Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions, except per share amounts)
Net revenue$7,685$5,835$15,123$11,308
Cost of sales4,3662,7407,8175,423
Amortization of acquisition-related intangibles260231511461
Total cost of sales4,6262,9718,3285,884
Gross profit3,0592,8646,7955,424
Research and development1,8941,5833,6223,108
Marketing, general and administrative9916401,8771,247
Amortization of acquisition-related intangibles308372624764
Total operating expenses3,1932,5956,1235,119
Operating income (loss)(134)269672305
Interest expense(38)(25)(58)(50)
Other income (expense), net9855137108
Income (loss) from continuing operations before income taxes and equity income(74)299751363
Income tax provision (benefit)(834)41(711)(11)
Equity income in investee871514
Income from continuing operations, net of tax7682651,477388
Income from discontinued operations, net of tax104—104—
Net income$872$265$1,581$388
Earnings per share
Earnings from continuing operations - basic$0.47$0.16$0.91$0.24
Earnings from discontinued operations - basic0.07—0.07—
Basic earnings per share$0.54$0.16$0.98$0.24
Earnings from continuing operations - diluted$0.47$0.16$0.91$0.24
Earnings from discontinued operations - diluted0.07—0.06—
Diluted earnings per share$0.54$0.16$0.97$0.24
Shares used in per share calculation
Basic1,6231,6181,6211,617
Diluted1,6301,6371,6281,638

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions)
Net income$872$265$1,581$388
Other comprehensive income, net of tax:
Net change in unrealized gains (losses) on cash flow hedges50(1)79(19)
Total comprehensive income$922$264$1,660$369

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

June 28, 2025December 28, 2024
(In millions, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents$4,442$3,787
Short-term investments1,4251,345
Accounts receivable, net5,1156,192
Inventories6,6775,734
Assets held for sale4,326—
Prepaid expenses and other current assets2,5341,991
Total current assets24,51919,049
Property and equipment, net2,1281,802
Goodwill25,08324,839
Acquisition-related intangibles, net17,81218,930
Deferred tax assets860688
Other non-current assets4,4183,918
Total assets$74,820$69,226
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$3,080$2,466
Accrued liabilities4,4794,260
Liabilities held for sale1,968—
Other current liabilities316555
Total current liabilities9,8437,281
Long-term debt, net3,2181,721
Long-term operating lease liabilities668491
Deferred tax liabilities341349
Other long-term liabilities1,0851,816
Commitments and contingencies (See Note 13)
Stockholders’ equity:
Capital stock:
Common stock, par value $0.01; shares authorized: 4,000; shares issued: 1,684 and 1,680; shares outstanding: 1,622 and 1,6221717
Additional paid-in capital62,22861,362
Treasury stock, at cost (shares held: 62 and 58)(6,535)(6,106)
Retained earnings3,9452,364
Accumulated other comprehensive income (loss)10(69)
Total stockholders’ equity59,66557,568
Total liabilities and stockholders’ equity$74,820$69,226

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended
June 28, 2025June 29, 2024
(In millions)
Cash flows from operating activities:
Net income$1,581$388
Income from discontinued operations, net of tax(104)—
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization364328
Amortization of acquisition-related intangibles1,1351,225
Stock-based compensation733717
Deferred income taxes(200)(256)
Release of reserves for uncertain tax positions(853)—
Inventory loss at contract manufacturer—65
Other2915
Changes in operating assets and liabilities:
Accounts receivable, net1,078252
Inventories(943)(710)
Prepaid expenses and current assets(377)(874)
Accounts payable547(299)
Accrued and other liabilities(589)263
Net cash provided by operating activities of continuing operations2,4011,114
Net cash provided by operating activities of discontinued operations549—
Net cash flows provided by operations2,9501,114
Cash flows from investing activities:
Purchases of property and equipment(494)(296)
Purchases of short-term investments(796)(565)
Proceeds from maturity of short-term investments6831,202
Proceeds from sale of short-term investments482
Purchases of strategic investments(358)(94)
Acquisitions, net of cash acquired(1,716)—
Other—2
Net cash (used in) provided by investing activities of continuing operations(2,633)251
Net cash (used in) investing activities of discontinued operations(22)—
Net cash flows (used in) provided by investing activities(2,655)251
Cash flows from financing activities:
Proceeds from debt and commercial paper issuance, net of issuance costs2,441—
Repayment of debt and commercial paper(950)(750)
Proceeds from sales of common stock through employee equity plans159148
Repurchases of common stock(1,227)(356)
Stock repurchases for tax withholding on employee equity plans(76)(226)
Other—(1)
Net cash provided by (used in) financing activities of continuing operations347(1,185)
Net increase in cash, cash equivalents and restricted cash642180
Cash, cash equivalents and restricted cash at beginning of period3,8113,933
Cash, cash equivalents and restricted cash at end of period$4,453$4,113

