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amd-20231230

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

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Washington, D.C. 20549

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FORM 10-K

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(Mark One)

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For the fiscal year ended

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OR

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For the transition period from

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to

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Commission File Number

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ADVANCED MICRO DEVICES, INC.

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(Exact name of registrant as specified in its charter)

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Delaware

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(State or other jurisdiction of incorporation or organization)

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(I.R.S. Employer  Identification No.)

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2485 Augustine Drive

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Santa Clara, California 95054

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(Address of principal executive offices)(Zip Code)

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(Title of each class)

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(Trading symbol)

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Common Stock, $0.01 par value per share

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AMD

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The NASDAQ Global Select Market

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None

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Large accelerated filer

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Non-accelerated filer

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Emerging growth company

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DOCUMENTS INCORPORATED BY REFERENCE

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INDEX

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PART I

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Business

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Risk Factors

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Unresolved Staff Comments

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TEM 1C.

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ybersecurity

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Properties

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Legal Proceedings

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Mine Safety Disclosures

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PART II

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[Reserved]

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Quantitative and Qualitative Disclosure About Market Risk

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Financial Statements and Supplementary Data

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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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Controls and Procedures

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Other Information

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Disclosures Regarding Foreign Jurisdictions that Prevent Inspections

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PART III

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Directors, Executive Officers and Corporate Governance

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Executive Compensation

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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Certain Relationships and Related Transactions and Director Independence

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Principal Accountant Fees and Services

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PART IV

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ITEM 15.

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Exhibits and Financial Statement

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Schedules

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ITEM 16.

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Form 10-K Summary

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SIGNATURES

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Table of Contents

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PART I

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ITEM 1.

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BUSINESS

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Cautionary Statement Regarding Forward-Looking Statements

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Overview

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We are a global semiconductor company primarily offering:

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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;

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Table of Contents

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CPUs, APUs and chipsets for desktop, notebook, and handheld personal computers;

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discrete GPUs, and semi-custom SoC products and development services; and

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embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.

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From time to time, we may also sell or license portions of our intellectual property (IP) portfolio.

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Additional Information

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AMD, the AMD Arrow logo, AMD CDNA, AMD Instinct, RDNA, Alveo, Artix, Athlon, CoolRunner, EPYC, FidelityFX, FirePro, FreeSync, Geode, Infinity Fabric, Kinex, Kria, Pensando, Radeon, ROCm, Ryzen, Spartan, Threadripper, UltraScale, UltraScale+, V-Cache, Versal, Virtex, Vitis, Vivado, Xilinx, XDNA, Zynq and combinations thereof are trademarks of Advanced Micro Devices, Inc.

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Microsoft, Windows, DirectX and Xbox One are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. PCIe is a registered trademark of PCI-SIG Corporation. Linux is the registered trademark of Linus Torvalds in the United States and/or other countries. PlayStation is a registered trademark or trademark of Sony Interactive Entertainment, Inc. Arm is a registered trademark of ARM Limited (or its subsidiaries) in the United States and/or other countries. Vulkan and the Vulkan logo are registered trademarks of Khronos Group Inc. Steam Deck and the Steam Deck logo are trademarks and/or registered trademarks of Valve Corporation in the United States and/or other countries.

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Other names are for informational purposes only and are used to identify companies and products and may be trademarks of their respective owners.

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Website Access to Our SEC Filings and Corporate Governance Documents

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On the Investor Relations pages of our website, http://ir.amd.com, we post links to our filings with the SEC, our Principles of Corporate Governance, our Code of Ethics for our executive officers, all other senior finance executives and certain representatives from legal and internal audit, our Worldwide Standards of Business Conduct, which applies to our Board of Directors and all of our employees, and the charters of the committees of our Board of Directors. Our filings with the SEC are posted as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. The SEC website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can also obtain copies of these documents by writing to us at: Corporate Secretary, AMD, 2485 Augustine Drive, Santa Clara, California 95054, or emailing us at: Corporate.Secretary@amd.com. All of these documents and filings are available free of charge.

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If we make substantive amendments to our Code of Ethics or grant any waiver, including any implicit waiver, to our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions, we intend to disclose the nature of such amendment or waiver on our website.

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The information contained on our website is not incorporated by reference in, or considered to be a part of, this report.

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Our Industry

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We are a global semiconductor company. Semiconductors are components used in a variety of electronic products and systems. An integrated circuit (IC) is a semiconductor device that consists of many interconnected transistors on a single chip. Since the invention of the transistor in 1948, improvements in IC process and design technologies have led to the development of smaller, more complex and more reliable ICs at a lower cost-per-function.

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Table of Contents

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Our Strategy

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We believe that AI capabilities are central to products and solutions across our markets and we have a broad technology roadmap and products targeting AI training and inference spanning cloud, edge and intelligent endpoints. We offer products that include capabilities to support AI deployment and we expect this part of our business to grow. Our AI product portfolio caters to customers across strategic markets, from data center to enterprise to client. We achieve this through our family of CPUs, GPUs, FPGAs, and Adaptive SoCs. With the acquisitions of Mipsology SAS and Nod, Inc. in 2023, we expanded our AI software capabilities to accelerate our AI growth strategy centered on an open software ecosystem to help lower the barriers of entry for customers through developer tools, libraries and models.

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We develop world-class software platforms that are used to enable our high-performance products. Our software platforms include development tools, compilers, and drivers for our CPUs, APUs, GPUs and FPGAs. We work closely with our customers to define and develop customized solutions to precisely match their requirements. We enable this by combining our broad portfolio of high-performance IP with our leadership design and packaging to deliver world-class customized solutions to our customers. We invest in innovative technology and solutions such as our custom-ready chiplet platform and AMD Infinity Architecture to maintain our leadership position as a custom-design silicon provider of choice.

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Our four reportable segments are:

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the Data Center segment, which primarily includes server CPUs, GPUs, APUs, DPUs, FPGAs, SmartNICs, AI accelerators and Adaptive SoC products for data centers;

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the Client segment, which primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers;

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the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and

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the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, SOMs, and Adaptive SoC products.

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In addition to these reportable segments, we have an All Other category, which is not a reportable segment.

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Table of Contents

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Data Center Segment

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Data Center Market

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The Data Center segment primarily includes server-class CPUs, GPUs, AI accelerators, DPUs, FPGAs, SmartNICs, and Adaptive SoC products. We leverage our technology to address the computational, visual data processing and AI workload acceleration needs in the data center market. Modern data centers require high performance, energy efficient, scalable and adaptable compute engines to meet the demand driven by the growing amount of data that needs to be stored, accessed, analyzed and managed. Different combinations of CPUs, GPUs, DPUs, FPGAs, SmartNICs, and Adaptive SoCs enable the optimization of performance and power for a diverse set of workloads.

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Data Center Products

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Server CPUs.

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th

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rd

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Data Center GPUs.

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FPGAs and Adaptive SoCs.

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platform for accelerating workloads including AI processing in the data center, at the edge or the cloud. Our AMD Alveo MA35D media accelerator is designed to deliver high channel density, power efficiency and ultra-low-latency performance. To make it

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accessible for developers, Alveo is available on most major OEM server platforms, as well as a growing presence across all major cloud providers who provide FPGA-as-a-Service (FaaS).

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DPUs.

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Our P4 programmable AMD Pensando DPUs are designed to help offload data center infrastructure services from the host CPU, and coupled with our comprehensive networking software stack, AMD DPUs help enable cloud and enterprise customers to optimize performance for network, storage, and security services at cloud scale. Designed for minimal latency, jitter and power impact, our DPUs can help large Infrastructure as a Service (IaaS) cloud providers improve workload performance for hosted virtualized and bare-metal offerings.

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Table of Contents

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Client Segment

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Client Market

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Client Products

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Desktop CPUs.

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Notebook CPUs.

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Commercial CPUs.

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Chipsets.

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We offer a full suite of chipset products to support our AMD Ryzen and Threadripper platforms, including chipsets for the AM5 socket like the X670 chipsets which support PCIe

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5.0 (fifth generation Peripheral Component Interconnect Express motherboard interface) designed for enthusiast desktop platforms. In the AM5 platform we also offer B650 chipsets to enable a broader range of solutions in the market. In the AM4 ecosystem for 5000-series processors and prior, we offer the X570, B550 and A520 chipsets. In addition, we continue to offer the B450 chipsets that are combined with AMD Ryzen processors for the AM4 desktop platform for the performance and affordable mainstream platforms segments. In HEDT and Workstation segments, we offer the WRX90 and TRX50 chipsets to support 7000-series Threadripper and Threadripper PRO platforms, as well as the WRX80 chipsets to support the 5000-series Threadripper PRO platforms.

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Table of Contents

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Gaming Segment

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Gaming Market

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5 and Microsoft

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Gaming Products

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Semi-Custom Products.

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Our semi-custom products are tailored, high-performance, customer-specific solutions based on our CPU, GPU and multi-media technologies. We work closely with our customers to define solutions to precisely match the requirements of the device or application. We developed the semi-custom SoC products that power both the Sony PlayStation

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5 as well as the Microsoft

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Discrete Desktop and Notebook GPUs

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Professional GPUs.

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Embedded Segment

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The Embedded Market

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The Embedded segment primarily includes embedded CPUs, GPUs, APUs, FPGAs, and Adaptive SoC products. Embedded products address computing needs in automotive, industrial, test, measurement, emulation, medical, broadcast, professional audio visual (ProAV), aerospace, defense, communications, networking, security, and storage markets as well as thin clients, which are computers that serve as an access device on a network. Typically, our embedded products are used in applications that require varying levels of performance, where key features may include relatively low power, small form factors, and 24x7 operations. High-performance graphics are important in some embedded systems. Support for Linux

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, Windows

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and other operating systems as well as for increasingly sophisticated applications are also critical for some customers. Other requirements may include meeting rigid specifications for industrial temperatures, shock, vibration and reliability. The embedded market has moved from developing proprietary, custom designs to leveraging industry-standard instruction set architectures and processors as a way to help reduce costs and speed time to market.

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Embedded Products

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Embedded CPUs, APUs and GPUs

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Our products for embedded platforms include AMD EPYC Embedded CPUs, AMD Ryzen Embedded V-Series APUs and CPUs, AMD Ryzen Embedded R-Series APUs and CPUs, AMD Ryzen Embedded 5000 Series processors and AMD Ryzen Embedded 7000 Series processors

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FPGAs and Adaptive SoCs.

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Development Boards, Kits and Configuration Products.

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Table of Contents

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Legacy Product Families.

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Design Platforms and Services

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Adaptable Platforms.

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We offer two types of platforms that support our customers' designs and reduce their development efforts: FPGAs and Adaptive SoCs. All devices feature adaptable hardware that enables our customers to implement customized, domain-specific architectures. With both hardware-accelerated performance and flexibility beyond what CPUs, GPUs, application-specific standard parts (ASSPs), and application-specific integrated circuits (ASICs) can offer, customers can introduce new innovations to the market quickly. FPGAs feature reconfigurable hardware as well as integrated memory, digital signal processing, analog mixed signal, high-speed serial transceivers, and networking cores coupled with advanced software for a broad range of applications in all of our end markets. Our Adaptive SoCs feature a heterogeneous processing subsystem with integrated programmable hardware fabric targeting embedded systems needing real-time control, analytics, sensor fusion, and adaptable hardware for differentiation and acceleration. Our Zynq UltraScale+ RFSoCs feature integrated high-performance RF data converters targeting wireless, radar, and cable access applications. Enabled by both hardware and software design tools and an extensive operating system, middleware, software stack, and IP ecosystem, SoC platforms target software developers as well as traditional hardware designers. Versal is the most recent addition to the silicon portfolio. Versal combines Scalar Processing Engines, Adaptable Hardware Engines, and Intelligent Engines with leading-edge memory and interfacing technologies to deliver powerful heterogeneous acceleration for any application. This product family is ideally suited to accelerate a broad set of applications in the emerging era of big data and AI. Versal hardware and software can be programmed and optimized by software developers, data scientists, and hardware developers alike, enabled by a host of tools, software, libraries, IP, middleware, and frameworks that enable industry-standard design flows.

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Software Development Platform.

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Sales and Marketing

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We sell our products through our direct sales force and through independent distributors and sales representatives in both domestic and international markets. Our sales arrangements generally operate on the basis of product forecasts provided by the particular customer, but do not typically include any commitment or requirement for minimum product purchases. We primarily use product quotes, purchase orders, sales order acknowledgments and contractual agreements as evidence of our sales arrangements. Our agreements typically contain standard terms and conditions covering matters such as payment terms, warranties and indemnities for issues specific to our products.

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We generally warrant that our products sold to our customers will conform to our approved specifications and be free from defects in material and workmanship under normal use and conditions for one year. We offer up to three-year limited warranties for certain product types, and sometimes provide other warranty periods based on negotiated terms with certain customers.

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We market and sell our latest products under the AMD trademark. Our client processors include: AMD Ryzen, AMD Ryzen PRO, AMD Ryzen Threadripper, AMD Ryzen Threadripper PRO, AMD Athlon, AMD Athlon PRO, and AMD PRO A-Series. These products service desktop and notebook personal computers.

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Our product brand for the consumer graphics market is AMD Radeon graphics, and AMD Embedded Radeon graphics is our product brand for the embedded graphics market.

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Our product brand for professional graphics products is AMD Radeon PRO graphics.

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Table of Contents

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Our product brands for data center graphics are Radeon PRO V-series, and AMD Instinct accelerators for servers. We also market and sell our chipsets under AMD trademarks.

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Our product brand for server microprocessors is AMD EPYC processors.

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Our FPGA product brands are Virtex-6, Virtex-7, Virtex UltraScale+, Kintex-7, Kintex UltraScale, Kintex UltraScale+, Artix-7, Artix UltraScale+, Spartan-6 and Spartan-7.

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Our product brands for Adaptive SoCs are Zynq-7000, Zynq UltraScale+ MPSoC, Zynq UltraScale+ RFSoCs, Versal HBM, Versal Premium, Versal Prime, Versal AI Core, Versal AI Edge, Vitis and Vivado.

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Our product brand for System-on-Module (SOM) is Kria.

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Our compute and network acceleration board products are sold under the Alveo and Pensando brands.

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We market our products through direct marketing and co-marketing programs. In addition, we have cooperative advertising and marketing programs with customers and third parties, including market development programs, pursuant to which we may provide product information, training, marketing materials and funds. Under our co-marketing development programs, eligible customers can use market development funds as reimbursement for advertisements and marketing programs related to our products and third-party systems integrating our products, subject to meeting defined criteria.

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Customers

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Our Data Center Segment customers consist primarily of hyperscale data centers, original equipment manufacturers (OEMs), original design manufacturers (ODMs), system integrators and independent distributors in both domestic and international markets. ODMs provide design and/or manufacturing services to branded and unbranded private label resellers, OEMs and system builders.

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Customers of our Client Segment products consist primarily of PC OEMs, a network of independent distributors and, for chipset products, ODMs that manufacture motherboards. Our Gaming Segment customers include PC OEMs and independent distributors as well as add-in-board manufacturers (AIBs), independent game console and portable gaming devices manufacturers and contract manufacturers for AMD branded graphics cards.

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Our Embedded Segment products are sold to customers in a very wide range of markets such as Aerospace and Defense, Test and Measurement, Industrial, Automotive, Consumers, Broadcast, Communication Infrastructure and Data Center. For these products we either sell directly to our customers or through a network of distributors and OEM partners. We are also developing a network of Value Added Resellers (VARs) and Integrated Solution Vendors (ISVs) for our Alveo products.

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We also work with our customers to create differentiated products that leverage our CPU, GPU, DPU and APU technology. Certain customers pay us non-recurring engineering fees for design and development services and a purchase price for the resulting products.

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One customer accounted for 18% of our consolidated net revenue for the year ended December 30, 2023. Sales to this customer consisted of sales of products from our Gaming segment. A loss of this customer would have a material adverse effect on our business.

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Table of Contents

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Original Equipment Manufacturers

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Hyperscale Data Centers

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Large multi-national public cloud service providers and hyperscale private data centers directly and indirectly purchase a substantial portion of our data center-focused products, including server CPUs, GPU accelerators, DPUs, FPGAs and Adaptive SOCs.

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These products are incorporated into servers and other data center appliances sold by OEMs to the hyperscale customers or into custom servers or hardware designed by or for these customers and manufactured by ODMs or contract manufacturers.

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Hyperscale data centers use these products to operate web-based applications or to support public cloud computing and storage service offerings, including but not limited to AI workloads such as generative AI models.

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Third-Party Distributors

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Our authorized channel distributors resell to sub-distributors and OEMs, ODMs, and other customers. Typically, distributors handle a wide variety of products, and may include products from other manufacturers that compete with our products. Distributors typically maintain an inventory of our products. In most instances, our agreements with distributors protect their inventory of our products against price reductions and provide certain return rights with respect to any product that we have removed from our price book or otherwise subject to discontinuation. In addition, some agreements with our distributors may contain standard stock rotation provisions permitting limited product returns.

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Add-in-Board (AIB) Manufacturers and System Integrators

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We offer component-level graphics and chipset products to AIB manufacturers who in turn build and sell board-level products using our technology to system integrators (SIs), retail buyers and sub distributors. Our agreements with AIBs protect their inventory of our products against price reductions. We also sell directly to our SI customers. SIs typically sell from positions of regional or product-based strength in the market. They usually operate on short design cycles and can respond quickly with new technologies. SIs often use discrete graphics solutions as a means to differentiate their products and add value to their customers.

