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What changed in Advanced Micro Devices's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Advanced Micro Devices's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+480 added−446 removedSource: 10-K (2024-01-31) vs 10-K (2023-02-27)

Top changes in Advanced Micro Devices's 2023 10-K

480 paragraphs added · 446 removed · 315 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

89 edited+49 added−20 removed61 unchanged
Biggest changeThe forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s consolidated financial statements; demand for AMD’s products; the growth, change and competitive landscape of the markets in which AMD participates; international sales will continue to be a significant portion of total sales in the foreseeable future; that AMD’s cash, cash equivalents and short-term investment balances together with the availability under that certain revolving credit facility (the Revolving Credit Agreement) made available to AMD and certain of its subsidiaries, our commercial paper program, and our cash flows from operations will be sufficient to fund AMD’s operations including capital expenditures and purchase commitments over the next 12 months and beyond; AMD’s ability to obtain sufficient external financing on favorable terms, or at all; AMD’s expectation that based on management’s current knowledge, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial position, results of operation or cash flows; anticipated ongoing and increased costs related to enhancing and implementing information security controls; all unbilled accounts receivables are expected to be billed and collected within 12 months; revenue allocated to remaining performance obligations that are unsatisfied which will be recognized in the next 12 months; and a small number of customers will continue to account for a substantial part of AMD’s revenue in the future.
Biggest changeThe forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s consolidated financial statements; demand for AMD’s products; AMD’s strategy and expected benefits; the growth, change and competitive landscape of the markets in which AMD participates; international sales will continue to be a significant portion of total sales in the foreseeable future; that AMD’s cash, cash equivalents and short-term investment balances together with the availability under that certain revolving credit facility (the Revolving Credit Agreement) made available to AMD and certain of its subsidiaries, our commercial paper program, and our cash flows from operations will be sufficient to fund AMD’s operations including capital expenditures and purchase commitments over the next 12 months and beyond; AMD’s ability to obtain sufficient external financing on favorable terms, or at all; AMD’s expectation that based on management’s current knowledge, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial position, results of operation or cash flows; anticipated ongoing and increased costs related to enhancing and implementing information security controls; all unbilled accounts receivables are expected to be billed and collected within 12 months; revenue allocated to remaining performance obligations that are unsatisfied which will be recognized in the next 12 months; a small number of customers will continue to account for a substantial part of AMD’s revenue in the future; the expected implications from the development of the legal and regulatory environment relating to emerging technologies such as AI; AMD’s expectation that it will not pay dividends in the near future; AMD’s ability to achieve its corporate responsibility initiatives; expected future AI technology trends and developments.
Microsoft, Windows, DirectX and Xbox One are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. PCIe is a registered trademark of PCI-SIG Corporation. Linux is the registered trademark of Linus Torvalds in the United States and other countries. PlayStation is a registered trademark or trademark of Sony Interactive Entertainment, Inc.
Microsoft, Windows, DirectX and Xbox One are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. PCIe is a registered trademark of PCI-SIG Corporation. Linux is the registered trademark of Linus Torvalds in the United States and/or other countries. PlayStation is a registered trademark or trademark of Sony Interactive Entertainment, Inc.
The Versal portfolio is composed of software-programmable Adaptive SoCs, with a heterogeneous compute platform that combines Scalar Engines, Adaptable Engines, and Intelligent Engines to achieve dramatic performance improvements over today's fastest FPGA and accelerate applications in a wide variety of markets, including data center, wired network, 5G wireless, automotive, industrial, scientific, medical, aerospace and defense.
The Versal portfolio is composed of software-programmable Adaptive SoCs, with a heterogeneous compute platform that combines Scalar Engines, Adaptable Engines, and Intelligent Engines to achieve dramatic performance improvements over today's fastest FPGA and accelerate applications in a wide variety of markets, including data center, wired network, 5G wireless infrastructure, automotive, industrial, scientific, medical, aerospace and defense.
For example, the European Union (EU) and China are two among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging.
For example, the European Union (EU) and China are among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging.
Our strategy is to create and deliver the world’s leading high-performance and adaptive computing products across a diverse set of markets including the data center, embedded, client and gaming.
Our strategy is to create and deliver the world’s leading high-performance and adaptive computing products across a diverse set of customer markets including data center, client, gaming and embedded.
In addition, we continue to offer the B450 and A320 chipsets that are combined with AMD Ryzen processors for the AM4 desktop platform for the performance and affordable mainstream platforms segments.
In addition, we continue to offer the B450 chipsets that are combined with AMD Ryzen processors for the AM4 desktop platform for the performance and affordable mainstream platforms segments.
From time to time, we may also sell or license portions of our intellectual property (IP) portfolio. 1 Table of Contents Additional Information AMD was incorporated under the laws of Delaware on May 1, 1969 and became a publicly held company in 1972. Our common stock is currently listed on The NASDAQ Global Select Market (NASDAQ) under the symbol “AMD”.
From time to time, we may also sell or license portions of our intellectual property (IP) portfolio. Additional Information AMD was incorporated under the laws of Delaware on May 1, 1969 and became a publicly held company in 1972. Our common stock is currently listed on The NASDAQ Global Select Market (NASDAQ) under the symbol “AMD”.
AMD, the AMD Arrow logo, AMD CDNA, AMD Instinct, AMD RDNA, Alveo, Artix, Athlon, CoolRunner, EPYC, FidelityFX, FirePro, FreeSync, Geode, Infinity Fabric, Kinex, Pensando, Radeon, Radeon Instinct, ROCm, Ryzen, Spartan, Threadripper, UltraScale, UltraScale+, V-Cache, Versal, Virtex, Vitis, Vivado, Xilinx, Zynq and combinations thereof are trademarks of Advanced Micro Devices, Inc.
AMD, the AMD Arrow logo, AMD CDNA, AMD Instinct, RDNA, Alveo, Artix, Athlon, CoolRunner, EPYC, FidelityFX, FirePro, FreeSync, Geode, Infinity Fabric, Kinex, Kria, Pensando, Radeon, ROCm, Ryzen, Spartan, Threadripper, UltraScale, UltraScale+, V-Cache, Versal, Virtex, Vitis, Vivado, Xilinx, XDNA, Zynq and combinations thereof are trademarks of Advanced Micro Devices, Inc.
We leverage our existing IP to create a variety of products tailored to a specific customer’s needs, including complex fully-customized SoCs to more modest adaptations and integrations of existing CPU, APU or GPU products. Gaming Products Semi-Custom Products. Our semi-custom products are tailored, co-developed, high-performance, customer-specific solutions based on our CPU, GPU and multi-media technologies.
We leverage our existing IP to create a variety of products tailored to a specific customer’s needs, including complex fully-customized SoCs to more modest adaptations and integrations of existing CPU, APU or GPU products. Gaming Products Semi-Custom Products. Our semi-custom products are tailored, high-performance, customer-specific solutions based on our CPU, GPU and multi-media technologies.
Our Vitis™ unified software platform enables the development and deployment of embedded software and accelerated applications, on our FPGAs and Adaptive SoCs. Out Vitis AI unified software platform enables the development and deployment of AI software on our FPGAs and Adaptive SoCs.
Our Vitis™ unified software platform enables the development and deployment of embedded software and accelerated applications, on our FPGAs and Adaptive SoCs. Our Vitis AI unified software platform enables the development and deployment of AI software on our FPGAs and Adaptive SoCs.
We believe that integrated, balanced computing platforms consisting of CPUs, chipsets and GPUs (either as discrete GPUs or integrated into an APU or SoC) that work together at the system level bring end users improved system stability, increased performance and enhanced power efficiency.
We believe that integrated, balanced computing platforms consisting of CPUs, chipsets, GPUs (either as discrete GPUs or integrated into an APU or SoC) and AI accelerators that work together at the system level bring end users improved system stability, increased performance and enhanced power efficiency.
The results are reviewed by our Board of Directors and acted upon by our senior leadership team and individual managers at every level. Results from our 2022 survey reported scores that continued to be among the very best for global companies in the technology industry.
The results are reviewed by our Board of Directors and acted upon by our senior leadership team and individual managers at every level. Results from our 2023 survey reported scores that continued to be among the very best for global companies in the technology industry.
Our P4 programmable AMD Pensando DPUs are designed to help offload data center infrastructure services from the CPU, and coupled with our comprehensive software stack, help enable cloud and enterprise customers to optimize performance for network, storage, and security services at cloud scale.
Our P4 programmable AMD Pensando DPUs are designed to help offload data center infrastructure services from the host CPU, and coupled with our comprehensive networking software stack, AMD DPUs help enable cloud and enterprise customers to optimize performance for network, storage, and security services at cloud scale.
Our employees described our culture as inclusive, innovative, open, and respectful, and rated the quality of our managers among the top 10% of our technology industry peers. Diversity, Belonging and Inclusion Our diverse and inclusive workforce encourages employees to share their opinions and different perspectives.
Our employees described our culture as inclusive, innovative, open, and respectful, and rated the quality of our managers among the top 10% of our technology industry peers. Diversity, Belonging and Inclusion (DB&I) Our diverse and inclusive workforce encourages employees to share their opinions and different perspectives.
We use a 52- or 53-week fiscal year ending on the last Saturday in December. References in this report to 2022, 2021 and 2020 refer to the fiscal year unless explicitly stated otherwise.
We use a 52- or 53-week fiscal year ending on the last Saturday in December. References in this report to 2023, 2022 and 2021 refer to the fiscal year unless explicitly stated otherwise.
Arm is a registered trademark of ARM Limited (or its subsidiaries) in the United States and/or elsewhere. Vulkan and the Vulkan logo are registered trademarks of Khronos Group Inc. Steam and the Steam logo are trademarks and/or registered trademarks of Valve Corporation in the United States and/or other countries.
Arm is a registered trademark of ARM Limited (or its subsidiaries) in the United States and/or other countries. Vulkan and the Vulkan logo are registered trademarks of Khronos Group Inc. Steam Deck and the Steam Deck logo are trademarks and/or registered trademarks of Valve Corporation in the United States and/or other countries.
We leverage our technology to address the computational and visual data processing needs in the data center market. Modern data centers require high performance, energy efficient, scalable and adaptable compute engines to meet the demand driven by the growing amount of data that needs to be stored, accessed, analyzed and managed.
We leverage our technology to address the computational, visual data processing and AI workload acceleration needs in the data center market. Modern data centers require high performance, energy efficient, scalable and adaptable compute engines to meet the demand driven by the growing amount of data that needs to be stored, accessed, analyzed and managed.
A loss of this customer would have a material adverse effect on our business. Original Equipment Manufacturers We focus on three types of OEM partners: multi-nationals, selected regional accounts and selected global and local system integrators, who target commercial and consumer end customers of all sizes.
A loss of this customer would have a material adverse effect on our business. 9 Table of Contents Original Equipment Manufacturers We focus on three types of OEM partners: multi-nationals, selected regional accounts and selected global and local system integrators, who target commercial and consumer end customers of all sizes.
Today, we develop high-performance and adaptive computing to solve some of the world’s toughest and most interesting challenges. Our Vision - High performance and adaptive computing is transforming our lives. 11 Table of Contents Our Mission - Build great products that accelerate next-generation computing experiences. Our employees are driven by this vision and mission.
Today, we develop high-performance and adaptive computing to solve some of the world’s toughest and most interesting challenges. Our Vision - High performance and adaptive computing is transforming our lives. Our Mission - Build great products that accelerate next-generation computing experiences. Our employees are driven by this vision and mission.
Development Boards, Kits and Configuration Products. We offer development kits for all our FPGA and Adaptive SoC products that include hardware, development tools, IP and reference designs that are designed to streamline and accelerate the development of domain-specific and market-specific applications. Legacy Product Families.
Development Boards, Kits and Configuration Products. We offer development kits for all our FPGA and Adaptive SoC products that include hardware, development tools, IP and reference designs that are designed to streamline and accelerate the development of domain-specific and market-specific applications.
These laws and regulations require our suppliers to obtain permits for operations making our products, including the discharge of air pollutants and wastewater. Environmental laws are complex, change frequently and have tended to become more stringent over time.
These laws and regulations require our suppliers to obtain permits for operations making our products, including the discharge of air pollutants and wastewater. Environmental laws are complex, change frequently and tend to become more stringent over time.
We believe that any amount in addition to what has already been accrued would not be material. 13 Table of Contents
We believe that any amount in addition to what has already been accrued would not be material. 14 Table of Contents
To address anticipated future remediation costs under the orders, we have computed and recorded an estimated environmental liability of approximately $3.9 million and have not recorded any potential insurance recoveries in determining the estimated costs of the cleanup. The progress of future remediation efforts cannot be predicted with certainty and these costs may change.
To address anticipated future remediation costs under the orders, we have computed and recorded an estimated environmental liability of approximately $4.8 million and have not recorded any potential insurance recoveries in determining the estimated costs of the cleanup. The progress of future remediation efforts cannot be predicted with certainty and these costs may change.
In addition, we believe customers also benefit from an all-AMD platform (consisting of an APU or CPU, a discrete GPU, and a chipset when needed), as we are able to optimize interoperability, provide our customers a single point of contact for the key platform components and enable them to bring the platforms to market quickly in a variety of PC and server system form factors.
In addition, we believe customers also benefit from an all-AMD platform (consisting of an APU or CPU, a discrete GPU, a chipset and AMD software), as we are able to optimize interoperability, provide our customers a single point of contact for the key platform components and enable them to bring the platforms to market quickly in a variety of PC form factors.
Our FPGA and Adaptive SOC products are sold to customers in a very wide range of markets such as Aerospace and Defense, Test and Measurement, Industrial, Automotive, Consumers, Broadcast, Communication Infrastructure and Data Center. For these products we either sell directly to our customers or through a network of distributors and OEM partners.
Our Embedded Segment products are sold to customers in a very wide range of markets such as Aerospace and Defense, Test and Measurement, Industrial, Automotive, Consumers, Broadcast, Communication Infrastructure and Data Center. For these products we either sell directly to our customers or through a network of distributors and OEM partners.
Our four reportable segments are: • the Data Center segment, which primarily includes server CPUs and GPUs, DPUs, FPGAs, and Adaptive SoC products for data centers; • the Client segment, which primarily includes CPUs, APUs, and chipsets for desktop and notebook personal computers; • the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services; and • the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs and Adaptive SoC products.
Our four reportable segments are: • the Data Center segment, which primarily includes server CPUs, GPUs, APUs, DPUs, FPGAs, SmartNICs, AI accelerators and Adaptive 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, semi-custom SoC products and development services; and • the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, SOMs, and Adaptive SoC products.
Our customers generally use our graphics solutions to enable or increase the speed of rendering images, to help improve image resolution and color definition. We develop our graphics products for use in various computing devices and entertainment platforms, including desktop PCs, notebook PCs, All-in-Ones (AIOs), professional workstations, and the data center.
Our customers generally use our graphics solutions to enable or increase the speed of rendering images, to help improve image resolution and color definition and/or to process AI/ML based workloads. We develop our graphics products for use in various computing devices and entertainment platforms, including desktop PCs, notebook PCs, handheld PCs, All-in-Ones (AIOs), professional workstations, and the data center.
Since the invention of the transistor in 1948, improvements in IC process and design technologies have led to the development of smaller, more complex and more reliable ICs at a lower cost-per-function. 2 Table of Contents Our Strategy AMD is focused on high-performance and adaptive computing technology, software and product leadership.
Since the invention of the transistor in 1948, improvements in IC process and design technologies have led to the development of smaller, more complex and more reliable ICs at a lower cost-per-function. 2 Table of Contents Our Strategy AMD drives innovation through high-performance and adaptive computing technology, software and product leadership.
