2021 ANNUAL REPORT ON FORM 10-K

March 2022 KEY FINANCIAL HIGHLIGHTS

Dear Shareholders:
REVENUE
There has never been a more exciting time for AMD. We are in a $16.4B
high-performance computing mega cycle with strong demand across +68%
$9.8B
our leadership product portfolio driven by the acceleration of digital $6.7B +45%
transformation across every industry, increasing adoption of cloud +4%
computing services, and the explosion of data coming from tens of
billions of connected devices. 2019 2020 2021

Against this backdrop, 2021 was an excellent year for AMD as we GROSS MARGIN
exceeded our ambitious goals and delivered record results. Each of
our businesses grew significantly year-over-year driven by customer 48%
preference for our leadership products and strong execution. Importantly,
45%
by successfully delivering on our technology, product and operational
commitments throughout the year we have built a strong foundation 43%
and are well positioned to continue our best-in-class growth.
2019 2020 2021

Annual revenue grew 68% to a record $16.4 billion, exceeding the strong
45% topline growth we achieved in 2020. We also expanded gross OPERATING MARGIN
margin by 370 basis points, increased operating margin by 8 percentage
points and delivered another year of significant net income growth. 22%

Computing and Graphics segment revenue grew 45% with strong 14%
demand for our AMD Ryzen™ desktop and mobile PC processors and 9%
AMD Radeon™ graphics cards. We delivered record annual client revenue
2019 2020 2021
and set a record for mobile processor unit share as our PC partners
introduced more than 150 premium consumer, gaming and commercial
notebooks powered by our latest Ryzen mobile processors. R&D INVESTMENT

$2.8B
In graphics, we had record annual revenue driven by strong demand for
our expanded family of Radeon RX 6000 desktop and notebook GPUs. $2.0B
$1.5B
For gamers, we expanded our AMD RDNA™ 2-based desktop GPUs to
offer a top-to-bottom family of leadership solutions and launched our
first AMD Advantage notebooks that combine high-performance Ryzen
CPUs, Radeon GPUs and AMD software with premium design features 2019 2020 2021
to deliver best-in-class gaming experiences.
For the data center and supercomputing markets, we introduced the industry’s fastest accelerator for
High Performance Computing (HPC) and AI with our AMD Instinct™ MI200 GPUs that power the Frontier
supercomputer at Oak Ridge National Laboratory — the first exascale supercomputer in the United States.

Enterprise, Embedded and Semi-Custom segment revenue grew 113% in 2021 with very strong demand
for the latest AMD-powered game consoles and increased cloud, enterprise and HPC adoption of our
AMD EPYC™ processors.

Server processor revenue more than doubled for the third straight year to set a new annual record. We launched
3rd Gen EPYC processors in March, delivering 25% more performance-per-watt compared to our previous
generation and both per-socket and per-core leadership across multiple workloads. In cloud, the world’s
largest cloud providers nearly doubled the number of AMD-powered instances from 200 to approximately
400 in the year and expanded their use of EPYC processors to power their internal infrastructure. AMD is now
designed into the data centers of the 10 largest hyperscale cloud companies in the world, with AWS, Alibaba
Cloud, Baidu, Google, IBM Cloud, Meta, Microsoft Azure, Oracle, Tencent Cloud and Twitter all adopting EPYC
processors as the critical compute engine behind their leadership technology offerings.

Enterprise server adoption was driven by Cisco, Dell, HPE, Lenovo and Supermicro expanding their AMD
portfolios with the launches of more than 100 platforms powered by 3rd Gen EPYC processors. In HPC, we
tripled the number of AMD-powered systems on the November Top500 supercomputer list to 73 and power
eight of the top 10 most efficient supercomputers in the world based on the latest Green500 list.

Our embedded business also delivered record annual revenue as we expanded our presence across key
verticals including automotive, networking and storage. In addition to powering new enterprise and cloud
storage solutions by Hewlett Packard Enterprise and others, our strategic move into the automotive market
was highlighted by Tesla adopting AMD Ryzen Embedded APUs to power the infotainment systems across
their entire family of vehicles.

LEADING BEYOND THE PRODUCT PORTFOLIO

I am pleased to report that we increased our focus on Environmental, Social and Governance (ESG) in 2021
as a key element of our business strategy. We are committed to driving meaningful impact across our value
chain through our new ESG goals for 2025 that span strategic areas including digital impact, environmental
stewardship, supply chain responsibility and diversity, belonging and inclusion. As part of our leadership
roadmaps and environmental efforts, we announced a goal to deliver a 30x increase in energy efficiency for
AMD EPYC CPUs and AMD Instinct accelerators in AI training and HPC applications running on accelerated
compute nodes by 2025.

We believe prioritizing diversity, belonging and inclusion are key to creating a culture of innovation. AMD
was recognized as one of Fortune’s World’s Most Admired Companies and Fast Company’s Most Innovative
Companies in Consumer Electronics as well as being included in both the Bloomberg Gender-Equality Index
and Human Rights Campaign Foundation’s Corporate Equality Index in 2021.
 2022: THE HIGH-PERFORMANCE & ADAPTIVE COMPUTING LEADER
LEADERSHIP PRODUCT
PORTFOLIO While 2021 was an exceptional year for AMD, I am very excited about
what’s ahead of us in 2022 as we ramp our latest products and launch
our next generation of “Zen 4” CPUs and AMD RDNA 3 GPUs.

\ In notebooks, our AMD Ryzen 6000 series mobile processors

combine the powerful and efficient “Zen 3+” and AMD RDNA 2
CPUs graphics architectures to deliver leadership performance, graphics
and battery life for ultrathin, gaming and commercial notebooks.

\ Our 3rd Gen AMD EPYC processors with AMD 3D V-Cache are the
industry’s first high-performance server processors featuring
advanced 3D die stacking technology, a breakthrough in chip
packaging that delivers leadership performance for technical
GPUs
computing workloads. We will bring the same advanced 3D die
stacking to the PC market with our AMD Ryzen 7 5800X3D desktop
processor that delivers leadership gaming performance.

\ We are on-track to introduce our next-generation 5nm Ryzen and

EPYC processors that will extend our leadership PC and server
FPGAs AND
ADAPTIVE SOCs product portfolios by combining our newest “Zen 4” core with next-
generation memory and I/O technologies and the industry’s most
advanced manufacturing.

\ And for gaming, we plan to deliver another significant leap in

performance and performance-per-watt with the introduction of
our next-generation AMD RDNA 3 GPUs later this year.
SEMI-CUSTOM
SILICON Looking longer term, I am even more excited about the opportunities
ahead now that we have closed the largest semiconductor acquisition
in history. Our acquisition of Xilinx, the industry’s #1 provider of FPGAs
and Adaptive SoCs, brings together two companies with a highly
complementary set of products, customers and markets. In addition
to now offering the industry’s strongest portfolio of leadership CPUs,
DIFFERENTIATED GPUs, FPGAs and Adaptive SoCs, the acquisition significantly expands
SOLUTIONS our R&D scale while also bringing deep, established partnerships
and solutions across a diverse set of new markets where AMD has
traditionally not had a significant presence. This is an exciting start to the next chapter for AMD as we now
have more than 15,000 of the industry’s best engineers working together to deliver differentiated IP and
leadership products.

As we enter the next stage of our journey, AMD has the strongest product portfolio and deepest customer
relationships in our history. We remain focused on aggressively driving our product and technology roadmaps
to set the pace of innovation for high-performance and adaptive computing and driving broader adoption
with customers who now view AMD as a long-term strategic enabler of their products and services.

With our success over the last several years and our strategic acquisition of Xilinx, AMD is now an industry
leader at scale with product leadership across multiple large and diverse markets. While we have accomplished
so much, we have very ambitious goals and believe there is so much more we will accomplish over the coming
years as the semiconductor industry’s premier growth company. Thank you as always for your continued
support and for joining us on this journey.

Dr. Lisa Su
Chair and Chief Executive Officer

CAUTIONARY STATEMENT
This letter contains forward-looking statements, including but not limited to, the features, functionality, availability, timing, performance, expectations, adoption and expected benefits
of AMD’s products and future products; the strong demand for AMD’s products; AMD being well positioned to continue best-in-class growth; being on-track to introduce 5nm Ryzen and
EPYC processors; and the expected benefits of AMD’s acquisition of Xilinx, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that forward-looking statements contained herein involve risk and uncertainties that could cause actual results to differ materially from current expectations. We
urge investors to review in detail the risk and uncertainties in our Securities and Exchange Commission filings, including but not limited to our most recent reports on Forms 10-K and 10-Q.
Advanced Micro Devices, Inc.
2021 ANNUAL REPORT ON FORM 10-K
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 25, 2021
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)
(408) 749-4000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

(Title of each class) (Trading symbol) (Name of each exchange on which registered)

Common Stock, $0.01 par value per share AMD The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ‘ No Í
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 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 Í No ‘
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files): Yes Í 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 definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í 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 has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public
accounting firm that prepared or issued its audit report. Í
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ‘ No Í
As of June 26, 2021, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was
approximately $103.4 billion based on the reported closing sale price of $85.62 per share as reported on The NASDAQ Global Select Market
(NASDAQ) on June 25, 2021, which was the last business day of the registrant’s most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
1,199,303,422 shares of common stock, $0.01 par value per share, as of January 28, 2022.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the 2022 Annual Meeting of Stockholders (2022 Proxy Statement) are incorporated into
Part III hereof. The 2022 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the
registrant’s fiscal year ended December 25, 2021.
 INDEX

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ITEM 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ITEM 6. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . 51
ITEM 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
ITEM 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
ITEM 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ITEM 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . 92

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
ITEM 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 93
ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
ITEM 13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . 93
ITEM 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
ITEM 15. Exhibits, Financial Statements Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
ITEM 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
 PART I

ITEM 1. BUSINESS
Cautionary Statement Regarding Forward-Looking Statements
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 consolidated
financial statements; demand for AMD’s products; the growth, change and competitive landscape of the markets
in which AMD participates; international sales will continue to be a significant portion of total sales in the
foreseeable future; that AMD’s cash, cash equivalents and short-term investment balances, together with the
availability under that certain revolving credit facility (the Revolving Credit Facility) made available to AMD
and certain of its subsidiaries under the Credit Agreement, and our cash flows from operations will be sufficient
to fund AMD’s operations including capital expenditures and purchase commitments over the next 12 months;
AMD’s ability to obtain sufficient external financing on favorable terms, or at all; AMD’s expectation that based
on the information presently known to management, the potential liability related to AMD’s current litigation
will not have a material adverse effect on its financial condition, cash flows or results of operations; anticipated
ongoing and increased costs related to enhancing and implementing information security controls; all unbilled
accounts receivables are expected to be billed and collected within 12 months; revenue allocated to remaining
performance obligations that are unsatisfied which will be recognized over the next 12 months; a small number
of customers will continue to account for a substantial part of AMD’s revenue in the future; and the acquisition
of Xilinx, Inc. is currently expected to close in the first quarter of 2022. For a discussion of the factors that could
cause actual results to differ materially from the forward-looking statements, see “Part I, Item 1A-Risk Factors”
and the “Financial Condition” section set forth in “Part II, Item 7-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 Annual Report on Form 10-K to “AMD,” “we,” “us,” “management,” “our” or the “Company”
mean Advanced Micro Devices, Inc. and our consolidated subsidiaries.

Overview
We are a global semiconductor company primarily offering:
• x86 microprocessors (CPUs), as standalone devices or as incorporated into accelerated processing units
(APUs), chipsets, discrete and integrated graphics processing units (GPUs), data center and professional
GPUs, and development services; and
• server and embedded processors, semi-custom system-on-chip (SoC) products, development services
and technology for game consoles.

From time to time, we may also sell or license portions of our intellectual property (IP) portfolio.

Additional Information
AMD was incorporated under the laws of Delaware on May 1, 1969 and became a publicly held company in
1972. Our common stock is currently listed on The NASDAQ Global Select Market (NASDAQ) under the

1
symbol “AMD”. Our mailing address and executive offices are located at 2485 Augustine Drive, Santa Clara,
California 95054, and our telephone number is (408) 749-4000. For financial information about geographic areas
and for segment information with respect to revenues and operating results, refer to the information set forth in
Note 14 of our consolidated financial statements. We use a 52 or 53 week fiscal year ending on the last Saturday
in December. References in this report to 2021, 2020 and 2019 refer to the fiscal year unless explicitly stated
otherwise.

AMD, the AMD Arrow logo, AMD CDNA, AMD Instinct, AMD RDNA, Athlon, EPYC, FirePro,
FreeSync, Geode, Infinity Fabric, Radeon, Radeon Instinct, Ryzen, Threadripper, and combinations thereof are
trademarks of Advanced Micro Devices, Inc.

Microsoft, Windows, DirectX and Xbox One are either registered trademarks or trademarks of Microsoft
Corporation in the United States and/or other countries. PCIe is a registered trademark of PCI-SIG Corporation.
Chromebook and Stadia are trademarks of Google Inc. Linux is the registered trademark of Linus Torvalds in the
United States and other countries. PlayStation is a registered trademark or trademark of Sony Interactive
Entertainment, Inc. Arm is a registered trademark of ARM Limited (or its subsidiaries) in the United States and/
or elsewhere. Vulkan and the Vulkan logo are registered trademarks of Khronos Group Inc. Apple and Mac Pro
are trademarks of Apple Inc., registered in the United States and/or other countries. Steam and the Steam logo are
trademarks and/or registered trademarks of Valve Corporation in the United States and/or other countries.

Other names are for informational purposes only and are used to identify companies and products and may
be trademarks of their respective owners.

Website Access to Our SEC Filings and Corporate Governance Documents

On the Investor Relations pages of our website, http://ir.amd.com, we post links to our filings with the SEC,
our Principles of Corporate Governance, our Code of Ethics for our executive officers, all other senior finance
executives and certain representatives from legal and internal audit, our Worldwide Standards of Business
Conduct, which applies to our Board of Directors and all of our employees, and the charters of the committees of
our Board of Directors. Our filings with the SEC are posted as soon as reasonably practical after they are
electronically filed with, or furnished to, the SEC. The SEC website, www.sec.gov, contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC. You can
also obtain copies of these documents by writing to us at: Corporate Secretary, AMD, 7171 Southwest Parkway,
M/S B100.T, Austin, Texas 78735, or emailing us at: [email protected]. All of these documents
and filings are available free of charge.

If we make substantive amendments to our Code of Ethics or grant any waiver, including any implicit
waiver, to our principal executive officer, principal financial officer, principal accounting officer, controller or
persons performing similar functions, we intend to disclose the nature of such amendment or waiver on our
website.

The information contained on our website is not incorporated by reference in, or considered to be a part of,
this report.

Pending Acquisition
On October 26, 2020, we entered into an Agreement and Plan of Merger (the Merger Agreement) with
Thrones Merger Sub, Inc., our wholly owned subsidiary (Merger Sub), and Xilinx, Inc. (Xilinx), whereby Merger
Sub will merge with and into Xilinx (the Merger), with Xilinx surviving such Merger as a wholly owned
subsidiary of ours. Under the Merger Agreement, at the effective time of the Merger (the Effective Time), each
share of common stock of Xilinx (Xilinx Common Stock) issued and outstanding immediately prior to the
Effective Time (other than treasury shares and any shares of Xilinx Common Stock held directly by us or Merger

2
Sub) will be converted into the right to receive 1.7234 fully paid and non-assessable shares of our common stock
and, if applicable, cash in lieu of fractional shares, subject to any applicable withholding. As of the signing of the
Merger Agreement, the transaction was valued at $35 billion. The actual valuation of the transaction could differ
significantly from the estimated amount due to movements in the price of our common stock, the number of
shares of Xilinx common stock outstanding on the closing date of the Merger and other factors. The closing of
the Merger is subject to customary conditions, including regulatory approval. On April 7, 2021, our stockholders
voted to approve all the proposals relating to the Merger at a special meeting of stockholders. Xilinx stockholders
also voted to approve their respective proposals relating to the Merger at a Xilinx special meeting held on the
same day. The Merger is currently expected to close in the first quarter of 2022.

Our Industry
We are a global semiconductor company. Semiconductors are components used in a variety of electronic
products and systems. An integrated circuit (IC) is a semiconductor device that consists of many interconnected
transistors on a single chip. Since the invention of the transistor in 1948, improvements in IC process and design
technologies have led to the development of smaller, more complex and more reliable ICs at a lower
cost-per-function.

Our Strategy
AMD is focused on high performance computing technology, software and product leadership. Our strategy
is to create and deliver the world’s leading high-performance CPUs and GPUs, and to integrate these CPUs and
GPUs with hardware and software to build differentiated solutions. We invest in high-performance CPUs for
client systems, as well as for high performance computing solutions, cloud infrastructure and the private and
public cloud environment. We also invest in high-performance GPUs and software for markets such as gaming,
compute, artificial intelligence, cloud gaming, and virtual and augmented reality. We combine our high-
performance CPUs and GPUs to deliver solutions that are differentiated at the chip level, such as our semi-
custom SoCs and APUs, and at the solution level, such as PC and server platforms.

Computing and Graphics Markets

Our Computing and Graphics products address the need for computational and visual data processing in
computing devices that include personal computers, laptops / notebooks, and workstations. In the PC market, we
design CPUs, APUs and GPUs for consumer and commercial desktops, notebooks and workstations. Our CPUs
and APUs are designed to bring performance, efficiency and modern security features to gamers, creators,
consumers and commercial enterprises. Our GPUs address the need for improved visual and data processing in
various computing devices.