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Competition

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The markets in which our products are sold are highly competitive and delivering the latest and best products to market on a timely basis is critical to achieving revenue growth. We believe that the main factors that determine our product competitiveness are total cost of ownership, timely product introductions, product quality, product features and capabilities (including accelerations for key workloads such as AI, energy efficiency (including power consumption and battery life, given their impact on total cost of ownership), reliability, processor clock speed, performance, size (or form factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of integration, software and hardware compatibility, ease of use and functionality of software design tools, completeness of applicable software solutions, security and stability, brand recognition and availability. We expect that competition will continue to be intense due to rapid technological changes, frequent product introductions by our competitors or new competitors of products that may provide better performance or experience or that may include additional features that render our products comparatively less competitive.

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Competition in Data Center Segment

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In Data Center, we compete against Intel Corporation (Intel) and NVIDIA Corporation (NVIDIA) with our CPU, GPU and DPU server products. In addition, we compete against Intel with our FPGA and Adaptive SoC server products. A variety of smaller fabless silicon companies offer proprietary accelerator solutions and ARM based CPUs targeting data center use-cases. In addition, some of our customers are internally developing their own data center microprocessor products and accelerator products which could impact the available market for our products.

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Table of Contents

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Competition in Client Segment

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Our primary competitor in the supply of CPUs and APUs is Intel.

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A variety of companies provide or have developed ARM-based microprocessors and platforms. ARM-based designs are being used in the PC market, which could lead to further growth and development of the ARM ecosystem.

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Competition in Gaming Segment

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Competition in Embedded Segment

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We expect continued competition from our primary FPGA competitors such as Intel, Lattice Semiconductor Corporation and Microsemi Corporation (Microsemi, acquired by Microchip), from ASSP vendors such as Broadcom Corporation, Marvell Technology Group, Ltd., Analog Devices, Texas Instruments Incorporated and NXP Semiconductors N.V., and from NVIDIA. In addition, we expect continued competition from the ASIC market, which has been ongoing since the inception of FPGAs. Intel is our main competitor for embedded CPUs. Other competitors include manufacturers of high-density programmable logic products characterized by FPGA-type architectures; high-volume and low-cost FPGAs as programmable replacements for ASICs and ASSPs; ASICs and ASSPs with incremental amounts of embedded programmable logic; high-speed, low-density complex programmable logic devices (CPLDs); high-performance digital signal processing (DSP) devices; products with embedded processors; products with embedded multi-gigabit transceivers; discrete general-purpose GPUs targeting data center and automotive applications; and other new or emerging programmable logic products

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Research and Development

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We focus our research and development (R&D) activities on designing and developing products. Our main area of focus is on delivering the next generation of processors (CPU and GPU), FPGAs and Adaptive SoCs, accelerators (adaptive, graphics and DPU), System on Modules (SOMs) and SmartNICs and associated software. We focus on designing new ICs with improved performance and performance-per-watt in advanced semiconductor manufacturing processes, the design of logic and interface IP, advanced packaging technologies, and heterogeneous integration technologies. We also focus on software as part of the development of our products, including design automation tools for hardware, embedded software, optimized software tools and libraries that extend the reach of our platforms to software and AI developers. Through our R&D efforts, we were able to introduce a number of new products and enhance our IP core offerings and software.

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We also work with industry leaders on process technology, design tools, intellectual property, software and other industry consortia to conduct early-stage research and development. We are also actively contributing to numerous industry open-source software initiatives across a broad range of technologies. We conduct product and system research and development activities for our products in the United States with additional design and development engineering teams located in various countries who undertake specific activities at the direction of our U.S. headquarters.

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Manufacturing Arrangements and Assembly and Test Facilities

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Third-Party Wafer Foundry Facilities

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We have foundry arrangements with Taiwan Semiconductor Manufacturing Company Limited (TSMC) for the production of wafers for our HPC, FPGA and Adaptive SoC products. We are also a party to a Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES Inc. (GF), with respect to wafer purchases for our HPC products at the 12 nm and 14 nm technology nodes. Additionally, we utilize TSMC, United Microelectronics Corporation (UMC) and Samsung Electronics Co., Ltd. for the production of our integrated circuits (IC) in the form of programmable logic devices.

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Other Third-Party Manufacturers

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We outsource board-level graphics product manufacturing to third-party manufacturers.

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Assembly, Test, Mark and Packaging Facilities

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Wafers for our products are either sorted by the foundry or delivered by the foundry to our assembly, test, mark and packaging (ATMP) partners or subcontractors located in the Asia-Pacific region who package and test our final semiconductor products. We are party to two ATMP joint ventures (collectively, the ATMP JVs) with Tongfu Microelectronics Co., Ltd. The ATMP JVs, Siliconware Precision Industries Ltd. (SPIL) and King Yuan Electronics Company (KYEC) provide ATMP services for our products.

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Intellectual Property and Licensing

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Backlog

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Sales are made primarily pursuant to purchase orders for current delivery or agreements covering purchases over a period of time. Although such orders or agreements may provide visibility into future quarters, they may not necessarily be indicative of actual sales for any succeeding period as some of these orders or agreements may be revised or canceled without penalty.

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Seasonality

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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 these trends.

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Human Capital

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Mission, Culture, and Engagement

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Our Vision - High performance and adaptive computing is transforming our lives.

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Our Mission - Build great products that accelerate next-generation computing experiences.

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Our employees are driven by this vision and mission. Innovation occurs when creative minds and diverse perspectives from all over the world work together. This is the foundation of our unique culture and the reason why we believe our employees are among the most engaged in our industry.

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We conduct a confidential annual survey of our global workforce to measure our culture, engagement, and manager quality. The results are reviewed by our Board of Directors and acted upon by our senior leadership team and individual managers at every level. Results from our 2023 survey reported scores that continued to be among the very best for global companies in the technology industry. Our employees described our culture as inclusive, innovative, open, and respectful, and rated the quality of our managers among the top 10% of our technology industry peers.

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Diversity, Belonging and Inclusion (DB&I)

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Total Rewards

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We have a strong pay for performance culture that we believe drives superior results. Our employees have benefited from our robust financial results through our strong short-term and long-term incentive programs. Our rewards programs enable us to attract, retain and motivate our workforce.

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Development

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We offer our employees opportunities to advance their careers at the Company and the majority of our new leaders are promoted from within. We are focused on leadership progression and encourage our employees to take advantage of new opportunities. Our manager and leadership development programs are highly rated, and we provide specialized development programs for our employees as well as educational assistance in the form of tuition reimbursement for eligible employees to continue their university education or achieve advanced certifications.

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We have an enterprise-wide mentoring program where

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employees have the opportunity to learn from experienced colleagues, develop new skills, and build their professional networks. The program also supports effective onboarding, helping new hires more quickly acclimate to our company culture and work processes. We believe that our mentoring program is a valuable investment in our workforce, and we are committed to its ongoing success.

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Employee Voice

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At AMD, we value the importance of employee voice and actively engage in efforts to ensure that our employees' opinions and perspectives are heard and considered. Our employee voice strategy includes an annual AMDer Survey (engagement survey). Our scores rank AMD in the top 10% of high tech firms on like questions, categories and overall score. Additionally, we measure effectiveness across all elements of the employee lifecycle, including onboarding, exit, and various ad hoc surveys including benefits and total rewards satisfaction. Further, our executive team holds frequent employee roundtables, town halls and global team meetings with question-and-answer segments which facilitates open communication and feedback from our workforce.

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Table of Contents

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Government Regulations

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Our global operations are subject to various United States and foreign laws and regulations, including, but not limited to, those relating to export control, customs, intellectual property, data privacy and security, climate, environmental, health and safety requirements, cybersecurity, tax, employment, competition and anti-trust, anti-corruption, anti-bribery, conflict minerals, corporate governance, financial and other disclosures, and AI. Compliance with these governmental laws and regulations do not presently have a material adverse impact on our capital expenditures, results of operations or competitive position. However, compliance with changes to existing or new regulations may have a material adverse impact on our future capital expenditures, results of operations or competitive position. In addition, the failure to comply with government laws and regulations may subject us to consequences including fines, limits on our ability to sell our products, suspension of certain of our business activities, reputational damage, criminal and civil liabilities, and sanctions, which may have a material adverse effect on our

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capital expenditures, results of operations or competitive position.

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For additional information about government regulations applicable to our business, and their potential impacts see Risk Factors in Item 1A.

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Environmental Regulations

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Our operations and properties are subject to various United States and foreign laws and regulations, including those relating to materials used in our products and the manufacturing processes of our products, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and hazardous wastes and remediation of contamination. These laws and regulations require our suppliers to obtain permits for operations making our products, including the discharge of air pollutants and wastewater. Environmental laws are complex, change frequently and tend to become more stringent over time. For example, the European Union (EU) and China are among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging. Jurisdictions including the EU, Australia, California and China are developing or have finalized market entry or public procurement regulations for computers and servers based on ENERGY STAR specifications as well as additional energy consumption limits.

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Certain environmental laws, including the United States Comprehensive, Environmental Response, Compensation and Liability Act of 1980, or the Superfund Act, impose strict or, under certain circumstances, joint and several liability on current and previous owners or operators of real property for the cost of removal or remediation of hazardous substances and impose liability for damages to natural resources. These laws often impose liability even if the owner or operator did not know of, or was not responsible for, the release of such hazardous substances. These environmental laws also assess liability on persons who arrange for hazardous substances to be sent to disposal or treatment facilities when such facilities are found to be contaminated. Such persons can be responsible for cleanup costs even if they never owned or operated the contaminated facility. We have been named as a responsible party on Superfund clean-up orders for three sites in Sunnyvale, California that are on the National Priorities List. Since 1981, we have discovered hazardous material releases to the groundwater from former underground tanks and proceeded to investigate and conduct remediation at these three sites. The chemicals released into the groundwater were commonly used in the semiconductor industry in the United States in the wafer fabrication process prior to 1979.

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In 1991, we received Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites. We have entered into settlement agreements with other responsible parties on two of the orders. During the term of such agreements, other parties have agreed to assume most of the foreseeable costs as well as the primary role in conducting remediation activities under the orders. We remain responsible for additional costs beyond the scope of the agreements as well as all remaining costs in the event that the other parties do not fulfill their obligations under the settlement agreements.

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To address anticipated future remediation costs under the orders, we have computed and recorded an estimated environmental liability of approximately $4.8 million and have not recorded any potential insurance recoveries in determining the estimated costs of the cleanup. The progress of future remediation efforts cannot be predicted with certainty and these costs may change. We believe that any amount in addition to what has already been accrued would not be material.

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ITEM 1A.       RISK FACTORS

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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.

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Risk Factors Summary

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The following is a summary of the principal risks that could adversely affect our business, financial condition and results of operations.

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Economic and Strategic Risks

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Economic and market uncertainty may adversely impact our business and operating results.

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The semiconductor industry is highly cyclical and has experienced severe downturns.

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The demand for our products depends in part on the market conditions in the industries into which they are sold. There may be fluctuations in demand for our products or a market decline in any of these industries.

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The loss of a significant customer may have a material adverse effect on us.

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We are subject to risks associated with public health crises, such as pandemics and epidemics.

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The markets in which our products are sold are highly competitive.

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Our operating results are subject to quarterly and seasonal sales patterns.

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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.

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Unfavorable currency exchange rate fluctuations could adversely affect us.

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Operational and Technology Risks

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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.

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Essential equipment, materials, substrates or manufacturing processes may not be available to us.

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We may fail to achieve expected manufacturing yields for our products.

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The success of our business is dependent upon 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.

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Our products may be subject to security vulnerabilities that could have a material adverse effect on us.

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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.

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We may encounter difficulties in operating our newly upgraded enterprise resource planning (ERP) system.

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Uncertainties involving the ordering and shipment of our products could materially adversely affect us.

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Our ability to design and introduce new products includes the use of third-party intellectual property.

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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.

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Our reliance on third-party distributors and add-in-board (AIB) partners subjects us to certain risks.

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Our business depends on the proper functioning of our internal business processes and information systems.

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Our products may not be compatible with some or all industry-standard software and hardware.

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Costs related to defective products could have a material adverse effect on us.

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We may fail to maintain the efficiency of our supply chain as we respond to changes in customer demand.

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We outsource to third parties certain supply-chain logistics functions.

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We may be unable to effectively control the sales of our products on the gray market.

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Climate change may have a long-term impact on our business.

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Legal and Regulatory Risks

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Government actions and regulations may limit our ability to export our products to certain customers.

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If we cannot realize our deferred tax assets, our results of operations could be adversely affected.

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Our business is subject to potential tax liabilities, including as a result of tax regulation changes.

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We are party to litigation and may become a party to other claims or litigation.

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We are subject to environmental laws, conflict minerals-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other laws or regulations that could result in additional costs and liabilities.

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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.

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Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.

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Merger, Acquisition and Integration Risks

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Acquisitions, joint ventures, and/or investments, and the failure to integrate acquired businesses may fail to materialize their anticipated benefits and disrupt our business.

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Any impairment of our tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact our financial position and results of operations.

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Liquidity and Capital Resources Risks

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Our indebtedness could adversely affect our financial position and prevent us from implementing our strategy or fulfilling our contractual obligations.

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We may not generate sufficient cash to meet our working capital requirements. If we cannot generate sufficient revenue and operating cash flow, we may face a cash shortfall. Also, our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.

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General Risks

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Our worldwide operations are subject to political, legal and economic risks and natural disasters.

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We may incur future impairments of our technology license purchases.

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Our inability to continue to attract and retain qualified personnel may hinder our business.

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Our stock price is subject to volatility.

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For a more complete discussion of the material risks facing our business, see below.

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Economic and Strategic Risks

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We also compete with Intel in field programmable gate arrays (FPGAs) and Adaptive SoC products. In the graphics processing unit (GPU) market, Intel has developed and released their own high-end discrete GPUs, including gaming focused discrete GPUs. Intel could take actions that place our GPUs at a competitive disadvantage, including giving one or more of our competitors in the graphics market preferential access to its proprietary graphics interface or other useful information or restricting access to external companies.

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Economic and market uncertainty may adversely impact our business and operating results.

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Uncertain global or regional economic conditions have and may in the future adversely impact our business. Uncertainty in the economic environment or other unfavorable changes in economic conditions, such as inflation, higher interest rates, recession, slowing growth, increased unemployment, tighter credit markets, changes in fiscal monetary or trade policy, or currency fluctuations, may negatively impact consumer confidence and spending causing our customers to stop or postpone purchases. For example, our Client segment revenue decreased due to a decline in the PC market in the second half of 2022 and the first half of 2023, and our Embedded segment revenue decreased as a result of an inventory correction in several end markets in the second half of 2023. During challenging economic times, our current or potential future customers may experience cash flow problems and as a result may modify, delay or cancel plans to purchase our products. Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, accounts receivable that they owe us. The risk related to our customers potentially defaulting on or delaying payments to us is increased because we expect that a small number of customers will continue to account for a substantial part of our revenue. Any inability of our current or potential future customers to pay us for our products may adversely affect our earnings and cash flow. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to manufacture our products. Adverse changes in economic conditions could increase costs of memory, equipment, materials or substrates and other supply chain expenses. If we are not able to procure a stable supply of materials on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a supply shortage or an increase in production costs, which could negatively impact our gross margin and materially adversely affect our business. In addition, uncertain economic conditions could lead to higher borrowing costs and reduced availability of capital and credit markets, making it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities. An economic downturn or increased uncertainty could also lead to failures of counterparties including financial institutions and insurers, asset impairments and declines in the value of our financial instruments.

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The semiconductor industry is highly cyclical and has experienced severe downturns that have materially adversely affected, and may continue to materially adversely affect, our business in the future.

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The semiconductor industry is highly cyclical and has experienced significant downturns, often in conjunction with constant and rapid technological change, wide fluctuations in supply and demand, continuous new product introductions, price erosion and declines in general economic conditions. We have incurred substantial losses in previous downturns, due to substantial declines in average selling prices; the cyclical nature of supply and demand imbalances in the semiconductor industry; a decline in demand for end-user products that incorporate our products; and excess inventory levels and periods of inventory adjustment. Such industry-wide fluctuations may materially adversely affect us in the future.

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Global economic uncertainty and weakness have in the past impacted the semiconductor market as consumers and businesses have deferred purchases, which negatively impacted demand for our products. For example, our Client segment revenue decreased due to a decline in the PC market in the second half of 2022 and the first half of 2023, and our Embedded segment revenue decreased as a result of an inventory correction in several end markets in the second half of 2023. Our financial performance has been, and may in the future be, negatively affected by these downturns.

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The growth of our business is also dependent on continued demand for our products from high-growth adjacent emerging global markets. Our ability to be successful in such markets depends in part on our ability to establish adequate local infrastructure, as well as our ability to cultivate and maintain local relationships in these markets. If demand from these markets is below our expectations, sales of our products may decrease, which would have a material adverse effect on us.

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The demand for our products depends in part on the market conditions in the industries into which they are sold. Fluctuations in demand for our products or a market decline in any of these industries could have a material adverse effect on our results of operations.

