Advanced Micro Devices 10-Q 2024-03-30

Filed 2024-05-01. 8 sections, 219K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

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 March 30, 2024


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

For the transition period from to

Commission File Number 001-07882

ADVANCED MICRO DEVICES, INC.

(Exact name of registrant as specified in its charter)


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

2485 Augustine Drive

Santa Clara, California 95054

(Address of principal executive offices)(Zip Code)

(408) 749-4000

Registrant’s telephone number, including area code

N/A

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

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


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

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

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

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


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

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

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

Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value per share, as of April 25, 2024: 1,616,313,871

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	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4	Controls and Procedures	26
Part II Other Information

Item 1	Legal Proceedings	27
Item 1A	Risk Factors	27
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 5	Other Information	53
Item 6	Exhibits	54
Signature		55

PART I. FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
		March 30, 2024		April 1, 2023
		(In millions, except per share amounts)
Net revenue		$	5,473	$	5,353
Cost of sales		2,683		2,689
Amortization of acquisition-related intangibles		230		305
Total cost of sales		2,913		2,994
Gross profit		2,560		2,359

Research and development		1,525		1,411
Marketing, general and administrative		620		585
Amortization of acquisition-related intangibles		392		518
Licensing gain		(13)		(10)
Operating income (loss)		36		(145)

Interest expense		(25)		(25)
Other income (expense), net		53		43
Income (loss) before income taxes and equity income		64		(127)

Income tax provision (benefit)		(52)		13
Equity income in investee		7		1
Net income (loss)		$	123	$	(139)

Earnings (loss) per share
Basic		$	0.08	$	(0.09)
Diluted		$	0.07	$	(0.09)
Shares used in per share calculation
Basic		1,617		1,611
Diluted		1,639		1,611

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended
			March 30, 2024		April 1, 2023
		(In millions)
Net income (loss)			$	123	$	(139)
Other comprehensive income (loss), net of tax:
Net change in unrealized gains (losses) on cash flow hedges			(22)		20
Total comprehensive income (loss)			$	101	$	(119)

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	March 30, 2024		December 30, 2023
	(In millions, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	4,190	$	3,933
Short-term investments	1,845		1,840
Accounts receivable, net	5,038		5,376
Inventories	4,652		4,351
Receivables from related parties	31		9
Prepaid expenses and other current assets	1,328		1,259
Total current assets	17,084		16,768
Property and equipment, net	1,624		1,589
Operating lease right-of-use assets	632		633
Goodwill	24,262		24,262
Acquisition-related intangibles, net	20,741		21,363
Investment: equity method	106		99
Deferred tax assets	433		366
Other non-current assets	3,013		2,805
Total Assets	$	67,895	$	67,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,418	$	2,055
Payables to related parties	438		363
Accrued liabilities	3,444		3,082
Current portion of long-term debt, net	750		751
Other current liabilities	424		438
Total current liabilities	6,474		6,689
Long-term debt, net of current portion	1,718		1,717
Long-term operating lease liabilities	530		535
Deferred tax liabilities	1,199		1,202
Other long-term liabilities	1,776		1,850
Commitments and contingencies (See Note 12)
Stockholders’ equity:
Capital stock:
Common stock, par value $0.01; shares authorized: 2,250; shares issued: 1,666 and 1,663; shares outstanding: 1,618 and 1,616	17		17
Additional paid-in capital	60,053		59,676
Treasury stock, at cost (shares held: 48 and 47)	(4,690)		(4,514)
Retained earnings	846		723
Accumulated other comprehensive loss	(28)		(10)
Total stockholders’ equity	56,198		55,892
Total liabilities and stockholders’ equity	$	67,895	$	67,885

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	March 30, 2024		April 1, 2023
	(In millions)
Cash flows from operating activities:
Net income (loss)	$	123	$	(139)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	784		982
Stock-based compensation	371		309
Amortization of operating lease right-of-use assets	26		24
Deferred income taxes	(66)		(308)

Inventory loss at contract manufacturer	65		—
Other	(22)		5
Changes in operating assets and liabilities
Accounts receivable, net	338		86
Inventories	(368)		(464)

Prepaid expenses and other assets	(322)		(191)
Receivables from and payables to related parties, net	53		(109)
Accounts payable	(636)		73
Accrued and other liabilities	175		218
Net cash provided by operating activities	521		486
Cash flows from investing activities:
Purchases of property and equipment	(142)		(158)
Purchases of short-term investments	(433)		(1,703)
Proceeds from maturity of short-term investments	441		473
Proceeds from sale of short-term investments	2		145


Other	(3)		6
Net cash used in investing activities	(135)		(1,237)
Cash flows from financing activities:


Proceeds from sales of common stock through employee equity plans	5		3
Repurchases of common stock	(4)		(241)
Common stock repurchases for tax withholding on employee equity plans	(129)		(21)
Other	(1)		—
Net cash used in financing activities	(129)		(259)
Net increase (decrease) in cash and cash equivalents	257		(1,010)
Cash and cash equivalents at beginning of period	3,933		4,835
Cash and cash equivalents at end of period	$	4,190	$	3,825












Supplemental cash flow information:
Cash paid for taxes, net of refunds	$	87	$	21
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	$	102	$	69

Repurchases for tax withholding on employee equity plans, not yet paid	$	42	$	—


Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities	$	25	$	—

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Three Months Ended
		March 30, 2024		April 1, 2023
		(In millions)
Capital stock:
Common stock, par value
Balance, beginning of period		$	17	$	16

Balance, end of period		$	17	$	16
Additional paid-in capital
Balance, beginning of period		$	59,676	$	58,005
Common stock issued under employee equity plans		6		4
Stock-based compensation		371		309

Issuance of common stock warrants		—		13

Balance, end of period		$	60,053	$	58,331
Treasury stock
Balance, beginning of period		$	(4,514)	$	(3,099)
Repurchases of common stock		(4)		(242)
Common stock repurchases for tax withholding on employee equity plans		(172)		(21)
Balance, end of period		$	(4,690)	$	(3,362)

Retained earnings (Accumulated deficit):
Balance, beginning of period		$	723	$	(131)

Net income (loss)		123		(139)
Balance, end of period		$	846	$	(270)

Accumulated other comprehensive loss:
Balance, beginning of period		$	(10)	$	(41)
Other comprehensive income (loss)		(18)		20
Balance, end of period		$	(28)	$	(21)

Total stockholders' equity		$	56,198	$	54,694

See accompanying notes.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – The Company

Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its consolidated subsidiaries. AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) Accelerators and Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.

NOTE 2 – Basis of Presentation and Significant Accounting Policies

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of AMD have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the three months ended March 30, 2024 shown in this report are not necessarily indicative of results to be expected for the full year ending December 28, 2024 or any other future period. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity. All such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023. Certain immaterial prior period amounts have been reclassified to conform to current period presentation.

The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. The three months ended March 30, 2024 and April 1, 2023 each consisted of 13 weeks.

Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those estimates, and such differences may be material to the financial statements. Areas where management uses judgment include, but are not limited to, revenue allowances, inventory valuation, valuation of goodwill, long-lived and intangible assets, and income taxes.

Significant Accounting Policies. There have been no material changes to the Company’s significant accounting policies in Note 2 - Basis of Presentation and Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

NOTE 3 – Supplemental Financial Statement Information

Accounts Receivable, net

As of March 30, 2024 and December 30, 2023, Accounts receivable, net included unbilled accounts receivable of $1.6 billion and $1.1 billion, respectively. Unbilled accounts receivable primarily represents work completed on development services and on custom products for which revenue has been recognized but not yet invoiced. Unbilled accounts receivable that are included in Accounts receivable, net are expected to be billed and collected within 12 months.


Inventories	March 30, 2024		December 30, 2023
	(In millions)
Raw materials	$	292	$	279
Work in process	3,376		3,260
Finished goods	984		812
Total inventories	$	4,652	$	4,351


Property and Equipment, net	March 30, 2024		December 30, 2023
	(In millions)
Land, building and leasehold improvements	$	829	$	821
Equipment	2,456		2,346
Construction in progress	223		209
Property and equipment, gross	3,508		3,376
Accumulated depreciation	(1,884)		(1,787)
Total property and equipment, net	$	1,624	$	1,589


Accrued Liabilities	March 30, 2024		December 30, 2023
	(In millions)
Accrued marketing programs	$	761	$	827
Accrued compensation and benefits	826		884
Customer program liabilities	936		544
Other accrued liabilities	921		827
Total accrued liabilities	$	3,444	$	3,082

Revenue

Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of March 30, 2024, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $113 million, of which $67 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less.

Revenue recognized over time associated with custom products and development services accounted for 16% and 29% of the Company’s revenue for the three months ended March 30, 2024 and April 1, 2023, respectively.

NOTE 4 – Segment Reporting

Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the reportable segments based on management’s judgment.

The Company’s four reportable segments are:

the Data Center segment, which primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers;
the Client segment, which primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers;
the Gaming segment, which primarily includes discrete GPUs, and semi-custom SoC products and development services; and
the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.

From time to time, the Company may also sell or license portions of its IP portfolio.

In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation expense, inventory loss at contract manufacturer, acquisition-related and other costs, and licensing gain. Acquisition-related and other costs primarily include transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.