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended
June 28, 2025June 29, 2024
(In millions)
Supplemental cash flow information:
Cash paid during the period for:
Income taxes, net of refunds$760$311
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid$333$110
Reissuance of treasury stock for the acquisition of ZT Systems$860$—
Contingent consideration liability for the acquisition of ZT Systems$361$—
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$4,442$4,113
Restricted cash included in Prepaid expenses and other current assets11—
Cash, cash equivalents and restricted cash at end of period$4,453$4,113

See accompanying notes.

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions)
Capital stock:
Common stock, par value
Balance, beginning of period$17$17$17$17
Balance, end of period$17$17$17$17
Additional paid-in capital
Balance, beginning of period$61,730$60,053$61,362$59,676
Common stock issued under employee equity plans157143161149
Stock-based compensation369346733717
Reissuance of treasury stock(28)—(28)—
Balance, end of period$62,228$60,542$62,228$60,542
Treasury stock
Balance, beginning of period$(6,899)$(4,690)$(6,106)$(4,514)
Repurchases of common stock(480)(352)(1,236)(356)
Common stock repurchases for tax withholding on employee equity plans(44)(61)(81)(233)
Reissuance of treasury stock888—888—
Balance, end of period$(6,535)$(5,103)$(6,535)$(5,103)
Retained earnings:
Balance, beginning of period$3,073$846$2,364$723
Net income8722651,581388
Balance, end of period$3,945$1,111$3,945$1,111
Accumulated other comprehensive income (loss):
Balance, beginning of period$(40)$(28)$(69)$(10)
Other comprehensive income (loss)50(1)79(19)
Balance, end of period$10$(29)$10$(29)
Total stockholders' equity$59,665$56,538$59,665$56,538

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 Artificial Intelligence (AI) accelerators, microprocessors (CPUs) for servers 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), and Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.

On March 31, 2025, the Company completed the acquisition of ZT Systems Group Int’l, Inc. (ZT Systems). See Note 5 - Acquisitions and Divestitures for additional information.

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 United States 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 six months ended June 28, 2025 shown in this report are not necessarily indicative of results to be expected for the full year ending December 27, 2025 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 28, 2024. Certain amounts from fiscal year 2024 have been reclassified to conform to current period presentation. These include the presentation of Payables to related parties within Accounts payable, Operating lease right-of-use assets and Investment: equity method within Other non-current assets, and Receivables from related parties within Prepaid expenses and other current assets.

The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. The three and six months ended June 28, 2025 and June 29, 2024 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 subjective judgment include, but are not limited to: revenue allowances, inventory valuation, valuation of goodwill, long-lived and intangible assets, business combination accounting 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 Condensed Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

NOTE 3 – Supplemental Financial Statement Information

InventoriesJune 28, 2025December 28, 2024
(In millions)
Raw materials$639$351
Work in process4,1674,289
Finished goods1,8711,094
Total inventories$6,677$5,734
Prepaid Expenses and Other Current AssetsJune 28, 2025December 28, 2024
(In millions)
Unbilled receivables$571$628
Other1,9631,363
Total prepaid expenses and other current assets$2,534$1,991
Property and Equipment, netJune 28, 2025December 28, 2024
(In millions)
Land, building and leasehold improvements$922$853
Equipment3,0652,798
Construction in progress575324
Property and equipment, gross4,5623,975
Accumulated depreciation(2,434)(2,173)
Total property and equipment, net$2,128$1,802
Accrued LiabilitiesJune 28, 2025December 28, 2024
(In millions)
Customer-related liabilities$1,175$1,349
Accrued marketing programs1,2211,063
Accrued compensation and benefits9481,174
Other accrued expenses and liabilities1,135674
Total accrued liabilities$4,479$4,260

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 June 28, 2025, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $218 million, of which $125 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 approximately 12% and 11% of the Company’s revenue for the three and six months ended June 28, 2025, respectively, and 8% and 12% of the Company’s revenue for the three and six months ended June 29, 2024, respectively.

