Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions, except per share amounts)
Net revenue			$	6,819					$	5,800					$	18,127					$	16,512
Cost of sales			3,167						2,843						8,590						8,236
Amortization of acquisition-related intangibles			233						210						694						727
Total cost of sales			3,400						3,053						9,284						8,963
Gross profit			3,419						2,747						8,843						7,549
Research and development			1,636						1,507						4,744						4,361
Marketing, general and administrative			721						576						1,991						1,708
Amortization of acquisition-related intangibles			352						450						1,116						1,449
Licensing gain			(14)						(10)						(37)						(28)
Operating income			724						224						1,029						59
Interest expense			(23)						(26)						(73)						(79)
Other income (expense), net			36						59						144						148
Income before income taxes and equity income			737						257						1,100						128
Income tax (benefit)			(27)						(39)						(38)						(49)
Equity income in investee			7						3						21						10
Net income			$	771					$	299					$	1,159					$	187
Earnings per share
Basic			$	0.48					$	0.18					$	0.72					$	0.12
Diluted			$	0.47					$	0.18					$	0.71					$	0.11
Shares used in per share calculation
Basic			1,620						1,616						1,619						1,613
Diluted			1,636						1,629						1,638						1,625

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions)
Net income			$	771					$	299					$	1,159					$	187
Other comprehensive income (loss), net of tax:
Net change in unrealized gains (losses) on cash flow hedges			31						(18)						12						(9)
Total comprehensive income			$	802					$	281					$	1,171					$	178

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

			September 28, 2024						December 30, 2023
			(In millions, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents			$	3,897					$	3,933
Short-term investments			647						1,840
Accounts receivable, net			7,241						5,376
Inventories			5,374						4,351
Receivables from related parties			29						9
Prepaid expenses and other current assets			1,547						1,259
Total current assets			18,735						16,768
Property and equipment, net			1,669						1,589
Operating lease right-of-use assets			647						633
Goodwill			24,839						24,262
Acquisition-related intangibles, net			19,572						21,363
Investment: equity method			137						99
Deferred tax assets			1,183						366
Other non-current assets			2,854						2,805
Total assets			$	69,636					$	67,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	2,530					$	2,055
Payables to related parties			461						363
Accrued liabilities			4,120						3,082
Current portion of long-term debt, net			—						751
Other current liabilities			389						438
Total current liabilities			7,500						6,689
Long-term debt, net of current portion			1,720						1,717
Long-term operating lease liabilities			518						535
Deferred tax liabilities			1,162						1,202
Other long-term liabilities			1,751						1,850
Commitments and contingencies (See Note 13)
Stockholders’ equity:
Capital stock:
Common stock, par value $0.01; shares authorized: 2,250; shares issued: 1,678 and 1,663; shares outstanding: 1,623 and 1,616			17						17
Additional paid-in capital			60,896						59,676
Treasury stock, at cost (shares held: 55 and 47)			(5,812)						(4,514)
Retained earnings			1,882						723
Accumulated other comprehensive income (loss)			2						(10)
Total stockholders’ equity			56,985						55,892
Total liabilities and stockholders’ equity			$	69,636					$	67,885

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

			Nine Months Ended
			September 28, 2024						September 30, 2023
			(In millions)
Cash flows from operating activities:
Net income			$	1,159					$	187
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			2,309						2,654
Stock-based compensation			1,068						1,010
Deferred income taxes			(863)						(800)
Amortization of operating lease right-of-use assets			82						73
Inventory loss at contract manufacturer			65						—
Other			(50)						(31)
Changes in operating assets and liabilities
Accounts receivable, net			(1,862)						(929)
Inventories			(1,096)						(674)
Prepaid expenses and other assets			(250)						(380)
Receivables from and payables to related parties, net			78						(136)
Accounts payable			476						(238)
Accrued and other liabilities			626						550
Net cash provided by operating activities			1,742						1,286
Cash flows from investing activities:
Purchases of property and equipment			(428)						(407)
Purchases of short-term investments			(707)						(3,312)
Proceeds from maturity of short-term investments			1,351						1,917
Proceeds from sale of short-term investments			591						248
Acquisitions, net of cash acquired			(548)						(14)
Related party equity method investment			(17)						—
Other			(129)						(5)
Net cash provided by (used in) investing activities			113						(1,573)
Cash flows from financing activities:
Repayment of debt			(750)						—
Proceeds from sales of common stock through employee equity plans			152						148
Repurchases of common stock			(606)						(752)
Common stock repurchases for tax withholding on employee equity plans			(686)						(382)
Other			(1)						(1)
Net cash used in financing activities			(1,891)						(987)
Net decrease in cash and cash equivalents			(36)						(1,274)
Cash and cash equivalents at beginning of period			3,933						4,835
Cash and cash equivalents at end of period			$	3,897					$	3,561

