Advanced Micro Devices 10-Q 2023-04-01

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-07882

ADVANCED MICRO DEVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware									94-1692300
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

2485 Augustine Drive

Santa Clara, California 95054

(Address of principal executive offices)

(408) 749-4000

Registrant’s telephone number, including area code

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $0.01 par value			AMD			The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer						☑						Accelerated filer						☐			Non-accelerated filer						☐
Smaller reporting company						☐						Emerging growth company						☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value, as of April 28, 2023: 1,610,361,870

INDEX

						Page No.
Part I Financial Information
Item 1			Condensed Consolidated Financial Statements (Unaudited)
			Condensed Consolidated Statements of Operations			3
			Condensed Consolidated Statements of Comprehensive Income (Loss)			4
			Condensed Consolidated Balance Sheets			5
			Condensed Consolidated Statements of Cash Flows			6
			Condensed Consolidated Statements of Stockholders’ Equity			8
			Notes to Condensed Consolidated Financial Statements			9
Item 2			Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3			Quantitative and Qualitative Disclosures about Market Risk			29
Item 4			Controls and Procedures			29
Part II Other Information
Item 1			Legal Proceedings			30
Item 1A			Risk Factors			30
Item 2			Unregistered Sales of Equity Securities and Use of Proceeds			54
Item 6			Exhibits			55
Signature						56

PART I. FINANCIAL INFORMATION

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

									Three Months Ended
															April 1, 2023						March 26, 2022
															(In millions, except per share amounts)
Net revenue															$	5,353					$	5,887
Cost of sales															2,689						2,883
Amortization of acquisition-related intangibles															305						186
Total cost of sales															2,994						3,069
Gross profit															2,359						2,818
Research and development															1,411						1,060
Marketing, general and administrative															585						597
Amortization of acquisition-related intangibles															518						293
Licensing gain															(10)						(83)
Operating income (loss)															(145)						951
Interest expense															(25)						(13)
Other income (expense), net															43						(42)
Income (loss) before income taxes and equity income															(127)						896
Income tax provision															13						113
Equity income in investee															1						3
Net income (loss)															$	(139)					$	786
Earnings (loss) per share
Basic															$	(0.09)					$	0.56
Diluted															$	(0.09)					$	0.56
Shares used in per share calculation
Basic															1,611						1,393
Diluted															1,611						1,410

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

									Three Months Ended
															April 1, 2023						March 26, 2022
															(In millions)
Net income (loss)															$	(139)					$	786
Other comprehensive income (loss), net of tax:
Net change in unrealized gains on cash flow hedges															20						1
Total comprehensive income (loss)															$	(119)					$	787

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

			April 1, 2023						December 31, 2022
			(In millions, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents			$	3,825					$	4,835
Short-term investments			2,114						1,020
Accounts receivable, net			4,040						4,126
Inventories			4,235						3,771
Receivables from related parties			2						2
Prepaid expenses and other current assets			1,442						1,265
Total current assets			15,658						15,019
Property and equipment, net			1,500						1,513
Operating lease right-of-use assets			447						460
Goodwill			24,177						24,177
Acquisition-related intangibles, net			23,291						24,118
Investment: equity method			84						83
Deferred tax assets			67						58
Other non-current assets			2,410						2,152
Total assets			$	67,634					$	67,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	2,518					$	2,493
Payables to related parties			353						463
Accrued liabilities			3,167						3,077
Other current liabilities			539						336
Total current liabilities			6,577						6,369
Long-term debt			2,467						2,467
Long-term operating lease liabilities			381						396
Deferred tax liabilities			1,641						1,934
Other long-term liabilities			1,874						1,664
Commitments and Contingencies (See Note 12)
Stockholders’ equity:
Capital stock:
Common stock, par value $0.01; shares authorized: 2,250; shares issued: 1,646 and 1,645; shares outstanding: 1,609 and 1,612			16						16
Additional paid-in capital			58,331						58,005
Treasury stock, at cost (shares held: 37 and 33)			(3,362)						(3,099)
Accumulated deficit			(270)						(131)
Accumulated other comprehensive loss			(21)						(41)
Total stockholders’ equity			54,694						54,750
Total liabilities and stockholders’ equity			$	67,634					$	67,580