Cost of Sales

During the three months ended June 28, 2025, the Company recorded approximately $800 million of inventory and related charges associated with the U.S. government export control on AMD Instinct MI308 Data Center GPU products in Cost of sales.

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, cost of sales and operating expenses, and operating income (loss). These performance measures include the allocation of expenses to the reportable segments based on management’s judgment. The CODM is regularly provided segment operating income to assess relative segment performance.

Beginning with the fiscal year ending December 27, 2025, the Company changed its segment structure, combining the Client and Gaming segments into one reportable segment to align with how the Company manages its business. All prior period segment data were retrospectively adjusted. The Company’s three reportable segments are:

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

  • the Client and Gaming segment, which primarily includes CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, and semi-custom SoC products and development services; and

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

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

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

The following table provides a summary of net revenue, cost of sales and operating expenses, and operating income (loss) by segment. Segment cost of sales and operating expenses primarily include materials, external manufacturing, labor and marketing and advertising costs, and exclude expenses and credits that are recorded within the All Other category. Neither of the Client and Gaming businesses qualify as a separate reportable operating segment, however, the Company continues to separately disclose revenue for each business.

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions)
Net revenue:
Data Center$3,240$2,834$6,914$5,171
Client and Gaming
Client2,4991,4924,7932,860
Gaming1,1226481,7691,570
Total Client and Gaming3,6212,1406,5624,430
Embedded8248611,6471,707
Total net revenue$7,685$5,835$15,123$11,308
Cost of sales and operating expenses:
Data Center$3,395$2,091$6,137$3,887
Client and Gaming2,8541,9745,2994,027
Embedded5495161,0441,020
All other1,0219851,9712,069
Total cost of sales and operating expenses$7,819$5,566$14,451$11,003
Operating income (loss):
Data Center$(155)$743$777$1,284
Client and Gaming7671661,263403
Embedded275345603687
All other (1)(1,021)(985)(1,971)(2,069)
Total operating income (loss)$(134)$269$672$305
(1)For the three and six months ended June 28, 2025, all other operating losses primarily included $568 million and $1.1 billion of amortization of acquisition-related intangibles, and $369 million and $733 million of stock-based compensation expense, respectively. For the three and six months ended June 29, 2024, all other operating losses primarily included $603 million and $1.2 billion of amortization of acquisition-related intangibles, and $346 million and $717 million of stock-based compensation expense, respectively.

NOTE 5 – Acquisitions and Divestitures

ZT Systems Acquisition

On March 31, 2025 (the Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of ZT Systems for a total purchase consideration of $4.4 billion. ZT Systems is a provider of AI and general-purpose compute infrastructure for hyperscale computing companies. The acquisition is expected to enable the Company to deliver end-to-end AI solutions and accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud.

The purchase consideration is comprised of the following (in millions):

Cash paid on Acquisition Date$3,188
Fair value of 8,335,849 shares(1) issued on Acquisition Date860
Fair value of contingent consideration(2) not yet paid361
Total purchase consideration$4,409

(1) Represents the fair value based on the closing price of AMD common stock on March 28, 2025 of $103.22 per share, as the transaction closed prior to the opening of markets on March 31, 2025.

(2) Represents the estimated fair value of 740,961 shares of AMD common stock to be issued and $300 million of cash to be paid to ZT Systems stockholders and warrant holders assuming the contingencies are fully met.

The purchase consideration was allocated as follows (in millions):

Cash and cash equivalents$1,500
Assets held for sale5,965
Other assets81
Total assets acquired7,546
Liabilities held for sale3,221
Other liabilities124
Total liabilities assumed3,345
Fair value of net assets acquired4,201
Goodwill208
Total purchase consideration$4,409

The Company allocated the purchase price to identified tangible and intangible assets acquired and liabilities assumed based on estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. Fair values of assets and liabilities held for sale were determined using the income and cost valuation approaches which incorporate significant unobservable inputs. Goodwill arising from the ZT Systems acquisition was assigned to the Company’s Data Center reporting unit. Goodwill was primarily attributed to the assembled workforce and is not expected to be deductible for income tax purposes.