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


	Three Months Ended
		March 30, 2024		April 1, 2023
		(In millions)
Net revenue:
Data Center		$	2,337	$	1,295
Client		1,368		739
Gaming		922		1,757
Embedded		846		1,562
Total net revenue		$	5,473	$	5,353
Operating income (loss):
Data Center		$	541	$	148
Client		86		(172)
Gaming		151		314
Embedded		342		798
All Other(1)		(1,084)		(1,233)
Total operating income (loss)		$	36	$	(145)


(1)			For the three months ended March 30, 2024, all other operating losses primarily included $622 million of amortization of acquisition-related intangibles, $371 million of stock-based compensation expense, $65 million of inventory loss at contract manufacturer and $39 million of acquisition-related and other costs. For the three months ended April 1, 2023, all other operating losses primarily included $823 million of amortization of acquisition-related intangibles, $309 million of stock-based compensation expense and $111 million of acquisition-related and other costs.

NOTE 5 – Acquisition-related Intangible Assets

Acquisition-related intangibles were as follows:


	March 30, 2024						December 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In millions)						(In millions)
Developed technology	$	13,390	$	(1,815)	$	11,575	$	13,390	$	(1,583)	$	11,807
Customer relationships	12,324		(4,127)		8,197		12,324		(3,755)		8,569
Customer backlog	809		(809)		—		809		(809)		—
Corporate trade name	65		(65)		—		65		(65)		—
Product trademarks	914		(165)		749		914		(147)		767
Identified intangible assets subject to amortization	27,502		(6,981)		20,521		27,502		(6,359)		21,143
In-process research and development (IPR&D) not subject to amortization	220		—		220		220		—		220
Total acquisition-related intangible assets	$	27,722	$	(6,981)	$	20,741	$	27,722	$	(6,359)	$	21,363

Developed technology and customer relationships were acquired primarily from the Xilinx acquisition on February 14, 2022. Acquisition-related intangible amortization expense was $622 million and $823 million for the three months ended March 30, 2024 and April 1, 2023, respectively.

Based on the carrying value of acquisition-related intangibles recorded as of March 30, 2024, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:


Fiscal Year	(In millions)
Remainder of 2024	$	1,749
2025	2,145
2026	2,034
2027	1,922
2028	1,846
2029 and thereafter	10,825
Total	$	20,521

NOTE 6 – Related Parties — Equity Joint Ventures

ATMP Joint Ventures

The Company holds a 15% equity interest in two joint ventures (collectively, the ATMP JV) with affiliates of Tongfu Microelectronics Co., Ltd, a Chinese joint stock company. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV.

The ATMP JV provides assembly, testing, marking and packaging (ATMP) services to the Company. The Company assists the ATMP JV in its management of certain raw material inventory. The purchases from and resales to the ATMP JV of inventory under the Company’s inventory management program are reported within purchases and resales with the ATMP JV and do not impact the Company’s condensed consolidated statements of operations.

The Company’s purchases from the ATMP JV during the three months ended March 30, 2024 and April 1, 2023 amounted to $450 million and $367 million, respectively. As of March 30, 2024 and December 30, 2023, the amounts payable to the ATMP JV were $438 million and $363 million, respectively, and are included in Payables to related parties on the Company’s condensed consolidated balance sheets. The Company’s resales to the ATMP JV during the three months ended March 30, 2024 and April 1, 2023 amounted to $40 million and $1 million, respectively. As of March 30, 2024 and December 30, 2023, the Company had receivables from the ATMP JV of $31 million and $9 million, respectively, included in Receivables from related parties on the Company’s condensed consolidated balance sheets.

During the three months ended March 30, 2024 and April 1, 2023, the Company recorded a gain of $7 million and $1 million, respectively, in Equity income in investee on its condensed consolidated statements of operations, respectively. As of March 30, 2024 and December 30, 2023, the carrying value of the Company’s investment in the ATMP JV was $106 million and $99 million, respectively.

THATIC Joint Ventures

The Company holds equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. As of both March 30, 2024 and December 30, 2023, the carrying value of the investment was zero. The Company licensed certain of its intellectual IP (Licensed IP) to the THATIC JV and receives royalty based on sales of the THATIC JV’s products, which is recorded within operating income. During the three months ended March 30, 2024 and April 1, 2023, the Company recognized $13 million and $10 million of licensing gain from royalty income associated with Licensed IP, respectively. As of both March 30, 2024 and December 30, 2023, the Company had no receivables from the THATIC JV. In June 2019, the Bureau of Industry and Security of the United States Department of Commerce added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. The Company is complying with U.S. law pertaining to the Entity List designation.

NOTE 7 – Debt and Revolving Credit Facility

Debt

The Company’s total debt as of March 30, 2024 and December 30, 2023 consisted of the following:


	March 30, 2024		December 30, 2023
	(In millions)
2.95% Senior Notes Due 2024 (2.95% Notes)	$	750	$	750

2.375% Senior Notes Due 2030 (2.375% Notes)	750		750
3.924% Senior Notes Due 2032 (3.924% Notes)	500		500
4.393% Senior Notes Due 2052 (4.393% Notes)	500		500
Total debt (principal amount)	2,500		2,500
Unamortized debt premium, discount and issuance costs, net	(32)		(32)
Total debt (net)	2,468		2,468
Less: current portion of long-term debt and related unamortized debt premium and issuance costs	(750)		(751)
Total long-term debt	$	1,718	$	1,717

2.95% Senior Notes Due 2024 and 2.375% Senior Notes Due 2030

The 2.95% Notes and 2.375% Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.