Different combinations of CPUs, GPUs, DPUs, FPGAs, and Adaptive SoCs enable the optimization of performance and power for a diverse set of workloads. 3 Table of Contents Data Center Products Server CPUs. Our CPUs for server platforms currently include the AMD EPYC™ Series processors – AMD EPYC 9004 Series, AMD EPYC 7003 Series and AMD EPYC 7002 Series.
Different combinations of CPUs, GPUs, DPUs, FPGAs, SmartNICs, and Adaptive SoCs enable the optimization of performance and power for a diverse set of workloads. Data Center Products Server CPUs. Our CPUs for server platforms currently include the AMD EPYC™ Series processors – AMD EPYC 9004 Series, AMD EPYC 8004 Series, AMD EPYC 7003 Series and AMD EPYC 7002 Series.
Our AMD Advantage Design™ Framework is a collaboration with our global PC partners, delivering high-performance gaming notebooks by combining our AMD Radeon RX series mobile graphics, AMD Software: Adrenalin Edition, AMD Ryzen series mobile processors and utilizing AMD smart technologies to provide best-in-class gaming experiences.
Our AMD Advantage Design™ Framework is a collaboration with our global PC partners, delivering high-performance gaming notebooks by combining our AMD Radeon RX series mobile graphics, AMD Software: Adrenalin Edition, AMD Ryzen series mobile processors and utilizing AMD smart technologies to provide best-in-class gaming experiences. 6 Table of Contents Professional GPUs.
Environmental Regulations Our operations and properties have in the past been and continue to be subject to various United States and foreign laws and regulations, including those relating to materials used in our products and manufacturing processes, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and hazardous wastes and remediation of contamination.
Environmental Regulations Our operations and properties are subject to various United States and foreign laws and regulations, including those relating to materials used in our products and the manufacturing processes of our products, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and hazardous wastes and remediation of contamination.
We partnered with Valve to create a semi-custom APU optimized for handheld gaming to power the Steam Deck™. 5 Table of Contents Discrete Desktop and Notebook GPUs .
We partnered with Valve to create a semi-custom APU optimized for handheld gaming to power the Steam Deck™. Discrete Desktop and Notebook GPUs .
We believe that building a diverse talent pipeline, encouraging a culture of respect and belonging, and increasing inclusion of unique and underrepresented voices makes our Company stronger. Our Employee Resource Groups encourage employee engagement and play an important role in our culture.
We believe that building a diverse talent pipeline, encouraging a culture of respect and belonging, and increasing inclusion of unique and underrepresented voices makes our company stronger. Our Employee Resource Groups, which are open to all our employees, encourage employee engagement and play an important role in our culture.
Our embedded processors and GPUs are designed to support high performance and bandwidth network connectivity and security, high-performance storage requirements for enterprise and cloud infrastructure, 3D graphics performance and 4K multimedia requirements of automotive infotainment systems. 6 Table of Contents FPGAs and Adaptive SoCs.
Our embedded processors and GPUs are designed to support high performance and bandwidth network connectivity and security, high-performance storage requirements for enterprise and cloud infrastructure, 3D graphics performance and 4K multimedia requirements of automotive infotainment systems.
Our AMD Instinct™ family of GPU accelerator products, including AMD Instinct MI200 Series which is based on 2 nd Gen AMD CDNA architecture, and are specifically designed to address the growing demand for compute-accelerated data center workloads, including AI training and a range of supercomputing applications where the compute capabilities of GPUs provide additional performance.
Our AMD Instinct™ family of GPU accelerator products, including AMD Instinct MI200 and MI300 Series which are based on AMD CDNA architecture. AMD Instinct accelerators are designed to address the growing demand for compute-accelerated data center workloads, including AI training and inferencing, and a range of supercomputing applications where the compute capabilities of GPUs can provide additional performance.
In the AM5 platform we also offer B650 chipsets to enable a broader range of solutions in the market. In the AM4 ecosystem for 5000-series processors and prior, we offer the X570, B550 and A520 chipsets for socket AM4 for 3 rd Gen AMD Ryzen desktop processors and 5000 processors.
In the AM5 platform we also offer B650 chipsets to enable a broader range of solutions in the market. In the AM4 ecosystem for 5000-series processors and prior, we offer the X570, B550 and A520 chipsets.
Our products for embedded platforms include AMD Embedded EPYC CPUs, AMD Embedded Ryzen V-Series APUs, CPUs and SoCs, AMD Embedded Ryzen R-Series APUs, CPUs and SoCs .
Our products for embedded platforms include AMD EPYC Embedded CPUs, AMD Ryzen Embedded V-Series APUs and CPUs, AMD Ryzen Embedded R-Series APUs and CPUs, AMD Ryzen Embedded 5000 Series processors and AMD Ryzen Embedded 7000 Series processors .
We currently base our CPUs and chipsets on the x86 instruction set architecture and the AMD Infinity Fabric™, which connects an on-chip memory controller and input/output (I/O) channels directly to one or more CPU cores. Client Products Desktop CPUs. Our CPUs for desktop platforms currently include the AMD Ryzen™ and AMD Athlon™ series processors.
We currently base our CPUs, APUs and chipsets on the x86 instruction set architecture and the AMD Infinity Fabric™, which connects an on-chip memory controller and input/output (I/O) channels directly to our compute engines and domain specific accelerators. Client Products Desktop CPUs. Our CPUs and APUs for desktop platforms currently include the AMD Ryzen™ and AMD Athlon™ series processors.
We assume no obligation to update forward-looking statements. References in this Annual Report on Form 10-K to “AMD,” “we,” “us,” “management,” “our” or the “Company” mean Advanced Micro Devices, Inc. and our consolidated subsidiaries.
References in this Annual Report on Form 10-K to “AMD,” “we,” “us,” “management,” “our” or the “Company” mean Advanced Micro Devices, Inc. and our consolidated subsidiaries.
Additionally, our RDNA 2 architecture supports advanced graphics features such as ray tracing, AMD Infinity Cache™ and variable rate shading. The Sony PlayStation ® 5 and Microsoft ® Xbox Series S™ and X™ game consoles also feature our RDNA graphics architecture.
This generation continues to support advanced graphics features introduced with RDNA 2, such as ray tracing, AMD Infinity Cache™ and variable rate shading. The Sony PlayStation ® 5 and Microsoft ® Xbox Series S™ and X™ game consoles also feature our RDNA graphics architecture.
ARM-based designs are being used in the PC market, which could lead to further growth and development of the ARM ecosystem. 9 Table of Contents Competition in Gaming Segment In the graphics market, our principal competitor in the supply of discrete graphics is NVIDIA who is the market share leader.
ARM-based designs are being used in the PC market, which could lead to further growth and development of the ARM ecosystem. Competition in Gaming Segment In the graphics market, our principal competitor in the supply of discrete graphics is NVIDIA, who is the market share leader, and Intel, who manufactures and sells integrated graphics processors and gaming-focused discrete GPUs.
Customers Our microprocessor customers consist primarily of original equipment manufacturers (OEMs), large public cloud service providers, original design manufacturers (ODMs), system integrators and independent distributors in both domestic and international markets. ODMs provide design and/or manufacturing services to branded and unbranded private label resellers, OEMs and system builders.
Customers Our Data Center Segment customers consist primarily of hyperscale data centers, original equipment manufacturers (OEMs), original design manufacturers (ODMs), system integrators and independent distributors in both domestic and international markets. ODMs provide design and/or manufacturing services to branded and unbranded private label resellers, OEMs and system builders.
Historically, our net revenue has been generally higher in the second half of the year than in the first half of the year, although market conditions and product transitions could impact these trends. Human Capital As of December 31, 2022, we had approximately 25,000 employees in our global workforce.
Seasonality Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the second half of the year than in the first half of the year, although market conditions and product transitions could impact these trends. Human Capital As of December 30, 2023, we had approximately 26,000 employees in our global workforce.
All devices feature adaptable hardware that enables our customers to implement customized, domain-specific architectures. With both hardware-accelerated performance and flexibility beyond what CPUs, GPUs, application-specific standard parts (ASSPs), and application-specific integrated circuits (ASICs) can offer, customers can introduce new innovations to the market quickly.
With both hardware-accelerated performance and flexibility beyond what CPUs, GPUs, application-specific standard parts (ASSPs), and application-specific integrated circuits (ASICs) can offer, customers can introduce new innovations to the market quickly.
Overview We are a global semiconductor company primarily offering: • server microprocessors (CPUs) and graphics processing units (GPUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and Adaptive System-on-Chip (SoC) products for data centers; • CPUs, accelerated processing units (APUs) that integrate CPUs and GPUs, and chipsets for desktop and notebook personal computers; • discrete GPUs, and semi-custom SoC products and development services; and • embedded CPUs, GPUs, APUs, FPGAs, and Adaptive SoC products.
Overview We are a global semiconductor company primarily offering: • server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs), Artificial Intelligence (AI) accelerators and Adaptive System-on-Chip (SoC) products for data centers; 1 Table of Contents • CPUs, APUs and chipsets for desktop, notebook, and handheld personal computers; • discrete GPUs, and semi-custom SoC products and development services; and • embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
Our visual cloud data center GPUs include a range of solutions tailored towards workloads requiring remote visualization, such as Desktop-as-a-Service, Workstation-as-a-Service and Cloud Gaming.
Our visual cloud data center GPUs include a range of solutions tailored towards workloads requiring remote visualization, such as Desktop-as-a-Service, Workstation-as-a-Service and Cloud Gaming. FPGAs and Adaptive SoCs. We offer a wide range of FPGAs, Adaptive SoCs and acceleration cards for the data center.
In addition, we expect continued competition from the ASIC market, which has been ongoing since the inception of FPGAs.
In addition, we expect continued competition from the ASIC market, which has been ongoing since the inception of FPGAs. Intel is our main competitor for embedded CPUs.
With each of our graphics products, we have available drivers and supporting software packages that enable the effective use of these products under a variety of operating systems and applications. We have developed AMD RDNA™ 3, a high performing and power efficient graphics architecture, which is the foundation for next-generation PC gaming graphics.
With each of our graphics products, we have available drivers and supporting software packages that enable the effective use of these products under a variety of operating systems and applications. We have developed AMD RDNA™ 3, a high performing and power efficient graphics architecture, featuring a chiplet design, AI accelerators and the Radiance Display™ Engine.
Third-Party Distributors Our authorized channel distributors resell to sub-distributors and OEMs, ODMs, and other customers. Typically, distributors handle a wide variety of products, and may include products from other manufacturers that compete with our products. Distributors typically maintain an inventory of our products.
Typically, distributors handle a wide variety of products, and may include products from other manufacturers that compete with our products. Distributors typically maintain an inventory of our products.
Embedded Segment The Embedded Market The Embedded segment primarily includes embedded CPUs, GPUs, APUs, FPGAs, and Adaptive SoC products. Embedded products address computing needs in automotive, industrial, test, measurement, emulation, medical, multimedia, aerospace, defense, communications, networking, security, and storage markets as well as thin clients, which are computers that serve as an access device on a network.
Embedded products address computing needs in automotive, industrial, test, measurement, emulation, medical, broadcast, professional audio visual (ProAV), aerospace, defense, communications, networking, security, and storage markets as well as thin clients, which are computers that serve as an access device on a network.
Prior generation high-end Virtex FPGA families include Virtex-6, Virtex-5, Virtex-4, Virtex-II Pro, Virtex-II and the original Virtex family. Prior generation low end Spartan™ FPGA families include Spartan-6, Spartan-3, the Spartan-3E and Spartan-3A, Spartan-IIE, Spartan-II, Spartan XL and the original Spartan family. Complex Programmable Logic Devices (CPLDs) operate on the lowest end of the programmable logic density spectrum.
Prior generation low end Spartan™ FPGA families include Spartan-6, Spartan-3, the Spartan-3E and Spartan-3A, Spartan-IIE, Spartan-II, Spartan XL and the original Spartan family. Complex Programmable Logic Devices (CPLDs) operate on the lowest end of the programmable logic density spectrum. CPLDs are single-chip, nonvolatile solutions characterized by instant-on and universal interconnect.
As of December 31, 2022, we had approximately 8,200 patents in the United States and approximately 2,200 patent applications pending in the United States. In certain cases, we have filed corresponding applications in foreign jurisdictions. Including United States and foreign matters, we have approximately 19,800 patent matters worldwide consisting of approximately 13,200 issued patents and 6,600 patent applications pending.
As of December 30, 2023, we had approximately 7,500 patents in the United States and approximately 2,000 patent applications pending in the United States. In certain cases, we have filed corresponding applications in foreign jurisdictions. Including United States and foreign matters, we have approximately 18,500 patent matters worldwide consisting of approximately 12,800 issued patents and 5,600 patent applications pending.
Our AMD Radeon Software expands remote gaming functionality and enables new features and customization capabilities. In addition, we also offer tools for game developers such as our AMD FidelityFX™ open-source image quality software toolkit that helps deliver improved visual quality with minimal performance overhead. FidelityFX Super Resolution (FSR) uses upscaling technologies to help boost frame rates in games.
Our AMD Radeon Software offers performance enhancing tools and enables new features and customization capabilities to customers and end-users. In addition, we also offer tools for game developers such as our AMD FidelityFX™ open-source image quality software toolkit that helps deliver improved visual quality with minimal performance overhead.
From time to time, we may also sell or license portions of our IP portfolio. In addition to these reportable segments, we have an All Other category, which is not a reportable segment. Data Center Segment Data Center Market The Data Center segment primarily includes server CPUs, GPUs, DPUs, FPGAs, and Adaptive SoC products.
In addition to these reportable segments, we have an All Other category, which is not a reportable segment. 3 Table of Contents Data Center Segment Data Center Market The Data Center segment primarily includes server-class CPUs, GPUs, AI accelerators, DPUs, FPGAs, SmartNICs, and Adaptive SoC products.
Innovation occurs when creative minds and diverse perspectives from all over the world work together. This is the foundation of our unique culture and the reason why our employees are among the most engaged in our industry. We conduct a confidential annual survey of our global workforce to measure our culture, engagement, and manager quality.
This is the foundation of our unique culture and the reason why we believe our employees are among the most engaged in our industry. 12 Table of Contents We conduct a confidential annual survey of our global workforce to measure our culture, engagement, and manager quality.
We achieve this through our family of CPUs, GPUs, FPGAs, and Adaptive SoCs. We develop world-class software platforms that are used to enable our high-performance products. Our software platforms include development tools, compilers, and drivers for our CPUs, GPUs and FPGAs. We work closely with our customers to define and develop customized solutions to precisely match their requirements.
Our software platforms include development tools, compilers, and drivers for our CPUs, APUs, GPUs and FPGAs. We work closely with our customers to define and develop customized solutions to precisely match their requirements. We enable this by combining our broad portfolio of high-performance IP with our leadership design and packaging to deliver world-class customized solutions to our customers.
We leverage our high-performance CPU, GPU, FPGA and DPU product portfolios to deliver solutions that are differentiated at the chip level, such as our semi-custom SoCs, Adaptive SoCs, and APUs, and at the systems level, such as PCs, embedded platforms and servers.
With our high-performance product portfolios, we deliver solutions that are differentiated at the chip level, such as our semi-custom SoCs, Adaptive SoCs, and APUs, and at the platform level, such as in our customers’ client computing devices, embedded platforms and servers.
We enable this by combining our broad portfolio of high-performance IP with our leadership design and packaging to deliver world-class customized solutions to our customers. We invest in innovative technology and solutions such as our custom-ready chiplet platform and AMD Infinity Architecture to maintain our leadership position as a custom-design silicon provider of choice.
We invest in innovative technology and solutions such as our custom-ready chiplet platform and AMD Infinity Architecture to maintain our leadership position as a custom-design silicon provider of choice.