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Industry-wide fluctuations in the computer marketplace have materially adversely affected us in the past and may materially adversely affect us in the future. We offer products that are used in different end markets and the demand for our products can vary among our Data Center, Client, Gaming and Embedded end markets. For instance, in our Data Center segment, we offer products that are optimized for generative AI applications and in the fourth quarter of 2023, we experienced significant demand for our AI accelerators. The demand for such products will depend on the extent to which our customers utilize generative AI solutions in a wide variety of applications. Also, in our Client segment revenue is focused on the consumer desktop and notebook PC segments. Our Client segment revenue decreased due to a decline in the PC market in the second half of 2022 and the first half of 2023. In the past, revenues from the Client and Gaming segments have experienced a decline driven by, among other factors, the adoption of smaller and other form factors, increased competition and changes in replacement cycles. In addition, our GPU revenue in the past has been affected in part by the volatility of the cryptocurrency mining market. If we are unable to manage the risks related to the volatility of the cryptocurrency mining market (including potential actions by global monetary authorities), our GPU business could be materially adversely affected. The success of our semi-custom SoC products in our Gaming segment is dependent on securing customers for our semi-custom design pipeline and consumer market conditions, including the success of game console systems and next generation consoles for Sony and Microsoft. Our Embedded segment primarily includes embedded CPUs and GPUs, APUs, FPGAs and Adaptive SoC products some of which are subject to macroeconomic trends and volatile business conditions. To the extent our embedded customers are faced with higher inventory levels, they may choose to draw down their existing inventory and order less of our products. Our Embedded segment revenue decreased as a result of an inventory correction in several end markets in the second half of 2023.

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The loss of a significant customer may have a material adverse effect on us.

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We depend on a small number of customers for a substantial portion of our business and we expect that a small number of customers will continue to account for a significant part of our revenue in the future. If one of our key customers decides to stop buying our products, materially reduces its operations or its demand for our products, or has operations that are materially impaired for a significant period of time such that it is unable to receive or utilize our products, our business would be materially adversely affected.

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We are subject to risks associated with public health crises, such as pandemics and epidemics, including the COVID-19 pandemic, which may have a material adverse effect on our business.

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We are subject to risks associated with public health crises, such as pandemics and epidemics, which may have a material adverse effect on our business. Global health outbreaks, such as COVID-19, have and may continue to adversely affect our employees, disrupt our business operations and practices, as well those of our customers, partners, vendors and suppliers. Public health measures by government authorities such as travel bans, social-distancing, lockdown measures, vaccination requirements may cause us to incur additional costs, limit our operations, modify our business practices, diminish employee productivity or disrupt our supply chain, which may have a material adverse effect on our business. To the extent a public health crisis will impact our business, financial condition and results of operations depends on factors outside of our control, including severity, duration and the measures to contain the health outbreak.

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The markets in which our products are sold are highly competitive.

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The markets in which our products are sold are highly competitive and delivering the latest and best products to market on a timely basis is critical to achieving revenue growth. We believe that the main factors that determine our product competitiveness are total cost of ownership, timely product introductions, product quality, product features and capabilities (including accelerations for key workloads such as artificial intelligence (AI)), energy efficiency relating to power consumption and battery life given their impact on total cost of ownership, reliability, processor clock speed, performance, size (or form factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of integration, software and hardware compatibility, ease of use and functionality of software design tools, completeness of applicable software solutions, security and stability, brand recognition and availability.

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We expect that competition will continue to be intense due to rapid technological changes, frequent product introductions by our competitors or new competitors of products that may provide better performance/experience or that may include additional features that render our products comparatively less competitive. We may also face aggressive pricing by competitors, especially during challenging economic times. In addition, our competitors have significant marketing and sales resources which could increase the competitive environment in a declining market or during challenging economic times, leading to lower prices and margins. Some competitors may have greater access or rights to complementary technologies, including interface, processor and memory technical information. For instance, with our APU products and other competing solutions with integrated graphics, we believe that demand for additional discrete graphics chips and cards may decrease in the future due to improvements in the quality and performance of integrated graphics. If competitors introduce competitive new products into the market before us, demand for our products could be adversely impacted and our business could be adversely affected. In addition, Intel is expanding its position in integrated graphics for the PC market with high-end discrete graphics solutions for a broad range of computing markets, which may negatively impact our ability to compete in these computing markets, and Nvidia has added an ARM CPU offering which adds competition in the CPU market. Also, increased adoption of ARM-based semiconductor designs could lead to further growth and development of the ARM ecosystem. While we see significant opportunity in AI, we expect intense competition from companies such as Nvidia in the supply of GPUs and other accelerators for the AI market.

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In addition, we are entering markets with current and new competitors who may be able to adapt more quickly to customer requirements and emerging technologies. We cannot guarantee that we will be able to compete successfully against current or new competitors who may have stronger positions in these new markets or superior ability to anticipate customer requirements and emerging industry trends. Furthermore, we may face competition from some of our customers who internally develop the same products as us.

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We may face delays or disruptions in research and development efforts, or we may be required to invest significantly greater resources in research and development than anticipated. Also, the semiconductor industry has seen several mergers and acquisitions over the last number of years. Further consolidation could adversely impact our business due to there being fewer suppliers, customers and partners in the industry.

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Our operating results are subject to quarterly and seasonal sales patterns.

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The profile of our sales may be weighted differently during the year. A large portion of our quarterly sales have historically been made in the last month of the quarter. This uneven sales pattern makes prediction of revenue for each financial period difficult and increases the risk of unanticipated variations in quarterly results and financial condition. In addition, our operating results tend to vary seasonally with the markets in which our products are sold. For example, 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 these trends. Many of the factors that create and affect quarterly and seasonal trends are beyond our control.

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If we cannot adequately protect our technology or other intellectual property in the United States and abroad, through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.

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We rely on a combination of protections provided by contracts, including confidentiality and nondisclosure agreements, copyrights, patents, trademarks and common law rights, such as trade secrets, to protect our intellectual property. However, we cannot assure you that we will be able to adequately protect our technology or other intellectual property from third-party infringement or from misappropriation in the United States and abroad. Any patent licensed by us or issued to us could be challenged, invalidated, expire, or circumvented or rights granted thereunder may not provide a competitive advantage to us.

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Furthermore, patent applications that we file may not result in issuance of a patent or, if a patent is issued, the patent may not be issued in a form that is advantageous to us. Despite our efforts to protect our intellectual property rights, others may independently develop similar products, duplicate our products or design around our patents and other rights. In addition, it is difficult to monitor compliance with, and enforce, our intellectual property on a worldwide basis in a cost-effective manner. In jurisdictions where foreign laws provide less intellectual property protection than afforded in the U.S. and abroad, our technology or other intellectual property may be compromised, and our business would be materially adversely affected.

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Unfavorable currency exchange rate fluctuations could adversely affect us.

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We have costs, assets and liabilities that are denominated in foreign currencies. As a consequence, movements in exchange rates could cause our foreign currency denominated expenses to increase as a percentage of revenue, affecting our profitability and cash flows. Whenever we believe appropriate, we hedge a portion of our foreign currency exposure to protect against fluctuations in currency exchange rates. We determine our total foreign currency exposure using projections of long-term expenditures for items such as payroll. We cannot assure you that these activities will be effective in reducing foreign exchange rate exposure. Failure to do so could have an adverse effect on our business, financial condition, results of operations and cash flow. In addition, the majority of our product sales are denominated in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the local currency can cause increases or decreases in the cost of our products in the local currency of such customers. An appreciation of the U.S. dollar relative to the local currency could reduce sales of our products.

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Operational and Technology Risks

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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.

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We utilize third-party wafer foundries to fabricate the silicon wafers for all of our products. We rely on Taiwan Semiconductor Manufacturing Company Limited (TSMC) for the production of all wafers for microprocessor and GPU products at 7 nanometer (nm) or smaller nodes, and we rely primarily on GLOBALFOUNDRIES Inc. (GF) for wafers for microprocessor and GPU products manufactured at process nodes larger than 7 nm. We also utilize TSMC, United Microelectronics Corporation (UMC) and Samsung Electronics Co., Ltd. for our integrated circuits (IC) in the form of programmable logic devices. We also rely on third-party manufacturers to assemble, test, mark and pack (ATMP) our products. Our third-party package assembly partners are responsible for packaging technology used to fabricate our products. It is important to have reliable relationships with all of these third-party manufacturing suppliers to ensure adequate product supply to respond to customer demand.

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We cannot guarantee that these manufacturers or our other third-party manufacturing suppliers will be able to meet our near-term or long-term manufacturing requirements. If we experience supply constraints from our third-party manufacturing suppliers, we may be required to allocate the reduced quantities of affected products amongst our customers, which could have a material adverse effect on our relationships with these customers and on our financial condition. In addition, if we are unable to meet customer demand due to fluctuating or late supply from our manufacturing suppliers, it could result in lost sales and have a material adverse effect on our business. For example, if TSMC is not able to manufacture wafers for our microprocessor and GPU products at 7 nm or smaller nodes and our newest IC products in sufficient quantities to meet customer demand, it could have a material adverse effect on our business.

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We do not have long-term commitment contracts with some of our third-party manufacturing suppliers. We obtain many of these manufacturing services on a purchase order basis and these manufacturers are not required to provide us with any specified minimum quantity of product beyond the quantities in an existing purchase order. Accordingly, we depend on these suppliers to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable quality and at acceptable manufacturing yields and to deliver those products to us on a timely basis and at acceptable prices. The manufacturers we use also fabricate wafers and ATMP products for other companies, including certain of our competitors. They could choose to prioritize capacity for other customers, increase the prices that they charge us on short notice, require onerous prepayments, or reduce or eliminate deliveries to us, which could have a material adverse effect on our business.

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Other risks associated with our dependence on third-party manufacturers include limited control over delivery schedules, yield, cycle times, quality assurance, price increases, lack of capacity in periods of excess demand, misappropriation of our intellectual property, dependence on several subcontractors, and limited ability to manage inventory and parts. Moreover, if any of our third-party manufacturers (or their subcontractors) suffer any damage to facilities, lose benefits under material agreements, experience power outages, water shortages, or high heat events, lack sufficient capacity to manufacture our products, encounter financial difficulties, are unable to secure necessary raw materials from their suppliers, suffer any other disruption or reduction in efficiency, or experience uncertain environmental, social, atmospheric or natural, economic or political circumstances or conditions, we may encounter supply delays or disruptions. If we are unable to secure sufficient or reliable supplies of products, our ability to meet customer demand may be adversely affected and this could materially affect our business.

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If we transition the production of some of our products to new manufacturers, we may experience delayed product introductions, lower yields or poorer performance of our products. If we experience problems with product quality or are unable to secure sufficient capacity from a particular third-party manufacturer, or if we for other reasons cease utilizing one of those manufacturers, we may be unable to timely secure an alternative supply for any specific product. We could experience significant delays in the shipment of our products if we are required to find alternative third-party manufacturers, which could have a material adverse effect on our business.

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We are a party to a wafer supply agreement (WSA) with GF that governs the terms by which we purchase products manufactured by GF and this agreement is in place through 2025. GF will provide a minimum annual capacity allocation to us through 2025 and we have corresponding annual wafer purchase targets. If we do not meet the annual wafer purchase target, we will be required to pay to GF a portion of the difference between the actual wafer purchases and the wafer purchase target for such year. AMD and GF also have agreed to wafer pricing through 2025. We do not have any exclusivity commitments with GF, and we have full flexibility to contract with any wafer foundry with respect to all products manufactured at any technology node. If our actual wafer requirements are less than the number of wafers required to meet the applicable annual wafer purchase target, we could have excess inventory or higher inventory unit costs, both of which may adversely impact our gross margin and our results of operations. If GF fails to meet its minimum annual capacity allocation obligations, we could experience significant delays in the shipment of our products, which could have a material adverse effect on our business.

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We are party to two ATMP joint ventures (collectively, the ATMP JVs) with affiliates of Tongfu Microelectronics Co., Ltd. The majority of our ATMP services are provided by the ATMP JVs and there is no guarantee that the ATMP JVs will be able to fulfill our long-term ATMP requirements. If we are unable to meet customer demand due to fluctuating or late supply from the ATMP JVs, it could result in lost sales and have a material adverse effect on our business.

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If essential equipment, materials, substrates or manufacturing processes are not available to manufacture our products, we could be materially adversely affected.

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We may purchase equipment, materials and substrates for use by our back-end manufacturing service providers from a number of suppliers and our operations depend upon obtaining deliveries of adequate supplies of equipment and materials on a timely basis. Our third-party suppliers also depend on the same timely delivery of adequate quantities of equipment and materials in the manufacture of our products. In addition, as many of our products increase in technical complexity, we rely on our third-party suppliers to update their processes in order to continue meeting our back-end manufacturing needs. Certain equipment and materials that are used in the manufacture of our products are available only from a limited number of suppliers, or in some cases, a sole supplier. We also depend on a limited number of suppliers to provide the majority of certain types of IC packages for our microprocessors, including our APU products. Similarly, certain non-proprietary materials or components such as memory, printed circuit boards (PCBs), interposers, substrates and capacitors used in the manufacture of our products are currently available from only a limited number of suppliers. If we are unable to procure a stable supply of memory, equipment, materials or substrates on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a shortage in memory, equipment, materials or substrate supply or an increase in production costs, which could have a material adverse effect on our business. We have long-term purchase commitments and prepayment arrangements with some of our suppliers. If the delivery of such supply is delayed or does not occur for any reason, it could materially impact our ability to procure and process the required volume of supply to meet customer demand. Conversely, a decrease in customer demand could result in excess inventory and an increase in our production costs, particularly since we have prepayment arrangements with certain suppliers. Because some of the equipment and materials that we and our third-party manufacturers purchase are complex, it is sometimes difficult to substitute one equipment or materials supplier for another.

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From time to time, suppliers may extend lead times, limit supply or increase prices due to capacity constraints or other factors. Also, some of these materials and components may be subject to rapid changes in price and availability. Interruption of supply or increased demand in the industry could cause shortages and price increases in various essential materials. Dependence on a sole supplier or a limited number of suppliers exacerbates these risks. If we are unable to procure certain of these materials for our back-end manufacturing operations, or our third-party manufacturers are unable to procure materials for manufacturing our products, our business would be materially adversely affected.

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Failure to achieve expected manufacturing yields for our products could negatively impact our results of operations.

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Any decrease in manufacturing yields could result in an increase in per unit costs, which would adversely impact our gross margin and/or force us to allocate our reduced product supply amongst our customers, which could harm our relationships and reputation with our customers and materially adversely affect our business.

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The success of our business is dependent upon our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting and coinciding with significant industry transitions.

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Our success depends to a significant extent on the development, qualification, implementation and acceptance of new product designs and improvements that provide value to our customers. Our ability to develop, qualify and distribute, and have manufactured, new products and related technologies to meet evolving industry requirements, at prices acceptable to our customers and on a timely basis, are significant factors in determining our competitiveness in our target markets. We cannot assure you that our efforts to execute our product roadmap will result in innovative products and technologies that provide value to our customers. If we fail to or are delayed in developing, qualifying or shipping new products or technologies that provide value to our customers and address these new trends or if we fail to predict which new form factors, product features preferences or requirements, consumers will adopt and adjust our business accordingly, we may lose competitive positioning, which could cause us to lose market share and require us to discount the selling prices of our products. Although we make substantial investments in research and development, we cannot be certain that we will be able to develop, obtain or successfully implement new products and technologies on a timely basis or that they will be well-received by our customers. Moreover, our investments in new products and technologies involve certain risks and uncertainties and could disrupt our ongoing business. New investments may not generate sufficient revenue, may incur unanticipated liabilities and may divert our limited resources and distract management from our current operations. We cannot be certain that our ongoing investments in new products and technologies will be successful, will meet our expectations and will not adversely affect our reputation, financial condition and operating results. For example, as part of our Pervasive AI strategy, we have a portfolio of hardware products and software tools to allow our customers to develop scalable and pervasive AI solutions. We are increasingly building AI capabilities into our products, but if we fail to develop and timely offer such products and technologies or keep pace with the product offerings of our competitors, our business could be adversely affected. Additionally,

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our efforts in developing new AI technology solutions are inherently risky and may not always succeed.

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We may incur significant costs, resources, investments and delays and not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the

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long-term trajectory of this technological trend is uncertain.

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Our products may be subject to security vulnerabilities that could have a material adverse effect on us.

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The products that we sell are complex and have been and may in the future be subject to security vulnerabilities that could result in, among other things, the loss, corruption, theft or misuse of confidential data or system performance issues. Our efforts to prevent and address security vulnerabilities may decrease performance, be only partially effective or not successful at all. We may depend on vendors to create mitigations to their technology that we incorporate into our products and they may delay or decline to make such mitigations. We may also depend on third parties, such as customers and end users, to deploy our mitigations alone or as part of their own mitigations, and they may delay, decline or modify the implementation of such mitigations. Our relationships with our customers could be adversely affected as some of our customers may stop purchasing our products, reduce or delay future purchases of our products, or use competing products. Any of these actions by our customers could adversely affect our revenue. We have and may in the future be subject to claims and litigation related to security vulnerabilities. Actual or perceived security vulnerabilities of our products may subject us to adverse publicity, damage to our brand and reputation, and could materially harm our business or results of operations.

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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.

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Threat actors are also increasingly using tools and techniques that circumvent controls, evade detection, and remove forensic evidence, which means that we and others may be unable to anticipate, detect, deflect, contain or recover from cyberattacks in a timely or effective manner. As AI capabilities improve and are increasingly adopted, we may see cyberattacks created through AI. These attacks could be crafted with an AI tool to directly attack IT Systems with increased speed and/or efficiency than a human threat actor or create more effective phishing emails. In addition, the threat could be introduced from the result of our or our customers and business partners incorporating the output of an AI tool that includes a threat, such as introducing malicious code by incorporating AI generated source code. Our network and storage applications, as well as those of our customers, business partners, and third-party providers, may be subject to unauthorized access by hackers or breached due to operator error, malfeasance or other system disruptions.

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We may encounter difficulties in operating our newly upgraded enterprise resource planning system, which could materially adversely affect us.

