amd-20240330

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

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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

SEC Form 10-Q filed by Advanced Micro Devices Inc.