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

The 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company, semi-annual fixed interest payments due on June 1 and December 1. The 3.924% and 4.393% Notes are governed by the terms of an indenture dated June 9, 2022 between the Company and US Bank Trust Company, National Association as trustee.

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

Future Debt Payment Obligations

As of March 30, 2024, the Company’s future principal debt payment obligations were as follows:


Fiscal Year	(In millions)
Remainder of 2024	$	750
2025-2028	—
2029 and thereafter	1,750
Total	$	2,500

Revolving Credit Facility

The Company has $3.0 billion available under a revolving credit agreement that expires on April 29, 2027 (Revolving Credit Agreement). As of March 30, 2024 and December 30, 2023, the Company had no outstanding borrowings under the Revolving Credit Agreement. Revolving loans under the Revolving Credit Agreement can be either Secure Overnight Financing Rate (SOFR) Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option. Each SOFR Loan will bear interest at a rate per annum equal to the applicable SOFR plus a margin between 0.625% and 1.250%. Each Base Rate Loan will bear interest equal to the Base Rate plus a margin between 0.000% and 0.250%. The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions. The Revolving Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default applicable to the Company and its subsidiaries. As of March 30, 2024, the Company was in compliance with these covenants.

Commercial Paper

On November 3, 2022, the Company established a commercial paper program, under which the Company 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. The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of issuance. During the three months ended March 30, 2024 and April 1, 2023, the Company did not issue any commercial paper under the program and as of March 30, 2024 and December 30, 2023, the Company had no commercial paper outstanding.

NOTE 8 – Financial Instruments

Fair Value Measurements

The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred.

Financial Instruments Recorded at Fair Value on a Recurring Basis


	March 30, 2024						December 30, 2023
(In millions)	Level 1		Level 2		Total		Level 1		Level 2		Total
Cash equivalents
Money market funds	$	1,051	$	—	$	1,051	$	969	$	—	$	969
Corporate debt securities	—		1,472		1,472		—		753		753
U.S. government and agency securities	573		—		573		1,252		—		1,252
Non-U.S. government and agency securities	—		70		70		—		135		135
Time deposits and certificates of deposits	—		166		166		—		205		205
Short-term investments
Corporate debt securities	—		526		526		—		506		506
Time deposits and certificates of deposits	—		10		10		—		9		9
Asset-backed and mortgage-backed securities	—		33		33		—		34		34
U.S. government and agency securities	1,158		41		1,199		1,209		28		1,237
Non-U.S. government and agency securities	—		77		77		—		54		54
Other non-current assets
Deferred compensation plan investments	147		—		147		133		—		133
Total assets measured at fair value	$	2,929	$	2,395	$	5,324	$	3,563	$	1,724	$	5,287

Deferred compensation plan investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan.

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


	March 30, 2024								December 30, 2023
	Cost/ Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cost/ Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in millions)								(in millions)
Asset-backed and mortgage-backed securities	$	35	$	—	$	(2)	$	33	$	35	$	—	$	(2)	$	33
Corporate debt securities	1,998		—		—		1,998		1,259		—		—		1,259
Money market funds	1,051		—		—		1,051		969		—		—		969
Time deposits and certificates of deposits	176		—		—		176		214		—		—		214
U.S. government and agency securities	1,772		—		—		1,772		2,487		3		—		2,490
Non-U.S. government and agency securities	147		—		—		147		189		—		—		189
	$	5,179	$	—	$	(2)	$	5,177	$	5,153	$	3	$	(2)	$	5,154

As of March 30, 2024 and December 30, 2023, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.

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


	March 30, 2024				December 30, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In millions)				(In millions)
Due within 1 year	$	3,638	$	3,637	$	3,792	$	3,792
Due in 1 year through 5 years	459		459		361		364
Due in 5 years and later	31		30		32		30
	$	4,128	$	4,126	$	4,185	$	4,186

Financial Instruments Not Recorded at Fair Value

The Company carries its financial instruments at fair value except for its debt. The carrying amounts and estimated fair values of the Company’s debt are as follows:


	March 30, 2024				December 30, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
	(In millions)				(In millions)
Current portion of long-term debt, net	$	750	$	747	$	751	$	741

Long-term debt, net of current portion	$	1,718	$	1,570	$	1,717	$	1,630

The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets.

The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.