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

			Three Months Ended
			April 1, 2023						March 26, 2022
			**(In

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The statements in this report include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s condensed consolidated financial statements; demand for AMD’s products; the growth, change and competitive landscape of the markets in which AMD participates; international sales will continue to be a significant portion of total sales in the foreseeable future; that AMD’s cash, cash equivalents and short-term investment balances and cash flows from operations together with the availability under that certain revolving credit facility (the Revolving Credit Agreement) and commercial paper program will be sufficient to fund AMD’s operations including capital expenditures and purchase commitments over the next 12 months and beyond; AMD’s ability to obtain sufficient external financing on favorable terms, or at all; AMD’s expectation that based on management’s current knowledge, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial position, results of operation or cash flows; anticipated ongoing and increased costs related to enhancing and implementing information security controls; all unbilled accounts receivables are expected to be billed and collected within 12 months; revenue allocated to remaining performance obligations that are unsatisfied which will be recognized in the next 12 months; and a small number of customers will continue to account for a substantial part of AMD’s revenue in the future. For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see “Part II, Item 1A—Risk Factors” and the “Financial Condition” section set forth in “Part I, Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A, and such other risks and uncertainties as set forth below in this report or detailed in our other Securities and Exchange Commission (SEC) reports and filings. We assume no obligation to update forward-looking statements.

References in this Quarterly Report on Form 10-Q to “AMD,” “we,” “us,” “management,” “our” or the “Company” mean Advanced Micro Devices, Inc. and our consolidated subsidiaries.

AMD, the AMD Arrow logo, Alveo, EPYC, Radeon, Ryzen, Versal, Xilinx, Zynq Ultrascale and combinations thereof are trademarks of Advanced Micro Devices, Inc. Microsoft and Xbox are trademarks or registered trademarks of Microsoft Corporation in the United States and other jurisdictions. PlayStation is a registered trademark or trademark of Sony Interactive Entertainment, Inc. Other names are for informational purposes only and are used to identify companies and products and may be trademarks of their respective owners. “Zen” is a codename for an AMD architecture and is not a product name.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report and our audited consolidated financial statements and related notes as of December 31, 2022 and December 25, 2021, and for each of the three years for the period ended December 31, 2022 as filed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Overview and Recent Developments

We are a global semiconductor company primarily offering:

• server microprocessors (CPUs) and graphics processing units (GPUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs) and Adaptive System-on-Chip (SoC) products for data centers;

• CPUs, accelerated processing units (APUs) that integrate CPUs and GPUs, and chipsets for desktop and notebook personal computers;

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

• embedded CPUs, GPUs, APUs, FPGAs, and Adaptive SoC products.

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

In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for the three months ended April 1, 2023 compared to the prior year period and an analysis of changes in our financial condition.

Net revenue for the three months ended April 1, 2023 was $5.4 billion, a 9% decrease compared to the prior year period. The decrease in net revenue was driven mainly by a 65% decrease in Client segment revenue primarily due to shipping below consumption to reduce downstream inventory, as well as a 6% decrease in Gaming segment revenue primarily due to a decline in gaming graphics sales. The decrease was partially offset by a 163% increase in Embedded segment revenue driven mainly by the inclusion of a full quarter of Xilinx embedded product sales in the first quarter of 2023 as compared to a partial quarter of Xilinx embedded product sales in the first quarter of 2022, which was measured from February 14, 2022, the date of the Xilinx acquisition (Xilinx Acquisition Date).

Gross margin for the three months ended April 1, 2023 was 44% compared to gross margin of 48% for the prior year period. The decrease in gross margin was primarily due to lower Client segment performance and higher amortization of acquisition-related intangible assets.

Operating loss for the three months ended April 1, 2023 was $145 million compared to operating income of $951 million for the prior year period. Net loss for the three months ended April 1, 2023 was $139 million compared to net income of $786 million for the prior year period. The decrease in operating and net income was primarily due to Client segment performance and higher amortization of acquisition-related intangible assets.

During the first quarter of 2023, we launched two new AMD Ryzen™ X3D desktop processors, the Ryzen 9 7900X3D and Ryzen 9 7950X3D processors with 3D V-Cache technology. We introduced the AMD EPYC™ 9004 Series processors, designed to provide technology and features for embedded networking, security/firewall and storage systems in cloud and enterprise computing, as well as industrial edge servers. We also launched the AMD Alveo™ MA35D media accelerator featuring two 5 nanometer, ASIC-based video processing units to power live interactive streaming services at scale. We also expanded our Zynq™ UltraScale™ RFSoC digital front-end portfolio with two additional devices. These RFSoCs will enable the expansion and deployment of 4G/5G radios where lower cost, power and spectrum-efficient radios are required to address increased wireless connectivity.

As of April 1, 2023 and December 31, 2022, our cash, cash equivalents and short-term investments were $5.9 billion.

