securities to fair value when the Company recognizes an observable price adjustment or an impairment. As of September 28, 2024 and December 30, 2023, the Company had non-marketable securities in privately-held companies of $257 million and $155 million, respectively, that are recorded under Other non-current assets in the balance sheet. Impairment losses or observable price adjustments were not material during the three and nine months ended September 28, 2024 and September 30, 2023.
Hedging Transactions and Derivative Financial Instruments
Foreign Currency Forward Contracts Designated as Accounting Hedges
The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 24 months and are designated as accounting hedges. As of September 28, 2024 and December 30, 2023, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $2.2 billion and $2.4 billion, respectively. The fair value of these contracts, recorded as an asset, was $19 million and $6 million as of September 28, 2024 and December 30, 2023, respectively.
Foreign Currency Forward Contracts Not Designated as Accounting Hedges
The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of September 28, 2024 and December 30, 2023, the notional value of these outstanding contracts was $573 million and $568 million, respectively. The fair value of these contracts was not material as of September 28, 2024 and December 30, 2023.
NOTE 10 – Earnings Per Share
The following table sets forth the components of basic and diluted earnings per share:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions, except per share amounts) |
Numerator | | | | | | | |
Net income for basic earnings per share | $ | 771 | | | $ | 299 | | | $ | 1,159 | | | $ | 187 | |
Denominator | | | | | | | |
Basic weighted average shares | 1,620 | | | 1,616 | | | 1,619 | | | 1,613 | |
Potentially dilutive shares from employee equity plans | 16 | | | 13 | | | 19 | | | 12 | |
Diluted weighted average shares | 1,636 | | | 1,629 | | | 1,638 | | | 1,625 | |
Earnings per share: | | | | | | | |
Basic | $ | 0.48 | | | $ | 0.18 | | | $ | 0.72 | | | $ | 0.12 | |
Diluted | $ | 0.47 | | | $ | 0.18 | | | $ | 0.71 | | | $ | 0.11 | |
Securities which would have been anti-dilutive are not material and are excluded from the computation of diluted earnings per share for all periods presented.
NOTE 11 – Common Stock and Stock-based Compensation
Common Stock
Shares of common stock outstanding were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions) |
Balance, beginning of period | 1,618 | | | 1,614 | | | 1,616 | | | 1,612 | |
Common stock issued under employee equity plans | 10 | | | 9 | | | 15 | | | 14 | |
Common stock repurchases for tax withholding on equity awards | (3) | | | (3) | | | (4) | | | (4) | |
Issuance of common stock upon warrant exercise | — | | | — | | | — | | | 1 | |
Repurchases of common stock | (2) | | | (5) | | | (4) | | | (8) | |
Balance, end of period | 1,623 | | | 1,615 | | | 1,623 | | | 1,615 | |
Stock Repurchase Program
The Company has an approved stock repurchase program authorizing repurchases of up to $12 billion of the Company’s common stock (Repurchase Program). During the three and nine months ended September 28, 2024, the Company returned $250 million and $606 million, respectively, to shareholders through the repurchase of its common stock under the Repurchase Program. As of September 28, 2024, $4.9 billion remains available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
Stock-based Compensation
Stock-based compensation expense recorded in the condensed consolidated statements of operations was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions) |
Cost of sales | $ | 5 | | | $ | 6 | | | $ | 16 | | | $ | 24 | |
Research and development | 267 | | | 260 | | | 809 | | | 721 | |
Marketing, general and administrative | 79 | | | 87 | | | 243 | | | 265 | |
Total | $ | 351 | | | $ | 353 | | | $ | 1,068 | | | $ | 1,010 | |
NOTE 12 – Income Taxes
The Company determines its income taxes for interim reporting periods by applying the Company’s estimated annual effective tax rate to the year-to-date results, adjusted for tax items discrete to each period.
For the three and nine months ended September 28, 2024, the Company recorded an income tax benefit of $27 million and $38 million representing an effective tax rate of (3.6)% and (3.3)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits, partially offset by the tax rate detriment from foreign earnings. The tax benefit for the three and nine months ended September 28, 2024 reflected discrete tax benefits of $28 million and $68 million, respectively, primarily related to stock-based compensation, partially offset by the interest and penalties accrued for uncertain tax positions.
