Advanced Micro Devices (AMD) 10-K risk factor changes: FY2020 vs FY2019

[removed: Intel] [added: - Intel] Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete [removed: effectively.][added: effectively on a level playing field.]

As long as Intel remains in this dominant position, we may be materially adversely affected by Intel’s business practices, including rebating and allocation strategies and pricing actions, designed to limit our market share and margins; product mix and introduction schedules; product bundling, marketing and merchandising strategies; exclusivity payments to its current and potential customers, retailers and channel partners; de facto control over industry standards, and heavy influence on PC manufacturers and other PC industry participants, including motherboard, memory, chipset and basic input/output system (BIOS) suppliers and software companies as well as the graphics interface for Intel platforms; and marketing and advertising expenditures in support of positioning the Intel brand over the brand of its original equipment manufacturer [removed: OEM] [added: (OEM)] customers and retailers.

[added: 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.

Other risks associated with our dependence on third-party manufacturers include limited control over delivery schedules and quality assurance, lack of capacity in periods of excess demand, misappropriation of our intellectual property, dependence on several [removed: small undercapitalized subcontractors] [added: subcontractors,] and limited ability to manage inventory and parts.

Moreover, if any of our third-party manufacturers suffer any damage to facilities, lose benefits under material agreements, experience power outages, lack sufficient capacity to manufacture our products, encounter financial difficulties, are unable to secure necessary raw materials from their [removed: suppliers or] [added: suppliers,] suffer any other disruption or reduction in efficiency, [added: or experience uncertain social economic or political circumstances or conditions,] we may encounter supply delays or disruptions.

We are party to two ATMP joint ventures (collectively, the ATMP JVs) with Tongfu Microelectronics Co., Ltd. The majority of our ATMP services are provided by the [added: ATMP] JVs and there is no guarantee that the [added: ATMP] JVs will be able to fulfill our long-term ATMP requirements.

For example, we are presently focusing our 7 [removed: nanometer (nm)] [added: nm] product portfolio on [removed: Taiwan Semiconductor Co., Ltd.’s (TSMC) 7nm] [added: TSMC’s 7 nm] process.

If TSMC is not able to manufacture [added: wafers for] our [removed: 7nm] [added: 7 nm] products in sufficient quantities to meet customer demand, it could have a material adverse effect on our business.

Our success depends to a significant extent on the development, qualification, implementation and acceptance of [removed: new product designs and improvements that provide value to our customers.]

Our product roadmap includes our next generation AMD Ryzen™, AMD Radeon™ and AMD EPYC™ processors using [removed: 7nm+] [added: 7 nm] process technology.

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 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 [added: products.]

[removed: 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.

[removed: Our] [added: - Our] receipt of revenue from our semi-custom SoC products is dependent upon our [removed: technology] [added: semi-custom SoC products] being [removed: designed] [added: incorporated] into [removed: third-party] [added: customer’s] products and the success of those [removed: products.][added: products.]

As a result, our ability to generate revenue from our semi-custom products depends on our ability to secure customers for our semi-custom design pipeline, our customers’ desire to pursue the [removed: project,] [added: project] and our semi-custom SoC products being incorporated into those customer’s products.

Consequently, the semi-custom SoC product revenue expected by us may not be fully realized and our [added: operating results may be adversely affected.]

[removed: In addition, uncertain economic conditions may] make it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities.

International sales, as a percent of net revenue, were [removed: 74%] [added: 77%] for the year ended December [removed: 28, 2019.][added: 26, 2020.]

In addition, our worldwide operations (or those of our business partners) could be subject to natural disasters such as earthquakes, tsunamis, flooding, [removed: typhoons] [added: typhoons, fires] and volcanic eruptions that disrupt manufacturing or other operations.

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 [removed: 2019-Novel Coronavirus (2019-nCoV),] [added: 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 [removed: a] [added: equity interests in two] joint [removed: venture] [added: ventures (collectively, the THATIC JV)] with Higon Information Technology Co., Ltd. (THATIC), [removed: comprised of two separate legal entities, China JV1 and China JV2 (collectively, the THATIC JV).][added: a third-party Chinese entity.]

In June 2019, the [removed: United States Commerce Department’s] Bureau of Industry and Security (BIS) [added: of the United States Department of Commerce] added certain Chinese entities to the Entity List, including THATIC and the THATIC JV.

There is also a possibility of future tariffs, trade protection measures, import or export regulations or other restrictions imposed on our products or on our customers by the United States, China or other [added: countries that could have a material adverse effect on our business.]

[removed: countries] [added: - Our products may be subject to security vulnerabilities] that could have a material adverse effect on [removed: our business.][added: us.]

[removed: We also are subject to claims and litigation related to Spectre side-channel] [added: channel] exploits and may face additional claims or litigation for future vulnerabilities.

We believe that companies [added: like AMD] have been increasingly subject to a wide variety of security incidents, cyber-attacks, hacking and phishing attacks, business and system disruption attacks, and other attempts to gain unauthorized access.

Cyber-attacks on us or our customers, business partners or [removed: third party] [added: third-party] providers could also cause us to incur significant remediation costs, result in product development delays, disrupt key business operations and divert attention of management and key information technology resources.

We also maintain confidential and personally identifiable information about our [removed: workers.][added: workers and consumers.]

[removed: We have a wafer supply agreement with GLOBALFOUNDRIES Inc. (GF) with obligations to] [added: We] purchase [added: wafers for] all [removed: of] our [removed: microprocessor] [added: CPU] and [removed: accelerated processing unit (APU) product requirements] [added: APU products,] and [added: wafers for] a certain portion of our [removed: graphics processing unit (GPU) product requirements] [added: GPU products] manufactured at process nodes larger than 7 [removed: nanometer from GF,] [added: nm,] with limited [removed: exceptions.][added: exceptions, from GLOBALFOUNDRIES, Inc. (GF).]

[removed: The] [added: We are a party to a] wafer supply agreement (WSA) [added: with GF that] governs the terms by which we purchase products manufactured by GF and is in place until 2024.

Pursuant to the WSA, we are required to purchase [added: wafers for] all of our [removed: microprocessor] [added: CPU] and APU product requirements and [added: wafers for] a certain portion of our GPU product requirements from GF manufactured at process nodes larger than 7 [removed: nanometer (nm),] [added: nm,] with limited exceptions.

[removed: Under the terms of the WSA, we] [added: We] have agreed to minimum annual wafer purchase targets through 2021.

[removed: PC and consumer] [added: Many of our] markets are characterized by short product lifecycles, which can lead to rapid obsolescence and price erosion.

[removed: The] [added: - The] agreements governing our notes and our [removed: Secured] Revolving [added: Credit] Facility impose restrictions on us that may adversely affect our ability to operate our [removed: business.][added: business.]

The indenture governing our 7.50% Senior Notes due 2022 (7.50% Notes) contains various covenants which limit our ability to, among other things: incur additional indebtedness; pay dividends and make other restricted payments; make certain investments, including investments in our unrestricted subsidiaries; create or permit certain liens; create or permit restrictions on the ability of certain restricted subsidiaries to pay dividends or make other distributions to us; use the proceeds from sales of assets; enter [added: into certain types of transactions with affiliates; and consolidate or merge or sell our assets as an entirety or substantially as an entirety.]

In addition, the [removed: Secured] Revolving [added: Credit] Facility’s credit agreement (Credit Agreement) restricts our ability to make cash payments on the notes to the extent that (i) on the date of such payment, an event of default exists under the Credit Agreement or would result therefrom or (ii) if we would have, on a pro forma basis after giving effect to such payment, a consolidated total leverage ratio that exceeds 3.50x.

Our [removed: Secured] Revolving [added: Credit] Facility also contains various covenants which limit our ability to, among other things, incur additional indebtedness and liens, make certain investments, merge or consolidate with other entities, make certain dispositions, create any encumbrance on the ability of a subsidiary to make any upstream payments, make payments with respect to subordinated debt or certain borrowed money prior to its due date and enter into any non-arm’s-length transaction with an affiliate (in each case, except for certain customary exceptions).

The agreements governing our notes and our [removed: Secured] Revolving [added: Credit] Facility contain cross-default provisions whereby a default under [removed: one agreement] [added: certain agreements with respect to other indebtedness] would [removed: likely] result in cross defaults under [removed: agreements covering other indebtedness.][added: the indentures or the Revolving Credit Facility.]

For example, the occurrence of a default with respect to any indebtedness or any failure to repay indebtedness when due in an amount in excess of (i) $50 million would cause a cross default under the indentures (to the extent such default would result in the acceleration of such indebtedness) governing our 7.50% Notes and 2.125% Convertible Senior Notes due 2026 (2.125% Notes), and (ii) $100 million would cause a cross default under the [removed: Secured] Revolving [added: Credit] Facility.

The occurrence of a default under any of these borrowing arrangements would permit the applicable note holders or the lenders under our [removed: Secured] Revolving [added: Credit] Facility to declare all amounts outstanding under [removed: those borrowing arrangements] [added: the indentures or the Revolving Credit Facility] to be immediately due and payable.

[removed: If the note holders or the trustee under the indentures governing our 7.50% Notes or 2.125% Notes or the] lenders under our [removed: Secured] Revolving [added: Credit] Facility accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings.

Risk Factors Summary

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

Economic and Strategic Risks

- Global economic and market uncertainty may adversely impact our business and operating results.

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

- The ongoing novel coronavirus (COVID-19) pandemic could materially adversely affect our business, financial condition and results of operations.

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

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

- 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.

- 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.

- 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.

- Unfavorable currency exchange rate fluctuations could adversely affect us.

Operational and Technology Risks

- We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected.

- Failure to achieve expected manufacturing yields for our products could negatively impact our financial results.

- 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.

- IT outages, data loss, data breaches and cyber-attacks could compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation and operations.

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

- Our ability to design and introduce new products in a timely manner is dependent upon third-party intellectual property.

- We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business.

- If we lose Microsoft Corporation’s support for our products or other software vendors do not design and develop software to run on our products, our ability to sell our products could be materially adversely affected.

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

- 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.

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

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

- 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.

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

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

Legal and Regulatory Risks

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

- If we cannot realize our deferred tax assets, our results of operations would be adversely affected

- Our business is subject to potential tax liabilities.

- 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.

- 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.