Advanced Micro Devices, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)
			Nine Months Ended
			September 28, 2024						September 30, 2023
			(In millions)
Supplemental cash flow information:
Cash paid for taxes, net of refunds			$	1,011					$	34
Non-cash investing activities:
Purchases of property and equipment, accrued but not paid			$	99					$	113
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities			$	95					$	121

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions)
Capital stock:
Common stock, par value
Balance, beginning of period			$	17					$	16					$	17					$	16
Common stock issued under employee equity plans			—						1						—						1
Balance, end of period			$	17					$	17					$	17					$	17
Additional paid-in capital
Balance, beginning of period			$	60,542					$	58,825					$	59,676					$	58,005
Common stock issued under employee equity plans			3						4						152						153
Stock-based compensation			351						353						1,068						1,010
Issuance of common stock to settle convertible debt			—						—						—						1
Issuance of common stock warrants			—						—						—						13
Balance, end of period			$	60,896					$	59,182					$	60,896					$	59,182
Treasury stock
Balance, beginning of period			$	(5,103)					$	(3,430)					$	(4,514)					$	(3,099)
Repurchases of common stock			(250)						(511)						(606)						(752)
Common stock repurchases for tax withholding on employee equity plans			(459)						(294)						(692)						(384)
Balance, end of period			$	(5,812)					$	(4,235)					$	(5,812)					$	(4,235)
Retained earnings (Accumulated deficit):
Balance, beginning of period			$	1,111					$	(243)					$	723					$	(131)
Net income			771						299						1,159						187
Balance, end of period			$	1,882					$	56					$	1,882					$	56
Accumulated other comprehensive income (loss):
Balance, beginning of period			$	(29)					$	(32)					$	(10)					$	(41)
Other comprehensive income (loss)			31						(18)						12						(9)
Balance, end of period			$	2					$	(50)					$	2					$	(50)
Total stockholders' equity			$	56,985					$	54,970					$	56,985					$	54,970

See accompanying notes.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 – The Company

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

NOTE 2 – Basis of Presentation and Significant Accounting Policies

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

The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. The three and nine months ended September 28, 2024 and September 30, 2023 each consisted of 13 weeks and 26 weeks, respectively.

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

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

Recently Issued Accounting Standards Not Yet Adopted. In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses. This ASU is effective for the Company’s fiscal year 2024 and interim periods in fiscal year 2025. Early adoption is permitted. The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.

NOTE 3 – Supplemental Financial Statement Information

Accounts Receivable, net

As of September 28, 2024 and December 30, 2023, Accounts receivable, net included unbilled accounts receivable of $937 million and $1.1 billion, respectively. Unbilled accounts receivable primarily represent work completed on development services and on custom products for which revenue has been recognized but not yet invoiced. Unbilled accounts receivable that are included in Accounts receivable, net are expected to be billed and collected within 12 months.

Inventories			September 28, 2024						December 30, 2023
			(In millions)
Raw materials			$	412					$	279
Work in process			3,999						3,260
Finished goods			963						812
Total inventories			$	5,374					$	4,351

Property and Equipment, net			September 28, 2024						December 30, 2023
			(In millions)
Land, building and leasehold improvements			$	844					$	821
Equipment			2,669						2,346
Construction in progress			228						209
Property and equipment, gross			3,741						3,376
Accumulated depreciation			(2,072)						(1,787)
Total property and equipment, net			$	1,669					$	1,589

Accrued Liabilities			September 28, 2024						December 30, 2023
			(In millions)
Customer-related liabilities			$	1,405					$	788
Accrued marketing programs			1,001						827
Accrued compensation and benefits			1,048						884
Other accrued liabilities			666						583
Total accrued liabilities			$	4,120					$	3,082

Revenue

Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied) include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of September 28, 2024, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $86 million, of which $49 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less.