For the three months and nine months ended September 30, 2023, the Company recorded an income tax benefit of $39 million and $49 million representing an effective tax rate of (15.2)% and (35.8)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from FDII and R&D tax credits. The tax benefit for the three months ended September 30, 2023 reflected a discrete tax benefit of $17 million primarily related to tax effects of stock-based compensation. The tax benefit for the nine months ended September 30, 2023, reflected a discrete tax benefit of $29 million primarily related to tax effects of stock-based compensation, partially offset by interest and penalties accrued for uncertain tax positions.
As of September 28, 2024 and December 30, 2023, the Company had long-term income tax liabilities related to unrecognized tax benefits of $1.5 billion and $1.4 billion recorded under Other long-term liabilities in the balance sheet.
NOTE 13 – Commitments and Contingencies
Commitments
The Company’s purchase commitments primarily include obligations to purchase wafers and substrates from third parties. These purchase obligations were made under noncancellable purchase orders or contractual obligations requiring minimum purchases for which cancellation would lead to significant penalties. Purchase commitments also include future payments related to certain software, technology and IP licenses.
Total future unconditional purchase commitments as of September 28, 2024 were as follows: | | | | | |
Fiscal Year | (In millions) |
Remainder of 2024 | $ | 2,510 | |
2025 | 1,325 | |
2026 | 268 | |
2027 | 45 | |
2028 | 44 | |
2029 and thereafter | 95 | |
Total unconditional purchase commitments | $ | 4,287 | |
On an ongoing basis, the Company works with suppliers on timing of payments and deliveries of purchase commitments, taking into account business conditions.
Contingencies
During the quarterly period ended September 28, 2024, there were no material legal proceedings. The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
NOTE 14 – Subsequent Event
On October 9, 2024, the Company entered into a one-year term loan agreement with one of the ATMP JVs for $100 million to provide funds for the ATMP JV’s general corporate purposes. The loan bears interest, payable quarterly, at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points. The loan is secured by the ATMP JV’s receivable balance due from the Company. Subject to the Company’s discretion, the loan may be extended for further terms of up to twelve months.
| | | | | |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The statements in this report include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s condensed consolidated financial statements; demand for AMD’s products; AMD’s strategy and expected benefits; the growth, change and competitive landscape of the markets in which AMD participates; the expectation that international sales will continue to be a significant portion of total sales in the foreseeable future; the expectation that AMD’s cash, cash equivalents and short-term investment balances, together with the availability under that certain revolving credit facility made available to AMD and certain of its subsidiaries, our commercial paper program, and our cash flows from operations will be sufficient to fund AMD’s operations including capital expenditures, purchase commitments and acquisitions over the next 12 months and beyond; AMD’s ability to access capital markets; AMD’s ability to obtain sufficient external financing on favorable terms, or at all; AMD’s expectation that based on management’s current knowledge, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial positions, results of operation or cash flows; anticipated ongoing and increased costs related to enhancing and implementing information security controls; AMD’s expectation that all unbilled accounts receivables are expected to be billed and collected within 12 months; that revenue allocated to remaining performance obligations that are unsatisfied which will be recognized in the next 12 months and that a small number of customers will continue to account for a substantial part of AMD’s revenue in the future; the expected implications from the development of the legal and regulatory environment relating to emerging technologies, such as AI; AMD’s ability to achieve its corporate responsibility initiatives; expected future AI trends and developments; the expected benefits of AMD’s acquisition of Silo AI Oy (Silo AI); AMD’s anticipated acquisition of ZT Group Int’l, Inc. (ZT Systems) and the anticipated timing of the transaction; AMD’s intention to seek a strategic partner to acquire ZT Systems' manufacturing business; and AMD’s expectation to fund stock repurchases through cash generated from operations. For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see “Part II, Item 1A—Risk Factors” and the “Financial Condition” section set forth in “Part I, Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A, and such other risks and uncertainties as set forth below in this report or detailed in our other Securities and Exchange Commission (SEC) reports and filings. We assume no obligation to update forward-looking statements.
References in this Quarterly Report on Form 10-Q to “AMD,” “we,” “us,” “management,” “our” or the “Company” mean Advanced Micro Devices, Inc. and our consolidated subsidiaries.