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

The Company’s investments in non-marketable securities in privately-held companies are recorded using a measurement alternative that adjusts the securities to fair value when the Company recognizes an observable price adjustment or an impairment. As of March 30, 2024 and December 30, 2023, the Company had non-marketable securities in privately-held companies of $156 million and $155 million, respectively, that are recorded under Other non-current assets in the balance sheet. Impairment losses or observable price adjustments were not material during the three months ended March 30, 2024 and April 1, 2023.

Hedging Transactions and Derivative Financial Instruments

Foreign Currency Forward Contracts Designated as Accounting Hedges

The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 24 months and are designated as accounting hedges. As of March 30, 2024 and December 30, 2023, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $2.2 billion and $2.4 billion, respectively. The fair value of these contracts, recorded as a liability, was $14 million as of March 30, 2024 and as an asset of $6 million as of December 30, 2023.

Foreign Currency Forward Contracts Not Designated as Accounting Hedges

The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of March 30, 2024 and December 30, 2023, the notional value of these outstanding contracts was $803 million and $568 million, respectively. The fair value of these contracts was not material as of March 30, 2024 and December 30, 2023.

NOTE 9 – Earnings Per Share

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


	Three Months Ended
		March 30, 2024		April 1, 2023
		(In millions, except per share amounts)
Numerator
Net income (loss) for basic earnings per share		$	123	$	(139)
Denominator
Basic weighted average shares		1,617		1,611
Potentially dilutive shares from employee equity plans		22		—
Diluted weighted average shares		1,639		1,611
Earnings (loss) per share:
Basic		$	0.08	$	(0.09)
Diluted		$	0.07	$	(0.09)

Securities which would have been anti-dilutive are not material and are excluded from the computation of diluted earnings per share for all periods presented.

NOTE 10 – Common Stock and Employee Equity Plans

Common Stock

Shares of common stock outstanding were as follows:


	Three Months Ended
		March 30, 2024	April 1, 2023
		(In millions)
Balance, beginning of period		1,616	1,612
Common stock issued under employee equity plans		3	1
Common stock repurchases for tax withholding on equity awards		(1)	(1)

Repurchases of common stock		—	(3)
Balance, end of period		1,618	1,609

Stock Repurchase Program

The Company has an approved stock repurchase program authorizing repurchases of up to $12 billion of the Company’s common stock (Repurchase Program). During the three months ended March 30, 2024, the Company returned $4 million to shareholders through the repurchase of its common stock under the Repurchase Program. As of March 30, 2024, $5.6 billion remains available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.

Stock-based Compensation

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


	Three Months Ended
		March 30, 2024		April 1, 2023
		(In millions)
Cost of sales		$	6	$	8
Research and development		279		214
Marketing, general and administrative		86		87
Total		$	371	$	309

NOTE 11 – Income Taxes

The Company determines its income taxes for interim reporting periods by applying the Company’s estimated annual effective tax rate to the year-to-date results, adjusted for tax items discrete to each period.

For the three months ended March 30, 2024, the Company recorded an income tax benefit of $52 million representing an effective tax rate of (73.2)%. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits. In addition, the tax benefit reflected discrete income tax benefits of $61 million, primarily related to stock-based compensation.

For the three months ended April 1, 2023, the Company recorded an income tax provision of $13 million representing an effective tax rate of (10.3)%. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to a higher mix of income taxed in lower tax rate jurisdictions, R&D tax credits, and beneficial rate impact from FDII tax benefit. In addition, the tax provision reflected discrete tax expense related to interest and penalties accrued for uncertain tax position.

As of March 30, 2024 and December 30, 2023, the Company had long-term income tax liabilities of $1.5 billion and $1.6 billion recorded under Other long-term liabilities in the balance sheet, respectively.

NOTE 12 – Commitments and Contingencies

Commitments

The Company’s purchase commitments primarily include obligations to purchase wafers and substrates from third parties. These purchase obligations were made under noncancellable purchase orders or contractual obligations requiring minimum purchases for which cancellation would lead to significant penalties. Purchase commitments also include future payments related to certain software, technology and IP licenses.

Total future unconditional purchase commitments as of March 30, 2024 were as follows:


Fiscal Year	(In millions)
Remainder of 2024	$	3,278
2025	348
2026	182
2027	44
2028	46
2029 and thereafter	94
Total unconditional purchase commitments	$	3,992

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

Contingencies

During the quarterly period ended March 30, 2024, there were no material legal proceedings. The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

AMD, the AMD Arrow logo, EPYC, Radeon, Ryzen, Xilinx and combinations thereof are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and are used to identify companies and products and may be trademarks of their respective owners. “Zen” is a codename for an AMD architecture and is not a product name.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report and our audited consolidated financial statements and related notes as of December 30, 2023 and December 31, 2022, and for each of the three years for the period ended December 30, 2023 as filed in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Overview and Recent Developments

We are a global semiconductor company primarily offering:

server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers;
CPUs, APUs and chipsets for desktop, notebook, and handheld personal computers;
discrete GPUs, and semi-custom SoC products and development services; and
embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.