Xilinx Merger and Acquisition Risks

- Our ability to complete the Merger is subject to closing conditions, including approval by our and Xilinx’s stockholders and the receipt of consents and approvals from governmental authorities, which may impose conditions that could adversely affect us or cause the Merger not to be completed.

- Whether or not it is completed, the announcement and pendency of the Merger could cause disruptions in our business, which could have an adverse effect on our business and financial results.

- Any impairment of the combined company’s tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact the combined company’s financial position and results of operations.

Liquidity and Capital Resources Risks

Accordingly, we depend on these suppliers to

products.

operating results may be adversely affected.

For example, the United Kingdom’s 2016 referendum, commonly referred to as “Brexit,” has created economic and political uncertainty in the European Union.

If GF is not able to satisfy our manufacturing requirements, our business could be adversely impacted.

If GF is unable to achieve anticipated manufacturing yields, manufacture our products on a timely basis at competitive prices or meet our capacity requirements, then we may experience supply shortages for certain products or increased costs and our business could be materially adversely affected.

In addition, GF has relied on Mubadala Technology Investments LLC (Mubadala Tech) for its funding needs.

If Mubadala Tech fails to adequately fund GF on a timely basis, or at all, and if GF is not otherwise able to adequately fund its operations, GF’s ability to manufacture products for us could be materially adversely affected.

into certain types of transactions with affiliates; and consolidate or merge or sell our assets as an entirety or substantially as an entirety.

with our products are certified by Microsoft.

For example, during the fourth quarter of 2018, we recorded an impairment charge in Cost of sales of $45 million on technology licenses related to products that were no longer being used.

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.

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.

Moreover, if such acquisitions or joint

currently available from only a limited number of sources.

The Tax Cuts and Jobs Act of 2017 (the Tax Reform Act) contains many significant changes to the U.S. federal income tax laws, which the consequences of could have a material impact on the value of our deferred tax assets and could increase our future U.S. income tax expense.

As additional regulatory guidance is issued by the applicable taxing authorities and as new accounting treatment is clarified, we may report additional adjustments in the period if new information becomes available.

| | |

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The following discussion should be read in conjunction with the consolidated financial statements as of December [removed: 28, 2019] [added: 26, 2020] and December [removed: 29, 2018] [added: 28, 2019] and for each of the three years in the period ended December [removed: 28, 2019] [added: 26, 2020] and related notes, which are included in this Annual Report on Form 10-K as well as with the other sections of this Annual Report on Form 10-K, including “Part I, Item 1: Business,” “Part II, Item 6: Selected Financial Data” and “Part II, Item 8: Financial Statements and Supplementary Data.”

In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for [removed: 2019] [added: 2020] compared to [removed: 2018,] [added: 2019,] an analysis of changes in our financial condition and a discussion of our contractual obligations and off-balance sheet arrangements.

Discussions of [removed: 2017] [added: 2018] items and year-to-year comparisons between [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December [removed: 29, 2018.][added: 28, 2019.]

Net revenue for [removed: 2019] [added: 2020] was [removed: $6.7] [added: $9.8] billion, an increase of [removed: 4%] [added: 45%] compared to [removed: 2018] [added: 2019] net revenue of [removed: $6.5] [added: $6.7] billion.

Gross margin, as a percentage of net revenue for [removed: 2019,] [added: 2020,] was [removed: 43%,] [added: 45%,] compared to [removed: 38%] [added: 43%] in [removed: 2018.][added: 2019.]

Our operating income for [removed: 2019] [added: 2020] improved to [removed: $631 million] [added: $1.4 billion] compared to operating income of [removed: $451] [added: $631] million for [removed: 2018.][added: 2019.]

Our net income for [removed: 2019] [added: 2020] improved to [removed: $341 million] [added: $2.5 billion] compared to [removed: $337] [added: $341] million in the prior year.

Cash, cash equivalents and [removed: marketable securities] [added: short-term investments] as of December [removed: 28, 2019] [added: 26, 2020] were [removed: $1.5] [added: $2.3] billion, [removed: up from $1.2] [added: compared to $1.5] billion at the end of [removed: 2018.][added: 2019.]

We made significant progress towards improving our balance sheet in [removed: 2019 as we reduced our debt.][added: 2020.]

[removed: Principal] [added: The aggregate principal] amount of total debt as of December [removed: 28, 2019] [added: 26, 2020] was [removed: $563] [added: $338] million, compared to [removed: $1.5 billion] [added: $563 million] as of December [removed: 29, 2018.][added: 28, 2019.]

We evaluate our estimates on an on-going basis, including those related to our revenue, inventories, goodwill [removed: impairments] and income taxes.

[removed: These] [added: Overall, our] estimates [added: of adjustments to contract price due to variable consideration under our contracts with OEM and distributor customers, based on our assumptions and include adjustments, if any, for known events, have been materially consistent with actual results; however, these estimates] are subject to management’s judgment and actual provisions could be different from our estimates and current provisions, resulting in future adjustments to our revenue and operating results.

If in any period we anticipate [added: a change in assumptions such as] future demand or market conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in cost of [removed: sales] [added: sales, resulting] in [removed: the period the revision is made.][added: a negative impact to our gross margin in that period.]

If in any period we are able to sell inventories that [removed: were not valued or that] had been written down [added: to a level below the ultimate realized selling price] in a previous period, related [removed: revenues] [added: revenue] would be recorded [removed: without any] [added: with a lower or no] offsetting charge to cost of sales resulting in a net benefit to our gross margin in that period.

Qualitative factors include industry and market [removed: consideration,] [added: considerations,] overall financial performance, share price trends and market capitalization and Company-specific events.

A goodwill impairment charge is recognized for the amount by which [removed: the] [added: a] reporting unit’s fair value is less than its carrying [removed: value.][added: value, not to exceed the total amount of goodwill allocated to that reporting unit.]

We [removed: must] [added: regularly] assess the likelihood that we will be able to recover our deferred tax assets.

When considering all available evidence, if [added: we determine] it is [removed: determined we can] more-likely-than-not [added: we will] realize our deferred tax assets, we will reverse [added: 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 addition, the calculation of our tax liabilities involves [removed: dealing with] [added: addressing] uncertainties in the application of [removed: complex] [added: 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.

If our estimates of these taxes are greater or less than actual results, an additional tax benefit or charge [removed: will] [added: could] result.

Additional information on our reportable segments is contained in Note [removed: 15:] [added: 14 –] Segment Reporting of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

The following table provides a summary of net revenue and operating income (loss) by segment for [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

| | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]

| | [added: | |] (In millions) | | | | | | | | | | | [added: | | | |]

| Net revenue: | | | | | | | | | | | | [added: | | | | | |]

| Computing and Graphics | [added: | |] $ | [removed: 4,709] [added: 6,432] | | | [added: | |] $ | [removed: 4,125] [added: 4,709] | | | [added: | |] $ | [removed: 2,977] [added: 4,125] | |

| Enterprise, Embedded and Semi-Custom | [removed: 2,022] | | [added: 3,331] | | [removed: 2,350] | | | | [removed: 2,276] [added: 2,022] | | | [added: | | | 2,350 | | |]

| Total net revenue | [added: | |] $ | [removed: 6,731] [added: 9,763] | | | [added: | |] $ | [removed: 6,475] [added: 6,731] | | | [added: | |] $ | [removed: 5,253] [added: 6,475] | |

| Operating income (loss): | | | | | | | | | | | | [added: | | | | | |]

| Computing and Graphics | [added: | |] $ | [removed: 577] [added: 1,266] | | | [added: | |] $ | [removed: 470] [added: 577] | | | [added: | |] $ | [removed: 92] [added: 470] | |

| Enterprise, Embedded and Semi-Custom | [removed: 263] | | [added: 391] | | [removed: 163] | | | | [removed: 132] [added: 263] | | | [added: | | | 163 | | |]

| All Other | [removed: (209] | | [removed: )] [added: (288)] | | [removed: (182] | | [removed: )] | | [removed: (97] [added: (209)] | | [removed: )] | [added: | | | (182) | | |]

| Total operating income | [added: | |] $ | [removed: 631] [added: 1,369] | | | [added: | |] $ | [removed: 451] [added: 631] | | | [added: | |] $ | [removed: 127] [added: 451] | |

Computing and Graphics net revenue of [removed: $4.7] [added: $6.4] billion in [removed: 2019] [added: 2020] increased by [removed: 14%,] [added: 37%,] compared to [removed: $4.1] [added: $4.7] billion in [removed: 2018,] [added: 2019,] primarily as a result of a [removed: 22%] [added: 37%] increase in [removed: average selling price] [added: unit shipments] and a [removed: 4%] [added: 2%] increase in [removed: unit shipments.][added: average selling price.]

The increase in average selling price was primarily driven by a richer mix of client processors [removed: due to strong demand] [added: from higher sales] of our Ryzen [removed: processors.][added: processors, which have a higher average selling price, partially offset by lower average selling price for our Radeon products due to product cycle timing.]

The increase in unit shipments was primarily due to higher demand for our Ryzen [removed: processors, partially offset by lower demand for our Radeon graphics products.][added: processors.]

Computing and Graphics operating income was [removed: $577 million] [added: $1.3 billion] in [removed: 2019] [added: 2020] compared to [removed: operating income of $470] [added: $577] million in [removed: 2018.][added: 2019.]

The increase in operating income was primarily driven by [added: the margin contribution from] higher [removed: sales, partially] [added: sales which more than] offset [removed: by a $194 million increase in] [added: higher] operating expenses.

Enterprise, Embedded and Semi-Custom net revenue of [removed: $2.0] [added: $3.3] billion in [removed: 2019 decreased] [added: 2020 increased] by [removed: 14%] [added: 65%] compared to net revenue of [removed: $2.4] [added: $2.0] billion in [removed: 2018,] [added: 2019,] primarily [removed: as a result of lower semi-custom product revenue, partially offset] [added: driven] by higher sales of our EPYC server [removed: processors.][added: processors and higher semi-custom revenue.]

Enterprise, Embedded and Semi-Custom operating income was [removed: $263] [added: $391] million in [removed: 2019] [added: 2020] compared to [removed: operating income of $163] [added: $263] million in [removed: 2018.][added: 2019.]

OPERATIONS

During 2020, we continued to build on our technical, operational and financial foundation to drive our long-term growth strategy.