During the three months ended April 1, 2023, we generated $486 million of cash from operating activities, and returned $241 million to shareholders through the repurchase of 3 million shares of our common stock under our Board authorized stock repurchase program. As of April 1, 2023, $6.3 billion remains available for future stock repurchases under the repurchase program. Our stock repurchase program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time.

We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenue, inventories, goodwill, long-lived and intangible assets, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.

Management believes there have been no significant changes for the three months ended April 1, 2023 to the items that we disclosed as our critical accounting estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Results of Operations

Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the second half of the year than in the first half of the year, although market conditions and product transitions could impact this trend.

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

									Three Months Ended
															April 1, 2023						March 26, 2022
															(In millions)
Net revenue:
Data Center															$	1,295					$	1,293
Client															739						2,124
Gaming															1,757						1,875
Embedded															1,562						595
Total net revenue															$	5,353					$	5,887
Operating income (loss):
Data Center															$	148					$	427
Client															(172)						692
Gaming															314						358
Embedded															798						277
All Other															(1,233)						(803)
Total operating income (loss)															$	(145)					$	951

Data Center

Data Center net revenue was $1.3 billion for the three months ended April 1, 2023 and remained flat compared to net revenue of $1.3 billion for the prior year period. Higher sales of EPYC processors to cloud customers were offset by lower enterprise server processor sales.

Data Center operating income was $148 million for the three months ended April 1, 2023, compared to operating income of $427 million for the prior year period. The decrease in operating income was primarily due to product mix and higher R&D investment.

Client

Client net revenue of $739 million for the three months ended April 1, 2023 decreased by 65%, compared to net revenue of $2.1 billion for the prior year period, primarily due to lower Client processor sales driven by a 26% decrease in average selling price and a 55% decrease in unit shipments due to shipping below consumption to reduce downstream inventory.

Client operating loss was $172 million for the three months ended April 1, 2023, compared to operating income of $692 million for the prior year period. The decrease in operating income was primarily due to lower revenue.

Gaming

Gaming net revenue of $1.8 billion for the three months ended April 1, 2023 decreased by 6%, compared to net revenue of $1.9 billion for the prior year period. The decrease in net revenue was due to lower gaming graphics revenue as a result of soft consumer demand, partially offset by higher semi-custom product sales as demand for gaming console SoCs remained strong.

Gaming operating income was $314 million for the three months ended April 1, 2023, compared to operating income of $358 million for the prior year period. The decrease in operating income was primarily due to lower gaming graphics revenue.

Embedded

Embedded net revenue of $1.6 billion for the three months ended April 1, 2023 increased by 163%, compared to net revenue of $595 million for the prior year period. The significant increase in net revenue was primarily driven by the inclusion of Xilinx embedded product revenue for the full fiscal quarter in 2023 as compared to a partial quarter from the Xilinx Acquisition Date in the prior year period.

Embedded operating income was $798 million for the three months ended April 1, 2023, compared to operating income of $277 million for the prior year period. The significant increase in operating income was primarily driven by the inclusion of Xilinx for the full fiscal quarter in 2023 as compared to a partial quarter from the Xilinx Acquisition Date in the prior year period.

All Other

All Other operating loss of $1.2 billion for the three months ended April 1, 2023 primarily consisted of $823 million of amortization of acquisition-related intangibles, $309 million of stock-based compensation expense, and $111 million of acquisition-related costs.

All Other operating loss of $803 million for the prior year period primarily consisted of $479 million of amortization of acquisition-related intangibles, $199 million of stock-based compensation expense, $208 million of acquisition-related costs, and $83 million of licensing gain.

Acquisition-related costs primarily include transaction costs, depreciation related to the Xilinx fixed assets fair value step-up adjustment, certain compensation charges, and contract termination costs.

International Sales

International sales as a percentage of net revenue were 68% and 69% for the three months ended April 1, 2023 and March 26, 2022, respectively. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. Substantially all of our sales transactions were denominated in U.S. dollars.

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

The following is a summary of certain condensed consolidated statement of operations data for the periods indicated:

															Three Months Ended
																											April 1, 2023						March 26, 2022
																											(In millions except for percentages)
Net revenue																											$	5,353					$	5,887
Cost of sales																											2,689						2,883
Amortization of acquisition-related intangibles																											305						186
Gross profit																											2,359						2,818
Gross margin																											44		%				48		%
Research and development																											1,411						1,060
Marketing, general and administrative																											585						597
Amortization of acquisition-related intangibles																											518						293
Licensing gain																											(10)						(83)
Interest expense																											(25)						(13)
Other income (expense), net																											43						(42)
Income tax provision																											13						113
Equity income in investee																											1						3

Gross Margin

Gross margin was 44% and 48% for the three months ended April 1, 2023 and March 26, 2022, respectively. The decrease in gross margin was primarily due to lower Client segment performance and higher amortization of acquisition-related intangible assets.

