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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2025
OR

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

For the transition period from to
Commission File Number: 001-07882

ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)

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

2485 Augustine Drive
Santa Clara, California 95054
(Address of principal executive offices)(Zip Code)
(408) 749-4000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of the registrant’s common stock, $0.01 par value per share, as of October 30, 2025: 1,628,041,540

Table of Contents
INDEX

|  | Page No.
Part I Financial Information |
Item 1 | Condensed Consolidated Financial Statements (Unaudited) |
| Condensed Consolidated Statements of Operations | 3
| Condensed Consolidated Statements of Comprehensive Income | 4
| Condensed Consolidated Balance Sheets | 5
| Condensed Consolidated Statements of Cash Flows | 6
| Condensed Consolidated Statements of Stockholders’ Equity | 8
| Notes to Condensed Consolidated Financial Statements | 9
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24
Item 3 | Quantitative and Qualitative Disclosures about Market Risk | 32
Item 4 | Controls and Procedures | 32
Part II Other Information |
Item 1 | Legal Proceedings | 34
Item 1A | Risk Factors | 34
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 60
Item 5 | Other Information | 60
Item 6 | Exhibits | 61
Signature | 62

2

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions, except per share amounts)
Net revenue | $ | 9,246 |  |  | $ | 6,819 |  |  | $ | 24,369 |  |  | $ | 18,127 |
Cost of sales | 4,206 |  |  | 3,167 |  |  | 12,023 |  |  | 8,590 |
Amortization of acquisition-related intangibles | 260 |  |  | 233 |  |  | 771 |  |  | 694 |
Total cost of sales | 4,466 |  |  | 3,400 |  |  | 12,794 |  |  | 9,284 |
Gross profit | 4,780 |  |  | 3,419 |  |  | 11,575 |  |  | 8,843 |
Research and development | 2,139 |  |  | 1,636 |  |  | 5,761 |  |  | 4,744 |
Marketing, general and administrative | 1,069 |  |  | 707 |  |  | 2,946 |  |  | 1,954 |
Amortization of acquisition-related intangibles | 302 |  |  | 352 |  |  | 926 |  |  | 1,116 |
Total operating expenses | 3,510 |  |  | 2,695 |  |  | 9,633 |  |  | 7,814 |
Operating income | 1,270 |  |  | 724 |  |  | 1,942 |  |  | 1,029 |
Interest expense | (37) |  |  | (23) |  |  | (95) |  |  | (73) |
Other income (expense), net | 82 |  |  | 36 |  |  | 219 |  |  | 144 |
Income from continuing operations before income taxes and equity income | 1,315 |  |  | 737 |  |  | 2,066 |  |  | 1,100 |
Income tax provision (benefit) | 153 |  |  | (27) |  |  | (558) |  |  | (38) |
Equity income in investee | 10 |  |  | 7 |  |  | 25 |  |  | 21 |
Income from continuing operations, net of tax | 1,172 |  |  | 771 |  |  | 2,649 |  |  | 1,159 |
Income from discontinued operations, net of tax | 71 |  |  | — |  |  | 175 |  |  | — |
Net income | $ | 1,243 |  |  | $ | 771 |  |  | $ | 2,824 |  |  | $ | 1,159 |
Earnings per share |  |  |  |  |  |  |
Earnings from continuing operations - basic | $ | 0.72 |  |  | $ | 0.48 |  |  | $ | 1.63 |  |  | $ | 0.72 |
Earnings from discontinued operations - basic | 0.04 |  |  | — |  |  | 0.11 |  |  | — |
Basic earnings per share | $ | 0.76 |  |  | $ | 0.48 |  |  | $ | 1.74 |  |  | $ | 0.72 |
Earnings from continuing operations - diluted | $ | 0.71 |  |  | $ | 0.47 |  |  | $ | 1.62 |  |  | $ | 0.71 |
Earnings from discontinued operations - diluted | 0.04 |  |  | — |  |  | 0.11 |  |  | — |
Diluted earnings per share | $ | 0.75 |  |  | $ | 0.47 |  |  | $ | 1.73 |  |  | $ | 0.71 |
Shares used in per share calculation |  |  |  |  |  |  |
Basic | 1,626 |  |  | 1,620 |  |  | 1,623 |  |  | 1,619 |
Diluted | 1,641 |  |  | 1,636 |  |  | 1,632 |  |  | 1,638 |

See accompanying notes.
3

Table of Contents
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions)
Net income | $ | 1,243 |  |  | $ | 771 |  |  | $ | 2,824 |  |  | $ | 1159 |
Other comprehensive income, net of tax: |  |  |  |  |  |  |
Net change in unrealized gains (losses) on cash flow hedges | (23) |  |  | 31 |  |  | 56 |  |  | 12 |
Total comprehensive income | $ | 1,220 |  |  | $ | 802 |  |  | $ | 2,880 |  |  | $ | 1,171 |

See accompanying notes.
4

Table of Contents
Advanced Micro Devices, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

| September 27, 2025 |  | December 28, 2024
| (In millions, except par value amounts)
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 4,808 |  |  | $ | 3,787 |
Short-term investments | 2,435 |  |  | 1,345 |
Accounts receivable, net | 6,201 |  |  | 6,192 |
Inventories | 7,313 |  |  | 5,734 |
Assets held for sale | 3,990 |  |  | — |
Prepaid expenses and other current assets | 2,253 |  |  | 1,991 |
Total current assets | 27,000 |  |  | 19,049 |
Property and equipment, net | 2,205 |  |  | 1,802 |
Goodwill | 25,083 |  |  | 24,839 |
Acquisition-related intangibles, net | 17,250 |  |  | 18,930 |
Deferred tax assets | 633 |  |  | 688 |
Other non-current assets | 4,720 |  |  | 3,918 |
Total assets | $ | 76,891 |  |  | $ | 69,226 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 3,483 |  |  | $ | 2,466 |
Accrued liabilities | 5,112 |  |  | 4,260 |
Current portion of long-term debt, net | 873 |  |  | — |
Liabilities held for sale | 1,908 |  |  | — |
Other current liabilities | 324 |  |  | 555 |
Total current liabilities | 11,700 |  |  | 7,281 |
Long-term debt, net | 2,347 |  |  | 1,721 |
Long-term operating lease liabilities | 650 |  |  | 491 |
Deferred tax liabilities | 326 |  |  | 349 |
Other long-term liabilities | 1,078 |  |  | 1,816 |
Commitments and contingencies (See Note 13) |  |  |
Stockholders’ equity: |  |  |
Capital stock: |  |  |
Common stock, par value $0.01; shares authorized: 4,000; shares issued: 1,693 and 1,680; shares outstanding: 1,628 and 1,622 | 17 |  |  | 17 |
Additional paid-in capital | 62,657 |  |  | 61,362 |
Treasury stock, at cost (shares held: 65 and 58) | (7,059) |  |  | (6,106) |
Retained earnings | 5,188 |  |  | 2,364 |
Accumulated other comprehensive loss | (13) |  |  | (69) |
Total stockholders’ equity | 60,790 |  |  | 57,568 |
Total liabilities and stockholders’ equity | $ | 76,891 |  |  | $ | 69,226 |

See accompanying notes.
5

Table of Contents
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

| Nine Months Ended
| September 27, 2025 |  | September 28, 2024
| (In millions)
Cash flows from operating activities: |  |  |
Net income | $ | 2,824 |  |  | $ | 1,159 |
Income from discontinued operations, net of tax | (175) |  |  | — |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 556 |  |  | 499 |
Amortization of acquisition-related intangibles | 1,697 |  |  | 1,810 |
Stock-based compensation | 1,152 |  |  | 1,068 |
Deferred income taxes | 18 |  |  | (863) |
Release of reserves for uncertain tax positions | (853) |  |  | — |
Inventory loss at (recovery from) contract manufacturer | (67) |  |  | 65 |
Other | 29 |  |  | 32 |
Changes in operating assets and liabilities: |  |  |
Accounts receivable, net | (7) |  |  | (1,961) |
Inventories | (1,579) |  |  | (1,096) |
Prepaid expenses and other assets | (259) |  |  | (171) |
Accounts payable | 998 |  |  | 574 |
Accrued and other liabilities | (145) |  |  | 626 |
Net cash provided by operating activities of continuing operations | 4,189 |  |  | 1,742 |
Net cash provided by operating activities of discontinued operations | 920 |  | — |
Net cash flows provided by operating activities | 5,109 |  |  | 1,742 |
Cash flows from investing activities: |  |  |
Purchases of property and equipment | (752) |  |  | (428) |
Purchases of short-term investments | (2,110) |  |  | (707) |
Proceeds from maturity of short-term investments | 982 |  |  | 1,351 |
Proceeds from sale of short-term investments | 66 |  |  | 591 |
Purchases of strategic investments | (432) |  |  | (131) |
Acquisitions, net of cash acquired | (1,716) |  |  | (548) |
Other | — |  |  | (15) |
Net cash (used in) provided by investing activities of continuing operations | (3,962) |  |  | 113 |
Net cash used in investing activities of discontinued operations | (30) |  |  | — |
Net cash flows (used in) provided by investing activities | (3,992) |  |  | 113 |
Cash flows from financing activities: |  |  |
Proceeds from debt and commercial paper issuance, net of issuance costs | 2,441 |  |  | — |
Repayment of debt and commercial paper | (950) |  |  | (750) |
Proceeds from sales of common stock through employee equity plans | 169 |  |  | 152 |
Repurchases of common stock | (1,316) |  |  | (606) |
Stock repurchases for tax withholding on employee equity plans | (447) |  |  | (686) |
Other | — |  |  | (1) |
Net cash used in financing activities of continuing operations | (103) |  |  | (1,891) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 1,014 |  |  | (36) |
Cash, cash equivalents and restricted cash at beginning of period | 3,811 |  |  | 3,933 |
Cash, cash equivalents and restricted cash at end of period | $ | 4,825 |  |  | $ | 3,897 |

6

Table of Contents
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

| Nine Months Ended
| September 27, 2025 |  | September 28, 2024
| (In millions)
Supplemental cash flow information: |  |  |
Cash paid during the period for: |  |  |
Income taxes, net of refunds | $ | 818 |  |  | $ | 1,011 |
Non-cash investing and financing activities: |  |  |
Purchases of property and equipment, accrued but not paid | $ | 153 |  |  | $ | 99 |
Reissuance of treasury stock for the acquisition of ZT Systems | $ | 860 |  |  | $ | — |
Contingent consideration liability for the acquisition of ZT Systems | $ | 361 |  |  | $ | — |
Reconciliation of cash, cash equivalents and restricted cash |  |  |
Cash and cash equivalents | $ | 4,808 |  |  | $ | 3,897 |
Restricted cash included in Prepaid expenses and other current assets | 17 |  |  | — |
Cash, cash equivalents and restricted cash at end of period | $ | 4,825 |  |  | $ | 3,897 |

See accompanying notes.
7

Table of Contents
Advanced Micro Devices, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions)
Capital stock: |  |  |  |  |  |  |
Common stock, par value |  |  |  |  |  |  |
Balance, beginning of period | $ | 17 |  |  | $ | 17 |  |  | $ | 17 |  |  | $ | 17 |
Balance, end of period | $ | 17 |  |  | $ | 17 |  |  | $ | 17 |  |  | $ | 17 |
Additional paid-in capital |  |  |  |  |  |  |
Balance, beginning of period | $ | 62,228 |  |  | $ | 60,542 |  |  | $ | 61,362 |  |  | $ | 59,676 |
Common stock issued under employee equity plans | 10 |  |  | 3 |  |  | 170 |  |  | 152 |
Stock-based compensation | 419 |  |  | 351 |  |  | 1,152 |  |  | 1,068 |
Reissuance of treasury stock | — |  |  | — |  |  | (27) |  |  | — |
Balance, end of period | $ | 62,657 |  |  | $ | 60,896 |  |  | $ | 62,657 |  |  | $ | 60,896 |
Treasury stock |  |  |  |  |  |  |
Balance, beginning of period | $ | (6,535) |  |  | $ | (5,103) |  |  | $ | (6,106) |  |  | $ | (4,514) |
Repurchases of common stock | (81) |  |  | (250) |  |  | (1,317) |  |  | (606) |
Common stock repurchases for tax withholding on employee equity plans | (443) |  |  | (459) |  |  | (524) |  |  | (692) |
Reissuance of treasury stock | — |  |  | — |  |  | 888 |  |  | — |
Balance, end of period | $ | (7,059) |  |  | $ | (5,812) |  |  | $ | (7,059) |  |  | $ | (5,812) |
Retained earnings: |  |  |  |  |  |  |
Balance, beginning of period | $ | 3,945 |  |  | $ | 1,111 |  |  | $ | 2,364 |  |  | $ | 723 |
Net income | 1,243 |  |  | 771 |  |  | 2,824 |  |  | 1,159 |
Balance, end of period | $ | 5,188 |  |  | $ | 1,882 |  |  | $ | 5,188 |  |  | $ | 1,882 |
Accumulated other comprehensive income (loss): |  |  |  |  |  |  |
Balance, beginning of period | $ | 10 |  |  | $ | (29) |  |  | $ | (69) |  |  | $ | (10) |
Other comprehensive income (loss) | (23) |  |  | 31 |  |  | 56 |  |  | 12 |
Balance, end of period | $ | (13) |  |  | $ | 2 |  |  | $ | (13) |  |  | $ | 2 |
Total stockholders' equity | $ | 60,790 |  |  | $ | 56,985 |  |  | $ | 60,790 |  |  | $ | 56,985 |

See accompanying notes.
8

Table of Contents
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1 – The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its consolidated subsidiaries. AMD’s products include Artificial Intelligence (AI) accelerators, microprocessors (CPUs) for servers and graphics processing units (GPUs) as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), Smart Network Interface Cards (SmartNICs), and Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.
On March 31, 2025, the Company completed the acquisition of ZT Group Int’l, Inc. (ZT Systems). See Note 5 - Acquisitions and Divestitures for additional information.
NOTE 2 – Basis of Presentation and Significant Accounting Policies
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of AMD have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The results of operations for the three and nine months ended September 27, 2025 shown in this report are not necessarily indicative of results to be expected for the full year ending December 27, 2025 or any other future period. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity. All such adjustments are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024. Certain amounts from fiscal year 2024 have been reclassified to conform to current period presentation. These include the presentation of Payables to related parties within Accounts payable, Operating lease right-of-use assets and Investment: equity method within Other non-current assets, and Receivables from related parties within Prepaid expenses and other current assets.
The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. The three and nine months ended September 27, 2025 and September 28, 2024 each consisted of 13 weeks and 39 weeks, respectively.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not limited to: revenue allowances, inventory valuation, valuation of goodwill, long-lived and intangible assets, business combination accounting and income taxes.
Significant Accounting Policies. There have been no material changes to the Company’s significant accounting policies in Note 2 - Basis of Presentation and Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
9

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NOTE 3 – Supplemental Financial Statement Information

Inventories | September 27, 2025 |  | December 28, 2024
| (In millions)
Raw materials | $ | 676 |  |  | $ | 351 |
Work in process | 4,401 |  |  | 4,289 |
Finished goods | 2,236 |  |  | 1,094 |
Total inventories | $ | 7,313 |  |  | $ | 5,734 |

Prepaid Expenses and Other Current Assets | September 27, 2025 |  | December 28, 2024
| (In millions)
Unbilled receivables | $ | 312 |  |  | $ | 628 |
Other | 1,941 |  |  | 1,363 |
Total prepaid expenses and other current assets | $ | 2,253 |  |  | $ | 1,991 |

Property and Equipment, net | September 27, 2025 |  | December 28, 2024
| (In millions)
Land, building and leasehold improvements | $ | 955 |  |  | $ | 853 |
Equipment | 3,183 |  |  | 2,798 |
Construction in progress | 590 |  |  | 324 |
Property and equipment, gross | 4,728 |  |  | 3,975 |
Accumulated depreciation | (2,523) |  |  | (2,173) |
Total property and equipment, net | $ | 2,205 |  |  | $ | 1,802 |

Accrued Liabilities | September 27, 2025 |  | December 28, 2024
| (In millions)
Customer-related liabilities | $ | 1,080 |  |  | $ | 1,349 |
Accrued marketing programs | 1,311 |  |  | 1,063 |
Accrued compensation and benefits | 1,425 |  |  | 1,174 |
Other accrued expenses and liabilities | 1,296 |  |  | 674 |
Total accrued liabilities | $ | 5,112 |  |  | $ | 4,260 |

Revenue
Revenue allocated to remaining performance obligations that are unsatisfied or partially unsatisfied include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for development services, IP licensing and product revenue. As of September 27, 2025, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $279 million, of which $139 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 9% and 10% of the Company’s revenue for the three and nine months ended September 27, 2025, respectively, and 5% and 10% of the Company’s revenue for the three and nine months ended September 28, 2024, respectively.
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Cost of Sales
During the nine months ended September 27, 2025, the Company recorded approximately $800 million of inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products in Cost of sales.
NOTE 4 – Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue, cost of sales and operating expenses, and operating income (loss). These performance measures include the allocation of expenses to the reportable segments based on management’s judgment. The CODM is regularly provided segment operating income to assess relative segment performance.
Beginning with the fiscal year ending December 27, 2025, the Company changed its segment structure, combining the Client and Gaming segments into one reportable segment to align with how the Company manages its business. All prior period segment data were retrospectively adjusted. The Company’s three reportable segments are:
•the Data Center segment, which primarily includes Artificial Intelligence (AI) accelerators, microprocessors (CPUs) for servers, graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs) and Adaptive System-on-Chip (SoC) products for data centers;
•the Client and Gaming segment, which primarily includes CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, and semi-custom SoC products and development services; and
•the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation expense, acquisition-related and other costs, inventory loss at (recovery from) contract manufacturer, and restructuring charges. Acquisition-related and other costs primarily include certain compensation charges and transaction costs.
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The following table provides a summary of net revenue, cost of sales and operating expenses, and operating income (loss) by segment. Segment cost of sales and operating expenses primarily include materials, external manufacturing, labor and marketing and advertising costs, and exclude expenses and credits that are recorded within the All Other category. Neither of the Client and Gaming businesses qualify as a separate reportable operating segment, however, the Company continues to separately disclose revenue for each business.