We delivered strong financial results and further extended our industry-leading product portfolio despite the backdrop of the COVID-19 pandemic.

We recognized a $1.3 billion income tax benefit upon the release of a portion of the valuation allowance on deferred tax assets.

During 2020, we consistently executed our product roadmap and launched multiple products in leading-edge manufacturing technologies.

We introduced a number of 7 nanometer (nm) products during the year, including new additions to our 3rd Gen AMD Ryzen™ desktop processor family, the AMD Ryzen 3 3100 and AMD Ryzen 3 3300X for the mainstream market, and the AMD Ryzen 9 3900XT, AMD Ryzen 7 3800XT and AMD Ryzen 5 3600XT processors for the enthusiast market.

In July 2020, we introduced the AMD Ryzen Threadripper™ PRO Processor family designed for professional workstations from OEMs to system integrators and AMD Ryzen 4000 Series desktop processors with Radeon™ graphics for consumers, gamers, streamers and creators.

We also introduced AMD Athlon™ 3000 Series desktop processors using the same Zen core architecture and built-in Radeon graphics as the AMD Ryzen desktop processor family.

Also, the AMD Ryzen PRO 4000 series and AMD Athlon PRO 3000 series desktop processors were introduced for the commercial market.

In October 2020, we introduced the AMD Ryzen 5000 Series desktop processor family powered by “Zen 3” core architecture.

We also expanded our notebook products in 2020.

In May 2020, we announced the global availability of the AMD Ryzen™ PRO 4000 Series Mobile family for commercial notebooks built with enterprise-grade AMD PRO technologies, which deliver a set of security and manageability features for Enterprise IT deployments.

Also, we announced the AMD Ryzen 3000 C-Series mobile processors and the AMD Athlon 3000 C-Series mobile processors for Chromebook platforms designed for multi-tasking and content creation in distance learning and remote working.

With respect to our graphics products, we expanded our professional offerings with the AMD Radeon™ Pro VII workstation graphics card designed for broadcast and engineering professionals.

In August 2020, we announced the availability of the new AMD Radeon Pro 5000 series GPUs for the updated 27-inch iMac bringing a wide variety of graphically intensive applications and workloads to consumer and professional users.

We also introduced the AMD Radeon RX 6000 Series graphics cards built on AMD RDNA™ 2 gaming architecture and designed for enthusiast-class PC gaming.

In November 2020, we introduced our data center graphics processor, the AMD Instinct™ MI100 GPU accelerator, the first accelerator to use new AMD CDNA architecture dedicated to HPC workloads.

We expanded our EPYC server family during the year.

In April 2020, we announced the extension of the 2nd Gen AMD EPYC processor family with three new processors: AMD EPYC 7F32 (8 cores), AMD EPYC 7F52 (16 cores) and AMD EPYC 7F72 (24 cores).

These new processors leverage up to 500 MHz of additional base frequency and large amounts of cache.

In October 2020, we announced the AMD EPYC™ processor based Azure Dav4, Eav4,

Easv4 and Lsv2 VMs for use to improve real-time analysis on large volumes of data streaming from applications, websites and more.

We also expanded our embedded processor family with two new AMD Ryzen Embedded R1000 low-power processors that provide customers with a thermal design power (TDP) range of 6 up to 10 watts.

In November 2020, we launched the AMD Ryzen Embedded V2000 series processor built on 7 nm process technology, “Zen 2” cores and high-performance AMD Radeon graphics.

While the current COVID-19 pandemic continues to impact our business operations and practices, and we expect that it may continue to impact our business, we experienced limited financial disruption during 2020.

Although many of our offices remained open to enable critical on-site business functions in accordance with local government guidelines, most of our employees worked from home during 2020.

During the second half of 2020, the majority of our employees in China returned to work and we maintained normal business operations subject to local government health measures.

We continue to monitor and take measures to protect the health and safety of our employees, and support those employees who work from home so that they can be productive.

We monitor demand signals as we adjust our supply chain requirements based on changing customer needs and demands.

We also assess our product schedules and roadmaps to make any adjustments that may be necessary to support remote working requirements and address the geographic and market demand shifts caused by COVID-19.

As part of our strategy to establish AMD as the industry’s high performance computing leader, we announced in October 2020 that we entered into a definitive agreement to acquire Xilinx, Inc. in an all-stock transaction.

The transaction is currently expected to close by the end of calendar year 2021.

*Revenue Allowances.* Revenue contracts with our customers include variable amounts which we evaluate under ASC 606-10-32-8 through 14 in order to determine the net amount of consideration to which we are entitled and which we recognize as revenue.

We determine the net amount of consideration to which we are entitled by estimating the most likely amount of consideration we expect to receive from the customer after adjustments to the contract price for rights of return and rebates to our OEM customers and rights of return, rebates and price protection on unsold merchandise to our distributor customers.

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.

We offer incentive programs through cooperative advertising and marketing promotions.

Where funds provided for such programs can be estimated, we recognize a reduction to revenue at the time the related revenue is recognized; otherwise, we recognize such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the program is offered.

For transactions where we reimburse a customer for a portion of the customer’s cost to perform specific product advertising or marketing and promotional activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.

2019 marked a milestone in our multi-year journey with the launch of our 7 nanometer (nm) product portfolio.

We executed our product roadmap and introduced a number of high-performance products in 2019.

For the PC market, we introduced the 3rd Gen AMD Ryzen™ desktop processor family based on the new Zen 2 core architecture with AMD chiplet design approach.

In addition to our mainstream PC product family, we introduced the next generation of the Ryzen™ Threadripper™ product line designed for the high-end desktop segment for creators and enthusiasts.

We announced our second-generation AMD Ryzen™ 3000 Series notebook processors, powering ultrathin, commercial and gaming notebooks.

A number of high-performance graphics products were also launched in 2019.

We introduced the AMD Radeon™ VII, a premium graphics card for gamers, creators and enthusiasts.

We also announced the availability of the AMD Radeon™ RX 5700-series gaming graphics card family, the AMD Radeon™ RX 5500 series that will be available in desktop PCs from major PC manufacturers as well as the Radeon™ 5500M GPU for notebook PCs.

Our AMD Radeon™ Pro Vega II GPU is designed to power demanding professional applications.

We also announced the AMD Radeon™ Pro W5700, a 7nm professional PC workstation graphics card that enables 3D professionals to visualize and interact with their designs in real time.

For the server market, we introduced the 2nd Gen AMD EPYC™ family of processors that feature up to 64 “Zen 2” cores in 7nm process technology for performance and are designed to reduce total cost of ownership (TOC) by up to 50%.

*Revenue recognition.* We recognize revenue upon the shipment of the product to our distributors (sell-in), rather than upon the resale of the product by our distributors to their customers (sell-through).

Accordingly, we have established provisions for rights of return and price protection on unsold product held by our distributors.

*Revenue Allowances.* We record a provision for estimated sales returns and allowances on product sales for estimated future price reductions and other customer incentives in the same period that the related revenues are recorded.

We base these estimates on actual historical sales returns, historical allowances, historical price reductions, market activity and other known or anticipated trends and factors.

*Inventory Valuation.* At each balance sheet date, we evaluate our ending inventories for excess quantities and obsolescence based on projected sales outlook.

This evaluation includes analysis of historical sales levels by product and projections of future demand.

These projections assist us in determining the carrying value of our inventory.

In addition, we write off inventories that we consider obsolete.

We adjust the remaining specific inventory balances to approximate the lower of our actual cost or estimated net realizable value.

Among other factors, management considers recent historical activity as well as anticipated or forecasted demand, estimates of future selling prices, competitiveness of product offerings, market and industry conditions, customer requirements and product life cycles when determining excess, obsolescence and net realizable value in relation to the inventory on hand.

This would have a negative impact on our gross margin in that period.

We first analyze qualitative factors.

Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

In determining the need to establish or maintain a valuation allowance, we consider multiple factors including past performance, the reversal of deferred tax liabilities, tax planning strategies, and future expected taxable income.

We recognize the interest and penalties related to unrecognized tax benefits as interest expense and income tax expense, respectively.

| | | | | | | | | | | | |

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The increase in operating income was due primarily to higher sales of our EPYC server processor and a licensing

gain of $60 million recognized in the first quarter of 2019, partially offset by lower semi-custom product revenue and a $37 million increase in operating expenses.

The change from 2018 to 2019 was primarily due to $176 million of loss on redemption, repurchases and conversions of debt in 2019.

Provision For (Benefit From) Income Taxes

The income tax benefit in 2018 was primarily due to a $36 million refund of withholding tax from a foreign jurisdiction related to a legal settlement from 2010, offset by $13 million of U.S. income taxes resulting from the Tax Reform Act, $7 million tax provision in foreign locations and $7 million of withholding taxes on cross-border transactions.

As we continue to make progress in our business resulting in improved financial results, our future reassessment could possibly result in a determination that a valuation allowance is no longer required.

The impact of the determination would result in the release of the valuation allowance and significant financial impact in a future reporting period with a material non-cash income tax benefit and the recording of additional deferred tax assets on our consolidated balance sheet.

Net cash provided by operating activities was $493 million in 2019 compared to net cash provided by operating activities of $34 million in 2018.

The increase in net cash provided by operating activities was primarily due to changes in working capital, largely driven by higher cash collections, partially offset by timing of accounts payable payments and higher wafer purchases and payroll.

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| Purchase obligations (3) | 2,290 | | | | 1,677 | | | | 592 | | | | 10 | | | | 4 | | | | 2 | | | | 5 | | |

[removed: *Interest] [added: Interest] Rate [removed: Risk.*] [added: Risk.] Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and long-term debt.

As of December [removed: 28, 2019,] [added: 26, 2020,] our investment portfolio consisted [removed: primarily] of [added: time deposits and] commercial paper.

As of December [removed: 28, 2019,] [added: 26, 2020,] all of our outstanding long-term debt had fixed interest rates.

[removed: *Default Risk.*] [added: Default Risk.] We mitigate default risk in our investment portfolio by investing in only high credit quality securities and by constantly positioning our portfolio to respond to a significant reduction in a credit rating of any investment issuer or guarantor.

As of December [removed: 28, 2019,] [added: 26, 2020,] substantially all of our investments in debt securities were A-rated by at least one of the rating agencies.