Our mobile APUs, including AMD Ryzen and AMD Athlon mobile processors for the commercial and consumer markets, combine both high levels of performance and efficiency for notebook PCs. Our AMD Ryzen 7000 Series processors for mobile applications have up to 16 “Zen 4” architecture cores.
Our mobile APUs, including AMD Ryzen and AMD Athlon mobile processors for the commercial and consumer markets, combine both high levels of performance and efficiency for notebook PCs. Our AMD Ryzen 7045 Series processors are designed to deliver high performance gaming solutions.
In addition, we have cooperative advertising and marketing programs with customers and third parties, including market development programs, pursuant to which we may provide product information, training, marketing materials and funds.
Our compute and network acceleration board products are sold under the Alveo and Pensando brands. We market our products through direct marketing and co-marketing programs. In addition, we have cooperative advertising and marketing programs with customers and third parties, including market development programs, pursuant to which we may provide product information, training, marketing materials and funds.
Competition in Data Center Segment In Data Center, we compete against Intel Corporation (Intel) with our FPGA, Adaptive SoC, CPU and DPU server products and NVIDIA Corporation (NVIDIA) with our CPU, GPU and DPU server products. A variety of companies provide or have developed ARM-based microprocessors and platforms.
Competition in Data Center Segment In Data Center, we compete against Intel Corporation (Intel) and NVIDIA Corporation (NVIDIA) with our CPU, GPU and DPU server products. In addition, we compete against Intel with our FPGA and Adaptive SoC server products. A variety of smaller fabless silicon companies offer proprietary accelerator solutions and ARM based CPUs targeting data center use-cases.
You can also obtain copies of these documents by writing to us at: Corporate Secretary, AMD, 7171 Southwest Parkway, M/S B100.T, Austin, Texas 78735, or emailing us at: Corporate.Secretary@amd.com. All of these documents and filings are available free of charge.
You can also obtain copies of these documents by writing to us at: Corporate Secretary, AMD, 2485 Augustine Drive, Santa Clara, California 95054, or emailing us at: Corporate.Secretary@amd.com. All of these documents and filings are available free of charge.
AMD Radeon RX 7900 series chiplet design combines 5 nm and 6 nm process nodes, each optimized for specific chips in the GPU. We continue to offer AMD Radeon RX 6000 series discrete graphics, based on our RDNA2 architecture, for high-performance gaming desktops and notebooks.
We continue to offer AMD Radeon RX 6000 series discrete graphics, based on our RDNA2 architecture, for high-performance gaming desktops and notebooks.
Our FSR 2.0 technology uses temporal data and optimized anti-aliasing to boost frame rates in supported games while delivering similar or better image quality than native resolution without requirement dedicated machine learning hardware. Our AMD Radeon RX 7900 XTX and Radeon RX 7900 XT graphics cards are built on high-performance, energy-efficient AMD RDNA 3 architecture.
FidelityFX Super Resolution (FSR) uses upscaling technologies to help boost frame rates in games. Our FSR 2.0 technology uses temporal data and optimized anti-aliasing to boost frame rates in supported games while delivering similar or better image quality than native resolution without the requirement of dedicated machine learning hardware.
CPLDs are single-chip, nonvolatile solutions characterized by instant-on and universal interconnect. Prior generations of CPLDs include the CoolRunner™ and XC9500 product families. Design Platforms and Services Adaptable Platforms. We offer two types of platforms that support our customers' designs and reduce their development efforts: FPGAs and Adaptive SoCs.
Prior generations of CPLDs include the CoolRunner™ and XC9500 product families. Design Platforms and Services Adaptable Platforms. We offer two types of platforms that support our customers' designs and reduce their development efforts: FPGAs and Adaptive SoCs. All devices feature adaptable hardware that enables our customers to implement customized, domain-specific architectures.
A number of jurisdictions including the EU, Australia, California and China are developing or have finalized market entry or public procurement regulations for computers and servers based on ENERGY STAR specifications as well as additional energy consumption limits. 12 Table of Contents Certain environmental laws, including the United States Comprehensive, Environmental Response, Compensation and Liability Act of 1980, or the Superfund Act, impose strict or, under certain circumstances, joint and several liability on current and previous owners or operators of real property for the cost of removal or remediation of hazardous substances and impose liability for damages to natural resources.
Certain environmental laws, including the United States Comprehensive, Environmental Response, Compensation and Liability Act of 1980, or the Superfund Act, impose strict or, under certain circumstances, joint and several liability on current and previous owners or operators of real property for the cost of removal or remediation of hazardous substances and impose liability for damages to natural resources.
We also sell low-power versions of our AMD Athlon, as well as AMD Geode™, AMD Ryzen, AMD EPYC, AMD R-Series and G-Series processors as embedded processor solutions. Our FPGA product brands are Virtex-6, Virtex-7, Virtex UltraScale+, Kintex-7, Kintex UltraScale, Kintex UltraScale+, Artix-7, Artix UltraScale+, Spartan-6 and Spartan-7.
We also market and sell our chipsets under AMD trademarks. Our product brand for server microprocessors is AMD EPYC processors. We also sell low-power versions of our AMD Athlon, as well as AMD Geode™, AMD Ryzen, AMD EPYC, AMD R-Series and G-Series processors as embedded processor solutions.
Certain customers pay us non-recurring engineering fees for design and development services and a purchase price for the resulting products. One customer accounted for 16% of our consolidated net revenue for the year ended December 31, 2022. Sales to this customer consisted of sales of products from our Gaming segment.
We also work with our customers to create differentiated products that leverage our CPU, GPU, DPU and APU technology. Certain customers pay us non-recurring engineering fees for design and development services and a purchase price for the resulting products. One customer accounted for 18% of our consolidated net revenue for the year ended December 30, 2023.
Our AMD Ryzen Threadripper PRO 5000 WX-Series processors provide full-spectrum performance across multiple workstation workloads due to the performance and efficiency of the “Zen 3” core architecture and increased processor frequencies. We also offer the AMD Ryzen PRO 7030 Series Mobile processors built on “Zen 3” core architecture. Chipsets.
Our AMD Ryzen Threadripper PRO 7000 WX-Series processors with “Zen 4” core architecture and 5000 WX-Series processors with “Zen 3” core architecture provide full-spectrum performance across multiple workstation workloads due to the performance and efficiency of the Zen CPU core with core count scaling up to 96 cores in the 7000 WX-Series.
We offer a wide range of FPGAs, Adaptive SoCs and acceleration cards for the data center. Devices include the Virtex™ and Kintex™ FPGA products, as well as Zynq™, Zynq MPSoC, and Versal™ Adaptive SoC products. Our Alveo™ accelerator cards provide a platform for accelerating workloads in the data center, at the edge or the cloud.
Devices include the Virtex™ and Kintex™ FPGA products, as well as Zynq™, Zynq MPSoC, and Versal™ Adaptive SoC products. Our Alveo™ accelerator cards provide a platform for accelerating workloads including AI processing in the data center, at the edge or the cloud. Our AMD Alveo MA35D media accelerator is designed to deliver high channel density, power efficiency and ultra-low-latency performance.
We believe that our commitment to customer service and design support improves our customers’ time-to-market and fosters relationships that encourage customers to use the next generation of our products. 8 Table of Contents We also work with our customers to create differentiated products that leverage our CPU, GPU and APU technology.
We also employ application engineers to assist our customers in designing, testing and qualifying system designs that incorporate our products. We believe that our commitment to customer service and design support improves our customers’ time-to-market and fosters relationships that encourage customers to use the next generation of our products.
We primarily use product quotes, purchase orders, sales order acknowledgments and contractual agreements as evidence of our sales arrangements.
We primarily use product quotes, purchase orders, sales order acknowledgments and contractual agreements as evidence of our sales arrangements. Our agreements typically contain standard terms and conditions covering matters such as payment terms, warranties and indemnities for issues specific to our products.
Our 4 th Gen AMD EPYC 9004 Series processors are built on the “Zen 4” core and are designed to deliver leadership performance and energy efficiency across multiple market segments and workloads. Our 3 rd Gen AMD EPYC processors include AMD 3D V-Cache™ technology for leadership performance in technical computing workloads. FPGAs and Adaptive SoCs.
Our 4 th Gen AMD EPYC 9004 Series processors are built on the “Zen 4” 5 nanometer (nm) process node and re designed to deliver leadership performance and energy efficiency across a range of market segments and workloads.
Our Ryzen 7000 Series desktop processors are based on “Zen 4” architecture and deliver leadership performance for gamers and content creators.
Our Ryzen 7000 Series desktop processors are based on “Zen 4” architecture and deliver leadership performance for gamers and content creators. Our AMD Ryzen 5000 Series desktop processor family powered by our “Zen 3” core architecture has up to 16 cores and provides price-performance for all levels of customers.
Our product brands for data center graphics are Radeon Instinct, Radeon PRO V-series, and AMD Instinct accelerators for servers. We also market and sell our chipsets under AMD trademarks. Our product brand for server microprocessors is AMD EPYC processors.
Our product brand for the consumer graphics market is AMD Radeon graphics, and AMD Embedded Radeon graphics is our product brand for the embedded graphics market. Our product brand for professional graphics products is AMD Radeon PRO graphics. 8 Table of Contents Our product brands for data center graphics are Radeon PRO V-series, and AMD Instinct accelerators for servers.
Gaming Segment Gaming Market Graphics processing is a fundamental component across many of our products and can be found in an APU, GPU, SoC or a combination of a discrete GPU with one of the other foregoing products working in tandem.
In HEDT and Workstation segments, we offer the WRX90 and TRX50 chipsets to support 7000-series Threadripper and Threadripper PRO platforms, as well as the WRX80 chipsets to support the 5000-series Threadripper PRO platforms. 5 Table of Contents Gaming Segment Gaming Market Graphics processing is a fundamental component across many of our products and can be found in APU, GPU, SoC or a combination of a discrete GPU with another product working in tandem.
Development We offer our employees opportunities to advance their careers at the Company and the majority of our new leaders are promoted from within. We are focused on leadership progression and encourage our employees to take advantage of new opportunities. Our manager and leadership development programs are highly rated, and we provide specialized development programs for our employees.
We are focused on leadership progression and encourage our employees to take advantage of new opportunities. Our manager and leadership development programs are highly rated, and we provide specialized development programs for our employees as well as educational assistance in the form of tuition reimbursement for eligible employees to continue their university education or achieve advanced certifications.
(GF), with respect to wafer purchases for our HPC products at the 12 nm and 14 nm technology nodes. 10 Table of Contents Additionally, we purchase wafers from United Microelectronics Corporation (UMC) and Samsung Electronics Co., Ltd. Other Third-Party Manufacturers We outsource board-level graphics product manufacturing to third-party manufacturers.
Additionally, we utilize TSMC, United Microelectronics Corporation (UMC) and Samsung Electronics Co., Ltd. for the production of our integrated circuits (IC) in the form of programmable logic devices. 11 Table of Contents Other Third-Party Manufacturers We outsource board-level graphics product manufacturing to third-party manufacturers.
Our agreements typically contain standard terms and conditions covering matters such as payment terms, warranties and indemnities for issues specific to our products. 7 Table of Contents We generally warrant that our products sold to our customers will conform to our approved specifications and be free from defects in material and workmanship under normal use and conditions for one year.
We generally warrant that our products sold to our customers will conform to our approved specifications and be free from defects in material and workmanship under normal use and conditions for one year. We offer up to three-year limited warranties for certain product types, and sometimes provide other warranty periods based on negotiated terms with certain customers.
Our AMD Radeon PRO family of professional graphics products includes multi-view graphics cards and GPUs designed for integration in mobile and desktop workstations. AMD Radeon PRO graphics cards are designed for demanding use cases such as design and manufacturing for CAD, and media and entertainment for broadcast and animation pipelines.
AMD Radeon PRO graphics cards are designed to optimize design workloads across demanding use cases such as 3D rendering, design and manufacturing for CAD, and media and entertainment for broadcast and animation pipelines on high resolution displays.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOperational and Technology Risks • We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected. • If essential equipment, materials, substrates or manufacturing processes are not available to manufacture our products, we could be materially adversely affected. • Failure to achieve expected manufacturing yields for our products could negatively impact our financial results. • The success of our business is dependent upon our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting and coinciding with significant industry transitions. • Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products. • Our products may be subject to security vulnerabilities that could have a material adverse effect on us. • IT outages, data loss, data breaches and cyber-attacks could compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation and operations. • We may encounter difficulties in upgrading and operating our new enterprise resource planning (ERP) system, which could materially adversely affect us. • Uncertainties involving the ordering and shipment of our products could materially adversely affect us. • Our ability to design and introduce new products in a timely manner includes the use of third-party intellectual property. • We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business and products. • If we lose Microsoft Corporation’s support for our products or other software vendors do not design and develop software to run on our products, our ability to sell our products could be materially adversely affected. 14 Table of Contents • Our reliance on third-party distributors and add-in-board (AIB) partners subjects us to certain risks. • Our business is dependent upon the proper functioning of our internal business processes and information systems and modification or interruption of such systems may disrupt our business, processes and internal controls. • If our products are not compatible with some or all industry-standard software and hardware, we could be materially adversely affected. • Costs related to defective products could have a material adverse effect on us. • If we fail to maintain the efficiency of our supply chain as we respond to changes in customer demand for our products, our business could be materially adversely affected. • We outsource to third parties certain supply-chain logistics functions, including portions of our product distribution, transportation management and information technology support services. • Our inability to effectively control the sales of our products on the gray market could have a material adverse effect on us.
Biggest changeOperational and Technology Risks • We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected. • Essential equipment, materials, substrates or manufacturing processes may not be available to us. • We may fail to achieve expected manufacturing yields for our products. • The success of our business is dependent upon our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting significant industry transitions. • Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products. • Our products may be subject to security vulnerabilities that could have a material adverse effect on us. • IT outages, data loss, data breaches and cyberattacks could disrupt operations and compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation, financial condition and results of operations. • We may encounter difficulties in operating our newly upgraded enterprise resource planning (ERP) system. • Uncertainties involving the ordering and shipment of our products could materially adversely affect us. • Our ability to design and introduce new products includes the use of third-party intellectual property. • We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business and products. 15 Table of Contents • If we lose Microsoft Corporation’s support for our products or other software vendors do not design and develop software to run on our products, our ability to sell our products could be materially adversely affected. • Our reliance on third-party distributors and add-in-board (AIB) partners subjects us to certain risks. • Our business depends on the proper functioning of our internal business processes and information systems. • Our products may not be compatible with some or all industry-standard software and hardware. • Costs related to defective products could have a material adverse effect on us. • We may fail to maintain the efficiency of our supply chain as we respond to changes in customer demand. • We outsource to third parties certain supply-chain logistics functions. • We may be unable to effectively control the sales of our products on the gray market. • Climate change may have a long-term impact on our business.
For example, our Santa Clara and San Jose operations are located near major earthquake fault lines in California. Also, we have operations and employees in regions that have experienced extreme weather such as prolonged heat waves, wildfires and freezing.
For example, our Santa Clara and San Jose operations are located near major earthquake fault lines in California. We also have operations and employees in regions that have experienced extreme weather such as prolonged heat waves, wildfires and freezing.
If we are unable to procure a stable supply of equipment, materials or substrates on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a shortage in equipment, materials or substrate supply or an increase in production costs, which could have a material adverse effect on our business.
If we are unable to procure a stable supply of memory, equipment, materials or substrates on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a shortage in memory, equipment, materials or substrate supply or an increase in production costs, which could have a material adverse effect on our business.
Our income tax obligations could be affected by many factors, including, but not limited to, changes to our corporate operating structure, intercompany arrangements, and tax planning strategies. Our income tax expense is computed based on tax rates at the time of the respective financial period.