AMD, the AMD Arrow logo, EPYC, Radeon, Ryzen, Xilinx and combinations thereof are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and are used to identify companies and products and may be trademarks of their respective owners. “Zen” is a codename for an AMD architecture and is not a product name.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report and our audited consolidated financial statements and related notes as of December 30, 2023 and December 31, 2022, and for each of the three years for the period ended December 30, 2023 as filed in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
Overview and Recent Developments
We are a global semiconductor company primarily offering:
•server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers;
•CPUs, APUs and chipsets for desktop, notebook, and handheld personal computers;
•discrete GPUs, and semi-custom SoC products and development services; and
•embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
From time to time, we may also sell or license portions of our intellectual property (IP) portfolio.
In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for the three and nine months ended September 28, 2024 compared to the prior year period and an analysis of changes in our financial condition.
Net revenue for the three months ended September 28, 2024 was $6.8 billion, an 18% increase compared to the prior year period. The increase in net revenue was driven by an increase in Data Center segment revenue primarily driven by the strong ramp of AMD Instinct™ GPU shipments and growth in AMD EPYC™ CPU sales, and an increase in Client segment revenue primarily driven by strong demand for “Zen 5” AMD Ryzen™ processors, partially offset by a decrease in Gaming segment revenue primarily due to lower semi-custom revenue, and a decrease in Embedded segment revenue as customers continued to normalize their inventory levels.
Gross margin for the three months ended September 28, 2024 was 50% compared to gross margin of 47% for the prior year period. The increase in gross margin was primarily driven by higher Data Center segment revenue.
Operating income for the three months ended September 28, 2024 was $724 million compared to operating income of $224 million for the prior year period. Net income for the three months ended September 28, 2024 was $771 million compared to net income of $299 million for the prior year period. The increase in operating and net income was primarily driven by higher revenue and gross margin, and lower amortization of acquisition-related intangible assets, partially offset by increased operating expenses.
As of September 28, 2024, our cash, cash equivalents and short-term investments were $4.5 billion compared to $5.8 billion as of December 30, 2023. During the three and nine months ended September 28, 2024, we generated $628 million and $1.7 billion of cash, respectively, from operating activities, and we returned $250 million and $606 million, respectively, to shareholders through the repurchase of common stock under our Repurchase Program.
As part of the next step in our AI strategy, on August 9, 2024, we completed the acquisition of Silo AI, an AI lab based in Finland in an all-cash transaction of $665 million, which resulted in a net purchase consideration of $553 million. The acquisition of Silo AI expands our ability to accelerate development and deployment of AI models on AMD hardware. Silo AI financial results, which were immaterial, were included in our statement of operations from the date of acquisition primarily within the Data Center segment.
On August 17, 2024, we entered into an agreement to acquire ZT Systems, a provider of AI and general-purpose compute infrastructure for hyperscale computing companies, in a cash and stock transaction valued at approximately $4.9 billion (the Acquisition). Upon closing of the Acquisition, we will pay approximately $3.4 billion in cash and 8,335,852 shares of the Company’s common stock and to the extent certain conditions are met, we will pay an additional $300 million of cash and up to 740,963 shares of the Company’s common stock. The Acquisition is expected to close in the first half of fiscal year 2025, subject to certain regulatory approvals and other customary closing conditions. We intend to seek a strategic partner to acquire ZT Systems' manufacturing business.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an ongoing basis, including those related to our revenue, inventories, goodwill, long-lived and intangible assets, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.
Management believes there have been no significant changes for the three and nine months ended September 28, 2024 to the items that we disclosed as our critical accounting estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
Results of Operations
Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the second half of the year than in the first half of the year, although market conditions and product transitions could impact this trend.
The following table provides a summary of net revenue and operating income (loss) by segment:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 |
| (In millions) |
Net revenue: | | | | | | | |
Data Center | $ | 3,549 | | | $ | 1,598 | | | $ | 8,720 | | | $ | 4,214 | |
Client | 1,881 | | | 1,453 | | | 4,741 | | | 3,190 | |
Gaming | 462 | | | 1,506 | | | 2,032 | | | 4,844 | |
Embedded | 927 | | | 1,243 | | | 2,634 | | | 4,264 | |
Total net revenue | $ | 6,819 | | | $ | 5,800 | | | $ | 18,127 | | | $ | 16,512 | |
Operating income (loss): | | | | | | | |
Data Center | $ | 1,041 | | | $ | 306 | | | $ | 2,325 | | | $ | 601 | |
Client | 276 | | | 140 | | | 451 | | | (101) | |
Gaming | 12 | | | 208 | | | 240 | | | 747 | |
Embedded | 372 | | | 612 | | | 1,059 | | | 2,167 | |
All Other | (977) | | | (1,042) | | | (3,046) | | | (3,355) | |
Total operating income | $ | 724 | | | $ | 224 | | | $ | 1,029 | | | $ | 59 | |
Data Center
Data Center net revenue of $3.5 billion for the three months ended September 28, 2024 increased by 122%, compared to net revenue of $1.6 billion for the prior year period. Data Center net revenue of $8.7 billion for the nine months ended September 28, 2024 increased by 107%, compared to net revenue of $4.2 billion for the prior year period. The increase in both periods was primarily driven by the strong ramp of AMD Instinct GPU shipments and growth in AMD EPYC CPU sales.