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We have recently upgraded our enterprise resource planning (ERP) system to help us manage our operations and financial reporting. Our newly upgraded ERP system may not operate as we expect it to and may cause disruption to our operations, which could have a material adverse effect on our business. Difficulties that may occur in connection with operating our newly upgraded ERP system include disruptions to business continuity, administrative or technical problems, difficulty in maintaining effective internal controls, and interruptions or delays to our sales processes. Any of these events could have an adverse effect on our business, operating results and financial condition.

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Uncertainties involving the ordering and shipment of our products could materially adversely affect us.

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Excess or obsolete inventory have resulted in, and may in the future result in, write-downs of the value of our inventory. For example, in the third quarter of 2022, we recorded certain charges primarily for inventory, pricing and related reserves in the Gaming and Client segments. Factors that may result in excess or obsolete inventory, a reduction in the average selling price, or a reduction in our gross margin include: a sudden or significant decrease in demand for our products; a production or design defect in our products; a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements; a failure to accurately estimate customer demand for our products, including for our older products as our new products are introduced; or our competitors introducing new products or taking aggressive pricing actions.

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Our ability to design and introduce new products in a timely manner includes the use of third-party intellectual property.

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In the design and development of new and enhanced products, we rely on third-party intellectual property such as development and testing tools for software and hardware. Furthermore, certain product features may rely on intellectual property acquired from third parties that incorporate into our software or hardware. The design requirements necessary to meet customer demand for more features and greater functionality from semiconductor products may exceed the capabilities of the third-party intellectual property or development or testing tools available to us. If the third-party intellectual property that we use becomes unavailable, is not available with required functionality or performance in the time frame, manufacturing technology, or price point needed for our new products or fails to produce designs that meet customer demands, or laws are adopted that affect our use of third party intellectual property in certain regions or products, our business could be materially adversely affected.

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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.

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We depend on third-party companies for the design, manufacture and supply of motherboards, graphics cards, software (e.g., BIOS, operating systems, drivers), memory and other components that we use to design, support and sell, and our customers utilize to support and/or use our product offerings. We also rely on our AIB partners to support our products. In addition, our microprocessors are not designed to function with motherboards and chipsets designed to work with Intel microprocessors. If the designers, manufacturers, AIBs and suppliers of motherboards, graphics cards, software, memory and other components cease or reduce their design, manufacture or production of current or future products that are based on, utilized in, or support our products, or laws are adopted that result in the same, our business could be materially adversely affected.

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Our ability to innovate beyond the x86 instruction set controlled by Intel depends partially on Microsoft designing and developing its operating systems to run on or support our x86-based microprocessor products. With respect to our graphics products, we depend in part on Microsoft to design and develop its operating system to run on or support our graphics products. Similarly, the success of our products in the market, such as our APU products, is dependent on independent software providers designing and developing software to run on our products. If Microsoft does not continue to design and develop its operating systems so that they work with our x86 instruction sets or does not continue to develop and maintain their operating systems to support our graphics products, independent software providers may forego designing their software applications to take advantage of our innovations and customers may not purchase PCs with our products. In addition, some software drivers licensed for use with our products are certified by Microsoft. If Microsoft did not certify a driver, or if we otherwise fail to retain the support of Microsoft or other software vendors, our ability to market our products would be materially adversely affected.

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Our reliance on third-party distributors and AIB partners subjects us to certain risks.

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Additionally, distributors and AIB partners typically maintain an inventory of our products. In most instances, our agreements with distributors protect their inventory of our products against price reductions, as well as provide return rights for any product that we have removed from our price book that is less than 12 months older than the manufacturing date. Some agreements with our distributors also contain standard stock rotation provisions permitting limited levels of product returns. Our agreements with AIB partners protect their inventory of our products against price reductions. In the event of a significant decline in the price of our products, the price protection rights we offer would materially adversely affect us because our revenue and corresponding gross margin would decline.

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Our business is dependent upon the proper functioning of our internal business processes and information systems and modification or interruption of such systems may disrupt our business, processes and internal controls.

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We rely upon a number of internal business processes and information systems to support key business functions, and the efficient operation of these processes and systems is critical to our business. Our business processes and information systems need to be sufficiently scalable to support the growth of our business and may require modifications or upgrades that expose us to a number of operational risks. As such, our information systems will continually evolve and adapt in order to meet our business needs. These changes may be costly and disruptive to our operations and could impose substantial demands on management time.

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These changes may also require changes in our information systems, modification of internal control procedures and significant training of employees and third-party resources. We continuously work on simplifying our information systems and applications through consolidation and standardization efforts. There can be no assurance that our business and operations will not experience any disruption in connection with this transition. Our information technology systems, and those of third-party information technology providers or business partners, may also be vulnerable to damage or disruption caused by circumstances beyond our control including catastrophic events, power anomalies or outages, natural disasters, viruses or malware, cyberattacks, insider threat attacks, unauthorized system or data modifications, data breaches and computer system or network failures, exposing us to significant cost, reputational harm and disruption or damage to our business.

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In addition, as our IT environment continues to evolve, we are embracing new ways of communicating and sharing data internally and externally with customers and partners using methods such as mobility and the cloud that can promote business efficiency. However, these practices can also result in a more distributed IT environment, making it more difficult for us to maintain visibility and control over internal and external users, and meet scalability and administrative requirements. If our security controls cannot keep pace with the speed of these changes or if we are not able to meet regulatory and compliance requirements, our business would be materially adversely affected.

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If our products are not compatible with some or all industry-standard software and hardware, we could be materially adversely affected.

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Our products may not be fully compatible with some or all industry-standard software and hardware. Further, we may be unsuccessful in correcting any such compatibility problems in a timely manner. If our customers are unable to achieve compatibility with software or hardware, we could be materially adversely affected. In addition, the mere announcement of an incompatibility problem relating to our products could have a material adverse effect on our business.

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Costs related to defective products could have a material adverse effect on us.

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Products as complex as those we offer may contain defects or failures when first introduced or when new versions or enhancements to existing products are released. We cannot assure you that, despite our testing procedures, errors will not be found in new products or releases after commencement of commercial shipments in the future, which could result in loss of or delay in market acceptance of our products, material recall and replacement costs, loss of revenue, writing down the inventory of defective products, the diversion of the attention of our engineering personnel from product development efforts, defending against litigation related to defective products or related liabilities, including property damage, personal injury, damage to our reputation in the industry and loss of data or intangible property, and could adversely affect our relationships with our customers. In addition, we may have difficulty identifying the end customers of the defective products in the field. As a result, we could incur substantial costs to implement modifications to correct defects. Any of these problems could materially adversely affect our business.

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We could be subject to potential product liability claims if one of our products causes, or merely appears to have caused, an injury, whether tangible or intangible. Claims may be made by consumers or others selling our products, and we may be subject to claims against us even if an alleged injury is due to the actions of others. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business.

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If we fail to maintain the efficiency of our supply chain as we respond to changes in customer demand for our products, our business could be materially adversely affected.

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Our ability to meet customer demand for our products depends, in part, on our ability to deliver the products our customers want on a timely basis. Accordingly, we rely on our supply chain for the manufacturing, distribution and fulfillment of our products. As we continue to grow our business, expand to high-growth adjacent markets, acquire new customers and strengthen relationships with existing customers, the efficiency of our supply chain will become increasingly important because many of our customers tend to have specific requirements for particular products, geographic requirements, and specific time-frames in which they require delivery of these products. If we are unable to consistently deliver the right products to our customers on a timely basis in the right locations, our customers may reduce the quantities they order from us, which could have a material adverse effect on our business.

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We outsource to third parties certain supply-chain logistics functions, including portions of our product distribution, transportation management and information technology support services.

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We rely on third-party providers to operate our regional product distribution centers and to manage the transportation of our work-in-process and finished products among our facilities, to our third-party manufacturers and to our customers. In addition, we rely on third parties to provide certain information technology services to us, including help desk support, desktop application services, business and software support applications, server and storage administration, data center operations, database administration and voice, video and remote access. We cannot guarantee that these providers will fulfill their respective responsibilities in a timely manner in accordance with the contract terms, in which case our internal operations and the distribution of our products to our customers could be materially adversely affected. Also, we cannot guarantee that our contracts with these third-party providers will be renewed, in which case we would have to transition these functions in-house or secure new providers, which could have a material adverse effect on our business if the transition is not executed appropriately.

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Our inability to effectively control the sales of our products on the gray market could have a material adverse effect on us.

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Climate change may have a long-term impact on our business.

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Climate change may have an adverse impact on our business and the business of our suppliers and customers. Global climate change may result in certain natural disasters and climate-related events occurring with increasing frequency and severity and its physical impact on the U.S., China and other major regions where we have operations has the potential to disrupt our business and those of our customers and suppliers. Our headquarters and some of our operations and facilities are located in areas

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that are susceptible to earthquakes and tsunamis, wildfires, extreme storms, extreme heat, drought, freezing and other natural disasters. Water and energy availability and reliability in the regions where we have facilities and where our suppliers have operations is important to our business. Certain natural disasters, including drought, wildfires, storms, sea-level rise and flooding could disrupt the availability of water necessary for the operations of our business or those of our suppliers and customers. Global climate change may also result in chronic changes that result in certain natural disasters occurring more frequently or with greater intensity, which could disrupt our operations, or the operations of our third parties. Such disruptions could cause delays in manufacturing or shipping our products, affect our supply chain and may result in the loss of business, and additional costs to maintain or resume operations, any of which could adversely affect our business and results of operation. We may also experience contractual disputes relating to supply chain delays resulting from climate change related disruptions, which could result in increased litigation and costs.

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Although we maintain insurance coverage for a variety of property, casualty, and other risks, the types and amounts of insurance we obtain vary depending on coverage, availability and cost. Some of our policies have large deductibles and broad exclusions. Additionally, our insurance providers may be unable or unwilling to pay a claim. Losses not covered by insurance may be large, which could harm our results of operations and financial condition.

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Our business and the business of our suppliers and customers may also be subject to further climate-related regulations, contract terms and lawsuits. New increased regulations regarding carbon taxes, greenhouse gas emissions, fuel or energy taxes and other climate-related risks could result in greater costs; for example, as a result of carbon pricing impacts on electrical utilities and/or necessitating that we purchase more renewable energy than otherwise planned. Our supply chain manufacturing suppliers may be exposed to increased costs of doing business should they be affected by new climate-related expectations such as those affecting abatement equipment, renewable energy, and/or alter production processes and materials selections. The additional compliance costs incurred by our suppliers may be passed on to us and result in greater indirect costs to us. These costs and restrictions could harm our business and results of operations by increasing our expenses, impacting our reputation if there is actual or perceived non-compliance, or requiring us to alter our operations and products. The long-term effects of climate change on the global economy and the technology industry are unclear but could be severe.

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Legal and Regulatory Risks

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Government actions and regulations such as export regulations, tariffs, and trade protection measures may limit our ability to export our products to certain customers.

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We have equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. In June 2019, the Bureau of Industry and Security (BIS) of the United States Department of Commerce added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. Since that time, the United States administration has called for changes to domestic and foreign policy, including policies with respect to China and Russia. Specifically, United States-China trade relations remain uncertain as the United States continues to add more Chinese companies to the Entity List and more regulations targeted to advanced computing, semiconductor manufacturing, and emerging technologies such as AI. Further, the United States and other countries and coalitions have issued sanctions and revisions to export control and other regulations against Russia, Belarus and the DNR and LNR regions of Ukraine, due to the conflict in Ukraine.

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We may, from time to time, receive technical data from third parties that is subject to the International Traffic and Arms Regulations (ITAR), which are administered by the U.S. Department of State. Export Administration Regulation (EAR) governs the export and re-export of certain AMD products, including FPGAs, as well as the transfer of related technologies or provision of services, whether in the U.S. or abroad. We are required to maintain an internal compliance program and security infrastructure to meet EAR and ITAR requirements. An inability to obtain the required export licenses, or to predict when or pursuant to which conditions they will be granted, increases the difficulties of forecasting shipments. When we file license applications or Notification Advanced Computing (NAC) exception notices we have no assurance that BIS will grant any exemptions or licenses or that the BIS will act on the filings in a timely manner. Even if BIS grants a requested license, the license may come with burdensome conditions that we cannot or decide not to fulfill. In addition, security or compliance program failures that could result in penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to overseas customers, could have a material adverse effect on our business, financial condition and/or operating results.

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If we cannot realize our deferred tax assets, our results of operations could be adversely affected.

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Our deferred tax assets include net operating losses and tax credit carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods. Each quarter, we consider both positive and negative evidence to determine whether all or a portion of the deferred tax assets are more likely than not to be realized. If we determine that some or all of our deferred tax assets are not realizable, it could result in a material expense in the period in which this determination is made which may have a material adverse effect on our financial condition and results of operations.

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In addition, a significant amount of our deferred tax assets related to net operating losses or tax credits which remain under a valuation allowance could be subject to limitations under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules. The limitations could reduce our ability to utilize the net operating losses or tax credits before the expiration of the tax attributes.

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Our business is subject to potential tax liabilities, and exposure to greater-than-anticipated income tax liabilities as a result of changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits, could affect our effective tax rates, financial condition, and results of operations.

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We are a U.S.-based multinational company subject to income tax, indirect tax or other tax claims in multiple U.S. and foreign tax jurisdictions in which we conduct business. Significant judgment is required in determining our worldwide provision for income taxes. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Any changes to tax laws could have a material adverse effect on our tax obligations and effective tax rate. Our income tax obligations could be affected by many factors, including, but not limited to, changes to our corporate operating structure, intercompany arrangements, and tax planning strategies.

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In addition, we are subject to examinations of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from the current examinations. There can be no assurance that the final determination of any of these examinations will not have an adverse effect on our effective tax rates, financial condition, and results of operations.

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In the ordinary course of our business, there are many transactions and calculations where the ultimate income tax, indirect tax, or other tax determination is uncertain. Although we believe our tax estimates are reasonable, we cannot assure that the final determination of any tax audits or litigation will not be materially different from that which is reflected in historical tax provisions and accruals. Should additional taxes be assessed as a result of an audit, assessment or litigation, there could be a material adverse effect on our cash, tax provisions and results of operations in the period or periods for which that determination is made.

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We are party to litigation and may become a party to other claims or litigation that could cause us to incur substantial costs or pay substantial damages or prohibit us from selling our products.

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From time to time, we are a defendant or plaintiff in various legal actions, as described in Note 17 - Contingencies of the Notes to our Consolidated Financial Statements. For example, we have been subject to certain claims concerning federal securities laws and corporate governance. Our products are purchased by and/or used by consumers, which could increase our exposure to consumer actions such as product liability claims and consumer class action claims. On occasion, we receive claims that individuals were allegedly exposed to substances used in our former semiconductor wafer manufacturing facilities and that this alleged exposure caused harm. Litigation can involve complex factual and legal questions, and its outcome is uncertain. It is possible that if a claim is successfully asserted against us, it could result in the payment of damages that could be material to our business.

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Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which could have a material adverse effect on us.

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We are subject to environmental laws, conflict minerals-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as a variety of other laws or regulations that could result in additional costs and liabilities.

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Future environmental legal requirements may become more stringent or costly. As such, the costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past and future releases of, or exposure to, hazardous substances may increase and could have a material adverse effect on us.

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Environmental laws are complex, change frequently and tend to become more stringent over time. For example, the European Union (EU) and China are among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging. As regulations restricting materials in electronic products continue to increase around the world, there is a risk that the cost, quality and manufacturing yields of products that are subject to these restrictions may be less favorable compared to products that are not subject to such restrictions, or that the transition to compliant products may not meet customer roadmaps, or produce sudden changes in demand, which may result in excess inventory. Jurisdictions including the EU, Australia, California and China are developing or have finalized market entry or public procurement regulations for computers and servers based on ENERGY STAR specifications, and the like, as well as additional energy consumption limits. Certain of our products may be excluded from some of these markets which could materially adversely affect us.

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In addition, many governments have enacted laws around PII, such as the GDPR and the CCPA, and the failure to comply could result in sanctions or other actions by the governments. The GDPR imposes significant requirements on how we collect, process and transfer personal data, as well as significant fines for non-compliance.

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New emerging technology trends, such as AI, require us to keep pace with evolving regulations and industry standards. Given the complexity and rapid development of AI, there are various current and proposed regulatory frameworks relating to the use of AI in products and services in the U.S. and foreign jurisdictions such as the EU. For example, in the EU, an AI act is being considered. Such laws and regulations may impede our ability to offer certain products and services in certain jurisdictions if we are unable to comply with them. We expect that the legal and regulatory environment relating to emerging technologies such as AI will continue to develop and could increase the cost of doing business, and create compliance risks and potential liability, all which may have a material adverse effect on our financial condition and results of operations. Governments are also considering the new issues in intellectual property law that AI creates, which could result in different intellectual property rights in technology we create with AI and development processes and procedures and could have a material adverse effect on our business.

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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.

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Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.

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Merger, Acquisition and Integration Risks

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Acquisitions, joint ventures, and/or investments, and the failure to integrate acquired businesses, may fail to materialize their anticipated benefits and could disrupt our business, which could adversely affect our results of operation and financial condition.

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We have acquired and invested in businesses, and may continue to do so, that offer products, services and technologies that we believe will help expand our product offerings and grow our business in response to changing technologies, customer demands and competitive pressures. Acquisitions or joint ventures include numerous risks including

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our inability to identify suitable opportunities in a timely manner or on terms acceptable to us; failure to complete a transaction in a timely manner, or at all, due to our inability to obtain required government or other approvals or IP disputes or other litigation; difficulty in obtaining financing on terms acceptable to us or at all; or other unforeseen factors.