At the time of the announcement of its acquisition of ZT Systems in August 2024, the Company disclosed its intent to divest ZT Systems’ data center infrastructure manufacturing business (the ZT Manufacturing Business), while retaining only certain intellectual property and employees (the ZT Design Business). Accordingly, upon acquisition, the Company classified the ZT Manufacturing Business and its related assets and liabilities as held for sale. The results of the ZT Design Business and the ZT Manufacturing Business are presented within continuing operations and discontinued operations of the Company’s consolidated statements of operations and cash flows, respectively.

The financial results of the ZT Design Business, which are not material, are included in the consolidated statements of operations from the Acquisition Date within the Data Center segment. Transaction costs of $36 million and $47 million were recorded within Marketing, general and administrative expenses during the three and six months ended June 28, 2025.

The following summarizes carrying amounts of major classes of ZT Manufacturing Business assets and liabilities held for sale as of June 28, 2025 (in millions):

Accounts receivable$1,883
Inventories1,353
Other assets631
Goodwill and intangible assets459
Total assets held for sale$4,326
Accounts payable$1,384
Accrued and other liabilities584
Total liabilities held for sale$1,968

Assets and liabilities held for sale are recorded using the lower of carrying values or fair values less estimated costs to sell.

The following table presents a reconciliation of the contingent consideration liability (in millions:)

Initial valuation of contingent consideration liability$361
Change in fair value35
Contingent consideration liability, June 28, 2025$396

Contingent consideration liability was measured at fair value on Acquisition Date and is remeasured to fair value until the contingencies are resolved. The fair value of the contingent consideration liability was estimated based on the present value of the contingent cash and stock consideration using significant unobservable inputs such as risk-adjusted discount rates, equity volatility and simulated stock price. The simulated stock price was calculated using the Monte Carlo simulation method. The fair value of contingent consideration liability may increase or decrease based on changes in these significant inputs. The amount is recorded within Accrued liabilities of the Company’s consolidated balance sheets and the changes in fair value are recognized within Income from discontinued operations of the consolidated statements of operations.

ZT Manufacturing Business Divestiture

On May 18, 2025, the Company entered into an equity purchase agreement (the Sale Agreement) with Sanmina Corporation to sell the ZT Manufacturing Business for $3.0 billion in cash and stock, inclusive of a contingent payment of up to $450 million, subject to customary adjustments for working capital and other items. The Sale Agreement provides that if the sale is not completed by May 18, 2026, subject to two automatic extensions until November 18, 2026, the Company will be entitled to receive a termination fee of up to $153 million. The transaction is expected to close near the end of 2025, subject to regulatory approvals and customary closing conditions.

Other Acquisitions

During the three and six months ended June 28, 2025, the Company completed other business acquisitions for a total consideration of $36 million that resulted in the recognition of $36 million of goodwill. The financial results of these acquired businesses, which were not material, were included in the Company's consolidated statements of operations from their respective dates of acquisition within the Data Center segment.              

Pro Forma Information

Since the ZT Manufacturing Business represents the majority of ZT Systems’ operations and is being held for sale, pro forma information presenting the combined results of operations of ZT Systems and other acquired entities were deemed neither material nor meaningful to the Company’s consolidated income from continuing operations and were omitted.

NOTE 6 – Goodwill and Acquisition-related Intangibles, net

Goodwill

In the first quarter of fiscal year 2025, the Company assigned goodwill to its updated reporting units to reflect the change in its segment reporting structure. The Company performed a goodwill impairment test immediately prior to and after the segment change and determined that no indicators of impairment to goodwill existed.

The following table summarizes Goodwill:

Before segment changeAfter segment change
(in millions)Data CenterEmbeddedClientGamingClient and GamingTotal
December 28, 2024$3,403$21,072$126$238$—$24,839
Reassignment due to segment change——(126)(238)364—
Acquisitions244————244
June 28, 2025$3,647$21,072$—$—$364$25,083

Acquisition-related Intangibles, net

The following table summarizes Acquisition-related Intangibles Assets:

June 28, 2025December 28, 2024
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(In millions)(In millions)
Developed technology$13,587$(3,040)$10,547$13,408$(2,529)$10,879
Customer relationships12,324(5,708)6,61612,324(5,124)7,200
Product trademarks914(265)649914(225)689
Acquisition-related intangible assets subject to amortization26,825(9,013)17,81226,646(7,878)18,768
In-process research and development (IPR&D) not subject to amortization———162—162
Total acquisition-related intangible assets, net$26,825$(9,013)$17,812$26,808$(7,878)$18,930

In April 2025, $162 million of IPR&D intangible asset reached technological feasibility, was placed in service as developed technology and started amortization over its estimated useful life of 5 years.