Revenue recognized over time associated with custom products and development services accounted for 5% and 10% of the Company’s revenue for the three and nine months ended September 28, 2024, respectively and 25% and 27% of the Company’s revenue for the three and nine months ended September 30, 2023, respectively.

NOTE 4 – Segment Reporting

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

The Company’s four reportable segments are:

• the Data Center segment, which primarily includes server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers;

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

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

• the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.

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

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

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

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions)
Net revenue:
Data Center			$	3,549					$	1,598					$	8,720					$	4,214
Client			1,881						1,453						4,741						3,190
Gaming			462						1,506						2,032						4,844
Embedded			927						1,243						2,634						4,264
Total net revenue			$	6,819					$	5,800					$	18,127					$	16,512
Operating income (loss):
Data Center			$	1,041					$	306					$	2,325					$	601
Client			276						140						451						(101)
Gaming			12						208						240						747
Embedded			372						612						1,059						2,167
All Other(1)			(977)						(1,042)						(3,046)						(3,355)
Total operating income			$	724					$	224					$	1,029					$	59

(1)			For the three and nine months ended September 28, 2024, all other operating losses primarily included $585 million and $1.8 billion of amortization of acquisition-related intangibles, and $351 million and $1.1 billion of stock-based compensation expense, respectively. For the three and nine months ended September 30, 2023, all other operating losses primarily included $660 million and $2.2 billion of amortization of acquisition-related intangibles, and $353 million and $1.0 billion of stock-based compensation expense, respectively.

NOTE 5 – Business Combinations

Acquisition of Silo AI

On August 9, 2024, the Company completed the acquisition of Silo AI Oy (Silo AI), an AI lab based in Finland in an all-cash transaction of $665 million. Net of closing adjustments, transaction costs and deferred cash compensation, the purchase consideration of $553 million was allocated to $19 million of identifiable intangible assets, $43 million of net liabilities assumed, and $577 million to goodwill. Goodwill was attributed to Silo AI’s workforce who will help the Company accelerate the deployment and development of AI models and software solutions on AMD hardware. Silo AI financial results, which were not material, were included in the Company's statement of operations from the date of acquisition primarily within the Data Center segment.

Pending Acquisition of ZT Systems

On August 17, 2024, the Company entered into an agreement (the Agreement) to acquire ZT Group Int’l, Inc. (ZT Systems), a provider of AI and general purpose compute infrastructure for hyperscale computing companies, in a cash and stock transaction valued at approximately $4.9 billion (the Acquisition). The aggregate closing consideration payable by the Company consists of 8,335,852 shares of the Company’s common stock and $3.4 billion in cash. Contingent consideration of up to 740,964 shares of the Company’s common stock and up to $300 million of cash is payable by the Company to the extent certain conditions are met. The Agreement provides that if the Acquisition is not completed by August 17, 2025, subject to two automatic extensions until February 17, 2026, the Company will pay a termination fee of $300 million. The Acquisition is expected to close in the first half of 2025, subject to certain regulatory approvals and other customary closing conditions. The Company intends to seek a strategic partner to acquire ZT Systems' manufacturing business.

NOTE 6 – Goodwill and Acquisition-related Intangibles, net

Goodwill

The carrying amount of goodwill was assigned to reporting units within the following reportable segments:

			December 30, 2023						Acquisitions						September 28, 2024
			(In millions)
Data Center			$	2,942					$	461					$	3,403
Client			18						108						126
Gaming			238						—						238
Embedded			21,064						8						21,072
Total			$	24,262					$	577					$	24,839

Acquisition-related Intangibles, net

Acquisition-related intangibles, net were as follows:

			September 28, 2024																		December 30, 2023
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(In millions)																		(In millions)
Developed technology			$	13,409					$	(2,279)					$	11,130					$	13,390					$	(1,583)					$	11,807
Customer relationships			12,324						(4,811)						7,513						12,324						(3,755)						8,569
Customer backlog			809						(809)						—						809						(809)						—
Corporate trade name			65						(65)						—						65						(65)						—
Product trademarks			914						(205)						709						914						(147)						767
Acquisition-related intangible assets subject to amortization			27,521						(8,169)						19,352						27,502						(6,359)						21,143
In-process research and development (IPR&D) not subject to amortization			220						—						220						220						—						220
Total acquisition-related intangible assets, net			$	27,741					$	(8,169)					$	19,572					$	27,722					$	(6,359)					$	21,363

Acquisition-related intangible amortization expense was $585 million and $1.8 billion for the three and nine months ended September 28, 2024, and $660 million and $2.2 billion for the three and nine months ended September 30, 2023, respectively.