Our income tax obligations could be affected by many factors, including, but not limited to, changes to our corporate operating structure, intercompany arrangements, and tax planning strategies. Our income tax expense is computed based on tax rates enacted at the time of the respective financial period.
For example, the European Union (EU) and China are two among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging.
For example, the European Union (EU) and China are among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging.
Excess or obsolete inventory have and may in the future result in write-downs of the value of our inventory. For example, in the third quarter of 2022, we recorded certain charges primarily for inventory, pricing and related reserves in the Gaming and Client segments.
Excess or obsolete inventory have resulted in, and may in the future result in, write-downs of the value of our inventory. For example, in the third quarter of 2022, we recorded certain charges primarily for inventory, pricing and related reserves in the Gaming and Client segments.
Moreover, we are likely to encounter challenges to satisfy those customers who require that all of the components of our products be certified as “conflict free.” If we cannot satisfy these customers, they may choose a competitor’s products.
Moreover, we are likely to encounter challenges to satisfy customers who require that all of the components of our products be certified as “conflict free.” If we cannot satisfy these customers, they may choose a competitor’s products.
It is possible that if a claim is successfully asserted against us, it could result in the payment of damages that could be material to our business. 29 Table of Contents With respect to intellectual property litigation, from time to time, we have been notified of, or third parties may bring or have brought, actions against us and/or against our customers based on allegations that we are infringing the intellectual property rights of others, contributing to or inducing the infringement of the intellectual property rights of others, improperly claiming ownership of intellectual property or otherwise improperly using the intellectual property of others.
It is possible that if a claim is successfully asserted against us, it could result in the payment of damages that could be material to our business. 31 Table of Contents With respect to intellectual property litigation, from time to time, we have been notified of, or third parties may bring or have brought, actions against us and/or against our customers based on allegations that we are infringing the intellectual property rights of others, contributing to or inducing the infringement of the intellectual property rights of others, improperly claiming ownership of intellectual property or otherwise improperly using the intellectual property of others.
Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results.
Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, financial condition and results of operations.
Failure to achieve expected manufacturing yields for our products could negatively impact our financial results. Semiconductor manufacturing yields are a result of product design, process technology and packaging technology, which is typically proprietary to the manufacturer, and low yields can result from design failures, packaging technology failures, process technology failures or a combination of some or all of these.
Failure to achieve expected manufacturing yields for our products could negatively impact our results of operations. Semiconductor manufacturing yields are a result of product design, process technology and packaging technology, which is typically proprietary to the manufacturer, and low yields can result from design failures, packaging technology failures, process technology failures or a combination of some or all of these.
We cannot be certain that our third-party manufacturers will be able to develop, obtain or successfully implement leading-edge process or packaging technologies needed to manufacture future generations of our products profitably or on a timely basis or that our competitors will not develop new technologies, products or processes earlier.
We cannot be certain that our third-party manufacturers will be able to develop, expand, obtain or successfully implement leading-edge manufacturing process or packaging technologies needed to manufacture future generations of our products profitably or on a timely basis or that our competitors will not develop new technologies, products or processes earlier.
For example, we may not realize the expected benefits from the THATIC JV’s expected future performance, including the receipt of any future milestone payments and any royalties from certain licensed intellectual property. In June 2019, the BIS added certain Chinese entities to the Entity List, including THATIC and the THATIC JV.
We may not realize the expected benefits from the THATIC JV’s expected future performance, including the receipt of any future milestone payments and any royalties from certain licensed intellectual property. In June 2019, the BIS added certain Chinese entities to the Entity List, including THATIC and the THATIC JV.
Conversely, a decrease in customer demand could result in excess inventory and an increase in our production costs, particularly since we have prepayment arrangements with certain suppliers. 21 Table of Contents Because some of the equipment and materials that we and our third-party manufacturers purchase are complex, it is sometimes difficult to substitute one equipment or materials supplier for another.
Conversely, a decrease in customer demand could result in excess inventory and an increase in our production costs, particularly since we have prepayment arrangements with certain suppliers. Because some of the equipment and materials that we and our third-party manufacturers purchase are complex, it is sometimes difficult to substitute one equipment or materials supplier for another.
We obtain some of these manufacturing services on a purchase order basis and these manufacturers are not required to provide us with any specified minimum quantity of product beyond the quantities in an existing purchase order.
We obtain many of these manufacturing services on a purchase order basis and these manufacturers are not required to provide us with any specified minimum quantity of product beyond the quantities in an existing purchase order.
If the designers, manufacturers, AIBs and suppliers of motherboards, graphics cards, software, memory and other components cease or reduce their design, manufacture or production 25 Table of Contents of current or future products that are based on, utilized in, or support our products, or laws are adopted that result in the same, our business could be materially adversely affected.
If the designers, manufacturers, AIBs and suppliers of motherboards, graphics cards, software, memory and other components cease or reduce their design, manufacture or production of current or future products that are based on, utilized in, or support our products, or laws are adopted that result in the same, our business could be materially adversely affected.
In addition, during challenging economic times, our current or potential future customers may experience cash flow problems and as a result may modify, delay or cancel plans to purchase our products.
During challenging economic times, our current or potential future customers may experience cash flow problems and as a result may modify, delay or cancel plans to purchase our products.
We anticipate ongoing and increasing costs related to enhancing and implementing information security controls, including costs related to upgrading application, computer, and network security components; training workers to maintain and monitor our security controls; investigating, responding to and remediating any data security breach, and addressing any related litigation; mitigating reputational harm; and complying with external regulations.
We anticipate ongoing and increasing costs related to enhancing and implementing information security controls, including costs related to upgrading application, computer, and network security components; training workers to maintain and monitor our security controls; investigating, responding to and remediating any data security breach, and addressing any related litigation or regulatory proceedings; mitigating reputational harm; and complying with external regulations.
Factors such as the life of the assets, changes in competing technologies, and changes to the business strategy may represent an indicator of impairment. The occurrence of any of these events may require us to record future technology license impairment charges. 35 Table of Contents Our inability to continue to attract and retain qualified personnel may hinder our business.
Factors such as the life of the assets, changes in competing technologies, and changes to the business strategy may represent an indicator of impairment. The occurrence of any of these events may require us to record future technology license impairment charges. Our inability to continue to attract and retain qualified personnel may hinder our business.
Certain equipment and materials that are used in the manufacture of our products are available only from a limited number of suppliers, or in some cases, a sole supplier. We also depend on a limited number of suppliers to provide the majority of certain types of integrated circuit packages for our microprocessors, including our APU products.
Certain equipment and materials that are used in the manufacture of our products are available only from a limited number of suppliers, or in some cases, a sole supplier. We also depend on a limited number of suppliers to provide the majority of certain types of IC packages for our microprocessors, including our APU products.
If we are unable to manage the risks related to the use of our third-party distributors and AIB partners or offer appropriate incentives to focus them on the sale of our products, our business could be materially adversely affected. Additionally, distributors and AIB partners typically maintain an inventory of our products.
If we are unable to manage the risks related to the use of our third-party distributors and AIB partners or offer appropriate incentives to focus them on the sale of our products, our business could be materially adversely affected. 26 Table of Contents Additionally, distributors and AIB partners typically maintain an inventory of our products.
The markets in which our products are sold are very competitive and delivering the latest and best products to market on a timely basis is critical to achieving revenue growth.
The markets in which our products are sold are highly competitive and delivering the latest and best products to market on a timely basis is critical to achieving revenue growth.
If we fail to or are delayed in developing, qualifying or shipping new products or technologies that provide value to our customers and address these new trends or if we fail to predict which new form factors consumers will adopt and adjust our business accordingly, we may lose competitive positioning, which could cause us to lose market share and require us to discount the selling prices of our products.
If we fail to or are delayed in developing, qualifying or shipping new products or technologies that provide value to our customers and address these new trends or if we fail to predict which new form factors, product features preferences or requirements, consumers will adopt and adjust our business accordingly, we may lose competitive positioning, which could cause us to lose market share and require us to discount the selling prices of our products.
The majority of our ATMP services are provided by the ATMP JVs, and there is no guarantee that the JVs will be able to fulfill our long-term ATMP requirements.
For example, the majority of our ATMP services are provided by the ATMP JVs, and there is no guarantee that the JVs will be able to fulfill our long-term ATMP requirements.
In addition, our worldwide operations (or those of our business partners) could be subject to natural disasters and climate change such as earthquakes, tsunamis, flooding, typhoons, droughts, fires, extreme heat and volcanic eruptions that disrupt our operations, or those of our manufacturers, vendors or customers.
In addition, our worldwide operations (or those of our business partners) could be subject to natural disasters and climate change such as earthquakes, tsunamis, flooding, typhoons, droughts, fires, sea-level rise, extreme heat and volcanic eruptions that disrupt our operations, or those of our manufacturers, vendors or customers.
There is also a possibility of future tariffs, trade protection measures, import or export regulations or other restrictions imposed on our products or on our customers by the United States, China or other countries that could have a material adverse effect on our business.
There is also a possibility of future tariffs, trade protection measures, import or export regulations or other restrictions imposed on our current and future products, customers, or suppliers by the United States, China or other countries that could have a material adverse effect on our business.
If we are unable to meet customer demand due to fluctuating or late supply from the ATMP JVs, it could result in lost sales and have a material adverse effect on our business. If essential equipment, materials, substrates or manufacturing processes are not available to manufacture our products, we could be materially adversely affected.
If we are unable to meet customer demand due to fluctuating or late supply from the ATMP JVs, it could result in lost sales and have a material adverse effect on our business. 21 Table of Contents If essential equipment, materials, substrates or manufacturing processes are not available to manufacture our products, we could be materially adversely affected.
Our information technology systems, and those of third-party information technology providers or business partners, may also be vulnerable to damage or disruption caused by circumstances beyond our control including catastrophic events, 26 Table of Contents power anomalies or outages, natural disasters, viruses or malware, cyber-attacks, insider threat attacks, unauthorized system or data modifications, data breaches and computer system or network failures, exposing us to significant cost, reputational harm and disruption or damage to our business.
Our information technology systems, and those of third-party information technology providers or business partners, may also be vulnerable to damage or disruption caused by circumstances beyond our control including catastrophic events, power anomalies or outages, natural disasters, viruses or malware, cyberattacks, insider threat attacks, unauthorized system or data modifications, data breaches and computer system or network failures, exposing us to significant cost, reputational harm and disruption or damage to our business.
New investments may not generate sufficient revenue, may incur unanticipated liabilities and may divert our limited resources and distract management from our current operations. We cannot be certain that our ongoing investments in new products and 22 Table of Contents technologies will be successful, will meet our expectations and will not adversely affect our reputation, financial condition and operating results.
New investments may not generate sufficient revenue, may incur unanticipated liabilities and may divert our limited resources and distract management from our current operations. We cannot be certain that our ongoing investments in new products and technologies will be successful, will meet our expectations and will not adversely affect our reputation, financial condition and operating results.
A decrease in the long-term economic outlook and future cash flows of our business could significantly impact asset values and potentially result in the impairment of goodwill and may require us to record future goodwill impairment charges, which may have a material adverse impact on our financial position and results of operations.
A decrease in the long-term economic outlook and future cash flows of our business could significantly impact asset values and potentially result in the impairment of tangible and intangible assets, including goodwill and may require us to record future impairment charges, which may have a material adverse impact on our financial position and results of operations.
In addition, our competitors have significant marketing and sales resources which could increase the competitive environment in a declining market, leading to lower prices and margins. Some competitors may have greater access or rights to complementary technologies, including interface, processor and memory technical information.
In addition, our competitors have significant marketing and sales resources which could increase the competitive environment in a declining market or during challenging economic times, leading to lower prices and margins. Some competitors may have greater access or rights to complementary technologies, including interface, processor and memory technical information.
We account for certain acquisitions, including the Xilinx and Pensando acquisitions, using the acquisition method of accounting under the provisions of ASC 805, Business Combinations, with AMD representing the accounting acquirer under this guidance. We record assets acquired, including identifiable intangible assets, and liabilities assumed, at their respective fair values at the acquisition date.
(Pensando) acquisitions, using the acquisition method of accounting under the provisions of ASC 805, Business Combinations, with AMD representing the accounting acquirer under this guidance. We record assets acquired, including identifiable intangible assets, and liabilities assumed, at their respective fair values at the acquisition date.
Should additional taxes be assessed as a result of an audit, assessment or litigation, there could be a material adverse effect on our cash, tax provisions and net income in the period or periods for which that determination is made.
Should additional taxes be assessed as a result of an audit, assessment or litigation, there could be a material adverse effect on our cash, tax provisions and results of operations in the period or periods for which that determination is made.
Specifically, United States-China trade relations remain uncertain as the United States continues to add more Chinese companies to the Entity List and more regulations targeted to advanced computing, semiconductor manufacturing, and AI.
Specifically, United States-China trade relations remain uncertain as the United States continues to add more Chinese companies to the Entity List and more regulations targeted to advanced computing, semiconductor manufacturing, and emerging technologies such as AI.
Consequently, the semi-custom SoC product revenue expected by us may not be fully realized and our operating results may be adversely affected. Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
Consequently, the semi-custom SoC product revenue expected by us may not be fully realized and our operating results may be adversely affected. 23 Table of Contents Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
Any of the above risks, should they occur, could result in an increase in the cost of components, production and shipment delays, general business interruptions, the inability to obtain, or delays from difficulties in obtaining export licenses for certain technology, penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to international customers, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse effect on our business.
Any of the above risks, should they occur, could result in increased costs, shipment delays, general business interruptions, the inability to obtain, or delays in obtaining export licenses for certain technology, penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to international customers, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse effect on our business.
Much of our future success depends upon the continued service of numerous qualified engineering, marketing, sales and executive employees. Competition for highly skilled executives and employees in the technology industry is intense and our competitors have targeted individuals in our organization that have desired skills and experience.
Much of our future success depends upon the continued service of numerous qualified engineering, marketing, sales and executive employees. Competition for highly skilled executives and employees in the technology industry, especially in the areas of AI and machine learning, is intense and our competitors have targeted individuals in our organization that have desired skills and experience.
Moreover, if any of our third-party manufacturers (or their subcontractors) suffer any damage to facilities, lose benefits under material agreements, experience power outages, lack sufficient capacity to manufacture our products, encounter financial difficulties, are unable to secure necessary raw materials from their suppliers, suffer any other disruption or reduction in efficiency, or experience uncertain social, economic or political circumstances or conditions, we may encounter supply delays or disruptions.
Moreover, if any of our third-party manufacturers (or their subcontractors) suffer any damage to facilities, lose benefits under material agreements, experience power outages, water shortages, or high heat events, lack sufficient capacity to manufacture our products, encounter financial difficulties, are unable to secure necessary raw materials from their suppliers, suffer any other disruption or reduction in efficiency, or experience uncertain environmental, social, atmospheric or natural, economic or political circumstances or conditions, we may encounter supply delays or disruptions.
Liquidity and Capital Resources Risks • The agreements governing our notes, our guarantees of Xilinx’s 2.95% and 2.375% Notes (Assumed Xilinx Notes), and our Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business. • Our indebtedness could adversely affect our financial position and prevent us from implementing our strategy or fulfilling our contractual obligations. • We may not be able to generate sufficient cash to meet our working capital requirements.
Liquidity and Capital Resources Risks • The agreements governing our notes, our guarantees of Xilinx’s notes, and our Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business. • Our indebtedness could adversely affect our financial position and prevent us from implementing our strategy or fulfilling our contractual obligations. • We may not generate sufficient cash to meet our working capital requirements.
Economic and Strategic Risks • Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field. • Global economic and market uncertainty may adversely impact our business and operating results. • The semiconductor industry is highly cyclical and has experienced severe downturns that have materially adversely affected, and may continue to materially adversely affect, our business in the future. • The demand for our products depends in part on the market conditions in the industries into which they are sold.