Many consumers use PCs as entertainment platforms, in addition to traditional productivity and
communications uses, and therefore value a richer, more visually compelling and immersive experience. As a
result, visual realism and graphical display capabilities are key product differentiation elements among
computing devices. This has led to the increased creation and use of processing-intensive multimedia content for
playing games, capturing media, viewing online videos, editing photos and managing digital content on
computing devices. In turn, these trends have contributed to higher consumer demand for performance graphics
solutions and to manufacturers designing computing devices with these capabilities. Our CPUs and APUs bring
performance, efficiency and modern security features to gamers, creators, consumers and enterprises. Industries
that utilize computer assisted design (CAD), that develop content for media and entertainment markets and that
generate professional visualizations and renderings can benefit greatly from graphics solutions optimized for the
professional graphics market.

In addition to traditional graphics markets, there is a large and growing demand for accelerated computing,
powered by graphics processors in markets such as high performance computing (HPC), artificial intelligence,

3
and Cloud Visualization (Virtual Desktop Infrastructure & Cloud Gaming). Another area of the market for
graphics compute is blockchain technology, which is a decentralized digital ledger used to securely store,
transmit and process sensitive and valuable data. Blockchain applications are typically performed using specially
designed application-specific integrated circuits (ASICs) or a general-purpose CPU or GPU.

Our Computing Products

Our microprocessors are incorporated into computing platforms, which are a collection of technologies that
are designed to work together to provide a more complete computing solution. We believe that integrated,
balanced computing platforms consisting of microprocessors, chipsets (either as discrete devices or integrated
into an SoC) and GPUs (either as discrete GPUs or integrated into an APU or SoC) that work together at the
system level bring end users improved system stability, increased performance and enhanced power efficiency.
In addition, we believe our customers also benefit from an all-AMD platform (consisting of an APU or CPU, a
discrete GPU, and a chipset when needed), as we are able to optimize interoperability, provide our customers a
single point of contact for the key platform components and enable them to bring the platforms to market quickly
in a variety of PC and server system form factors.

We currently base our microprocessors and chipsets on the x86 instruction set architecture and the AMD
Infinity Fabric™, which connects an on-chip memory controller and input/output (I/O) channels directly to one or
more microprocessor cores. We typically integrate two or more processor cores onto a single die, and each core
has its own dedicated cache, which is memory that is located on the semiconductor die, permitting quick access
to frequently used data and instructions. Some of our microprocessors have additional levels of cache such as L2,
or second-level cache, and L3, or third-level cache, to enable fast data access and high-performance.

We focus on continually improving the energy efficiency of our products through our design principles and
innovations in power management technology. To that end, we offer CPUs, GPUs, APUs, SoCs and chipsets
with multiple low power states that are designed to utilize lower clock speeds and voltages to reduce processor
power consumption during active and idle times. The use of intelligent, dynamic power management is designed
to create lower energy use by allowing compute applications to be completed quickly and efficiently, enabling a
return to the ultra-low power idle state. We also continually strive to improve security features in our products to
help our customers protect their sensitive information. To that end, we offer integrated on-chip security features
and other security features our customers can choose to enable.

Desktop Microprocessors. Our microprocessors for desktop platforms currently include the AMD Ryzen
series processors and AMD Athlon processors. Our AMD Ryzen 5000 Series desktop processor family powered
by our “Zen 3” core architecture has up to 16 cores and delivers across the board leadership performance for
gamers and content creators.

Notebook Microprocessors. Our mobile APUs, including AMD Ryzen and AMD Athlon mobile
processors for the consumer and commercial markets, combine both high levels of performance and efficiency
for notebook PC platforms. In January 2021, we launched our AMD Ryzen 5000 Series Mobile Processors,
which are powered with our “Zen 3” core architecture and are designed for gamers, creators and professionals.

Commercial Microprocessors. We offer enterprise-class desktop and notebook PC solutions sold as AMD
PRO Mobile and AMD PRO desktop processors with Radeon graphics for the commercial market. AMD Ryzen
PRO, AMD Threadripper PRO and AMD Athlon PRO series solutions are designed to provide enterprise
customers with the performance, security capabilities and business features such as enhanced security and
manageability, platform longevity and extended image stability. We launched the AMD Ryzen PRO 5000 Series
Mobile Processors powered with our “Zen 3” core architecture for business laptops in March 2021.

Chipsets. We offer a full suite of chipset products to support our AMD Ryzen and Threadripper platforms,
including the X570 chipset which supports PCIe® 4.0 (fourth generation Peripheral Component Interconnect

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Express motherboard interface) designed for enthusiast desktop platforms. We offer the B550 chipset and the
A520 chipset for socket AM4 for 3rd Gen AMD Ryzen desktop processors and 5000 processors. In addition, we
continue to offer the B450 and A320 chipsets that are combined with AMD Ryzen processors for the AM4
desktop platform for the performance and affordable mainstream platforms segments. In the High-End Desktop
(HEDT) and Workstation segments, we offer the TRX40 and the WRX80 chipsets, respectively, to support the
3rd Gen Ryzen Threadripper and Threadripper PRO platforms offering high speed I/O and platform bandwidth.

Our Graphics Products

Graphics processing is a fundamental component across many of our products and can be found in an APU,
GPU, SoC or a combination of a discrete GPU with one of the other foregoing products working in tandem. Our
customers generally use our graphics solutions to enable or increase the speed of rendering images, to help
improve image resolution and color definition, and increasingly to process massive data sets for cloud and data
center applications. We develop our graphics products for use in various computing devices and entertainment
platforms, including desktop PCs, notebook PCs, All-in-Ones (AIOs), professional workstations, and the data
center. With each of our graphics products, we have available drivers and supporting software packages that
enable the effective use of these products under a variety of operating systems and applications. We have
developed RDNA™ 2, a high performing and power efficient graphics architecture, which is the foundation for
next-generation PC gaming graphics, the PlayStation 5 and Xbox Series S and X consoles. Additionally, our
RDNA 2 architecture supports advanced graphics features such as ray tracing, Infinity Cache and variable rate
shading. Our hardware and software components are used to implement ray tracing technology to simulate the
paths of light rays moving through a movie or game scene, resulting in photorealistic 3D images.

Our APUs deliver visual processing functionality for value and mainstream PCs by integrating a CPU and a
GPU on a single chip, while discrete GPUs (which are also known as dGPUs) offer high-performance graphics
processing across all platforms. AMD Accelerated Parallel Processing or General Purpose GPU (GPGPU) refers
to a set of advanced hardware and software technologies that enable discrete AMD GPUs, working in concert
with the CPU, to accelerate computational tasks beyond traditional CPU processing by utilizing the vast number
of GPU cores while working with the CPU to process information cooperatively. In addition, computing devices
with heterogeneous computing features can run computationally-intensive tasks more efficiently, which we
believe provides a superior application experience to the end user. Moreover, heterogeneous computing allows
for the elevation of the GPU to the same level as the CPU for memory access, queuing, and execution.

Discrete Desktop and Notebook Graphics. Our AMD Radeon™ series discrete GPU processors for
desktop and notebook PCs support current generation application program interfaces (APIs) like DirectX® 12
Ultimate and Vulkan®, support new displays using AMD FreeSync™, AMD FreeSync Premium, and AMD
FreeSync Premium Pro technologies, and are designed to support virtual reality (VR) in PC platforms. Our AMD
Radeon Software expands remote gaming functionality and enables new features and customization capabilities.
In addition, we also offer tools for game developers such as our AMD FidelityFX™ open-source image quality
software toolkit that helps deliver improved visual quality with minimal performance overhead. Our latest
FidelityFX Super Resolution (FSR) uses upscaling technologies to help boost frame rates in games.

We offer AMD Radeon RX 6000M and RX 6000S series mobile graphics for high-performance gaming
notebooks. Our AMD Advantage Design™ Framework, a collaboration with our global PC partners, delivers
high-performance gaming notebooks by combining AMD Radeon RX series mobile graphics, AMD Software
and AMD Ryzen series mobile processors with AMD smart technologies to deliver best-in-class gaming
experiences. We continued the roll-out of the AMD RDNA 2 architecture in the desktop market that began in
2020 with additional Radeon RX 6000 series graphics card launches. In July 2021, we announced the AMD
Radeon RX 6600 XT graphics card, designed to deliver high-framerate, high-fidelity and highly responsive
1080p gaming experience.

Professional Graphics. Our AMD Radeon PRO family of professional graphics products includes multi-
view graphics cards and GPUs designed for integration in mobile and desktop workstations. AMD Radeon PRO

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graphics cards are designed for demanding use cases such as design and manufacturing for CAD, and media and
entertainment for broadcast and animation pipelines. AMD Radeon PRO supports end users utilizing GPU
accelerated visualization for construction, architecture and mechanical design through gaming and visualization
engines on high resolution displays; Radeon VR Creator cards are also capable of supporting this functionality
with VR and augmented reality (AR). Software drivers for AMD Radeon PRO cards are designed to deliver high
stability and performance across a wide variety of software packages including those requiring professional
software vendor certifications. Our AMD Radeon PRO W6000 series workstation graphics include AMD RDNA
2 architecture and AMD Infinity Cache and are designed to reduce latency and power consumption and to
optimize design workloads, complex design and engineering simulations along with image and video editing
applications. In July 2021, we announced the AMD Radeon RX 6600 XT graphics card, designed to deliver high-
framerate, high-fidelity and highly responsive 1080p gaming experience. In August 2021, we also introduced the
Radeon PRO W6000X series GPUs for the Mac Pro to power a variety of professional applications and
workloads, including 3D rendering, 8K video composition and color correction.

Data Center Graphics. Our AMD Instinct™ family of GPU products are specifically designed to address
the growing demand for compute-accelerated data center workloads, including deep learning training and a range
of HPC applications where the compute capabilities of GPUs provide additional performance. Combined with
our AMD ROCm™ open software platform, our customers can deliver differentiated acceleration platforms to
address the next-generation of computing challenges while minimizing power and space needs in the data center.

In November, 2021, we introduced the AMD Instinct MI200 series accelerators based on the 2nd Gen AMD
CDNA architecture, which is optimized for HPC and AI/ML (Artificial Intelligence/Machine Learning)
workloads. The MI200 series includes the MI250 Open Accelerator Module (OAM) form factor for purpose-built
HPC/AI platforms and the MI210 PCIe form factor for mainstream server platforms. We also introduced the
AMD Infinity Hub which provides end users with a growing catalog of containerized HPC applications and ML
frameworks that are ported and optimized for AMD Instinct accelerators and AMD ROCm.

Cloud Gaming and VDI. Our visual cloud GPU offerings include products in the Radeon Instinct and
Radeon PRO V families. Our visual cloud data center GPUs include a range of solutions tailored towards
workloads requiring remote visualization, such as Desktop-as-a-Service, Workstation-as-a-Service and Cloud
Gaming. These GPUs are designed to cover the full range of graphical application acceleration, from light
desktop to workstation tasks, multi-GPU high end rendering, and cloud gaming activities. Our software solutions
carry certification for a number of professional software vendor applications as well as being optimized for
modern gaming titles. In November 2021, AMD introduced the Radeon PRO V620, a data center GPU using the
RDNA 2 architecture and incorporating new capabilities including ray tracing acceleration and Infinity Cache.

The Enterprise, Embedded and Semi-Custom Markets

Our Enterprise, Embedded and Semi-Custom products address the need for computational and visual data
processing. We serve these markets with our CPU, GPU, APU, and customized SoC products.

Server. A server is a computer system that performs services for connected customers as part of a client-
server architecture. Many servers are designed to run an application or applications often for extended periods of
time with minimal human intervention. Examples of servers include cloud, web, e-mail, print and on-premise
servers. These servers can run a variety of applications, including business intelligence, enterprise resource
planning, customer relationship management and advanced scientific or engineering models to solve advanced
computational problems in disciplines ranging from financial modeling to weather forecasting to oil and gas
exploration. Servers are also used in cloud computing, which is a computing model where data, applications and
services are delivered over the internet or an intranet which can be rapidly provisioned and released with minimal
effort. Today’s data centers require new technologies and configuration models to meet the demand driven by the
growing amount of data that needs to be stored, accessed, analyzed and managed. Servers must be efficient,
scalable and adaptable to meet the compute characteristics of new and changing workloads. We leverage our

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technology to address the computational and visual data processing needs in the data center market where we
design CPUs, GPUs, and software for HPC, cloud gaming, and cloud and enterprise customers.

Embedded. Embedded products address computing needs in enterprise-class telecommunications,

networking, security, storage systems and thin clients, which are computers that serve as an access device on a
network. Typically, AMD embedded products are used in applications that require high to moderate levels of
performance, where key features may include relatively low power, small form factors, and 24x7 operations.
High-performance graphics are important in some embedded systems. Support for Linux®, Windows® and other
operating systems as well as for increasingly sophisticated applications are also critical for some customers.
Other requirements may include meeting rigid specifications for industrial temperatures, shock, vibration and
reliability. The embedded market has moved from developing proprietary, custom designs to leveraging industry-
standard instruction set architectures and processors as a way to help reduce costs and speed time to market.

Semi-Custom. We leverage our core IP, including our graphics and processing technologies to develop
semi-custom solutions. In this market, semiconductor suppliers work alongside system designers and
manufacturers to enhance the performance and overall user experience for semi-custom customers. We have used
this collaborative co-development approach with many of today’s leading game console and handheld PC
gaming manufacturers and can also address customer needs in many other markets. We leverage our existing IP
to create a variety of products tailored to a specific customer’s needs, ranging from complex fully-customized
SoCs to more modest adaptations and integrations of existing CPU, APU or GPU products.

Our Enterprise, Embedded and Semi-Custom Products

Server Processors. Our microprocessors for server platforms currently include the AMD EPYC™ Series
processors. We launched our 3rd Gen AMD EPYC processors, the AMD EPYC 7003 Series CPUs, in March
2021. Our new AMD EPYC 7003 Series processors are powered by our “Zen 3” core architecture and are
designed to support HPC, cloud and enterprise workloads.

Embedded Processors. Our products for embedded platforms include AMD Embedded EPYC CPUs,
AMD Embedded Ryzen V-Series APUs, CPUs and SoCs, AMD Embedded Ryzen R-Series APUs, CPUs and
SoCs, AMD Embedded Ryzen G-Series SoC platform and AMD Embedded Radeon GPUs. Our embedded
processors and GPUs are designed to support high performance and bandwidth network connectivity and
security, high-performance storage requirements for enterprise and cloud infrastructure, 3D graphics
performance and 4K multimedia requirements of automotive infotainment systems.

Semi-Custom Products. Our semi-custom products are tailored, co-developed, high-performance,

customer-specific solutions based on AMD CPU, GPU and multi-media technologies. We work closely with our
customers to define solutions to precisely match the requirements of the device or application. We developed the
semi-custom SoC products that power both the Sony PlayStation® 5 as well as the Microsoft® Xbox Series X™
and Microsoft® Xbox Series S™ game consoles. We also recently partnered with Valve to create a custom APU
optimized for handheld gaming to power the Steam Deck™.

Sales and Marketing

We sell our products through our direct sales force and through independent distributors and sales
representatives in both domestic and international markets. Our sales arrangements generally operate on the basis
of product forecasts provided by the particular customer, but do not typically include any commitment or
requirement for minimum product purchases. We primarily use purchase orders, sales order acknowledgments
and contractual agreements as evidence of our sales arrangements. Our agreements typically contain standard
terms and conditions covering matters such as payment terms, warranties and indemnities for issues specific to
our products.

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 We generally warrant that our products sold to our customers will conform to our approved specifications
and be free from defects in material and workmanship under normal use and conditions for one year. We offer up
to three-year limited warranties for certain product types, and sometimes provide other warranty periods based on
negotiated terms with certain customers.

We market and sell our latest products under the AMD trademark. Our processors include: AMD Ryzen™,
AMD Ryzen™ PRO, Ryzen™ Threadripper™, Ryzen™ Threadripper™ PRO, AMD Athlon™, AMD Athlon™
PRO, AMD FX™, AMD A-Series, and AMD PRO A-Series. These products service desktop and notebook
personal computers.

Our product brand for the consumer graphics market is AMD Radeon™ graphics, and AMD Embedded
Radeon graphics is our product brand for the embedded graphics market.

Our product brand for professional graphics products are AMD Radeon PRO and AMD FirePro™ graphics.

Our product brands for data center graphics are Radeon Instinct™, Radeon PRO V-series, and AMD
Instinct™ accelerators for servers. We also market and sell our chipsets under AMD trademarks.

Our product brand for server microprocessors is AMD EPYC™ processors.

We also sell low-power versions of our AMD Athlon, as well as AMD Geode™, AMD Ryzen, AMD EPYC,
AMD R-Series and G-Series processors as embedded processor solutions.

We market our products through direct marketing and co-marketing programs. In addition, we have
cooperative advertising and marketing programs with customers and third parties, including market development
programs, pursuant to which we may provide product information, training, marketing materials and funds.
Under our co-marketing development programs, eligible customers can use market development funds as
reimbursement for advertisements and marketing programs related to our products and third-party systems
integrating our products, subject to meeting defined criteria.

Customers
Our microprocessor customers consist primarily of original equipment manufacturers (OEMs), large public
cloud service providers, original design manufacturers (ODMs), system integrators and independent distributors
in both domestic and international markets. ODMs provide design and/or manufacturing services to branded and
unbranded private label resellers, OEMs and system builders. Customers of our microprocessor products also
include online and brick and mortar retailers. Our graphics product customers include the foregoing as well as
add-in-board manufacturers (AIBs).

Customers of our chipset products consist primarily of PC OEMs, often through ODMs or other contract
manufacturers, who build the OEM motherboards, as well as desktop and server motherboard manufacturers who
incorporate chipsets into their channel motherboards.

We work closely with our customers to define product features, performance and timing of new products so
that the products we are developing meet our customers’ needs. We also employ application engineers to assist
our customers in designing, testing and qualifying system designs that incorporate our products. We believe that
our commitment to customer service and design support improves our customers’ time-to-market and fosters
relationships that encourage customers to use the next generation of our products.