Expenses

Research and Development Expenses

Research and development expenses of $1.4 billion for the three months ended April 1, 2023 increased by $351 million, or 33%, compared to $1.1 billion for the prior year period. The increase was primarily driven by an increase in headcount through acquisitions and organic growth.

Marketing, General and Administrative Expenses

Marketing, general and administrative expenses of $585 million for the three months ended April 1, 2023 decreased by $12 million, or 2%, compared to $597 million for the prior year period. The decrease was primarily due to a decrease in go-to-market activities.

Amortization of Acquisition-Related Intangibles

For the three months ended April 1, 2023, cost of sales and operating expense included $305 million and $518 million, respectively, of amortization expense from acquired intangible assets. For the three months ended March 26, 2022, cost of sales and operating expense included $186 million and $293 million, respectively, of amortization expense from acquired intangible assets.

Licensing Gain

During the three months ended April 1, 2023, we recognized $10 million of licensing gain from royalty income associated with Licensed IP. During the three months ended March 26, 2022, we recognized $83 million of licensing gain from a milestone achievement and royalty income associated with Licensed IP.

Interest Expense

Interest expense for the three months ended April 1, 2023 was $25 million compared to $13 million for the prior year period. The increase was primarily due to interest expense from the 2.95% Senior Notes due 2024, the 2.375% Senior Notes due 2030 (together, the Assumed Xilinx Notes) and the 3.924% Notes and the 4.393% Notes that were issued in June 2022.

Other Income (Expense), Net

Other income (expense), net is primarily comprised of interest income from short-term investments, changes in valuation of equity investments, and foreign currency transaction gains and losses.

Other income, net for the three months ended April 1, 2023 was $43 million, primarily due to $47 million of interest income driven by rising interest rates. Other expense, net for the prior year period was $42 million, primarily due to a decrease of $44 million in the fair value of equity investments.

Income Tax Provision

We recorded an income tax provision of $13 million and $113 million for the three months ended April 1, 2023 and March 26, 2022, respectively, representing an effective tax rate of (10.3)% and 12.6%, respectively.

The difference between the U.S. federal statutory tax rate of 21% and our effective tax rate for the three months ended April 1, 2023 and March 26, 2022 was primarily due to the geographic mix of income taxed in lower tax rate jurisdictions, research credits and the beneficial rate impact from the foreign-derived intangible income (FDII) tax benefit.

The lower tax provision for the three months ended April 1, 2023 was primarily due to the year-to-date pre-tax loss, which was more than offset by the impact of discrete interest and penalties on liabilities for uncertain tax positions.

FINANCIAL CONDITION

Liquidity and Capital Resources

As of April 1, 2023 and December 31, 2022, our cash, cash equivalents and short-term investments were $5.9 billion. The percentage of cash, cash equivalents and short-term investments held domestically as of April 1, 2023 and December 31, 2022 were 77% and 73%, respectively.

Our operating, investing and financing activities for the three months ended April 1, 2023 compared to the prior year period are as described below:

			Three Months Ended
			April 1, 2023						March 26, 2022
			(In millions)
Net cash provided by (used in):
Operating activities			$	486					$	995
Investing activities			(1,237)						3,158
Financing activities			(259)						(1,948)
Net (decrease) increase in cash and cash equivalents			$	(1,010)					$	2,205

We have a Revolving Credit Agreement that provides for a five-year unsecured revolving credit facility in the aggregate principal amount of $3.0 billion.

We also have a commercial paper program where we may issue unsecured commercial paper notes up to a maximum principal amount outstanding, at any time, of $3.0 billion, with a maturity of up to 397 days from the date of issue.

As of April 1, 2023, our principal debt obligations were $2.5 billion, which primarily included $1.5 billion of the Assumed Xilinx Notes and $1.0 billion of 3.924% Notes and 4.393% Notes, compared to $2.5 billion as of December 31, 2022.

As of April 1, 2023, we had unconditional purchase commitments of approximately $6.8 billion, of which $4.4 billion are for the remainder of fiscal year 2023. On an ongoing basis, we work with our suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.

We believe our cash, cash equivalents, short-term investments and cash flows from operations along with our Revolving Credit Agreement and commercial paper program will be sufficient to fund operations, including capital expenditures and purchase commitments, over the next 12 months and beyond. We believe we will be able to access the capital markets should we require additional funds. However, we cannot assure that such funds will be available on favorable terms, or at all.