Economic and Strategic Risks • Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field. • Economic and market uncertainty may adversely impact our business and operating results. • The semiconductor industry is highly cyclical and has experienced severe downturns. • The demand for our products depends in part on the market conditions in the industries into which they are sold.
An inability to obtain the required export licenses, or to predict when they will be granted, increases the difficulties of forecasting shipments.
An inability to obtain the required export licenses, or to predict when or pursuant to which conditions they will be granted, increases the difficulties of forecasting shipments.
EAR and ITAR govern the export and re-export of certain AMD products, including FPGAs, and the transfer of related technologies, whether in the U.S. or abroad, and the provision of services. We are required to maintain an internal compliance program and security infrastructure to meet EAR and ITAR requirements.
Export Administration Regulation (EAR) governs the export and re-export of certain AMD products, including FPGAs, as well as the transfer of related technologies or provision of services, whether in the U.S. or abroad. We are required to maintain an internal compliance program and security infrastructure to meet EAR and ITAR requirements.
Our operations and properties have in the past been and continue to be subject to various United States and foreign laws and regulations, including those relating to materials used in our products and manufacturing processes, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and hazardous wastes and remediation of contamination.
Our operations and properties are subject to various United States and foreign laws and regulations, including those relating to materials used in our products and the manufacturing processes of our products, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and hazardous wastes and remediation of contamination.
Cyber-attacks have and may come into our IT system through the compromise of our users’ access credentials. Users’ access credentials can be compromised by phishing, vishing, smishing, multi-factor authentication (MFA) prompt bombing, hacking, or other social engineering, cybersecurity, or theft activities.
Cyberattacks have and may come into our IT Systems through the compromise of user’ access credentials. Users’ access credentials can be compromised by phishing, vishing, smishing, multi-factor authentication (MFA) prompt bombing, hacking, or other social engineering, cybersecurity, or theft activities.
Additionally, in connection with the acquisition of Xilinx, we entered into supplemental indentures for the Assumed Xilinx Notes pursuant to which all obligations of Xilinx under the Assumed Xilinx Notes are unconditionally guaranteed on a senior unsecured basis by us.
Additionally, in connection with the acquisition of Xilinx, we entered into supplemental indentures for the Xilinx’s 2.950% Notes and 2.375% Notes (together, the Assumed Xilinx Notes ), pursuant to which all obligations of Xilinx under the Assumed Xilinx Notes are unconditionally guaranteed on a senior unsecured basis by us.
Recently, the United States and other countries and coalitions have issued sanctions and revisions to export control and other regulations against Russia, Belarus or the DNR or LNR regions of Ukraine, due to the conflict in Ukraine.
Recently, the U.S. and other countries and coalitions have issued sanctions and revisions to export control and other regulations against Russia, Belarus, and the DNR and LNR regions of Ukraine, due to the conflict in Ukraine.
If we are unable to meet customer demand due to fluctuating or late supply from the ATMP JVs, it could result in lost sales and have a material adverse effect on our business. In addition, we may not realize the anticipated benefits from our business initiatives.
If we are unable to meet customer demand due to fluctuating or late supply from the ATMP JVs, it could result in lost sales and have a material adverse effect on our business.
We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. 34 Table of Contents The political, legal and economic risks associated with our operations in foreign countries include, without limitation: expropriation; changes in a specific country’s or region’s political or economic conditions; changes in tax laws, trade protection measures and import or export licensing requirements and restrictions; difficulties in protecting our intellectual property; difficulties in managing staffing and exposure to different employment practices and labor laws; changes in foreign currency exchange rates; restrictions on transfers of funds and other assets of our subsidiaries between jurisdictions; changes in freight rates; changes to macroeconomic conditions, including interest rates, inflation and recession; disruption in air transportation between the United States and our overseas facilities; loss or modification of exemptions for taxes and tariffs; and compliance with United States laws and regulations related to international operations, including export control and economic sanctions laws and regulations and the Foreign Corrupt Practices Act.
The political, legal and economic risks associated with our operations in foreign countries include, without limitation: expropriation; changes in a specific country’s or region’s political or economic conditions; changes in tax laws, trade protection measures and import or export licensing requirements and restrictions; difficulties in protecting our intellectual property; difficulties in managing staffing and exposure to different employment practices and labor laws; changes in foreign currency exchange rates; restrictions on transfers of funds and other assets of our subsidiaries between jurisdictions; changes in freight rates; changes to macroeconomic conditions, including interest rates, inflation and recession; disruption in air transportation between the U.S. and our overseas facilities; loss or modification of exemptions for taxes and tariffs; and compliance with U.S. laws and regulations related to international operations, including export control and economic sanctions laws and regulations and the Foreign Corrupt Practices Act.
In addition, our inability to control gray market activities could result in customer satisfaction issues because any time products are purchased outside our authorized distribution channels there is a risk that our customers are buying counterfeit or substandard products, including products that may have been altered, mishandled or damaged, or are used products represented as new.
In addition, our inability to control gray market activities could result in customer satisfaction issues because any time products are purchased outside our authorized distribution channels there is a risk that our customers are buying counterfeit or substandard products, including products that may have been altered, mishandled or damaged, or are used products represented as new. 28 Table of Contents Climate change may have a long-term impact on our business.
Our ability to forecast demand is even further complicated when our products are sold indirectly through downstream channel distributors and customers, as our forecasts for demand are then based on estimates provided by multiple parties throughout the downstream channel. For instance, we have experienced and continue to experience increased demand for our products.
Our ability to forecast demand is further complicated when our products are sold indirectly through downstream channel distributors and customers, as our forecasts for demand are then based on estimates provided by multiple parties throughout the downstream channel.
Other factors that may result in excess or obsolete inventory include, a reduction in the average selling price, or a reduction in our gross margin include: a sudden or significant decrease in demand for our products; a production or design defect in our products; a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements; a failure to accurately estimate customer demand for our products, including for our older products as our new products are introduced; or our competitors introducing new products or taking aggressive pricing actions.
Factors that may result in excess or obsolete inventory, a reduction in the average selling price, or a reduction in our gross margin include: a sudden or significant decrease in demand for our products; a production or design defect in our products; a higher incidence of inventory obsolescence because of rapidly changing technology and customer requirements; a failure to accurately estimate customer demand for our products, including for our older products as our new products are introduced; or our competitors introducing new products or taking aggressive pricing actions. 25 Table of Contents Our ability to design and introduce new products in a timely manner includes the use of third-party intellectual property.
For a more complete discussion of the material risks facing our business, see below. 15 Table of Contents Economic and Strategic Risks Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field. Intel Corporation (Intel) has been the market share leader for microprocessors for many years.
For a more complete discussion of the material risks facing our business, see below. 16 Table of Contents Economic and Strategic Risks Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit our ability to compete effectively on a level playing field.
Our reliance on third-party distributors and AIB partners subjects us to certain risks. We market and sell our products directly and through third-party distributors and AIB partners pursuant to agreements that can generally be terminated for convenience by either party upon prior notice to the other party.
Our reliance on third-party distributors and AIB partners subjects us to certain risks. We market and sell our products directly and through third-party distributors and AIB partners pursuant to agreements that can generally be terminated for convenience by either party upon prior notice. These agreements are non-exclusive and permit both our distributors and AIB partners to offer our competitors’ products.
To the extent Intel manufactures a significantly larger portion of its microprocessor products using more advanced process technologies, or introduces competitive new products into the market before we do, we may be more vulnerable to Intel’s aggressive marketing and pricing strategies for microprocessor products.
To the extent Intel manufactures a significantly larger portion of its microprocessor products using more advanced process technologies or introduces competitive new products into the market before we do, we may be more vulnerable to Intel’s aggressive marketing and pricing strategies for microprocessor products. We also compete with Intel in field programmable gate arrays (FPGAs) and Adaptive SoC products.
In addition, we may have difficulty identifying the end customers of the defective products in the field. As a result, we could incur substantial costs to implement modifications to correct defects. Any of these problems could materially adversely affect our business.
In addition, we may have difficulty identifying the end customers of the defective products in the field. As a result, we could incur substantial costs to implement modifications to correct defects.
We may encounter difficulties in upgrading and operating our new enterprise resource planning system, which could materially adversely affect us. We are currently upgrading our enterprise resource planning (ERP) system to help us manage our operations and financial reporting.
We may encounter difficulties in operating our newly upgraded enterprise resource planning system, which could materially adversely affect us. We have recently upgraded our enterprise resource planning (ERP) system to help us manage our operations and financial reporting.
We have incurred substantial losses in previous downturns, due to substantial declines in average selling prices; the cyclical nature of supply and demand imbalances in the semiconductor industry; a decline in demand for end-user products (such as PCs) that incorporate our products; and excess inventory levels.
We have incurred substantial losses in previous downturns, due to substantial declines in average selling prices; the cyclical nature of supply and demand imbalances in the semiconductor industry; a decline in demand for end-user products that incorporate our products; and excess inventory levels and periods of inventory adjustment. Such industry-wide fluctuations may materially adversely affect us in the future.
Also, if we cannot generate sufficient revenue and operating cash flow, we may face a cash shortfall and be unable to make all of our planned investments in research and development or other strategic investments.
If we cannot generate sufficient revenue and operating cash flow, we may face a cash shortfall and be unable to make all of our planned investments in research and development or other strategic investments. Also, our cash and cash equivalents could be adversely affected if the banking institutions in which we hold our cash and cash equivalents fail.
The indentures governing the Assumed Xilinx Notes also contain various covenants which limit our ability to, among other things, create certain liens on principal property or the capital stock of certain subsidiaries, enter into certain sale and leaseback transactions with respect to principal property, and consolidate or merge with, or convey, transfer or lease all or substantially all our assets, taken as a whole, to another person.
The indentures governing the Assumed Xilinx Notes also contain various covenants which limit our ability to, among other things, create certain liens on principal property or the capital stock of certain subsidiaries, enter into certain sale and leaseback transactions with respect to principal property, and consolidate or merge with, or convey, transfer or lease all or substantially all our assets, taken as a whole, to another person. 36 Table of Contents We also have an unsecured revolving credit facility in the aggregate principal amount of $3.0 billion (Revolving Credit Agreement).
Nearly all product assembly and final testing of our products is performed at manufacturing facilities, operated by third-party manufacturing facilities, in China, Malaysia and Taiwan. We also depend on third-party subcontractors to provide shipment services. We also have international sales operations. International sales, as a percent of net revenue, were 66% for the year ended December 31, 2022.
Nearly all product assembly and final testing of our products is performed at third-party operated manufacturing facilities, in China, Malaysia and Taiwan. Our shipping services are provided by third-party subcontractors. We also have international sales operations. International sales, as a percent of net revenue, were 65% for the year ended December 30, 2023.
Furthermore, these attacks or hostile acts may make travel and the transportation of our products more difficult and more expensive, which could materially adversely affect us. Any of these events could cause consumer spending to decrease or result in increased volatility in the United States economy and worldwide financial markets. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 36 Table of Contents
Furthermore, these attacks or hostile acts may make travel and the transportation of our products more difficult and more expensive, which could materially adversely affect us. Any of these events could cause consumer spending to decrease or result in increased volatility in the U.S. economy and worldwide financial markets.
In addition, security or compliance program failures that could result in penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to overseas customers, could have a material adverse effect on our business, financial condition and/or operating results . 28 Table of Contents If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
In addition, security or compliance program failures that could result in penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to overseas customers, could have a material adverse effect on our business, financial condition and/or operating results.
Merger, Acquisition and Integration Risks • Acquisitions, joint ventures and/or investments and the failure to integrate acquired businesses could disrupt our business and/or dilute or adversely affect the price of our common stock. • Any impairment of the combined company’s tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact the combined company’s financial position and results of operations.
Merger, Acquisition and Integration Risks • Acquisitions, joint ventures, and/or investments, and the failure to integrate acquired businesses may fail to materialize their anticipated benefits and disrupt our business. • Any impairment of our tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact our financial position and results of operations.
If we cannot adequately protect our technology or other intellectual property in the United States and abroad, through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.
Many of the factors that create and affect quarterly and seasonal trends are beyond our control. If we cannot adequately protect our technology or other intellectual property in the United States and abroad, through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.
Our ability to design and introduce new products in a timely manner includes use of third-party intellectual property. In the design and development of new and enhanced products, we rely on third-party intellectual property such as development and testing tools for software and hardware. Furthermore, certain product features may rely on intellectual property acquired from third parties.
In the design and development of new and enhanced products, we rely on third-party intellectual property such as development and testing tools for software and hardware. Furthermore, certain product features may rely on intellectual property acquired from third parties that incorporate into our software or hardware.
The success of our semi-custom SoC products is dependent on securing customers for our semi-custom design pipeline and consumer market conditions, including the success of the Sony PlayStation® 5, Microsoft® Xbox TM Series S and Microsoft® Xbox TM Series X game console systems and next generation consoles for Sony and Microsoft, worldwide.
The success of our semi-custom SoC products in our Gaming segment is dependent on securing customers for our semi-custom design pipeline and consumer market conditions, including the success of game console systems and next generation consoles for Sony and Microsoft.
Export control restrictions may adversely impact the ability of our research and development teams located outside of the United States from executing our product roadmaps in a timely manner or at all.
New export control restrictions may adversely impact the ability of our research and development teams located outside of the United States from executing our product roadmaps in a timely manner or at all. In addition, deemed export restrictions could further affect our ability to provide services or develop products in the United States.
Fluctuations in demand for our products or a market decline in any of these industries could have a material adverse effect on our results of operations. • The loss of a significant customer may have a material adverse effect on us. • The ongoing novel coronavirus (COVID-19) pandemic could materially adversely affect our business, financial condition and results of operations. • The markets in which our products are sold are highly competitive. • Our operating results are subject to quarterly and seasonal sales patterns. • If we cannot adequately protect our technology or other intellectual property in the United States and abroad, through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses. • Unfavorable currency exchange rate fluctuations could adversely affect us.
There may be fluctuations in demand for our products or a market decline in any of these industries. • The loss of a significant customer may have a material adverse effect on us. • We are subject to risks associated with public health crises, such as pandemics and epidemics. • The markets in which our products are sold are highly competitive. • Our operating results are subject to quarterly and seasonal sales patterns. • If we cannot adequately protect our technology or other intellectual property through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses. • Unfavorable currency exchange rate fluctuations could adversely affect us.
We believe that the main factors that determine our product competitiveness are timely product introductions, product quality, product features and capabilities (including enabling state-of-the-art visual and virtual reality (VR) experiences), energy efficiency (including power consumption and battery life), reliability, processor clock speed, performance, size (or form factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of integration, software and hardware compatibility, ease of use and functionality of software design tools, completeness of applicable software solutions, security and stability, brand recognition and availability.
We believe that the main factors that determine our product competitiveness are total cost of ownership, timely product introductions, product quality, product features and capabilities (including accelerations for key workloads such as artificial intelligence (AI)), energy efficiency relating to power consumption and battery life given their impact on total cost of ownership, reliability, processor clock speed, performance, size (or form factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of integration, software and hardware compatibility, ease of use and functionality of software design tools, completeness of applicable software solutions, security and stability, brand recognition and availability.
Cyber threats have and may come into our network through malicious code that is added to widely available open-source software, compromised commercial software or security vulnerabilities in our products or those of a third party that are being used by attackers prior to mitigations being put in place, such as zero-day attacks.
Our IT Systems and Confidential Data are vulnerable to a range of cybersecurity risks and threats, including malicious code that is added to widely available open-source software, compromised commercial software or security vulnerabilities in our products or systems, or those of a third party, that are being used by attackers prior to mitigations being put in place, such as zero-day attacks.