We also work with our customers to create differentiated products that leverage our CPU, GPU and APU
technology. Certain customers pay us non-recurring engineering fees for design and development services and a
purchase price for the resulting products.

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 Two customers, A and B, accounted for 14% and 11%, respectively, of our consolidated net revenue for the
year ended December 25, 2021. Sales to Customer A consisted of products from our Enterprise, Embedded and
Semi-Custom segment, and sales to Customer B consisted of products from our Computing and Graphics
segment. A loss of either of these customers would have a material adverse effect on our business.

Original Equipment Manufacturers

We focus on three types of OEM partners: multi-nationals, selected regional accounts and some local
system integrators, who target commercial and consumer end customers of all sizes. Large multi-nationals and
regional accounts are the core of our OEM partners’ business; however, we are increasingly focused on the Value
Added Reseller (VAR) channel which resells OEM systems to the mid-market and the small and medium
business (SMB) segments. Additionally, we have increased our focus on global system integrators, which resell
OEM systems, coupled with their software and services solutions into Enterprise, HPC and Cloud Service
Provider Customers. Our OEM customers include numerous foreign and domestic manufacturers of servers and
workstations, desktops, notebooks, PC motherboards and game consoles.

Third-Party Distributors
Our authorized channel distributors resell to sub-distributors and mid-sized and smaller OEMs and
ODMs. Typically, distributors handle a wide variety of products, and may include those that compete with our
products. Distributors typically maintain an inventory of our products. In most instances, our agreements with
distributors protect their inventory of our products against price reductions and provide return rights with respect
to any product that we have removed from our price book that is less than 12 months older than the
manufacturing code date. In addition, some agreements with our distributors may contain standard stock rotation
provisions permitting limited levels of product returns.

Add-in-Board (AIB) Manufacturers and System Integrators

We offer component-level graphics and chipset products to AIB manufacturers who in turn build and sell
board-level products using our technology to system integrators (SIs), retail buyers and sub distributors. Our
agreements with AIBs protect their inventory of our products against price reductions. We also sell directly to
our SI customers. SIs typically sell from positions of regional or product-based strength in the market. They
usually operate on short design cycles and can respond quickly with new technologies. SIs often use discrete
graphics solutions as a means to differentiate their products and add value to their customers.

Competition in the Computing and Graphics Segment

The markets in which we participate are highly competitive. Our primary competitor in the supply of
microprocessors is Intel Corporation (Intel). A variety of companies provide or have developed ARM-based
microprocessors and platforms. ARM-based designs are being used in the PC market, which could lead to further
growth and development of the ARM ecosystem. In 2020, NVIDIA Corporation (NVIDIA), our principal
competitor in the discrete graphics market, announced that it had entered into an agreement to acquire ARM
Holdings. Our ability to compete with companies who use ARM-based solutions depends on our ability to timely
design and bring to market energy-efficient, high-performing products at an attractive price point.

In the graphics market, our principal competitor in the supply of discrete graphics is NVIDIA who is the
market share leader. Intel also manufactures and sells embedded graphics processors and integrated graphics
processor (IGP) chipsets and is a dominant competitor with respect to this portion of our business. Also, Intel has
developed their own high-end discrete GPUs and has announced that they have developed gaming-focused
discrete graphics that will release in 2022. Other competitors include suppliers of discrete graphics, embedded
graphics processors and integrated graphics processor (IGP) chipsets. Some of our competitors are smaller
companies, which may have greater flexibility to address specific market needs, but less financial resources to do

9
so. We believe that the growing complexity of graphics processors and the associated research and development
costs represent a high and growing barrier to entry in this market. With respect to integrated graphics, higher unit
shipments of our APUs and Intel’s integrated graphics may drive computer manufacturers to reduce the number
of systems they build paired with discrete graphics components, particularly for notebooks, because they may
offer satisfactory graphics performance for most mainstream PC users at a lower cost. For GPU data center
products, our principal competitor is NVIDIA, which established its market share in HPC and machine learning
through its CUDA software platform. Another competitor, Intel, builds products for acceleration in the data
center, such as Intel Xe or Habana AI processors. Other competitors include numerous deep learning accelerator
companies, consisting mostly of early to late stage start-ups. Large cloud service providers have also shown
interest in building their own products to accelerate AI.

Competition in the Enterprise, Embedded and Semi-Custom Segment

In the server market, we compete against Intel with our CPU server products and NVIDIA with our GPU
server products. A variety of companies provide or have developed ARM-based microprocessors and platforms.
ARM-based designs are being used in the server market, which could lead to further growth and development of
the ARM ecosystem. In 2020, NVIDIA announced that it had entered into an agreement to acquire ARM
Holdings. Our ability to compete with companies who use ARM-based solutions depends on our ability to timely
design and bring to market energy-efficient, high-performing products at an attractive price point.

We are the market share leader in semi-custom game console products, where graphics performance is
critical, and where we compete primarily against NVIDIA.

Research and Development

We focus our research and development activities on improving product performance and enhancing
product design. Our main area of focus is on delivering the next generation of CPU and GPU IP, and designing
that IP into our SoCs for our next generation of products, with, in each case, improved system performance and
performance-per-watt characteristics. For example, we are focusing on improving the battery life of our APU
products for notebooks and the performance and power efficiency of our discrete GPUs and our microprocessors
for servers. In September 2021, we announced our goal to deliver a 30x increase in energy efficiency of EPYC
CPUs and Instinct GPU accelerators by 2025. Another important area of focus is on HPC, which has traditionally
focused on scientific computing and supercomputers. We are also focusing on delivering a range of low-power
integrated platforms to serve key markets, including commercial clients, mobile computing and gaming. We
believe these platforms will bring customers increased performance and energy efficiency. We are also focusing
on ways to increase cores and modularity in design through our implementation of chiplet technology, where the
typical monolithic chip is broken into different smaller units called a chiplet. We are also working on innovations
in packaging technology for chiplets, such as 2D and 3D packaging. For example, in November 2021 we
announced our 3D V-Cache packaging technology which stacks dies three dimensionally for improved
performance. We also work on advanced memory technologies. As SoC technology advances, the memory can
sometimes limit CPU performance and we work on improving memory technology to improve performance.
AMD worked with the JEDEC standard bodies and participating companies to establish a new industry memory
standard, high bandwidth memory (HBM). HBM is a type of memory chip with lower power consumption and
ultra-wide communication lanes to improve performance and energy efficiency. HBM memory chips are
vertically stacked, like floors in a skyscraper to shorten the distance of the information being communicated.
Another area of focus is machine intelligence which is the platform for the growing field of machine learning.
Our CPUs, GPUs, accelerators, and APUs offer the computation capability and flexibility required for various
machine learning deployments. We also work with industry leaders on process technology, software and other
functional intellectual property and with others in the industry and industry consortia to conduct early stage
research and development. We conduct product and system research and development activities for our products
in the United States with additional design and development engineering teams, located in Canada, China, India,
Singapore and Taiwan, who undertake specific activities at the direction of our U.S. headquarters.

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Manufacturing Arrangements and Assembly and Test Facilities
Third-Party Wafer Foundry Facilities
We have foundry arrangements with Taiwan Semiconductor Manufacturing Company Limited (TSMC) for
the production of wafers for our products at 7 nanometer (nm) or smaller nodes.

We are also a party to a Wafer Supply Agreement (WSA) with GLOBALFOUNDRIES Inc. (GF), with
respect to wafer purchases at the 12 nm and 14 nm technology nodes.

Other Third-Party Manufacturers

We outsource board-level graphics product manufacturing to third-party manufacturers.

Assembly, Test, Mark and Packaging Facilities

Wafers for our products under the Computing and Graphics and the Enterprise, Embedded and Semi-
Custom segments are delivered from third-party foundries to our assembly, test, mark and packaging partners
located in the Asia-Pacific region who package and test our final semiconductor products. We are party to two
assembly, test, mark and pack (ATMP) joint ventures (collectively, the ATMP JVs) with Tongfu
Microelectronics Co., Ltd. The majority of our ATMP services are provided by the ATMP JVs.

Intellectual Property and Licensing

We rely on contracts and intellectual property rights to protect our products and technologies from
unauthorized third-party copying and use. Intellectual property rights include copyrights, patents, patent
applications, trademarks, trade secrets and mask work rights. As of December 25, 2021, we had approximately
4,000 patents in the United States and approximately 1,600 patent applications pending in the United States. In
certain cases, we have filed corresponding applications in foreign jurisdictions. Including United States and
foreign matters, we have approximately 10,000 patent matters worldwide consisting of approximately 6,800
issued patents and 3,300 patent applications pending. We expect to file future patent applications in both the
United States and abroad on significant inventions, as we deem appropriate. We do not believe that any
individual patent, or the expiration of any patent, is or would be material to our business.

As is typical in the semiconductor industry, we have numerous cross-licensing and technology exchange
agreements with other companies under which we both transfer and receive technology and intellectual property
rights. We have acquired various licenses from external parties to certain technologies that are implemented in
our products, including our IP cores and devices. These licenses support our continuing ability to make and sell
our products. We have also acquired licenses to certain proprietary software, open-source software, and related
technologies, such as compilers, for our design tools. Continued use of such software and technology is important
to the operation of the design tools upon which our customers depend.

Backlog
Sales are made primarily pursuant to purchase orders for current delivery or agreements covering purchases
over a period of time. Although such orders or agreements may provide visibility into future quarters, they may
not necessarily be indicative of actual sales for any succeeding period as some of these orders or agreements may
be revised or canceled without penalty. With respect to our semi-custom SoC products, our orders and
agreements are more stringent resulting in meaningful backlog for the coming quarter.

Seasonality
Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the
second half of the year than in the first half of the year, although market conditions and product transitions could
impact these trends.

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Human Capital
As of December 25, 2021, we had approximately 15,500 employees in our global workforce. We believe we
are at our best when our culture of innovation, creative minds and people from all kinds of backgrounds work
together in an engaging and open environment. Areas of focus for us include the following:

Mission, Culture, and Engagement

Our History—Founded in 1969 as a Silicon Valley start-up, the AMD journey began with dozens of
employees focused on leading-edge semiconductor products. From those modest beginnings, we have grown into
a global company achieving many important industry firsts along the way. Today, we develop high-performance
computing and visualization products to solve some of the world’s toughest and most interesting challenges.

Our Vision—High performance computing is transforming our lives.

Our Mission—Build great products that accelerate next-generation computing experiences.

Our employees are driven by this vision and mission. Innovation occurs when creative minds and diverse
perspectives from all over the world work together. This is the foundation of our unique culture and the reason
why AMD employees are among the most engaged in our industry.

We conduct a confidential annual survey of our global workforce to measure our culture, engagement, and
manager quality. The results are reviewed by the AMD Board of Directors and acted upon by our senior
leadership team and individual managers at every level. Results from our 2021 survey reported scores that
continued to be among the very best for global companies in the technology industry. Our employees described
our culture as inclusive, innovative, open, and respectful, and rated the quality of our managers among the top
10% of our technology industry peers.

Diversity, Belonging and Inclusion

Our diverse and inclusive workforce encourages employees to share their opinions and different
perspectives. We believe that building a diverse talent pipeline, encouraging a culture of respect and belonging,
and increasing inclusion of unique and underrepresented voices makes AMD stronger. Our Employee Resource
Groups encourage employee engagement and play an important role in our culture. In 2021, we were recognized
for the fifth consecutive year by the Human Rights Campaign Foundation as a Best Place to Work for LGBTQ+
equality and were included in Bloomberg’s Gender Equality Index for the third consecutive year.

We are focused on hiring and developing underrepresented groups and women leaders. We are proud to be
led by a highly regarded CEO who has won many esteemed awards for her business and leadership prowess. In
2021, Dr. Lisa Su received the “Woman Innovation Award” from the Global Semiconductor Alliance and she
was listed among Barron’s World’s Best CEOs and Forbes’ World’s Most Powerful Women for her strategic
vision and successful company turn around. In addition, Dr. Su was appointed by President Biden to the
President’s Council of Advisors on Science and Technology.

Total Rewards
We invest in our workforce by offering competitive salaries, incentives, and benefits to ensure that we
continue to attract and retain the industry’s best and brightest. Our rewards are guided by employees’ preferences
and the market for talent. Based on this, we grew headcount by over 20% in 2021 to support the substantial
growth in the business. We have a strong pay for performance culture that we believe drives superior results. Our
employees have benefited from our robust financial results with very strong short-term and long-term incentives.
Cash bonuses have exceeded target levels. Stock awards, which drive an ownership mentality among employees,
create considerable income for our employees.

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Development
We offer our employees opportunities to advance their careers at AMD. We are focused on leadership
progression and encourage our employees to take advantage of new opportunities. Our manager and leadership
development programs are highly rated and we provide specialized development programs for our employees.

Environmental Regulations
Our operations and properties have in the past been and continue to be subject to various United States and
foreign laws and regulations, including those relating to materials used in our products and manufacturing
processes, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and
hazardous wastes and remediation of contamination. These laws and regulations require our suppliers to obtain
permits for operations making our products, 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 at all times 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. 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 facilities or other environmental or natural resource damage. While we have budgeted for foreseeable
associated expenditures, we cannot assure you that future environmental legal requirements will not become
more stringent or costly in the future. Therefore, we cannot assure you that our 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 will not have a material adverse effect on us.

Environmental laws are complex, change frequently and have tended to become more stringent over time.
For example, the European Union (EU) and China are two among a growing number of jurisdictions that have
enacted restrictions on the use of lead and other materials in electronic products. These regulations affect
semiconductor devices and packaging. 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. A number of jurisdictions including the EU, Australia, California
and China are developing or have finalized market entry or public procurement regulations for computers and
servers based on ENERGY STAR specifications as well as additional energy consumption limits. There is the
potential for certain of our products being excluded from some of these markets which could materially adversely
affect us.

Certain environmental laws, including the U.S. Comprehensive, Environmental Response, Compensation
and Liability Act of 1980, or the Superfund Act, impose strict or, under certain circumstances, joint and several
liability on current and previous owners or operators of real property for the cost of removal or remediation of
hazardous substances and impose liability for damages to natural resources. These laws often impose liability
even if the owner or operator did not know of, or was not responsible for, the release of such hazardous
substances. These environmental laws also assess liability on persons who arrange for hazardous substances to be
sent to disposal or treatment facilities when such facilities are found to be contaminated. Such persons can be
responsible for cleanup costs even if they never owned or operated the contaminated facility. We are named as a
responsible party on Superfund clean-up orders for three sites in Sunnyvale, California that are on the National
Priorities List. Since 1981, we have discovered hazardous material releases to the groundwater from former
underground tanks and proceeded to investigate and conduct remediation at these three sites. The chemicals
released into the groundwater were commonly used in the semiconductor industry in the United States in the
wafer fabrication process prior to 1979.

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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, operations and
financial results.

Economic and Strategic Risks

• Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may
limit our ability to compete effectively on a level playing field.
• Global economic and market uncertainty may adversely impact our business and operating results.
• The loss of a significant customer may have a material adverse effect on us.
• The ongoing novel coronavirus (COVID-19) pandemic could materially adversely affect our business,
financial condition and results of operations.
• The markets in which our products are sold are highly competitive.
• 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.
• 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.
• Our operating results are subject to quarterly and seasonal sales patterns.
• If we cannot adequately protect our technology or other intellectual property in the United States and
abroad, through patents, copyrights, trade secrets, trademarks and other measures, we may lose a
competitive advantage and incur significant expenses.
• Unfavorable currency exchange rate fluctuations could adversely affect us.

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.
• If essential equipment, materials, substrates or manufacturing processes are not available to manufacture
our products, we could be materially adversely affected.
• Failure to achieve expected manufacturing yields for our products could negatively impact our financial
results.
• The success of our business is dependent upon our ability to introduce products on a timely basis with
features and performance levels that provide value to our customers while supporting and coinciding
with significant industry transitions.
• Our revenue from our semi-custom SoC products is dependent upon our semi-custom SoC products
being incorporated into customers’ products and the success of those products.

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• Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
• IT outages, data loss, data breaches and cyber-attacks could compromise our intellectual property or
other sensitive information, be costly to remediate or cause significant damage to our business,
reputation and operations.
• Uncertainties involving the ordering and shipment of our products could materially adversely affect us.
• Our ability to design and introduce new products in a timely manner is dependent upon 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.
• 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 is dependent upon the proper functioning of our internal business processes and
information systems and modification or interruption of such systems may disrupt our business,
processes and internal controls.
• If our products are not compatible with some or all industry-standard software and hardware, we could
be materially adversely affected.
• Costs related to defective products could have a material adverse effect on us.
• If we fail to maintain the efficiency of our supply chain as we respond to changes in customer demand
for our products, our business could be materially adversely affected.
• We outsource to third parties certain supply-chain logistics functions, including portions of our product
distribution, transportation management and information technology support services.
• Our inability to effectively control the sales of our products on the gray market could have a material
adverse effect on us.

Legal and Regulatory Risks

• Government actions and regulations such as export administration regulations, 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 that could cause us to
incur substantial costs or pay substantial damages or prohibit us from selling our products.
• We are subject to environmental laws, conflict minerals-related provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act as well as a variety of other laws or regulations that could
result in additional costs and liabilities.

Xilinx Merger and Acquisition Risks

• Acquisitions, joint ventures and/or investments, including our previously announced acquisition of
Xilinx, and the failure to integrate acquired businesses, could disrupt our business and/or dilute or
adversely affect the price of our common stock.

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 • Our ability to complete the Xilinx Merger is subject to closing conditions, including the receipt of
consents and approvals from governmental authorities, which may impose conditions that could
adversely affect us or cause the Xilinx Merger not to be completed.
• Whether or not it is completed, the announcement and pendency of the Xilinx Merger could cause
disruptions in our business, which could have an adverse effect on our business and financial results.
• Any impairment of the combined company’s tangible, definite-lived intangible or indefinite-lived
intangible assets, including goodwill, may adversely impact the combined company’s financial position
and results of operations.