[removed: *Foreign] [added: Foreign] Exchange [removed: Risk.*] [added: Risk.] As a result of our foreign operations, we incur costs and we carry assets and liabilities that are denominated in foreign currencies, while sales of products are primarily denominated in U.S. dollars.

The following table provides information about our foreign currency forward contracts as of December [removed: 28, 2019] [added: 26, 2020] and December [removed: 29, 2018.][added: 28, 2019.]

| | [added: | |] December [removed: 28, 2019] [added: 26, 2020] | | | | | | | | | | | [added: | | | | | | |] December [removed: 29, 2018] [added: 28, 2019] | | | | | | | | | | [added: | | | | |]

| | [removed: Notional Amount] | | [added: Notional Amount] | | [removed: Average Contract Rate] | | | [removed: Estimated Fair Value Gain] [added: | Average Contract Rate | | | | | | Estimated Fair Value Gain] (Loss) | | | | [removed: Notional Amount] | | [added: Notional Amount] | | [removed: Average Contract Rate] | | | [removed: Estimated Fair Value Gain] [added: | Average Contract Rate | | | | | | Estimated Fair Value Gain] (Loss) | | |

| | [added: | |] (In millions except contract rates) | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Foreign currency forward contracts: | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| Chinese Renminbi | [added: | |] $ | [removed: 277] [added: 261] | | | [removed: 6.9890] | | [added: 6.8160] | [added: | | | | |] $ | [removed: (1] [added: 8] | [removed: )] | | [added: | |] $ | [removed: 182] [added: 277] | | | [removed: 6.5733] | | [added: 6.9890] | [added: | | | | |] $ | [removed: (3] [added: (1)] | [removed: )] |

| Canadian Dollar | [removed: 249] | | [added: 247] | | [removed: 1.3183] | | | [removed: 2] | [added: 1.3165] | | | [removed: 110] | | | [added: 6] | [removed: 1.3007] | | | [removed: (5] | | [removed: )] [added: 249] | [added: | | | | | 1.3183 | | | | | | 2 | | |]

| Indian Rupee | [removed: 76] | | [added: 97] | | [removed: 72.9476] | | | [removed: —] | [added: 76.0259] | | | [removed: 45] | | | [added: 1] | [removed: 72.2338] | | | [added: | | 76 | | | | | | 72.9476 | | | | | |] — | | |

| Singapore Dollar | [added: | |] 50 | | | | [removed: 1.3597] | | [added: 1.3574] | [removed: —] | | | | [removed: 26] | [added: 1] | | | [removed: 1.3478] | | | [added: 50 | | | | | | 1.3597 | | | | | |] — | | |

| Euro | [removed: 48] | | [added: 35] | | [removed: 0.8927] | | | [added: | 0.8578 | | | | | |] 1 | | | | [removed: —] | | [added: 48] | | [removed: —] | | | [removed: —] | [added: 0.8927] | | [added: | | | | 1 | | |]

| Taiwan Dollar | [removed: 38] | | [added: 58] | | [removed: 30.1873] | | | [added: | 28.0978 | | | | | |] — | | | | [removed: 21] | | [added: 38] | | [removed: 29.6490] | | | [added: | 30.1873 | | | | | |] — | | |

| Pound Sterling | [removed: 1] | | [added: 3] | | [removed: 0.7614] | | | [removed: —] | [added: 0.7375] | | | [added: | | |] — | | | | [removed: —] | | [added: 1] | [added: | | | | | 0.7614 | | | | | |] — | | |

| Malaysian Ringgit | [removed: —] | | [added: 3] | | [removed: 4.0889] | | | [added: | 4.0456 | | | | | |] — | | | | [removed: 12] | | [added: —] | | [removed: 4.1775] | | | [added: | 4.0889 | | | | | |] — | | |

| Total | [added: | |] $ | [removed: 739] [added: 755] | | | | | | [added: | | | | |] $ | [removed: 2] [added: 17] | | | [added: | |] $ | [removed: 396] [added: 739] | | | | | | [added: | | | | |] $ | [removed: (8] [added: 2] | [removed: )] |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Japanese Yen | | | 1 | | | | | | 103.5000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

These investments were highly liquid.

The following table presents certain information for our investment portfolio and debt obligations as of December 28, 2019:

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| | 2020 | | | | 2021 | | | | 2022 | | | | 2023 | | | | 2024 | | | | 2025 and thereafter | | | | Total (1) | | | | 2019 Fair Value (2) | | |

| | (In millions, except for percentages) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Investment Portfolio | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash equivalents: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Variable rate amounts | $ | 1,425 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,425 | | | $ | 1,425 | |

| Weighted-average rate | 1.83 | | % | | — | | % | | — | | % | | — | | % | | — | | % | | — | | % | | 1.83 | | % | | | | |

| Marketable securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Fixed rate amounts | $ | 37 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 37 | | | $ | 37 | |

| Weighted-average rate | 2.13 | | % | | — | | % | | — | | % | | — | | % | | — | | % | | — | | % | | 2.13 | | % | | | | |

| Total Investment Portfolio | $ | 1,462 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,462 | | | $ | 1,462 | |

| Debt Obligations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Fixed rate amounts | $ | — | | | $ | — | | | $ | 312 | | | $ | — | | | $ | — | | | $ | 251 | | | $ | 563 | | | $ | 1,823 | |

| Weighted-average effective interest rate | — | | % | | — | | % | | 7.50 | | % | | — | | % | | — | | % | | 2.125 | | % | | 5.10 | | % | | | | |

| Total Debt Obligations | $ | — | | | $ | — | | | $ | 312 | | | $ | — | | | $ | — | | | $ | 251 | | | $ | 563 | | | $ | 1,823 | |

| | | |

| --- | --- | --- |

| (1) | | The dollar amounts represent the cost basis of our investment portfolio and the remaining principal of our debt obligations. |

| (2) | | Our 2.125% Notes, included in debt obligations above, were convertible at the option of the holder as of December 28, 2019. The estimated fair value of the 2.125% Notes takes into account the value of our stock price of $46.18 as of December 28, 2019 and the initial conversion price of approximately $8.00 per share of common stock. |

In applying our strategy, from time to time we use foreign currency forward contracts to hedge certain forecasted expenses denominated in foreign currencies.

We designate these contracts as cash flow hedges of forecasted expenses to the extent eligible under the accounting rules and evaluate hedge effectiveness prospectively and retrospectively.

To the extent such hedges are effective, the gain or loss on these contracts is recorded as a component of accumulated other comprehensive income (loss) and

reclassified to earnings in the same line item as the associated forecasted transaction and in the same period during which the hedged transaction affects earnings.

We also use, from time to time, foreign currency forward contracts to economically hedge recognized foreign currency exposures on the balance sheets of various subsidiaries.

We do not designate these forward contracts as hedging instruments.

Accordingly, the gain or loss associated with these contracts is immediately recorded in earnings.

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The forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s consolidated financial statements; demand for AMD’s products; the growth, change and competitive landscape of the markets in which AMD participates; the expected amounts to be received by AMD under the IP licensing agreement and AMD’s expected royalty payments from future product sales of [removed: China JVs’] [added: the two joint ventures AMD holds equity in with Higon Information Technology Co., Ltd. (THATIC JVs)] products to be developed on the basis of such licensed IP; sales patterns of AMD’s [removed: PC products and semi-custom System-on-Chip (SoC) products for game consoles;] [added: products;] international sales will continue to be a significant portion of total sales in the foreseeable future; [removed: the balance of the uncertain tax benefits in the next 12 months;] that AMD’s cash, cash equivalents and [removed: marketable securities] [added: short-term investment] balances together with the availability under that certain revolving credit facility [removed: (Secured] [added: (the] Revolving [added: Credit] Facility) made available to AMD and certain of its subsidiaries under the Credit Agreement, will be sufficient to fund AMD’s operations including capital expenditures over the next 12 months; AMD’s ability to obtain sufficient external financing on favorable terms, or at all; AMD’s expectation that based on the information presently known to management, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial condition, cash flows or results of operations; any amounts in addition to what has been already accrued by AMD for future remediation costs under clean-up orders will not [removed: be material;] [added: have a material effect on our financial condition, cash flows or results of operations;] we expect to file future patent applications in both the United States and abroad on significant inventions as we deem appropriate; anticipated ongoing and increased [removed: in] costs related to enhancing and implementing information security controls; revenue allocated to remaining performance obligations that are unsatisfied which will be recognized over the next 12 months; all unbilled accounts receivables are expected to be billed and collected within 12 months; [removed: and] a small number of customers will continue to account for a substantial part of AMD’s revenue in the [removed: future.][added: future; and the acquisition of Xilinx, Inc. is currently expected to close by the end of calendar year 2021.]

[removed: We] [added: From time to time, we may] also [added: sell or] license portions of our intellectual property (IP) portfolio.

For financial information about geographic areas and for segment information with respect to revenues and operating results, refer to the information set forth in Note [removed: 15] [added: 14] of our consolidated financial statements.

References in this report to [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] refer to the fiscal year unless explicitly stated otherwise.

The [removed: SEC’s] [added: SEC] website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

AMD, the AMD Arrow logo, Athlon, [added: AMD CDNA, AMD Instinct, AMD RDNA,] EPYC, FirePro, FreeSync, Geode, Opteron, Radeon, [added: Radeon Instinct, RDNA,] Ryzen, Threadripper, Infinity Fabric, and combinations thereof are trademarks of Advanced Micro Devices, Inc.

Microsoft, Windows, [removed: DirectX, Xbox 360] [added: DirectX] and Xbox One are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.

Chromebook and Stadia are trademarks of Google Inc. [removed: Cray] [added: Linux] is [removed: a] [added: the registered] trademark of [removed: Cray Inc. and is registered] [added: Linus Torvalds] in the United States and other countries.

PlayStation is a registered trademark or trademark of Sony Interactive Entertainment, [removed: Inc..][added: Inc. Arm is a registered trademark of ARM Limited (or its subsidiaries) in the US and/or elsewhere.]

Other factors impacting microprocessor performance include the process technology used in its manufacture, the number and type of cores, the ability of the cores to process multi-thread or process multiple [added: instructions simultaneously, the bit size of its instruction set, memory size and data access speed.]

The more sophisticated the GPU, the higher the resolution and the faster and smoother moving objects can be displayed on [added: a] video display or in a virtual environment (e.g. virtual reality (VR) and augmented reality (AR)).