Data Center operating income was $1.0 billion for the three months ended September 28, 2024, compared to operating income of $306 million for the prior year period. Data Center operating income was $2.3 billion for the nine months ended September 28, 2024, compared to operating income of $601 million for the prior year period. The increase in operating income in both periods was primarily driven by higher revenue, partially offset by higher operating expenses.
Client
Client net revenue of $1.9 billion for the three months ended September 28, 2024 increased by 29%, compared to net revenue of $1.5 billion for the prior year period. The increase was primarily driven by a 25% increase in unit shipments and a 3% increase in average selling price of AMD Ryzen desktop and mobile processors driven by strong demand for “Zen 5” AMD Ryzen processors.
Client net revenue of $4.7 billion for the nine months ended September 28, 2024 increased by 49%, compared to net revenue of $3.2 billion for the prior year period, primarily driven by a 36% increase in unit shipments and a 9% increase in average selling price of AMD Ryzen mobile and desktop processors. The increase was driven by an improvement from weak PC market conditions and inventory corrections across the PC supply chain experienced in the first half of fiscal year 2023.
Client operating income was $276 million for the three months ended September 28, 2024, compared to operating income of $140 million for the prior year period. Client operating income was $451 million for the nine months ended September 28, 2024, compared to operating loss of $101 million for the prior year period. The increase in operating income in both periods was primarily driven by higher revenue, partially offset by higher operating expenses.
Gaming
Gaming net revenue of $462 million for the three months ended September 28, 2024 decreased by 69%, compared to net revenue of $1.5 billion for the prior year period. Gaming net revenue of $2.0 billion for the nine months ended September 28, 2024 decreased by 58%, compared to net revenue of $4.8 billion for the prior year period. The decrease in both periods was primarily due to lower semi-custom revenue.
Gaming operating income was $12 million for the three months ended September 28, 2024, compared to operating income of $208 million for the prior year period. Gaming operating income was $240 million for the nine months ended September 28, 2024, compared to operating income of $747 million for the prior year period. The decrease in operating income in both periods was primarily due to lower revenue.
Embedded
Embedded net revenue of $927 million for the three months ended September 28, 2024 decreased by 25%, compared to net revenue of $1.2 billion for the prior year period. Embedded net revenue of $2.6 billion for the nine months ended September 28, 2024 decreased by 38%, compared to net revenue of $4.3 billion for the prior year period. Net revenue decreased in both periods as customers continued to normalize their inventory levels.
Embedded operating income was $372 million for the three months ended September 28, 2024, compared to operating income of $612 million for the prior year period. Embedded operating income was $1.1 billion for the nine months ended September 28, 2024, compared to operating income of $2.2 billion for the prior year period. The decrease in operating income in both periods was primarily due to lower revenue.
All Other
All Other operating loss of $977 million for the three months ended September 28, 2024 primarily consisted of $585 million of amortization of acquisition-related intangibles and $351 million of stock-based compensation expense. All Other operating loss of $1.0 billion for the prior year period primarily consisted of $660 million of amortization of acquisition-related intangibles and $353 million of stock-based compensation expense.
All Other operating loss of $3.0 billion for the nine months ended September 28, 2024 primarily consisted of $1.8 billion of amortization of acquisition-related intangibles and $1.1 billion of stock-based compensation expense. All Other operating loss of $3.4 billion for the prior year period primarily consisted of $2.2 billion of amortization of acquisition-related intangibles and $1.0 billion of stock-based compensation expense.