Liquidity and Capital Resources Risks

• The agreements governing our notes and our Revolving Credit Facility impose restrictions on us that
may adversely affect our ability to operate our business.
• Our indebtedness could adversely affect our financial position and prevent us from implementing our
strategy or fulfilling our contractual obligations.
• We may not be able to generate sufficient cash to meet our working capital requirements. Also, if we
cannot generate sufficient revenue and operating cash flow, we may face a cash shortfall and be unable
to make all of our planned investments in research and development or other strategic investments.

General Risks
• Our worldwide operations are subject to political, legal and economic risks and natural disasters, which
could have a material adverse effect on us.
• We may incur future impairments of goodwill and technology license purchases.
• Our inability to continue to attract and retain qualified personnel may hinder our business.
• Our stock price is subject to volatility.
• Worldwide political conditions may adversely affect demand for our products.

For a more complete discussion of the material risks facing our business, see below.

Economic and Strategic Risks

Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit
our ability to compete effectively on a level playing field.
Intel Corporation (Intel) has been the market share leader for microprocessors for many years. Intel’s market
share, margins and significant financial resources enable it to market its products aggressively, to target our
customers and our channel partners with special incentives and to influence customers who do business with us.
These aggressive activities have in the past resulted in lower unit sales and a lower average selling price for
many of our products and adversely affected our margins and profitability.

Intel exerts substantial influence over computer manufacturers and their channels of distribution through
various brand and other marketing programs. As a result of Intel’s position in the microprocessor market, Intel
has been able to control x86 microprocessor and computer system standards and benchmarks and to dictate the
type of products the microprocessor market requires of us. Intel also dominates the computer system platform,
which includes core logic chipsets, graphics chips, networking devices (wired and wireless), non-volatile storage
and other components necessary to assemble a computer system. Additionally, Intel is able to drive de facto
standards and specifications for x86 microprocessors that could cause us and other companies to have delayed
access to such standards.

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 As long as Intel remains in this dominant position, we may be materially adversely affected by Intel’s
business practices, including rebating and allocation strategies and pricing actions, designed to limit our market
share and margins; product mix and introduction schedules; product bundling, marketing and merchandising
strategies; exclusivity payments to its current and potential customers, retailers and channel partners; de facto
control over industry standards, and heavy influence on PC manufacturers and other PC industry participants,
including motherboard, memory, chipset and basic input/output system (BIOS) suppliers and software companies
as well as the graphics interface for Intel platforms; and marketing and advertising expenditures in support of
positioning the Intel brand over the brand of its original equipment manufacturer (OEM) customers and retailers.

Intel has substantially greater financial resources than we do and accordingly spends substantially greater
amounts on marketing and research and development than we do. We expect Intel to continue to invest heavily in
marketing, research and development, new manufacturing facilities and other technology companies. To the
extent Intel manufactures a significantly larger portion of its microprocessor products using more advanced
process technologies, or introduces competitive new products into the market before we do, we may be more
vulnerable to Intel’s aggressive marketing and pricing strategies for microprocessor products.

Intel could also take actions that place our discrete graphics processing units (GPUs) at a competitive
disadvantage, including giving one or more of our competitors in the graphics market, such as NVIDIA
Corporation, preferential access to its proprietary graphics interface or other useful information or restricting
access to external companies. Also, Intel has developed their own high-end discrete GPUs and has announced
that they have developed gaming-focused discrete graphics that will be released in 2022. Intel’s position in the
microprocessor market, its introduction of competitive new products, its existing relationships with top-tier
OEMs, and its aggressive marketing and pricing strategies could result in lower unit sales and lower average
selling prices for our products, which could have a material adverse effect on us.

Global economic and market uncertainty may adversely impact our business and operating results.
Uncertain global economic conditions have in the past and may in the future adversely impact our business,
including, without limitation, a slowdown in the Chinese economy, one of the largest global markets for desktop
and notebook PCs. Uncertainty in the worldwide economic environment or other unfavorable changes in
economic conditions, such as inflation, interest rates or recession, may negatively impact consumer confidence
and spending causing our customers to postpone purchases. In addition, during challenging economic times, our
current or potential future customers may experience cash flow problems and as a result may modify, delay or
cancel plans to purchase our products. 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. The risk related to our customers potentially defaulting on or delaying payments to
us is increased because we expect that a small number of customers will continue to account for a substantial part
of our revenue. Any inability of our current or potential future customers to pay us for our products may
adversely affect our earnings and cash flow. Moreover, our key suppliers may reduce their output or become
insolvent, thereby adversely impacting our ability to manufacture our products. In addition, uncertain economic
conditions may make it more difficult for us to raise funds through borrowings or private or public sales of debt
or equity securities.

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 in the future. If one of
our key customers decides to stop buying our products, or if one of these customers materially reduces its
operations or its demand for our products, our business would be materially adversely affected.

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The ongoing novel coronavirus (COVID-19) pandemic could materially adversely affect our business,
financial condition and results of operations.
The COVID-19 pandemic has caused government authorities to implement numerous public health
measures, including vaccination and testing requirements and recordkeeping, quarantines, business closures,
travel bans, and restrictions related to social gathering and mobility, to contain the virus. Various state and
federal rules are issued and updated on an ongoing basis, at times in conflict and/or with minimal notice. We
have experienced and expect to continue to experience disruptions to our business as these measures have, and
will continue to have, an effect on our business operations and practices.

While many of our offices around the world remain open, either because the pandemic has been contained
in that location or to enable critical on-site business functions in compliance with government guidelines, we
continue to have many of our employees work from home until further notice. It is uncertain as to when the
measures put in place to attempt to contain the spread of COVID-19 will be lifted or whether there will be
additional measures put into place. If COVID-19 continues to spread or if there are further waves of the virus, we
may need to further limit operations or modify our business practices in a manner that may impact our business.
If our employees are not able to perform their job duties due to self-isolation, quarantine, unavailability of
COVID-19 tests, travel restrictions or illness, a reluctance or refusal to vaccinate, or are unable to perform them
as efficiently at home for an extended period of time, we may not be able to meet our product schedules,
roadmaps and customer commitments and we may experience an overall lower productivity of our workforce.
We continue to monitor our operations and public health measures implemented by governmental authorities in
response to COVID-19. Although some public health measures have eased and a small portion of our employees
are at work in certain offices, our efforts to reopen our offices safely may not be successful and could expose our
employees to health risks. Even when COVID-19 measures regarding mobility are lifted or modified, our
employees’ ability to return to work may delay the return of our full workforce and the resumption of normal
business operations.

COVID-19 continues to impact the global supply chain causing disruptions to service providers, logistics
and the flow and availability of supplies and products. We have experienced some disruptions to parts of our
supply chain as a result of COVID-19 and we adjust our supply chain requirements based on changing customer
needs and demands. We have taken efforts to maintain a stable supply of materials to meet our production
requirements through long-term purchase commitments and prepayment arrangements with some of our
suppliers. If we are unable to procure a stable supply of equipment, materials or substrates at a reasonable cost, it
could have a material adverse effect on our business. We may also assess our product schedules and roadmaps to
make any adjustments that may be necessary to support remote working requirements and address the geographic
and market demand shifts caused by COVID-19. If the supply of our products to customers is delayed, reduced
or canceled due to disruptions encountered by our third-party manufacturers, back-end manufacturers,
warehouses, partners, suppliers or vendors as a result of facility closures, border and port restrictions or closures,
transportation delays, labor shortages or workforce mobility limitations, it could have a material adverse effect
on our business.

COVID-19 has in the short-term and may in the long-term adversely impact the global economy, creating
uncertainty and potentially leading to an economic downturn. This could negatively impact consumer confidence
and spending causing our customers to postpone or cancel purchases, or delay paying or default on payment of
outstanding amounts due to us, which may have a material adverse effect on our business. Even in times of
robust demand for our products, as we are currently experiencing across our business, the worldwide economic
environment remains uncertain due to COVID-19 and such demand may not be sustainable over the longer term.

COVID-19 has also led to a disruption and volatility in the global capital and financial markets. While we
believe our cash, cash equivalents and short-term investments along with our Revolving Credit Facility and cash
flows from operations will be sufficient to fund operations, including capital expenditures and purchase
commitments, over the next 12 months and beyond, to the extent we may require additional funding to finance

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our operations and capital expenditures and such funding may not be available to us as a result of contracting
capital and financial markets resulting from COVID-19, it may have an adverse effect on our business.

The extent to which COVID-19 impacts our business and financial results will depend on future
developments, which are unpredictable and highly uncertain, including the continued spread, duration and
severity of the outbreak, the appearances of new variants of COVID-19, the breadth and duration of business
disruptions related to COVID-19, the availability and distribution of effective treatments and vaccines, and
public health measures and actions taken throughout the world to contain COVID-19. The prolonged effect of
COVID-19 could materially adversely impact our business, financial condition and results of operations.

The markets in which our products are sold are highly competitive.
The markets in which our products are sold are very competitive and delivering the latest and best products
to market on a timely basis is critical to achieving revenue growth. We believe that the main factors that
determine our product competitiveness are timely product introductions, product quality, product features and
capabilities (including enabling state-of-the-art visual and virtual reality experiences), energy efficiency
(including power consumption and battery life), reliability, processor clock speed, performance, size (or form
factor), selling price, cost, adherence to industry standards (and the creation of open industry standards), level of
integration, software and hardware compatibility, security and stability, brand recognition and availability.

We expect that competition will continue to be intense due to rapid technological changes, frequent product
introductions by our competitors or new competitors of products that may provide better performance/experience
or that may include additional features that render our products comparatively less competitive. We may also
face aggressive pricing by competitors, especially during challenging economic times. In addition, our
competitors have significant marketing and sales resources which could increase the competitive environment in
a declining market, leading to lower prices and margins. Some competitors may have greater access or rights to
complementary technologies, including interface, processor and memory technical information. For instance,
with our APU products and other competing solutions with integrated graphics, we believe that demand for
additional discrete graphics chips and cards may decrease in the future due to improvements in the quality and
performance of integrated graphics. If competitors introduce competitive new products into the market before us,
demand for our products could be adversely impacted and our business could be adversely affected. In addition,
Intel is seeking to expand its position in integrated graphics for the PC market with high-end discrete graphics
solutions for a broad range of computing segments, which may negatively impact our ability to compete in these
computing segments. We also face competition from companies that use competing computing architectures and
platforms like the ARM architecture. Increased adoption of ARM-based semiconductor designs could lead to
further growth and development of the ARM ecosystem.

In addition, we are entering markets with current and new competitors who may be able to adapt more
quickly to customer requirements and emerging technologies. We cannot assure you that we will be able to
compete successfully against current or new competitors who may have stronger positions in these new markets
or superior ability to anticipate customer requirements and emerging industry trends. Furthermore, we may face
competition from some of our customers who internally develop the same products as us. We may face delays or
disruptions in research and development efforts, or we may be required to invest significantly greater resources
in research and development than anticipated. Also, the semiconductor industry has seen several mergers and
acquisitions over the last number of years. Further consolidation could adversely impact our business due to there
being fewer suppliers, customers and partners in the industry.

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. A large portion of our Computing and Graphics revenue is

19
focused on the consumer desktop PC and notebook segments, which have in the past experienced a decline
driven by, among other factors, the adoption of smaller and other form factors, increased competition and
changes in replacement cycles. The success of our semi-custom SoC products is dependent on securing
customers for our semi-custom design pipeline and consumer market conditions, including the success of the
Sony PlayStation®5, Microsoft® Xbox™ Series S and Microsoft® Xbox™ Series X game console systems and
next generation consoles for Sony and Microsoft, worldwide. In addition, the GPU market has at times seen
elevated demand due to the application of GPU products to cryptocurrency mining. For example, our GPU
revenue has been affected in part by the volatility of the cryptocurrency mining market. Demand for
cryptocurrency has changed and is likely to continue to change quickly. For example, South Korea has instituted
restrictions on cryptocurrency trading and the valuations of the currencies and China has banned such activities,
and corresponding interest in mining of such currencies are subject to significant fluctuations. Alternatively,
countries have created and may continue to create their own cryptocurrencies or equivalents that could also
impact interest in mining. If we are unable to manage the risks related to the volatility of the cryptocurrency
mining market, our GPU business could be materially adversely affected.

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 recent downturns, due to substantial declines in average selling prices; the cyclical nature of
supply and demand imbalances in the semiconductor industry; a decline in demand for end-user products (such
as PCs) that incorporate our products; and excess inventory levels.

Industry-wide fluctuations in the computer marketplace have materially adversely affected us in the past and
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.

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

20
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. Also, due to measures to slow down the
spread of COVID-19, various patent offices and courts have been adversely impacted and there is a potential for
delay or disruptions that might affect certain of our patent rights.

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 United States 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 short-term 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 can cause increases or decreases in the cost of our products in
the local currency of such 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 products at
7 nanometer (nm) or smaller nodes, and we rely primarily on GLOBALFOUNDRIES Inc. (GF) for wafers for
products manufactured at process nodes larger than 7 nm. We also rely on third-party manufacturers to assemble,
test, mark and pack (ATMP) 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 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 products at 7 nm or smaller nodes in sufficient
quantities to meet customer demand, it could have a material adverse effect on our business.

We do not have long-term commitment contracts with some of our third-party manufacturing suppliers. We
obtain some of these manufacturing services on a purchase order basis and these manufacturers are not required

21
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
prepayments, or reduce or eliminate deliveries to us, which could have a material adverse effect on our business.

Other risks associated with our dependence on third-party manufacturers include limited control over
delivery schedules, quality assurance and 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 suffer any damage to facilities,
lose benefits under material agreements, experience power outages, lack sufficient capacity to manufacture our
products, encounter financial difficulties, are unable to secure necessary raw materials from their suppliers, suffer
any other disruption or reduction in efficiency, or experience uncertain social economic or political
circumstances or conditions, we may encounter supply delays or disruptions. If we are unable to secure sufficient
or reliable supplies 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 suppliers, we may be unable to secure an alternative supply for any
specific product in a short time frame. 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 a party to a wafer supply agreement (WSA) with GF that governs the terms by which we purchase
products manufactured by GF, and this agreement is in place through 2025. In May 2021, we entered into an
amendment to the WSA, and in December 2021, we further amended these terms (the “Amendment”). Under the
Amendment, GF will provide a minimum annual capacity allocation to us for years 2022 through 2025 and AMD
has corresponding annual wafer purchase targets. If we do not meet the annual wafer purchase target for any of
these years, we will be required to pay to GF a portion of the difference between the actual wafer purchases and
the wafer purchase target for that year. AMD and GF also have agreed to wafer pricing through 2025, and AMD
is obligated to pre-pay GF certain amounts for those wafers in 2022 and 2023. The Amendment no longer
includes any exclusivity commitments and provides us with full flexibility to contract with any wafer foundry
with respect to all products manufactured at any technology node. 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. If GF fails to meet its minimum annual capacity allocation obligations, we could experience
significant delays in the shipment of our products, 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.

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

22
of equipment and materials on a timely basis. Our third-party suppliers also depend on the same timely delivery
of adequate quantities of equipment and materials 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 integrated
circuit 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 sources. If we are
unable to procure a stable supply of equipment, materials or substrates on an ongoing basis and at reasonable
costs to meet our production requirements, we could experience a shortage in equipment, materials or substrate
supply or an increase in production costs, which could have a material adverse effect on our business. We have
long-term purchase commitments and prepayment arrangements with some of our vendors. 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, a decrease in customer demand
could result in excess inventory and an increase in our production costs, particularly since we have prepayment
arrangements with certain vendors. Because some of the equipment and materials that we and our third-party
manufacturing suppliers purchase are complex, it is sometimes difficult to substitute one 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 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 foundries or manufacturing suppliers 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 financial
results.
Semiconductor manufacturing yields are a result of both product design and process technology, which is
typically proprietary to the manufacturer, and low yields can result from design failures, process technology
failures or a combination of both. Our third-party foundries are responsible for the process technologies used to
fabricate silicon wafers. If our third-party foundries experience manufacturing inefficiencies or encounter
disruptions, errors or difficulties during production, we may fail to achieve acceptable yields or experience
product delivery delays. We cannot be certain that our third-party foundries will be able to develop, obtain or
successfully implement leading-edge process 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 foundries are implementing new process 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
portfolio on TSMC’s processes. If TSMC is not able to manufacture wafers for our products at 7nm or smaller
nodes in sufficient quantities to meet customer demand, it could have a material adverse effect on our business.

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.

23
The success of our business is dependent upon our ability to introduce products on a timely basis with features
and performance levels that provide value to our customers while supporting and coinciding with significant
industry transitions.
Our 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
develop, qualify and distribute, and have manufactured, new products and related technologies to meet evolving
industry requirements, at prices acceptable to our customers and on a timely basis, are significant factors in
determining our competitiveness in our target markets. As consumers have new product feature preferences or
have different requirements than those consumers in the PC market, PC sales could be negatively impacted,
which could adversely impact our business. Our product roadmap includes our next-generation AMD Ryzen™,
AMD Radeon™ and AMD EPYC™ processors. We cannot assure you 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 developing, qualifying or shipping new products or technologies that provide value to our
customers and address these new trends or if we fail to predict which new form factors consumers will adopt and
adjust our business accordingly, we may lose competitive positioning, which could cause us to lose market share
and require us to discount the selling prices of our products. 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, may incur unanticipated liabilities and
may divert our limited resources and distract management from our current operations. We cannot be certain that
our ongoing investments in new products and technologies will be successful, will meet our expectations and will
not adversely affect our reputation, financial condition and operating results.