Several customers have also issued expectations to eliminate these occurrences, if any, that may impact us. While we have a Human Rights Policy and management systems to identify and avoid these practices in our supply chain, we cannot guarantee that our suppliers will always be in conformance to these laws and expectations.
While we have a Human Rights Policy and management systems to identify and avoid these practices in our supply chain, we cannot guarantee that our suppliers will always be in conformance with laws and expectations.
General Risks • Our worldwide operations are subject to political, legal and economic risks and natural disasters, which could have a material adverse effect on us. • We may incur future impairments of technology license purchases. • Our inability to continue to attract and retain qualified personnel may hinder our business. • Our stock price is subject to volatility. • Worldwide political conditions may adversely affect demand for our products.
General Risks • Our worldwide operations are subject to political, legal and economic risks and natural disasters. • We may incur future impairments of our technology license purchases. • Our inability to continue to attract and retain qualified personnel may hinder our business. • Our stock price is subject to volatility.
Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. In addition, volatility in our stock price could adversely affect our business and financing opportunities. In May 2021, our Board of Directors approved a stock repurchase program of up to $4 billion of our common stock (Existing Repurchase Program).
Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. In addition, volatility in our stock price could adversely affect our business and financing opportunities. We have an approved stock repurchase program that authorizes repurchases of up to $12 billion of our common stock (Repurchase Program).
In addition, if we are unable to collect accounts receivable from our significant distributors and/or AIB partners, it could have a material adverse effect on our business.
We extend credit to certain of our distributors and AIB partners. If we are unable to collect accounts receivable from our significant distributors and/or AIB partners or incur higher allowances for credit losses, it could have a material adverse effect on our business.
In the past, revenues from the Client and Gaming segments have experienced a decline driven by, among other factors, the adoption of smaller and other form factors, increased competition and changes in replacement cycles.
In the past, revenues from the Client and Gaming segments have experienced a decline driven by, among other factors, the adoption of smaller and other form factors, increased competition and changes in replacement cycles. In addition, our GPU revenue in the past has been affected in part by the volatility of the cryptocurrency mining market.
If we do not meet the annual wafer purchase target for any of these years, we will be required to pay to GF a portion of the difference between the actual wafer purchases and the wafer purchase target for that year.
If we do not meet the annual wafer purchase target, we will be required to pay to GF a portion of the difference between the actual wafer purchases and the wafer purchase target for such year. AMD and GF also have agreed to wafer pricing through 2025.
In addition, to complete an acquisition, we may issue equity securities, which would dilute our stockholders’ ownership and could adversely affect the price of our common stock, and/or incur debt, assume contingent liabilities or have amortization expenses and write-downs of acquired assets, which could adversely affect our results of operations.
In addition, to complete an acquisition, we may issue equity securities, which would dilute our stockholders’ ownership and could adversely affect the price of our common stock, and/or incur debt, assume contingent liabilities or have amortization expenses and write-downs of acquired assets, which could adversely affect our results of operations. 35 Table of Contents Moreover, we may not adequately assess the risks of new business initiatives and subsequent events may arise that alter the risks that were initially considered.
The risk related to our customers potentially defaulting on or delaying payments to us is increased because we expect that a small number of customers will continue to account for a substantial part of our revenue.
The risk related to our customers potentially defaulting on or delaying payments to us is increased because we expect that a small number of customers will continue to account for a substantial part of our revenue. Any inability of our current or potential future customers to pay us for our products may adversely affect our earnings and cash flow.
Our business is subject to potential tax liabilities, and exposure to greater-than-anticipated income tax liabilities as a result of changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits, any of which could affect our effective tax rates, financial condition, and results of operations.
The limitations could reduce our ability to utilize the net operating losses or tax credits before the expiration of the tax attributes. 30 Table of Contents Our business is subject to potential tax liabilities, and exposure to greater-than-anticipated income tax liabilities as a result of changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits, could affect our effective tax rates, financial condition, and results of operations.
We could be subject to potential product liability claims if one of our products causes, or merely appears to have caused, an injury, whether tangible or intangible. Claims may be made by consumers or others selling our products, and we may be subject to claims against us even if an alleged injury is due to the actions of others.
Claims may be made by consumers or others selling our products, and we may be subject to claims against us even if an alleged injury is due to the actions of others.
We utilize third-party wafer foundries to fabricate the silicon wafers for all of our products. We rely on Taiwan Semiconductor Manufacturing Company Limited (TSMC) for the production of all wafers for microprocessor and GPU products at 7 nanometer (nm) or smaller nodes, and we rely primarily on GLOBALFOUNDRIES Inc.
We rely on Taiwan Semiconductor Manufacturing Company Limited (TSMC) for the production of all wafers for microprocessor and GPU products at 7 nanometer (nm) or smaller nodes, and we rely primarily on GLOBALFOUNDRIES Inc. (GF) for wafers for microprocessor and GPU products manufactured at process nodes larger than 7 nm.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of December 31, 2022, we have 6 million square feet of space for research and development, engineering, administrative and warehouse use throughout the world. These facilities include 5 million square feet of leased space and 1 million square feet of owned space.
Biggest changeITEM 2. PROPERTIES As of December 30, 2023, we have approximately 6 million square feet of space for research and development, engineering, administrative and warehouse use throughout the world. These facilities include approximately 5 million square feet of leased space and approximately 1 million square feet of owned space.
LEGAL PROCEEDINGS For a discussion of our legal proceedings, refer to Note 17 – Contingencies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K). ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 37 Table of Contents PART II
LEGAL PROCEEDINGS For a discussion of our legal proceedings, refer to Note 17 – Contingencies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K). ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. 41 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table provides information relating to our repurchase of common stock for the year ended December 31, 2022: Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Program Maximum Dollar Value of Shares That May Yet be Purchased Under the Program (In millions) Repurchases during each fiscal quarter of 2022: December 26, 2021 - March 26, 2022 15,785,806 $ 121.03 15,785,806 $ 8,327 March 27, 2022 - June 25, 2022 10,159,900 $ 90.58 10,159,900 $ 7,407 June 26, 2022 - September 24, 2022 6,895,972 $ 89.52 6,895,972 $ 6,790 September 25, 2022 - December 31, 2022 3,484,459 $ 71.75 3,484,459 $ 6,540 36,326,137 36,326,137 Repurchases during last fiscal quarter of 2022: September 25, 2022 - October 29, 2022 — $ — — $ 6,790 October 30, 2022 - November 26, 2022 1,455,994 $ 70.65 1,455,994 $ 6,687 November 27, 2022 - December 31, 2022 2,028,465 $ 72.54 2,028,465 $ 6,540 Total 3,484,459 3,484,459 Equity Award Share Withholding Shares of common stock withheld as payment of withholding taxes in connection with the vesting or exercise of equity awards are also treated as common stock repurchases.
Biggest changeThe following table provides information relating to our repurchase of common stock during the fourth quarter of fiscal year 2023: Date of Repurchase Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Publicly Announced Plans or Programs (In millions) Oct 1, 2023 - Oct 28, 2023 — $ — — $ 5,788 Oct 29, 2023 - Nov 25, 2023 781,106 $ 119.59 781,106 $ 5,694 Nov 26, 2023 - Dec 30, 2023 1,164,316 $ 119.99 1,164,316 $ 5,555 Total 1,945,422 1,945,422 Equity Award Share Withholding Shares of common stock withheld as payment of withholding taxes in connection with the vesting or exercise of equity awards are also treated as common stock repurchases.
We expect to fund repurchases through cash generated from operations which have been strengthened by our strong operational results. Our Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
We expect to fund repurchases through cash generated from operations. Our Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
For information about our equity compensation plans, see Part III, Item 11, below. 38 Table of Contents Performance Graph Comparison of Five-Year Cumulative Total Returns Advanced Micro Devices, S&P 500 Index and S&P 500 Semiconductor Index The following graph shows a five-year comparison of cumulative total return on our common stock, the S&P 500 Index and the S&P 500 Semiconductor Index from December 30, 2017 through December 31, 2022.
For information about our equity compensation plans, see Part III, Item 11, below. 42 Table of Contents Performance Graph Comparison of Five-Year Cumulative Total Returns Advanced Micro Devices, S&P 500 Index and S&P 500 Semiconductors Index The following graph shows a five-year comparison of cumulative total return on our common stock, the S&P 500 Index and the S&P 500 Semiconductors Index from December 29, 2018 through December 30, 2023, assuming reinvestment of dividends.
Those withheld shares of common stock are not considered common stock repurchases under an authorized common stock repurchase plan. During fiscal year 2022, we withheld 5 million shares as payment of withholding taxes in connection with the vesting and exercise of equity awards.
Those withheld shares of common stock are not considered common stock repurchases under an authorized common stock repurchase plan. During fiscal year 2023, we withheld 4 million shares at an average price of $110.51 per share as payment of withholding taxes in connection with the vesting and exercise of equity awards.
On February 22, 2023, there were 5,014 registered holders of our common stock, and the closing price of our common stock was $76.61 per share as reported on NASDAQ. Issuer Purchases of Equity Securities In May 2021, our Board of Directors approved a stock repurchase program of up to $4 billion of our common stock (Existing Repurchase Program).
On January 25, 2024, there were 4,909 registered holders of our common stock, and the closing price of our common stock was $180.33 per share as reported on NASDAQ. Issuer Purchases of Equity Securities We have an approved stock repurchase program authorizing repurchases of up to $12 billion of our common stock (Repurchase Program).
Base Period Years Ended Company / Index 12/30/2017 12/29/2018 12/28/2019 12/26/2020 12/25/2021 12/31/2022 Advanced Micro Devices, Inc. 100 173 449 893 1,422 630 S&P 500 Index 100 95 126 147 190 157 S&P 500 Semiconductors Index 100 93 138 193 296 185 Unregistered Sales of Equity Securities On January 3, 2023, we issued warrants to purchase 300,260 shares of our common stock to a commercial partner pursuant to a strategic arrangement executed in 2018 with such partner.
Base Period Years Ended Company / Index 12/29/2018 12/28/2019 12/26/2020 12/25/2021 12/31/2022 12/30/2023 Advanced Micro Devices, Inc. $100 $ 259 $ 515 $ 820 $ 363 $ 827 S&P 500 Index $100 $ 133 $ 155 $ 200 $ 165 $ 209 S&P 500 Semiconductors Index $100 $ 148 $ 208 $ 317 $ 198 $ 417 Unregistered Sales of Equity Securities None.
Removed
In February 2022, our Board of Directors approved a new stock repurchase program in addition to the Existing Repurchase Program to purchase up to additional $8 billion of our outstanding common stock in the open market (collectively referred to as the “Repurchase Program”).
Removed
The warrants have an exercise price of $25.4994 per share and expire on January 3, 2026. The warrants were issued pursuant to Section 4(a)(2) of the Securities Act of 1933.
Removed
On February 9, 2023, we issued 27,230 shares of AMD’s common stock pursuant to an exercise in full by a commercial partner of warrants to purchase up to 42,260 shares of AMD’s common stock at an exercise price of $25.4994 per share (the Warrants). As a result, the Warrants are no longer outstanding.
Removed
The commercial partner acquired the Warrants on March 30, 2020 and June 29, 2020 pursuant to a strategic arrangement with such partner. The shares of common stock were issued pursuant to Section 3(a)(9) of the Securities Act of 1933. ITEM 6. [RESERVED] 39 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

53 edited+31 added−49 removed25 unchanged
Biggest changeOur operating, investing and financing cash flow activities for 2022 and 2021 were as follows: December 31, 2022 December 25, 2021 (In millions) Net cash provided by (used in): Operating activities $ 3,565 $ 3,521 Investing activities 1,999 (686) Financing activities (3,264) (1,895) Net increase in cash and cash equivalents $ 2,300 $ 940 Our aggregate principal debt obligations were $2.5 billion as of December 31, 2022, which consisted primarily of $1.5 billion of the Xilinx Notes assumed as part of the Xilinx acquisition and $1.0 billion of 3.924% Notes and 4.393% Notes issued during the year, compared to $313 million as of December 25, 2021, respectively.
Biggest changeOur operating, investing and financing cash flow activities for 2023 and 2022 were as follows: December 30, 2023 December 31, 2022 (In millions) Net cash provided by (used in): Operating activities $ 1,667 $ 3,565 Investing activities (1,423) 1,999 Financing activities (1,146) (3,264) Net increase (decrease) in cash and cash equivalents $ (902) $ 2,300 We have $3.0 billion available under an unsecured revolving credit agreement (Revolving Credit Agreement) that expires on April 29, 2027.
Financing Activities Net cash used in financing activities was $3.3 billion in 2022, which primarily consisted of common stock repurchases of $3.7 billion under the Repurchase Program, higher repurchases to cover tax withholding on employee equity plans of $406 million and repayment of debt of $312 million, partially offset by proceeds from the issuance of debt of $991 million and higher proceeds from the issuance of common stock under our employee equity plans of $167 million.
Net cash used in financing activities was $3.3 billion in 2022, which primarily consisted of common stock repurchases of $3.7 billion under the Repurchase Program, higher repurchases to cover tax withholding on employee equity plans of $406 million and repayment of debt of $312 million, partially offset by proceeds from the issuance of debt of $991 million and higher proceeds from the issuance of common stock under our employee equity plans of $167 million.
Additional information on our reportable segments is contained in Note 4 – Segment Reporting of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). Our operating results tend to vary seasonally.
Results of Operations Additional information on our reportable segments is contained in Note 4 – Segment Reporting of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). Our operating results tend to vary seasonally.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements. 41 Table of Contents Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements. 45 Table of Contents Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S.
Overall, our estimates of adjustments to contract price due to variable consideration under our contracts with OEM and distributor customers, based on our assumptions and include adjustments, if any, for known events, have been materially consistent with actual results; however, these estimates are subject to management’s judgment and actual provisions could be different from our estimates and current provisions, resulting in future adjustments to our revenue and operating results. 42 Table of Contents Inventory Valuation.
Overall, our estimates of adjustments to contract price due to variable consideration under our contracts with OEM and distributor customers, based on our assumptions and include adjustments, if any, for known events, have been materially consistent with actual results; however, these estimates are subject to management’s judgment and actual provisions could be different from our estimates and current provisions, resulting in future adjustments to our revenue and operating results. 46 Table of Contents Inventory Valuation.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements as of December 31, 2022 and December 25, 2021 and for each of the three years in the period ended December 31, 2022 and related notes, which are included in this Annual Report on Form 10-K as well as with the other sections of this Annual Report on Form 10-K, “Part II, Item 8: Financial Statements and Supplementary Data.” Introduction In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for 2022 compared to 2021, an analysis of changes in our financial condition and a discussion of our off-balance sheet arrangements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements as of December 30, 2023 and December 31, 2022 and for each of the three years in the period ended December 30, 2023 and related notes, which are included in this Annual Report on Form 10-K as well as with the other sections of this Annual Report on Form 10-K, “Part II, Item 8: Financial Statements and Supplementary Data.” Introduction In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for 2023 compared to 2022, an analysis of changes in our financial condition and a discussion of our off-balance sheet arrangements.
GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenue, inventories, business combination, goodwill, long-lived and intangible assets, and income taxes.
GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenue, inventories, goodwill, long-lived and intangible assets, and income taxes.
In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals.
In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals. Income Taxes .
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 25, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Other Income (Expense), net Other income (expense), net is primarily comprised of interest income from short-term investments, changes in valuation of equity investments and foreign currency transaction gains and losses. Other income, net was $8 million in 2022 compared to $55 million of Other income, net in 2021.
Other Income (expense), net Other income (expense), net is primarily comprised of interest income from short-term investments, changes in valuation of equity investments and foreign currency transaction gains and losses. Other income (expense), net was $197 million in 2023 compared to $8 million of Other income, net in 2022.
Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows. When indicators of impairment exist and assets are held for use, we estimate future undiscounted cash flows attributable to the related asset groups.
Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows. When indicators of impairment exist and assets are held for use, we estimate future undiscounted cash flows attributable to the related asset groups.
Investing Activities Net cash provided by investing activities was $2 billion in 2022, which primarily consisted of higher cash provided by maturities of short-term investments of $4.3 billion and cash acquired as part of the acquisition of Xilinx of $2.4 billion, partially offset by higher cash used for purchases of short-term investments of $2.7 billion, cash used in the acquisition of Pensando of $1.5 billion and $450 million for purchases of property and equipment.
Net cash provided by investing activities was $2 billion in 2022, which primarily consisted of higher cash provided by maturities of short-term investments of $4.3 billion and cash acquired as part of the acquisition of Xilinx of $2.4 billion, partially offset by higher cash used for purchases of short-term investments of $2.7 billion, cash used in the acquisition of Pensando Systems Inc.
During the twelve months ended December 31, 2022, we returned a total of $3.7 billion to shareholders through the repurchase of 36.3 million shares of common stock under our stock repurchase program. As of December 31, 2022, $6.5 billion remained available for future stock repurchases under this program.
During the twelve months ended December 30, 2023, we returned a total of $985 million to shareholders through the repurchase of 9.7 million shares of common stock under our stock repurchase program. As of December 30, 2023, $5.6 billion remained available for future stock repurchases under this program.
Substantially all of our sales transactions are denominated in U.S. dollars. 47 Table of Contents FINANCIAL CONDITION Liquidity and Capital Resources As of December 31, 2022, our cash, cash equivalents and short-term investments were $5.9 billion compared to $3.6 billion as of December 25, 2021.
Substantially all of our sales transactions are denominated in U.S. dollars. 50 Table of Contents FINANCIAL CONDITION Liquidity and Capital Resources As of December 30, 2023, our cash, cash equivalents and short-term investments were $5.8 billion compared to $5.9 billion as of December 31, 2022.
As of December 31, 2022, we had unconditional purchase commitments of approximately $8.6 billion, of which $6.5 billion are in fiscal year 2023. On an ongoing basis, we work with our suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.
As of December 30, 2023, we had unconditional purchase commitments of approximately $4.6 billion, of which $3.9 billion are in fiscal year 2024. On an ongoing basis, we work with our suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.
Net cash used in financing activities was $1.9 billion in 2021, which primarily consisted of common stock repurchases of $1.8 billion under the Repurchase Program and higher repurchases to cover tax withholding on employee equity plans of $237 million, partially offset by higher proceeds from the issuance of common stock under our employee equity plans of $104 million.
Financing Activities Net cash used in financing activities was $1.1 billion in 2023, which primarily consisted of common stock repurchases of $985 million under the Repurchase Program and repurchases to cover tax withholding on employee equity plans of $427 million, partially offset by proceeds from the issuance of common stock under our employee equity plans of $268 million.
We perform our goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis.
Our goodwill is contained within four reporting units: Data Center, Client, Gaming and Embedded. We perform our goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis.
Licensing Gain During 2022, we recognized $102 million of licensing gain from milestone achievement and royalty income associated with the licensed IP to the THATIC JV, our two joint ventures with Higon Information Technology Co., Ltd., a third-party Chinese entity. We recognized a licensing gain from royalty income of $12 million for the year ended December 25, 2021.
Licensing Gain We recognized $34 million of licensing gain from royalty income and $102 million of licensing gain from milestone achievement and royalty income associated with the licensed IP to the THATIC JV, our two joint ventures with Higon Information Technology Co., Ltd., a third-party Chinese entity, in 2023 and 2022, respectively.
Net cash provided by operating activities was $3.5 billion in 2021, primarily due to our higher net income of $3.2 billion in 2021, adjusted for non-cash adjustments of $1.1 billion and net cash outflows of $774 million from changes in our operating assets and liabilities.
Net cash provided by operating activities was $1.7 billion in 2023, primarily due to our net income of $854 million in 2023, adjusted for non-cash adjustments of $3.9 billion and net cash outflows of $3.0 billion from changes in our operating assets and liabilities.
Comparison of Gross Margin, Expenses, Licensing Gain, Interest Expense, Other Income (Expense) and Income Taxes The following is a summary of certain consolidated statement of operations data for 2022 and 2021: December 31, 2022 December 25, 2021 (In millions, except for percentages) Net revenue $ 23,601 $ 16,434 Cost of sales 11,550 8,505 Amortization of acquisition-related intangibles 1,448 — Gross profit 10,603 7,929 Gross margin 45 % 48 % Research and development 5,005 2,845 Marketing, general and administrative 2,336 1,448 Amortization of acquisition-related intangibles 2,100 — Licensing gain (102) (12) Interest expense (88) (34) Other income, net 8 55 Income tax provision (benefit) (122) 513 Gross Margin Gross margin as a percentage of net revenue was 45% in 2022 compared to 48% in 2021.
Comparison of Gross Margin, Expenses, Licensing Gain, Interest Expense, Other Income (expense) and Income Taxes The following is a summary of certain consolidated statement of operations data for 2023 and 2022: December 30, 2023 December 31, 2022 (In millions, except for percentages) Net revenue $ 22,680 $ 23,601 Cost of sales 11,278 11,550 Amortization of acquisition-related intangibles 942 1,448 Gross profit 10,460 10,603 Gross margin 46 % 45 % Research and development 5,872 5,005 Marketing, general and administrative 2,352 2,336 Amortization of acquisition-related intangibles 1,869 2,100 Licensing gain (34) (102) Interest expense (106) (88) Other income (expense), net 197 8 Income tax (benefit) (346) (122) Gross Margin Gross margin as a percentage of net revenue was 46% in 2023 compared to 45% in 2022.
The reduction in income tax expense in 2022 was primarily due to the lower pre-tax income coupled with a $261 million foreign-derived intangible income tax benefit and $241 million of research and development tax credits.
The increase in income tax benefit in 2023 was primarily due to the lower pre-tax income coupled with a $185 million foreign-derived intangible income tax benefit and $169 million of research and development tax credits.
In determining the need to establish or maintain a valuation allowance, we consider the four sources of jurisdictional taxable income: (i) carryback of net operating losses to prior years; (ii) future reversals of existing taxable temporary differences; (iii) viable and prudent tax planning strategies; and (iv) future taxable income exclusive of reversing temporary differences and carryforwards.
In determining the need to establish or maintain a valuation allowance, we consider the four sources of jurisdictional taxable income: (i) carryback of net operating losses to prior years; (ii) future reversals of existing taxable temporary differences; (iii) viable and prudent tax planning strategies; and (iv) future taxable income exclusive of reversing temporary differences and carryforwards. 47 Table of Contents Through the end of 2023, we continue to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes.
The percentage of cash and cash equivalents held domestically was 73% as of December 31, 2022, and 91% as of December 25, 2021.
The percentage of cash and cash equivalents held domestically was 77% as of December 30, 2023, and 73% as of December 31, 2022.
These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes. We regularly assess the likelihood that we will be able to recover our deferred tax assets.
In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes.
Off-Balance Sheet Arrangements As of December 31, 2022, we had no off-balance sheet arrangements. 49 Table of Contents
Off-Balance Sheet Arrangements As of December 30, 2023, we had no off-balance sheet arrangements. 52 Table of Contents
Net income for 2022 was $1.3 billion compared to $3.2 billion in the prior year. The decrease in net income was primarily driven by lower operating income. Cash, cash equivalents and short-term investments as of December 31, 2022 were $5.9 billion, compared to $3.6 billion at the end of 2021.
The decrease in net income was primarily driven by lower operating income. Cash, cash equivalents and short-term investments as of December 30, 2023 were $5.8 billion, compared to $5.9 billion at the end of 2022. Our aggregate principal amount of total debt as of December 30, 2023 and December 31, 2022 was $2.5 billion.
Net cash used in investing activities was $686 million in 2021, which primarily consisted of higher cash used for purchases of short-term investments of $2.1 billion and $301 million for purchases of property and equipment, partially offset by higher cash provided by maturities of short-term investments of $1.7 billion.
Investing Activities Net cash used in investing activities was $1.4 billion in 2023, which primarily consisted of cash used for purchases of short-term investments of $3.7 billion, $546 million for purchases of property and equipment, and cash used in acquisitions, net of cash acquired of $131 million, partially offset by proceeds from maturities of short-term investments of $2.7 billion and sale of short-term investments of $300 million.
The following table provides a summary of net revenue and operating income (loss) by segment for 2022 and 2021: Year Ended December 31, 2022 December 25, 2021 (In millions) Net revenue: Data Center $ 6,043 $ 3,694 Client 6,201 6,887 Gaming 6,805 5,607 Embedded 4,552 246 Total net revenue $ 23,601 $ 16,434 Operating income (loss): Data Center $ 1,848 $ 991 Client 1,190 2,088 Gaming 953 934 Embedded 2,252 44 All Other (4,979) (409) Total operating income (loss) $ 1,264 $ 3,648 Data Center Data Center net revenue of $6 billion in 2022 increased by 64%, compared to net revenue of $3.7 billion in 2021.
The following table provides a summary of net revenue and operating income (loss) by segment for 2023 and 2022: Year Ended December 30, 2023 December 31, 2022 (In millions) Net revenue: Data Center $ 6,496 $ 6,043 Client 4,651 6,201 Gaming 6,212 6,805 Embedded 5,321 4,552 Total net revenue $ 22,680 $ 23,601 Operating income (loss): Data Center $ 1,267 $ 1,848 Client (46) 1,190 Gaming 971 953 Embedded 2,628 2,252 All Other (4,419) (4,979) Total operating income $ 401 $ 1,264 Data Center Data Center net revenue of $6.5 billion in 2023 increased by 7%, compared to net revenue of $6.0 billion in 2022.
Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations. Our reporting units are at the operating segment level. Our goodwill is contained within three reporting units: Data Center, Gaming and Embedded.
Overall, our estimates of inventory carrying value adjustments have been materially consistent with actual results. Goodwill. Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations. Our reporting units are at the operating segment level.
Through the end of 2022, we continue to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes. The federal valuation allowance maintained is due to limitations, under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules.
The federal valuation allowance maintained is due to limitations, under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules. Certain state and foreign valuation allowances are maintained due to a lack of sufficient sources of future taxable income.
The repurchase program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time. We continued executing our product technology roadmap by delivering a number of new leadership products and technologies during 2022.
The repurchase program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
All Other operating loss of $409 million in 2021 primarily consisted of $379 million of stock-based compensation expense and $42 million of acquisition-related costs.
All Other All Other operating loss of $4.4 billion in 2023 primarily consisted of $2.8 billion of amortization of acquisition-related intangibles, $1.4 billion of stock-based compensation expense, and $258 million of acquisition-related and other costs.
Based on our annual impairment testing, the fair values of all of our reporting units exceeded their carrying values. Long-Lived and Intangible Assets. Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-lived intangible assets. Impairment indicators are reviewed on a quarterly basis.
Based on our annual qualitative impairment test, we concluded it is not more likely than not that the fair value of each reporting unit exceeded its carrying amount. Long-Lived and Intangible Assets. Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-lived intangible assets.
On November 3, 2022, we established a new commercial paper program where we may issue unsecured commercial paper notes up to a maximum principal amount outstanding at any time of $3.0 billion with a maturity of up to 397 days from the date of issue.
No funds were drawn from this credit facility during the year ended December 30, 2023. We also have a commercial paper program to issue unsecured commercial paper notes up to a maximum principal amount outstanding, at any time, of $3.0 billion, with a maturity of up to 397 days from the date of issue.
In addition, the calculation of our tax liabilities involves addressing uncertainties in the application of complex, multi-jurisdictional tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing authorities. 44 Table of Contents Results of Operations During the second quarter of fiscal year 2022, we changed our reporting segments to align our financial reporting with how we manage our business in strategic end markets.
In addition, the calculation of our tax liabilities involves addressing uncertainties in the application of complex, multi-jurisdictional tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing authorities.
All Other All Other operating loss of $5.0 billion in 2022 primarily consisted of $3.5 billion of amortization of acquisition-related intangibles, $1.1 billion of stock-based compensation expense, and $452 million of acquisition-related costs, which primarily include transaction costs, amortization of Xilinx inventory fair value step-up adjustment, and depreciation related to the Xilinx fixed assets fair value step-up adjustment, certain compensation charges related to the acquisitions of Xilinx and Pensando, and licensing gain.
All Other operating loss of $5.0 billion in 2022 primarily consisted of $3.5 billion of amortization of acquisition-related intangibles, $1.1 billion of stock-based compensation expense and $452 million of acquisition-related and other costs.
Interest Expense Interest expense of $88 million in 2022 increased by $54 million compared to $34 million in 2021, primarily due to interest expense from the 2.95% Senior Notes due 2024 and the 2.375% Senior Notes due 2030 (together, the Assumed Xilinx Notes) and the 3.924% Notes and 4.393% Notes issued in 2022.
Interest Expense Interest expense of $106 million in 2023 increased by $18 million compared to $88 million in 2022, primarily due to interest expense from our 3.924% Senior Notes Due 2032 (3.924% Notes) and our 4.393% Senior Notes Due 2052 (4.393% Notes) that were issued in June 2022.
Income Tax Provision (Benefit) We recorded an income tax benefit of $122 million in 2022 and an income tax provision of $513 million in 2021, representing effective tax rates of (10%) and 14%, respectively.
The change was primarily due to an increase in interest income driven by rising interest rates. Income Tax Benefit We recorded an income tax benefit of $346 million and $122 million in 2023 and 2022, respectively, representing effective tax rates of (68%) and (10%), respectively.
Embedded Embedded net revenue of $4.6 billion in 2022 increased significantly, compared to net revenue of $246 million in 2021. The significant increase in net revenue was primarily driven by the inclusion of Xilinx embedded product revenue as a result of the acquisition of Xilinx in February 2022.
The increase in net revenue was primarily driven by the inclusion of embedded product revenue from Xilinx, Inc. (Xilinx) for the full twelve months period in 2023, as compared to a partial period from February 14, 2022 (the Xilinx Acquisition Date) in the prior year period.
Embedded operating income was $2.3 billion in 2022, compared to operating income of $44 million in 2021. The significant increase in operating income was primarily driven by the inclusion of Xilinx embedded product revenue.
Embedded operating income was $2.6 billion in 2023, compared to operating income of $2.3 billion in 2022. The increase in operating income was primarily driven by the inclusion of Xilinx for the full twelve months period as compared to a partial period from the Xilinx Acquisition Date in the prior year period.
The increase was primarily driven by strategic investments across all of our segments, including an increase in headcount through acquisitions and organic growth. Marketing, General and Administrative Expenses Marketing, general and administrative expenses of $2.3 billion in 2022 increased by $888 million, or 61%, compared to $1.4 billion in 2021.
The increase was primarily due to higher employee-related costs due to an increase in headcount to support increased investment in AI. 49 Table of Contents Marketing, General and Administrative Expenses Marketing, general and administrative expenses of $2.4 billion in 2023 increased by $16 million, or 1%, compared to $2.3 billion in 2022.
Gaming operating income was $953 million in 2022, compared to operating income of $934 million in 2021. The increase in operating income was primarily driven by higher revenue, partially offset by higher operating expenses. Operating expenses increased for the reasons outlined under “Expenses” below.
Gaming operating income was $971 million in 2023, compared to operating income of $953 million in 2022. The increase in operating income was primarily driven by product mix, partially offset by higher R&D investment. Embedded Embedded net revenue of $5.3 billion in 2023 increased by 17%, compared to net revenue of $4.6 billion in 2022.