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Furthermore, we may at times invest in private companies to further our strategic objectives and to support certain key business initiatives. Many of the instruments that we invest in are non-marketable and illiquid at the time of our initial investment, and we are not always able to achieve a return. To the extent any of the companies in which we invest in are not successful, we could recognize an impairment and/or lose all or part of our investment.

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Any impairment of our tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact our financial position and results of operations.

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A decrease in the long-term economic outlook and future cash flows of our business could significantly impact asset values and potentially result in the impairment of tangible and intangible assets, including goodwill and may require us to record future impairment charges, which may have a material adverse impact on our financial position and results of operations.

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Liquidity and Capital Resources Risks

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The agreements governing our notes, our guarantees of the Assumed Xilinx Notes, and our Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.

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The indenture governing our 3.924% Senior Notes due 2032 and 4.393% Senior Notes due 2052 contains various covenants that limit our ability to, among other things: create liens on certain assets to secure debt, enter into certain sale and leaseback transactions; and consolidate with, merge into or sell, convey or lease all or substantially all of our assets to any other person.

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Assumed Xilinx Notes

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), pursuant to which all obligations of Xilinx under the Assumed Xilinx Notes are unconditionally guaranteed on a senior unsecured basis by us. The indentures governing the Assumed Xilinx Notes also contain various covenants which limit our ability to, among other things, create certain liens on principal property or the capital stock of certain subsidiaries, enter into certain sale and leaseback transactions with respect to principal property, and consolidate or merge with, or convey, transfer or lease all or substantially all our assets, taken as a whole, to another person.

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We also have an unsecured revolving credit facility in the aggregate principal amount of $3.0 billion (Revolving Credit Agreement). Our Revolving Credit Agreement contains various covenants which limit our ability to, among other things, incur liens; and consolidate or merge or sell our assets as an entirety or substantially as an entirety (in each case, except for certain customary exceptions). In addition, our Revolving Credit Agreement requires us to maintain a minimum consolidated interest coverage ratio at the end of each fiscal quarter. The agreement governing our convertible notes and our Revolving Credit Agreement contains provisions whereby a payment default or acceleration under certain agreements with respect to other material indebtedness would result in cross defaults under our convertible indenture or the Revolving Credit Agreement and allow note holders or the lenders under our Revolving Credit Agreement to declare all amounts outstanding under certain of our indentures or the Revolving Credit Agreement to be immediately due and payable. If the lenders under our Revolving Credit Agreement accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings.

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Our indebtedness could adversely affect our financial position and prevent us from implementing our strategy or fulfilling our contractual obligations.

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Our total debt principal amount outstanding as of December 30, 2023 was $2.5 billion. Our indebtedness may make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments; limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate and other purposes; limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general corporate purposes; require us to use a substantial portion of our cash flow from operations to make debt service payments; place us at a competitive disadvantage compared to our competitors with relatively less debt; and increase our vulnerability to the impact of adverse economic and industry conditions.

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We enter into sale and factoring arrangements from time to time with respect to certain accounts receivables, which arrangements are non-recourse to us in the event that an account debtor fails to pay for credit-related reasons, and are not included in our indebtedness. We could become obligated to repurchase such accounts receivables or otherwise incur liability to the counterparties under these arrangements under certain circumstances, such as where a commercial dispute arises between us and an account debtor.

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We may not be able to generate sufficient cash to meet our working capital requirements. If we cannot generate sufficient revenue and operating cash flow, we may face a cash shortfall and be unable to make all of our planned investments in research and development or other strategic investments. Also, our cash and cash equivalents could be adversely affected if the banking institutions in which we hold our cash and cash equivalents fail.

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Our ability to generate sufficient cash to meet our working capital requirements will depend on our financial and operating performance, which may fluctuate significantly from quarter to quarter, and is subject to prevailing economic, financial and business conditions along with other factors, many of which are beyond our control. We cannot assure you that we will be able to generate cash flow in amounts sufficient to enable us to meet our working capital requirements. If we are not able to generate sufficient cash flow from operations, we may be required to sell assets or equity, reduce expenditures, refinance all or a portion of our existing debt or obtain additional financing.

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In addition, our ability to fund research and development expenditures depends on generating sufficient revenue and cash flow from operations and the availability of external financing, if necessary. Our research and development expenditures, together with ongoing operating expenses, will be a substantial drain on our cash flow and may decrease our cash balances. If new competitors, technological advances by existing competitors, or other competitive factors require us to invest significantly greater resources than anticipated in our research and development efforts, our operating expenses would increase. If we are required to invest significantly greater resources than anticipated in research and development efforts without an increase in revenue, our operating results could decline.

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Our inability to generate sufficient cash from operations may require us to abandon projects or curtail planned investments in research and development or other strategic initiatives. If we curtail planned investments in research and development or abandon projects, our products may fail to remain competitive and our business would be materially adversely affected.

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We maintain our cash and cash equivalents in accounts at certain banking institutions, and our deposits at these banking institutions may exceed insured limits. If a banking institution in which we hold funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds. Any such loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations. Further, these events may make equity or debt financing more difficult to obtain, and additional equity or debt financing might not be available on reasonable terms, if at all.

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General Risks

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Our worldwide operations are subject to political, legal and economic risks and natural disasters, which could have a material adverse effect on us.

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In addition, our worldwide operations (or those of our business partners) could be subject to natural disasters and climate change such as earthquakes, tsunamis, flooding, typhoons, droughts, fires, sea-level rise, extreme heat and volcanic eruptions that disrupt our operations, or those of our manufacturers, vendors or customers. For example, our Santa Clara and San Jose operations are located near major earthquake fault lines in California. We also have operations and employees in regions that have experienced extreme weather such as prolonged heat waves, wildfires and freezing. Extreme weather events and natural disasters can also disrupt the ability of our suppliers to deliver expected manufacturing parts and/or services for periods of time. In addition, certain natural disasters, including drought, wildfires, storms, sea-level rise and flooding, could disrupt the availability of water necessary for the operations of our business or the business of our suppliers or customers. Global climate change also may result in chronic changes that result in certain natural disasters occurring more frequently or with greater intensity, which could disrupt our operations, or the operations of our third parties. There may be conflict or uncertainty in the countries in which we operate, including public health issues (for example, an outbreak of a contagious disease such as COVID-19, avian influenza, measles or Ebola), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant accidents or general economic or political factors. We have experienced, and will continue to experience, disruptions to our business as these measures have, and will continue to have, an effect on our business operations and practices.

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The United States has been and may continue to be involved in armed conflicts that could have a further impact on our sales and our supply chain. The consequences of armed conflict, political instability or civil or military unrest are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us. Terrorist attacks or other hostile acts may negatively affect our operations, or adversely affect demand for our products, and such attacks or related armed conflicts may impact our physical facilities or those of our suppliers or customers. Furthermore, these attacks or hostile acts may make travel and the transportation of our products more difficult and more expensive, which could materially adversely affect us. Any of these events could cause consumer spending to decrease or result in increased volatility in the U.S. economy and worldwide financial markets.

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Any of the above risks, should they occur, could result in increased costs, shipment delays, general business interruptions, the inability to obtain, or delays in obtaining export licenses for certain technology, penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to international customers, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse effect on our business.

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We may incur future impairments of our technology license purchases.

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We license certain third-party technologies and tools for the design and production of our products. We report the value of those licenses as other non-current assets on the balance sheet and we periodically evaluate the carrying value of those licenses based on their future economic benefit to us. Factors such as the life of the assets, changes in competing technologies, and changes to the business strategy may represent an indicator of impairment. The occurrence of any of these events may require us to record future technology license impairment charges.

␟

Our inability to continue to attract and retain qualified personnel may hinder our business.

␟

Much of our future success depends upon the continued service of numerous qualified engineering, marketing, sales and executive employees. Competition for highly skilled executives and employees in the technology industry, especially in the areas of AI and machine learning, is intense and our competitors have targeted individuals in our organization that have desired skills and experience. If we are not able to continue to attract, train and retain our leadership team and our qualified employees necessary for our business, the progress of our product development programs could be hindered, and we could be materially adversely affected. To help attract, retain and motivate our executives and qualified employees, we use share-based incentive awards such as employee stock options and non-vested share units (restricted stock units). If the value of such stock awards does not appreciate as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate our executives and employees could be weakened, which could harm our results of operations. Also, if the value of our stock awards increases substantially, this could potentially create great personal wealth for our executives and employees and affect our ability to retain our personnel. In addition, any future restructuring plans may adversely impact our ability to attract and retain key employees.

␟

Our stock price is subject to volatility.

␟

Our stock price has experienced price and volume fluctuations and could be subject to wide fluctuations in the future. The trading price of our stock may fluctuate widely due to various factors including actual or anticipated fluctuations in our financial conditions and operating results, changes in financial estimates by us or financial estimates and ratings by securities analysts, changes in our capital structure, including issuance of additional debt or equity to the public, interest rate changes, inflation, news regarding our products or products of our competitors, and broad market and industry fluctuations. Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. In addition, volatility in our stock price could adversely affect our business and financing opportunities.

␟

We have an approved stock repurchase program that authorizes repurchases of up to $12 billion of our common stock (Repurchase Program). As of December 30, 2023, $5.6 billion remained available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time. Our stock repurchases could affect the trading price of our stock, the volatility of our stock price, reduce our cash reserves, and may be suspended or discontinued at any time, which may result in a decrease in our stock price.

␟

Table of Contents

␟

None.

␟

Cybersecurity Risk Management and Strategy

␟

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.

␟

We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF and AI Risk Management Framework). This does not mean that we meet any particular technical standards, specifications, or requirements, but only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.

␟

Information about cybersecurity risks and our risk management processes is collected, analyzed and considered as part of our overall enterprise risk management program.

␟

Key components of our cybersecurity risk management program include:

␟

risk assessments designed to help identify cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment;

␟

a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

␟

the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes;

␟

cybersecurity awareness training of our employees, incident response personnel and senior management;

␟

a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and

␟

a third-party cyber risk management process for vendors including, among other things, a security assessment and contracting program for vendors based on their risk profile.

␟

At this time, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

␟

Cybersecurity Governance

␟

The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, as necessary, regarding any significant cybersecurity incidents.

␟

Table of Contents

␟

Our management team, led by our CISO and Sr. Director of Information Security, are responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and any retained external cybersecurity consultants. Our Sr. Director of Information Security has served in various roles in information technology and information security for over 20 years and holds multiple industry-recognized certifications. Our CISO, who is also our Chief Information Officer, has over 20 years of experience managing global IT operations, including strategy, applications, infrastructure, information security, support and execution.

␟

Our management team, led by our CISO and Sr. Director of Information Security, is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which may include, among other things, briefings with internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in our IT environment.

␟

We currently do not anticipate difficulty in either retaining occupancy of any of our facilities through lease renewals prior to expiration or through month-to-month occupancy or replacing them with equivalent facilities. We believe that our existing facilities are suitable and adequate for our present purposes and that the productive capacity of such facilities is substantially being utilized or we have plans to utilize such capacity.

␟

For a discussion of our legal proceedings, refer to Note 17

␟

Contingencies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K).

␟

Not Applicable.

␟

Table of Contents

␟

PART II

␟

per share as reported on NASDAQ.

␟

Issuer Purchases of Equity Securities

␟

We have an approved stock repurchase program authorizing repurchases of up to $12 billion of our common stock (Repurchase Program). We expect to fund repurchases through cash generated from operations. Our Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time. The following table provides information relating to our repurchase of common stock during the fourth quarter of fiscal year 2023:

␟

Date of Repurchase

␟

Total Number of Shares Repurchased

␟

Average Price Paid per Share

␟

Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs

␟

Approximate Dollar Value of Shares That May Yet be Purchased Under the Publicly Announced Plans or Programs

␟

(In millions)

␟

Oct 1, 2023 - Oct 28, 2023

␟

Oct 29, 2023 - Nov 25, 2023

␟

Nov 26, 2023 - Dec 30, 2023

␟

Total

␟

Equity Award Share Withholding

␟

Shares of common stock withheld as payment of withholding taxes in connection with the vesting or exercise of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not considered common stock repurchases under an authorized common stock repurchase plan. During fiscal year 2023, we withheld 4 million shares at an average price of $110.51 per share as payment of withholding taxes in connection with the vesting and exercise of equity awards.

␟

Table of Contents

␟

Performance Graph

␟

Comparison of Five-Year Cumulative Total Returns

␟

Advanced Micro Devices, S&P 500 Index and S&P 500 Semiconductors Index

␟

Base Period

␟

Years Ended

␟

Company / Index

␟

12/29/2018

␟

12/28/2019

␟

12/26/2020

␟

12/25/2021

␟

12/31/2022

␟

12/30/2023

␟

Advanced Micro Devices, Inc.

␟

$100

␟

S&P 500 Index

␟

$100

␟

S&P 500 Semiconductors Index

␟

$100

␟

Unregistered Sales of Equity Securities

␟

None.

␟

Table of Contents

␟

Introduction

␟

Overview

␟

Table of Contents

␟

Against the backdrop of a mixed demand environment, net revenue for 2023 was $22.7 billion, a decrease of 4% compared to 2022 net revenue of $23.6 billion. The decrease in net revenue was primarily due to a 25% decrease in Client segment revenue primarily due to lower processor sales and a 9% decrease in Gaming segment revenue primarily due to lower semi-custom product sales. This decrease was partially offset by a 17% increase in Embedded segment revenue primarily due to the inclusion of embedded product revenue from Xilinx, Inc. (Xilinx) for the full twelve months period in 2023, as compared to a partial period from February 14, 2022 (the Xilinx Acquisition Date) in the prior year period, and a 7% increase in Data Center segment revenue primarily driven by higher sales of AMD Instinct GPUs and 4th Gen AMD EPYC CPUs. Gross margin, as a percentage of net revenue for 2023, was 46%, compared to 45% in 2022. The increase in gross margin was primarily due to higher Embedded segment revenue and lower amortization of acquisition-related intangible assets, partially offset by lower Client segment revenue and product mix. Operating income for 2023 was $401 million compared to operating income of $1.3 billion for 2022. The decrease in operating income was primarily due to lower Client segment performance and increased R&D investments, partially offset by lower amortization of acquisition-related intangible assets. Net income for 2023 was $854 million compared to $1.3 billion in the prior year. The decrease in net income was primarily driven by lower operating income.

␟

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.

␟

Table of Contents

␟

Critical Accounting Estimates

␟

Management believes the following critical accounting estimates are the most significant to the presentation of our financial statements and require the most difficult, subjective and complex judgments.

␟

Revenue Allowances.

␟

We base our determination of necessary adjustments to the contract price by reference to actual historical activity and experience, including actual historical returns, rebates and credits issued to OEM and distributor customers adjusted, as applicable, to include adjustments, if any, for known events or current economic conditions, or both.

␟

Our estimates of necessary adjustments for distributor price incentives and price protection on unsold products held by distributors are based on actual historical incentives provided to distributor customers and known future price movements based on our internal and external market data analysis.

␟

Our estimates of necessary adjustments for OEM price incentives utilize, in addition to known pricing agreements, actual historical rebate attainment rates and estimates of future OEM rebate program attainment based on internal and external market data analysis.

␟

Table of Contents

␟

Inventory Valuation.

␟

Goodwill.

␟

Long-Lived and Intangible Assets.

␟

Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows. When indicators of impairment exist and assets are held for use, we estimate future undiscounted cash flows attributable to the related asset groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals.

␟

Income Taxes

␟

We regularly assess the likelihood that we will be able to recover our deferred tax assets. Unless recovery is considered more-likely-than-not (a probability level of more than 50%), we will record a charge to income tax expense in the form of a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable or maintain the valuation allowance recorded in prior periods. When considering all available evidence, if we determine it is more-likely-than-not we will realize our deferred tax assets, we will reverse some or all of the existing valuation allowance, which would result in a credit to income tax expense and the establishment of an asset in the period of reversal.

␟

In determining the need to establish or maintain a valuation allowance, we consider the four sources of jurisdictional taxable income: (i) carryback of net operating losses to prior years; (ii) future reversals of existing taxable temporary differences; (iii) viable and prudent tax planning strategies; and (iv) future taxable income exclusive of reversing temporary differences and carryforwards.

␟

Table of Contents

␟

Through the end of 2023, we continue to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes. The federal valuation allowance maintained is due to limitations, under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules. Certain state and foreign valuation allowances are maintained due to a lack of sufficient sources of future taxable income.

␟

In addition, the calculation of our tax liabilities involves addressing uncertainties in the application of complex, multi-jurisdictional tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing authorities.

␟

Results of Operations

␟

Additional information on our reportable segments is contained in Note 4

␟

Segment Reporting of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

␟

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 these trends.

␟

The following table provides a summary of net revenue and operating income (loss) by segment for 2023 and 2022:

␟

Year Ended

␟

December 30,

␟

December 31,

␟

(In millions)

␟

Net revenue:

␟

Data Center

␟

Client

␟

Gaming

␟

Embedded

␟

Total net revenue

␟

Operating income (loss):

␟

Data Center

␟

Client

␟

Gaming

␟

Embedded

␟

All Other

␟

Total operating income

␟

Data Center

␟

Data Center net revenue of $6.5 billion in 2023 increased by 7%, compared to net revenue of $6.0 billion in 2022. The increase was primarily driven by higher sales of AMD Instinct GPUs and 4th Gen AMD EPYC CPUs.

␟

Data Center operating income was $1.3 billion in 2023, compared to operating income of $1.8 billion in 2022. The decrease in operating income was primarily due to product mix and higher research and development (R&D) investment.