In addition to graphics processing, GPUs are used to perform parallel operations on multiple sets of data and are increasingly used to perform vector processing for non-graphics applications that require repetitive computations such as [removed: supercomputing,] [added: high-performance computing (HPC),] deep learning, artificial and machine intelligence, blockchain and various other applications (e.g., cryptocurrency mining and autonomous driving).

This integration enhances system performance by “offloading” selected tasks to the best-suited component [removed: (i.e.,] [added: (i.e.] the CPU or the GPU) to optimize component use, increasing the [removed: speed of data flow between the CPU and GPU through shared memory and allowing the GPU to function as both a graphics engine and an application accelerator.]

By combining all of these elements as an SoC, system performance and energy efficiency [removed: is] [added: are] improved, similar to an APU.

Chipsets can perform essential logic [removed: functions,] [added: functions] and operate in concert with the microprocessor to manage system control and power management functions of all the devices in the system.

Typical notebook platforms and small form factor desktop platforms [removed: typically] [added: usually] do not utilize a chipset and instead rely on the capabilities of the APU to connect to all the required devices on the platform.

Our microprocessors are incorporated into computing platforms, which are a collection of technologies that are designed to work together to provide a more complete computing [removed: solution and to enable and advance the computing components.][added: solution.]

In addition, we believe our customers also benefit from an all-AMD platform (consisting of an APU or CPU, a discrete GPU, and a chipset when needed), as we are able to optimize interoperability, provide our customers a single point of contact for the [added: key platform components and enable them to bring the platforms to market quickly in a variety of PC and server system form factors.]

We currently base our microprocessors and chipsets on the x86 instruction set architecture and the AMD Infinity [removed: Fabric,] [added: Fabric™,] which connects an on-chip memory controller and input/output (I/O) channels directly to one or more microprocessor cores.

Some of our microprocessors have additional levels of cache such as L2, or second-level cache, and L3, or third-level cache, to enable fast data access and [removed: high performance.][added: high-performance.]

Notebooks and 2-in-1s. We continue to invest in designing and developing high performing and low power APUs for notebook PC platforms [added: and we offer AMD Ryzen and AMD Athlon mobile processors] for the consumer and commercial markets.

Commercial. We offer enterprise-class desktop and notebook PC solutions sold as AMD PRO Mobile and AMD PRO desktop processors with [removed: Radeon™ Vega Graphics] [added: Radeon graphics] for the commercial [removed: client] market.

These solutions are designed to provide enterprise customers with the performance, security [added: capabilities] and business features such as [removed: commercial-grade quality,] [added: enhanced security and manageability,] platform longevity and extended image [removed: stability they require.][added: stability.]

Chipsets. We offer a full suite of chipset products, including the [removed: new] X570 chipset [removed: introduced in July 2019] which supports PCIe® 4.0 (fourth generation Peripheral Component Interconnect Express motherboard interface) designed for enthusiast desktop platforms.

In addition, we [removed: also] [added: continue to] offer the B450 and [removed: the] A320 [removed: chipset] [added: chipsets] that are combined with AMD Ryzen processors for the AM4 desktop platform for the performance and affordable mainstream platforms segments.

In the High-End Desktop (HEDT) [removed: segment,] [added: and Workstation segments,] we [removed: introduced] [added: offer] the [removed: new] TRX40 [removed: chipset] [added: and the WRX80 chipsets, respectively,] to support the 3rd generation Ryzen Threadripper [removed: platform which offers] [added: and Threadripper Pro platforms offering] high speed I/O and platform bandwidth.

This has led to [removed: increasing] [added: the increased] creation and use of processing-intensive multimedia content for [removed: computing devices, including] playing games, capturing [removed: media content,] [added: media,] viewing online videos, editing photos and managing digital [removed: content.][added: content on computing devices.]

In addition to traditional graphics markets, there is a large and growing [removed: market] [added: demand] for accelerated computing, powered by graphics [removed: processors, which is primarily made up of high-performance] [added: processors in markets such as high performance] computing [added: (HPC), artificial intelligence,] and [removed: machine learning/deep learning.][added: Cloud Visualization (Virtual Desktop Infrastructure & Cloud Gaming).]

Traditional [removed: high performance computing focuses] [added: HPC focused] on scientific research, model simulation, and exploration [removed: which] is [removed: mainly driven by a] [added: driving an increased] need for computing throughput [removed: in] [added: at] universities and government research centers.

[removed: The second market] [added: Artificial intelligence] is [removed: the] [added: a] rapidly growing area of machine learning and deep learning workloads.

Graphics processors are used [removed: both] [added: primarily] in the training of machine learning [removed: models as well as the application of models via inference.][added: models.]

Blockchain applications are typically performed using [removed: specifically] [added: specially] designed application-specific integrated circuits (ASICs) or a general purpose CPU or GPU.

Our customers generally use our graphics solutions to enable or increase the speed of rendering images, to help improve image resolution and color definition, and increasingly to process massive data sets for cloud and data [removed: center applications.]

Our APUs deliver visual processing functionality for value and mainstream PCs by integrating a CPU and a GPU on a single chip, while discrete GPUs (which are also known as dGPUs) offer [removed: high performance] [added: high-performance] graphics processing across all platforms.

Moreover, heterogeneous computing allows for the elevation of the GPU to the same level as the CPU for memory access, [removed: queuing] [added: queuing,] and execution.

Our discrete GPUs for desktop and notebook PCs support current generation application program [removed: interface] [added: interfaces] (APIs) like DirectX® 12 [added: Ultimate] and Vulkan®, support new displays using [removed: Radeon™ FreeSync™] [added: AMD FreeSync™, AMD FreeSync Premium,] and [removed: Radeon™] [added: AMD] FreeSync [removed: 2 HDR™] [added: Premium Pro] technologies, and are designed to support VR in PC platforms.

Professional Graphics. Our AMD [removed: Radeon™] [added: Radeon] Pro family of professional graphics products includes multi-view graphics cards and GPUs designed for integration in mobile and desktop workstations.

AMD Radeon Pro supports end users utilizing GPU accelerated visualization for construction, architecture and mechanical design through gaming and visualization engines on high resolution displays; Radeon [removed: VR™] [added: VR] Creator cards are also capable of supporting this functionality with VR and AR.

[removed: Data Center Graphics*.*] Our AMD Radeon Instinct™ [added: and AMD Instinct] family of GPU products are specifically designed to address growing demand for [added: compute-oriented] data center applications, including deep learning training and traditional [removed: high performance computing (HPC)] [added: HPC] workloads such as simulation where the compute capabilities of GPUs provide exceptional flexibility and performance.

Combined with our [removed: open-source software, Radeon™ Open eCosystem (ROCm),] [added: ROCm™ open software platform,] our customers can deliver [removed: a] differentiated acceleration platforms to address the next-generation of computing challenges while minimizing power and space needs in the data center.

Pending Acquisition

On October 26, 2020, we entered into an Agreement and Plan of Merger (the Merger Agreement) with Thrones Merger Sub, Inc., our wholly owned subsidiary (Merger Sub), and Xilinx, Inc. (Xilinx), whereby Merger Sub will merge with and into Xilinx (the Merger), with Xilinx surviving such Merger as a wholly owned subsidiary of ours.

Under the Merger Agreement, at the effective time of the Merger (the Effective Time), each share of common stock of Xilinx (Xilinx Common Stock) issued and outstanding immediately prior to the Effective Time (other than treasury shares and any shares of Xilinx Common Stock held directly by us or Merger Sub) will be converted into the right to receive 1.7234 fully paid and non-assessable shares of our common stock and, if applicable, cash in lieu of fractional shares, subject to any applicable withholding.

As of the signing of the Merger Agreement, the transaction was valued at $35 billion.

The actual valuation of the transaction could differ significantly from the estimated amount due to movements in the price of our Common Stock, the number of shares of Xilinx common stock outstanding on the closing date of the Merger and other factors.

The closing of the Merger is subject to customary conditions, including regulatory approval and approval by our stockholders and Xilinx stockholders.

The transaction is currently expected to close by the end of calendar year 2021.

The Computing and Graphics market addresses the need for computational and visual data processing in computing devices that include personal computers, laptops / notebooks, and workstations.

We service this market with our CPU, GPU, APU, system-on-chip and chipset product offerings.

speed of data flow between the CPU and GPU through shared memory and allowing the GPU to function as both a graphics engine and an application accelerator.

Desktop. Our microprocessors for desktop platforms currently include the AMD Ryzen™ series processors and AMD Athlon™ processors.

In April 2020, we expanded our 3rd Gen AMD Ryzen desktop processor family by adding AMD Ryzen 3 3100 and AMD Ryzen 3 3300X processors with “Zen 2” core architecture to business users, gamers and creators.

In June 2020, we announced further additions to the 3rd Gen AMD Ryzen desktop processor family, by introducing the AMD Ryzen 9 3900XT, AMD Ryzen 7 3800XT and AMD Ryzen 5 3600XT desktop processors designed for the enthusiast market.

In July 2020, we introduced for the consumer market, the AMD Ryzen 4000 series desktop processors and the AMD Athlon 3000 series desktop processors with built-in Radeon™ graphics.

The AMD Ryzen 4000 G-Series desktop processors offer power efficiency for consumers, gamers, streamers and creators and include multi-layered security features.

The AMD Athlon 3000 G-Series desktop processors provide responsive performance and features for entry-level PCs using “Zen” core architecture.

In October 2020, we introduced the AMD Ryzen 5000 Series desktop processor family powered by “Zen 3” core architecture.

The AMD Ryzen 5000 Series processors have up to 16 cores and deliver across the board leadership performance for gamers and content creators.

In January 2020, we introduced the AMD Ryzen 4000 Series Mobile Processors for ultrathin and gaming laptops designed to deliver performance and power efficiency.

In September 2020, we introduced the

first mobile AMD Ryzen and AMD Athlon processors for Chromebooks.

The AMD Ryzen and Athlon 3000 C-Series mobile processors are designed to enable thinner and lighter Chromebook designs with long battery life and enhanced connectivity.

In May 2020, we announced the global availability of the AMD Ryzen PRO 4000 series mobile family for commercial notebooks built with enterprise-grade AMD PRO technologies, which deliver a set of security and manageability features for Enterprise IT deployments.