Operating Activities

Our working capital cash inflows and outflows from operations are primarily cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures.

Net cash provided by operating activities was $486 million in the three months ended April 1, 2023, primarily due to our net loss of $139 million, adjusted for non-cash and non-operating charges of $1.0 billion and net cash outflows of $387 million from changes in our operating assets and liabilities. The primary driver of the change in operating assets and liabilities was a $464 million increase in inventory primarily in anticipation of the ramp of Data Center and Client products in advanced process nodes.

Net cash provided by operating activities was $1.0 billion in the three months ended March 26, 2022, primarily due to our net income of $786 million, adjusted for non-cash and non-operating charges of $631 million and net cash outflows of $422 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities included a $672 million increase in accounts receivable driven primarily by higher revenue in the first fiscal quarter of 2022 and a $260 million increase in prepaid expenses and other assets driven primarily by prepayments under long-term supply agreements, partially offset by a $412 million increase in accrued and other liabilities driven primarily by higher customer-related accruals.

Investing Activities

Net cash used in investing activities was $1.2 billion for the three months ended April 1, 2023 which primarily consisted of cash used in the purchases of short-term investments of $1.7 billion and purchases of property and equipment of $158 million, partially offset by $618 million of proceeds from the maturity and sale of short-term investments.

Net cash provided by investing activities was $3.2 billion for the three months ended March 26, 2022 which primarily consisted of $2.4 billion of cash received from Xilinx and $963 million of proceeds from the maturity of short-term investments, partially offset by purchases of short-term investments of $100 million and purchases of property and equipment of $71 million.

Financing Activities

Net cash used in financing activities was $259 million for the three months ended April 1, 2023, which primarily consisted of common stock repurchases of $241 million and repurchases for tax withholding on employee equity plans of $21 million, partially offset by a cash inflow of $3 million from issuance of common stock under our employee equity plans.

Net cash used in financing activities was $1.9 billion for the three months ended March 26, 2022, which primarily consisted of common stock repurchases of $1.9 billion and repurchases for tax withholding on employee equity plans of $35 million, partially offset by a cash inflow of $2 million from issuance of common stock under our employee equity plans.

Reference is made to “Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

There have not been any material changes in interest rate risk, default risk or foreign exchange risk since December 31, 2022.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports made under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of April 1, 2023, the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

During the first quarter of fiscal year 2023, we completed the initial phase of the implementation of our new enterprise resource planning (ERP) system to help us manage our operations and financial reporting. In connection with this implementation, we modified the design and documentation of our internal control processes and procedures relating to the new system. Following the initial phase of the implementation, the changes to our control environment were validated according to our established processes and our internal controls over financial reporting continued to operate as designed.

As the phased implementation of the new ERP system continues, we could have changes to our processes and procedures, which in turn, could result in changes to our internal control over financial reporting. As such changes occur, we will evaluate whether they materially affect our internal control over financial reporting.

There were no other changes in our internal controls over financial reporting for the three months ended April 1, 2023 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

For a discussion of our legal proceedings, refer to Note 12—Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q).

The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. In addition, you should consider the interrelationship and compounding effects of two or more risks occurring simultaneously.

Risk Factors Summary

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

Economic and Strategic Risks

• Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field.

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

• 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.

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

• The ongoing 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.

• 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.

• If essential equipment, materials, substrates or manufacturing processes are not available to manufacture our products, we 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.

• Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products.

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

• IT outages, data loss, data breaches and 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.

• We may encounter difficulties in upgrading and operating our new enterprise resource planning (ERP) system, which could materially adversely affect us.

• 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 includes the use of third-party intellectual property.

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

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

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

• Our business 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 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 could be adversely affected.

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

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

Merger, Acquisition and Integration Risks

• Acquisitions, joint ventures and/or investments, and the failure to integrate acquired businesses could disrupt our business and/or dilute or adversely affect the price of our common stock.

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

Liquidity and Capital Resources Risks

• The agreements governing our notes, our guarantees of Xilinx’s 2.95% and 2.375% Notes (Assumed Xilinx Notes), and our Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.

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

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

General Risks

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

• We may incur future impairments of our technology license purchases.

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

• Our stock price is subject to volatility.

• Worldwide political conditions may adversely affect demand for our products.

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

Economic and Strategic Risks

**Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limi

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31.1						Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document
_____________________

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						ADVANCED MICRO DEVICES, INC.
May 3, 2023						By:			/s/ Jean Hu
						Name:			Jean Hu
						Title:			Executive Vice President, Chief Financial Officer and Treasurer Signing on behalf of the Registrant as the Principal Financial Officer