Acquisition-related intangible amortization expense was $568 million and $1.1 billion for the three and six months ended June 28, 2025, respectively, and $603 million and $1.2 billion for the three and six months ended June 29, 2024, respectively.

Based on the carrying value of acquisition-related intangibles recorded as of June 28, 2025, 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 2025$1,119
20262,149
20272,031
20281,919
20291,691
2030 and thereafter8,903
Total$17,812

NOTE 7 – Related Party — 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 carrying value of the Company’s investment in ATMP JV was $165 million and $149 million as of June 28, 2025 and December 28, 2024, respectively, and is recorded within Other non-current assets on the Company’s consolidated balance sheets.

The ATMP JV provides assembly, test, mark and packaging (ATMP) services to the Company. The Company’s purchases from the ATMP JV during the three and six months ended June 28, 2025 were $529 million and $1.0 billion, respectively. The Company’s purchases from the ATMP JV during the three and six months ended June 29, 2024 were $389 million and $839 million, respectively. As of June 28, 2025 and December 28, 2024, the amounts payable to the ATMP JV were $522 million and $476 million, respectively, and are included in Accounts payable on the consolidated balance sheets.

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 receivable is included within Prepaid expenses and other current assets on the Company’s consolidated balance sheets.

During the three and six months ended June 28, 2025, the Company recorded income related to the ATMP JV of $8 million and $15 million, respectively, in Equity income in investee on its consolidated statements of operations. During the three and six months ended June 29, 2024, the Company recorded income related to the ATMP JV of $7 million and $14 million, respectively, in Equity income in investee on its consolidated statements of operations.

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

Debt

The Company’s debt as of June 28, 2025 and December 28, 2024 consisted of the following:

June 28, 2025December 28, 2024
(In millions)
4.212% Senior Notes Due 2026 (4.212% Notes)$875$—
4.319% Senior Notes Due 2028 (4.319% Notes)625—
2.375% Senior Notes Due 2030 (2.375% Notes)750750
3.924% Senior Notes Due 2032 (3.924% Notes)500500
4.393% Senior Notes Due 2052 (4.393% Notes)500500
Total debt (principal amount)3,2501,750
Unamortized debt discount and issuance costs(32)(29)
Total long-term debt (net)$3,218$1,721

4.212% Senior Notes Due 2026 and 4.319% Senior Notes Due 2028

On March 24, 2025, the Company issued 4.212% Notes and 4.319% Notes in aggregate principal amount of $1.5 billion. The 4.212% Notes and the 4.319% Notes are general unsecured senior obligations of the Company. The interest is payable semi-annually on March 24 and September 24 of each year, commencing on September 24, 2025.

The Company may redeem some or all of the 4.212% Notes prior to September 24, 2026 at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the 4.212% Notes or 100% of the principal amount plus accrued and unpaid interest. The Company may redeem some or all of the 4.319% Notes prior to February 24, 2028, one month prior to the maturity date of the 4.319% Notes (4.319% Notes Par Call Date), at a price equal to the greater of the present value of the principal amount and future interest through the 4.319% Notes Par Call Date or 100% of the principal amount plus accrued and unpaid interest. On or after February 24, 2028, the Company may also redeem some or all of the 4.319% Notes at 100% of the principal amount plus accrued and unpaid interest.

Holders of the 4.212% Notes and the 4.319% Notes have the right to require the Company to repurchase all or a portion of the 4.212% Notes or 4.319% Notes in the event that the Company undergoes a change of control, 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 4.212% Notes and 4.319% Notes.

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 June 28, 2025, 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 six months ended June 28, 2025, the Company did not draw funds from the revolving credit facility. As of June 28, 2025, 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 a principal amount of $3.0 billion at any time with maturities 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 the issuance. During the three months ended March 29, 2025, the Company issued $950 million in aggregate principal amount of commercial paper which was subsequently repaid before June 28, 2025. As of June 28, 2025 and December 28, 2024, the Company had no commercial paper outstanding.