In July 2020, we introduced the AMD Ryzen PRO 4000 series and AMD Athlon PRO 3000 series desktop processors with built-in Radeon graphics for the commercial market.

Also in July, we announced the new AMD Ryzen Threadripper™ PRO Processor family with up to 64 cores and built with enterprise grade AMD PRO technologies.

Designed for professional workstations from OEMs and system integrators, AMD Ryzen Threadripper PRO processors offer full spectrum compute capabilities for multi-threaded workloads and high frequency single core performance for lightly threaded workloads.

We also introduced the B550 chipset in April 2020 and the A520 chipset in July 2020 for socket AM4 for 3rd Gen AMD Ryzen desktop processors and 5000 processors.

Many consumers use PCs as entertainment platforms, in addition to traditional productivity and communications uses, and therefore value a richer, more visually compelling and immersive experience.

The cloud visualization market is fueled by the trend to in work from home and thus the increased need for remote accessibility, and the shift from traditional desktop and notebook workloads to the cloud.

center applications.

We have developed RDNA™ 2, a high performing and power efficient graphics architecture, which is the foundation for next-generation PC gaming graphics, the PlayStation 5 and Xbox Series S and X consoles.

Additionally, the RDNA 2 architecture supports advanced graphics features such as ray tracing, Infinity Cache and variable rate shading.

Our hardware and software components are used to implement ray tracing technology to simulate the paths of light rays moving through a movie or game scene, resulting in photorealistic 3D images.

In August 2020, we announced the availability of the new AMD Radeon Pro 5000 series GPUs for the updated 27-inch iMac bringing a wide variety of graphically intensive applications and workloads to consumer and professional users.

In October 2020, we unveiled the AMD Radeon RX™ 6000 series graphics cards for enthusiast-class PC gaming experiences.

The AMD Radeon RX 6000 series includes the AMD Radeon RX 6800 and Radeon RX 6800 XT graphics cards as well as the Radeon RX 6900 XT built upon the AMD RDNA 2 gaming architecture that spans from game consoles to PCs.

The AMD RDNA 2 GPUs feature enhancements in the compute unit, advancements in the visual pipeline, and the introduction of a new high-speed cache called AMD Infinity Cache.

These architecture enhancements enable ultra-high performance and ultra-high fidelity in the latest games.

Complimenting the introduction of the new AMD RX 6000 Series graphics cards, AMD introduced AMD Smart Access Memory, which when combined with an AMD Ryzen 5000 series processor, offers an incremental performance boost in many games.

In February 2020, we announced the AMD Radeon Pro W5500 workstation graphics card for Design & Manufacturing and Architecture, Engineering & Construction (AEC) professionals.

Linux is the registered trademark of Linus Torvalds in the United States and other countries.

Arm is a registered trademark of ARM Limited (or its subsidiaries) in the US and/or elsewhere.

instructions simultaneously, the bit size of its instruction set, memory size and data access speed.

key platform components and enable them to bring the platforms to market quickly in a variety of PC and server system form factors.

Desktop. In May 2019, we introduced the 3rd Gen AMD Ryzen™ desktop processor family based on the new “Zen 2” core architecture with AMD chiplet design approach.

Following that introduction, we announced in November 2019 the global availability of the flagship product in our AM4 mainstream platform infrastructure, the AMD Ryzen™ 9 3950X.

This product enables a high core count with 16 cores and 32 threads designed for PC buyers.

At the value end of the mainstream AM4 platform portfolio, we also announced the new AMD Athlon™ 3000G processor offering better performance and value for end users building budget oriented desktop platforms.

In addition to the mainstream product family, we introduced the next generation of the Ryzen™ Threadripper™ product line built on the new TRX40 platform to serve the needs of the high-end desktop segment for creators and enthusiasts.

Our November 2019 introduction included the 24-core AMD Ryzen™ Threadripper™ 3960X and the 32-core AMD Ryzen™ Threadripper™ 3970X processors.

In January 2020, we announced a processor for creative professionals, the 64-core, 128-thread AMD Ryzen™ Threadripper™ 3990X built to enable extreme performance for 3D, visual effects, and video professionals.

In January 2019, we announced our mobility line-up encompassing all notebook segments: second generation AMD Ryzen™ 3000 Series Mobile Processors, powering ultrathin, commercial and gaming notebooks; AMD Athlon™ 300 Series Mobile Processors, powering mainstream notebooks with the “Zen” core; and optimized seventh generation A-Series processors, elevating performance for mainstream Chromebooks™ notebook computers.

In January 2020, we announced our x86 8-core ultrathin laptop processors, the AMD Ryzen™ 4000 U-Series, as part of the AMD Ryzen™ 4000 Series Mobile Processor family, built on “Zen 2” core architecture with 7nm process technology and high performance Radeon™ graphics in an SOC design.

In addition, as part of the AMD Ryzen 4000 Series Mobile Processor family, we announced the Ryzen™ 4000 H-Series Mobile Processors for gaming and content creation.

These processors support AMD SmartShift technology, which allows for automatic power shifting with AMD Radeon discrete mobile GPUs to enable new levels of performance in thin notebooks.

We also announced the AMD Athlon™ 3000 Series Mobile Processor family powered by “Zen” architecture for mainstream notebook users.

In April 2019, we announced the 2nd Gen AMD Ryzen™ PRO mobile processors with Radeon Vega Graphics and the AMD Athlon™ PRO mobile processors with Radeon Vega Graphics.

These processors provide power-efficient performance, security features and commercial-grade reliability and manageability.

In September 2019, we expanded our commercial desktop lineup with the global availability of our new AMD Ryzen™ PRO 3000 Series desktop processors: AMD Ryzen™ 9 PRO 3900, AMD Ryzen™ 7 PRO 3700, and AMD Ryzen™ 5 PRO 3600.

The processors offer up to 12 cores and 24 threads and bring the computing performance of “Zen 2” and high core count to the commercial segment.

We also have the A300 chipsets designed for small form factors.

For the 1st and 2nd generation Threadripper families, we continue to offer the X399 chipset.

We also continue to offer AMD 9-Series chipsets for the Socket AM3/3+ platforms serving desktop PCs, and AMD A-Series Controller Hubs

for the Socket FM2/2+ platforms.

We also offer AMD 785E, 780E, 780M, 690E, SR5690, SP5100, SB600, SB710, SB850 and M690E chipsets and AMD A-Series Controller Hubs for our embedded products.

Many consumers value a rich visual experience to enable a more compelling and immersive experience, and, for these consumers, the PC has evolved from a traditional data processing and communications device to an entertainment platform.

In January 2019, we introduced the AMD Radeon™ VII, a premium graphics card for gamers, creators and enthusiasts built on 7nm process technology and with 16GB of HBM2 memory (High Bandwidth Memory) and 1 TB/s memory bandwidth.

In May 2019, we announced the RDNA gaming architecture which is designed to deliver better performance, power and memory efficiency.

In July 2019, we announced the availability of the 7nm AMD Radeon™ RX 5700-series gaming graphics card family (AMD Radeon™ RX 5700 XT and RX 5700) featuring AMD RDNA architecture, high-speed GDDR6 (Graphics Double Data Rate type 6) memory and support for the PCIe 4.0 interface.

In October 2019, we announced the AMD Radeon™ RX 5500 series that includes the Radeon RX 5500 graphics card that will be available in desktop PCs from manufacturers and graphics cards from board partners as well as the Radeon™ 5500M GPU for notebook PCs.

In December 2019, we announced AMD

Radeon™ RX 5500 XT graphics card that is optimized to deliver high performance.

In January 2020, we introduced AMD Radeon™ RX 5600 series graphics products, which includes the AMD Radeon™ RX 5600 XT graphics card and the AMD Radeon RX 5600 graphics card, with AMD RDNA architecture and software feature to provide high-performance and high-fidelity experiences for 1080p gamers.

In June 2019, we announced the AMD Radeon™ Pro Vega II GPUs which utilizes 7nm AMD Radeon™ Vega family GPUs, HBM2 and AMD Infinity Fabric Link GPU interconnect technology designed to power demanding professional applications.

In November 2019, we announced the AMD Radeon™ Pro W5700, a 7nm professional PC workstation graphics card that enables 3D designers, architects and engineers to visualize, review and interact with their designs in real time to accelerate decision-making processes and product development cycles.

In March 2019, Google announced its new Stadia™ cloud gaming service using high-performance, custom AMD Radeon data center GPUs.

In May 2019, the US Department of Energy announced the Frontier exascale A+A (AMD CPUs plus AMD GPUs) system with Oakridge National Labs (ORNL).

In August 2019, Microsoft announced its new NVv4-series cloud offering of Azure Virtual Machines based on Radeon Instinct™ MI25 GPUs.

And in November 2019, we released ROCm 3.0, marking a major milestone in the path to Exascale class systems and platforms.

AMD has used this type of collaborative co-

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).

Shareholder Derivative Lawsuits (Wessels, Hamilton and Ha)

On March 20, 2014, a purported shareholder derivative lawsuit captioned *Wessels v.

Read, et al.*, Case No. 1:14 cv-262486 (Wessels) was filed against us (as a nominal defendant only) and certain of our directors and officers in the Santa Clara County Superior Court of the State of California.

The complaint purports to assert claims against us and certain individual directors and officers for breach of fiduciary duty, waste of corporate assets and unjust enrichment.

The complaint seeks damages allegedly caused by alleged materially misleading statements and/or material omissions by us and the individual directors and officers regarding our 32nm technology and “Llano” product, which statements and omissions, the plaintiffs claim, allegedly operated to artificially inflate the price paid for our common stock during the period.

On April 27, 2015, a similar purported shareholder derivative lawsuit captioned *Christopher Hamilton and David Hamilton v.

Barnes, et al.*, Case No. 5:15-cv-01890 (Hamilton) was filed against us (as a nominal defendant only) and certain of our directors and officers in the United States District Court for the Northern District of California.

On September 29, 2015, a similar purported shareholder derivative lawsuit captioned *Jake Ha v Caldwell, et al.,* Case No. 3:15-cv-04485 (Ha) was filed against us (as a nominal defendant only) and certain of our directors and officers in the United States District Court for the Northern District of California.

The lawsuit also seeks a court order voiding the stockholder vote on our 2015 proxy.