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions)
Net revenue: |  |  |  |  |  |  |
Data Center | $ | 4,341 |  |  | $ | 3,549 |  |  | $ | 11,255 |  |  | $ | 8,720 |
Client and Gaming |  |  |  |  |  |  |
Client | 2,750 |  |  | 1,881 |  |  | 7,543 |  |  | 4,741 |
Gaming | 1,298 |  |  | 462 |  |  | 3,067 |  |  | 2,032 |
Total Client and Gaming | 4,048 |  |  | 2,343 |  |  | 10,610 |  |  | 6,773 |
Embedded | 857 |  |  | 927 |  |  | 2,504 |  |  | 2,634 |
Total net revenue | $ | 9,246 |  |  | $ | 6,819 |  |  | $ | 24,369 |  |  | $ | 18,127 |
Cost of sales and operating expenses: |  |  |  |  |  |  |
Data Center | $ | 3,267 |  |  | $ | 2,508 |  |  | $ | 9,404 |  |  | $ | 6,395 |
Client and Gaming | 3,181 |  |  | 2,055 |  |  | 8,480 |  |  | 6,082 |
Embedded | 574 |  |  | 555 |  |  | 1,618 |  |  | 1,575 |
All other | 954 |  |  | 977 |  |  | 2,925 |  |  | 3,046 |
Total cost of sales and operating expenses | $ | 7,976 |  |  | $ | 6,095 |  |  | $ | 22,427 |  |  | $ | 17,098 |
Operating income (loss): |  |  |  |  |  |  |
Data Center | $ | 1,074 |  |  | $ | 1,041 |  |  | $ | 1,851 |  |  | $ | 2,325 |
Client and Gaming | 867 |  |  | 288 |  |  | 2,130 |  |  | 691 |
Embedded | 283 |  |  | 372 |  |  | 886 |  |  | 1,059 |
All other (1) | (954) |  |  | (977) |  |  | (2,925) |  |  | (3,046) |
Total operating income | $ | 1,270 |  |  | $ | 724 |  |  | $ | 1,942 |  |  | $ | 1,029 |

(1) | For the three and nine months ended September 27, 2025, all other operating losses primarily included $562 million and $1.7 billion of amortization of acquisition-related intangibles, and $419 million and $1.2 billion of stock-based compensation expense, respectively. For the three and nine months ended September 28, 2024, all other operating losses primarily included $585 million and $1.8 billion of amortization of acquisition-related intangibles, and $351 million and $1.1 billion of stock-based compensation expense, respectively.

NOTE 5 – Acquisitions and Divestitures
ZT Systems Acquisition
On March 31, 2025 (the Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of ZT Systems for a total purchase consideration of $4.4 billion. ZT Systems is a provider of AI and general-purpose compute infrastructure for hyperscale computing companies. The acquisition is expected to enable the Company to deliver end-to-end AI solutions and accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud.
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The purchase consideration is comprised of the following (in millions):

Cash paid on Acquisition Date |  | $ | 3,188 |
Fair value of 8,335,849 shares(1) issued on Acquisition Date |  | 860 |
Fair value of contingent consideration(2) on Acquisition Date not yet paid |  | 361 |
Total purchase consideration |  | $ | 4,409 |

(1) Represents the fair value based on the closing price of AMD common stock on March 28, 2025 of $103.22 per share, as the transaction closed prior to the opening of markets on March 31, 2025.
(2) Represents the estimated fair value of 740,961 shares of AMD common stock to be issued and $300 million of cash to be paid to former ZT Systems stockholders and warrant holders assuming the contingencies are fully met.
The purchase consideration was allocated as follows (in millions):

Cash and cash equivalents |  |  | $ | 1,500 |
Assets held for sale |  |  | 5,965 |
Other assets |  |  | 81 |
Total assets acquired |  |  | 7,546 |
Liabilities held for sale |  |  | 3,221 |
Other liabilities |  |  | 124 |
Total liabilities assumed |  |  | 3,345 |
Fair value of net assets acquired |  |  | 4,201 |
Goodwill |  |  | 208 |
Total purchase consideration |  |  | $ | 4,409 |

The Company allocated the purchase price to identifiable tangible and intangible assets acquired and liabilities assumed based on estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The assets and liabilities related to the ZT Systems’ data center infrastructure manufacturing business (ZT Manufacturing Business) were classified as held for sale due to the Company’s intent to divest it. Fair values of assets and liabilities classified as held for sale were determined using the income and cost valuation approaches, which incorporate significant unobservable inputs. Goodwill arising from the ZT Systems acquisition was assigned to the Company’s Data Center reporting unit. Goodwill was primarily attributed to the assembled workforce and is not expected to be deductible for income tax purposes.
The Company retained select intellectual property and employees associated with the design operations (ZT Design Business). The results of operations of the ZT Design business, which are not material, are included in the Company’s continuing operations within the Data Center segment. The results of operations of the ZT Manufacturing Business are presented as discontinued operations in the Company’s consolidated financial statements.
Transaction costs of $47 million were recorded within Marketing, general and administrative expenses during the nine months ended September 27, 2025 and no transaction costs were incurred in the three months ended September 27, 2025.
The following summarizes carrying amounts of major classes of ZT Manufacturing Business assets and liabilities held for sale as of September 27, 2025 (in millions):

Accounts receivable |  | $ | 1,489 |
Inventories |  | 1,365 |
Other assets |  | 677 |
Goodwill and intangible assets |  | 459 |
Total assets held for sale |  | $ | 3,990 |

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Accounts payable |  | $ | 1,118 |
Accrued and other liabilities |  | 790 |
Total liabilities held for sale |  | $ | 1,908 |

Assets and liabilities held for sale are recorded using the lower of carrying values or fair values less estimated costs to sell.
The following table presents a reconciliation of the contingent consideration liability (in millions:)

Initial valuation of contingent consideration liability |  |  |  | $ | 361 |
Change in fair value |  |  |  | 52
Contingent consideration liability, September 27, 2025 |  |  |  | $ | 413 |

Contingent consideration liability was measured at fair value on Acquisition Date and is remeasured to fair value until the contingencies are resolved. The fair value of the contingent consideration liability was estimated based on the present value of the contingent cash and stock consideration using significant unobservable inputs such as risk-adjusted discount rates, equity volatility and simulated stock price. The simulated stock price was calculated using the Monte Carlo simulation method. The fair value of contingent consideration liability may increase or decrease based on changes in these significant inputs. The amount is recorded within Accrued liabilities of the Company’s consolidated balance sheets and the changes in fair value are recognized within Income from discontinued operations of the Company’s consolidated statements of operations.
ZT Manufacturing Business Divestiture
On May 18, 2025, the Company entered into an equity purchase agreement with Sanmina Corporation (Sanmina) to sell the ZT Manufacturing Business for $3.0 billion in cash and stock, inclusive of a contingent payment of up to $450 million, subject to customary adjustments for working capital and other items. See Note 15 - Subsequent Events for additional information.
Other Acquisitions
During the three and nine months ended September 27, 2025, the Company completed other business acquisitions for a total consideration of $36 million that resulted in the recognition of $36 million of goodwill. The financial results of these acquired businesses, which were not material, were included in the Company's consolidated statements of operations from their respective dates of acquisition within the Data Center segment.
Pro Forma Information
Since the ZT Manufacturing Business represents the majority of ZT Systems’ operations and was held for sale, pro forma information presenting the combined results of operations of ZT Systems and other acquired entities were deemed neither material nor meaningful to the Company’s consolidated income from continuing operations and were omitted.
NOTE 6 – Goodwill and Acquisition-related Intangibles, net
Goodwill
In the first quarter of fiscal year 2025, the Company assigned goodwill to its updated reporting units to reflect the change in its segment reporting structure. The Company performed a goodwill impairment test immediately prior to and after the segment change and determined that no indicators of impairment to goodwill existed.
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The following table summarizes Goodwill:

|  |  |  |  | Before segment change |  | After segment change |  |
(in millions) | Data Center |  | Embedded |  | Client |  | Gaming |  | Client and Gaming |  | Total
December 28, 2024 | $ | 3,403 |  |  | $ | 21,072 |  |  | $ | 126 |  |  | $ | 238 |  |  | $ | — |  |  | $ | 24,839 |
Reassignment due to segment change | — |  |  | — |  |  | (126) |  |  | (238) |  |  | 364 |  |  | — |
Acquisitions | 244 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 244 |
September 27, 2025 | $ | 3,647 |  |  | $ | 21,072 |  |  | $ | — |  |  | $ | — |  |  | $ | 364 |  |  | $ | 25,083 |

Acquisition-related Intangibles, net
The following table summarizes Acquisition-related Intangibles Assets:

| September 27, 2025 |  | December 28, 2024
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
| (In millions) |  | (In millions)
Developed technology | $ | 13,587 |  |  | $ | (3,300) |  |  | $ | 10,287 |  |  | $ | 13,408 |  |  | $ | (2,529) |  |  | $ | 10,879 |
Customer relationships | 12,324 |  |  | (5,990) |  |  | 6,334 |  |  | 12,324 |  |  | (5,124) |  |  | 7,200 |
Product trademarks | 914 |  |  | (285) |  |  | 629 |  |  | 914 |  |  | (225) |  |  | 689 |
Acquisition-related intangible assets subject to amortization | 26,825 |  |  | (9,575) |  |  | 17,250 |  |  | 26,646 |  |  | (7,878) |  |  | 18,768 |
In-process research and development (IPR&D) not subject to amortization | — |  |  | — |  |  | — |  |  | 162 |  |  | — |  |  | 162 |
Total acquisition-related intangible assets, net | $ | 26,825 |  |  | $ | (9,575) |  |  | $ | 17,250 |  |  | $ | 26,808 |  |  | $ | (7,878) |  |  | $ | 18,930 |

In April 2025, $162 million of IPR&D intangible asset reached technological feasibility, was placed in service as developed technology and started amortization over its estimated useful life of 5 years.
Acquisition-related intangible amortization expense was $562 million and $1.7 billion for the three and nine months ended September 27, 2025, respectively, and $585 million and $1.8 billion for the three and nine months ended September 28, 2024, respectively.
Based on the carrying value of acquisition-related intangibles recorded as of September 27, 2025, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:

Fiscal Year | (In millions)
Remainder of 2025 | $ | 556 |
2026 | 2,149 |
2027 | 2,031 |
2028 | 1,919 |
2029 | 1,691 |
2030 and thereafter | 8,904 |
Total | $ | 17,250 |

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NOTE 7 – Related Party — Equity Joint Ventures
ATMP Joint Ventures
The Company holds a 15% equity interest in two joint ventures (collectively, the ATMP JV) with affiliates of Tongfu Microelectronics Co., Ltd, a Chinese joint stock company. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV. The carrying value of the Company’s investment in ATMP JV was $174 million and $149 million as of September 27, 2025 and December 28, 2024, respectively, and is recorded within Other non-current assets on the Company’s consolidated balance sheets.
The ATMP JV provides assembly, test, mark and packaging (ATMP) services to the Company. The Company’s purchases from the ATMP JV during the three and nine months ended September 27, 2025 were $483 million and $1.5 billion, respectively. The Company’s purchases from the ATMP JV during the three and nine months ended September 28, 2024 were $407 million and $1.2 billion, respectively. As of September 27, 2025 and December 28, 2024, the amounts payable to the ATMP JV were $516 million and $476 million, respectively, and are included in Accounts payable on the Company’s consolidated balance sheets.
On October 9, 2024, the Company entered into a one-year term loan agreement with one of the ATMP JVs for $100 million to provide funds for the ATMP JV’s general corporate purposes. The loan bears interest, payable quarterly, at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points. The loan receivable is included within Prepaid expenses and other current assets on the Company’s consolidated balance sheets. On October 9, 2025, the loan agreement was amended to extend the term of the loan until October 16, 2026 with an interest rate, payable quarterly, at the three months term SOFR plus 35 basis points.
During the three and nine months ended September 27, 2025, the Company recorded income related to the ATMP JV of $10 million and $25 million, respectively, in Equity income in investee on its consolidated statements of operations. During the three and nine months ended September 28, 2024, the Company recorded income related to the ATMP JV of $7 million and $21 million, respectively, in Equity income in investee on its consolidated statements of operations.
NOTE 8 – Debt, Revolving Credit Facility and Commercial Paper Program
Debt
The Company’s debt as of September 27, 2025 and December 28, 2024 consisted of the following:

| September 27, 2025 |  | December 28, 2024
| (In millions)
4.212% Senior Notes Due 2026 (4.212% Notes) | $ | 875 |  |  | $ | — |
4.319% Senior Notes Due 2028 (4.319% Notes) | 625 |  |  | — |
2.375% Senior Notes Due 2030 (2.375% Notes) | 750 |  |  | 750 |
3.924% Senior Notes Due 2032 (3.924% Notes) | 500 |  |  | 500 |
4.393% Senior Notes Due 2052 (4.393% Notes) | 500 |  |  | 500 |
Total debt (principal amount) | 3,250 |  |  | 1,750 |
Unamortized debt discount and issuance costs | (30) |  |  | (29) |
Total debt (net) | 3,220 |  |  | 1,721 |
Less: current portion of long-term debt and related unamortized debt issuance costs | (873) |  |  | — |
Total long-term debt (net) | $ | 2,347 |  |  | $ | 1,721 |

4.212% Senior Notes Due 2026 and 4.319% Senior Notes Due 2028
On March 24, 2025, the Company issued 4.212% Notes and 4.319% Notes in aggregate principal amount of $1.5 billion. The 4.212% Notes and the 4.319% Notes are general unsecured senior obligations of the Company. The interest is payable semi-annually on March 24 and September 24 of each year, commencing on September 24, 2025.
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The Company may redeem some or all of the 4.212% Notes prior to September 24, 2026 at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the 4.212% Notes or 100% of the principal amount plus accrued and unpaid interest. The Company may redeem some or all of the 4.319% Notes prior to February 24, 2028, one month prior to the maturity date of the 4.319% Notes (4.319% Notes Par Call Date), at a price equal to the greater of the present value of the principal amount and future interest through the 4.319% Notes Par Call Date or 100% of the principal amount plus accrued and unpaid interest. On or after February 24, 2028, the Company may also redeem some or all of the 4.319% Notes at 100% of the principal amount plus accrued and unpaid interest.
Holders of the 4.212% Notes and the 4.319% Notes have the right to require the Company to repurchase all or a portion of the 4.212% Notes or 4.319% Notes in the event that the Company undergoes a change of control, at a repurchase price of 101% of the principal amount plus accrued and unpaid interest. Additionally, an event of default may result in the acceleration of the maturity of the 4.212% Notes and 4.319% Notes.
2.375% Senior Notes Due 2030, 3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052
The 2.375% Notes, 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.
As of September 27, 2025, the Company was in compliance with the covenants associated with its debt.
Revolving Credit Facility
The Company has $3.0 billion available under an unsecured revolving credit facility that expires on April 29, 2027. During the three and nine months ended September 27, 2025, the Company did not draw funds from the revolving credit facility. As of September 27, 2025, the Company was in compliance with the covenants under the revolving credit facility.
Commercial Paper Program
The Company has a commercial paper program under which it can issue unsecured commercial paper notes up to a principal amount of $3.0 billion at any time with maturities of up to 397 days from the date of issue. The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of the issuance. During the three months ended March 29, 2025, the Company issued $950 million in aggregate principal amount of commercial paper which was subsequently repaid before June 28, 2025. As of September 27, 2025 and December 28, 2024, the Company had no commercial paper outstanding.
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NOTE 9 – Financial Instruments
Financial Instruments Recorded at Fair Value on a Recurring Basis

| September 27, 2025 |  | December 28, 2024
(In millions) | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | $ | 732 |  |  | $ | — |  |  | $ | — |  |  | $ | 732 |  |  | $ | 1,496 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,496 |
Corporate debt securities | — |  |  | 1,733 |  |  | — |  |  | 1,733 |  |  | — |  |  | 806 |  |  | — |  |  | 806 |
U.S. government and agency securities | 312 |  |  | 400 |  |  | — |  |  | 712 |  |  | 130 |  |  | — |  |  | — |  |  | 130 |
Non-U.S. government and agency securities | — |  |  | 165 |  |  | — |  |  | 165 |  |  | — |  |  | 116 |  |  | — |  |  | 116 |
Time deposits and certificates of deposits | — |  |  | 179 |  |  | — |  |  | 179 |  |  | — |  |  | 107 |  |  | — |  |  | 107 |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities | — |  |  | 1,525 |  |  | — |  |  | 1,525 |  |  | — |  |  | 814 |  |  | — |  |  | 814 |
U.S. government and agency securities | 643 |  |  | 73 |  |  | — |  |  | 716 |  |  | 332 |  |  | 82 |  |  | — |  |  | 414 |
Non-U.S. government and agency securities | — |  |  | 161 |  |  | — |  |  | 161 |  |  | — |  |  | 79 |  |  | — |  |  | 79 |
Time deposits and certificates of deposits | — |  |  | 10 |  |  | — |  |  | 10 |  |  | — |  |  | 10 |  |  | — |  |  | 10 |
Asset-backed and mortgage-backed securities | — |  |  | 23 |  |  | — |  |  | 23 |  |  | — |  |  | 28 |  |  | — |  |  | 28 |
Other non-current assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan and other investments | 238 |  |  | — |  |  | 121 |  |  | 359 |  |  | 197 |  |  | — |  |  | 25 |  |  | 222 |
Time deposits and certificates of deposits | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Total assets measured at fair value | $ | 1,925 |  |  | $ | 4,269 |  |  | $ | 121 |  |  | $ | 6,315 |  |  | $ | 2,155 |  |  | $ | 2,043 |  |  | $ | 25 |  |  | $ | 4,223 |
Accrued liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration liability | $ | — |  |  | $ | — |  |  | $ | 413 |  |  | $ | 413 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Total liabilities measured at fair value | $ | — |  |  | $ | — |  |  | $ | 413 |  |  | $ | 413 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |

Deferred compensation plan investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan.
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The following is a summary of cash equivalents and short-term investments:

| September 27, 2025 |  | December 28, 2024
| Cost/ Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Cost/ Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
| (in millions) |  | (in millions)
Money market funds | $ | 732 |  |  | $ | — |  |  | $ | — |  |  | $ | 732 |  |  | $ | 1,496 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,496 |
Corporate debt securities | 3,256 |  |  | 2 |  |  | — |  |  | 3,258 |  |  | 1,621 |  |  | — |  |  | (1) |  |  | 1,620 |
U.S. government and agency securities | 1,427 |  |  | 1 |  |  | — |  |  | 1,428 |  |  | 544 |  |  | — |  |  | — |  |  | 544 |
Non-U.S. government and agency securities | 326 |  |  | — |  |  | — |  |  | 326 |  |  | 195 |  |  | — |  |  | — |  |  | 195 |
Time deposits and certificates of deposits | 189 |  |  | — |  |  | — |  |  | 189 |  |  | 117 |  |  | — |  |  | — |  |  | 117 |
Asset-backed and mortgage-backed securities | 24 |  |  | — |  |  | (1) |  |  | 23 |  |  | 30 |  |  | — |  |  | (2) |  |  | 28 |
| $ | 5,954 |  |  | $ | 3 |  |  | $ | (1) |  |  | $ | 5,956 |  |  | $ | 4,003 |  |  | $ | — |  |  | $ | (3) |  |  | $ | 4,000 |