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

In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for the three months ended March 30, 2024 compared to the prior year period and an analysis of changes in our financial condition.

Net revenue for the three months ended March 30, 2024 was $5.5 billion, a 2% increase compared to the prior year period. The increase in net revenue was driven by an increase in Data Center segment revenue from higher sales of AMD Instinct™ GPUs and 4th Gen AMD EPYC™ CPUs, and an increase in Client segment revenue primarily driven by Ryzen™ 8000 Series processor sales, partially offset by a decrease in Gaming segment revenue primarily due to a decrease in semi-custom revenue and lower Radeon™ GPU sales, and a decrease in Embedded segment revenue as customers continued to manage their inventory levels.

Gross margin for the three months ended March 30, 2024 was 47% compared to gross margin of 44% for the prior year period. The increase in gross margin was primarily driven by higher Data Center and Client segments revenue, and lower amortization of acquisition-related intangible assets, partially offset by lower Embedded and Gaming segments revenue.

Operating income for the three months ended March 30, 2024 was $36 million compared to operating loss of $145 million for the prior year period. Net income for the three months ended March 30, 2024 was $123 million compared to net loss of $139 million for the prior year period. The increase in operating and net income was primarily driven by higher Data Center and Client segments revenue, and lower amortization of acquisition-related intangible assets.

As of March 30, 2024, our cash, cash equivalents and short-term investments were $6.0 billion compared to $5.8 billion as of December 30, 2023. During the three months ended March 30, 2024, we generated $521 million of cash from operating activities.

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

Critical Accounting Policies and Estimates

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

Management believes there have been no significant changes for the three months ended March 30, 2024 to the items that we disclosed as our critical accounting estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

Results of Operations

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

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


	Three Months Ended
		March 30, 2024		April 1, 2023
		(In millions)
Net revenue:
Data Center		$	2,337	$	1,295
Client		1,368		739
Gaming		922		1,757
Embedded		846		1,562
Total net revenue		$	5,473	$	5,353
Operating income (loss):
Data Center		$	541	$	148
Client		86		(172)
Gaming		151		314
Embedded		342		798
All Other		(1,084)		(1,233)
Total operating income (loss)		$	36	$	(145)

Data Center

Data Center net revenue of $2.3 billion for the three months ended March 30, 2024 increased by 80%, compared to net revenue of $1.3 billion for the prior year period primarily driven by higher sales of AMD Instinct GPUs and 4th Gen AMD EPYC CPUs.

Data Center operating income was $541 million for the three months ended March 30, 2024, compared to operating income of $148 million for the prior year period. The increase in operating income was primarily driven by higher revenue.

Client

Client net revenue of $1.4 billion for the three months ended March 30, 2024 increased by 85%, compared to net revenue of $739 million for the prior year period, primarily driven by a 58% increase in unit shipments and a 16% increase in average selling price of Ryzen processors, resulting from a recovery of weak PC market conditions and inventory corrections across the PC supply chain experienced in the first half of fiscal year 2023.

Client operating income was $86 million for the three months ended March 30, 2024, compared to operating loss of $172 million for the prior year period. The increase in operating income was primarily driven by higher revenue.

Gaming

Gaming net revenue of $922 million for the three months ended March 30, 2024 decreased by 48%, compared to net revenue of $1.8 billion for the prior year period, primarily due to a decrease in semi-custom revenue and lower Radeon GPU sales.

Gaming operating income was $151 million for the three months ended March 30, 2024, compared to operating income of $314 million for the prior year period. The decrease in operating income was primarily due to a decrease in semi-custom revenue and lower Radeon GPU sales.

Embedded

Embedded net revenue of $846 million for the three months ended March 30, 2024 decreased by 46%, compared to net revenue of $1.6 billion for the prior year period, as customers continued to manage their inventory levels.

Embedded operating income was $342 million for the three months ended March 30, 2024, compared to operating income of $798 million for the prior year period. The decrease in operating income was primarily due to lower revenue.

All Other

All Other operating loss of $1.1 billion for the three months ended March 30, 2024 primarily consisted of $622 million of amortization of acquisition-related intangibles, $371 million of stock-based compensation expense, $65 million of inventory loss at contract manufacturer and $39 million of acquisition-related and other costs. All Other operating loss of $1.2 billion for the prior year period primarily consisted of $823 million of amortization of acquisition-related intangibles, $309 million of stock-based compensation expense, and $111 million of acquisition-related and other costs.

Acquisition-related and other costs primarily include transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.

International Sales

International sales as a percentage of net revenue were 60% and 68% for the three months ended March 30, 2024 and April 1, 2023, respectively. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. Substantially all of our sales transactions were denominated in U.S. dollars.