␟

Client

␟

Client net revenue of $4.7 billion in 2023 decreased by 25%, compared to net revenue of $6.2 billion in 2022, primarily due to lower sales of Ryzen mobile and desktop processors, resulting from a 16% decrease in average selling price and a 12% decrease in unit shipments. Lower Ryzen processor sales were due to weak PC market conditions and inventory correction across the PC supply chain that impacted the first half of 2023.

␟

Client operating loss was $46 million in 2023, compared to operating income of $1.2 billion in 2022. The decrease in operating income was primarily due to lower revenue.

␟

Table of Contents

␟

Gaming

␟

Gaming net revenue of $6.2 billion in 2023 decreased by 9%, compared to net revenue of $6.8 billion in 2022. The decrease in net revenue was primarily due to lower semi-custom product revenue.

␟

Gaming operating income was $971 million in 2023, compared to operating income of $953 million in 2022. The increase in operating income was primarily driven by product mix, partially offset by higher R&D investment.

␟

Embedded

␟

Embedded net revenue of $5.3 billion in 2023 increased by 17%, compared to net revenue of $4.6 billion in 2022. The increase in net revenue was primarily driven by the inclusion of embedded product revenue from Xilinx, Inc. (Xilinx) for the full twelve months period in 2023, as compared to a partial period from February 14, 2022 (the Xilinx Acquisition Date) in the prior year period.

␟

Embedded operating income was $2.6 billion in 2023, compared to operating income of $2.3 billion in 2022. The increase in operating income was primarily driven by the inclusion of Xilinx for the full twelve months period as compared to a partial period from the Xilinx Acquisition Date in the prior year period.

␟

All Other

␟

All Other operating loss of $4.4 billion in 2023 primarily consisted of $2.8 billion of amortization of acquisition-related intangibles, $1.4 billion of stock-based compensation expense, and $258 million of acquisition-related and other costs. All Other operating loss of $5.0 billion in 2022 primarily consisted of $3.5 billion of amortization of acquisition-related intangibles, $1.1 billion of stock-based compensation expense and $452 million of acquisition-related and other costs.

␟

Comparison of Gross Margin, Expenses, Licensing Gain, Interest Expense, Other Income (expense) and Income Taxes

␟

The following is a summary of certain consolidated statement of operations data for 2023 and 2022:

␟

December 30, 2023

␟

December 31, 2022

␟

Net revenue

␟

Cost of sales

␟

Amortization of acquisition-related intangibles

␟

Gross profit

␟

Gross margin

␟

Research and development

␟

Marketing, general and administrative

␟

Amortization of acquisition-related intangibles

␟

Licensing gain

␟

Interest expense

␟

Other income (expense), net

␟

Income tax (benefit)

␟

Gross Margin

␟

Gross margin as a percentage of net revenue was 46% in 2023 compared to 45% in 2022. The increase in gross margin was primarily driven by higher Embedded segment revenue and lower amortization of acquisition-related intangible assets, partially offset by lower Client segment revenue and product mix.

␟

Expenses

␟

Research and Development Expenses

␟

Research and development expenses of $5.9 billion in 2023 increased by $867 million, or 17%, compared to $5.0 billion in 2022. The increase was primarily due to higher employee-related costs due to an increase in headcount to support increased investment in AI.

␟

Table of Contents

␟

Marketing, General and Administrative Expenses

␟

Marketing, general and administrative expenses of $2.4 billion in 2023 increased by $16 million, or 1%, compared to $2.3 billion in 2022. The increase was primarily due to an increase in employee-related costs.

␟

Amortization of Acquisition-Related Intangibles

␟

Licensing Gain

␟

We recognized $34 million of licensing gain from royalty income and $102 million of licensing gain from milestone achievement and royalty income associated with the licensed IP to the THATIC JV, our two joint ventures with Higon Information Technology Co., Ltd., a third-party Chinese entity, in 2023 and 2022, respectively.

␟

Interest Expense

␟

Interest expense of $106 million in 2023 increased by $18 million compared to $88 million in 2022, primarily due to interest expense from our 3.924% Senior Notes Due 2032

␟

(3.924% Notes) and our 4.393% Senior Notes Due 2052 (4.393% Notes) that were issued in June 2022.

␟

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 was $197 million in 2023 compared to $8 million of Other income, net in 2022. The change was primarily due to an increase in interest income driven by rising interest rates.

␟

Income Tax Benefit

␟

We recorded an income tax benefit of $346 million and $122 million in 2023 and 2022, respectively, representing effective tax rates of (68%) and (10%), respectively. The increase in income tax benefit in 2023 was primarily due to the lower pre-tax income coupled with a $185 million foreign-derived intangible income tax benefit and $169 million of research and development tax credits.

␟

Global Minimum Tax

␟

International Sales

␟

International sales as a percentage of net revenue were

␟

65%

␟

in 2023 and 66% in 2022. 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 are denominated in U.S. dollars.

␟

Table of Contents

␟

FINANCIAL CONDITION

␟

Liquidity and Capital Resources

␟

Our operating, investing and financing cash flow activities for 2023 and 2022 were as follows:

␟

December 30, 2023

␟

December 31, 2022

␟

(In millions)

␟

Net cash provided by (used in):

␟

Operating activities

␟

Investing activities

␟

Financing activities

␟

Net increase (decrease) in cash and cash equivalents

␟

We have $3.0 billion available under an unsecured revolving credit agreement (Revolving Credit Agreement) that expires on April 29, 2027. No funds were drawn from this credit facility during the year ended December 30, 2023.

␟

We also have a commercial paper program to issue unsecured commercial paper notes up to a maximum principal amount outstanding, at any time, of $3.0 billion, with a maturity of up to 397 days from the date of issue. We did not issue any commercial paper during the year ended December 30, 2023.

␟

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, including capital expenditures and purchase commitments, 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 consist primarily of cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures.

␟

Table of Contents

␟

Investing Activities

␟

Financing Activities

␟

Off-Balance Sheet Arrangements

␟

Table of Contents

␟

Interest Rate Risk.

␟

We will continue to monitor our exposure to interest rate risk.

␟

Default Risk.

␟

Foreign Exchange Risk.

␟

We maintain a foreign currency hedging strategy which uses derivative financial instruments to mitigate the risks associated with changes in foreign currency exchange rates. This strategy takes into consideration all of our exposures. We do not use derivative financial instruments for trading or speculative purposes.

␟

December 30, 2023

␟

December 31, 2022

␟

Notional

␟

Amount

␟

Average

␟

Contract

␟

Rate

␟

Estimated

␟

Notional

␟

Amount

␟

Average

␟

Contract

␟

Rate

␟

Estimated

␟

(In millions except contract rates)

␟

Foreign currency forward contracts:

␟

Chinese Renminbi

␟

Canadian Dollar

␟

Indian Rupee

␟

Taiwan Dollar

␟

Singapore Dollar

␟

Euro

␟

Pound Sterling

␟

Japanese Yen

␟

Australian Dollar

␟

Total

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Consolidated Statements of Operations

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

Net revenue

␟

Cost of sales

␟

Amortization of acquisition-related intangibles

␟

Total cost of sales

␟

Gross profit

␟

Research and development

␟

Marketing, general and administrative

␟

Amortization of acquisition-related intangibles

␟

Licensing gain

␟

Operating income

␟

Interest expense

␟

Other income (expense), net

␟

Income before income taxes and equity income

␟

Income tax provision (benefit)

␟

Equity income in investee

␟

Net income

␟

Earnings per share

␟

Shares used in per share calculation

␟

See accompanying notes to consolidated financial statements.

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Consolidated Statements of Comprehensive Income

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

Net income

␟

Other comprehensive income (loss)

␟

Net change in unrealized gains (losses) on cash flow hedges

␟

Total comprehensive income

␟

See accompanying notes to consolidated financial statements.

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Consolidated Balance Sheets

␟

December 30,

␟

December 31,

␟

ASSETS

␟

Current assets:

␟

Cash and cash equivalents

␟

Short-term investments

␟

Accounts receivable, net

␟

Inventories

␟

Receivables from related parties

␟

Prepaid expenses and other current assets

␟

Total current assets

␟

Property and equipment, net

␟

Operating lease right-of-use assets

␟

Goodwill

␟

Acquisition-related intangibles

␟

Investment: equity method

␟

Deferred tax assets

␟

Other non-current assets

␟

Total assets

␟

Current liabilities:

␟

Accounts payable

␟

Payables to related parties

␟

Accrued liabilities

␟

Current portion of long-term debt, net

␟

Other current liabilities

␟

Total current liabilities

␟

Long-term debt, net of current portion

␟

Long-term operating lease liabilities

␟

Deferred tax liabilities

␟

Other long-term liabilities

␟

Commitments and Contingencies (see Notes 16 and 17)

␟

Capital stock:

␟

Common stock, par value $

␟

; shares authorized:

␟

; shares issued: 1,663 and 1,645; shares outstanding: 1,616 and 1,612

␟

Additional paid-in capital

␟

Treasury stock, at cost (shares held: 47 and 33)

␟

Retained earnings (Accumulated deficit)

␟

Accumulated other comprehensive loss

␟

See accompanying notes to consolidated financial statements.

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

Capital stock

␟

Common stock

␟

Balance, beginning of period

␟

Common stock issued under employee equity plans

␟

Issuance of common stock as consideration for acquisition

␟

Balance, end of period

␟

Additional paid-in capital

␟

Balance, beginning of period

␟

Common stock issued under employee equity plans

␟

Stock-based compensation

␟

Issuance of common stock to settle convertible debt

␟

Issuance of common stock as consideration for acquisition

␟

Fair value of replacement share-based awards related to acquisition

␟

Issuance of common stock warrants

␟

Balance, end of period

␟

Treasury stock

␟

Balance, beginning of period

␟

Repurchases of common stock

␟

Reissuance of treasury stock as consideration for acquisition

␟

Common stock repurchases for tax withholding on employee equity plans

␟

Balance, end of period

␟

Retained earnings (Accumulated deficit)

␟

Balance, beginning of period

␟

Cumulative effect of adoption of accounting standard

␟

Net income

␟

Balance, end of period

␟

Accumulated other comprehensive income (loss)

␟

Balance, beginning of period

␟

Other comprehensive income (loss)

␟

Balance, end of period

␟

Total stockholders' equity

␟

See accompanying notes to consolidated financial statements.

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Consolidated Statements of Cash Flows

␟

December 30,

␟

December 31,

␟

December 25,

␟

(In millions)

␟

Cash flows from operating activities:

␟

Net income

␟

Adjustments to reconcile net income to net cash provided by operating activities:

␟

Depreciation and amortization

␟

Stock-based compensation

␟

Amortization of operating lease right-of-use assets

␟

Amortization of inventory fair value adjustment

␟

Loss on debt redemption, repurchase and conversion

␟

Loss on sale or disposal of property and equipment

␟

Deferred income taxes

␟

(Gains) losses on equity investments, net

␟

Other

␟

Changes in operating assets and liabilities:

␟

Accounts receivable, net

␟

Inventories

␟

Receivables from related parties

␟

Prepaid expenses and other assets

␟

Payables to related parties

␟

Accounts payable

␟

Accrued and other liabilities

␟

Net cash provided by operating activities

␟

Cash flows from investing activities:

␟

Purchases of property and equipment

␟

Purchases of short-term investments

␟

Proceeds from maturity of short-term investments

␟

Proceeds from sale of short-term investments

␟

Cash received from acquisition of Xilinx

␟

Acquisitions, net of cash acquired

␟

Other

␟

Net cash provided by (used in) investing activities

␟

Cash flows from financing activities:

␟

Proceeds from debt, net of issuance costs

␟

Repayment of debt

␟

Proceeds from sales of common stock through employee equity plans

␟

Repurchases of common stock

␟

Common stock repurchases for tax withholding on employee equity plans

␟

Other

␟

Net cash used in financing activities

␟

Net increase (decrease) in cash and cash equivalents

␟

Cash and cash equivalents at beginning of year

␟

Cash and cash equivalents at end of year

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Consolidated Statements of Cash Flows

␟

December 30,

␟

December 31,

␟

December 25,

␟

(In millions)

␟

Supplemental cash flow information:

␟

Cash paid during the year for:

␟

Interest

␟

Income taxes, net of refund

␟

Non-cash investing and financing activities:

␟

Purchases of property and equipment, accrued but not paid

␟

Issuance of common stock and treasury stock for the acquisition of Xilinx

␟

Fair value of replacement share-based awards related to acquisition of Xilinx

␟

Non-cash activities for leases:

␟

Operating lease right-of-use assets acquired by assuming related liabilities

␟

See accompanying notes to consolidated financial statements.

␟

Table of Contents

␟

Advanced Micro Devices, Inc.

␟

Notes to Consolidated Financial Statements

␟

Fiscal Year

␟

Principles of Consolidation.

␟

Reclassification.

␟

Certain immaterial prior period amounts have been reclassified to conform to current period presentation.

␟

Use of Estimates.

␟

Revenue Recognition

␟

30 to 60 days. The Company has determined that it does not have significant financing components in its contracts with customers.

␟

Non-custom products

␟

The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Non-custom product arrangements generally comprise a single performance obligation. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and rebates based on actual historical experience and any known events.

␟

Table of Contents

␟

Constraints of variable consideration have not been material.

␟

Custom products

␟

Sales of custom products are not subject to a right of return and arrangements generally involve a single performance obligation. Generally, there are no variable consideration estimates associated with custom products.

␟

Development and intellectual property licensing agreements

␟

There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving either the sale or licensing of IP.

␟

Inventories

␟

The Company values inventory at standard cost, adjusted to approximate the lower of

␟

actual cost or estimated net realizable value using assumptions about future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required

␟

Table of Contents

␟

Business Combinations

␟

The Company is required to use the acquisition method of accounting for business combinations. The acquisition method of accounting requires the Company to allocate the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future revenue growth rates and margins, future changes in technology, time to recreate customer relationships, useful lives, and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made.

␟

Goodwill

␟

The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment.

␟

The Company has the option to first perform qualitative testing to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying amount. Qualitative factors include industry and market considerations, overall financial performance, share price trends and market capitalization and Company-specific events. If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the Company does not proceed to perform a quantitative impairment test.

␟

Long-Lived and Intangible Assets

␟

Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows.

␟

When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the related asset groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Factors affecting impairment of assets held for use include the ability of the specific assets to generate separately identifiable positive cash flows.

␟

When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over their fair value. Market conditions are among the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate impairment recognition in future periods for assets held for use or assets held for sale.

␟

Cash Equivalents

␟

Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of purchase.

␟

Table of Contents

␟

Accounts Receivable

␟

Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. Accounts receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to customers and custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, for which revenue has been recognized but not yet invoiced to customers. All unbilled accounts receivables are expected to be billed and collected within twelve months.

␟

The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing monitoring procedures and credit approvals. Furthermore, the Company performs in-depth credit evaluations of all new customers and, at intervals, for existing customers. From this, the Company may require letters of credit, bank or corporate guarantees or advance payments if deemed necessary. The Company maintains an allowance for credit loss, consisting of known specific troubled accounts as well as an amount based on overall estimated potential uncollectible accounts receivable based on historical experience and review of their current credit quality. The Company does not believe the receivable balance from its customers represents a significant credit risk.

␟

Investments

␟

Available-for-Sale Debt Securities.

␟

Non-marketable Equity Securities.

␟

Fair Value Measurements

␟

Fair Value Hierarchy

␟

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

␟

Table of Contents

␟

Property and Equipment

␟

Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of two to 15 years for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements.

␟

Leases

␟

Foreign Currency Translation/Transactions

␟

Marketing and Advertising Expenses

␟

Stock-Based Compensation

␟

Table of Contents

␟

Contingencies

␟

From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to new developments in each matter or changes in circumstances such as a change in settlement strategy.

␟

Income Taxes

␟

The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority. Interest and penalties related to income taxes are recorded in the Income tax provision (benefit) line in the Consolidated Statements of Operations. The Company is subject to the Global Intangible Low Taxed Income (GILTI) tax in the U.S. and recognizes deferred taxes for temporary basis differences that are expected to reverse as GILTI tax in future years.

␟

Recently Issued Accounting Standard Updates Not Yet adopted

␟

Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a material impact on its Consolidated Financial Statements

␟

Accounts Receivable, net

␟

Table of Contents

␟

Inventories

␟

December 30,

␟

December 31,

␟

(In millions)

␟

Raw materials

␟

Work in process

␟

Finished goods

␟

Total inventories

␟

Property and Equipment, net

␟

December 30,

␟

December 31,

␟

(In millions)

␟

Land, building and leasehold improvements

␟

Equipment

␟

Construction in progress

␟

Property and equipment, gross

␟

Accumulated depreciation

␟

Total property and equipment, net

␟

Depreciation expense for 2023, 2022 and 2021 was $441 million, $439 million and $296 million, respectively.

␟

Accrued Liabilities

␟

December 30,

␟

December 31,

␟

(In millions)

␟

Accrued marketing programs

␟

Accrued compensation and benefits

␟

Customer program liabilities

␟

Other accrued and current liabilities

␟

Total accrued liabilities

␟

Revenue

␟

Table of Contents

␟

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, 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 for 2023, 2022 and 2021.

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

(In millions)

␟

Net revenue:

␟

Data Center

␟

Client

␟

Gaming

␟

Embedded

␟

Total net revenue

␟

Operating income (loss):

␟

Data Center

␟

Client

␟

Gaming

␟

Embedded

␟

All Other

␟

Total operating income

␟

The following table provides items included in All Other category:

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

(In millions)

␟

Operating loss:

␟

Stock-based compensation expense

␟

Acquisition-related and other costs

␟

Amortization of acquisition-related intangibles

␟

Licensing gain

␟

Total operating loss

␟

Table of Contents

␟

The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information.