As of September 27, 2025 and December 28, 2024, the Company did not have material available-for-sale debt securities which have been in a continuous unrealized loss position of more than twelve months.
The contractual maturities of investments classified as available-for-sale are as follows:

| September 27, 2025 |  | December 28, 2024
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
| (In millions) |  | (In millions)
Due within 1 year | $ | 4,311 |  |  | $ | 4,312 |  |  | $ | 2,073 |  |  | $ | 2,073 |
Due in 1 year through 5 years | 887 |  |  | 889 |  |  | 406 |  |  | 405 |
Due in 5 years and later | 24 |  |  | 23 |  |  | 27 |  |  | 26 |
| $ | 5,222 |  |  | $ | 5,224 |  |  | $ | 2,506 |  |  | $ | 2,504 |

Financial Instruments Not Recorded at Fair Value
The carrying amounts and estimated fair values of the Company’s current and long-term debt are as follows:

| September 27, 2025 |  | December 28, 2024
| Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
| (In millions) |  | (In millions)
Current portion of long-term debt, net | $ | 873 |  |  | $ | 880 |  |  | $ | — |  |  | $ | — |
Long-term debt | $ | 2,347 |  |  | $ | 2,242 |  |  | $ | 1,721 |  |  | $ | 1,543 |

The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets.
The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Financial Instruments Measured at Fair Value on a Non-Recurring Basis
As of September 27, 2025 and December 28, 2024, the Company had non-marketable securities in privately-held companies of $898 million and $468 million, respectively, which are recorded at estimated fair value on a non-recurring basis and within Other non-current assets in the Company’s consolidated balance sheets. Impairment losses or observable price adjustments were not material during the three and nine months ended September 27, 2025 and September 28, 2024.
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Hedging Transactions and Derivative Financial Instruments
Foreign Currency Forward Contracts Designated as Accounting Hedges
The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 24 months and are designated as accounting hedges. As of September 27, 2025 and December 28, 2024, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $2.3 billion and $2.2 billion, respectively. The fair value of these contracts as of September 27, 2025 and December 28, 2024 was not material.
Foreign Currency Forward Contracts Not Designated as Accounting Hedges
The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of September 27, 2025 and December 28, 2024, the notional value of these outstanding contracts was $797 million and $642 million, respectively. The fair value of these contracts was not material as of September 27, 2025 and December 28, 2024.
NOTE 10 – Earnings Per Share
The following table sets forth the components of basic and diluted earnings per share:

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions, except per share amounts)
Numerator |  |  |  |  |  |  |
Income from continuing operations | $ | 1,172 |  |  | $ | 771 |  |  | $ | 2,649 |  |  | $ | 1,159 |
Income from discontinued operations | 71 |  |  | — |  |  | 175 |  |  | — |
Net income | $ | 1,243 |  |  | $ | 771 |  |  | $ | 2,824 |  |  | $ | 1,159 |
Denominator |  |  |  |  |  |  |
Basic weighted average shares | 1,626 |  |  | 1,620 |  |  | 1,623 |  |  | 1,619 |
Potentially dilutive shares from employee equity plans | 15 |  |  | 16 |  |  | 9 |  |  | 19 |
Diluted weighted average shares | 1,641 |  |  | 1,636 |  |  | 1,632 |  |  | 1,638 |
Earnings per share: |  |  |  |  |  |  |
Earnings per share from continuing operations - basic | $ | 0.72 |  |  | $ | 0.48 |  |  | $ | 1.63 |  |  | $ | 0.72 |
Earnings per share from discontinued operations - basic | 0.04 |  |  | — |  |  | 0.11 |  |  | — |
Basic earnings per share | $ | 0.76 |  |  | $ | 0.48 |  |  | $ | 1.74 |  |  | $ | 0.72 |
Earnings per share from continuing operations - diluted | $ | 0.71 |  |  | $ | 0.47 |  |  | $ | 1.62 |  |  | $ | 0.71 |
Earnings per share from discontinued operations - diluted | 0.04 |  |  | — |  |  | 0.11 |  |  | — |
Diluted earnings per share | $ | 0.75 |  |  | $ | 0.47 |  |  | $ | 1.73 |  |  | $ | 0.71 |

Securities which would have been anti-dilutive are not material and are excluded from the computation of diluted earnings per share for all periods presented.
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NOTE 11 – Common Stock and Stock-based Compensation
Common Stock
On May 14, 2025, the Company’s stockholders approved the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 2.25 billion shares to 4.0 billion shares.
Shares of common stock outstanding were as follows:

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions)
Balance, beginning of period | 1,622 |  |  | 1,618 |  |  | 1,622 |  |  | 1,616 |
Common stock issued under employee equity plans | 9 |  |  | 10 |  |  | 13 |  |  | 15 |
Common stock repurchases for tax withholding on equity awards | (3) |  |  | (3) |  |  | (3) |  |  | (4) |
Repurchases of common stock | — |  |  | (2) |  |  | (12) |  |  | (4) |
Common stock issued in the acquisition of ZT Systems | — |  |  | — |  |  | 8 |  |  | — |
Balance, end of period | 1,628 |  |  | 1,623 |  |  | 1,628 |  |  | 1,623 |

Stock Repurchase Program
On May 13, 2025, the Company’s board of directors approved a new $6 billion share repurchase program. The authorization is in addition to the Company’s existing share repurchase program (collectively, the Repurchase Program), increasing the total repurchase authority to $14 billion. During the three and nine months ended September 27, 2025, the Company repurchased 0.6 million and 12 million shares of its common stock under the Repurchase Program for $89 million and $1.3 billion, respectively. The repurchased amounts do not include the 1% excise tax on stock repurchases enacted by the Inflation Reduction Act of 2022. As of September 27, 2025, $9.4 billion remained available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
Stock-based Compensation
Stock-based compensation expense recorded in the consolidated statements of operations was as follows:

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions)
Cost of sales | $ | 7 |  |  | $ | 5 |  |  | $ | 18 |  |  | $ | 16 |
Research and development | 333 |  |  | 267 |  |  | 905 |  |  | 809 |
Marketing, general and administrative | 79 |  |  | 79 |  |  | 229 |  |  | 243 |
Total | $ | 419 |  |  | $ | 351 |  |  | $ | 1,152 |  |  | $ | 1,068 |

NOTE 12 – Income Taxes
The Company determines its income taxes for interim reporting periods by applying the Company’s estimated annual effective tax rate to the year-to-date results, adjusted for tax items discrete to each period.
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Continuing Operations
For the three and nine months ended September 27, 2025, the Company recorded an income tax provision of $153 million and an income tax benefit of $558 million representing an effective tax rate of 11.5% and (26.7)%, respectively. The tax provision (benefit) for both periods reflected the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits, partially offset by the tax rate detriment from foreign earnings, as well as a discrete tax benefit related to stock-based compensation. In addition, the tax benefit for the nine months ended September 27, 2025 also included a discrete tax benefit of $853 million related to the release of uncertain tax positions pertaining to the reasonable cause relief for dual consolidated losses approved by the Internal Revenue Service (IRS) in April 2025.
For the three and nine months ended September 28, 2024, the Company recorded an income tax benefit of $27 million and $38 million representing an effective tax rate of (3.6)% and (3.3)%, respectively. The tax benefit for the three and nine months ended September 28, 2024 reflected discrete tax benefits primarily related to stock-based compensation, partially offset by the interest and penalties accrued for uncertain tax positions.
In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. For the three and nine months ended September 27, 2025, the primary impact of the OBBBA to the Company’s tax provision was the accelerated expensing of domestic R&D activities which decreased the Company’s estimated income eligible for FDII resulting in a higher estimated annual effective tax rate. The OBBBA is also expected to reduce the Company’s deferred tax assets and current income tax liability for fiscal year 2025. Other OBBBA changes did not have a material impact on the Company’s financial statements.
As of September 27, 2025 and December 28, 2024, the Company had long-term income tax liabilities related to unrecognized tax benefits of $763 million and $1.4 billion, respectively, recorded under Other long-term liabilities in the Company’s consolidated balance sheets. The reduction in long-term income tax liabilities was primarily due to the release of $853 million of uncertain tax positions pertaining to reasonable cause relief for dual consolidated losses approved by the IRS in April 2025.
Discontinued Operations
For the three and nine months ended September 27, 2025, the Company recorded income tax provisions of $25 million and $1 million, respectively, related to discontinued operations. The $1 million provision for the nine months ended September 27, 2025 primarily reflects a tax expense from the ZT Manufacturing Business, offset by a discrete tax benefit from its expected sale.
NOTE 13 – Commitments and Contingencies
Commitments
The Company’s commitments primarily include obligations to purchase wafers and substrates from third parties, obligations for future payments related to multi-year cloud service provider, software, technology and IP license agreements, and obligations for leases that have not yet commenced. These commitments were made under noncancellable purchase orders and contractual obligations requiring minimum commitments for which cancellation would lead to significant penalties.
Total future commitments as of September 27, 2025 were as follows:

Fiscal Year | (In millions)
Remainder of 2025 | $ | 3,778 |
2026 | 3,960 |
2027 | 1,242 |
2028 | 1,231 |
2029 | 1,032 |
2030 and thereafter | 882 |
Total commitments | $ | 12,125 |

The Company continually works with suppliers and partners on timing of payments and deliveries of commitments, taking into account business conditions.
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Contingencies
During the quarterly period ended September 27, 2025, there were no material legal proceedings. The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
NOTE 14 – Restructuring Charges
In the fourth quarter of 2024, the Company implemented a restructuring plan (the 2024 Restructuring Plan) which reduced the global workforce by approximately 4% of headcount. Actions associated with the 2024 Restructuring Plan were substantially completed in the first quarter of fiscal year 2025. The 2024 Restructuring Plan charges to date were $186 million, of which $113 million was related to employee severance and benefits and $73 million was related to asset impairment. For the three and nine months ended September 27, 2025, the Company made less than $1 million and $78 million of severance payments, respectively, and had no charges or adjustments to period expense under the 2024 Restructuring Plan. As of September 27, 2025 and December 28, 2024, restructuring plan liabilities of $11 million and $89 million, respectively, were recorded within Accrued liabilities in the Company’s consolidated balance sheets.
NOTE 15 - Subsequent Events
Warrant
On October 5, 2025, the Company issued to OpenAI OpCo, LLC (the Warrantholder) a warrant to purchase up to an aggregate of 160 million shares of the Company’s common stock at an exercise price of $0.01 per share. The warrant shares will vest in tranches based on certain GPU purchase milestones by the Warrantholder, or its affiliates, or indirectly through third parties, and achievement of specified Company stock price targets and stock performance. Each vested tranche is further subject to the fulfillment of certain other technical and commercial conditions prior to exercise. Subject to certain terms and conditions, the warrant is exercisable through October 5, 2030. The Company expects to account for the warrant as a liability-classified financial instrument, unless the conditions for equity classification are satisfied. The grant date fair value of the warrant will be recognized as a reduction to revenue when revenue is recognized. The warrant, when classified as a liability, will be remeasured at fair value at each reporting period, with changes in fair value to be recorded within Other income (expense), net.
ZT Manufacturing Business Divestiture
On October 27, 2025, the Company completed the sale of the ZT Manufacturing Business to Sanmina for 1,151,052 shares of Sanmina common stock and $2.4 billion in cash, subject to certain purchase price adjustments. The Company is eligible to receive additional cash consideration of up to $450 million to the extent certain conditions are met following the close of the sale.
On October 30, 2025, with the completion of the sale of the ZT Manufacturing Business, the Company settled the contingent consideration liability of $300 million in cash and 740,961 shares of the Company’s common stock with the former ZT Systems stockholders and warrant holders.
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The statements in this report include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” “anticipates,” or the negative of these words and phrases, other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things: possible impact of future accounting rules on AMD’s condensed consolidated financial statements; demand for AMD’s products; AMD’s strategy and expected benefits; the growth, change and competitive landscape of the markets in which AMD participates; the expectation that international sales will continue to be a significant portion of total sales in the foreseeable future; the expectation that AMD’s cash, cash equivalents, short-term investments and cash flows from operations along with our revolving credit facility and our commercial paper program will be sufficient to fund AMD’s operations, capital expenditures, commitments and strategic activities over the next 12 months and beyond; AMD’s ability to access capital markets; AMD’s expectation that based on management’s current knowledge, the potential liability related to AMD’s current litigation will not have a material adverse effect on its financial positions, results of operation or cash flows; anticipated ongoing and increased costs related to enhancing and implementing information security controls; the expectation that revenue allocated to remaining performance obligations that are unsatisfied will be recognized in the next 12 months; that a small number of customers will continue to account for a substantial part of AMD’s revenue in the future; the expected implications from the development of the legal and regulatory environment relating to emerging technologies, such as AI; AMD’s ability to achieve its corporate responsibility initiatives; compliance costs associated with new or developing sustainability laws and requirements; expected future AI trends and developments; the expected benefits of AMD’s acquisition of ZT Group Int’l, Inc. (ZT Systems); the extent of impact of export restrictions imposed on by the U.S. on our business; and AMD’s expectation to fund stock repurchases through cash generated from operations. For a discussion of the factors that could cause actual results to differ materially from the forward-looking statements, see “Part II, Item 1A—Risk Factors” and the “Financial Condition” section set forth in “Part I, Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A, and such other risks and uncertainties as set forth below in this report or detailed in our other Securities and Exchange Commission (SEC) reports and filings. We assume no obligation to update forward-looking statements.
References in this Quarterly Report on Form 10-Q to “AMD,” “we,” “us,” “management,” “our” or the “Company” mean Advanced Micro Devices, Inc. and our consolidated subsidiaries.
AMD, the AMD Arrow logo, AMD Instinct, EPYC, Radeon, Ryzen, Xilinx and combinations thereof are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and are used to identify companies and products and may be trademarks of their respective owners. “Zen” is a codename for an AMD architecture and is not a product name.
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report and our audited consolidated financial statements and related notes as of December 28, 2024 and December 30, 2023, and for each of the three years for the period ended December 28, 2024 as filed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
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Overview and Recent Developments
We are a global semiconductor company primarily offering:
•Artificial Intelligence (AI) accelerators, microprocessors (CPUs) for servers, graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs) and Adaptive System-on-Chip (SoC) products for data centers;
•CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, semi-custom SoC products and development services; and
•embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.
From time to time, we may also sell or license portions of our intellectual property (IP) portfolio.
In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “we”, “us,” “our”, “AMD” or the “Company”), including a discussion of our results of operations for the three and nine months ended September 27, 2025 compared to the prior year period and an analysis of changes in our financial condition.
Net revenue for the three months ended September 27, 2025 was $9.2 billion, a 36% increase compared to the prior year period. The increase in net revenue was driven by an increase in Client and Gaming segment revenue, primarily driven by strong demand for our AMD Ryzen™ processors, semi-custom game console SoCs and Radeon™ gaming GPUs; and an increase in Data Center segment revenue primarily driven by strong demand for our 5th generation AMD EPYC™ processors and AMD Instinct™ MI350 Series GPUs. Embedded segment revenue decreased as certain end market demand remained mixed.
Gross margin for the three months ended September 27, 2025 was 52% compared to gross margin of 50% for the prior year period, a 2% increase primarily driven by product mix.
Operating income for the three months ended September 27, 2025 was $1.3 billion compared to operating income of $724 million for the prior year period. The increase in operating income was due to higher gross profit, partially offset by higher operating expenses. Net income for the three months ended September 27, 2025 was $1.2 billion compared to net income of $771 million for the prior year period. The increase in net income was primarily driven by higher operating income.
As of September 27, 2025, our cash, cash equivalents and short-term investments were $7.2 billion compared to $5.1 billion as of December 28, 2024. During the nine months ended September 27, 2025, we generated $5.1 billion of cash from operating activities and we returned $1.3 billion to stockholders through the repurchase of common stock under our Repurchase Program.
On March 31, 2025 (the Acquisition Date), we completed the acquisition of ZT Group Int’l, Inc. (ZT Systems), which is expected to enable AMD to deliver end-to-end AI solutions and accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud. On the Acquisition Date, we paid $3.2 billion in cash and issued 8,335,849 shares of our common stock. ZT Systems is comprised of the data center infrastructure manufacturing business (ZT Manufacturing Business), which was classified as held for sale, and the design operations (ZT Design Business).
On October 27, 2025, we completed the sale of the ZT Manufacturing Business to Sanmina Corporation (Sanmina) for 1,151,052 shares of Sanmina common stock and $2.4 billion in cash, subject to certain purchase price adjustments, as closing consideration. We are eligible to receive additional cash consideration of up to $450 million to the extent certain conditions are met following the close of the sale.
On October 30, 2025, we settled the contingent consideration liability associated with the acquisition of ZT Systems of $300 million in cash and 740,961 shares of the Company’s common stock with the former ZT Systems stockholders and warrant holders.
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On October 5, 2025, the Company issued to OpenAI OpCo, LLC (the Warrantholder) a warrant to purchase up to an aggregate of 160 million shares of the Company’s common stock at an exercise price of $0.01 per share. The warrant shares will vest in tranches based on certain GPU purchase milestones by the Warrantholder, or its affiliates, or indirectly through third parties, and achievement of specified Company stock price targets and stock performance. Each vested tranche is further subject to the fulfillment of certain other technical and commercial conditions prior to exercise. Subject to certain conditions, the warrant is exercisable through October 5, 2030.
In April 2025, new U.S. export restrictions on certain semiconductors to China led to approximately $800 million in product inventory and related charges on AMD Instinct MI308 Data Center GPU products during the second quarter of fiscal year 2025. We applied for and were granted some licenses by the U.S. government that allow us to ship MI308 products to certain China-based customers. We did not record MI308 China-based customer revenue during the three months ended September 27, 2025. Sales of our MI308 products into China depend on customer demand, China’s import control rules and our ability to obtain licenses.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our consolidated financial statements. We evaluate our estimates on an ongoing basis, including those related to our revenue, inventories, goodwill, long-lived and intangible assets, business combination accounting and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.
Other than the estimates used in accounting for business combinations, management believes there have been no significant changes for the three and nine months ended September 27, 2025 to the items that we disclosed as our critical accounting estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Business Combinations. We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Such valuations require management to make significant estimates and assumptions, especially with respect to assets and liabilities held for sale, intangible assets and contingent consideration. Significant estimates and inputs used in valuing acquired assets and liabilities held for sale, developed technology, and other identifiable intangible assets include, but are not limited to, expected future revenue, future changes in technology, useful lives, and risk-adjusted discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over their useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized.
Results of Continuing Operations
Beginning with the fiscal year ending December 27, 2025, we combined the Client and Gaming segments into one reportable segment to align with how we manage our business. Neither of the Client and Gaming businesses qualify as a separate reportable operating segment, however, we continue to separately disclose revenues for each business. All prior period segment data were retrospectively adjusted.
Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the second half of the year than in the first half of the year, although market conditions and product transitions could impact this trend.
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The following table provides a summary of net revenue and operating income (loss) by segment:

| Three Months Ended |  | Nine Months Ended
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024
| (In millions)
Net revenue: |  |  |  |  |  |  |
Data Center | $ | 4,341 |  |  | $ | 3,549 |  |  | $ | 11,255 |  |  | $ | 8,720 |
Client and Gaming |  |  |  |  |  |  |
Client | $ | 2,750 |  |  | $ | 1,881 |  |  | $ | 7,543 |  |  | $ | 4,741 |
Gaming | 1,298 |  |  | 462 |  |  | 3,067 |  |  | 2,032 |
Total Client and Gaming | 4,048 |  |  | 2,343 |  |  | 10,610 |  |  | 6,773 |
Embedded | 857 |  |  | 927 |  |  | 2,504 |  |  | 2,634 |
Total net revenue | $ | 9,246 |  |  | $ | 6,819 |  |  | $ | 24,369 |  |  | $ | 18,127 |
Cost of sales and operating expenses: |  |  |  |  |  |  |
Data Center | $ | 3,267 |  |  | $ | 2,508 |  |  | $ | 9,404 |  |  | $ | 6,395 |
Client and Gaming | 3,181 |  |  | 2,055 |  |  | 8,480 |  |  | 6,082 |
Embedded | 574 |  |  | 555 |  |  | 1,618 |  |  | 1,575 |
All other | 954 |  |  | 977 |  |  | 2,925 |  |  | 3,046 |
Total cost of sales and operating expenses | $ | 7,976 |  |  | $ | 6,095 |  |  | $ | 22,427 |  |  | $ | 17,098 |
Operating income (loss): |  |  |  |  |  |  |
Data Center | $ | 1,074 |  |  | $ | 1,041 |  |  | $ | 1,851 |  |  | $ | 2,325 |
Client and Gaming | 867 |  |  | 288 |  |  | 2,130 |  |  | 691 |
Embedded | 283 |  |  | 372 |  |  | 886 |  |  | 1,059 |
All other | (954) |  |  | (977) |  |  | (2,925) |  |  | (3,046) |
Total operating income | $ | 1,270 |  |  | $ | 724 |  |  | $ | 1,942 |  |  | $ | 1,029 |

Data Center
Data Center net revenue of $4.3 billion for the three months ended September 27, 2025 increased by 22%, compared to net revenue of $3.5 billion for the prior year period. Data Center net revenue of $11.3 billion for the nine months ended September 27, 2025 increased by 29%, compared to net revenue of $8.7 billion for the prior year period. The increase in both periods was primarily driven by strong demand for our 5th generation AMD EPYC™ processors and AMD Instinct™ MI350 Series GPUs.
Data Center operating income was $1.1 billion for the three months ended September 27, 2025, compared to operating income of $1.0 billion for the prior year period. The increase in operating income was primarily due to higher revenue, partially offset by higher operating expenses.
Data Center operating income was $1.9 billion for the nine months ended September 27, 2025, compared to operating income of $2.3 billion for the prior year period. The decrease in operating income was primarily due to approximately $800 million of inventory and related charges associated with the U.S. government export control on AMD Instinct MI308 GPU product and higher operating expenses, partially offset by higher revenue.
Client and Gaming
Client and Gaming net revenue of $4.0 billion for the three months ended September 27, 2025 increased by 73%, compared to net revenue of $2.3 billion for the prior year period. Client and Gaming net revenue of $10.6 billion for the nine months ended September 27, 2025 increased by 57%, compared to net revenue of $6.8 billion for the prior year period.
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Client revenue for the three months ended September 27, 2025 was $2.8 billion, up 46% from the prior year period, primarily driven by a 38% increase in average selling price, and a 4% increase in unit shipments of AMD Ryzen desktop and mobile processors. Client revenue for the nine months ended September 27, 2025 was $7.5 billion, up 59% from the prior year period, primarily driven by a 41% increase in average selling price and a 13% increase in unit shipments of AMD Ryzen desktop and mobile processors.
Gaming revenue for the three months ended September 27, 2025 was $1.3 billion, up 181% from the prior year period. Gaming revenue for the nine months ended September 27, 2025 was $3.1 billion, up 51% from the prior year period. The increase in both periods was primarily driven by higher semi-custom revenue and strong demand of our Radeon gaming GPUs.
Client and Gaming operating income was $867 million for the three months ended September 27, 2025, compared to operating income of $288 million for the prior year period. Client and Gaming operating income was $2.1 billion for the nine months ended September 27, 2025, compared to operating income of $691 million for the prior year period. The increase in operating income was primarily driven by higher revenue, partially offset by higher operating expenses.
Embedded
Embedded net revenue of $857 million for the three months ended September 27, 2025 decreased by 8%, compared to net revenue of $927 million for the prior year period. Embedded net revenue of $2.5 billion for the nine months ended September 27, 2025 decreased by 5%, compared to net revenue of $2.6 billion for the prior year period. Net revenue decreased in both periods as certain end market demand remained mixed.
Embedded operating income was $283 million for the three months ended September 27, 2025, compared to operating income of $372 million for the prior year period. Embedded operating income was $886 million for the nine months ended September 27, 2025, compared to operating income of $1.1 billion for the prior year period. The decrease in operating income in both periods was primarily due to lower revenue.
All Other
All Other operating loss of $1.0 billion for the three months ended September 27, 2025 primarily consisted of $562 million of amortization of acquisition-related intangibles and $419 million of stock-based compensation expense. All Other operating loss of $977 million for the three months ended September 28, 2024 primarily consisted of $585 million of amortization of acquisition-related intangibles and $351 million of stock-based compensation expense.
All Other operating loss of $2.9 billion for the nine months ended September 27, 2025 primarily consisted of $1.7 billion of amortization of acquisition-related intangibles and $1.2 billion of stock-based compensation expense. All Other operating loss of $3.0 billion for the nine months ended September 28, 2024 primarily consisted of $1.8 billion of amortization of acquisition-related intangibles and $1.1 billion of stock-based compensation expense.
International Sales
International sales as a percentage of net revenue were 64% and 72% for the three months ended September 27, 2025 and September 28, 2024, respectively. International sales as a percentage of net revenue were 67% and 65% for the nine months ended September 27, 2025 and September 28, 2024, respectively. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. Substantially all of our sales transactions were denominated in U.S. dollars.
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Gross Margin and Expenses
The following is a summary of certain consolidated statement of operations data for the periods indicated:

| Three Months Ended |  | Nine Months Ended |
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
| In millions, except percentages |
Net revenue | $ | 9,246 |  |  | $ | 6,819 |  |  | $ | 24,369 |  |  | $ | 18,127 |  |
Cost of sales | 4,206 |  |  | 3,167 |  |  | 12,023 |  |  | 8,590 |  |
Amortization of acquisition-related intangibles | 260 |  |  | 233 |  |  | 771 |  |  | 694 |  |
Gross profit | 4,780 |  |  | 3,419 |  |  | 11,575 |  |  | 8,843 |  |
Gross margin | 52 | % | 50 | % | 47 | % | 49 | %
Research and development | 2,139 |  |  | 1,636 |  |  | 5,761 |  |  | 4,744 |  |
Marketing, general and administrative | 1,069 |  |  | 707 |  |  | 2,946 |  |  | 1,954 |  |
Amortization of acquisition-related intangibles | 302 |  |  | 352 |  |  | 926 |  |  | 1,116 |  |
Interest expense | (37) |  |  | (23) |  |  | (95) |  |  | (73) |  |
Other income (expense), net | 82 |  |  | 36 |  |  | 219 |  |  | 144 |  |
Income tax provision (benefit) | 153 |  |  | (27) |  |  | (558) |  |  | (38) |  |
Income from discontinued operations, net of tax | 71 |  |  | — |  |  | 175 |  |  | — |  |

Gross Margin
Gross margin was 52% and 50% for the three months ended September 27, 2025 and September 28, 2024, respectively, an increase of 2% primarily driven by product mix.
Gross margin was 47% and 49% for the nine months ended September 27, 2025 and September 28, 2024, respectively. The decrease in gross margin was primarily due to approximately $800 million of inventory and related charges associated with the U.S. government export control on AMD Instinct MI308 Data Center GPU product, partially offset by a richer mix of Ryzen processor sales.
Expenses
Research and Development Expenses
Research and development expenses of $2.1 billion for the three months ended September 27, 2025 increased by $503 million, or 31%, compared to $1.6 billion for the prior year period. Research and development expenses of $5.8 billion for the nine months ended September 27, 2025 increased by $1.0 billion, or 21%, compared to $4.7 billion for the prior year period. The increase in both periods was due to higher employee-related costs from an increase in headcount in support of our continued focus on our AI strategy.
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses of $1.1 billion for the three months ended September 27, 2025 increased by $362 million, or 51%, compared to $707 million for the prior year period. Marketing, general and administrative expenses of $2.9 billion for the nine months ended September 27, 2025 increased by $1.0 billion, or 51%, compared to $2.0 billion for the prior year period. The increase in both periods was primarily due to an increase in go‑to‑market activities to support our revenue growth.
Amortization of Acquisition-Related Intangibles
Amortization of acquisition-related intangibles of $562 million for the three months ended September 27, 2025 decreased by $23 million, or 4%, compared to $585 million for the prior year period. Amortization of acquisition-related intangibles of $1.7 billion for the nine months ended September 27, 2025 decreased by $113 million, or 6%, compared to $1.8 billion for the prior year period. The decrease in both periods was primarily due to certain acquisition-related intangibles that were fully amortized in the prior fiscal year, partially offset by amortization of intangible assets from current fiscal year acquisitions.
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Interest Expense
Interest expense for the three and nine months ended September 27, 2025 was $37 million and $95 million, respectively. Interest expense for the three and nine months ended September 28, 2024 was $23 million and $73 million, respectively. The increase in both periods was due to the issuance of $1.5 billion in aggregate principal amount of 4.212% Notes and 4.319% Notes on March 24, 2025.
Other Income (Expense), Net
Other income (expense), net primarily consists of interest income from short-term investments, changes in valuation of equity investments, and foreign currency transaction gains and losses.
Other income (expense), net for three and nine months ended September 27, 2025 was $82 million and $219 million, respectively. Other income (expense), net for the three and nine months ended September 28, 2024 was $36 million and $144 million, respectively. The increase in both periods was primarily due to unrealized gains and dividends received from investments in nonmarketable securities of privately held companies.
Income Taxes
We determine income taxes for interim reporting periods by applying our estimated annual effective tax rate to the year-to-date results and adjusted for tax items discrete to each period.
For the three and nine months ended September 27, 2025, we recorded an income tax provision of $153 million and an income tax benefit of $558 million representing an effective tax rate from continuing operations of 11.5% and (26.7)%, respectively. The tax provision (benefit) for both periods reflected the income tax benefit from foreign-derived intangible income (FDII) and research and development (R&D) tax credits, partially offset by the tax rate detriment from foreign earnings, as well as a discrete tax benefit related to stock-based compensation. In addition, the tax benefit for the nine months ended September 27, 2025 also included a discrete tax benefit of $853 million related to the release of uncertain tax positions pertaining to the reasonable cause relief for dual consolidated losses approved by the Internal Revenue Service (IRS) in April 2025.
For the three and nine months ended September 28, 2024, we recorded an income tax benefit of $27 million and $38 million representing an effective tax rate of (3.6)% and (3.3)%, respectively. The tax benefit for the three and nine months ended September 28, 2024 reflected discrete tax benefits primarily related to tax effects of stock-based compensation partially offset by the interest and penalties accrued for uncertain tax positions.
In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. For the three and nine months ended September 27, 2025, the primary impact of the OBBBA to our tax provision was the accelerated expensing of domestic R&D activities which decreased our estimated income eligible for FDII resulting in a higher estimated annual effective tax rate. The OBBBA is also expected to reduce our deferred tax assets and our current income tax liability for fiscal year 2025. Other OBBBA changes did not have a material impact on the financial statements.
Results of Discontinued Operations
Net income from discontinued operations for the three and nine months ended September 27, 2025 of $71 million and $175 million, respectively, include the results of operations of the ZT Manufacturing Business, partially offset by increases of $17 million and $52 million, respectively, in the fair value of the contingent consideration liability associated with the acquisition of ZT Systems.
FINANCIAL CONDITION
Liquidity and Capital Resources
As of September 27, 2025 and December 28, 2024, our cash, cash equivalents and short-term investments were $7.2 billion and $5.1 billion, respectively.
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Our operating, investing and financing activities for the nine months ended September 27, 2025 compared to the prior year period are as described below:

| Nine Months Ended
| September 27, 2025 |  | September 28, 2024
| (In millions)
Net cash provided by (used in): |  |  |
Net cash provided by operating activities of continuing operations | $ | 4,189 |  |  | $ | 1,742 |
Net cash provided by operating activities of discontinued operations | 920 |  |  | — |
Operating activities | 5,109 |  |  | 1,742 |
Net cash (used in) provided by investing activities of continuing operations | (3,962) |  |  | 113 |
Net cash used in investing activities of discontinued operations | (30) |  |  | — |
Investing activities | (3,992) |  |  | 113 |
Financing activities of continuing operations | (103) |  |  | (1,891) |
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 1,014 |  |  | $ | (36) |

On March 31, 2025, we paid $3.2 billion in cash and issued 8,335,849 shares of our common stock to close the acquisition of ZT Systems.
As of September 27, 2025, our principal short-term and long-term debt obligations were $873 million and $2.3 billion, respectively.
We may issue unsecured commercial paper 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. During the three months ended March 29, 2025, we issued $950 million in aggregate principal amount of commercial paper which was subsequently repaid before June 28, 2025. As of September 27, 2025, we had no commercial paper outstanding.
We have $3.0 billion available under an unsecured revolving credit facility that expires on April 29, 2027. No funds were drawn from this credit facility during the three months ended September 27, 2025.
As of September 27, 2025, we had commitments of approximately $12.1 billion, of which $3.8 billion are for the remainder of fiscal year 2025. We work continually with our suppliers and partners on the timing of payments and deliveries of commitments, taking into account business conditions.
We believe our cash, cash equivalents, short-term investments and cash flows from operations along with our revolving credit facility and commercial paper program will be sufficient to fund operations, capital expenditures, commitments and strategic activities over the next 12 months and beyond. We believe we will be able to access the capital markets should we require additional funds. However, we cannot assure that such funds will be available on favorable terms, or at all.
Operating Activities
Our working capital cash inflows and outflows from operations are primarily cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures.
Net cash provided by operating activities of continuing operations was $4.2 billion in the nine months ended September 27, 2025, primarily due to our net income of $2.8 billion, adjusted for non-cash and non-operating charges of $2.5 billion and net cash outflows of $992 million from changes in our operating assets and liabilities. The primary drivers of the change in operating assets and liabilities were a $1.6 billion increase in inventory primarily to support the continued ramp of Client and Data Center products in advanced process technology nodes and a $998 million increase in accounts payable due to timing of vendor payments and higher inventory purchases. Net cash provided by operating activities of the ZT Manufacturing Business, classified as discontinued operations, was $920 million.
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Net cash provided by operating activities was $1.7 billion in the nine months ended September 28, 2024, primarily due to our net income of $1.2 billion, adjusted for non-cash and non-operating charges of $2.6 billion and net cash outflows of $2.0 billion from changes in our operating assets and liabilities. The primary drivers of the change in operating assets and liabilities were a $1.9 billion increase in accounts receivable due to the timing of customer payments and higher revenue, a $1.1 billion increase in inventory primarily to support the continued ramp of Data Center products in advanced process technology nodes and $1.0 billion of tax payments.
Investing Activities
Net cash used in investing activities of continuing operations was $4.0 billion for the nine months ended September 27, 2025, which primarily consisted of cash used in acquisitions, net of cash acquired, of $1.7 billion, the purchases of short-term investments of $2.1 billion, purchases of property and equipment of $752 million, and purchases of strategic investments of $432 million, partially offset by $1.0 billion of proceeds from the maturity and sale of short-term investments. Net cash used in investing activities of the ZT Manufacturing Business, classified as discontinued operations, was $30 million due to purchases of equipment.
Net cash provided by investing activities was $113 million for the nine months ended September 28, 2024 which primarily consisted of $1.9 billion of proceeds from the maturity and sale of short-term investments, partially offset by cash used in the purchases of short-term investments of $707 million, cash used in acquisitions, net of cash acquired of $548 million, and purchases of property and equipment of $428 million.
Financing Activities
Net cash used in financing activities of continuing operations was $103 million for the nine months ended September 27, 2025, which primarily consisted of stock repurchases of $1.3 billion and stock repurchases for tax withholding on employee equity plans of $447 million partially offset by cash received from the issuance of senior notes of $1.5 billion. There was no net cash provided by financing activities of discontinued operations for the nine months ended September 27, 2025.
Net cash used in financing activities was $1.9 billion for the nine months ended September 28, 2024, which primarily consisted of repayment of the 2.95% Notes Due 2024 of $750 million, stock repurchases for tax withholding on employee equity plans of $686 million, and common stock repurchases of $606 million.

ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to “Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
There have not been any material changes in interest rate risk, default risk or foreign exchange risk since December 28, 2024.