Based on the carrying value of acquisition-related intangibles recorded as of September 28, 2024, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:

Fiscal Year			(In millions)
Remainder of 2024			$	565
2025			2,154
2026			2,040
2027			1,922
2028			1,846
2029 and thereafter			10,825
Total			$	19,352

NOTE 7 – Related Parties — Equity Joint Ventures

ATMP Joint Ventures

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

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

The Company’s purchases from the ATMP JV during the three and nine months ended September 28, 2024 were $407 million and $1.2 billion, respectively. The Company’s purchases from the ATMP JV during the three and nine months ended September 30, 2023 were $448 million and $1.2 billion, respectively. As of September 28, 2024 and December 30, 2023, the amounts payable to the ATMP JV were $461 million and $363 million, respectively, and are reflected as Payables to related parties on the Company’s condensed consolidated balance sheets. The Company’s resales to the ATMP JV during the three and nine months ended September 28, 2024 were $33 million and $103 million, respectively. The Company’s resales to the ATMP JV during the three and nine months ended September 30, 2023 were $2 million and $5 million, respectively. As of September 28, 2024 and December 30, 2023, the Company’s receivables from the ATMP JV were $29 million and $9 million, respectively, and are reflected as Receivables from related parties on the Company’s balance sheet.

During the three and nine months ended September 28, 2024, the Company recorded a gain of $7 million and $21 million, in Equity income in investee on its statements of operations, respectively. During the three and nine months ended September 30, 2023, the Company recorded a gain of $3 million and $10 million, in Equity income in investee on its statements of operations, respectively.

On August 8, 2024, the Company contributed $17 million to the ATMP JV, representing additional equity that is in proportion to the Company’s existing 15% equity interest. As of September 28, 2024 and December 30, 2023, the carrying value of the Company’s investment in the ATMP JV was $137 million and $99 million, respectively.

THATIC Joint Ventures

The Company holds equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. As of both September 28, 2024 and December 30, 2023, the carrying value of the investment was zero. The Company licenses certain of its intellectual property (Licensed IP) to the THATIC JV and receives royalties based on sales of the THATIC JV’s products, which is recorded within operating income as licensing gain. During the three and nine months ended September 28, 2024, the Company recognized $14 million and $37 million of licensing gain from royalties associated with Licensed IP, respectively. During the three and nine months ended September 30, 2023, the Company recognized $10 million and $28 million of licensing gain from royalties associated with Licensed IP, respectively. As of September 28, 2024 and December 30, 2023, the Company had no receivables from the THATIC JV. In June 2019, the Bureau of Industry and Security of the United States Department of Commerce added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. The Company is complying with U.S. law pertaining to the Entity List designation.

NOTE 8 – Debt, Revolving Credit Facility and Commercial Paper Program

Debt

The Company’s total debt as of September 28, 2024 and December 30, 2023 consisted of the following:

			September 28, 2024						December 30, 2023
			(In millions)
2.95% Senior Notes Due 2024 (2.95% Notes)			$	—					$	750
2.375% Senior Notes Due 2030 (2.375% Notes)			750						750
3.924% Senior Notes Due 2032 (3.924% Notes)			500						500
4.393% Senior Notes Due 2052 (4.393% Notes)			500						500
Total debt (principal amount)			1,750						2,500
Unamortized debt discount and issuance costs			(30)						(32)
Total debt (net)			1,720						2,468
Less: current portion of long-term debt and related unamortized debt premium and issuance costs			—						(751)
Total long-term debt			$	1,720					$	1,717

2.95% Senior Notes Due 2024

The 2.95% Notes with a principal amount of $750 million were repaid in June 2024.

2.375% Senior Notes Due 2030, 3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052

The 2.375% Notes, 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.

As of September 28, 2024, the Company was in compliance with the covenants associated with its debt.