The case was transferred to the judge handling the Hamilton Lawsuit and is now Case No. 4:15-cv-04485.

The Wessels, Hamilton and Ha shareholder derivative lawsuits were stayed pending resolution of a class action lawsuit captioned *Hatamian v.

AMD, et al.*, C.A. No. 3:14-cv-00226 filed against us in the United States District Court for the Northern District of California (the Hatamian Lawsuit).

The Hatamian Lawsuit asserted claims against us and certain of our officers for alleged violations of Section 10(b) of the Exchange Act of 1934, as amended (the Exchange Act), and SEC Rule 10b-5 concerning certain statements regarding our 32nm technology and “Llano” products.

On October 9, 2017, the parties signed a definitive settlement agreement resolving the Hatamian Lawsuit and submitted it to the Court for approval.

Under the terms of this agreement, the settlement was funded entirely by certain of our insurance carriers and the defendants continued to deny any liability or wrongdoing.

On March 2, 2018, the court approved the settlement and entered a final judgment in the Hatamian Lawsuit.

On January 30, 2018, the Wessels and Hamilton plaintiffs amended their complaints.

On February 2, 2018, the Ha plaintiff also filed an amended complaint.

On February 22, 2018, we filed motions to dismiss the Hamilton and Ha plaintiffs’ amended complaints.

On April 2, 2018, we filed a demurrer seeking to dismiss the Wessels amended complaint.

On July 23, 2018, the Santa Clara Superior Court sustained our demurrer in the Wessels case, dismissing all claims in that matter with prejudice.

The Wessels plaintiff filed a Notice of Appeal on September 27, 2018.

On October 4, 2018, the Federal Court issued an order dismissing the Hamilton and Ha amended complaints.

The Hamilton plaintiffs filed a Notice of Appeal on October 8, 2018, and the Ha plaintiffs filed a Notice of Appeal on October 15, 2018.

On November 19, 2018, the Hamilton and Ha plaintiffs filed a motion seeking summary reversal of the order dismissing their claims.

We opposed this motion on December 13, 2018, and the Court denied it on February 25, 2019.

The Wessels, Hamilton, and Ha appeals are currently pending.

Briefing has completed in each appeal.

Based upon information presently known to management, we believe that the potential liability, if any, will not have a material adverse effect on our financial condition, cash flows or results of operations.

Hauck et al.

Litigation

Since January 19, 2018, three putative class action complaints have been filed against us in the United States District Court for the Northern District of California: (1) *Diana Hauck et al.

v.

AMD, Inc.,* Case No. 5:18-cv-0047, filed on January 19, 2018; (2) *Brian Speck et al.

AMD, Inc.*, Case No. 5:18-cv-0744, filed on February 4, 2018; and (3) *Nathan Barnes and Jonathan Caskey-Medina, et al.

AMD, Inc.*, Case No. 5:18-cv-00883, filed on February 9, 2018.

On April 9, 2018, the court consolidated

these cases and ordered that *Diana Hauck et al.

AMD, Inc.* serve as the lead case.

On June 13, 2018, six plaintiffs (from California, Louisiana, Florida, and Massachusetts) filed a consolidated amended complaint alleging that we failed to disclose our processors’ alleged vulnerability to Spectre.

[removed: SECURITIES] [added: UNITED STATES SECURITIES] AND EXCHANGE COMMISSION

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | [added: | |]

| | [added: | |] For the fiscal year [removed: ended] [added: ended December 26, 2020] | [added: | |]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | [added: | |]

| | [added: | |] For the transition period from to | [added: | |]

[removed: Commission] [added: Commission] File [removed: Number] [added: Number] 001-07882

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[removed: |] 2485 Augustine Drive [removed: | |]

[removed: |] Santa [removed: Clara, | |][added: Clara, California 95054]

[removed: | (Address] [added: (Address] of principal executive [removed: offices) | (Zip Code) |][added: offices)]

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Yes [removed: ¨] [added: ☐] No [removed: ý][added: ☑]

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Yes [removed: ☐] [added: ☑] No [removed: ý][added: ☐]

As of June [removed: 29, 2019,] [added: 27, 2020,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $32.8] [added: $58.5] billion based on the reported closing sale price of [removed: $30.37] [added: $50.10] per share as reported on The NASDAQ Global Select Market (NASDAQ) on June [removed: 28, 2019,] [added: 26, 2020,] which was the last business day of the registrant’s most recently completed second fiscal quarter.

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| [ITEM [removed: 9B.](#sF30538A0BF1942F2C85338EBFD606416)] [added: 9B.](#i505d9be02d6f4cf5a4bf9060b46254de_226)] | [added: | |] [Other [removed: Information](#sF30538A0BF1942F2C85338EBFD606416)] [added: Information](#i505d9be02d6f4cf5a4bf9060b46254de_226)] | [removed: [82](#sF30538A0BF1942F2C85338EBFD606416)] | [added: | [88](#i505d9be02d6f4cf5a4bf9060b46254de_226) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Yes ☐ No ☑

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| [PART I](#i505d9be02d6f4cf5a4bf9060b46254de_10) | | | | | | [1](#i505d9be02d6f4cf5a4bf9060b46254de_13) | | |

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| [PART II](#i505d9be02d6f4cf5a4bf9060b46254de_31) | | | | | | [36](#i505d9be02d6f4cf5a4bf9060b46254de_31) | | |

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| [PART IV](#i505d9be02d6f4cf5a4bf9060b46254de_247) | | | | | | [90](#i505d9be02d6f4cf5a4bf9060b46254de_247) | | |

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UNITED STATES

FORM 10-K

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| | December 28, 2019 |

| | OR |

ADVANCED MICRO DEVICES, INC.

| California | 95054 |

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For The Fiscal Year Ended December 28, 2019

| [PART I](#s1E6C8A6502D6A338C4B838EBF059BABB) | | [1](#s1E6C8A6502D6A338C4B838EBF059BABB) |

| [PART II](#sF768D8297E91E5A6163038EBF1858BC8) | | [31](#sF768D8297E91E5A6163038EBF1858BC8) |

| [PART IV](#s7791B5908362ABF3C06238EBFE8B2319) | | [84](#s7791B5908362ABF3C06238EBFE8B2319) |

| [SIGNATURES](#s625FEE3FC83E2ECAE2E638EBC212330A). | | [90](#s625FEE3FC83E2ECAE2E638EBC212330A) |

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As of December [removed: 28, 2019,] [added: 26, 2020,] we leased approximately [removed: 2.35] [added: 2.46] million square feet of space for research and development, engineering, administrative and warehouse use, including our headquarters in Santa Clara, California, our principal administrative facilities in Austin, Texas, our design center in Shanghai, China, our main facility with respect to graphics and chipset products located in Markham, Ontario, [removed: Canada] [added: Canada, two design centers in Bangalore] and [added: Hyderabad, India, and] a number of smaller regional sales offices located in commercial centers near customers, [added: principally in the United States, Europe, Asia and Latin America.]

[removed: We occupy 220,000 square] feet of space in our headquarters in Santa Clara, California under [removed: a 10-year] [added: an] operating lease which [removed: commenced in August 2017 and] expires in July 2027.

We have the option to extend the term of the lease for two additional [removed: 5-year] [added: five-year] periods.

The lease for our principal administrative facilities in Austin, Texas [added: for approximately 511,000 square feet] expires in March 2025, and provides for one [removed: 10-year] [added: ten-year] optional renewal.

The leases for our facilities in Markham, Ontario, Canada [added: for approximately 365,000 square feet] expire in February 2028, and provide for one [removed: 5-year] [added: five-year] optional renewals.

We occupy approximately 265,000 square feet of space in our design center in Shanghai, China under a [removed: 10-year] [added: ten-year] operating lease, which expires in March 2028.

We occupy approximately 251,000 square

We also occupy approximately 287,000 square feet, in aggregate, under two leases in India.

The lease for our design center in Bangalore, India expires in September 2026, with an undefined term renewal option.

The lease for our design center in Hyderabad, India expires in November 2022, with a five-year renewal option.

principally in the United States, Europe, Asia and Latin America.

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On January [removed: 31, 2020,] [added: 22, 2021,] there were [removed: 4,364] [added: 4,155] registered holders of our common stock, and the closing price of our common stock was [removed: $47.00] [added: $92.79] per share as reported on NASDAQ.

The following graph shows a five-year comparison of cumulative total return on our common stock, the S&P 500 Index and the S&P 500 Semiconductor Index from December [removed: 27, 2014] [added: 26, 2015] through December [removed: 28, 2019.][added: 26, 2020.]

[removed: ][added: ]

| | [added: | |] Base Period | [added: | |] Years Ending | | | | | | | | | | [added: | | | | |]

| Company / Index | [removed: 12/27/2014] | [added: |] 12/26/2015 | | [added: |] 12/31/2016 | | [added: |] 12/30/2017 | | [added: |] 12/29/2018 | | [added: |] 12/28/2019 | | [added: | 12/26/2020 | | |]

We issued warrants dated December [removed: 30, 2019] [added: 28, 2020] to purchase [removed: 40,162] [added: 42,439] shares of our common stock to a commercial partner pursuant to a strategic arrangement with such partner.

The warrants have an exercise price of $25.4994 per share and expire on December [removed: 30, 2022.][added: 28, 2023.]