ITEM 4. | CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports made under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of September 27, 2025, the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
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There were no changes in our internal controls over financial reporting for the three months ended September 27, 2025 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION

ITEM 1. | LEGAL PROCEEDINGS

For a discussion of our legal proceedings, refer to Note 13—Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q).
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. In addition, you should consider the interrelationship and compounding effects of two or more risks occurring simultaneously.
Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, financial condition and results of operations.
Economic and Strategic Risks
•The markets in which our products are sold are highly competitive and rapidly evolving.
•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.
•The success of our business depends on our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting significant industry transitions.
•The loss of a significant customer may have a material adverse effect on us.
•Economic and market uncertainty may adversely impact our business and operating results.
•Our operating results are subject to quarterly and seasonal sales patterns.
•If we cannot adequately protect our technology or other intellectual property through patents, copyrights, trade secrets, trademarks and other measures, we may lose a competitive advantage and incur significant expenses.
•Unfavorable currency exchange rate fluctuations could adversely affect us.
Operational and Technology Risks
•We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected.
•Essential equipment, materials, substrates or manufacturing processes may not be available to us.
•We may fail to achieve expected manufacturing yields for our products.
•Our revenue from our semi-custom System-on-Chip (SoC) products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products.
•Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
•IT outages, data loss, data breaches and cyberattacks could disrupt operations and compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation, financial condition and results of operations.
•Uncertainties involving the ordering and shipment of our products could materially adversely affect us.
•Our ability to design and introduce new products includes the use of third-party intellectual property.
•We depend on third-party companies for the design, manufacture and supply of motherboards, software, memory and other computer platform components to support our business and products.
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•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 an impact on our business.
Legal and Regulatory Risks
•Government actions and regulations, including but not limited to export regulations, import tariffs and trade protection measures, may limit our ability to export our products to certain customers.
•If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
•Our business is subject to potential tax liabilities, including as a result of tax regulation changes.
•We are party to litigation and may become a party to other claims or litigation.
•We are subject to environmental laws, conflict minerals regulations, as well as a variety of other laws or regulations.
•Evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters could result in additional costs, harm to our reputation and a loss of customers.
•Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.
•The agreements governing our notes, our guarantee of Xilinx’s notes and the Revolving Credit Agreement.
Merger, Acquisition, Divestiture, and Integration Risks
•Acquisitions, joint ventures, and/or strategic investments, and the failure to integrate acquired businesses may fail to materialize their anticipated benefits and could disrupt our business.
•Any impairment of our tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact our financial position and results of operations.
General Risks
•Our worldwide operations are subject to political, legal and economic risks and natural disasters.
•We may incur future impairments of our technology license purchases.
•Our inability to continue to attract and retain key employees may hinder our business.
•Our stock price is subject to volatility.
For a more complete discussion of the material risks facing our business, see below.
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Economic and Strategic Risks
The markets in which our products are sold are highly competitive and rapidly evolving.
Delivering the latest and best products to market on time is critical to revenue growth. The competitiveness of our products depends on a number of factors including, performance, total cost of ownership, timely product introductions, product quality and reliability, product features and capabilities, energy efficiency (including power consumption and battery life, given their impact on total cost of ownership), 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.
Competition is expected to remain intense, driven by rapid technological change, evolving standards, shifting customer preferences, product obsolescence, and frequent product launches from both established and new competitors. Some of our competitors may possess stronger market positions, larger customer bases, more design wins, and greater financial, sales, marketing, and distribution resources than us. As a result, they may be able to acquire market share or limit our ability to do so, more effectively capitalize on new market opportunities, and transition their products more efficiently than we can. Some competitors are pursuing alternative computing architectures, such as Arm, which could grow the Arm ecosystem and increase competition in consumer, commercial and data center, reducing demand for our products. Additionally, we may encounter competition from customers who internally develop products to support similar AI workloads to those supported by ours.
Our competitors may use their market position and financial resources to market and price their products in a way to dissuade customers from purchasing from us. For example, Intel Corporation (Intel) uses its microprocessor market position to price its products aggressively and target our customers and channel partners with special incentives. These aggressive activities have reduced and may reduce our unit sales and average selling prices for many of our products, adversely affecting our business. Similarly, NVIDIA Corporation (NVIDIA) leverages its market position in data center GPU, financial resources, and proprietary software ecosystem to promote its systems and influences customers who do business with us. Our competitors’ business practices, including allocation strategies, pricing actions, product mix and introduction schedules, licensing terms, marketing arrangements, business acquisitions and product bundling strategies, can limit customers’ ability to choose alternative products, including ours. This may limit our market share and decrease our margins and profitability, which may have a material adverse effect on our business.
In addition, strategic partnerships, acquisitions and business collaborations by and between our competitors may increase competition and adversely affect our business. For example, in September 2025, NVIDIA announced a partnership and investment in Intel to partner on new data center and client platform products. This partnership may result in increased competition and pricing pressure for our products, which could materially adversely impact our business, financial condition and margins.
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 semiconductor industry is highly cyclical and has experienced significant downturns, often in conjunction with constant and rapid technological change, wide fluctuations in supply and demand, continuous new product introductions, price erosion and declines in general economic conditions. 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. Global economic uncertainty and weakness have in the past impacted the semiconductor market as consumers and businesses have deferred purchases, which negatively impacted demand for our products. Our financial performance has been, and may in the future be, negatively affected by these downturns. The growth of our business is also dependent on continued demand for our products from high-growth adjacent emerging global markets. Our ability to be successful in such markets depends in part on our ability to establish adequate local infrastructure, as well as our ability to cultivate and maintain local relationships in these markets. If demand from these markets is below our expectations, sales of our products may decrease, which would have a material adverse effect on us.
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The demand for our products depends in part on the market conditions in the industries into which they are sold. 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.
Industry-wide fluctuations in the computer marketplace have materially adversely affected us in the past and may materially adversely affect us in the future. We offer products that are used in different end markets and the demand for our products can vary among our Data Center, Client, Gaming and Embedded end markets. In our Data Center segment, we offer products that are optimized for generative AI applications and since 2024, we have experienced significant demand for our AI accelerators. The demand for such products will in part depend on the extent to which our customers utilize generative AI solutions in a wide variety of applications, and both the near-term and long-term trajectory of such generative AI solutions is unknown.
Our Client and Gaming segment revenue is focused on the consumer desktop and notebook PC segments and will depend in part on the market’s adoption of AI PCs. We are actively building AI capabilities into all our Client products, such as Ryzen AI PC processors, but there can be no assurance about the rate and pace of adoption of such product offerings. In the past, revenue from the Client and Gaming segment has 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 are unable to manage the risks related to the volatility of the cryptocurrency mining market (including potential actions by global monetary authorities), our GPU business could be materially adversely affected. The success of our semi-custom SoC products in our Client and 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.
Our Embedded segment primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs) and Adaptive SoC products some of which are subject to macroeconomic trends and volatile business conditions. To the extent our embedded customers are faced with higher inventory levels, they may choose to draw down their existing inventory and order less of our products.
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The success of our business depends on our ability to introduce products on a timely basis with features and performance levels that provide value to our customers while supporting and coinciding with significant industry transitions.
Our success depends to a significant extent on the development, qualification, implementation and acceptance of new product designs and improvements that provide value to our customers. Our ability to identify industry changes, and adapt our strategy to develop, qualify and distribute, and have manufactured, new products and related technologies to meet evolving industry trends and requirements, at prices acceptable to our customers and on a timely basis, are significant factors in determining our competitiveness in our target markets. We cannot assure you that we will be able to meet the evolving needs of industry changes or that our efforts to execute our product roadmap will result in innovative products and technologies that provide value to our customers. If we fail to or are delayed in identifying, 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 adapt our business accordingly, we may lose competitive positioning, which could cause us to lose market share. Although we make substantial investments in research and development, we cannot be certain that we will be able to develop, obtain or successfully implement new products and technologies on a timely basis or that they will be well-received by our customers. Moreover, our investments in new products and technologies involve certain risks and uncertainties and could disrupt our ongoing business. New investments may not generate sufficient revenue and we may incur unanticipated liabilities. 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. For example, as part of our pervasive AI strategy, we have a portfolio of hardware products and software tools to allow our customers to develop scalable and pervasive AI solutions. We are actively building AI capabilities into our products, but there can be no assurance about the rate and pace of adoption of such product offerings. In our Data Center segment, we offer products that are optimized for generative AI applications and we have experienced significant demand for our AI accelerators. The demand for such products in part will depend on the extent to which our customers utilize generative AI solutions in a wide variety of applications as both the near-term and long-term trajectory of such generative AI solutions is unknown. If we fail to develop and timely offer or deploy such products and technologies, keep pace with the product offerings of our competitors, or adapt to unexpected changes in industry standards or disruptive technological innovation, our business could be adversely affected. Additionally, our efforts in developing new AI technology solutions are inherently risky and may not always succeed. We may incur significant costs, resources, investments and delays and not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain.
Delays in developing, qualifying or shipping new products may cause us to miss our customers’ product design windows or, in some cases, breach contractual obligations. If our products are not selected by our customers in the initial design of their computer systems or products, they are typically excluded until at least the next design cycle. The process of being qualified for inclusion in a customer’s system or product can be lengthy and could cause us to further miss a cycle in the demand of end-users, which could result in a loss of market share and harm our business. We also depend on the timing and success of our customers’ platform launches. If our customers delay their product launches or if our customers do not effectively market their platforms with our products, it could result in a delay in bringing our products to market and cause us to miss a cycle in the demand of end-users, which could materially adversely affect our business. In addition, as market demand requires that products incorporate new features and performance standards on an industry-wide basis, product pricing declines over the life of a specific product. The introduction of new products and enhancements to existing products is necessary to maintain the overall corporate average selling price. If we are unable to introduce new products with sufficiently high sale prices or to increase unit sales volumes capable of offsetting the reductions in the sale prices of existing products over time, our business could be materially adversely affected.
Product transition risks may increase as the computing industry shifts toward shorter launch cycles and a broader range of accelerated computing platforms. Product transitions are complex and as such we may ship both new and prior-generation products concurrently. Customer adoption patterns can vary and while some customers may shift to newer products more quickly and reduce demand for current-generation offerings, other customers may lower their inventory of existing products before purchasing new ones. The increased frequency of product transitions and expansion of our product portfolio heightens the challenges of managing our supply and demand, which could adversely affect our revenue and inventory management. The increasing frequency and complexity of our newly introduced products may also result in unanticipated quality or production issues that could result in product delays.
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The loss of a significant customer may have a material adverse effect on us.
We depend on a small number of customers for a substantial portion of our business and we expect that a small number of customers will continue to account for a significant part of our revenue and receivables in the future. If one of our key customers decides to stop buying our products, materially reduces its operations or its demand for our products, or has operations that are materially impaired for a significant period of time such that it is unable to receive or utilize our products, or pay its liabilities, our business would be materially adversely affected.
Economic and market uncertainty may adversely impact our business and operating results.
Uncertain global or regional economic conditions have and may in the future adversely impact our business. Uncertainty in the economic environment or other unfavorable changes in economic conditions, such as inflation, higher interest rates, recession, slowing growth, increased unemployment, tighter credit markets, changes or uncertainty in fiscal monetary or trade policy, implementation of new or increased tariffs, retaliatory tariffs by other countries or other trade restrictions, or currency fluctuations, may negatively impact consumer confidence and spending causing our customers to stop or postpone purchases. 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. Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, accounts receivable that they owe us. If current or prospective customers default on or delay payments to us, our earnings and cash flow could be adversely impacted. This risk is heightened as we expect that a small number of customers will continue to account for a substantial part of our revenue. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to manufacture our products. Adverse changes in economic conditions could increase costs of memory, equipment, materials or substrates and other supply chain expenses. If we are not able to procure a stable supply of materials on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a supply shortage or an increase in production costs, which could negatively impact our gross margin and materially adversely affect our business. Our ability to forecast our operating results, make business decisions and execute our business strategy could be adversely impacted by challenging macroeconomic conditions. In addition, uncertain economic conditions could lead to higher borrowing costs and reduced availability of capital and credit markets, making it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities. An economic downturn or increased uncertainty could also lead to failures of counterparties including financial institutions and insurers, asset impairments and declines in the value of our financial instruments. If a banking institution in which we hold funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds, which in turn could adversely impact our short-term liquidity and ability to meet our operating expense obligations.
Our operating results are subject to quarterly and seasonal sales patterns.
The profile of our sales may be weighted differently during the year. A large portion of our quarterly sales have historically been made in the last month of the quarter. This uneven sales pattern makes prediction of revenue for each financial period difficult and increases the risk of unanticipated variations in quarterly results and financial condition. In addition, our operating results tend to vary seasonally with the markets in which our products are sold. For example, 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. 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.
We rely on a combination of protections provided by contracts, including confidentiality and nondisclosure agreements, copyrights, patents, trademarks and common law rights, such as trade secrets, to protect our intellectual property. However, we cannot assure you that we will be able to adequately protect our technology or other intellectual property from third-party infringement or from misappropriation in the United States and abroad. Any patent licensed by us or issued to us could be challenged, invalidated, expire, or circumvented or rights granted thereunder may not provide a competitive advantage to us.
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Furthermore, patent applications that we file may not result in issuance of a patent or, if a patent is issued, the patent may not be issued in a form that is advantageous to us. Despite our efforts to protect our intellectual property rights, others may independently develop similar products, duplicate our products or design around our patents and other rights. In addition, it is difficult to monitor compliance with, and enforce, our intellectual property on a worldwide basis in a cost-effective manner. In jurisdictions where foreign laws provide less intellectual property protection than afforded in the U.S. and abroad, our technology or other intellectual property may be compromised, and our business would be materially adversely affected.
Unfavorable currency exchange rate fluctuations could adversely affect us.
We have costs, assets and liabilities that are denominated in foreign currencies. As a consequence, movements in exchange rates could cause our foreign currency denominated expenses to increase as a percentage of revenue, affecting our profitability and cash flows. Whenever we believe appropriate, we hedge a portion of our foreign currency exposure to protect against fluctuations in currency exchange rates. We determine our total foreign currency exposure using projections of long-term expenditures for items such as payroll. We cannot assure you that these activities will be effective in reducing foreign exchange rate exposure. Failure to do so could have an adverse effect on our business, financial condition, results of operations and cash flow. In addition, the majority of our product sales are denominated in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the local currency may impact the cost of our products in the local currency for international customers. An appreciation of the U.S. dollar relative to the local currency could reduce sales of our products.
Operational and Technology Risks
We rely on third parties to manufacture our products, and if they are unable to do so on a timely basis in sufficient quantities and using competitive technologies, our business could be materially adversely affected.
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. (GF) for wafers for microprocessor and GPU products manufactured at process nodes larger than 7 nm. We also utilize TSMC, United Microelectronics Corporation (UMC) and Samsung Electronics Co., Ltd. for our integrated circuits (IC) in the form of programmable logic devices. We also rely on third-party manufacturers to assemble, test, mark and pack (ATMP) our products. Our third-party package assembly partners are responsible for packaging technology used to fabricate our products. It is important to have reliable relationships with all of these third-party manufacturing suppliers to ensure adequate product supply to respond to customer demand.
We cannot guarantee that these manufacturers or our other third-party manufacturing suppliers will be able to meet our near-term or long-term manufacturing requirements. If we experience supply constraints from our third-party manufacturing suppliers, we may be required to allocate the reduced quantities of affected products amongst our customers, which could have a material adverse effect on our relationships with these customers and on our financial condition. In addition, if we are unable to meet customer demand due to fluctuating or late supply from our manufacturing suppliers, it could result in lost sales and have a material adverse effect on our business. For example, if TSMC is not able to manufacture wafers for our microprocessor and GPU products at 7 nm or smaller nodes and our newest IC products in sufficient quantities to meet customer demand, it could have a material adverse effect on our business.
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We do not have long-term commitment contracts with some of our third-party manufacturing suppliers. 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. Accordingly, we depend on these suppliers to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable quality and at acceptable manufacturing yields and to deliver those products to us on a timely basis and at acceptable prices. The manufacturers we use also fabricate wafers and ATMP products for other companies, including certain of our competitors. They could choose to prioritize capacity for other customers, increase the prices that they charge us on short notice, require onerous prepayments, or reduce or eliminate deliveries to us, which could have a material adverse effect on our business. If we overestimate our customer demand or experience a decrease in customer demand, either could result in excess inventory and an increase in our production costs. We are party to a wafer supply agreement with GF where GF will provide a minimum annual capacity allocation to us and set pricing through 2026. If our actual wafer requirements are less than the number of wafers required to meet the applicable annual wafer purchase target, we could have excess inventory or higher inventory unit costs, both of which may adversely impact our gross margin and our results of operations.
Other risks associated with our dependence on third-party manufacturers include limited control over delivery schedules, yield, cycle times, quality assurance, price increases, lack of capacity in periods of excess demand, misappropriation of our intellectual property, dependence on several subcontractors, and limited ability to manage inventory and parts. 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. For example, in the first quarter of 2024, we experienced some inventory loss due to an incident at a contract manufacturer. If we are unable to secure sufficient or reliable supply of products, our ability to meet customer demand may be adversely affected and this could materially affect our business.
If we transition the production of some of our products to new manufacturers, we may experience delayed product introductions, lower yields or poorer performance of our products. If we experience problems with product quality or are unable to secure sufficient capacity from a particular third-party manufacturer, or if we for other reasons cease utilizing one of those manufacturers, we may be unable to timely secure an alternative supply for any specific product. We could experience significant delays in the shipment of our products if we are required to find alternative third-party manufacturers, which could have a material adverse effect on our business.
We are party to two ATMP joint ventures (collectively, the ATMP JVs) with affiliates of Tongfu Microelectronics Co., Ltd. The majority of our ATMP services are provided by the ATMP JVs and there is no guarantee that the ATMP JVs will be able to fulfill our long-term ATMP requirements. 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.
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If essential equipment, materials, substrates or manufacturing processes are not available to manufacture our products, we could be materially adversely affected.
We may purchase equipment, materials and substrates for use by our back-end manufacturing service providers from a number of suppliers and our operations depend upon obtaining deliveries of adequate supplies of equipment and materials of acceptable quality on a timely basis. Our third-party suppliers also depend on the same timely delivery of adequate quantities of equipment and materials of acceptable quality in the manufacture of our products. In addition, as many of our products increase in technical complexity, we rely on our third-party suppliers to update their processes in order to continue meeting our back-end manufacturing needs. 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. Similarly, certain non-proprietary materials or components such as memory, printed circuit boards (PCBs), interposers, substrates and capacitors used in the manufacture of our products are currently available from only a limited number of suppliers. If we are unable to procure a stable supply of memory, equipment, materials or substrates of acceptable quality 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. We have long-term purchase commitments and prepayment arrangements with some of our suppliers. If the delivery of such supply is delayed or does not occur for any reason, it could materially impact our ability to procure and process the required volume of supply to meet customer demand. Conversely, if we overestimate our customer demand or experience a decrease in customer demand, either because customers cancel orders or choose to purchase from our competitors, it 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.
From time to time, suppliers may extend lead times, limit supply or increase prices due to capacity constraints or other factors. Also, some of these materials and components may be subject to rapid changes in price, quality and availability. Interruption of supply or increased demand in the industry could cause shortages and price increases in various essential materials. Dependence on a sole supplier or a limited number of suppliers exacerbates these risks. If we are unable to procure certain of these materials for our back-end manufacturing operations, or our third-party manufacturers are unable to procure materials for manufacturing our products, our business would be materially adversely affected.
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. Our third-party manufacturers are responsible for the process technologies used to fabricate silicon wafers. If our third-party manufacturers experience manufacturing inefficiencies or encounter disruptions, errors or difficulties during production, we may fail to achieve acceptable yields or we may experience product delivery delays. 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. Moreover, during periods when our third-party manufacturers are implementing new process or packaging technologies, their manufacturing facilities may not be fully productive. A substantial delay in the technology transitions to smaller process technologies could have a material adverse effect on us, particularly if our competitors transition to more cost effective technologies before us. For example, we are presently focusing our 7 nm and lower product microprocessor and GPU portfolio on TSMC’s processes. If TSMC is not able to manufacture wafers for our products at 7 nm or smaller nodes in sufficient quantities to meet customer demand, it could have a material adverse effect on our business. Moreover, we rely on TSMC, UMC and our other foundries to produce wafers with competitive performance attributes for our IC products. Therefore, the foundries, particularly TSMC which manufactures our newest IC products, must be able to transition to advanced manufacturing process technologies and increased wafer sizes, produce wafers at acceptable yields and deliver them in a timely manner.
Any decrease in manufacturing yields could result in an increase in per unit costs, which would adversely impact our gross margin and/or force us to allocate our reduced product supply amongst our customers, which could harm our relationships and reputation with our customers and materially adversely affect our business.
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Our revenue from our semi-custom SoC products is dependent upon our semi-custom SoC products being incorporated into customers’ products and the success of those products.
The revenue that we receive from our semi-custom SoC products is in the form of non-recurring engineering fees charged to third parties for design and development services and revenue received in connection with sales of our semi-custom SoC products to these third parties. As a result, our ability to generate revenue from our semi-custom products depends on our ability to secure customers for our semi-custom design pipeline, our customers’ desire to pursue the project and our semi-custom SoC products being incorporated into those customers’ products. Any revenue from sales of our semi-custom SoC products is directly related to sales of the third-party’s products and reflective of their success in the market. Moreover, we have no control over the marketing efforts of these third parties, and we cannot make any assurances that sales of their products will be successful in current or future years. 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.
The products that we sell are complex and have been and may in the future be subject to security vulnerabilities that could result in, among other things, the loss, corruption, theft or misuse of confidential data or system performance issues. Our efforts to prevent and address security vulnerabilities may decrease performance, be only partially effective or not successful at all. We may depend on vendors to create mitigations to their technology that we incorporate into our products and they may delay or decline to make such mitigations. We may also depend on third parties, such as customers and end-users, to deploy our mitigations alone or as part of their own mitigations, and they may delay, decline or modify the implementation of such mitigations. Our relationships with our customers could be adversely affected as some of our customers may stop purchasing our products, reduce or delay future purchases of our products, or use competing products. Any of these actions by our customers could adversely affect our revenue. We have and may in the future be subject to claims and litigation related to security vulnerabilities. Actual or perceived security vulnerabilities of our products may subject us to adverse publicity, damage to our brand and reputation, and could materially harm our business or results of operations.
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.
Our business relies on technology hardware, software, cloud services, infrastructure, networks and systems (collectively, IT Systems). We own and manage some IT Systems but also rely on critical third-party IT Systems, products and services. In the ordinary course of business, we and various third-party providers and business partners process and maintain sensitive data, including personal information about workers, customers and others, as well as intellectual property and proprietary or confidential information relating to our business and that of our customers and business partners (collectively, Confidential Data). Maintaining the availability, integrity and security of our IT Systems and Confidential Data is critical to our business and reputation. While we and others have implemented various controls and defenses, AMD and companies like AMD and our vendors and customers have been and are increasingly subject to cybersecurity attacks, risks and threats. Risks and threat factors range in sophistication from negligent or bad acts by individuals, hackers or insiders, to ransom gangs and state-sponsored attackers. Cyber threats may be generic, or they may be custom-crafted against our IT Systems or supply chain. The increased prevalence of remote working arrangements at AMD and our providers present additional operational risks and attack vectors to our IT Systems. 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. Cyberattacks have and may come into our IT Systems through the compromise of users’ access credentials or those of third-party IT systems or untrusted assets. Users’ access credentials can be compromised by phishing, vishing, smishing, multi-factor authentication (MFA) prompt bombing, hacking, or other social engineering, cybersecurity, theft activities, or unintentional disclosure due to a human error.