International Sales
International sales as a percentage of net revenue were 72% and 68% for the three months ended September 28, 2024 and September 30, 2023, respectively. International sales as a percentage of net revenue were 65% and 67% for the nine months ended September 28, 2024 and September 30, 2023, respectively. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. Substantially all of our sales transactions were denominated in U.S. dollars.
Comparison of Gross Margin, Expenses, Licensing Gain, Interest Expense, Other Income (Expense) and Income Taxes
The following is a summary of certain condensed consolidated statement of operations data for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended | |
| September 28, 2024 | | September 30, 2023 | | September 28, 2024 | | September 30, 2023 | |
| In millions, except percentages | |
Net revenue | $ | 6,819 | | | $ | 5,800 | | | $ | 18,127 | | | $ | 16,512 | | |
Cost of sales | 3,167 | | | 2,843 | | | 8,590 | | | 8,236 | | |
Amortization of acquisition-related intangibles | 233 | | | 210 | | | 694 | | | 727 | | |
Gross profit | 3,419 | | | 2,747 | | | 8,843 | | | 7,549 | | |
Gross margin | 50 | % | 47 | % | 49 | % | 46 | % |
Research and development | 1,636 | | | 1,507 | | | 4,744 | | | 4,361 | | |
Marketing, general and administrative | 721 | | | 576 | | | 1,991 | | | 1,708 | | |
Amortization of acquisition-related intangibles | 352 | | | 450 | | | 1,116 | | | 1,449 | | |
Licensing gain | (14) | | | (10) | | | (37) | | | (28) | | |
Interest expense | (23) | | | (26) | | | (73) | | | (79) | | |
Other income (expense), net | 36 | | | 59 | | | 144 | | | 148 | | |
Income tax (benefit) | (27) | | | (39) | | | (38) | | | (49) | | |
Equity income in investee | 7 | | | 3 | | | 21 | | | 10 | | |
Gross Margin
Gross margin was 50% and 47% for the three months ended September 28, 2024 and September 30, 2023, respectively. Gross margin was 49% and 46% for the nine months ended September 28, 2024 and September 30, 2023, respectively. The increase in both periods was primarily driven by higher Data Center segment revenue.
Expenses
Research and Development Expenses
Research and development expenses of $1.6 billion for the three months ended September 28, 2024 increased by $129 million, or 9%, compared to $1.5 billion for the prior year period. Research and development expenses of $4.7 billion for the nine months ended September 28, 2024 increased by $383 million, or 9%, compared to $4.4 billion for the prior year period. The increase in both periods was primarily due to higher employee-related costs from an increase in headcount in support of our continued focus on our AI strategy.
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses of $721 million for the three months ended September 28, 2024 increased by $145 million, or 25%, compared to $576 million for the prior year period. Marketing, general and administrative expenses of $2.0 billion for the nine months ended September 28, 2024 increased by $283 million, or 17%, compared to $1.7 billion for the prior year period. The increase in both periods was primarily due to an increase in go-to-market activities driven by revenue growth.
Amortization of Acquisition-Related Intangibles
Amortization of acquisition-related intangibles of $585 million for the three months ended September 28, 2024 decreased by $75 million, or 11%, compared to $660 million for the prior year period. Amortization of acquisition-related intangibles of $1.8 billion for the nine months ended September 28, 2024 decreased by $366 million, or 17%, compared to $2.2 billion for the prior year period. The decrease was primarily due to certain acquisition-related intangibles that were fully amortized in the prior fiscal year.
Interest Expense
Interest expense for the three and nine months ended September 28, 2024 was $23 million and $73 million, respectively, compared to $26 million and $79 million, respectively, for the prior year period. Our 2.95% Notes with a principal amount of $750 million were repaid in June 2024.
Other Income (Expense), Net
Other income (expense), net is primarily comprised of interest income from short-term investments, changes in valuation of equity investments, and foreign currency transaction gains and losses.
Other income (expense), net for the three and nine months ended September 28, 2024 was $36 million and $144 million, respectively. Other income (expense), net for the prior year period was $59 million and $148 million, respectively. The decrease for the three months period was primarily due to lower interest income from lower balances held in short-term investments compared to the prior period.
Income Taxes
We determine income taxes for interim reporting periods by applying our estimated annual effective tax rate to the year-to-date results and adjusted for tax items discrete to each period.