Revolving Credit Facility

The Company has $3.0 billion available under an unsecured revolving credit facility that expires on April 29, 2027. During the three and nine months ended September 28, 2024, the Company did not borrow under the revolving credit facility and as of September 28, 2024 and December 30, 2023, the Company had no outstanding borrowings under the revolving credit facility. As of September 28, 2024, the Company was in compliance with the covenants under the revolving credit facility.

Commercial Paper Program

The Company has a commercial paper program under which it can issue unsecured commercial paper notes up to $3.0 billion. During the three and nine months ended September 28, 2024, the Company did not issue any commercial paper under the program and as of September 28, 2024 and December 30, 2023, the Company had no commercial paper outstanding.

NOTE 9 – Financial Instruments

Fair Value Measurements

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

Financial Instruments Recorded at Fair Value on a Recurring Basis

			September 28, 2024																								December 30, 2023
(In millions)			Level 1						Level 2						Level 3						Total						Level 1						Level 2						Total
Cash equivalents
Money market funds			$	1,879					$	—					$	—					$	1,879					$	969					$	—					$	969
Corporate debt securities			—						642						—						642						—						753						753
U.S. government and agency securities			330						—						—						330						1,252						—						1,252
Non-U.S. government and agency securities			—						—						—						—						—						135						135
Time deposits and certificates of deposits			—						132						—						132						—						205						205
Short-term investments
Corporate debt securities			—						271						—						271						—						506						506
Time deposits and certificates of deposits			—						10						—						10						—						9						9
Asset-backed and mortgage-backed securities			—						30						—						30						—						34						34
U.S. government and agency securities			275						40						—						315						1,209						28						1,237
Non-U.S. government and agency securities			—						21						—						21						—						54						54
Other non-current assets
Deferred compensation plan and other investments			162						—						25						187						133						—						133
Total assets measured at fair value			$	2,646					$	1,146					$	25					$	3,817					$	3,563					$	1,724					$	5,287

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

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

			September 28, 2024																								December 30, 2023
			Cost/ Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value						Cost/ Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
			(in millions)																								(in millions)
Asset-backed and mortgage-backed securities			$	32					$	—					$	(2)					$	30					$	35					$	—					$	(2)					$	33
Corporate debt securities			912						1						—						913						1,259						—						—						1,259
Money market funds			1,879						—						—						1,879						969						—						—						969
Time deposits and certificates of deposits			142						—						—						142						214						—						—						214
U.S. government and agency securities			643						2						—						645						2,487						3						—						2,490
Non-U.S. government and agency securities			21						—						—						21						189						—						—						189
			$	3,629					$	3					$	(2)					$	3,630					$	5,153					$	3					$	(2)					$	5,154

As of September 28, 2024 and December 30, 2023, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.

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

			September 28, 2024												December 30, 2023
			Amortized Cost						Fair Value						Amortized Cost						Fair Value
			(In millions)												(In millions)
Due within 1 year			$	1,472					$	1,473					$	3,792					$	3,792
Due in 1 year through 5 years			250						252						361						364
Due in 5 years and later			28						26						32						30
			$	1,750					$	1,751					$	4,185					$	4,186

Financial Instruments Not Recorded at Fair Value

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

			September 28, 2024												December 30, 2023
			Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
			(In millions)												(In millions)
Current portion of long-term debt, net			$	—					$	—					$	751					$	741
Long-term debt, net of current portion			$	1,720					$	1,644					$	1,717					$	1,630

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

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

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

The Company’s investments in non-marketable securities in privately-held companies are recorded using a measurement alternative that adjusts the securities to fair value when the Company recognizes an observable price adjustment or an impairment. As of September 28, 2024 and December 30, 2023, the Company had non-marketable securities in privately-held companies of $257 million and $155 million, respectively, that are recorded under Other non-current assets in the balance sheet. Impairment losses or observable price adjustments were not material during the three and nine months ended September 28, 2024 and September 30, 2023.

Hedging Transactions and Derivative Financial Instruments

Foreign Currency Forward Contracts Designated as Accounting Hedges

The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 24 months and are designated as accounting hedges. As of September 28, 2024 and December 30, 2023, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $2.2 billion and $2.4 billion, respectively. The fair value of these contracts, recorded as an asset, was $19 million and $6 million as of September 28, 2024 and December 30, 2023, respectively.