Delays in developing, qualifying or shipping new products can also cause us to miss our customers’ product
design windows or, in some cases, breach contractual obligations or cause us to pay penalties. If our customers
do not include our products in the initial design of their computer systems or products, they will typically not use
our products in their systems or products until at least the next design configuration. 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 also could result in a loss of market share and harm our business. We
also depend on the success and timing 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, market demand requires that products incorporate new
features and performance standards on an industry-wide basis. Over the life of a specific product, the sale price is
typically reduced over time. 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.

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

24
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
financial results.

IT outages, data loss, data breaches and cyber-attacks could compromise our intellectual property or other
sensitive information, be costly to remediate or cause significant damage to our business, reputation and
operations.
In the ordinary course of our business, we maintain sensitive data on our information technology (IT) assets,
and also may maintain sensitive information on our business partners’ and third-party providers’ IT assets,
including our intellectual property and proprietary or confidential business information relating to our business
and that of our customers and business partners. The White House, SEC and other regulators have also increased
their focus on companies’ cybersecurity vulnerabilities and risks. Maintaining the security of this information is
important to our business and reputation. We believe that companies like AMD have been increasingly subject to
a wide variety of security incidents, cyber-attacks, hacking and phishing attacks, business and system disruption
attacks, and other attempts to gain unauthorized access. The increased prevalence of work-from-home
arrangements at AMD and our providers has presented additional operational and cybersecurity risks to our IT
systems as well as those of our customers, business partners, and third-party partners. These threats can come
from a variety of sources, all ranging in sophistication from an individual hacker or insider threat to a state-
sponsored attack. Cyber threats may be generic, or they may be custom-crafted against our information systems.
Cyber threats may come into our network through malicious code that is added to widely available open-source
software. Cyber-attacks have become increasingly more prevalent and much harder to detect, defend against or
prevent. Our network and storage applications, as well as those of our customers, business partners, and third-
party providers, have been and may be subject to unauthorized access by hackers or breached due to operator
error, malfeasance or other system disruptions.

It is often difficult to anticipate or immediately detect such incidents and the damage caused by such
incidents. It also may not be possible to determine the root cause of such incidents. These data breaches and any
unauthorized access, misuse or disclosure of our information or intellectual property could compromise our
intellectual property and expose sensitive business information. Cyber-attacks on us or our customers, business
partners or third-party providers could also cause us to incur significant remediation costs, result in product
development delays, disrupt key business operations and divert attention of management and key information
technology resources. These incidents could also subject us to liability, expose us to significant expense and
cause significant harm to our reputation and business.

We also maintain confidential and personally identifiable information about our workers and consumers.
The confidentiality and integrity of our worker and consumer data is important to our business and our workers

25
and consumers have a high expectation that we adequately protect their personal information. In addition, many
governments have enacted laws around personally identifiable information, such as the European Union’s
General Data Protection Regulation and the California Consumer Privacy Act, and failure to comply could result
in sanctions or other actions by the governments.

We anticipate ongoing and increasing costs related to: enhancing and implementing information security
controls, including costs related to upgrading application, computer, and network security components; training
workers to maintain and monitor our security controls; investigating, responding to and remediating any data
security breach, and addressing any related litigation; mitigating reputational harm; and complying with external
regulations.

We often partner with third-party providers for certain worker services and we may provide certain limited
worker information to such third parties based on the scope of the services provided to us. However, if these third
parties fail to adopt or adhere to adequate data security practices, or in the event of a breach of their networks,
our workers’ data may be improperly accessed, used or disclosed.

A breach of data privacy may cause significant disruption of our business operations. Failure to adequately
maintain and update our security systems could materially adversely affect our operations and our ability to
maintain worker confidence. Failure to prevent unauthorized access to electronic and other confidential
information, IT outages, data loss and data breaches could materially adversely affect our financial condition, our
competitive position and operating results.

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 even
further complicated when our products are sold indirectly through downstream channel distributors and
customers, as our forecasts for demand are then based on estimates provided by multiple parties throughout the
downstream channel. For instance, we have experienced and continue to experience increased demand for our
products. 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. For instance, our OEMs have and continue to experience
industry-wide challenges securing matched component sets to build their products.

Factors that may result in excess or obsolete inventory, which could result in write-downs of the value of
our 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.

26
Our ability to design and introduce new products in a timely manner is dependent upon 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. 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 that meet
customer demands, 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.
We depend on third-party companies for the design, manufacture and supply of motherboards, graphics
cards, software (e.g., BIOS, operating systems, drivers), memory and other components that our customers utilize
to support and/or use our microprocessor, GPU and APU offerings. We also rely on our AIB partners to support
our GPU and APU 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, manufacture
or production of current or future products that are based on or support our products, 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 products. In addition, some software drivers
licensed for use with our 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 products
would be materially adversely affected.

Our reliance on third-party distributors and AIB partners subjects us to certain risks.
We market and sell our products directly and through third-party distributors and AIB partners pursuant to
agreements that can generally be terminated for convenience by either party upon prior notice to the other party.
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. In addition, if we are unable to collect accounts receivable from our significant
distributors and/or AIB partners, it could have a material adverse effect on our business. 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.

27
 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 is dependent upon the proper functioning of our internal business processes and information
systems and modification or interruption of such systems may disrupt our business, processes and internal
controls.
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, cyber-attacks, 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.

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

28
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, 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 manufacturing suppliers
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.

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.” Gray market products result in shadow inventory that is not visible to us, thus 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. In addition, our inability to control gray market activities could result in

29
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.

Legal and Regulatory Risks

Government actions and regulations such as export administration regulations, tariffs, and trade protection
measures may limit our ability to export our products to certain customers.
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, the Bureau of Industry and Security
(BIS) of the United States Department of Commerce added certain Chinese entities to the Entity List, including
THATIC and the THATIC JV. In October 2019, the BIS added additional Chinese entities to the Entity List.
Also, the United States administration has called for changes to domestic and foreign policy. Specifically, United
States-China trade relations remain uncertain. The United States administration has announced tariffs on certain
products imported into the United States with China as the country of origin, and China has imposed tariffs in
response to the actions of the United States. We are taking steps to mitigate the impact of these tariffs on our
business and AMD processor-based products. There is also a possibility of future tariffs, trade protection
measures, import or export regulations or other restrictions imposed on our products or on our customers by the
United States, China or other countries that could have a material adverse effect on our business. A significant
trade disruption or the establishment or increase of any tariffs, trade protection measures or restrictions could
result in lost sales adversely impacting our reputation and business.

If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
Our deferred tax assets include net operating losses and 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 net operating losses or tax credits
which remain under a valuation allowance could be subject to limitations under Internal Revenue Code
Section 382 or 383, separate return loss year rules, or dual consolidated loss rules. The limitations could reduce
our ability to utilize the net operating losses or tax credits before the expiration of the tax attributes.

Our business is subject to potential tax liabilities, including as a result of tax regulation changes.
We are subject to income tax, indirect tax or other tax claims by tax agencies in 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.

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 and 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 net income in the period or periods for which that determination is made.

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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 17 of our
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.

We are subject to environmental laws, conflict minerals-related provisions of the Dodd-Frank Wall Street
Reform and Consumer Protection Act as well as a variety of other laws or regulations that could result in
additional costs and liabilities.
Our operations and properties have in the past been and continue to be subject to various United States and
foreign laws and regulations, including those relating to materials used in our products and manufacturing
processes, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and
hazardous wastes and remediation of contamination. These laws and regulations require our suppliers to obtain
permits for operations making our products, 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 at all times 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 former facilities or other environmental or natural
resource damage. While we have budgeted for foreseeable associated expenditures, we cannot assure you that

31
future environmental legal requirements will not become more stringent or costly in the future. Therefore, we
cannot assure you that our 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 will not have a
material adverse effect on us.

Environmental laws are complex, change frequently and have tended to become more stringent over time.
For example, the European Union (EU) and China are two among a growing number of jurisdictions that have
enacted restrictions on the use of lead and other materials in electronic products. These regulations affect
semiconductor devices and packaging. 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. A number of jurisdictions including the EU, Australia, California
and China are developing or have finalized market entry or public procurement regulations for computers and
servers based on ENERGY STAR specifications as well as additional energy consumption limits. There is the
potential for certain of our products being excluded from some of these markets which could materially adversely
affect us.

Certain environmental laws, including the United States Comprehensive, Environmental Response,
Compensation and Liability Act of 1980, or the Superfund Act, impose strict or, under certain circumstances,
joint and several liability on current and previous owners or operators of real property for the cost of removal or
remediation of hazardous substances and impose liability for damages to natural resources. These laws often
impose liability even if the owner or operator did not know of, or was not responsible for, the release of such
hazardous substances. These environmental laws also assess liability on persons who arrange for hazardous
substances to be sent to disposal or treatment facilities when such facilities are found to be contaminated. Such
persons can be responsible for cleanup costs even if they never owned or operated the contaminated facility. We
have been named as a responsible party at three Superfund sites in Sunnyvale, California. Although we have not
yet been, we could be named a potentially responsible party at other Superfund or contaminated sites in the
future. In addition, contamination that has not yet been identified could exist at our other facilities.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted
disclosure and reporting requirements for companies that use “conflict” minerals originating from the
Democratic Republic of Congo or adjoining countries. We continue to incur additional costs associated with
complying with these requirements, such as costs related to developing internal controls for the due diligence
process, determining the source of any conflict minerals used in our products, auditing the process and reporting
to our customers and the SEC. In addition to the SEC regulation, the European Union, 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 face reputational challenges if we are unable to sufficiently verify the origins of the subject minerals.
Moreover, we are likely to encounter challenges to satisfy those customers who require that all of the
components of our products be certified as “conflict free.” If we cannot satisfy these customers, they may choose
a competitor’s products.

Customers, governments and authorities are increasingly focused on the risk of forced labor in supply chains
that may increase the cost of our compliance program. Germany’s federal procurement office, in collaboration
with the Bitkom trade association, issued new supply chain labor requirements. In addition, the United Kingdom,
Australia and the State of California have previously issued laws that require us to disclose our policy and
practices for identifying and eliminating forced labor and human trafficking in our supply chain. Several
customers have also issued expectations to eliminate these practices that may impact us. While we have a Human
Rights Policy and management systems to identify and avoid these practices in our supply chain, we cannot
guarantee that our suppliers will always be in conformance to these laws and expectations. We may face

32
enforcement liability and reputational challenges if we are unable to sufficiently meet these expectations.
Moreover, we are likely to encounter challenges with customers if we cannot satisfy their forced and trafficked
labor polices and they may choose a competitor’s product.

Xilinx Merger and Acquisition Risks

Acquisitions, joint ventures and/or investments, including our previously announced acquisition of Xilinx, and
the failure to integrate acquired businesses, could disrupt our business and/or dilute or adversely affect the
price of our common stock.
Our success will depend, in part, on our ability to expand our product offerings and grow our business in
response to changing technologies, customer demands and competitive pressures. In some circumstances, we
may pursue growth through the acquisition of complementary businesses, solutions or technologies or through
joint ventures or investments rather than through internal development. The identification of suitable acquisition
or joint venture candidates can be difficult, time-consuming and costly, and we may not be able to successfully
complete identified acquisitions or joint ventures.

For example, on October 26, 2020, we, along with a direct wholly-owned subsidiary of ours, entered into an
Agreement and Plan of Merger (the Merger Agreement) with Xilinx, Inc. (Xilinx), whereby we agreed to acquire
Xilinx (the Merger). We entered into the Merger Agreement with the belief that the Merger will result in certain
benefits, including certain operational synergies and cost efficiencies, and drive product innovations. Achieving
these anticipated benefits will depend on successfully combining our and Xilinx’s businesses together. It is not
certain that Xilinx’s business can be successfully integrated with our business in a timely manner or at all, or that
any of the anticipated benefits will be realized for a variety of reasons, including, but not limited to: failure to
obtain applicable regulatory approval in a timely manner or otherwise; failure to satisfy other closing conditions
to the Merger; our inability to integrate or benefit from Xilinx’s acquired technologies or services in a profitable
manner; diversion of capital and other resources, including management’s attention from our existing business;
unanticipated costs or liabilities associated with the Merger; failure to leverage the increased scale of the
combined businesses quickly and effectively; coordinating and integrating in countries in which we have not
previously operated; the potential impact of the Merger on our relationships with employees, vendors, suppliers
and customers; the impairment of relationships with, or the loss of, Xilinx’s employees, vendors, suppliers and
customers; adverse changes in general economic conditions in regions in which we and Xilinx operate; potential
litigation associated with the Merger; difficulties in the assimilation of employees and culture; difficulties in
managing the expanded operations of a larger and more complex company; challenges in attracting and retaining
key personnel; and difficulties with integrating and upgrading our and Xilinx’s financial reporting systems. Many
of these factors will be outside of our control and any one of them could result in increased costs, decreases in
expected revenues and diversion of management’s time and attention, which could materially impact the
combined company. In addition, even if the operations of the businesses are integrated successfully, the full
benefits of the Merger may not be realized within the anticipated time frame or at all. All of these factors could
decrease or delay the expected accretive effect of the Merger and negatively impact the combined company. If
we cannot successfully integrate our and Xilinx’s businesses and operations, or if there are delays in combining
the businesses, it could negatively impact our ability to develop or sell new products and impair our ability to
grow our business, which in turn could adversely affect our financial condition and operating results.

Acquisitions and joint ventures may also involve the entry into geographic or business markets in which we
have little or no prior experience. Consequently, we may not achieve anticipated benefits of acquisitions or joint
ventures, which could harm our operating results. In addition, to complete an acquisition (and as contemplated in
the Merger), 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. Moreover, if
such acquisitions or joint ventures require us to seek additional debt or equity financing, we may not be able to
obtain such financing on terms favorable to us or at all. Even if we successfully complete an acquisition or joint

33
venture, we may not be able to assimilate and integrate effectively or efficiently the acquired business,
technologies, solutions, assets, personnel or operations, particularly if key personnel of the acquired company
decide not to work for us.

Acquisitions and joint ventures may also reduce our cash available for operations and other uses, which
could harm our business. Also, any failure on our part to effectively evaluate and execute new business initiatives
could adversely affect our business. We may not adequately assess the risks of new business initiatives and
subsequent events may arise that alter the risks that were initially considered. Furthermore, we may not achieve
the objectives and expectations with respect to future operations, products and services. 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.

In addition, we may not realize the anticipated benefits from our business initiatives. For example, we may
not realize the expected benefits from the THATIC JV’s expected future performance, including the receipt of
any future milestone payments and any royalties from certain licensed intellectual property. In June 2019, the
BIS added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. We are complying
with U.S. law pertaining to the Entity List designation.

Our ability to complete the Xilinx Merger is subject to closing conditions, including the receipt of consents
and approvals from governmental authorities, which may impose conditions that could adversely affect us or
cause the Xilinx Merger not to be completed.
The Merger is subject to a number of closing conditions as specified in the Merger Agreement. These
include, among others, the receipt of approvals under certain competition laws and the absence of governmental
restraints or prohibitions preventing the consummation of the Merger. No assurance can be given that the
required consents and approvals will be obtained or that the closing conditions will be satisfied in a timely
manner or at all. Also, if a settlement or other resolution is not reached in any legal proceedings that may be
instituted against us, our directors, Xilinx or its directors relating to the transactions contemplated by the Merger
Agreement, and the plaintiffs in such proceedings secure injunctive or other relief prohibiting, delaying or
otherwise adversely affecting our and/or Xilinx’s ability to complete the Merger on the terms contemplated by
the Merger Agreement, then such injunctive or other relief may prevent the Merger from becoming effective in a
timely manner, or at all. Any delay in completing the Merger could cause the combined company not to realize,
or to be delayed in realizing, some or all of the benefits that we expect to achieve. We cannot provide any
assurances that these conditions will not result in the abandonment or delay of the Merger. The occurrence of any
of these events could have a material adverse effect on our results of operations and the trading price of our
common stock. Additionally, under the Merger Agreement, Xilinx will be required to pay a termination fee to us
equal to $1 billion if the Merger Agreement is terminated in certain circumstances, including if the Merger
Agreement is terminated because Xilinx’s board of directors has changed its recommendation. We will be
required to pay a termination fee to Xilinx equal to $1.5 billion if the Merger Agreement is terminated in certain
circumstances, including if the Merger Agreement is terminated because our board of directors has changed its
recommendation. We will be required to pay a termination fee equal to $1 billion if the Merger Agreement is
terminated in certain circumstances related to the failure to obtain required regulatory approvals by October 26,
2021 (subject to automatic extension first to January 26, 2022 and then to April 26, 2022, in each case, to the
extent the regulatory closing conditions remain outstanding).

Whether or not it is completed, the announcement and pendency of the Xilinx Merger could cause disruptions
in our business, which could have an adverse effect on our business and financial results.
Whether or not it is completed, the announcement and pendency of the Merger could cause disruptions in
our business: our and Xilinx’s current and prospective employees may experience uncertainty about their future
roles with the combined company, which might adversely affect the ability to retain key employees; uncertainty

34
regarding the completion of the Merger may cause customers, suppliers, distributors, vendors, strategic partners
or others to delay or defer entering into contracts, make other decisions or seek to change or cancel existing
business relationships; and the attention of management may be directed toward the completion of the Merger. If
the Merger is not completed, we will have incurred significant costs, including the potential payment of
termination fees and the diversion of management resources, for which we will have received little or no benefit.

Any impairment of the combined company’s tangible, definite-lived intangible or indefinite-lived intangible
assets, including goodwill, may adversely impact the combined company’s financial position and results of
operations.
The Merger will be accounted for using the acquisition method of accounting under the provisions of ASC
805, Business Combinations, with AMD representing the accounting acquirer under this guidance. We will
record assets acquired, including identifiable intangible assets, and liabilities assumed from Xilinx at their
respective fair values at the date of completion of the Merger. Any excess of the purchase price over the net fair
value of such assets and liabilities will be recorded as goodwill. In connection with the Merger, the combined
company is expected to record significant goodwill and other intangible assets on its consolidated balance sheet.