NOTE 9 – Financial Instruments

Financial Instruments Recorded at Fair Value on a Recurring Basis

June 28, 2025December 28, 2024
(In millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Cash equivalents
Money market funds$2,025$—$—$2,025$1,496$—$—$1,496
Corporate debt securities—1,161—1,161—806—806
U.S. government and agency securities126——126130——130
Non-U.S. government and agency securities—145—145—116—116
Time deposits and certificates of deposits—166—166—107—107
Short-term investments
Corporate debt securities—902—902—814—814
Time deposits and certificates of deposits—10—10—10—10
Asset-backed and mortgage-backed securities—24—24—28—28
U.S. government and agency securities35389—44233282—414
Non-U.S. government and agency securities—47—47—79—79
Other non-current assets
Time deposits and certificates of deposits—————1—1
Deferred compensation plan and other investments219—161380197—25222
Total assets measured at fair value$2,723$2,544$161$5,428$2,155$2,043$25$4,223
Accrued liabilities
Contingent consideration liability$—$—$396$396$—$—$—$—
Total liabilities measured at fair value$—$—$396$396$—$—$—$—

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:

June 28, 2025December 28, 2024
Cost/ Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueCost/ Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
(in millions)(in millions)
Asset-backed and mortgage-backed securities$26$—$(2)$24$30$—$(2)$28
Corporate debt securities2,0631—2,0641,621—(1)1,620
Money market funds2,025——2,0251,496——1,496
Time deposits and certificates of deposits176——176117——117
U.S. government and agency securities5671—568544——544
Non-U.S. government and agency securities192——192195——195
$5,049$2$(2)$5,049$4,003$—$(3)$4,000

As of June 28, 2025 and December 28, 2024, the Company did not have material available-for-sale debt securities which have been in a continuous unrealized loss position of more than twelve months.

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

June 28, 2025December 28, 2024
Amortized CostFair ValueAmortized CostFair Value
(In millions)(In millions)
Due within 1 year$2,505$2,506$2,073$2,073
Due in 1 year through 5 years494495406405
Due in 5 years and later25232726
$3,024$3,024$2,506$2,504

Financial Instruments Not Recorded at Fair Value

The carrying amounts and estimated fair values of the Company’s long-term debt are as follows:

June 28, 2025December 28, 2024
Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
(In millions)(In millions)
Long-term debt$3,218$3,092$1,721$1,543

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, commercial paper and other short-term obligations approximate their carrying value based on existing terms.

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

As of June 28, 2025 and December 28, 2024, the Company had non-marketable securities in privately-held companies of $760 million and $468 million, respectively, which are recorded at estimated fair value on a non-recurring basis and within Other non-current assets in the consolidated balance sheets. Impairment losses or observable price adjustments were not material during the three and six months ended June 28, 2025 and June 29, 2024.

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 June 28, 2025 and December 28, 2024, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $1.6 billion and $2.2 billion, respectively. The fair value of these contracts as of June 28, 2025 is recorded within Prepaid expenses and other current assets and Accrued liabilities of $31 million and $7 million, respectively. The fair value of these contracts as of December 28, 2024 is recorded within Prepaid expenses and other current assets, Accrued liabilities, and Other long-term liabilities of $6 million, $60 million and $11 million, 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 June 28, 2025 and December 28, 2024, the notional value of these outstanding contracts was $750 million and $642 million, respectively. The fair value of these contracts was not material as of June 28, 2025 and December 28, 2024.

NOTE 10 – Earnings Per Share

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

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions, except per share amounts)
Numerator
Income from continuing operations$768$265$1,477$388
Income from discontinued operations104—104—
Net income$872$265$1,581$388
Denominator
Basic weighted average shares1,6231,6181,6211,617
Potentially dilutive shares from employee equity plans719721
Diluted weighted average shares1,6301,6371,6281,638
Earnings per share:
Earnings per share from continuing operations - basic$0.47$0.16$0.91$0.24
Earnings per share from discontinued operations - basic0.07—0.07—
Basic earnings per share$0.54$0.16$0.98$0.24
Earnings per share from continuing operations - diluted$0.47$0.16$0.91$0.24
Earnings per share from discontinued operations - diluted0.07—0.06—
Diluted earnings per share$0.54$0.16$0.97$0.24

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

On May 14, 2025, the Company’s stockholders approved the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 2.25 billion shares to 4.0 billion shares.