␟

The following table summarizes sales to external customers by geographic regions based on billing location of the customer:

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

(In millions)

␟

United States

␟

Japan

␟

China (including Hong Kong)

␟

Singapore

␟

Europe

␟

Taiwan

␟

Other countries

␟

Total sales to external customers

␟

Year Ended

␟

Segment

␟

December 30,

␟

December 31,

␟

December 25,

␟

Customer A

␟

Gaming

␟

Customer B

␟

Client

␟

Less than 10%

␟

The following table summarizes Property and equipment, net by geographic areas:

␟

December 30,

␟

December 31,

␟

(In millions)

␟

United States

␟

Singapore

␟

India

␟

Canada

␟

Ireland

␟

China

␟

Other countries

␟

Total property and equipment, net

␟

Fiscal Year 2023 Acquisitions

␟

Table of Contents

␟

Fiscal Year 2022 Acquisitions

␟

Pensando Acquisition

␟

The purchase consideration was allocated as follows:

␟

(In millions)

␟

Cash and cash equivalents

␟

Accounts receivable

␟

Inventory

␟

Prepaid expenses and other current assets

␟

Property and equipment

␟

Deferred tax assets

␟

Acquisition-related intangibles

␟

Total Assets

␟

Accounts payable

␟

Accrued and other liabilities

␟

Total Liabilities

␟

Fair value of net assets acquired

␟

Goodwill

␟

Total purchase consideration

␟

Table of Contents

␟

Following are details of the purchase consideration allocated to acquired intangible assets:

␟

Fair Value

␟

Weighted-average estimated useful life

␟

(In millions)

␟

(In years)

␟

Developed technology

␟

4 years

␟

Customer relationships

␟

3 years

␟

Customer backlog

␟

1 year

␟

Product trademarks

␟

5 years

␟

Identified intangible assets subject to amortization

␟

In-process research and development (IPR&D) not subject to amortization

␟

N/A

␟

Total identified intangible assets acquired

␟

The fair value of developed technology was determined using the income approach, specifically the multi-period excess earnings method.

␟

Customer relationships represent the fair value of existing contractual relationships and customer loyalty determined based on existing relationships using the income approach, specifically the with and without method.

␟

Customer backlog represents the fair value of non-cancellable customer contract orders using the income approach, specifically the multi-period excess earnings method.

␟

Product trademarks primarily relate to the Pensando product-related trademarks, and the fair value was determined by applying the income approach, specifically the relief from royalty method.

␟

The fair value of IPR&D was determined using the income approach, specifically the multi-period excess earnings method.

␟

IPR&D consists of projects that have not yet reached technological feasibility as of the acquisition date. Accordingly, the Company recorded an indefinite-lived intangible asset of $220 million for the fair value of these projects, which will initially not be amortized. Instead, these projects will be tested for impairment annually and whenever events or changes in circumstances indicate that these projects may be impaired. Once the project reaches technological feasibility, the Company will begin to amortize the intangible assets over their estimated useful lives.

␟

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

␟

Xilinx Acquisition

␟

Table of Contents

␟

The purchase consideration was allocated as follows:

␟

(In millions)

␟

Cash and cash equivalents

␟

Short-term investments

␟

Accounts receivable

␟

Inventories

␟

Prepaid expenses and other current assets

␟

Property and equipment

␟

Operating lease right-of-use assets

␟

Acquisition-related intangibles

␟

Deferred tax assets

␟

Other non-current assets

␟

Total Assets

␟

Accounts payable

␟

Accrued liabilities

␟

Other current liabilities

␟

Long-term debt

␟

Long-term operating lease liabilities

␟

Deferred tax liabilities

␟

Other long-term liabilities

␟

Total Liabilities

␟

Fair value of net assets acquired

␟

Goodwill

␟

Total purchase consideration

␟

The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. Goodwill arising from the acquisition of Xilinx was assigned to the Embedded and Data Center segments. Goodwill was primarily attributed to increased synergies expected to be achieved from the integration of Xilinx. Goodwill is not expected to be deductible for income tax purposes.

␟

Table of Contents

␟

Following are details of the purchase consideration allocated to acquired intangible assets:

␟

Fair Value

␟

Weighted-average estimated useful life

␟

(In millions)

␟

(In years)

␟

Developed technology

␟

16 years

␟

Customer relationships

␟

14 years

␟

Customer backlog

␟

1 year

␟

Corporate trade name

␟

1 year

␟

Product trademarks

␟

12 years

␟

Identified intangible assets subject to amortization

␟

In-process research and development (IPR&D) not subject to amortization

␟

N/A

␟

Total identified intangible assets acquired

␟

The fair value of developed technology was determined using the income approach, specifically, the multi-period excess earnings method.

␟

Customer relationships represent the fair value of existing contractual relationships and customer loyalty determined based on existing relationships using the income approach, specifically the with and without method.

␟

Customer backlog represents the fair value of non-cancellable customer contract orders using the income approach, specifically the multi-period excess earnings method.

␟

Corporate trade name and product trademarks primarily relate to the Xilinx brand and product-related trademarks, respectively, and the fair values were determined by applying the income approach, specifically the relief from royalty method.

␟

The fair value of IPR&D was determined using the income approach, specifically the multi-period excess earnings method.

␟

The

␟

IPR&D consists of projects that

␟

have not yet reached technological feasibility as of the acquisition date. Accordingly, the Company recorded an indefinite-lived intangible asset of $970 million for the fair value of these projects, which were initially not amortized.

␟

In the fourth quarter of 2023, these IPR&D assets reached technological feasibility and were reclassified as developed technology, and began amortization over their estimated useful lives of 15 years.

␟

The Company also assumed unvested restricted stock units with estimated fair value o

␟

f $1.2 billion,

␟

of which $275 million

␟

was

␟

included as a component of the purchase co

␟

nsideration and $951 million will be recognized as expense subsequent to the acquisition.

␟

The Consolidated Statements of Operations include the following revenue and operating income attributable to Xilinx in 2022:

␟

(In millions)

␟

Net revenue

␟

Operating income

␟

In 2023 and 2022, Xilinx acquisition-related costs of

␟

and

␟

were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the C

␟

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

␟

Table of Contents

␟

Supplemental Unaudited Pro Forma Information

␟

Following are the supplemental consolidated financial results of the Company, Xilinx and Pensando on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of the fiscal year 2021 (i.e., December 27, 2020).

␟

December 31,

␟

December 25,

␟

(in millions)

␟

Net revenue

␟

Net income

␟

Acquisition-related Intangible Assets

␟

December 30, 2023

␟

December 31, 2022

␟

Gross Carrying Amount

␟

Accumulated Amortization

␟

Net Carrying Amount

␟

Gross Carrying Amount

␟

Accumulated Amortization

␟

Net Carrying Amount

␟

(In millions)

␟

(In millions)

␟

Developed technology

␟

Customer relationships

␟

Customer backlog

␟

Corporate trade name

␟

Product trademarks

␟

Identified intangible assets subject to amortization

␟

IPR&D not subject to amortization

␟

Total acquisition-related intangible assets

␟

Table of Contents

␟

Fiscal Year

␟

(In millions)

␟

2029 and thereafter

␟

Total

␟

Goodwill

␟

December 25, 2021

␟

Acquisitions

␟

Adjustments and Reassignment due to segment change*

␟

December 31, 2022

␟

Acquisitions

␟

(In millions)

␟

(In millions)

␟

Reportable segments before segment change:

␟

Enterprise, Embedded and Semi-Custom

␟

Xilinx

␟

Reportable segments after segment change:

␟

Data Center

␟

Client

␟

Gaming

␟

Embedded

␟

Total

␟

*In the second quarter of fiscal year 2022, the Company reassigned goodwill balances among the updated reportable segments to reflect changes in its segment reporting structure.

␟

During the fourth quarter of fiscal years 2023 and 2022, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.

␟

ATMP Joint Venture

␟

Table of Contents

␟

$363 million

␟

$14 million and $15 million, respectively

␟

$9 million

␟

$2 million, respectively

␟

During 2023, 2022 and 2021, the Company recorded gains of

␟

$16 million, $14 million and $6 million

␟

$99 million

␟

and $83 million, respectively.

␟

THATIC Joint Ventures

␟

$34 million of licensing gain from royalty income and $102 million

␟

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.

␟

Debt

␟

December 30,

␟

December 31,

␟

(In millions)

␟

2.950% Senior Notes Due 2024 (2.950% Notes)

␟

2.125% Convertible Senior Notes Due 2026 (2.125% Notes)

␟

2.375% Senior Notes Due 2030 (2.375% Notes)

␟

3.924% Senior Notes Due 2032 (3.924% Notes)

␟

4.393% Senior Notes Due 2052 (4.393% Notes)

␟

Total debt (principal amount)

␟

Unamortized debt premium, discount and issuance costs, net

␟

Total debt (net)

␟

Less: current portion of long-term debt and related unamortized debt premium and issuance costs

␟

Total long-term debt

␟

Assumed Xilinx Notes

␟

Assumed Xilinx Notes

␟

) which were recorded at fair value as of the Xilinx Acquisition Date. The Assumed Xilinx Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.

␟

Table of Contents

␟

3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052

␟

On June 9, 2022, the Company issued $1.0 billion in aggregate principal amount of 3.924% Notes and 4.393% Notes. The 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company. The interest is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2022. The 3.924% and 4.393% Notes are governed by the terms of an indenture dated June 9, 2022 between the Company and US Bank Trust Company, National Association as trustee.

␟

The Company may redeem some or all of the 3.924% Notes and 4.393% Notes prior to March 1, 2032 and December 1, 2051, respectively, at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the 3.924% Notes or 4.393% Notes or 100% of the principal amount plus accrued and unpaid interest. Holders have the right to require the Company to repurchase all or a portion of the 3.924% Notes or 4.393% Notes in the event that the Company undergoes a change of control as defined in the indenture, at a repurchase price of 101% of the principal amount plus accrued and unpaid interest. Additionally, an event of default may result in the acceleration of the maturity of the 3.924% Notes and 4.393% Notes.

␟

Future Payments on Total Debt

␟

Term Debt

␟

(Principal only)

␟

(In millions)

␟

2029 and thereafter

␟

Total

␟

Revolving Credit Facility

␟

Commercial Paper

␟

Table of Contents

␟

Financial Instruments Recorded at Fair Value on a Recurring Basis

␟

December 30, 2023

␟

December 31, 2022

␟

(In millions)

␟

Level 1

␟

Level 2

␟

Total

␟

Level 1

␟

Level 2

␟

Total

␟

Cash equivalents

␟

Money market funds

␟

Corporate debt securities

␟

U.S. government and agency securities

␟

Non-U.S. government and agency securities

␟

Time deposits and certificates of deposits

␟

Short-term investments

␟

Corporate debt securities

␟

Time deposits and certificates of deposits

␟

Asset-backed and mortgage-backed securities

␟

U.S. government and agency securities

␟

Non-U.S. government and agency securities

␟

Other non-current assets

␟

Time deposits and certificates of deposits

␟

Equity investments

␟

Deferred compensation plan investments

␟

Total assets measured at fair value

␟

The following is a summary of cash equivalents and short-term investments:

␟

December 30, 2023

␟

December 31, 2022

␟

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

␟

Corporate debt securities

␟

Money market funds

␟

Time deposits and certificates of deposits

␟

U.S. government and agency securities

␟

Non-U.S. government and agency securities

␟

Table of Contents

␟

The contractual maturities of investments classified as available-for-sale are as follows:

␟

December 30, 2023

␟

December 31, 2022

␟

Amortized Cost

␟

Fair Value

␟

Amortized Cost

␟

Fair Value

␟

(In millions)

␟

(In millions)

␟

Due within 1 year

␟

Due in 1 year through 5 years

␟

Due in 5 years and later

␟

Financial Instruments Measured at Fair Value on a Non-Recurring Basis

␟

Financial Instruments Not Recorded at Fair Value

␟

December 30, 2023

␟

December 31, 2022

␟

Carrying

␟

Amount

␟

Estimated

␟

Carrying

␟

Amount

␟

Estimated

␟

(In millions)

␟

(In millions)

␟

Current portion of long-term debt, net

␟

Long-term debt, net of current portion

␟

Hedging Transactions and Derivative Financial Instruments

␟

Foreign Currency Forward Contracts Designated as Accounting Hedges

␟

Foreign Currency Forward Contracts Not Designated as Accounting Hedges

␟

The cash flows associated with derivative instruments as cash flow hedging instruments are classified in the same category in the Consolidated Statement of Cash Flows as the cash flows of the related items.

␟

Table of Contents

␟

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments in time deposits, available-for-sale debt securities, equity investments and trade receivables.

␟

The Company places its investments with high credit quality financial institutions. At the time an investment is made, investments in commercial paper of industrial firms and financial institutions are rated A1, P1, F1 or better. The Company invests in bonds that are rated A, A2 or better and repurchase agreements, each of which have securities of the type and quality listed above as collateral.

␟

The Company is exposed to credit losses from nonperformance by counterparties on foreign currency hedge contracts. These counterparties are large global institutions, and to date, no such counterparty has failed to meet its financial obligations to the Company.

␟

Basic earnings per share is computed based on the weighted-average number of shares outstanding.

␟

The following table sets forth the components of basic and diluted earnings per share:

␟

Year Ended

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Numerator

␟

Net income for basic earnings per share

␟

Denominator

␟

Basic weighted-average shares

␟

Effect of potentially dilutive shares from employee equity plans and warrants

␟

Diluted weighted-average shares

␟

Earnings per share:

␟

Basic

␟

Diluted

␟

Table of Contents

␟

Common Stock

␟

Shares of common stock outstanding were as follows:

␟

Year Ended

␟

December 30,

␟

December 31,

␟

December 25,

␟

Balance, beginning of period

␟

Common stock issued in the acquisition of Xilinx

␟

Common stock issued under employee equity plans

␟

Repurchases of common stock

␟

Common stock repurchases for tax withholding on equity awards

␟

Issuance of common stock upon warrant exercise

␟

Issuance of common stock to settle convertible debt

␟

Balance, end of period

␟

Stock Repurchase Program

␟

Stock-Based Compensation

␟

Stock Options.

␟

Time-based RSUs.

␟

PRSUs.

␟

Table of Contents

␟

ESPP.

␟

Under the 2017 Plan, eligible employees who participate in an offering period may have up to 15% of their eligible earnings withheld, up to certain limitations, to purchase shares of common stock at 85% of the lower of the fair market value on the first or the last business day of the six-month offering period. The offering periods commence in May and November each year.

␟

Valuation and Expense

␟

Stock-based compensation expense was allocated in the consolidated statements of operations as follows:

␟

Year Ended

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Cost of sales

␟

Research and development

␟

Marketing, general, and administrative

␟

Total stock-based compensation expense before income taxes

␟

Income tax benefit

␟

Total stock-based compensation expense, net of income taxes

␟

Stock Options.

␟

The weighted-average estimated fair value of employee stock options granted during 2023, 2022 and 2021 was $53.72, $44.35 and $46.07 per share, respectively, using the following assumptions:

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Expected volatility

␟

52.36% - 52.42%

␟

Risk-free interest rate

␟

3.93% - 4.11%

␟

Expected dividends

␟

Expected life (in years)

␟

The following table summarizes stock option activity and related information:

␟

Outstanding Number

␟

Weighted-

␟

Average

␟

Exercise

␟

Price

␟

Aggregate Intrinsic Value

␟

Weighted-Average Remaining Contractual Life

␟

(in years)

␟

(In millions, except share price)

␟

Balance as of December 31, 2022

␟

Granted

␟

Canceled

␟

Exercised

␟

Balance as of December 30, 2023

␟

Exercisable December 30, 2023

␟

Table of Contents

␟

Time-based RSUs.

␟

The following table summarizes time-based RSU activity and related information:

␟

Number

␟

Weighted- Average Grant Date Fair Value

␟

Unvested shares as of December 31, 2022

␟

Granted

␟

Forfeited

␟

Vested

␟

Unvested shares as of December 30, 2023

␟

PRSUs.

␟

The weighted-average grant date fair values of PRSUs granted during 2023, 2022 and 2021 were $134.87, $121.12 and $153.89, respectively, using the following assumptions:

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Expected volatility

␟

51.12% - 56.22%

␟

50.65% - 53.51%

␟

Risk-free interest rate

␟

4.30% - 4.36%

␟

1.14% - 3.17%

␟

Expected dividends

␟

Expected term (in years)

␟

The Company uses the historical volatility of its common stock and risk-free interest rate based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the PRSUs grant at the date closest to the grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of PRSUs represents the requisite service periods of these PRSUs.

␟

The following table summarizes PRSU activity and related information:

␟

Number

␟

Weighted-Average

␟

Grant Date Fair Value

␟

Unvested shares as of December 31, 2022

␟

Granted

␟

Forfeited

␟

Vested

␟

Unvested shares as of December 30, 2023

␟

Table of Contents

␟

ESPP.

␟

The weighted-average grant date fair value for the ESPP during 2023, 2022 and 2021 was $31.11, $24.71 and $27.27 per share, respectively, using the following assumptions:

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Expected volatility

␟

45.74% - 49.40%

␟

58.15% - 63.76%

␟

36.90% - 39.39%

␟

Risk-free interest rate

␟

5.13% - 5.46%

␟

1.43% - 4.52%

␟

0.04% - 0.07%

␟

Expected dividends

␟

Expected term (in years)

␟

The Company uses the historical volatility of its common stock and the risk-free interest rate based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the ESPP grant at the date closest to the ESPP grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of the ESPP represents the six-month offering period.