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

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


	Three Months Ended
		March 30, 2024			April 1, 2023
		In millions, except percentages
Net revenue		$	5,473		$	5,353
Cost of sales		2,683			2,689
Amortization of acquisition-related intangibles		230			305
Gross profit		2,560			2,359
Gross margin		47		%	44		%
Research and development		1,525			1,411
Marketing, general and administrative		620			585
Amortization of acquisition-related intangibles		392			518
Licensing gain		(13)			(10)
Interest expense		(25)			(25)
Other income (expense), net		53			43
Income tax provision (benefit)		(52)			13
Equity income in investee		7			1

Gross Margin

Gross margin was 47% and 44% for the three months ended March 30, 2024 and April 1, 2023, respectively, primarily driven by higher Data Center and Client segments revenue, and lower amortization of acquisition-related intangible assets, partially offset by lower Embedded and Gaming segments revenue.

Expenses

Research and Development Expenses

Research and development expenses of $1.5 billion for the three months ended March 30, 2024 increased by $114 million, or 8%, compared to $1.4 billion for the prior year period. The increase was primarily due to an increase in employee-related costs due to an increase in headcount to support increased investment in AI.

Marketing, General and Administrative Expenses

Marketing, general and administrative expenses of $620 million for the three months ended March 30, 2024 increased by $35 million, or 6%, compared to $585 million for the prior year period, primarily due to an increase in go-to market activities.

Amortization of Acquisition-Related Intangibles

Amortization of acquisition-related intangibles of $622 million for the three months ended March 30, 2024 decreased by $201 million, or 24%, compared to $823 million for the prior year period. The decrease was primarily due to certain acquisition-related intangibles being fully amortized in the prior fiscal year.

Licensing Gain

During the three months ended March 30, 2024 and April 1, 2023, we recognized $13 million and $10 million, respectively, of licensing gain from royalty income associated with certain intellectual property licensed to two joint ventures in which we have an equity interest with Higon Information Technology Co., Ltd., a third-party Chinese entity (Licensed IP).

Interest Expense

Interest expense for the three months ended March 30, 2024 and April 1, 2023 was flat at $25 million since there was no material change in the Company’s interest bearing notes payable balance. Our 2.95% Notes with a principal amount of $750 million are due in June 2024.

Other Income (Expense), Net

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

Other income, net for the three months ended March 30, 2024 was $53 million, an increase of $10 million or 23% compared to $43 million for the prior year period. The increase was primarily driven by higher interest income from rising interest rates.

Income Tax Provision (Benefit)

We determine income taxes for interim reporting periods by applying our estimated annual effective tax rate to the year-to-date results and adjusted for tax items discrete to each period.

For the three months ended March 30, 2024, we recorded an income tax benefit of $52 million representing an effective tax rate of (73.2)%. The difference between the U.S. federal statutory tax rate of 21% and our estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits. In addition, the tax benefit reflected discrete income tax benefits of $61 million, primarily related to stock-based compensation.

For the three months ended April 1, 2023, we recorded an income tax provision of $13 million representing an effective tax rate of (10.3)%. The difference between the U.S. federal statutory tax rate of 21% and our estimated annual effective tax rate was primarily due to a higher mix of income taxed in lower tax rate jurisdictions, R&D tax credits, and beneficial rate impact from FDII tax benefit. In addition, the tax provision reflected discrete tax expense related to interest and penalties accrued for uncertain tax position.

FINANCIAL CONDITION

Liquidity and Capital Resources

As of March 30, 2024 and December 30, 2023, our cash, cash equivalents and short-term investments were $6.0 billion and $5.8 billion, respectively. The percentage of cash, cash equivalents and short-term investments held domestically as of March 30, 2024 and December 30, 2023 were 86% and 77%, respectively.

Our operating, investing and financing activities for the three months ended March 30, 2024 compared to the prior year period are as described below:


	Three Months Ended
	March 30, 2024		April 1, 2023
	(In millions)
Net cash provided by (used in):
Operating activities	$	521	$	486
Investing activities	(135)		(1,237)
Financing activities	(129)		(259)
Net (decrease) increase in cash and cash equivalents	$	257	$	(1,010)

We have $3.0 billion available under an unsecured revolving credit agreement (Revolving Credit Agreement) that expires on April 29, 2027. No funds were drawn from this credit facility during the three months ended March 30, 2024. 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. We did not issue any commercial paper during the three months ended March 30, 2024.

As of March 30, 2024, our principal debt obligations were $2.5 billion. Our 2.95% Notes with a principal amount of $750 million are due in June 2024.

As of March 30, 2024, we had unconditional purchase commitments of approximately $4.0 billion, of which $3.3 billion are for the remainder of fiscal year 2024. On an ongoing basis, we work with our suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.