Shares of common stock outstanding were as follows:

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions)
Balance, beginning of period1,6161,6181,6221,616
Common stock issued under employee equity plans3245
Common stock repurchases for tax withholding on equity awards———(1)
Repurchases of common stock(5)(2)(12)(2)
Common stock issued in the acquisition of ZT Systems8—8—
Balance, end of period1,6221,6181,6221,618

Stock Repurchase Program

On May 13, 2025, the Company’s board of directors approved a new $6 billion share repurchase program. The authorization is in addition to the Company’s existing share repurchase program (collectively, the Repurchase Program), increasing the total repurchase authority to $14 billion. During the three and six months ended June 28, 2025, the Company repurchased 5 million and 12 million shares of its common stock under the Repurchase Program for $478 million and $1.2 billion, respectively. As of June 28, 2025, $9.5 billion remained 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 consolidated statements of operations was as follows:

Three Months EndedSix Months Ended
June 28, 2025June 29, 2024June 28, 2025June 29, 2024
(In millions)
Cost of sales$6$5$11$11
Research and development290262572541
Marketing, general and administrative7379150165
Total$369$346$733$717

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.

Continuing Operations

For the three and six months ended June 28, 2025, the Company recorded an income tax benefit of $834 million and $711 million representing an effective tax rate of 1,263.6% and (92.8)%, respectively. The tax benefit for the three and six months ended June 28, 2025 reflected a discrete tax benefit of $792 million and $781 million, respectively, primarily due to a tax benefit of $853 million related to the release of uncertain tax positions pertaining to the reasonable cause relief for dual consolidated losses approved by the Internal Revenue Services (IRS) in April 2025, partially offset by other items, including $45 million of deferred tax expense associated with the expected gain on the transfer of appreciated assets related to the acquisition of ZT Systems.

For the three and six months ended June 29, 2024, the Company recorded an income tax provision of $41 million and an income tax benefit of $11 million representing an effective tax rate of 13.4% and (2.9)%, respectively. The tax provision for the three months ended June 29, 2024 reflected a discrete tax expense of $21 million, primarily related to interest and penalties accrued for uncertain tax positions partially offset by the tax effects of stock-based compensation. The tax benefit for the six months ended June 29, 2024 reflected a discrete tax benefit of $40 million, primarily related to stock-based compensation.

As of June 28, 2025 and December 28, 2024, the Company had long-term income tax liabilities related to unrecognized tax benefits of $738 million and $1.4 billion, respectively, recorded under Other long-term liabilities in the Company’s consolidated balance sheets. The reduction in long-term income tax liabilities was primarily due to the release of $853 million of uncertain tax positions pertaining to reasonable cause relief for dual consolidated losses approved by the IRS in April 2025.

Discontinued Operations

For the three and six months ended June 28, 2025, the Company recorded an income tax benefit of $24 million primarily related to a discrete tax benefit of $49 million related to the expected disposition of the ZT Manufacturing Business partially offset by income tax expense from operations included in income from discontinued operations.

NOTE 13 – Commitments and Contingencies

Commitments

The Company’s purchase commitments primarily include obligations to purchase wafers and substrates from third parties, and obligations for future payments related to multi-year cloud service provider, software, technology and IP license agreements. These purchase obligations were made under noncancellable purchase orders and contractual obligations requiring minimum purchases for which cancellation would lead to significant penalties.

Total future unconditional purchase commitments as of June 28, 2025 were as follows:

Fiscal Year(In millions)
Remainder of 2025$5,482
20261,152
2027910
2028861
2029729
2030 and thereafter304
Total unconditional purchase commitments$9,438

The Company continually works with suppliers and partners on timing of payments and deliveries of purchase commitments, taking into account business conditions.

Contingencies

During the quarterly period ended June 28, 2025, 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 – Restructuring Charges

In the fourth quarter of 2024, the Company implemented a restructuring plan (the 2024 Restructuring Plan) which reduced the global workforce by approximately 4% of headcount. Actions associated with the 2024 Restructuring Plan were substantially completed in the first quarter of fiscal year 2025. The 2024 Restructuring Plan charges to date were $186 million, of which $113 million was related to employee severance and benefits and $73 million was related to asset impairment. During the three and six months ended June 28, 2025, the Company made $3 million and $78 million of severance payments and had no charges or adjustments to period expense under the 2024 Restructuring Plan. As of June 28, 2025 and December 28, 2024, restructuring plan liabilities of $11 million and $89 million, respectively, were recorded within Accrued liabilities in the consolidated balance sheets.

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