ISSUER PURCHASES OF EQUITY SECURITIES

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| Advanced Micro Devices, Inc. | | | 100 | | | 388 | | | 352 | | | 610 | | | 1,582 | | | 3,144 | | |

| S&P 500 Index | | | 100 | | | 111 | | | 135 | | | 128 | | | 171 | | | 199 | | |

| S&P 500 Semiconductors Index | | | 100 | | | 126 | | | 171 | | | 160 | | | 236 | | | 331 | | |

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| Advanced Micro Devices, Inc. | 100 | 110.19 | | 427.92 | | 387.92 | | 672.45 | | 1,742.64 | |

| S&P 500 Index | 100 | 100.77 | | 111.92 | | 136.35 | | 129.26 | | 171.64 | |

| S&P 500 Semiconductors Index | 100 | 100.47 | | 126.23 | | 172.07 | | 160.39 | | 237.49 | |

| | [added: | | 2020(1) | | | | | |] 2019(1) | | | | [added: | |] 2018(1) | | | | [added: | |] 2017(1)(2) | | | | [added: | |] 2016(1)(2) | | | | [removed: 2015(1)] | | | [added: | |]

| | [added: | |] In millions except per share amounts | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| Net revenue | [added: | |] $ | [added: 9,763 | | | | | $ |] 6,731 | | | [added: | |] $ | 6,475 | | | [added: | |] $ | 5,253 | | | [added: | |] $ | 4,319 | | | [removed: $] | [removed: 3,991] | | [added: | |]

| Net income (loss) [removed: (3)(4)] [added: (3)] | [added: | |] $ | [added: 2,490 | | | | | $ |] 341 | | | [added: | |] $ | 337 | | | [added: | |] $ | [removed: (33] [added: (33)] | [removed: )] | | [added: | |] $ | [removed: (498] [added: (498)] | [removed: )] | | [removed: $] | [removed: (660] | [removed: )] | [added: | |]

| Earnings (loss) per share | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| Basic | [added: | |] $ | [added: 2.10 | | | | | $ |] 0.31 | | | [added: | |] $ | 0.34 | | | [added: | |] $ | [removed: (0.03] [added: (0.03)] | [removed: )] | | [added: | |] $ | [removed: (0.60] [added: (0.60)] | [removed: )] | | [removed: $] | [removed: (0.84] | [removed: )] | [added: | |]

| Diluted | [added: | |] $ | [added: 2.06 | | | | | $ |] 0.30 | | | [added: | |] $ | 0.32 | | | [added: | |] $ | [removed: (0.03] [added: (0.03)] | [removed: )] | | [added: | |] $ | [removed: (0.60] [added: (0.60)] | [removed: )] | | [removed: $] | [removed: (0.84] | [removed: )] | [added: | |]

| Shares used in per share calculation | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| Basic | [added: | | 1,184 | | | | | |] 1,091 | | | | [added: | |] 982 | | | | [added: | |] 952 | | | | [added: | |] 835 | | | | [removed: 783] | | | [added: | |]

| Diluted | [added: | | 1,207 | | | | | |] 1,120 | | | | [added: | |] 1,064 | | | | [added: | |] 952 | | | | [added: | |] 835 | | | | [removed: 783] | | | [added: | |]

| Long-term debt, net and other long-term liabilities [removed: (5)] [added: (4)] | [added: | |] $ | [added: 507 | | | | | $ |] 643 | | | [added: | |] $ | 1,306 | | | [added: | |] $ | 1,443 | | | [added: | |] $ | 1,559 | | | [removed: $] | [removed: 2,093] | | [added: | |]

| Total assets | [added: | |] $ | [added: 8,962 | | | | | $ |] 6,028 | | | [added: | |] $ | 4,556 | | | [added: | |] $ | 3,552 | | | [added: | |] $ | 3,328 | | | [removed: $] | [removed: 3,084] | | [added: | |]

| (1) | | [added: | | | | 2020,] 2019, 2018, [removed: 2017,] and [removed: 2015] [added: 2017] each consisted of 52 weeks, whereas 2016 consisted of 53 weeks. | [added: | |]

| (2) | | [added: | | | |] 2017 and 2016 amounts adjusted to reflect the retrospective application of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-09, *Revenue from Contracts with Customers*. | [added: | |]

| (3) | | [added: | | | |] In [added: 2020, we recognized a $1.3 billion income tax benefit upon the release of a portion of the valuation allowance on deferred tax assets, which resulted in an equivalent increase to our deferred tax assets and thus an increase to total assets. In] 2016, we recorded a charge of $340 million in Cost of sales, consisting of the $240 million value of the warrant under a warrant agreement and the $100 million payment, which were both associated with the sixth amendment to the [removed: WSA.] [added: wafer sourcing agreement (WSA) with Global Foundries.] In addition, we recorded a cumulative pre-tax gain of $146 million on the sale of our 85% equity interest in the ATMP JV. | [added: | |]

| [removed: (5)] [added: (4)] | | [added: | | | |] In 2019, we reduced our long-term debt, net and other [removed: long term] [added: long-term] liabilities by $663 million, primarily due to $628 million of net debt conversion and repayment. In 2016, we reduced our long-term debt, net and other long term liabilities by $534 million, primarily due to $1,048 million of net debt repayment, partially offset by the issuance of $805 million in principal amount of 2.125% Notes net of unamortized discount of $308 million and unamortized issuance cost of $14 million. | [added: | |]

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| (4) | | In 2015, we implemented restructuring plans and incurred net charges of $53 million, which primarily consisted of severance and related employee benefits. In addition, we exited the dense server systems business, formerly Sea Micro, Inc., resulting in a charge of $76 million in restructuring and other special charges, net. Also, we recorded an inventory write-down of $65 million, which was primarily the result of lower anticipated demand for older-generation APUs, and a technology node transition charge of $33 million. |

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| | [added: | |] Year Ended | | | | | | | | | | | [added: | | | |]

| | [added: | |] December [removed: 28, 2019] [added: 26, 2020] | | | | [added: | |] December [removed: 29, 2018] [added: 28, 2019] | | | | [added: | |] December [removed: 30, 2017] [added: 29, 2018] | | |

| | [added: | |] (In millions, except per share amounts) | | | | | | | | | | | [added: | | | |]

| Net revenue | [added: | |] $ | [removed: 6,731] [added: 9,763] | | | [added: | |] $ | [removed: 6,475] [added: 6,731] | | | [added: | |] $ | [removed: 5,253] [added: 6,475] | |

| Cost of sales | [removed: 3,863] | | [added: 5,416] | | [removed: 4,028] | | | | [removed: 3,466] [added: 3,863] | | | [added: | | | 4,028 | | |]

| Gross profit | [removed: 2,868] | | [added: 4,347] | | [removed: 2,447] | | | | [removed: 1,787] [added: 2,868] | | | [added: | | | 2,447 | | |]

| Research and development | [removed: 1,547] | | [added: 1,983] | | [removed: 1,434] | | | | [removed: 1,196] [added: 1,547] | | | [added: | | | 1,434 | | |]

| Marketing, general and administrative | [removed: 750] | | [added: 995] | | [removed: 562] | | | | [removed: 516] [added: 750] | | | [added: | | | 562 | | |]

| Licensing gain | [removed: (60] | | [removed: )] [added: —] | | [removed: —] | | | | [removed: (52] [added: (60)] | | [removed: )] | [added: | | | — | | |]

| Operating income | [removed: 631] | | [added: 1,369] | | [removed: 451] | | | | [removed: 127] [added: 631] | | | [added: | | | 451 | | |]

| Interest expense | [removed: (94] | | [removed: )] [added: (47)] | | [removed: (121] | | [removed: )] | | [removed: (126] [added: (94)] | | [removed: )] | [added: | | | (121) | | |]

| Other expense, net | [removed: (165] | | [removed: )] [added: (47)] | | [removed: —] | | | | [removed: (9] [added: (165)] | | [removed: )] | [added: | | | — | | |]

| Income [removed: (loss)] before income taxes and equity [removed: loss] [added: income (loss)] | [removed: 372] | | [added: 1,275] | | [removed: 330] | | | | [removed: (8] [added: 372] | | [removed: )] | [added: | | | 330 | | |]

| Equity [removed: loss] [added: income (loss)] in investee | [removed: —] | | [added: 5] | | [removed: (2] | | [removed: )] | | [removed: (7] [added: —] | | [removed: )] | [added: | | | (2) | | |]

| Net income [removed: (loss)] | [added: | |] $ | [removed: 341] [added: 2,490] | | | [added: | |] $ | [removed: 337] [added: 341] | | | [added: | |] $ | [removed: (33] [added: 337] | [removed: )] |

| Earnings [removed: (loss)] per share | | | | | | | | | | | | [added: | | | | | |]

| Basic | [added: | |] $ | [removed: 0.31] [added: 2.10] | | | [added: | |] $ | [removed: 0.34] [added: 0.31] | | | [added: | |] $ | [removed: (0.03] [added: 0.34] | [removed: )] |

| Diluted | [added: | |] $ | [removed: 0.30] [added: 2.06] | | | [added: | |] $ | [removed: 0.32] [added: 0.30] | | | [added: | |] $ | [removed: (0.03] [added: 0.32] | [removed: )] |

| Shares used in per share calculation | | | | | | | | | | | | [added: | | | | | |]

| Basic | [removed: 1,091] | | [added: 1,184] | | [removed: 982] | | | | [removed: 952] [added: 1,091] | | | [added: | | | 982 | | |]

| Diluted | [removed: 1,120] | | [added: 1,207] | | [removed: 1,064] | | | | [removed: 952] [added: 1,120] | | | [added: | | | 1,064 | | |]

Consolidated Statements of Comprehensive [removed: Income (Loss)][added: Income]

| | [added: | |] (In millions) | | | | | | | | | | | [added: | | | |]

| Other comprehensive income [removed: (loss), net of tax of zero:] [added: (loss)] | | | | | | | | | | | | [added: | | | | | |]

[removed: | Unrealized gains (losses) on available-for-sale securities: | | | | | | | | | | | |][added: Investments in Available-for-sale Debt Securities]

| [removed: Unrealized] [added: Net unrealized] gains [added: (losses)] arising during [added: the] period | [removed: —] | | | | [removed: —] | [added: 18] | | | [removed: 1] | | | [added: 2 | | | | | | (19) | | |]

| [removed: Unrealized] [added: Net change in unrealized] gains (losses) on cash flow [removed: hedges:] [added: hedges] | | | [added: 17] | | | | | | [added: 8] | | | [added: | | | (14) | | |]

| [removed: Total change in unrealized gains] [added: Gains] (losses) on cash flow [removed: hedges] [added: hedges:] | [removed: 8] | | | | [removed: (14] | [added: (In millions)] | [removed: )] | | [removed: 10] | | | [added: | | | | | | | | |]

| Cumulative-effect adjustment to accumulated deficit related to the adoption of ASU 2016-01, Financial Instruments | [removed: —] | | [added: —] | | [removed: 2] | | | | — | | | [added: | | | 2 | | |]

| Total comprehensive income [removed: (loss)] | [added: | |] $ | [removed: 349] [added: 2,507] | | | [added: | |] $ | [removed: 325] [added: 349] | | | [added: | |] $ | [removed: (22] [added: 325] | [removed: )] |