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Threat actors are also increasingly using tools and techniques that circumvent controls, evade detection, and remove forensic evidence, which means that we and others may be unable to implement adequate preventative measures against cyberattacks or to anticipate, detect, deflect, contain or recover from them in a timely or effective manner. As AI capabilities improve and are increasingly adopted, we may see more sophisticated threats created through the use of AI technology to launch more automated, targeted and coordinated cyberattacks. These attacks could be crafted with an AI tool to directly attack IT Systems with increased speed and/or efficiency than a human threat actor or create more effective phishing emails. In addition, the threat could be introduced from the result of our or our customers and business partners incorporating the output of an AI tool that includes a threat, such as introducing malicious code by incorporating AI generated source code. We leverage AI tools and systems to help support our internal functions and operations. These systems are increasingly vulnerable to cybersecurity threats, which can significantly impact data security. Our network and storage applications, as well as those of our customers, business partners, and third-party providers, may be subject to unauthorized access by hackers or breached due to operator error, malfeasance or other system disruptions.
Cyberattacks that breach our security measures, or those of our third-party service providers, customers or business partners, could result in any or all of the following, which individually or collectively could materially adversely affect our financial condition and competitive position; unauthorized access to, misuse or disclosure of Confidential Data (such as intellectual property, sensitive business information or personally identifiable information (PII)); reputational harm and/or diminution in our competitiveness; loss of existing and/or future customers; litigation and/or regulatory investigations or enforcement; significant remediation, restoration and compliance costs; and the diversion of management’s attention and key information technology resources. In addition, many governments have enacted and are continuing to enact strict privacy and security laws, such as the UK’s and European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act of 2018 (CCPA), as amended by the California Privacy Rights Act (CPRA), which provide for fines, penalties, and in the case of the CCPA and similar legislation, the basis for private claims for certain types of data breaches. 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.
Uncertainties involving the ordering and shipment of our products could materially adversely affect us.
We typically sell our products pursuant to individual purchase orders. We generally do not have long-term supply arrangements with our customers or minimum purchase requirements except that orders generally must be for standard pack quantities. Generally, our customers may cancel orders for standard products more than 30 days prior to shipment without incurring significant fees. We base our inventory levels in part on customers’ estimates of demand for their products, which may not accurately predict the quantity or type of our products that our customers will want in the future or ultimately end up purchasing. 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. To the extent we fail to forecast demand and product mix accurately or are unable to increase production or secure sufficient capacity and there is a mismatch between supply and demand for our products, it could limit our ability to meet customer demand and have a material adverse effect on our business. Many of our markets are characterized by short product lifecycles, which can lead to rapid obsolescence and price erosion. In addition, our customers may change their inventory practices on short notice for any reason. We may build inventories during periods of anticipated growth, and the cancellation or deferral of product orders or overproduction due to failure of anticipated orders to materialize could result in excess or obsolete inventory, which could result in write-downs of inventory and an adverse effect on gross margins. Our customers may also experience a shortage of, or delay in receiving certain components to build their products, which in turn may affect the demand for or the timing of our products. In April 2025, the U.S. government implemented a new license requirement for the export of certain semiconductor products to China (including Hong Kong and Macau) and D5 countries, or to companies headquartered in or with an ultimate parent located in such countries. This restriction impacts our AMD Instinct™ MI308 products. As a result of the restriction, we incurred approximately $800 million in inventory and related charges in the second quarter of 2025. We applied for and were granted some licenses by the U.S. government that allow us to ship our MI308 products to certain China-based customers. Sales of our MI308 products into China depend on customer demand, China’s import control rules and our ability to obtain licenses. As such, our revenues and results of operation could be negatively affected.
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Excess or obsolete inventory have resulted in, and may in the future result in, write-downs of the value of our inventory. 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.
Our ability to design and introduce new products in a timely manner includes the 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 that we incorporate into our software or hardware. The design requirements necessary to meet customer demand for more features and greater functionality from semiconductor products may exceed the capabilities of the third-party intellectual property or development or testing tools available to us. If the third-party intellectual property that we use becomes unavailable, is not available with required functionality or performance in the time frame, manufacturing technology, or price point needed for our new products or fails to produce designs or functionality that meet customer demands, or laws are adopted that affect our use of third party intellectual property in certain regions or products, our business could be materially adversely affected.
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.
We depend on third-party companies for the design, manufacture and supply of motherboards, graphics cards, software (e.g., BIOS, operating systems, drivers, AI models or tools), memory and other components that we use to design, support and sell, and our customers utilize to support and/or use our product offerings. We also rely on our AIB partners to support our products. In addition, our microprocessors are not designed to function with motherboards and chipsets designed to work with Intel microprocessors. If the designers, manufacturers, AIBs and suppliers of motherboards, graphics cards, software, memory and other components cease or reduce their design, quality, 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.
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 ability to innovate beyond the x86 instruction set controlled by Intel depends partially on Microsoft designing and developing its operating systems to run on or support our x86-based microprocessor products. With respect to our graphics products, we depend in part on Microsoft to design and develop its operating system to run on or support our graphics products. Similarly, the success of our products in the market, such as our APU products, is dependent on independent software providers designing and developing software to run on our products. If Microsoft does not continue to design and develop its operating systems so that they work with our x86 instruction sets or does not continue to develop and maintain their operating systems to support our graphics products, independent software providers may forego designing their software applications to take advantage of our innovations and customers may not purchase PCs with our x86 products. In addition, some software drivers licensed for use with our x86 products are certified by Microsoft. If Microsoft did not certify a driver, or if we otherwise fail to retain the support of Microsoft or other software vendors, our ability to market our x86 products would be materially adversely affected.
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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. We are dependent on our distributors and AIB partners to supplement our direct marketing and sales efforts. If any significant distributor or AIB partner or a substantial number of our distributors or AIB partners terminated their relationship with us, decided to market our competitors’ products over our products or decided not to market our products at all, our ability to bring our products to market would be impacted and we would be materially adversely affected. 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. 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. In most instances, our agreements with distributors protect their inventory of our products against price reductions, as well as provide return rights for any product that we have removed from our price book that is less than 12 months older than the manufacturing date. Some agreements with our distributors also contain standard stock rotation provisions permitting limited levels of product returns. Our agreements with AIB partners protect their inventory of our products against price reductions. In the event of a significant decline in the price of our products, the price protection rights we offer would materially adversely affect us because our revenue and corresponding gross margin would decline.
Our business depends on 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.
We rely upon a number of internal business processes and information systems to support key business functions, and the efficient operation of these processes and systems is critical to our business. Our business processes and information systems need to be sufficiently scalable to support the growth of our business and may require modifications or upgrades that expose us to a number of operational risks. As such, our information systems will continually evolve and adapt in order to meet our business needs. These changes may be costly and disruptive to our operations and could impose substantial demands on management time.
These changes may also require changes in our information systems, modification of internal control procedures and significant training of employees and third-party resources. We continuously work on simplifying our information systems and applications through consolidation and standardization efforts. There can be no assurance that our business and operations will not experience any disruption in connection with this transition. 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.
In addition, as our IT environment continues to evolve, we are embracing new ways of communicating and sharing data internally and externally with customers and partners using methods such as mobility and the cloud that can promote business efficiency. However, these practices can also result in a more distributed IT environment, making it more difficult for us to maintain visibility and control over internal and external users, and meet scalability and administrative requirements. If our security controls cannot keep pace with the speed of these changes or if we are not able to meet regulatory and compliance requirements, our business would be materially adversely affected.
If our products are not compatible with some or all industry-standard software and hardware, we could be materially adversely affected.
Our products may not be fully compatible with some or all industry-standard software and hardware. Further, we may be unsuccessful in correcting any such compatibility problems in a timely manner. If our customers are unable to achieve compatibility with software or hardware, we could be materially adversely affected. In addition, the mere announcement of an incompatibility problem relating to our products could have a material adverse effect on our business.
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Costs related to defective products could have a material adverse effect on us.
Products as complex as those we offer may contain defects or failures when first introduced or when new versions or enhancements to existing products are released. We cannot assure you that, despite our testing procedures, errors will not be found in new products or releases after commencement of commercial shipments in the future, which could result in loss of or delay in market acceptance of our products, material recall and replacement costs, loss of revenue, writing down the inventory of defective products, the diversion of the attention of our engineering personnel from product development efforts, defending against litigation related to defective products or related liabilities, including property damage, personal injury, damage to our reputation in the industry and loss of data or intangible property, and could adversely affect our relationships with our customers. 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.
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. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business.
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.
Our ability to meet customer demand for our products depends, in part, on our ability to deliver the products our customers want on a timely basis. Accordingly, we rely on our supply chain for the manufacturing, distribution and fulfillment of our products. As we continue to grow our business, expand to high-growth adjacent markets, acquire new customers and strengthen relationships with existing customers, the efficiency of our supply chain will become increasingly important because many of our customers tend to have specific requirements for particular products, geographic requirements, and specific time-frames in which they require delivery of these products. If we are unable to consistently deliver the right products to our customers on a timely basis in the right locations, our customers may reduce the quantities they order from us, which could have a material adverse effect on our business.
We outsource to third parties certain supply-chain logistics functions, including portions of our product distribution, transportation management and information technology support services.
We rely on third-party providers to operate our regional product distribution centers and to manage the transportation of our work-in-process and finished products among our facilities, to our third-party manufacturers and to our customers. In addition, we rely on third parties to provide certain information technology services to us, including help desk support, desktop application services, business and software support applications, server and storage administration, data center operations, database administration and voice, video and remote access. We cannot guarantee that these providers will fulfill their respective responsibilities in a timely manner in accordance with the contract terms, in which case our internal operations and the distribution of our products to our customers could be materially adversely affected. Also, we cannot guarantee that our contracts with these third-party providers will be renewed, in which case we would have to transition these functions in-house or secure new providers, which could have a material adverse effect on our business if the transition is not executed appropriately.
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Our inability to effectively control the sales of our products on the gray market could have a material adverse effect on us.
We market and sell our products directly to OEMs and through authorized third-party distributors. From time to time, our products are diverted from our authorized distribution channels and are sold on the “gray market.” 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. These substandard gray market products may have higher-than-expected failure rates and as a result, we may face reputational harm or unauthorized warranty claims. Additionally, products acquired on the gray market or through other unauthorized channels are at higher risk of being re-sold to prohibited end-users, misused, and deployed for uses that do not align with AMD’s ethics, values or compliance standards. Gray market products result in shadow inventory that is not visible to us, making it difficult to forecast demand accurately. Also, when gray market products enter the market, we and our distribution channels compete with these heavily discounted gray market products, which adversely affects demand for our products and negatively impacts our margins.
Climate change may have an impact on our business.
Climate change may have an adverse impact on our business and the business of our suppliers and customers. Global climate change may result in certain natural disasters and climate-related events occurring with increasing frequency and severity and its physical impact on the major regions where we have operations has the potential to disrupt our business and those of our customers and suppliers. Our headquarters and some of our operations and facilities are located in areas that are susceptible to earthquakes and tsunamis, wildfires, extreme storms, extreme heat, drought, freezing, tropical cyclones and other natural disasters. Water and energy availability and reliability in the regions where we have facilities and where our suppliers have operations is important to our business. Certain natural disasters, including drought, wildfires, storms, sea-level rise and flooding could disrupt our operations and our suppliers’ or customers’ operations, including by disrupting, the availability of energy or water necessary for the operations of our business or those of our suppliers and customers. Global climate change is also resulting in chronic changes that result in certain natural disasters occurring more frequently or with greater intensity, which could disrupt our operations, or the operations of our third parties. Such disruptions could cause delays in manufacturing or shipping our products, affect our supply chain and may result in the loss of business, and additional costs to maintain or resume operations, any of which could adversely affect our business and results of operation. We may also experience contractual disputes relating to supply chain delays resulting from climate change related disruptions, which could result in increased litigation and costs. Data centers depend on access to clean water and reliable energy, thus potential power or water shortages could impair our customers’ ability to expand their data center capacity and consume our products and services, which in turn could adversely impact our ability to generate revenue.
Although we maintain insurance coverage for a variety of property, casualty, and other risks, the types and amounts of insurance we obtain vary depending on coverage, availability and cost. Some of our policies have large deductibles and broad exclusions. Additionally, our insurance providers may be unable or unwilling to pay a claim. Losses not covered by insurance may be large, which could materially harm our results of operations and financial condition.
Our business and the business of our suppliers and customers may also be subject to climate-related regulations, and contract terms, and may be subject to additional regulations and contract terms and lawsuits in the future. New increased regulations regarding carbon taxes, greenhouse gas emissions, fuel or energy taxes and other climate-related risks will likely result in greater costs; for example, as a result of carbon pricing impacts on electrical utilities and/or necessitating that we purchase more renewable energy than otherwise planned. Our supply chain manufacturing suppliers may be exposed to increased costs of doing business should they be affected by new climate-related expectations such as those affecting abatement equipment, renewable energy, and/or alter production processes and materials selections. The additional compliance costs incurred by our suppliers may be passed on to us and result in greater indirect costs to us. These costs and restrictions could materially harm our business and results of operations by increasing our expenses, impacting our reputation if there is actual or perceived non-compliance, or requiring us to alter our operations and products. The long-term effects of climate change on the global economy and the technology industry are unclear but could be severe. Additionally, we are or expect to be subject to various new or proposed climate-related disclosure requirements and we expect to incur costs and resources in order to comply. Failure to accurately comply with such reporting obligations may result in enforcement actions, reputational harm or private litigation that could have a material adverse effect on us.
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Legal and Regulatory Risks
Government actions and regulations such as export regulations, import tariffs, and trade protection measures may limit our ability to export our products to certain customers.
We are subject to U.S. laws and regulations, including the Export Administration Regulations (EAR) administered by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, which restrict the export of certain products and technologies to certain countries, including China, Russia, and Belarus, among others. These restrictions may limit our ability to sell certain products or technologies in these markets or to certain customers.
Evolving U.S. government policy toward semiconductor exports, particularly in the context of national security and foreign policy priorities could adversely affect our business. In October 2023, the Bureau of Industry and Security (BIS) of the United States Department of Commerce issued requirements for certain advanced computing items that apply to the export of products classified ECCN 3A090 or 4A090 to a party headquartered in, or with an ultimate parent headquartered in, any of Country Groups D1, D4 or D5, including China (a D5 Country). These controls prevent us from shipping certain AMD Instinct™ integrated circuits and certain AMD Versal™ FPGAs to China, or to customers outside of the United States whose ultimate parent is headquartered in a D5 Country, without a license. BIS may issue new licensing requirements and regulatory controls in the future. Even new products that fall below the licensing thresholds may not be successful because we have no assurances BIS will agree that the alternative products are not subject to the new licensing requirements or that future regulations will not control the alternative products. The U.S. export restrictions on semiconductors and semiconductor technology to China and Chinese customers negatively impact our ability to sell to customers in China and make it easier for our China-based competitors to develop and sell their own solutions and reduce the need for our products. In April 2025, the U.S. government implemented a new license requirement for the export of certain semiconductor products to a D5 Country (including Hong Kong and Macau), and to companies headquartered in, or with an ultimate parent located in such D5 Country. This restriction impacts our AMD Instinct™ MI308 products. As a result of the restriction, we incurred approximately $800 million in inventory and related charges in the second quarter of 2025. We applied for and were granted some licenses by the U.S. government that allow us to ship our MI308 products to certain China-based customers. Sales of our MI308 products into China depend on customer demand, China’s import control rules and our ability to obtain licenses. In August 2025, U.S. government officials expressed an expectation that the U.S. government will receive 15% of the revenue generated from licensed MI308 sales to China. However, to date, the U.S. government has not published a regulation establishing such requirement. Any request for a percentage of the revenue by the U.S. government could subject us to litigation, increase our costs and harm our competitive position and benefit competitors that are not subject to such arrangements.
Additional export restrictions imposed in the future may not only impact our ability to serve China but could also impact our ability to serve other markets. If any new export controls impact more of our products, we may be unable to sell our inventory of such products and we may further incur inventory and related charges since there is no assurance that the U.S. government will grant licenses at all or in a timely manner. Even if we are granted licenses, the licenses may be temporary or could impose onerous conditions for us or our customers. If we are not granted licenses, we may not be able to create a product to compete in the China market that is not subject to licensing requirements. Limits on sales of our offerings in the China market due to export controls could impact our competitive position compared to domestic Chinese competitors and other companies not subject to the restrictions. As such, we could lose market position and our business, operating results, and financial condition would be adversely impacted.
In January 2025, BIS issued a final rule, commonly referred to as the “AI Diffusion Rule,” that imposes new restrictions on the export, reexport and in-country transfer of certain advanced semiconductor devices and technology. The rule seeks to control the spread of advanced AI technology in a manner that promotes its potential economic and social benefits, while also protecting U.S. national security and foreign policy interests. It expands licensing requirements worldwide for transactions involving entities or end uses associated with the development or proliferation of AI capabilities. In May 2025, BIS announced its intention to rescind the AI Diffusion Rule, publish a regulation formalizing the rescission, and issue replacement rules in the future. The replacement rules may limit our ability to engage in certain business transactions, require new export licenses, delay shipments, or necessitate changes in our compliance processes and product designs to ensure regulatory compliance. Additionally, BIS’s announced plans introduce uncertainty as we evaluate whether specific products, technologies, or software fall within the scope of any new restrictions, and whether BIS will grant licenses in a timely matter or at all. Compliance with the planned rules or rules that BIS may propose in the future could result in increased costs, disruption of key customer and supplier relationships, loss of competitive positioning in international markets or reputational harm.
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The implementation or increase of any tariffs, trade protection measures or restrictions, or retaliatory actions from foreign governments could result in lost sales and adversely impact our reputation and business. The U.S. government has instituted or proposed changes in trade policies that include higher tariffs on imports into the U.S. and other government regulations affecting trade between the United States and other countries where we conduct our business. Such changes to U.S. trade policy have the potential to adversely impact the U.S. economy or sectors thereof and could significantly impact our business, in particular the import of products used in our business that are manufactured outside the U.S. Any retaliatory actions by affected countries and foreign governments could result in tariffs, trade protection measures or other restrictions imposed on our current and future products. Our customers’ costs of doing business may increase or their sales may be negatively affected. As such, customer demand for our products may decline, which could adversely impact our ability to generate revenue and result in inventory impairment changes. For example, data centers require hardware infrastructure that may increase in costs for our customers due to tariffs, and thus our customers may delay or halt investments in AI infrastructure. Further, to the extent that the United States, China or other countries seek to promote products that are produced domestically or reduce the dependence upon products from another country, they may implement regulations or policies that may negatively affect our business.
The United States and other countries’ export control regulations continue to focus on targeting semiconductors associated with AI, including GPUs and associated products and services, by restricting or prohibiting their unlicensed sale or supply to U.S. embargoed or sanctioned countries, governments, persons and entities. The United States has imposed unilateral controls restricting GPUs and associated products, and in the future is likely to further adopt other unilateral or multilateral controls. The scope and application of such controls have been and may continue to be broad, which may prohibit us from exporting or providing access to our products to any or all customers in one or more markets, including but not limited to China, and could negatively impact our manufacturing, testing and warehousing locations, or could impose other conditions that limit our ability to meet demand abroad. If export controls targeting semiconductors associated with AI including GPUs and associated products and services are further tightened, or the classification of our products under those controls’ changes, our ability to export our technology, products or services could be further restricted. We may also be at a competitive disadvantage if our competitors are not subject to the same or similar restrictions or classifications. Such export controls have, and may in the future, subject downstream recipients of our products to additional restrictions on the use, resale, repair or transfer of our products and may have a material adverse effect on us. 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. Continued changes to export control regulations that we are subject to, or changes to their interpretation and enforcement, could result in greater compliance costs and other compliance burdens on our business and our customers which could adversely impact our business. Export controls have and may continue to encourage customers in China and other markets subject to those controls to pursue alternatives to U.S. semiconductors for their product designs to limit compliance burdens and potential impact on their product roadmaps. From time to time, governments provide incentives or make other investments that could benefit and give a competitive advantage to our competitors. For example, the United States government enacted the Creating Helpful Incentives to Produce Semiconductors for America and Science Act (CHIPS Act) of 2022 to provide financial incentives to the U.S. semiconductor industry. Government incentives, including the CHIPS Act, may not be available to us on acceptable terms or at all. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors’ relative position and have a material adverse effect on our business.
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We have equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. In June 2019, BIS added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. Since that time, the United States administration has called for changes to domestic and foreign policy, including policies with respect to China and Russia. 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, and China has imposed retaliatory tariffs. Moreover, as the U.S. government continues to add companies to the Entity List, our supply chain may be negatively impacted as we may be required to suspend purchasing from such suppliers or selling to such customers or otherwise unable to fulfill our contractual obligations to them. For example, in September 2025, BIS issued a new rule designating any entity that is at least 50% owned by one or more entities on the Entity List will be subject to Entity List restrictions and this rule similarly applies to entities at least 50% owned by listed “military end users” and certain sanctioned parties. In October 2025, the U.S. government announced that it planned to suspend enforcement of this new rule for one year. However, the restrictions can be reimposed at any time. These restrictive governmental actions and any similar measures that may be imposed on U.S. companies by other governments, especially in light of ongoing trade tensions with U.S. trading partners, will likely limit or prevent us from doing business with certain of our customers or suppliers and harm our ability to compete effectively or otherwise negatively affect our ability to sell our products. If we were ever found to have violated these laws or similar applicable non-U.S. laws, even if the violation occurred without our knowledge, we may be subject to penalties, which could adversely affect our reputation, business, operating results and financial condition.
We may, from time to time, receive technical data from third parties that is subject to the International Traffic and Arms Regulations (ITAR), which are administered by the U.S. Department of State. 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. 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. When we file license applications or Notification Advanced Computing (NAC) exception notices we have no assurance that BIS will grant any exemptions or licenses or that the BIS will act on the filings in a timely manner. Even if BIS grants a requested license, the license may come with burdensome conditions that we cannot or decide not to fulfill. 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.
If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
Our deferred tax assets include tax credit carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods. Each quarter, we consider both positive and negative evidence to determine whether all or a portion of the deferred tax assets are more likely than not to be realized. If we determine that some or all of our deferred tax assets are not realizable, it could result in a material expense in the period in which this determination is made which may have a material adverse effect on our financial condition and results of operations.
In addition, a significant amount of our deferred tax assets related to tax credits which remain under a valuation allowance could be subject to limitations that could reduce our ability to utilize the tax credits before the expiration of the tax attributes.
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 are a U.S.-based multinational company subject to income tax, indirect tax or other tax claims in multiple U.S. and foreign tax jurisdictions in which we conduct business. Significant judgment is required in determining our worldwide provision for income taxes. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Any changes to tax laws could have a material adverse effect on our tax obligations and effective tax rate. 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.