For the three and nine months ended September 28, 2024, we recorded an income tax benefit of $27 million and $38 million representing an effective tax rate of (3.6)% and (3.3)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and our estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits, partially offset by the tax rate detriment from foreign earnings. The tax benefit for the three and nine months ended September 28, 2024 reflected discrete tax benefits of $28 million and $68 million, respectively, primarily related to tax effects of stock-based compensation partially offset by the interest and penalties accrued for uncertain tax positions.
For the three months and nine months ended September 30, 2023, we recorded an income tax benefit of $39 million and $49 million representing an effective tax rate of (15.2)% and (35.8)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and our estimated annual effective tax rate was primarily due to the income tax benefit from FDII and R&D tax credits. The tax benefit for the three months ended September 30, 2023 reflected a discrete tax benefit of $17 million, primarily related to tax effects of stock-based compensation. The tax benefit for the nine months ended September 30, 2023 reflected a discrete tax benefit of $29 million, primarily related to tax effects of stock-based compensation partially offset by the interest and penalties accrued for uncertain tax positions.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of September 28, 2024 and December 30, 2023, our cash, cash equivalents and short-term investments were $4.5 billion and $5.8 billion, respectively. The percentage of cash, cash equivalents and short-term investments held domestically as of September 28, 2024 and December 30, 2023 were 85% and 77%, respectively.
Our operating, investing and financing activities for the nine months ended September 28, 2024 compared to the prior year period are as described below:
| | | | | | | | | | | |
| Nine Months Ended |
| September 28, 2024 | | September 30, 2023 |
| (In millions) |
Net cash provided by (used in): | | | |
Operating activities | $ | 1,742 | | | $ | 1,286 | |
Investing activities | 113 | | | (1,573) | |
Financing activities | (1,891) | | | (987) | |
Net (decrease) in cash and cash equivalents | $ | (36) | | | $ | (1,274) | |
We have $3.0 billion available under an unsecured revolving credit facility that expires on April 29, 2027. We also have $3.0 billion available under a commercial paper program.
As of September 28, 2024, our principal debt obligations were $1.8 billion. Our 2.95% Notes with a principal amount of $750 million were repaid in June 2024 and our remaining debt will mature starting in 2030.
As of September 28, 2024, we had unconditional purchase commitments of approximately $4.3 billion, of which $2.5 billion are for the remainder of fiscal year 2024. On an ongoing basis, we work with our suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.
During the three months ended September 28, 2024, we paid $548 million for Silo AI, net of cash acquired, using available cash.
On August 17, 2024, we agreed to acquire ZT Systems (the Acquisition). Upon closing of the Acquisition, we will pay approximately $3.4 billion in cash and 8,335,852 shares of the Company’s common stock and to the extent certain conditions are met, we will pay an additional $300 million of cash and up to 740,963 shares of the Company’s common stock. The Acquisition is expected to close in the first half of fiscal year 2025, subject to certain regulatory approvals and other customary closing conditions. We intend to seek a strategic partner to acquire ZT Systems' manufacturing business.
We believe our cash, cash equivalents, short-term investments and cash flows from operations along with our revolving credit facility and commercial paper program will be sufficient to fund operations, capital expenditures, purchase commitments and acquisitions over the next 12 months and beyond. We believe we will be able to access the capital markets should we require additional funds. However, we cannot assure that such funds will be available on favorable terms, or at all.
Operating Activities
Our working capital cash inflows and outflows from operations are primarily cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures.
Net cash provided by operating activities was $1.7 billion in the nine months ended September 28, 2024, primarily due to our net income of $1.2 billion, adjusted for non-cash and non-operating charges of $2.6 billion and net cash outflows of $2.0 billion from changes in our operating assets and liabilities. The primary drivers of the change in operating assets and liabilities were a $1.9 billion increase in accounts receivable due to the timing of customer payments and higher revenue, a $1.1 billion increase in inventory primarily to support the continued ramp of Data Center products in advanced process technology nodes and $1.0 billion of tax payments.
Net cash provided by operating activities was $1.3 billion in the nine months ended September 30, 2023, primarily due to our net income of $187 million, adjusted for non-cash and non-operating charges of $2.9 billion and net cash outflows of $1.8 billion from changes in our operating assets and liabilities. The primary drivers of the change in operating assets and liabilities were a $929 million increase in accounts receivable driven primarily by higher revenue in the last month of the quarter ended September 30, 2023 compared to the last month of the quarter ended December 31, 2022, and a $674 million increase in inventory primarily to support the continued ramp of Data Center and Client products in advanced process technology nodes.