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, purchase commitments and debt payments, 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 $521 million in the three months ended March 30, 2024, primarily due to our net income of $123 million, adjusted for non-cash and non-operating charges of $1.2 billion and net cash outflows of $760 million from changes in our operating assets and liabilities. The primary drivers of the change in operating assets and liabilities was a $636 million decrease in accounts payable driven primarily by the timing of payments and inventory receipts, and a $368 million increase in inventory primarily to support the continued ramp of Data Center and Client products in advanced process nodes.

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.

Investing Activities

Net cash used in investing activities was $135 million for the three months ended March 30, 2024 which primarily consisted of cash used in the purchases of short-term investments of $433 million and purchases of property and equipment of $142 million, partially offset by $443 million of proceeds from the maturity and sale of short-term investments.

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.

Financing Activities

Net cash used in financing activities was $129 million for the three months ended March 30, 2024, which primarily consisted of repurchases for tax withholding on employee equity plans of $129 million.

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.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to “Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023.

There have not been any material changes in interest rate risk, default risk or foreign exchange risk since December 30, 2023.

Item 4. CONTROLS AND PROCEDURES

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

As of March 30, 2024, the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes in our internal controls over financial reporting for the three months ended March 30, 2024 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).

Item 1A. RISK FACTORS

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

Risk Factors Summary

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

Economic and Strategic Risks

Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field.
The semiconductor industry is highly cyclical and has experienced severe downturns.
The demand for our products depends in part on the market conditions in the industries into which they are sold. There may be fluctuations in demand for our products or a market decline in any of these industries.
The loss of a significant customer may have a material adverse effect on us.
The markets in which our products are sold are highly competitive.
Economic and market uncertainty may adversely impact our business and operating results.
Our operating results are subject to quarterly and seasonal sales patterns.
If we cannot adequately protect our technology or other intellectual property through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.
Unfavorable currency exchange rate fluctuations could adversely affect us.

Operational and Technology Risks

We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected.
Essential equipment, materials, substrates or manufacturing processes may not be available to us.
We may fail to achieve expected manufacturing yields for our products.
The success of our business depends on our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting significant industry transitions.
Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products.
Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
IT outages, data loss, data breaches and cyberattacks could disrupt operations and compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation, financial condition and results of operations.
Uncertainties involving the ordering and shipment of our products could materially adversely affect us.
Our ability to design and introduce new products includes the use of third-party intellectual property.
We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business and products.
If we lose Microsoft Corporation’s support for our products or other software vendors do not design and develop software to run on our products, our ability to sell our products could be materially adversely affected.
Our reliance on third-party distributors and add-in-board (AIB) partners subjects us to certain risks.
Our business depends on the proper functioning of our internal business processes and information systems.
Our products may not be compatible with some or all industry-standard software and hardware.
Costs related to defective products could have a material adverse effect on us.
We may fail to maintain the efficiency of our supply chain as we respond to changes in customer demand.
We outsource to third parties certain supply-chain logistics functions.
We may be unable to effectively control the sales of our products on the gray market.
Climate change may have a long-term impact on our business.

Legal and Regulatory Risks

Government actions and regulations may limit our ability to export our products to certain customers.
If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
Our business is subject to potential tax liabilities, including as a result of tax regulation changes.
We are party to litigation and may become a party to other claims or litigation.
We are subject to environmental laws, conflict minerals regulations, as well as a variety of other laws or regulations..
Evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters could result in additional costs, harm to our reputation and a loss of customers.
Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.
The agreements governing our notes, our guarantees of Xilinx’s notes, and our Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.

Merger, Acquisition and Integration Risks

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

General Risks

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

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 limit our ability to compete effectively on a level playing field.

Intel’s microprocessor market share position, significant financial resources, introduction of competitive new products, and existing relationships with top-tier OEMs have enabled it to market and price its products aggressively, to target our customers and our channel partners with special incentives and to influence customers who do business with us. These aggressive activities have in the past resulted in lower unit sales and a lower average selling price for many of our products and adversely affected our margins and profitability. Intel also dominates the computer system platform and has a heavy influence on PC manufacturers, other PC industry participants, and benchmarks. It is able to drive de facto standards and specifications for x86 microprocessors that could cause us and other companies to have delayed access to such standards. 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; and exclusivity payments to its current and potential customers, retailers and channel partners. We expect Intel to continue to heavily invest substantial resources in marketing, research and development, new manufacturing facilities and other technology companies. To the extent Intel manufactures a significantly larger portion of its microprocessor products using more advanced process technologies or introduces competitive new products into the market before we do, we may be more vulnerable to Int

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Item 5. (c) Rule 10b5-1 Trading Plans

On March 7, 2024, Jean Hu, Executive Vice President, Chief Financial Officer and Treasurer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 40,000 shares of the Company’s common stock until March 7, 2025.

Item 6. EXHIBITS


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 1, 2024	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