Indefinite-lived intangible assets, including goodwill, will be tested for impairment at least annually, and all
tangible and intangible assets including goodwill will be tested for impairment when certain indicators are
present. If, in the future, the combined company determines that tangible or intangible assets, including goodwill,
are impaired, the combined company would record an impairment charge at that time. Impairment testing of
goodwill and intangible assets requires significant use of judgment and assumptions, particularly as it relates to
the determination of fair value. A decrease in the long-term economic outlook and future cash flows of the
combined company’s business could significantly impact asset values and potentially result in the impairment of
intangible assets, including goodwill, which may have a material adverse impact on the combined company’s
financial position and results of operations.

Liquidity and Capital Resources Risks

The agreements governing our notes and our Revolving Credit Facility impose restrictions on us that may
adversely affect our ability to operate our business.
The indenture governing our 7.50% Senior Notes due August 2022 (7.50% Notes) contains various
covenants which limit our ability to, among other things make certain investments, including investments in our
unrestricted subsidiaries, and consolidate or merge or sell our assets as an entirety or substantially as an entirety.

In addition, the Revolving Credit Facility’s credit agreement (Credit Agreement) restricts our ability to
make cash payments on the notes to the extent that (i) on the date of such payment, an event of default exists
under the Credit Agreement or would result therefrom or (ii) if we would have, on a pro forma basis after giving
effect to such payment, a consolidated total leverage ratio that exceeds 3.50x. Any of our future debt agreements
may contain similar restrictions. If under certain circumstances we fail to make a cash payment on a series of
notes when required by the applicable indenture, it would constitute an event of default under such indenture,
which, in turn, could constitute an event of default under the agreements governing our other indebtedness.

Our Revolving Credit Facility also contains various covenants which limit our ability to, among other
things, incur additional indebtedness and liens, make certain investments, merge or consolidate with other
entities, make certain dispositions, create any encumbrance on the ability of a subsidiary to make any upstream
payments, make payments with respect to subordinated debt or certain borrowed money prior to its due date and
enter into any non-arm’s-length transaction with an affiliate (in each case, except for certain customary
exceptions).

The agreements governing our notes and our Revolving Credit Facility contain cross-default provisions
whereby a default under certain agreements with respect to other indebtedness would result in cross defaults

35
under the indentures or the Revolving Credit Facility. For example, the occurrence of a default with respect to
any indebtedness or any failure to repay indebtedness when due in an amount in excess of (i) $50 million would
cause a cross default under the indentures (to the extent such default would result in the acceleration of such
indebtedness) governing our 7.50% Notes and 2.125% Convertible Senior Notes due 2026 (2.125% Notes), and
(ii) $100 million would cause a cross default under the Revolving Credit Facility. The occurrence of a default
under any of these borrowing arrangements would permit the applicable note holders or the lenders under our
Revolving Credit Facility to declare all amounts outstanding under the indentures or the Revolving Credit
Facility to be immediately due and payable. If the note holders or the trustee under the indentures governing our
7.50% Notes or 2.125% Notes or the lenders under our Revolving Credit Facility accelerate the repayment of
borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings.

Our indebtedness could adversely affect our financial position and prevent us from implementing our strategy
or fulfilling our contractual obligations.
Our total debt principal amount outstanding as of December 25, 2021 was $313 million. Our indebtedness
may make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest
payments; limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions and
general corporate and other purposes; limit our ability to use our cash flow or obtain additional financing for
future working capital, capital expenditures, acquisitions or other general corporate purposes; require us to use a
substantial portion of our cash flow from operations to make debt service payments; place us at a competitive
disadvantage compared to our competitors with relatively less debt; and increase our vulnerability to the impact
of adverse economic and industry conditions.

We may not be able to generate sufficient cash to meet our working capital requirements. Also, if we cannot
generate sufficient revenue and operating cash flow, we may face a cash shortfall and be unable to make all
of our planned investments in research and development or other strategic investments.
Our ability to generate sufficient cash to meet our working capital requirements will depend on our financial
and operating performance, which may fluctuate significantly from quarter to quarter, and is subject to prevailing
economic, financial and business conditions along with other factors, many of which are beyond our control. We
cannot assure you that we will be able to generate cash flow in amounts sufficient to enable us to meet our
working capital requirements. If we are not able to generate sufficient cash flow from operations, we may be
required to sell assets or equity, reduce expenditures, refinance all or a portion of our existing debt or obtain
additional financing. In addition, our ability to fund research and development expenditures depends on
generating sufficient revenue and cash flow from operations and the availability of external financing, if
necessary. Our research and development expenditures, together with ongoing operating expenses, will be a
substantial drain on our cash flow and may decrease our cash balances. If new competitors, technological
advances by existing competitors, or other competitive factors require us to invest significantly greater resources
than anticipated in our research and development efforts, our operating expenses would increase. If we are
required to invest significantly greater resources than anticipated in research and development efforts without an
increase in revenue, our operating results could decline.

Our inability to generate sufficient cash from operations may require us to abandon projects or curtail
planned investments in research and development or other strategic initiatives. If we curtail planned investments
in research and development or abandon projects, our products may fail to remain competitive and our business
would be materially adversely affected.

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

36
product assembly and final testing of our products is performed at manufacturing facilities, operated by third-
party manufacturing facilities, in China, Malaysia and Taiwan. We also have international sales operations.
International sales, as a percent of net revenue, were 72% for the year ended December 25, 2021. 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 operations in foreign countries include, without
limitation: expropriation; changes in a specific country’s or region’s political or economic conditions; changes in
tax laws, trade protection measures and import or export licensing requirements; difficulties in protecting our
intellectual property; difficulties in managing staffing and exposure to different employment practices and labor
laws; changes in foreign currency exchange rates; restrictions on transfers of funds and other assets of our
subsidiaries between jurisdictions; changes in freight and interest rates; inflation; disruption in air transportation
between the United States and our overseas facilities; loss or modification of exemptions for taxes and tariffs;
and compliance with United States laws and regulations related to international operations, including export
control and economic sanctions laws and regulations and the Foreign Corrupt Practices Act.

In addition, our worldwide operations (or those of our business partners) could be subject to natural
disasters and climate change such as earthquakes, tsunamis, flooding, typhoons, droughts, fires, extreme heat and
volcanic eruptions that disrupt our operations, or those of our manufacturers, vendors or customers. For example,
our Santa Clara operations are located near major earthquake fault lines in California. Also, we have operations
and employees in regions that have experienced prolonged heat waves and freezing in Texas and wildfires in
California. Extreme weather events can also disrupt the ability of our suppliers to deliver expected manufacturing
parts and/or services for periods of time. There may be conflict or uncertainty in the countries in which we
operate, including public health issues (for example, an outbreak of a contagious disease such as COVID-19,
avian influenza, measles or Ebola), safety issues, natural disasters, fire, disruptions of service from utilities,
nuclear power plant accidents or general economic or political factors. For example, governments worldwide
have implemented, and continue to implement, measures to slow down the outbreak of COVID-19. We have
experienced, and will continue to experience, disruptions to our business as these measures have, and will
continue to have, an effect on our business operations and practices. In addition, many governments have enacted
laws around personally identifiable information, such as the European Union’s general Data Protection
Regulation and the California Consumer Privacy Act, and the failure to comply could result in sanctions or other
actions by the governments. The European Union’s General Data Protection Regulation imposes significant
requirements on how we collect, process and transfer personal data, as well as significant fines for
non-compliance. Any of the above risks, should they occur, could result in an increase in the cost of components,
production delays, general business interruptions, delays from difficulties in obtaining export licenses for certain
technology, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the
repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately
have a material adverse effect on our business.

We may incur future impairments of goodwill and technology license purchases.

We perform our annual goodwill impairment analysis as of the first day of the fourth quarter of each year.
Subsequent to our annual goodwill impairment analysis, we monitor for any events or changes in circumstances,
such as 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 or significant declines in our stock price, which may represent an indicator of
impairment. The occurrence of any of these events may require us to record future goodwill impairment charges.

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

37
impairment. The occurrence of any of these events may require us to record future technology license
impairment charges.

Our inability to continue to attract and retain qualified personnel may hinder our business.
Much of our future success depends upon the continued service of numerous qualified engineering,
marketing, sales and executive employees. Competition for highly skilled executives and employees in the
technology industry is intense and our competitors have targeted individuals in our organization that have desired
skills and experience. If we are not able to continue to attract, train 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. To help attract, retain and motivate our executives and
qualified employees, we use share-based incentive awards such as employee stock options and non-vested share
units (restricted stock units). 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 weakened,
which could harm our results of operations. Also, if the value of our stock awards increases substantially, this
could potentially create great personal wealth for our executives and employees and affect our ability to retain
our personnel. In addition, any future restructuring plans may 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, 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, interest rate changes, inflation, news regarding our products or products of
our competitors, and broad market and industry fluctuations. Stock price fluctuations could impact the value of
our equity compensation, which could affect our ability to recruit and retain employees. In addition, volatility in
our stock price could adversely affect our business and financing opportunities.

In May 2021, we announced that our Board of Directors approved a new stock repurchase program to
purchase up to $4 billion of our outstanding common stock in the open market. This 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.

Worldwide political conditions may adversely affect demand for our products.
Worldwide political conditions may create uncertainties that could adversely affect our business. The United
States 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 United States economy and worldwide
financial markets.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

38
ITEM 2. PROPERTIES
As of December 25, 2021, we leased approximately 2.7 million square feet of space for research and
development, engineering, administrative and warehouse use throughout the world. Our headquarters is located
in Santa Clara, California, and we have significant operations in Austin, Texas; Shanghai, China; Markham,
Ontario, Canada; and Bangalore and Hyderabad, India. We also have a number of regional sales offices located
in commercial centers near customers, principally in the United States, Europe, Asia and Latin America.

We currently do not anticipate difficulty in either retaining occupancy of any of our facilities through lease
renewals prior to expiration or through month-to-month occupancy or replacing them with equivalent facilities.
We believe that our existing facilities are suitable and adequate for our present purposes and that the productive
capacity of such facilities is substantially being utilized or we have plans to utilize such capacity.

ITEM 3. LEGAL PROCEEDINGS

For a discussion of our legal proceedings, refer to Note 17 – Contingencies of the Notes to Consolidated
Financial Statements (Part II, Item 8 of this Form 10-K).

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

39
 PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on The NASDAQ Global Select Market (NASDAQ) under the symbol “AMD”.
On January 28, 2022, there were 4,492 registered holders of our common stock, and the closing price of our
common stock was $105.24 per share as reported on NASDAQ.

Issuer Purchases of Equity Securities

In May 2021, we announced that our Board of Directors approved a new stock repurchase program to purchase
up to $4 billion of our outstanding common stock in the open market. We expect to fund repurchases through
cash generated from operations which have been strengthened by our strong operational results. Our stock
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 year ended
December 25, 2021:

Total Number of Maximum Dollar

Shares Value of Shares
Repurchased as That May Yet be
Total Number of Part of Publicly Purchased
Shares Average Price Announced Under the
Repurchased Paid per Share Program Program
(In millions, except per share data)
Repurchases during each fiscal quarter of
2021:
March 28, 2021 - June 26, 2021 . . . . . . . . . . . . 3,234,896 $ 79.14 3,234,896 $3,744
June 27, 2021 - September 25, 2021 . . . . . . . . . 7,165,899 $104.66 7,165,899 $2,994
September 26, 2021 - December 25, 2021 . . . . 6,343,862 $119.20 6,343,862 $2,238
16,744,657 16,744,657
Repurchases during last fiscal quarter of 2021:
September 26, 2021 - October 30, 2021 . . . . . . 4,226,341 $106.57 4,226,341 $2,544
October 31, 2021 - November 27, 2021 . . . . . . 2,117,521 $144.40 2,117,521 $2,238
November 28, 2021 - December 25, 2021 . . . . — $ — — $2,238
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,343,862 6,343,862

Equity Award Share Withholding

Shares of common stock withheld as payment of withholding taxes in connection with the vesting or exercise of
equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not
considered common stock repurchases under an authorized common stock repurchase plan. During fiscal year
2021, we withheld 2 million shares as payment of withholding taxes in connection with the vesting and exercise
of equity awards.

For information about our equity compensation plans, see Part III, Item 11, below.

40
 Performance Graph

Comparison of Five-Year Cumulative Total Returns

Advanced Micro Devices, S&P 500 Index and S&P 500 Semiconductor Index

The following graph shows a five-year comparison of cumulative total return on our common stock, the
S&P 500 Index and the S&P 500 Semiconductor Index from December 31, 2016 through December 25, 2021.
The past performance of our common stock is no indication of future performance.

Comparison of Cumulative Five Year Total Return

1,500

1,000
Index Value

500

0
2016 2017 2018 2019 2020 2021

Advanced Micro Devices, Inc. S&P 500 Index S&P 500 Semiconductors Index

Base Period Years Ended

Company / Index 12/31/2016 12/30/2017 12/29/2018 12/28/2019 12/26/2020 12/25/2021

Advanced Micro Devices, Inc. 100 91 157 407 810 1,289

S&P 500 Index 100 122 115 154 179 231
S&P 500 Semiconductors Index 100 136 127 188 264 403

Unregistered Sales of Equity Securities

On December 14, 2021, we issued 109,807 shares of AMD’s common stock pursuant to an exercise in full
by a commercial partner of a warrant to purchase up to 127,435 shares of AMD’s common stock at an exercise
price of $20.0423 per share (the Warrant). As a result, the Warrant is no longer outstanding. The commercial
partner acquired the Warrant on December 26, 2018 pursuant to a strategic arrangement with such partner. The
shares of common stock were issued pursuant to Section 3(a)(9) of the Securities Act of 1933.

On December 27, 2021, we issued warrants to purchase 63,226 shares of our common stock to
a commercial partner pursuant to a strategic arrangement executed in 2018 with such partner. The warrants have
an exercise price of $25.4994 per share and expire on December 27, 2024. The warrants were issued pursuant to
Section 4(a)(2) of the Securities Act of 1933.

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ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements as of
December 25, 2021 and December 26, 2020 and for each of the three years in the period ended December 25,
2021 and related notes, which are included in this Annual Report on Form 10-K as well as with the other sections
of this Annual Report on Form 10-K, “Part II, Item 8: Financial Statements and Supplementary Data.”

Introduction
In this section, we will describe the general financial condition and the results of operations of Advanced
Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a
discussion of our results of operations for 2021 compared to 2020, an analysis of changes in our financial
condition and a discussion of our off-balance sheet arrangements. Discussions of 2019 items and year-to-year
comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the fiscal year ended December 26, 2020.

Overview
Our leadership portfolio of high-performance products, robust customer demand, and consistent execution
helped drive strong financial results in 2021. Net revenue for 2021 was $16.4 billion, an increase of 68%
compared to 2020 net revenue of $9.8 billion. Gross margin, as a percentage of net revenue for 2021, was 48%,
compared to 45% in 2020. Our operating income for 2021 improved to $3.6 billion compared to operating
income of $1.4 billion for 2020. Our net income for 2021 improved to $3.2 billion compared to $2.5 billion in the
prior year. Cash, cash equivalents and short-term investments as of December 25, 2021 were $3.6 billion,
compared to $2.3 billion at the end of 2020. The aggregate principal amount of total debt as of December 25,
2021 was $313 million, compared to $338 million as of December 26, 2020.

We introduced a number of high-performance products in 2021. We expanded the AMD Ryzen mobile
processor family with the launch of the AMD Ryzen 5000 Series Mobile Processors with “Zen 3” core
architecture designed for gamers, creators and professionals. We also announced the AMD Ryzen PRO 5000
Series Mobile Processors powered with our “Zen 3” core architecture for business laptops. AMD Ryzen PRO
Series Mobile Processors are built to provide powerful computing experiences with security features for
demanding business environments like remote working.

We also launched a number of graphics products during 2021, including the AMD Radeon RX 6700 XT
graphics card built on 7 nm process technology and AMD RDNA 2 gaming architecture to deliver performance
and power efficiency, as well as the AMD Radeon RX 6600 XT graphics card, designed to deliver high-frame
rate, high-fidelity and highly responsive 1080p gaming experience. For mobile graphics, we introduced the AMD
Radeon RX 6000M Series Mobile Graphics designed for high-performance gaming laptops and we announced
the AMD Advantage™ Design Framework to deliver best-in-class gaming experiences. AMD Advantage systems
combine AMD Radeon RX 6000M Series Mobile Graphics, AMD Radeon Software and AMD Ryzen 5000
Series Mobile Processors with AMD smart technologies. We also introduced the AMD Instinct MI200 series
accelerators based on the 2nd Gen AMD CDNA architecture, optimized for HPC and AI/ML (Artificial
Intelligence/Machine Learning) workloads. The MI200 series includes the MI250 Open Accelerator Module
(OAM) form factor for purpose-built HPC/AI platforms and the MI210 PCIe form factor for mainstream server
platforms. We also introduced our AMD FidelityFX Super Resolution software for game developers to help
deliver a high-quality, high-resolution gaming experience. For professional graphics, we announced our AMD
Radeon PRO W6000 series workstation graphics for professional users who have ultra-high resolution media
projects, complex design and engineering simulations and advanced image and video editing applications. We

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also introduced the AMD Radeon PRO W6000X series graphics for the Mac Pro, designed to power a wide
variety of demanding professional applications and workloads.

For the server business, we introduced the next generation of AMD EPYC processors with the AMD EPYC
7003 Series CPUs for high-performance computing, cloud and enterprise customers. The EPYC 7003 series
processors have up to 64 Zen 3 cores per processor and per-core cache memory and also include security features
through AMD Infinity Guard to help drive faster times to results and improve business outcomes.