Investing Activities
Net cash provided by investing activities was $113 million for the nine months ended September 28, 2024 which primarily consisted of $1.9 billion of proceeds from the maturity and sale of short-term investments, partially offset by cash used in the purchases of short-term investments of $707 million, cash used in acquisition, net of cash acquired of $548 million, and purchases of property and equipment of $428 million.
Net cash used in investing activities was $1.6 billion for the nine months ended September 30, 2023 which primarily consisted of cash used in the purchases of short-term investments of $3.3 billion and purchases of property and equipment of $407 million, partially offset by $2.2 billion of proceeds from the maturity and sale of short-term investments.
Financing Activities
Net cash used in financing activities was $1.9 billion for the nine months ended September 28, 2024, which primarily consisted of repayment of the 2.95% Notes of $750 million, stock repurchases for tax withholding on employee equity plans of $686 million, and common stock repurchase of $606 million.
Net cash used in financing activities was $987 million for the nine months ended September 30, 2023, which primarily consisted of common stock repurchases of $752 million and stock repurchases for tax withholding on employee equity plans of $382 million, partially offset by a cash inflow of $148 million from issuance of common stock under our employee equity plans.
| | | | | |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Reference is made to “Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
There have not been any material changes in interest rate risk, default risk or foreign exchange risk since December 30, 2023.
| | | | | |
ITEM 4. | CONTROLS AND PROCEDURES |
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports made under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of September 28, 2024, the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
There were no changes in our internal controls over financial reporting for the three months ended September 28, 2024 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II. OTHER INFORMATION
For a discussion of our legal proceedings, refer to Note 13—Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q).
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. In addition, you should consider the interrelationship and compounding effects of two or more risks occurring simultaneously.
Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, financial condition and results of operations.
Economic and Strategic Risks
•Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field.
•Nvidia’s dominance in the graphics processing unit market and its aggressive business practices may limit our ability to compete effectively on a level playing field.
•The markets in which our products are sold are highly competitive and rapidly evolving.
•The semiconductor industry is highly cyclical and has experienced severe downturns.
•The demand for our products depends in part on the market conditions in the industries into which they are sold.
•The success of our business depends on our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting significant industry transitions.
•The loss of a significant customer may have a material adverse effect on us.
•Economic and market uncertainty may adversely impact our business and operating results.
•Our operating results are subject to quarterly and seasonal sales patterns.
•If we cannot adequately protect our technology or other intellectual property through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.
•Unfavorable currency exchange rate fluctuations could adversely affect us.
Operational and Technology Risks
•We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected.
•Essential equipment, materials, substrates or manufacturing processes may not be available to us.
•We may fail to achieve expected manufacturing yields for our products.
•Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products.
•Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
•IT outages, data loss, data breaches and cyberattacks could disrupt operations and compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation, financial condition and results of operations.
•Uncertainties involving the ordering and shipment of our products could materially adversely affect us.
•Our ability to design and introduce new products includes the use of third-party intellectual property.
•We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business and products.
•If we lose Microsoft Corporation’s support for our products or other software vendors do not design and develop software to run on our products, our ability to sell our products could be materially adversely affected.
•Our reliance on third-party distributors and add-in-board (AIB) partners subjects us to certain risks.
•Our business depends on the proper functioning of our internal business processes and information systems.
•Our products may not be compatible with some or all industry-standard software and hardware.
•Costs related to defective products could have a material adverse effect on us.
•We may fail to maintain the efficiency of our supply chain as we respond to changes in customer demand.
•We outsource to third parties certain supply-chain logistics functions.
•We may be unable to effectively control the sales of our products on the gray market.
•Climate change may have a long-term impact on our business.
Legal and Regulatory Risks
•Government actions and regulations may limit our ability to export our products to certain customers.
•If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
•Our business is subject to potential tax liabilities, including as a result of tax regulation changes.
•We are party to litigation and may become a party to other claims or litigation.
•We are subject to environmental laws, conflict minerals regulations, as well as a variety of other laws or regulations.
•Evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters could result in additional costs, harm to our reputation and a loss of customers.
•Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.
•The agreements governing our notes, our guarantee of Xilinx’s notes, and our Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.
Merger, Acquisitio