Foreign Currency Forward Contracts Not Designated as Accounting Hedges

The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of September 28, 2024 and December 30, 2023, the notional value of these outstanding contracts was $573 million and $568 million, respectively. The fair value of these contracts was not material as of September 28, 2024 and December 30, 2023.

NOTE 10 – Earnings Per Share

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

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions, except per share amounts)
Numerator
Net income for basic earnings per share			$	771					$	299					$	1,159					$	187
Denominator
Basic weighted average shares			1,620						1,616						1,619						1,613
Potentially dilutive shares from employee equity plans			16						13						19						12
Diluted weighted average shares			1,636						1,629						1,638						1,625
Earnings per share:
Basic			$	0.48					$	0.18					$	0.72					$	0.12
Diluted			$	0.47					$	0.18					$	0.71					$	0.11

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

NOTE 11 – Common Stock and Stock-based Compensation

Common Stock

Shares of common stock outstanding were as follows:

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions)
Balance, beginning of period			1,618						1,614						1,616						1,612
Common stock issued under employee equity plans			10						9						15						14
Common stock repurchases for tax withholding on equity awards			(3)						(3)						(4)						(4)
Issuance of common stock upon warrant exercise			—						—						—						1
Repurchases of common stock			(2)						(5)						(4)						(8)
Balance, end of period			1,623						1,615						1,623						1,615

Stock Repurchase Program

The Company has an approved stock repurchase program authorizing repurchases of up to $12 billion of the Company’s common stock (Repurchase Program). During the three and nine months ended September 28, 2024, the Company returned $250 million and $606 million, respectively, to shareholders through the repurchase of its common stock under the Repurchase Program. As of September 28, 2024, $4.9 billion remains available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.

Stock-based Compensation

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

			Three Months Ended												Nine Months Ended
			September 28, 2024						September 30, 2023						September 28, 2024						September 30, 2023
			(In millions)
Cost of sales			$	5					$	6					$	16					$	24
Research and development			267						260						809						721
Marketing, general and administrative			79						87						243						265
Total			$	351					$	353					$	1,068					$	1,010

NOTE 12 – Income Taxes

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

For the three and nine months ended September 28, 2024, the Company recorded an income tax benefit of $27 million and $38 million representing an effective tax rate of (3.6)% and (3.3)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits, partially offset by the tax rate detriment from foreign earnings. The tax benefit for the three and nine months ended September 28, 2024 reflected discrete tax benefits of $28 million and $68 million, respectively, primarily related to stock-based compensation, partially offset by the interest and penalties accrued for uncertain tax positions.

For the three months and nine months ended September 30, 2023, the Company recorded an income tax benefit of $39 million and $49 million representing an effective tax rate of (15.2)% and (35.8)%, respectively. The difference between the U.S. federal statutory tax rate of 21% and the Company's estimated annual effective tax rate was primarily due to the income tax benefit from FDII and R&D tax credits. The tax benefit for the three months ended September 30, 2023 reflected a discrete tax benefit of $17 million primarily related to tax effects of stock-based compensation. The tax benefit for the nine months ended September 30, 2023, reflected a discrete tax benefit of $29 million primarily related to tax effects of stock-based compensation, partially offset by interest and penalties accrued for uncertain tax positions.

As of September 28, 2024 and December 30, 2023, the Company had long-term income tax liabilities related to unrecognized tax benefits of $1.5 billion and $1.4 billion recorded under Other long-term liabilities in the balance sheet.

NOTE 13 – Commitments and Contingencies

Commitments

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

Total future unconditional purchase commitments as of September 28, 2024 were as follows:

Fiscal Year			(In millions)
Remainder of 2024			$	2,510
2025			1,325
2026			268
2027			45
2028			44
2029 and thereafter			95
Total unconditional purchase commitments			$	4,287

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

Contingencies

During the quarterly period ended September 28, 2024, there were no material legal proceedings. The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

NOTE 14 – Subsequent Event

On October 9, 2024, the Company entered into a one-year term loan agreement with one of the ATMP JVs for $100 million to provide funds for the ATMP JV’s general corporate purposes. The loan bears interest, payable quarterly, at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points. The loan is secured by the ATMP JV’s receivable balance due from the Company. Subject to the Company’s discretion, the loan may be extended for further terms of up to twelve months.