Although the current COVID-19 pandemic continues to impact our business operations and practices, we
experienced limited disruptions during 2021. We are taking safety measures to protect our employees who are in
the office and support those employees who work from home. We are also monitoring our operations and public
health measures implemented by governmental authorities in response to the pandemic.

COVID-19 also continues to impact the global supply chain, causing disruptions to service providers,
logistics and the flow and availability of supplies and products. Despite these challenges, we took action to
maintain a stable supply of materials to meet our production requirements and delivered incremental supply
throughout the year. We also experienced strong customer demand in 2021 and made strategic investments
through long-term purchase commitments and prepayment arrangements in our supply chain to secure additional
capacity to support future revenue growth. For example, we amended our Wafer Supply Agreement (WSA) with
GLOBALFOUNDRIES Inc. (GF) in May 2021 (the A&R Seventh Amendment) and in December 2021 (the
Amendment) to modify certain terms of the WSA applicable to wafer purchases at the 12 nm and 14 nm
technology nodes from December 23, 2021 and continuing through December 31, 2025. Under the Amendment,
GF will provide a minimum annual capacity allocation to us for years 2022 through 2025 and we have
corresponding annual wafer targets. We also agreed to wafer pricing through 2025, and we are obligated to
pre-pay GF certain amounts for those wafers in 2022 and 2023. The Amendment does not affect any of the prior
exclusivity commitments that were removed under the A&R Seventh Amendment. We have full flexibility to
contract with any wafer foundry with respect to all products manufactured at any technology node.

Due to our strong financial results and growing cash flow generation, in May 2021, our Board of Directors
approved a stock repurchase program (Repurchase Program) to purchase up to $4 billion of our outstanding
common stock in the open market. During the twelve months ended December 25, 2021, we repurchased
16.7 million shares of our common stock under the Repurchase Program, for a total cash outlay of $1.8 billion.
As of December 25, 2021, $2.2 billion remained available for future stock repurchases under this 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.

As part of our strategy to establish AMD as the industry’s high performance computing leader, we
announced in October 2020 that we entered into a definitive agreement to acquire Xilinx, Inc. in an all-stock
transaction. The completion of the transaction remains subject to certain closing conditions, including regulatory
approval, and is currently expected to close in the first quarter of 2022.

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 Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with U.S. generally accepted
accounting principles (U.S. 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

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estimates on an on-going basis, including those related to our revenue, inventories, goodwill 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.

Management believes the following critical accounting estimates are the most significant to the presentation
of our financial statements and require the most difficult, subjective and complex judgments.

Revenue Allowances. Revenue contracts with our customers include variable amounts which we evaluate
under ASC 606-10-32-8 through 14 in order to determine the net amount of consideration to which we are
entitled and which we recognize as revenue. We determine the net amount of consideration to which we are
entitled by estimating the most likely amount of consideration we expect to receive from the customer after
adjustments to the contract price for rights of return and rebates to our OEM customers and rights of return,
rebates and price protection on unsold merchandise to our distributor customers.

We base our determination of necessary adjustments to the contract price by reference to actual historical
activity and experience, including actual historical returns, rebates and credits issued to OEM and distributor
customers adjusted, as applicable, to include adjustments, if any, for known events or current economic
conditions, or both.

Our estimates of necessary adjustments for distributor price incentives and price protection on unsold
products held by distributors are based on actual historical incentives provided to distributor customers and
known future price movements based on our internal and external market data analysis.

Our estimates of necessary adjustments for OEM price incentives utilize, in addition to known pricing
agreements, actual historical rebate attainment rates and estimates of future OEM rebate program attainment
based on internal and external market data analysis.

We offer incentive programs through cooperative advertising and marketing promotions. Where funds
provided for such programs can be estimated, we recognize a reduction to revenue at the time the related revenue
is recognized; otherwise, we recognize such reduction to revenue at the later of when: i) the related revenue
transaction occurs; or ii) the program is offered. For transactions where we reimburse a customer for a portion of
the customer’s cost to perform specific product advertising or marketing and promotional activities, such
amounts are recognized as a reduction to revenue unless they qualify for expense recognition.

We also provide limited product return rights to certain OEMs and to most distribution customers. These
return rights are generally limited to a contractual percentage of the customer’s prior quarter shipments, although,
from time to time we may approve additional product returns beyond the contractual arrangements based on the
applicable facts and circumstances. In order to estimate adjustments to revenue to account for these returns,
including product restocking rights provided to distributor and OEM customers, we utilize relevant, trended
actual historical product return rate information gathered, adjusted for actual known information or events, as
applicable.

Overall, our estimates of adjustments to contract price due to variable consideration under our contracts with
OEM and distributor customers, based on our assumptions and include adjustments, if any, for known events,
have been materially consistent with actual results; however, these estimates are subject to management’s
judgment and actual provisions could be different from our estimates and current provisions, resulting in future
adjustments to our revenue and operating results.

Inventory Valuation. We value inventory at standard cost, adjusted to approximate the lower of actual cost
or estimated net realizable value using assumptions about future demand and market conditions. Material

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assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product
and are based on specific facts and circumstances. In determining excess or obsolescence reserves for products,
we consider assumptions such as changes in business and economic conditions, other-than-temporary decreases
in demand for our products, and changes in technology or customer requirements. In determining the lower of
cost or net realizable value reserves, we consider assumptions such as recent historical sales activity and selling
prices, as well as estimates of future selling prices. If in any period we anticipate a change in assumptions such as
future demand or market conditions to be less favorable than our previous estimates, additional inventory write-
downs may be required and would be reflected in cost of sales, resulting in a negative impact to our gross margin
in that period. If in any period we are able to sell inventories that had been written down to a level below the
ultimate realized selling price in a previous period, related revenue would be recorded with a lower or no
offsetting charge to cost of sales resulting in a net benefit to our gross margin in that period. Overall, our
estimates of inventory carrying value adjustments have been materially consistent with actual results.

Goodwill. We perform our goodwill impairment analysis as of the first day of the fourth quarter of each
year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more
frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an
impairment.

We first analyze qualitative factors to determine if it is more likely than not that the fair value of a reporting
unit exceeds its carrying amount. Qualitative factors include industry and market considerations, overall financial
performance, share price trends and market capitalization and Company-specific events. If we conclude it is
more likely than not that the fair value of a reporting unit exceeds its carrying amount, we do not proceed to
perform a quantitative impairment test.

If we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying
value, a quantitative goodwill impairment test will be performed by comparing the fair value of each reporting
unit to its carrying value. A quantitative impairment analysis, if necessary, considers the income approach, which
requires estimates of the present value of expected future cash flows to determine a reporting unit’s fair value.
Significant estimates include revenue growth rates and operating margins used to calculate projected future cash
flows, discount rates, and future economic and market conditions.

A goodwill impairment charge is recognized for the amount by which a reporting unit’s fair value is less
than its carrying value, not to exceed the total amount of goodwill allocated to that reporting unit.

Income Taxes. In determining taxable income for financial statement reporting purposes, we must make
certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax
liabilities and in the determination of the recoverability of deferred tax assets which arise from temporary
differences between the recognition of assets and liabilities for tax and financial statement reporting purposes.

We regularly assess the likelihood that we will be able to recover our deferred tax assets. Unless recovery is
considered more-likely-than-not (a probability level of more than 50%), we will record a charge to income tax
expense in the form of a valuation allowance for the deferred tax assets that we estimate will not ultimately be
recoverable or maintain the valuation allowance recorded in prior periods. When considering all available
evidence, if we determine it is more-likely-than-not we will realize our deferred tax assets, we will reverse some
or all of the existing valuation allowance, which would result in a credit to income tax expense and the
establishment of an asset in the period of reversal.

In determining the need to establish or maintain a valuation allowance, we consider the four sources of
jurisdictional taxable income: (i) carryback of net operating losses to prior years; (ii) future reversals of existing
taxable temporary differences; (iii) viable and prudent tax planning strategies; and (iv) future taxable income
exclusive of reversing temporary differences and carryforwards.

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 Through the end of 2021, we continue to maintain a valuation allowance of approximately $1.7 billion for
certain federal, state, and foreign tax attributes. The federal valuation allowance maintained is due to limitations,
under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules.
Certain state and foreign valuation allowances are maintained due to a lack of sufficient sources of future taxable
income.

In addition, the calculation of our tax liabilities involves addressing uncertainties in the application of
complex, multi-jurisdictional tax rules and the potential for future adjustment of our uncertain tax positions by
the Internal Revenue Service or other taxing authorities.

Results of Operations
We report our financial performance based on the following two reportable segments: Computing and
Graphics, and Enterprise, Embedded and Semi-Custom.

Additional information on our reportable segments is contained in Note 14 – Segment Reporting of the
Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the
second half of the year than in the first half of the year, although market conditions and product transitions could
impact these trends.

The following table provides a summary of net revenue and operating income (loss) by segment for 2021
and 2020:

December 25, 2021 December 26, 2020

(In millions)
Net revenue:
Computing and Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,332 $6,432
Enterprise, Embedded and Semi-Custom . . . . . . . . . . . . . . . . . . . . 7,102 3,331
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,434 $9,763
Operating income (loss):
Computing and Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,090 $1,266
Enterprise, Embedded and Semi-Custom . . . . . . . . . . . . . . . . . . . . 1,979 391
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (421) (288)
Total operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,648 $1,369

Computing and Graphics

Computing and Graphics net revenue of $9.3 billion in 2021 increased by 45%, compared to $6.4 billion in
2020, primarily as a result of a 57% increase in average selling price, partially offset by an 8% decrease in unit
shipments. The increase in average selling price was primarily driven by a richer mix of Ryzen, Radeon and
AMD Instinct products. The lower unit shipments were primarily driven by a strategic focus on premium and
higher end products in a tight supply environment.

Computing and Graphics operating income was $2.1 billion in 2021 compared to $1.3 billion in 2020. The
increase in operating income was primarily driven by higher revenue and improved margin in the segment which
more than offset higher operating expenses. Operating expenses increased for the reasons outlined under
“Expenses” below.

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Enterprise, Embedded and Semi-Custom
Enterprise, Embedded and Semi-Custom net revenue of $7.1 billion in 2021 increased by 113% compared to
net revenue of $3.3 billion in 2020, primarily driven by higher sales of our semi-custom products and EPYC
server processors.

Enterprise, Embedded and Semi-Custom operating income was $2.0 billion in 2021 compared to
$391 million in 2020. The increase in operating income was primarily due to the higher revenue and improved
margin in the segment which more than offset higher operating expenses. Operating expenses increased for the
reasons outlined under “Expenses” below.

All Other
All Other operating loss of $421 million in 2021 included stock-based compensation expense of
$379 million and acquisition-related costs of $42 million.

All Other operating loss of $288 million in 2020 included stock-based compensation expense of
$274 million and acquisition-related costs of $14 million.

Comparison of Gross Margin, Expenses, Licensing Gain, Interest Expense, Other Income (Expense) and
Income Taxes
The following is a summary of certain consolidated statement of operations data for 2021 and 2020:
December 25, 2021 December 26, 2020
(In millions, except for percentages)
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,434 $ 9,763
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,505 5,416
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,929 4,347
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48% 45%
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,845 1,983
Marketing, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,448 995
Licensing gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) —
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34) (47)
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 (47)
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 (1,210)

Gross Margin
Gross margin as a percentage of net revenue was 48% in 2021 compared to 45% in 2020. The increase in
gross margin was primarily driven by a richer mix of EPYC, Radeon and Ryzen processor sales.

Expenses
Research and Development Expenses
Research and development expenses of $2.8 billion in 2021 increased by $862 million, or 43%, compared to
$2.0 billion in 2020. The increase was primarily driven by an increase in product development costs due to an
increase in headcount and higher annual employee incentives driven by improved financial performance.

Marketing, General and Administrative Expenses

Marketing, general and administrative expenses of $1.4 billion in 2021 increased by $453 million, or 46%,
compared to $995 million in 2020. The increase was primarily due to an increase in go-to-market activities in

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both the Computing and Graphics and Enterprise, Embedded and Semi-Custom segments, as well as an increase
in headcount and higher annual employee incentives driven by improved financial performance.

Licensing Gain
During 2021, we recognized $12 million of royalty income associated with the licensed IP to the THATIC
JV, our two joint ventures with Higon Information Technology Co., Ltd., a third-party Chinese entity. We did not
recognize a licensing gain for the year ended December 26, 2020.

Interest Expense
Interest expense of $34 million in 2021 decreased by $13 million compared to $47 million in 2020,
primarily due to lower debt balances as a result of conversions by holders of our 2.125% Convertible Senior
Notes due 2026.

Other Income (Expense), net

Other income, net was $55 million for the year ended December 25, 2021 compared to $47 million of Other
expense, net for the year ended December 26, 2020. The change was primarily due to a net gain of $56 million
from an increase in fair value of equity investments in 2021 and lower losses from the conversion of our
convertible debt of $47 million in 2020.

Income Taxes Provision (Benefit)

We recorded an income tax provision of $513 million in 2021 and an income tax benefit of $1.2 billion in
2020, representing effective tax rates of 14% and (95)% respectively. The income tax provision of $513 million
was due to higher income in the U.S. and increase in foreign taxes, partially offset by $147 million of foreign-
derived intangible income tax benefit, $78 million of research and development tax credits, and $125 million of
excess tax benefit for stock-based compensation net of non-deductible officers’ compensation.

The income tax benefit in 2020 was primarily due to $1.3 billion of tax benefit from the valuation allowance
release in the U.S. This benefit was partially offset by approximately $10 million of withholding tax expense
related to cross-border transactions, $13 million of state and foreign taxes, and a $75 million increase in
valuation allowance against certain state and foreign tax credits.

Through the end of fiscal year 2021, we continued to maintain a valuation allowance of approximately
$1.7 billion for certain federal, state, and foreign tax attributes. The federal valuation allowance maintained is
due to limitations under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual
consolidated loss rules. Certain state and foreign valuation allowance maintained is due to lack of sufficient
sources of future taxable income.

International Sales
International sales as a percentage of net revenue were 72% in 2021 and 77% in 2020. 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 are denominated in U.S. dollars.

FINANCIAL CONDITION
Liquidity and Capital Resources
As of December 25, 2021, our cash, cash equivalents and short-term investments were $3.6 billion
compared to $2.3 billion as of December 26, 2020. The percentage of cash and cash equivalents held
domestically was 91% as of December 25, 2021, and 94% as of December 26, 2020. Subsequent to
December 25, 2021, we repurchased $1.0 billion of our common stock under our stock repurchase program.

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 Our operating, investing and financing cash flow activities for 2021 and 2020 were as follows:
December 25, 2021 December 26, 2020
(In millions)
Net cash provided by (used in):
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,521 $1,071
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (686) (952)
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,895) 6
Net increase in cash and cash equivalents, and restricted cash . . . . . . . . $ 940 $ 125

Our aggregate principal debt obligations were $313 million and $338 million as of December 25, 2021 and
December 26, 2020, respectively.

We believe our cash, cash equivalents, short-term investments and cash flows from operations along with
our Revolving Credit Facility will be sufficient to fund operations, including capital expenditures and purchase
commitments, 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 was $3.5 billion in 2021, primarily due to our higher net income of
$3.2 billion in 2021, adjusted for non-cash adjustments of $1.1 billion and net cash outflows of $774 million
from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and
liabilities included a $640 million increase in accounts receivable driven primarily by $1.6 billion higher revenue
in the fourth quarter of 2021 compared to the fourth quarter of 2020, a $556 million increase in inventories
driven by our continued increase in product build in support of customer demand, and a $920 million increase in
prepaid expenses and other assets due primarily to prepayments under long-term supply agreements in 2021,
offset by an $801 million increase in accounts payable primarily due to timing of payments to our suppliers, and
a $526 million increase in accrued liabilities and other, both of which were driven mainly by higher marketing
accruals, and higher accrued annual employee incentives due to improved financial performance.

Net cash provided by operating activities was $1.1 billion in 2020, primarily due to our net income of
$2.5 billion, adjusted for non-cash adjustments of $488 million and net cash outflows of $931 million from
changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and
liabilities included a $219 million increase in accounts receivable driven primarily by $1.1 billion higher revenue
in the fourth quarter of 2020 compared to the fourth quarter of 2019, partially offset by higher collections due to
better revenue linearity in the fourth quarter of 2020 compared to the fourth quarter of 2019, a $417 million
increase in inventories driven by an increase in product build in support of customer demand, a $231 million
increase in prepaid expenses and other assets due primarily to an increase in vendor credits, a $513 million
decrease in accounts payable primarily due to timing of payments to our suppliers, offset by a $574 million
increase in accrued liabilities and other driven by higher marketing accruals and higher accrued annual employee
incentives due to improved financial performance.

Investing Activities
Net cash used in investing activities was $686 million in 2021, which primarily consisted of higher cash
used for purchases of short-term investments of $2.1 billion and $301 million for purchases of property and
equipment, partially offset by higher cash provided by maturities of short-term investments of $1.7 billion.

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 Net cash used in investing activities was $952 million in 2020, which primarily consisted of $850 million
for purchases of short-term investments and $294 million for purchases of property and equipment, partially
offset by $192 million for maturities of short-term investments.

Financing Activities
Net cash used in financing activities was $1.9 billion in 2021, which primarily consisted of common stock
repurchases of $1.8 billion under the $4 billion stock repurchase program and higher repurchases to cover tax
withholding on employee equity plans of $237 million, partially offset by higher proceeds from the issuance of
common stock under our employee equity plans of $104 million.