␟

Xilinx Replacement Awards

␟

In connection with the acquisition of Xilinx, the Company issued equity awards as replacement for assumed equity awards to Xilinx employees. The replacement awards include restricted stock units of approximately 12 million shares with a weighted average fair value of $103.35 per share and have terms that are substantially the same as the assumed Xilinx awards. The fair value of replacement awards related to services rendered up to the Xilinx Acquisition Date was recognized as a component of the total purchase consideration while the remaining fair value of replacement awards attributable to post-combination services is being recognized as stock-based compensation expense over the remaining post-acquisition vesting period.

␟

Income before income taxes consists of the following:

␟

Year Ended

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

(In millions)

␟

U.S.

␟

Non-U.S.

␟

Total pre-tax income including equity income in investee

␟

Table of Contents

␟

The income tax provision (benefit) consists of:

␟

Year Ended

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

(In millions)

␟

Current:

␟

U.S. federal

␟

U.S. state and local

␟

Non-U.S.

␟

Total

␟

Deferred:

␟

U.S. federal

␟

U.S. state and local

␟

Non-U.S.

␟

Total

␟

Income tax provision (benefit)

␟

The table below displays the reconciliation between statutory federal income taxes and the total income tax provision (benefit).

␟

Year Ended

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Statutory federal income tax expense at 21%

␟

GILTI and other foreign inclusion

␟

Foreign-Derived Intangible Income (FDII) deduction

␟

Research credits

␟

Interest and penalty

␟

Foreign rate detriment (benefit)

␟

Stock-based and non-deductible compensation

␟

Other

␟

Income tax provision (benefit)

␟

Beginning in 2022, provisions in the U.S. Tax Cuts and Jobs Act of 2017 require the Company to capitalize and amortize R&D expenditures rather than deducting the costs as incurred. The capitalization resulted in an increase in 2023 and 2022 taxable income which also increased the income eligible for the FDII tax benefit.

␟

As a part of the Xilinx acquisition and as a result of certain employment and operational commitments the Company has made in Singapore, the Company has been granted a Development and Expansion Incentive (DEI) that is effective through 2031. The DEI reduces the local tax on Singapore income from a statutory rate of 17% to 5% through 2031. Due to the current year pre-tax loss in Singapore, the Company did not receive any income tax or earnings per share benefit.

␟

Table of Contents

␟

December 30,

␟

December 31,

␟

(In millions)

␟

Deferred tax assets:

␟

Net operating loss carryovers

␟

Accruals and reserves not currently deductible

␟

Employee benefits not currently deductible

␟

Federal and state tax credit carryovers

␟

Foreign R&D and investment tax credits

␟

Foreign tax credits

␟

Lease liability

␟

Capitalized R&D

␟

Other

␟

Total deferred tax assets

␟

Less: valuation allowance

␟

Total deferred tax assets, net of valuation allowance

␟

Deferred tax liabilities:

␟

Acquired intangibles

␟

Right-of-use assets

␟

GILTI

␟

Other

␟

Total deferred tax liabilities

␟

Net deferred tax assets (liabilities)

␟

As a result of the R&D capitalization tax law that became effective in 2022, the capitalization of R&D expense amounts resulted in increased taxable income in 2023 and 2022. The capitalized R&D will be amortized and become deductible in future periods.

␟

Therefore, the Company has recorded a deferred tax asset for the capitalized R&D expenditures.

␟

As a result of the acquisition of Xilinx in 2022, the Company recorded $4.3 billion of net deferred tax liabilities primarily on the excess of book basis over the tax basis of the acquired intangible assets, including $857 million of GILTI net deferred tax liability.

␟

The movement in the deferred tax valuation allowance was as follows:

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

Balance at beginning of year

␟

Charges to income tax expense and other accounts

␟

Acquisition-related

␟

Net recoveries

␟

Balance at end of year

␟

The net recoveries in 2021 were primarily related to net originating deferred tax assets and newly generated tax credits.

␟

Through the end of fiscal year 2023, the Company continued to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes. The federal valuation allowance maintained is due to limitations under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules. Certain state and foreign valuation allowance maintained is due to lack of sufficient sources of future taxable income.

␟

Table of Contents

␟

A reconciliation of the Company's gross unrecognized tax benefits was as follows:

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

(In millions)

␟

Balance at beginning of year

␟

Increases for tax positions taken in the current year

␟

Increases for tax positions taken in prior years

␟

Decreases for tax positions taken in prior years

␟

Increases to tax positions taken in prior years through acquisitions

␟

Decreases for settlements with taxing authorities and statute of limitation lapses

␟

Balance at end of year

␟

The Company is subject to taxation in the U.S. and foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The material jurisdiction in which the Company is subject to potential examination by the taxing authority is the United States, where tax years from 2008 are open for audit. Pre-acquisition Xilinx U.S. tax returns for fiscal years 2018 and 2019 are currently under audit by the IRS. It is possible the Company may have tax audits close in the next 12 months that could materially change the balance of the uncertain tax benefits; however, the timing of tax audit closures and settlements are highly uncertain.

␟

Table of Contents

␟

The following table summarizes the components of Other income (expense), net:

␟

Year Ended

␟

December 30, 2023

␟

December 31, 2022

␟

December 25, 2021

␟

(In millions)

␟

Interest income

␟

Loss on debt redemption, repurchase and conversion

␟

Gains (losses) on equity investments, net

␟

Other income (expense)

␟

Other income (expense), net

␟

Operating Leases

␟

The Company has entered into operating and finance leases for its corporate offices, data centers, research and development facilities and certain equipment. The leases expire at various dates through 2038, some of which include options to extend the lease for up to ten years.

␟

Supplemental information related to leases is as follows:

␟

December 30,

␟

Year

␟

2029 and thereafter

␟

Less: interest

␟

Less: current portion

␟

Certain other operating leases contain provisions for escalating lease payments subject to changes in the consumer price index.

␟

Table of Contents

␟

Commitments

␟

2029 and thereafter

␟

On an ongoing basis, the Company works with suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.

␟

Warranties and Indemnities

␟

The Company generally warrants that its products sold to its customers will conform to its approved specifications and be free from defects in material and workmanship under normal use and conditions for one year. The Company may also offer

␟

one

␟

to three-year limited warranties based on product type and negotiated warranty terms with certain customers. The Company accrues warranty costs to Cost of sales at the time of sale of warranted products.

␟

December 30,

␟

December 31,

␟

(In millions)

␟

Beginning balance

␟

Provisions during the period

␟

Settlements during the period

␟

Ending balance

␟

Litigation and Other Legal Matters

␟

As of December 30, 2023, there were no material legal proceedings.

␟

Table of Contents

␟

Environmental Matters

␟

The Company is named as a responsible party on Superfund clean-up orders for three sites in Sunnyvale, California that are on the National Priorities List. Since 1981, the Company has discovered hazardous material releases to the groundwater from former underground tanks and proceeded to investigate and conduct remediation at these three sites. The chemicals released into the groundwater were commonly used in the semiconductor industry in the United States in the wafer fabrication process prior to 1979.

␟

In 1991, the Company received Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites. The Company has entered into settlement agreements with other responsible parties on two of the orders. During the term of such agreements, other parties have agreed to assume most of the foreseeable costs as well as the primary role in conducting remediation activities under the orders. The Company remains responsible for additional costs beyond the scope of the agreements as well as all remaining costs in the event that the other parties do not fulfill their obligations under the settlement agreements.

␟

To address anticipated future remediation costs under the orders, the Company has computed and recorded an estimated environmental liability of approximately $4.8 million and has not recorded any potential insurance recoveries in determining the estimated costs of the cleanup. The progress of future remediation efforts cannot be predicted with certainty and these costs may change. The Company believes that any amount in addition to what has already been accrued would not be material.

␟

Table of Contents

␟

Report of Independent Registered Public Accounting Firm

␟

To the Stockholders and the Board of Directors of Advanced Micro Devices, Inc.

␟

Opinion on the Financial Statements

␟

Basis for Opinion

␟

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

␟

Critical Audit Matter

␟

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

␟

Table of Contents

␟

Inventory Valuation

␟

Description of the Matter

␟

How We Addressed the Matter in Our Audit

␟

/s/

␟

San Jose, California

␟

Table of Contents

␟

Report of Independent Registered Public Accounting Firm

␟

To the Stockholders and the Board of Directors of Advanced Micro Devices, Inc.

␟

Opinion on Internal Control Over Financial Reporting

␟

Basis for Opinion

␟

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

␟

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

␟

Definition and Limitations of Internal Control Over Financial Reporting

␟

Table of Contents

␟

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

␟

San Jose, California

␟

Table of Contents

␟

None.

␟

Disclosure Controls and Procedures

␟

Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles, and includes those policies and procedures that:

␟

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

␟

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

␟

Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

␟

Table of Contents

␟

Changes in Internal Control over Financial Reporting

␟

During the quarterly period ended December 30, 2023, the following directors and officers adopted, modified or terminated 10b5-1 plans:

␟

Name

␟

Title of Director or Officer

␟

Action

␟

Date

␟

Trading Arrangement

␟

Total Shares to be Sold

␟

Expiration Date

␟

Rule 10b5-1*

␟

Lisa Su

␟

Chair, President and Chief Executive Officer

␟

Adopt

␟

November 20, 2023

␟

December 5, 2024

␟

Mark Papermaster

␟

Executive Vice President, Chief Technology Officer

␟

Adopt

␟

November 15, 2023

␟

November 15, 2024

␟

* Intended to satisfy the affirmative defense of Rule 10b5-1(c)

␟

** Not intended to satisfy the affirmative defense of Rule 10b5-1(c)

␟

ITEM 9C.      DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

␟

Not applicable.

␟

Table of Contents

␟

PART III

␟

ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

␟

Table of Contents

␟

PART IV

␟

1. Financial Statements

␟

Index to Consolidated Financial Statements

␟

Consolidated Statements of Operations

␟

Consolidated Statements of Comprehensive Income

␟

Consolidated Balance Sheets

␟

Consolidated Statements of Cash Flows

␟

Notes to Consolidated Financial Statements

␟

Reports of Independent Registered Public Accounting Firm

␟

(PCAOB ID: 42)

␟

All schedules have been omitted because the information is not required, is not applicable, or is included in the Notes to the Consolidated Financial Statements.

␟

2. Exhibits

␟

The exhibits listed in the accompanying Index to Exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K. The following is a list of such Exhibits:

␟

Exhibit

␟

Description of Exhibits

␟

Advanced Micro Devices, Inc. Amended and Restated Bylaws, as amended on January 29, 2021

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filed as Exhibit 3.2 to AMD

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s Annual Report on Form 10-K for the fiscal year ended December 26, 2020

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, is hereby incorporated by reference

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Indenture by and among Advanced Micro Devices, Inc. and Wells Fargo Bank N.A., dated September 14, 2016, filed as Exhibit 4.1 to AMD's Current Report on Form 8-K dated September 14, 2016, is hereby incorporated by reference.

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First Supplemental Indenture governing 2.125% Convertible Senior Notes due 2026, including Form of 2.125% Note, between Advanced Micro Devices, Inc. and Wells Fargo Bank, N.A. dated September 14, 2016, filed as Exhibit 4.2 to AMD's Current Report on Form 8-K dated September 14, 2016, is hereby incorporated by reference.

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First Supplemental Indenture by and among Advanced Micro Devices, Inc. and Wells Fargo Bank N.A., dated September 23, 2016, filed as Exhibit 4.1 to AMD's Quarterly Report on Form 10-Q for the fiscal quarter ended September 24, 2016, is hereby incorporated by reference.

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Table of Contents

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*10.1

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*10.2

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*10.3

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*10.4

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*10.5

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*10.6

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*10.7

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*10.8

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*10.9

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**10.11

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Table of Contents

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*10.15

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*10.16

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*10.17

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*10.18

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*10.19

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*10.21

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Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.78 to AMD's Annual Report on Form 10-K for the fiscal year ended December 26, 2015, is hereby incorporated by reference.

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*10.22

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Form of Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.79 to AMD's Annual Report on Form 10-K for the fiscal year ended December 26, 2015, is hereby incorporated by reference.

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*10.23

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Form of Performance-Based Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.80 to AMD's Annual Report on Form 10-K for the fiscal year ended December 26, 2015, is hereby incorporated by reference.

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*10.24

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*10.25

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*10.26

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*10.27

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*10.28

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Amended and Restated 2017 Employee Stock Purchase Plan dated August 23, 2018, filed as Exhibit 10.1 to AMD's Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2018, is hereby incorporated by reference.

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Table of Contents

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*10.29

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2017 Employee Stock Purchase Plan, as amended and restated October 12, 2017, filed as Exhibit 10.98 to AMD's Annual Report on Form 10-K for the fiscal year ended December 30, 2017, is hereby incorporated by reference.

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*10.30

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Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.99 to AMD's Annual Report on Form 10-K for the fiscal year ended December 30, 2017, is hereby incorporated by reference.

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*10.31

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Form of Restricted Stock Unit Award Agreement for Senior Vice Presidents and Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.100 to AMD's Annual Report on Form 10-K for the fiscal year ended December 30, 2017, is hereby incorporated by reference.

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*10.32

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Form of Performance-Based Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004 Equity Incentive Plan filed as Exhibit 10.101 to AMD's Annual Report on Form 10-K for the fiscal year ended December 30, 2017, is hereby incorporated by reference.

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*10.33

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Amendment to Advanced Micro Devices, Inc. Executive Incentive Plan dated as of February 8, 2018, filed as Exhibit 10.1 to AMD's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018, is hereby incorporated by reference.

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*10.34

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*10.35

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Form of Performance-

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*10.36

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*10.37

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*10.38

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*10.39

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*10.40

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*10.41

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*10.42

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*10.43

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Form of Performance-

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Table of Contents

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*10.44

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*10.45

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**10.46

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**10.47

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**10.48

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, 2020, is hereby incorporated by reference.

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**10.49

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, is hereby incorporated by reference

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**10.50

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, is hereby incorporated by reference.

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**10.51

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, is hereby incorporated by reference.

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**10.52

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, 2020, is hereby incorporated by reference.

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**10.53

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*10.55

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Form of Performance-

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*10.56

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*10.57

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Table of Contents

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**10.58

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**10.59

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*10.61

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*10.62

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*10.63

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*10.64

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Form of Performance-

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*10.65

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*10.66

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*10.67

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*10.68

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*10.69

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*10.70

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Advanced Micro Devices, Inc. 2023 Equity Incentive Plan, filed as Exhibit A to AM

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Definitive Proxy S

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tat

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ement on

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Schedule 14A dated March 31, 2023, is hereby incorporated by reference.

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*10.71

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*10.72

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Table of Contents

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*10.73

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Form of Performance-

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*10.76

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Amendment to Advanced Micro Devices, Inc. Executive Incentive Plan dated as of February 23, 2022

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*10.77

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Form of Change

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of

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Control Agreement

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**10.78

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Intellectual Property

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Cross-Li

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ense Agreement

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between Advanced Micro Devices, Inc. and Broadcom Corporation,

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effective as of August 25, 2008

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**10.79

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IP Core

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License

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Agreement between Ad

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vanced

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Micro

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Devices, Inc. and

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Broadcom Co

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rporation, effective as of August 25, 2008

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List of AMD subsidiaries.

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Consent of Independent Registered Public Accounting Firm

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Power of Attorney

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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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ompensation

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Recovery

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Policy

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adopted by the Board of Direct

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ors

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of Advanced Micro Devices, Inc., effective as of November 17, 2023

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101.INS

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XBRL Instance Document -the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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101.SCH

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XBRL Taxonomy Extension Schema Document

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101.CAL

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XBRL Taxonomy Extension Calculation Linkbase Document

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101.DEF

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XBRL Taxonomy Extension Definition Linkbase Document

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101.LAB

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XBRL Taxonomy Extension Label Linkbase Document

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101.PRE

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XBRL Taxonomy Extension Presentation Linkbase Document

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Cover Page Interactive Data File -the Cover Page Interactive Data File does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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_____________________

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* Management contracts and compensatory plans or arrangements.

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Table of Contents

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** Portions of this exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed.

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ITEM 16.       FORM 10-K SUMMARY

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Not applicable.

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Table of Contents

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SIGNATURES

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January 31, 2024

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DVANCED

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ICRO

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EVICES

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, I

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NC

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By:

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/s/ Jean Hu

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Jean Hu

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Executive Vice President, Chief Financial Officer and Treasurer

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, on behalf of the registrant and in the capacities and on the dates indicated.

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Signature

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Title

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Date

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/s/Lisa T. Su

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President and Chief Executive Officer

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(Principal Executive Officer), Director

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January 31, 2024

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Lisa T. Su

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/s/Jean Hu

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Executive Vice President, Chief Financial Officer and Treasurer

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(Principal Financial Officer)

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January 31, 2024

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Jean Hu

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/s/Darla Smith

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Corporate Vice President, Chief Accounting Officer (Principal Accounting Officer)

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January 31, 2024

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Darla Smith

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Lead Independent Director

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January 31, 2024

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Nora M. Denzel

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Director

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January 31, 2024

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Mark Durcan

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Director

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January 31, 2024

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Mike P. Gregoire

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Director

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January 31, 2024

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Joe A. Householder

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Director

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January 31, 2024

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John W. Marren

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Director

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January 31, 2024

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Jon A. Olson

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Director

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January 31, 2024

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Abhi Y. Talwalkar

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Director

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January 31, 2024

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Beth W. Vanderslice

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*By:

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Jean Hu, Attorney-in-Fact