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Our income tax expense is computed based on tax rates enacted at the time of the respective financial period. Our future effective tax rates, financial condition and results from operations could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, by changes in the tax rules and regulations or the interpretation of tax rules and regulations in the jurisdictions in which we do business or by changes in the valuation of our deferred tax assets. Many countries have implemented legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting recommendations and action plan that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules, and nexus-based tax incentive practices. The OECD is also continuing discussions surrounding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax (namely “Pillar One” and “Pillar Two”). Many countries we do business in have implemented laws based on Pillar Two, which may materially adversely impact our provision for income taxes, net income and cash flows.
In addition, we are subject to examinations of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from the current examinations. There can be no assurance that the final determination of any of these examinations will not have an adverse effect on our effective tax rates, financial condition, and results of operations.
In the ordinary course of our business, there are many transactions and calculations where the ultimate income tax, indirect tax, or other tax determination is uncertain. Although we believe our tax estimates are reasonable, we cannot assure that the final determination of any tax audits or litigation will not be materially different from that which is reflected in historical tax provisions and accruals. 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.
We are party to litigation and may become a party to other claims or litigation that could cause us to incur substantial costs or pay substantial damages or prohibit us from selling our products.
From time to time, we are a defendant or plaintiff in various legal actions, as described in Note 13 - Commitments and Contingencies of the Notes to our Condensed Consolidated Financial Statements. For example, we have been subject to certain claims concerning federal securities laws and corporate governance. Our products are purchased by and/or used by consumers, which could increase our exposure to consumer actions such as product liability claims and consumer class action claims. On occasion, we receive claims that individuals were allegedly exposed to substances used in our former semiconductor wafer manufacturing facilities and that this alleged exposure caused harm. Litigation can involve complex factual and legal questions, and its outcome is uncertain. 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.
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. If any such claims are asserted, we may seek to obtain a license under the third parties’ intellectual property rights. We cannot assure you that we will be able to obtain all of the necessary licenses on satisfactory terms, if at all. These parties may file lawsuits against us or our customers seeking damages (potentially up to and including treble damages) or an injunction against the sale of products that incorporate allegedly infringed intellectual property or against the operation of our business as presently conducted, which could result in our having to stop the sale of some of our products or to increase the costs of selling some of our products or which could damage our reputation. The award of damages, including material royalty payments, or other types of damages, or the entry of an injunction against the manufacture and sale of some or all of our products could have a material adverse effect on us. We could decide, in the alternative, to redesign our products or to resort to litigation to challenge such claims. Such challenges could be extremely expensive and time-consuming regardless of their merit, could cause delays in product release or shipment and/or could have a material adverse effect on us. We cannot assure you that litigation related to our intellectual property rights or the intellectual property rights of others can always be avoided or successfully concluded.
Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which could have a material adverse effect on us.
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We are subject to environmental laws, conflict minerals regulations, as well as a variety of other laws or regulations that could result in additional costs and liabilities.
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. In addition, our operations and those of our suppliers are further governed by regulations prohibiting the use of forced labor (e.g., mining conflict materials), and restrictions on other materials, as well as laws or regulations governing the operation of our facilities, sale and distribution of our products, and real property. For the manufacturing of our products, these laws and regulations require our suppliers to obtain permits for operations, including the discharge of air pollutants and wastewater. Although our management systems are designed to oversee our suppliers’ compliance, we cannot assure you that our suppliers have been or will be in complete compliance with such laws, regulations and permits. If our suppliers violate or fail to comply with any of them, a range of consequences could result, including fines, suspension of production, alteration of manufacturing processes, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. Such non-compliance from our manufacturing suppliers could result in disruptions in supply, higher sourcing costs, and/or reputational damage for us. We could also be held liable for any and all consequences arising out of exposure to hazardous materials used, stored, released, disposed of by us or located at, under or emanating from our current or former facilities or other environmental or natural resource damage. We have been named as a responsible party at three Superfund sites in Sunnyvale, California and we are subject to Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites and we have entered into settlement agreements with other responsible parties on two of the orders. During the term of such agreements, other parties have agreed to assume most of the foreseeable costs as well as the primary role in conducting remediation activities under the orders. We remain responsible for additional costs beyond the scope of the agreements as well as all remaining costs in the event that the other parties do not fulfill their obligations under the settlement agreements. The progress of future remediation efforts cannot be predicted with certainty and these costs may change. Although we have not been, we could be named a potentially responsible party at other Superfund or contaminated sites in the future. In addition, contamination that has not been identified could exist at our other facilities.
Future environmental legal requirements may become more stringent or costly. As such, the costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past and future releases of, or exposure to, hazardous substances may increase and could have a material adverse effect on us.
Environmental laws are complex, change frequently and tend to become more stringent over time. 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. As regulations restricting materials in electronic products continue to increase around the world, there is a risk that the cost, quality and manufacturing yields of products that are subject to these restrictions may be less favorable compared to products that are not subject to such restrictions, or that the transition to compliant products may not meet customer roadmaps, or produce sudden changes in demand, which may result in excess inventory. 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, and the like, as well as additional energy consumption limits. Certain of our products may be excluded from some of these markets which could materially adversely affect us. We incur costs associated with complying with conflict minerals reporting requirements to our customers and the SEC. In addition to the SEC regulation, the EU, China and other jurisdictions are developing new policies focused on conflict minerals that may impact and increase the cost of our compliance program. Customers are increasingly seeking information about the source of minerals used in our supply chain beyond those addressed in laws and regulations. Given the complexity of mineral supply chains, we may be unable to sufficiently verify the origins of the subject minerals and thus our reputation may be harmed. 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. In addition, new or increased regulations limiting the use of such components, or regulation regarding greenhouse gas emissions and climate change-related risks, could increase our energy costs, for example as a result of carbon pricing impacts on electrical utilities and/or necessitating that we purchase more renewable energy than otherwise planned. Our supply chain manufacturing suppliers may be exposed to increased cost of doing business should they be affected by new climate-related regulations, for example, affecting abatement equipment, renewable energy, and/or alter production processes and materials selections.
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In addition to our Company, customers, governments and authorities continue to focus on eliminating risks of forced labor in supply chains which may increase the cost of our compliance program. 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 with laws and expectations. Our failure to satisfy customer expectations on forced and trafficked labor policies may result in these customers choosing a competitor’s product or enforcement liability and reputational challenges.
In addition, many governments have enacted laws around PII, such as the GDPR and the CCPA, and the failure to comply could result in sanctions or other actions by the governments. The GDPR imposes significant requirements on how we collect, process and transfer personal data, as well as significant fines for non-compliance.
New emerging technology trends, such as AI, require us to keep pace with evolving regulations and industry standards. Given the complexity and rapid development of AI, there are various current and proposed regulatory frameworks relating to the use of AI in products and services. For example, the EU AI Act was adopted in 2024 and its implementation will be phased in over the next few years. In other jurisdictions, similar legislation is being considered. Such laws and regulations may impede our ability to offer certain products and services in certain jurisdictions if we are unable to comply with them. We expect that the legal and regulatory environment relating to emerging technologies such as AI will continue to develop and could increase the cost of doing business, and create compliance risks and potential liability, all which may have a material adverse effect on our financial condition and results of operations. Governments are also considering the new issues in intellectual property law that AI creates, which could result in different intellectual property rights in technology we create with AI and development processes and procedures and could have a material adverse effect on our business.
Evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters could result in additional costs, harm to our reputation and a loss of customers.
There are evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters including those involving the environment and climate, energy and water consumption, diversity and inclusion, human rights, governance and cybersecurity. Additionally, we are and expect to continue to be subject to various new and proposed climate-related and sustainability laws and requirements that may impact how we and our suppliers and customers conduct and report on our business by requiring the disclosure and tracking of greenhouse gas emissions, climate change-related risks and other sustainability matters. As corporate responsibility reporting and disclosure requirements continue to evolve, we may incur additional compliance costs and indirect compliance costs that our customers and suppliers may pass on to us. Emerging legal and regulatory requirements in the various jurisdictions in which we operate, can be unpredictable, are subject to change, and may be difficult for us to comply with given the complexity of our supply chain and our outsourced manufacturing. As a result, we may be required to modify our business or supply chain in ways that are costly or less efficient. For example, the state of California has passed reporting requirements that will require corporations to report on climate data and risks, and these laws include data assurance requirements that entail third-party verifications. Our failure to comply, or the appearance of our failure to comply, with these legal and regulatory requirements can result in regulatory penalties, fines and legal liabilities, increase costs, and harm our reputation – any of which could materially adversely affect our business, financial condition and results of operation. While we have engaged, and may continue to engage, in voluntary initiatives (such as voluntary disclosures, certifications, goals, or targets, among others) or commitments to improve our corporate responsibility profile and/or products or to respond to stakeholder expectations, such initiatives or achievement of such commitments may be costly, may not have the desired effect or may impact our reputation with other stakeholders and have a material adverse effect on our business.
For example, we have publicly announced certain corporate responsibility goals spanning multiple topics informed by input from various of our stakeholders, including customers, investors and employees. These goals, which reflect our current plans and aspirations based on known conditions, may change in the future or may not be achieved, as they are subject to various challenges, risks and expectations such as standards, processes, and methodologies that continue to evolve or emerge, and many of these matters are outside our control. Our progress towards some goals receives third-party limited assurance and not reasonable assurance, or may rely on receipt of others’ information and data that may not be subject to either third-party limited or reasonable assurance. Any failure to achieve such goals, failure to achieve these goals within the set timeframe, or the perception by stakeholders of such failure to achieve these goals may result in reputational or financial harm.
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Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain environmental, social and governance matters. Both advocates and opponents of environmental, social and governance matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism or litigation, it may require us to incur costs or otherwise adversely impact our business. Stakeholder groups may find our stated goals to be insufficiently responsive to the implications of issues, and any failure to meet stakeholder expectations may result in loss of customers or in investors selling their shares, which could harm our reputation and could have a material adverse effect on our business.
Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.
We offer products that include capabilities to support AI deployment and we expect this part of our business to grow. As with many new emerging technologies, AI presents risks and challenges and increasing legal, social and ethical concerns relating to its responsible use that could affect the adoption of AI, and thus our business. Third-party misuse of AI applications, models, or solutions, or ineffective or inadequate AI development or deployment practices by us or our customers, could cause harm to individuals or society and impair the public’s acceptance of AI. Moreover, we may be subject to competitive harm, regulatory action and legal liability as a result of new and proposed legislation regulating AI, as well as new applications of existing data protection, privacy and intellectual property and other laws. Such regulations and changes thereto could cause us to incur greater compliance costs, could impact our ability to sell or the ability of our customers and users worldwide to acquire, deploy and use systems that include our AI-related products and services and reduce the number of customers, which could negatively impact our business and financial results. As there continues to be an increasing focus on risks related to AI technologies, there may be an increasing focus on regulatory restrictions that target products and services that enable or facilitate AI and that may negatively impact some of our AI-related products and services. If the AI-related products that we offer have unintended consequences, infringe intellectual property rights or rights of publicity, or are misused by our customers or are otherwise controversial due to their perceived or actual impact on human rights, privacy, cybersecurity, employment or other social, economic or political issues the public’s acceptance of AI may be impaired and this may also result in reputational, competitive and financial harm and liability to our business.
The agreements governing our notes, our guarantee of the Assumed Xilinx Notes and the Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.
The indentures governing our 3.924% Senior Notes due 2032, 4.393% Senior Notes due 2052, 4.212% Senior Notes due 2026 and 4.319% Senior Notes due 2028 contain various covenants that limit our ability to, among other things: create liens on certain assets to secure debt, enter into certain sale and leaseback transactions; and consolidate with, merge into or sell, convey or lease all or substantially all of our assets to any other person.
We unconditionally guarantee, on a senior unsecured basis, Xilinx’s obligations under the Xilinx’s 2.375% Notes due 2030 (the Assumed Xilinx Notes). The supplemental indenture 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.
We also have an unsecured revolving credit facility in the aggregate principal amount of $3.0 billion (Revolving Credit Agreement). Our Revolving Credit Agreement contains various covenants which limit our ability to, among other things, incur liens; and consolidate or merge or sell our assets as an entirety or substantially as an entirety (in each case, except for certain customary exceptions). In addition, our Revolving Credit Agreement requires us to maintain a minimum consolidated interest coverage ratio at the end of each fiscal quarter. The agreement governing our convertible notes and our Revolving Credit Agreement contains provisions whereby a payment default or acceleration under certain agreements with respect to other material indebtedness would result in cross defaults under our convertible indenture or the Revolving Credit Agreement and allow note holders or the lenders under our Revolving Credit Agreement to declare all amounts outstanding under certain of our indentures or the Revolving Credit Agreement to be immediately due and payable. If the lenders under our Revolving Credit Agreement accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings. Also, we enter into sale and factoring arrangements from time to time with respect to certain accounts receivables, which arrangements are non-recourse to us in the event that an account debtor fails to pay for credit-related reasons and are not included in our indebtedness.
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Merger, Acquisition, Divestiture, and Integration Risks
Acquisitions, joint ventures, and/or strategic investments, and the failure to integrate acquired businesses, may fail to materialize their anticipated benefits and could disrupt our business, which could adversely affect our results of operation and financial condition.
We have acquired and invested in businesses, and may continue to do so, that offer products, services and technologies that we believe will help expand our product offerings and services and grow our business in response to changing technologies, customer demands and competitive pressures. Acquisitions and joint ventures include numerous risks including, but not limited to: our inability to identify suitable opportunities in a timely manner or on terms acceptable to us; failure to complete a transaction in a timely manner, or at all; inability to obtain, or delay in obtaining, regulatory approvals or IP disputes or other litigation; difficulty in obtaining financing on terms acceptable to us or at all; and failure of a transaction to advance our business strategy or other unforeseen factors. For example, on March 31, 2025, we completed our acquisition of ZT Systems. While we believe that our acquisitions will result in certain benefits, including certain operational synergies, accretion and cost efficiencies, and drive product innovations, achieving these anticipated benefits depends on our ability to successfully integrate the acquired businesses into our business. We cannot be certain that ZT Systems’ business can be successfully integrated with our business in a timely manner or at all, for a variety of reasons, including, but not limited to: difficulty in integrating the technology, systems, products, policies, processes or operations and integrating and retaining the employees including key personnel of the acquired business; diversion of capital and other resources, including management’s attention from our existing business; unanticipated costs or liabilities, such as increased interest expense and compliance with debt covenants or other obligations; coordinating and integrating in countries in which we have not previously operated; the potential impact of the acquisitions on our relationships with employees, vendors, suppliers and customers; our inability to effectively retain suppliers, vendors and customers of the acquired businesses; entry into geographic or business markets in which we have little or no experience; adverse changes in general economic conditions in regions in which we and the acquired companies operate; potential litigation associated with the acquisitions; difficulties in the assimilation of employees and culture; difficulties in managing the expanded operations of a larger and more complex company; and difficulties with integrating and upgrading our and the acquired companies’ financial reporting systems. If we cannot successfully integrate or are delayed in integrating newly acquired businesses, it could result in increased costs, decreases in expected revenues, diversion of management’s time and attention, negatively impact our ability to develop or sell new products and impair our ability to grow our business, which could materially adversely affect our financial conditions and operating results. Even if the businesses we acquire are successfully integrated, the benefits of such transactions may not be realized within the anticipated time frame or at all. 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. From time to time, we may also seek to divest or wind down portions of our business, either acquired or otherwise. Such dispositions involve risks and uncertainties, including our ability to sell such businesses on terms acceptable to us, or at all; litigation; disruption of our ongoing business and distraction of management; failure to effectively transfer liabilities, contracts, facilities and employees to buyer; continued financial obligations and unanticipated liabilities; and closing delays.
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. Acquisitions, joint ventures and other investments involve significant challenges and risks and could impair our ability to grow our business, develop new products or sell our products, which could have a negative impact on our results of operations. Acquisitions or joint ventures may also reduce our cash available for operation and other uses which could harm our business. 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. 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 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 are complying with U.S. law pertaining to the Entity List designation.
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We invest in both public and private companies to further our strategic objectives and to support certain key business initiatives. We invest in early-stage companies that may still be in the process of developing a strategic direction and may not yet generate revenue. Many of the equity and debt instruments that we invest in are non-marketable and illiquid at the time of our initial investment, and we are not always able to achieve a return. Our ability to realize a return on our investments in private companies typically depends on the company completing a liquidity event, such as a public offering or acquisition. Market conditions and events, particularly in periods with economic uncertainty, inflation, volatile public equity markets or unsettled global market conditions, could cause our investments in public companies to expose us to volatility in our results due to changes in market prices and/or impairments. To the extent any of the companies in which we invest in are not successful, we could recognize an impairment and/or lose all or part of our investment. Our investment portfolio is concentrated in specific sectors and adverse developments in one or any of these sectors due to regulatory changes, technology disruptions or market downturns could negatively impact the performance of our investment portfolio.
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.
We account for certain acquisitions using the acquisition method of accounting under the provisions of ASC 805, Business Combinations, with AMD as the accounting acquirer. We record assets acquired, including identifiable intangible assets, and liabilities assumed, at their respective fair values at the acquisition date. Any excess of the purchase price over the net fair value of such assets and liabilities will be recorded as goodwill. These acquisitions resulted in recognition of significant goodwill and other intangible assets on our condensed consolidated balance sheets. Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. All tangible and intangible assets including goodwill, are subject to impairment testing when events or changes in circumstances suggest that their carrying amounts may not be recoverable. Impairment testing particularly for goodwill requires significant judgment and assumptions in determining fair value. We monitor for any events or changes in circumstances that may be indicators of impairment, including but not limited to: significant adverse changes in business climate or operating results; changes in management’s business strategy; an inability to successfully introduce new products in the marketplace; an inability to successfully achieve internal forecasts; significant declines in our stock price; significant negative industry; or macroeconomic trends. A deterioration in the long-term economic outlook or expected future cash flows of our business could result in impairment charges, which may have a material adverse impact on our financial position and results of operations.
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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 maintain operations around the world, including in the United States, Canada, Europe, Australia, Latin America and Asia. We rely on third-party wafer foundries in the United States, Europe and Asia. 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 64% for the three months ended September 27, 2025. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. The political, legal and economic risks associated with our worldwide operations 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; imposition of new and increased tariffs; worsening trade relationship between the United States and China (or other countries); volatile global economic conditions, including downturns or recessions in which some competitors may become more aggressive in their pricing practices; difficulties in protecting our intellectual property; difficulties in managing staffing and exposure to different employment practices and labor laws; changes in immigration law and regulations; 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; transportation restrictions or disruptions; 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. Changes in the public perception of the U.S. government in the regions where we operate or plan to operate could also negatively impact our business and results of operations. The Ukraine-Russia and Israel-Hamas conflicts could escalate and expand, which in turn could have negative impacts on the global economy and financial markets. Also, in addition to restrictions imposed by the United States or China on exports or imports from one another, geopolitical changes between China and Taiwan could disrupt the operations of our Taiwan-based third-party wafer foundries, manufacturing facilities and subcontractors, and materially adversely affect delivery of products and our business, financial condition and/or operating results.
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, tropical cyclones, droughts, fires, sea-level rise, extreme heat and volcanic eruptions that disrupt our operations, or those of our manufacturers, vendors or customers. For example, our California operations are located near major earthquake fault lines. In April 2024, Taiwan experienced an earthquake where our third-party wafer foundries are located. We also have operations and employees in regions that have experienced extreme weather such as prolonged heat waves, wildfires and freezing. Extreme weather events and natural disasters can also disrupt the ability of our suppliers to deliver expected manufacturing parts and/or services for periods of time. In addition, certain natural disasters, including drought, wildfires, storms, sea-level rise and flooding, could disrupt the availability of water necessary for the operations of our business or the business of our suppliers or customers. Global climate change also may result in chronic changes that result in certain natural disasters occurring more frequently or with greater intensity, which could disrupt our operations, or the operations of our third parties. There may be conflict or uncertainty in the countries in which we, our customers and suppliers operate, including public health issues, epidemics and pandemics, safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant accidents or general economic or political factors. Global health outbreaks, such as COVID-19, have and may adversely affect our employees and disrupt our business operations, as well those of our customers and suppliers. Public health measures by government authorities may cause us to incur additional costs, limit our operations, modify our business practices, diminish employee productivity or disrupt our supply chain, which may have a material adverse effect on our business.
The U.S. has been and may continue to be involved in armed conflicts that could have a further impact on our sales and our supply chain. The consequences of armed conflict, political instability or civil or military unrest are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us. Terrorist attacks or other hostile acts may negatively affect our operations, or adversely affect demand for our products, and such attacks or related armed conflicts may impact our physical facilities or those of our suppliers or customers. 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.
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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. Additionally, stringent licensing restrictions 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 are all factors that could have a material adverse effect on our business.
We may incur future impairments of our technology license purchases.
We license certain third-party technologies and tools for the design and production of our products. We report the value of those licenses as other non-current assets on the balance sheet and we periodically evaluate the carrying value of those licenses based on their future economic benefit to us. 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 key employees may hinder our business.
Our success depends upon the continued service of numerous qualified engineering, marketing, sales and executive employees. The market for qualified and skilled executives and employees in the technology industry, especially in the areas of AI and machine learning, is highly competitive. Our competitors have targeted individuals in our organization that have desired skills and experience. If we are unable to continue to attract, develop and retain our leadership team and our qualified employees necessary for our business, the progress of our product development programs could be hindered, and we could be materially adversely affected. We use share-based incentive awards to help attract, retain and motivate our executives and qualified employees. If the value of such stock awards does not appreciate as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate our executives and employees could be affected, which could harm our results of operations. If the value of our stock awards increases substantially, this could potentially create great personal wealth for our executives and key talent and affect our ability to retain our employees. Our ability to attract and retain qualified employees could also be impacted by changes in immigration law and regulations, or interpretation of new or existing laws. United States immigration controls could affect the employment status of key technical and professional employees, as well as our ability to hire talent globally. Any future restructuring plans may also adversely impact our ability to attract and retain key employees.
Our stock price is subject to volatility.
Our stock price has experienced price and volume fluctuations and could be subject to wide fluctuations in the future. The trading price of our stock may fluctuate widely due to various factors including: actual or anticipated fluctuations in our financial conditions and operating results; failure to meet expectations related to future growth; changes in financial estimates by us or financial estimates and ratings by securities analysts; changes in our capital structure, including issuance of additional debt or equity to the public; competitive landscape; news regarding our products or products of our competitors or other actions taken by competitors; broad market industry and competitor-related fluctuations; and general economic, political and market conditions, including imposition of new or increased tariffs and other trade restrictions, interest rate changes and inflation. 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 $14 billion of our common stock (Repurchase Program). As of September 27, 2025, $9.4 billion remained available for future stock repurchases under the Repurchase Program. 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. Our stock repurchases could affect the trading price of our stock, the volatility of our stock price, reduce our cash reserves, and may be suspended or discontinued at any time, which may result in a decrease in our stock price.
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ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities
We have an approved stock repurchase program authorizing repurchases of up to $14 billion of our common stock (Repurchase Program). 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.
The following table provides information relating to our repurchase of common stock for the three months ended September 27, 2025:

| Total Number of Shares Repurchased |  | Average Price Paid per Share |  | Total Number of Shares Repurchased as Part of Publicly Announced Program |  | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program
|  |  |  |  |  |  | (In millions)
Jun 29, 2025 to Jul. 26, 2025 | — |  |  | $ | — |  |  | — |  |  | $ | — |
Jul. 27, 2025 to Aug 23, 2025 | — |  |  | $ | — |  |  | — |  |  | $ | — |
Aug 24, 2025 to Sep. 27, 2025 | 576,189 |  |  | $ | 154.34 |  |  | 576,189 |  |  | $ | 9,376 |
Total | 576,189 |  |  |  |  |  |  |

The amounts above do not include the 1% excise tax on stock repurchases enacted by the Inflation Reduction Act of 2022.
Equity Award Share Withholding
During the three months ended September 27, 2025, there were $443 million in employee withholding taxes due upon the vesting of net settled equity awards. We withheld approximately 2.6 million shares of common stock from employees in connection with such net share settlement at an average price of $170.10 per share. These shares may be deemed to be “issuer purchases” of shares.

ITEM 5. | OTHER INFORMATION

Rule 10b5-1 Trading Plans
During the quarterly period ended September 27, 2025, the following directors and officers adopted, modified or terminated Rule 10b5-1 trading plans:
On August 22, 2025, Jean Hu, our Executive Vice President, Chief Financial Officer & Treasurer, adopted a Rule 10b5-1 trading plan, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which a maximum of 34,462 shares of our common stock may be sold. The plan will terminate on September 11, 2026, or such date as the plan is otherwise terminated according to its terms.
On September 5, 2025, Lisa Su, our President & CEO and Chair of our Board of Directors, terminated her previously reported Rule 10b5-1 trading plan adopted on December 2, 2024 which was intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which a maximum of 750,000 shares of our common stock could be sold (Previous Plan). The Previous Plan was scheduled to terminate on December 10, 2025. On September 9, 2025, Dr. Su adopted a new Rule 10b5-1 trading plan, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which a maximum of 600,000 shares of our common stock may be sold. The plan will terminate on November 10, 2026, or such date as the plan is otherwise terminated according to its terms.
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ITEM 6. EXHIBITS

2.1 |  | Equity Purchase Agreement dated as of May 18, 2025, by and among Advanced Micro Designs, Inc., AMD Design, LLC, ZT Group Int’l, Inc. and Sanmina Corporation, filed as Exhibit 2.1 to AMD’s Current Report on Form 8-K dated May 18, 2025, is hereby incorporated by reference.
3.1 |  | Amended and Restated Certificate of Incorporation of Advanced Micro Devices, Inc., filed as Exhibit 3.1 to AMD’s Current Report on Form 8-K/A dated May 14, 2025, is hereby incorporated by reference.
3.2 |  | Advanced Micro Devices, Inc. Amended and Restated Bylaws, as amended on February 13, 2024, filed as Exhibit 3.1 to AMD’s Current Report on Form 8-K dated February 20, 2024, is hereby incorporated by reference.
4.1 |  | Warrant to P urchase Shares of Common Stock, dated October 5, 2025, between Advanced Micro Devices, Inc. and OpenAI OpCo, LLC, filed as E xhibit 4.1 to AMD’s Current Report on Form 8-K dated October 5, 2025, is hereby incorp orated by re ference.
10.1 |  | R egistration Rights Agreement, dated October 5, 2025, between Advanced Micro Devices, Inc. and OpenAI OpCo, LLC, filed as E xhibit 10.1 to AMD’s Current Report on Form 8-K dated October 5, 2025, is hereby incorporated by reference.
*10.2 |  | Outside Director Equity Compensation Pol icy, as amend ed and restated, dated as of August 20, 2025.
31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 |  | Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 |  | Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | XBRL Instance Document.
101.SCH |  | XBRL Taxonomy Extension Schema Document.
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document.
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document.
104 |  | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document
*Management contracts and compensatory plans or arrangements.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | ADVANCED MICRO DEVICES, INC.
November 4, 2025 |  | By: | /s/ Jean Hu
|  | Name: | Jean Hu
|  | Title: | Executive Vice President, Chief Financial Officer and Treasurer Signing on behalf of the Registrant as the Principal Financial Officer

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