This growth was partially offset by a 10% decrease in Client segment revenue primarily due to lower processor shipments driven by a weak PC market and significant inventory correction actions across the PC supply chain. Gross margin, as a percentage of net revenue for 2022, was 45%, compared to 48% in 2021.
Gross margin, as a percentage of net revenue for 2023, was 46%, compared to 45% in 2022. The increase in gross margin was primarily due to higher Embedded segment revenue and lower amortization of acquisition-related intangible assets, partially offset by lower Client segment revenue and product mix.
Operating Activities Our working capital cash inflows and outflows from operations consist primarily of cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures. 48 Table of Contents Net cash provided by operating activities was $3.6 billion in 2022, primarily due to our net income of $1.3 billion in 2022, adjusted for non-cash adjustments of $4.1 billion and net cash outflows of $1.8 billion from changes in our operating assets and liabilities.
The primary drivers of the changes in operating assets and liabilities included a $1.3 billion increase in accounts receivable driven primarily by higher revenue in the last month of 2023 compared to the last month of 2022, and a $580 million increase in inventories driven primarily by build of advanced process nodes to support the ramp of new products. 51 Table of Contents Net cash provided by operating activities was $3.6 billion in 2022, primarily due to our net income of $1.3 billion in 2022, adjusted for non-cash adjustments of $4.1 billion and net cash outflows of $1.8 billion from changes in our operating assets and liabilities.
The decrease in gross margin was primarily due to amortization of intangible assets associated with the Xilinx acquisition. 46 Table of Contents Expenses Research and Development Expenses Research and development expenses of $5.0 billion in 2022 increased by $2.2 billion, or 76%, compared to $2.8 billion in 2021.
The increase in gross margin was primarily driven by higher Embedded segment revenue and lower amortization of acquisition-related intangible assets, partially offset by lower Client segment revenue and product mix. Expenses Research and Development Expenses Research and development expenses of $5.9 billion in 2023 increased by $867 million, or 17%, compared to $5.0 billion in 2022.
Certain state and foreign valuation allowance maintained is due to lack of sufficient sources of future taxable income. International Sales International sales as a percentage of net revenue were 66% in 2022 and 72% in 2021. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future.
We expect that international sales will continue to be a significant portion of total sales in the foreseeable future.
The decrease in gross margin was primarily due to amortization of intangible assets associated with the Xilinx acquisition. Operating income for 2022 was $1.3 billion compared to operating income of $3.6 billion for 2021. The decrease in operating income was primarily driven by amortization of intangible assets associated with the Xilinx acquisition.
Operating income for 2023 was $401 million compared to operating income of $1.3 billion for 2022. The decrease in operating income was primarily due to lower Client segment performance and increased R&D investments, partially offset by lower amortization of acquisition-related intangible assets. Net income for 2023 was $854 million compared to $1.3 billion in the prior year.
Client operating income was $1.2 billion in 2022, compared to operating income of $2.1 billion in 2021. The decrease in operating income was primarily driven by lower revenue and higher operating expenses.
The decrease in operating income was primarily due to lower revenue. 48 Table of Contents Gaming Gaming net revenue of $6.2 billion in 2023 decreased by 9%, compared to net revenue of $6.8 billion in 2022. The decrease in net revenue was primarily due to lower semi-custom product revenue.
Client Client net revenue of $6.2 billion in 2022 decreased by 10%, compared to net revenue of $6.9 billion in 2021, primarily driven by a 24% decrease in unit shipment, partially offset by a 19% increase in average selling price.
Client Client net revenue of $4.7 billion in 2023 decreased by 25%, compared to net revenue of $6.2 billion in 2022, primarily due to lower sales of Ryzen mobile and desktop processors, resulting from a 16% decrease in average selling price and a 12% decrease in unit shipments.
However, we cannot assure that such funds will be available on favorable terms, or at all.
However, we cannot assure that such funds will be available on favorable terms, or at all. Operating Activities Our working capital cash inflows and outflows from operations consist primarily of cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures.
The increase in net revenue was driven by a 64% increase in Data Center segment revenue primarily due to higher sales of our EPYC™ server processors, a 21% increase in Gaming segment revenue primarily due to higher semi-custom product sales, and a significant increase in Embedded segment revenue from the prior year period driven by the inclusion of Xilinx embedded product sales.
This decrease was partially offset by a 17% increase in Embedded segment revenue primarily due to the inclusion of embedded product revenue from Xilinx, Inc.
The increase was primarily driven by higher sales of our EPYC server processors. Data Center operating income was $1.8 billion in 2022, compared to operating income of $991 million in 2021. The increase in operating income was primarily driven by higher revenue, partially offset by higher operating expenses. Operating expenses increased for the reasons outlined under “Expenses” below.
The increase was primarily driven by higher sales of AMD Instinct GPUs and 4th Gen AMD EPYC CPUs. Data Center operating income was $1.3 billion in 2023, compared to operating income of $1.8 billion in 2022. The decrease in operating income was primarily due to product mix and higher research and development (R&D) investment.
The decrease in unit shipments was due to challenging PC market conditions and significant inventory correction across the PC supply chain experienced during the second half of 2022. The increase in average selling price was primarily driven by a richer mix of Ryzen mobile processor sales.
Lower Ryzen processor sales were due to weak PC market conditions and inventory correction across the PC supply chain that impacted the first half of 2023. Client operating loss was $46 million in 2023, compared to operating income of $1.2 billion in 2022.
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Overview 2022 was a transformative year for AMD as we took several major steps that scaled and reshaped our business. In February 2022, we completed our strategic acquisition of Xilinx, Inc.
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Overview During 2023 we successfully launched multiple leadership products across our business and made important progress on our artificial intelligence (AI) strategy.
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(Xilinx) which expanded our technology and product portfolio to include adaptable hardware platforms that enable hardware acceleration and rapid innovation across a variety of technologies and established AMD in multiple embedded markets where we have traditionally not had a significant presence. We now offer Field Programmable Gate Arrays (FPGAs), Adaptive SoCs, and Adaptive Compute Acceleration Platform (ACAP) products.
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In Data Center, we launched several 4th Gen AMD EPYC™ processors, including our AMD EPYC 97x4 processors, formerly codenamed “Bergamo,” built with our “Zen 4c” architecture core and designed to deliver leadership cloud-native computing, and our AMD EPYC 8004 Series processors, formerly codenamed “Siena”, that bring the “Zen 4c” core into a purpose-built CPU.
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With the acquisition of Xilinx, we have access to a new set of markets and customers, further strengthening and diversifying our business model. In May 2022, we expanded our data center solutions capabilities with the acquisition of Pensando Systems, Inc. (Pensando). We now offer high-performance data processing units (DPUs) and a software stack that complements our existing products.
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In addition, we announced the extension of our 3rd Gen AMD EPYC processor family with six new offerings to meet the needs of general IT and mainstream computing for businesses seeking to leverage the economics of established platforms.
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With the Xilinx and Pensando acquisitions, we are well positioned to provide the industry’s broadest set of leadership compute engines and accelerators to help enable best performance, security, flexibility and total cost of ownership for leading-edge data centers.
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For our AI Data Center solutions, we announced the availability of the AMD Instinct™ MI300X accelerators that are designed to deliver leadership performance for generative AI workloads and high performance computing (HPC) applications.
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Our 2022 financial results reflect the strength of our diversified business model despite the challenging PC market conditions in the second half of 2022. Net revenue for 2022 was $23.6 billion, an increase of 44% compared to 2021 net revenue of $16.4 billion.
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In addition, we unveiled the AMD Instinct MI300A APU, which integrate the CPU and GPU cores on a single package delivering an efficient platform while also providing the compute performance to accelerate training on the latest AI models.
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Our aggregate principal amount of total debt as of December 31, 2022 was $2.5 billion, compared to $313 million as of December 25, 2021. We took several actions in 2022 to strengthen our financial position.
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We enhanced the performance and features of our AMD RoCm™ software by releasing our latest AMD ROCm 6 open software platform for AI and HPC workloads. We expanded our Embedded processor portfolio with powerful, scalable offerings for a variety of embedded applications such as the AMD Ryzen™ Embedded 7000 Series processor family.
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In June 2022, we issued $1.0 billion in aggregate principal amount of senior notes, consisting of $500 million in aggregate principal amount of 3.924% Senior Notes due 2032 (3.924% Notes) and $500 million in aggregate principal amount of 4.393% Senior Notes due 2052 (4.393% Notes).
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We launched the AMD Versal™ Premium VP1902 adaptive SoC designed to help chipmakers streamline the verification of application-specific integrated circuits (SICs) and SoC designs, and we introduced the Spartan™ Ultrascale+™ FPGA ideal for cost-sensitive applications requiring low power and high I/O.
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The 3.924% Notes will mature on June 1, 2032 and bear interest at a rate of 3.924% per annum, and the 4.393% Notes will mature on June 1, 2052 and bear interest at a rate of 4.393% per annum.
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We launched the AMD Alveo™ MA35D media accelerator to power live interactive streaming services at scale, as well as the AMD Alveo UL3524 accelerator card.
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The 3.924% Notes and the 4.393% Notes are senior unsecured obligations. 40 Table of Contents We also entered into a revolving credit agreement in June 2022. The agreement provides for a five-year unsecured revolving credit facility in the aggregate principal amount of $3.0 billion. There were no funds drawn from this facility during the year ended December 31, 2022.
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We expanded our Zynq™ UltraScale™ RFSoC digital front-end portfolio with two additional devices to enable the expansion and deployment of 4G/5G radios where lower cost, power and spectrum-efficient radios are required to address increased wireless connectivity.
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In November 2022, we established a new commercial paper program, under which we may issue unsecured commercial paper notes up to a maximum principal amount outstanding at any time of $3.0 billion with a maturity of up to 397 days from the date of issue.
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For our adaptive System-on-Modules (SOMs), we announced the addition of AMD Kria™ K24 SOM and KD240 Drives Starter Kit which offer power-efficient compute in a small factor and target cost-sensitive industrial and commercial edge applications.
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The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of issuance. As of December 31, 2022, we had no commercial paper outstanding.
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We continued to expand our Client product portfolio by launching our Ryzen 7000 Series Mobile processors bringing the power of “Zen 4” and AMD RDNA 3 integrated graphics architecture to notebook users. We expanded our commercial portfolio with AMD Ryzen PRO 7000 Series Mobile processors to bring advanced and power efficient x86 processors to business notebooks and mobile workstations.
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For Data Center, we launched our 4th Gen AMD EPYC™ processors with next-generation architecture, technology and features, and designed to deliver optimizations across market segments and applications, while helping businesses free data center resources to create additional workload processing and accelerate output.
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We announced our Ryzen 7045HX3D gaming mobile processor with AMD 3D V-cache technology with leadership mobile gaming performance. We also introduced AMD Ryzen X3D desktop processors, the Ryzen 9 7900X3D and Ryzen 9 7950X3D processors with 3D V-Cache technology.
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We also unveiled our 3rd Gen AMD EPYC processors with AMD 3D V-Cache technology for leadership performance in technical computing workloads. We introduced the 7 nm Versal™ ACAP VCK5000 development card designed to offer leadership AI inference performance. We announced the availability of the AMD Instinct™ ecosystem, the new AMD Instinct MI210 accelerator and ROCm™ 5 software.
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For handheld PC gaming consoles, we introduced the AMD Ryzen Z1 and Z1 Extreme processors featuring RDNA 3 architecture based graphics, to bring portability and battery life to handled PC gaming consoles. 44 Table of Contents In Gaming, we introduced the AMD Radeon RX 7900M graphics for laptops, delivering desktop-class performance for gaming and content creation.
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Together the AMD Instinct and ROCm ecosystem offers exascale-class technology to a broad base of high performance computing (HPC) and artificial intelligence (AI) customers, designed to address the demand for compute-accelerated data center workloads and reduce the time to insights and discoveries.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDecember 31, 2022 December 25, 2021 Notional Amount Average Contract Rate Estimated Fair Value Gain (Loss) Notional Amount Average Contract Rate Estimated Fair Value Gain (Loss) (In millions except contract rates) Foreign currency forward contracts: Chinese Renminbi $ 599 6.7848 $ (3) $ 360 6.5693 $ 6 Canadian Dollar 607 1.3137 (16) 416 1.2646 (6) Indian Rupee 516 82.1493 (9) 162 77.3309 1 Taiwan Dollar 207 29.1231 (4) 122 27.2725 (1) Singapore Dollar 259 1.3600 4 71 1.3489 — Euro 142 0.9334 1 47 0.8444 (2) Pound Sterling 88 0.8204 (1) 6 0.7317 — Japanese Yen 2 133.7593 — 1 114.3214 — Australian Dollar 1 1.4689 — — 1.3809 — Total $ 2,421 $ (28) $ 1,185 $ (2) 50 Table of Contents
Biggest changeDecember 30, 2023 December 31, 2022 Notional Amount Average Contract Rate Estimated Fair Value Gain (Loss) Notional Amount Average Contract Rate Estimated Fair Value Gain (Loss) (In millions except contract rates) Foreign currency forward contracts: Chinese Renminbi $ 655 6.7593 $ (10) $ 599 6.7848 $ (3) Canadian Dollar 645 1.3479 11 607 1.3137 (16) Indian Rupee 514 84.6922 1 516 82.1493 (9) Taiwan Dollar 171 29.3064 (3) 207 29.1231 (4) Singapore Dollar 495 1.3314 6 259 1.3600 4 Euro 303 0.9017 1 142 0.9334 1 Pound Sterling 167 0.8057 2 88 0.8204 (1) Japanese Yen — — — 2 133.7593 — Australian Dollar — — — 1 1.4689 — Total $ 2,950 $ 8 $ 2,421 $ (28) 53 Table of Contents
As of December 31, 2022, substantially all of our investments in debt securities were A-rated by at least one of the rating agencies. While we believe we take prudent measures to mitigate investment-related risks, such risks cannot be fully eliminated as there are circumstances outside of our control. Foreign Exchange Risk.
As of December 30, 2023, all of our investments in debt securities were A-rated by at least one of the rating agencies. While we believe we take prudent measures to mitigate investment-related risks, such risks cannot be fully eliminated as there are circumstances outside of our control. Foreign Exchange Risk.
As of December 31, 2022, our investment portfolio consisted of fixed income instruments, time deposits and commercial paper. Our primary aim with our investment portfolio is to invest available cash while preserving principal and meeting liquidity needs.
As of December 30, 2023, our investment portfolio consisted of fixed income instruments, time deposits and commercial paper. Our primary aim with our investment portfolio is to invest available cash while preserving principal and meeting liquidity needs.
This strategy takes into consideration all of our exposures. We do not use derivative financial instruments for trading or speculative purposes. The following table provides information about our foreign currency forward contracts as of December 31, 2022 and December 25, 2021. All of our foreign currency forward contracts mature within 18 months.
This strategy takes into consideration all of our exposures. We do not use derivative financial instruments for trading or speculative purposes. The following table provides information about our foreign currency forward contracts as of December 30, 2023 and December 31, 2022. All of our foreign currency forward contracts mature within 24 months.
A hypothetical 50 basis-point (half percentage point) increase or decrease in interest rates compared to rates at December 31, 2022 would have affected the fair value of our cash equivalent and investment portfolio by approximately $2.9 million. As of December 31, 2022, all of our outstanding long-term debt had fixed interest rates.
A hypothetical 50 basis-point (half percentage point) increase or decrease in interest rates compared to rates at December 30, 2023 would have affected the fair value of our cash equivalent and investment portfolio by approximately $7 million. As of December 30, 2023, all of our outstanding long-term debt had fixed interest rates.

Other AMD 10-K year-over-year comparisons