Net cash provided by financing activities was $6 million in 2020, which primarily consisted of proceeds
from the issuance of common stock under our employee equity plans of $85 million, partially offset by
$78 million of common stock repurchased to cover employee withholding taxes on vesting of employee equity
grants. We borrowed $200 million of short-term debt during the second quarter of 2020 and paid off the balance
during the third quarter of 2020.

Contractual Obligations
For a description of our contractual obligations such as debt, leases, purchase and other contractual
obligations, see Part II, Item 8 Notes to Consolidated Financial Statements Note 6 – Debt and Revolving Credit
Facility and Note 16 – Commitments and Guarantees.

Off-Balance Sheet Arrangements

As of December 25, 2021, we had no off-balance sheet arrangements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Risk. Our exposure to market risk for changes in interest rates relates primarily to our
investment portfolio and long-term debt. We usually invest our cash in investments with short maturities or with
frequent interest reset terms. Accordingly, our interest income fluctuates with short-term market conditions. As
of December 25, 2021, our investment portfolio consisted of time deposits and commercial paper. Due to the
relatively short, weighted-average maturity of our investment portfolio and the current low interest rate
environment, our exposure to interest rate risk is minimal.

As of December 25, 2021, all of our outstanding long-term debt had fixed interest rates. Consequently, our
exposure to market risk for changes in interest rates on reported interest expense and corresponding cash flows is
minimal.

We will continue to monitor our exposure to interest rate risk.

Default Risk. We mitigate default risk in our investment portfolio by investing in only high credit quality
securities and by constantly positioning our portfolio to respond to a significant reduction in a credit rating of any
investment issuer or guarantor. Our portfolio includes investments in marketable debt securities with active
secondary or resale markets to ensure portfolio liquidity. We are averse to principal loss and strive to preserve
our invested funds by limiting default risk and market risk.

We actively monitor market conditions and developments specific to the securities and security classes in
which we invest. We believe that we take a conservative approach to investing our funds in that we invest only in
highly-rated debt securities with relatively short maturities and do not invest in securities which we believe
involve a higher degree of risk. As of December 25, 2021, substantially all of our investments in debt securities
were A-rated by at least one of the rating agencies. While we believe we take prudent measures to mitigate
investment-related risks, such risks cannot be fully eliminated as there are circumstances outside of our control.

Foreign Exchange Risk. As a result of our foreign operations, we incur costs and we carry assets and
liabilities that are denominated in foreign currencies, while sales of products are primarily denominated in U.S.
dollars.

We maintain a foreign currency hedging strategy which uses derivative financial instruments to mitigate the
risks associated with changes in foreign currency exchange rates. This strategy takes into consideration all of our
exposures. We do not use derivative financial instruments for trading or speculative purposes.

The following table provides information about our foreign currency forward contracts as of December 25,
2021 and December 26, 2020. All of our foreign currency forward contracts mature within 18 months.
December 25, 2021 December 26, 2020
Average Estimated Average Estimated
Notional Contract Fair Value Notional Contract Fair Value
Amount Rate Gain (Loss) Amount Rate Gain (Loss)
(In millions except contract rates)
Foreign currency forward contracts:
Chinese Renminbi . . . . . . . . . . . . . . . . . $ 360 6.5693 $ 6 $261 6.8160 $ 8
Canadian Dollar . . . . . . . . . . . . . . . . . . . 416 1.2646 (6) 247 1.3165 6
Indian Rupee . . . . . . . . . . . . . . . . . . . . . 162 77.3309 1 97 76.0259 1
Taiwan Dollar . . . . . . . . . . . . . . . . . . . . 122 27.2725 (1) 58 28.0978 —
Singapore Dollar . . . . . . . . . . . . . . . . . . 71 1.3489 — 50 1.3574 1
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 0.8444 (2) 35 0.8578 1
Pound Sterling . . . . . . . . . . . . . . . . . . . . 6 0.7317 — 3 0.7375 —
Malaysian Ringgit . . . . . . . . . . . . . . . . . — — — 3 4.0456 —
Japanese Yen . . . . . . . . . . . . . . . . . . . . . 1 114.3214 — 1 103.5000 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,185 $ (2) $755 $ 17

51
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Advanced Micro Devices, Inc.

Consolidated Statements of Operations

Year Ended
December 25, December 26, December 28,
2021 2020 2019
(In millions, except per share amounts)
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,434 $ 9,763 $6,731
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,505 5,416 3,863
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,929 4,347 2,868
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,845 1,983 1,547
Marketing, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . 1,448 995 750
Licensing gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) — (60)
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,648 1,369 631
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34) (47) (94)
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 (47) (165)
Income before income taxes and equity income . . . . . . . . . . . . . . . . . . . 3,669 1,275 372
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513 (1,210) 31
Equity income in investee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 —
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,162 $ 2,490 $ 341
Earnings per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.61 $ 2.10 $ 0.31
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.57 $ 2.06 $ 0.30
Shares used in per share calculation
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,213 1,184 1,091
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,229 1,207 1,120

See accompanying notes to consolidated financial statements.

52
 Advanced Micro Devices, Inc.
Consolidated Statements of Comprehensive Income

Year Ended
December 25, December 26, December 28,
2021 2020 2019
(In millions)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,162 $2,490 $341
Other comprehensive income (loss)
Net change in unrealized gains (losses) on cash flow hedges . . . . . (20) 17 8
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,142 $2,507 $349

See accompanying notes to consolidated financial statements.

53
 Advanced Micro Devices, Inc.
Consolidated Balance Sheets
December 25, December 26,
2021 2020
(In millions, except par value
amounts)
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,535 $ 1,595
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,073 695
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,706 2,066
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,955 1,399
Receivables from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 10
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312 378
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,583 6,143
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702 641
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 208
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 289
Investment: equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 63
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 931 1,245
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,478 373
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,419 $ 8,962
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,321 $ 468
Payables to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 78
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,424 1,796
Current portion of long-term debt, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312 —
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 75
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,240 2,417
Long-term debt, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 330
Long-term operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 201
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 177
Commitments and Contingencies (see Notes 16 and 17)
Stockholders’ equity:
Capital stock:
Common stock, par value $0.01; shares authorized: 2,250; shares issued: 1,232
and 1,217; shares outstanding: 1,207 and 1,211 . . . . . . . . . . . . . . . . . . . . . . . . 12 12
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,069 10,544
Treasury stock, at cost (shares held: 25 and 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,130) (131)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,451) (4,605)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . (3) 17
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,497 5,837
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,419 $ 8,962

See accompanying notes to consolidated financial statements.

54
 Advanced Micro Devices, Inc.
Consolidated Statements of Stockholders’ Equity

Year Ended
December 25, December 26, December 28,
2021 2020 2019
(In millions)
Capital stock
Common stock
Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12 $ 12 $ 10
Issuance of common stock upon warrant exercise . . . . . . . . . . . . . — — 1
Issuance of common stock to settle convertible debt . . . . . . . . . . . — — 1
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12 $ 12 $ 12
Additional paid-in capital
Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,544 $ 9,963 $ 8,750
Common stock issued under employee equity plans . . . . . . . . . . . 104 85 74
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 274 197
Issuance of common stock upon warrant exercise . . . . . . . . . . . . . — — 448
Issuance of common stock to settle convertible debt . . . . . . . . . . . 25 217 485
Issuance of treasury stock to partially settle debt . . . . . . . . . . . . . . — — 4
Issuance of common stock warrants . . . . . . . . . . . . . . . . . . . . . . . . 17 5 5
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,069 $10,544 $ 9,963
Treasury stock
Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (131) $ (53) $ (50)
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,762) — —
Common stock repurchases for tax withholding on employee
equity plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (237) (78) (6)
Issuance of treasury stock to partially settle debt . . . . . . . . . . . . . . — — 3
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,130) $ (131) $ (53)
Accumulated deficit
Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (4,605) $ (7,095) $(7,436)
Cumulative effect of adoption of accounting standard . . . . . . . . . . (8) — —
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,162 2,490 341
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,451) $ (4,605) $(7,095)
Accumulated other comprehensive income (loss)
Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17 $ — $ (8)
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . (20) 17 8
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3) $ 17 $ —
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,497 $ 5,837 $ 2,827

See accompanying notes to consolidated financial statements.

55
 Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 25, December 26, December 28,
2021 2020 2019
(In millions)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,162 $ 2,490 $ 341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 312 222
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 274 197
Amortization of debt discount and issuance costs . . . . . . . . . . . . . . . . . . . . . . . . 5 14 30
Amortization of operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . 56 42 36
Loss on debt redemption, repurchase and conversion . . . . . . . . . . . . . . . . . . . . . 7 54 176
Loss on sale or disposal of property and equipment . . . . . . . . . . . . . . . . . . . . . . 34 33 42
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 (1,223) (7)
Gain on equity investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56) (2) (1)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) 8 (1)
Changes in operating assets and liabilities:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (640) (219) (623)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (556) (417) (137)
Receivables from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 10 14
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (920) (231) (176)
Payables to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (135) 7
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801 (513) 153
Accrued liabilities and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526 574 220
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,521 1,071 493
Cash flows from investing activities:
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (301) (294) (217)
Purchases of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,056) (850) (284)
Proceeds from maturity of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,678 192 325
Collection of deferred proceeds on sale of receivables . . . . . . . . . . . . . . . . . . . . . . . . — — 25
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) — 2
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (686) (952) (149)
Cash flows from financing activities:
Proceeds from short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 200 —
Repayments and extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (200) (473)
Proceeds from warrant exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 449
Proceeds from sales of common stock through employee equity plans . . . . . . . . . . . . 104 85 74
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,762) — —
Common stock repurchases for tax withholding on employee equity plans . . . . . . . . (237) (78) (6)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1) (1)
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,895) 6 43
Net increase in cash and cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . . . . . . 940 125 387
Cash, cash equivalents and restricted cash at beginning of year . . . . . . . . . . . . . . . . . . . . . 1,595 1,470 1,083
Cash, cash equivalents and restricted cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,535 $ 1,595 $1,470
Supplemental cash flow information:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25 $ 31 $ 67
Income taxes, net of refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35 $ 8 $ (4)
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid . . . . . . . . . . . . . . . . $ 72 $ 31 $ 65
Issuance of common stock to settle convertible debt . . . . . . . . . . . . . . . . . . . . . . $ 25 $ 217 $ 377
Transfer of assets for the acquisition of property and equipment . . . . . . . . . . . . $ 37 $ 111 $ 115
Issuance of treasury stock to partially settle debt . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ — $ 7
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities . . . . $ 227 $ 45 $ 22
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,535 $ 1,595 $1,466
Restricted cash included in Prepaid expense and other current assets . . . . . . . . . — — 4
Total cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,535 $ 1,595 $1,470

See accompanying notes to consolidated financial statements.

56
 Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements

NOTE 1 – The Company

Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the
Company mean Advanced Micro Devices, Inc. and its consolidated subsidiaries. AMD’s products include x86
microprocessors (CPUs), as standalone devices or as incorporated into accelerated processing units (APUs),
chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs, server and
embedded processors, semi-custom SoC products, microprocessor and SoC development services and technology
for game consoles. From time to time, the Company may also sell or license portions of its intellectual property
(IP) portfolio.

NOTE 2 – Summary of Significant Accounting Policies

Fiscal Year. The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December.
Fiscal 2021, 2020 and 2019 ended on December 25, 2021, December 26, 2020 and December 28, 2019,
respectively. Fiscal 2021, 2020 and 2019 each consisted of 52 weeks.

Principles of Consolidation. The consolidated financial statements include the Company’s accounts and
those of its wholly-owned subsidiaries. Upon consolidation, all inter-company accounts and transactions have
been eliminated.

Reclassification. Certain prior period amounts have been reclassified to conform to current period
presentation.

Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally
accepted accounting principles (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 and assessing potential impairment, if any, of goodwill and deferred income taxes.

Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in
an amount that reflects the consideration which the Company expects to receive in exchange for those goods or
services. Sales, value-added, and other taxes collected concurrently with the provision of goods or services are
excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales.
Substantially all the Company’s revenue is derived from product sales, representing a single performance
obligation.

Non-custom products
The Company transfers control and recognizes revenue when non-custom products are shipped to
customers, which includes original equipment manufacturers (OEM) and distributors, in accordance with the
shipping terms of the sale. Non-custom product arrangements generally comprise a single performance
obligation. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company
also sells to distributors under terms allowing the majority of distributors certain rights of return and price
protection on unsold merchandise held by them. The Company estimates the amount of variable consideration
under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances
for price protection and rebates based on actual historical experience and any known events.

57
 The Company offers incentive programs to certain customers, including cooperative advertising, marketing
promotions, volume-based incentives and special pricing arrangements. Where funds provided for such programs
can be estimated, the Company recognizes a reduction to revenue at the time the related revenue is recognized;
otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue
transaction occurs; or ii) the program is offered. For transactions where the Company reimburses a customer for a
portion of the customer’s cost to perform specific product advertising or marketing and promotional activities,
such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.

Constraints of variable consideration have not been material.

Custom products
Custom products which are associated with the Company’s Enterprise, Embedded, and Semi-Custom
segment (semi-custom products), sold under non-cancellable purchases orders, for which the Company has an
enforceable right to payment, and which have no alternative use to the Company at contract inception, are
recognized as revenue, over the time of production of the products by the Company. The Company utilizes a
cost-based input method, calculated as cost incurred plus estimated margin, to determine the amount of revenue
to recognize for in-process, but incomplete, customer orders at a reporting date. The Company believes that a
cost-based input method is the most appropriate manner to measure how the Company satisfies its performance
obligations to customers because the effort and costs incurred best depict the Company’s satisfaction of its
performance obligation.

Sales of semi-custom products are not subject to a right of return. Custom products arrangements generally
involve a single performance obligation. There are no variable consideration estimates associated with custom
products.

Development and intellectual property licensing agreements

From time to time, the Company may enter into arrangements with customers that combine the provision of
development services and a license to the right to use the Company’s IP. These arrangements are deemed to be
single or multiple performance obligations based upon the nature of the arrangements. Revenue is recognized
upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The
Company evaluates whether the licensing component is distinct. A licensing component is distinct if it is both
(i) capable of being distinct and (ii) distinct in the context of the arrangement. If the license is not distinct, it is
combined with the development services as a single performance obligation and recognized over time. If the
license is distinct, revenue is recognized at a point in time when the customer has the ability to benefit from the
license.

From time to time, the Company may enter into arrangements with customers that solely involve the sale or
licensing of its patents or IP. Generally, there are no performance obligations beyond transferring the designated
license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when the customer
has the ability to benefit from the license.

There are no variable consideration estimates associated with either combined development and IP
arrangements or for standalone arrangements involving either the sale or licensing of IP.

Customers are generally required to pay for products and services within the Company’s standard
contractual terms, which are typically net 30 to 60 days. The Company has determined that it does not have
significant financing components in its contracts with customers.

Inventories
The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or
estimated net realizable value using assumptions about future demand and market conditions. In determining

58
excess or obsolescence reserves for its products, the Company considers assumptions such as changes in business
and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology
or customer requirements. In determining the lower of cost or net realizable value reserves, the Company
considers assumptions such as recent historical sales activity and selling prices, as well as estimates of future
selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory
deemed obsolete. The Company performs periodic reviews of inventory items to identify excess inventories on
hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent
historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further
or market conditions become less favorable than those projected by the Company, additional inventory carrying
value adjustments may be required.

Goodwill
The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each
year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more
frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an
impairment.

The Company first analyzes qualitative factors to determine if it is more likely than not that the fair value of
a reporting unit exceeds its carrying amount. Qualitative factors include industry and market considerations,
overall financial performance, share price trends and market capitalization and Company-specific events. If the
Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount,
the Company does not proceed to perform a quantitative impairment test.

If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its
carrying value, a quantitative goodwill impairment test will be performed by comparing the fair value of each
reporting unit to its carrying value. A quantitative impairment analysis, if necessary, considers the income
approach, which requires estimates of the present value of expected future cash flows to determine a reporting
unit’s fair value. Significant estimates include revenue growth rates and operating margins used to calculate
projected future cash flows, discount rates, and future economic and market conditions.

A goodwill impairment charge is recognized for the amount by which a reporting unit’s fair value is less
than its carrying value, not to exceed the total amount of goodwill allocated to that reporting unit.

Contingencies
From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal
course of business. The Company is also subject to income tax, indirect tax or other tax claims by tax agencies in
jurisdictions in which it conducts business. In addition, the Company is a party to environmental matters
including local, regional, state and federal government clean-up activities at or near locations where the
Company currently or has in the past conducted business. The Company is required to assess the likelihood of
any adverse judgments or outcomes to these matters as well as potential ranges of reasonably possible losses. A
determination of the amount of reserves required for these commitments and contingencies that would be
charged to earnings, if any, includes assessing the probability of adverse outcomes and estimating the amount of
potential losses. The required reserves, if any, may change due to new developments in each matter or changes in
circumstances such as a change in settlement strategy.

Cash Equivalents and Short-term Investments

Cash equivalents consist of financial instruments that are readily convertible into cash and have original
maturities of three months or less at the time of purchase. Other investments in time deposits due within 12
months and marketable securities are included in short-term investments. Classification of marketable securities
as current is based on the Company’s intent and belief in its ability to sell these securities and use the proceeds
from sale in operations within 12 months.

59
Accounts Receivable
Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection
and an allowance for credit loss. Accounts receivable also include unbilled receivables, which primarily represent
work completed on development services recognized as revenue but not yet invoiced to customers and semi-
custom products under non-cancellable purchase orders that have no alternative use to the Company at contract
inception, for which revenue has been recognized but not yet invoiced to customers. All unbilled accounts
receivables are expected to be billed and collected within twelve months.

The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing
monitoring procedures and credit approvals. Furthermore, the Company performs in-depth credit evaluations of
all new customers and, at intervals, for existing customers. From this, the Company may require letters of credit,
bank or corporate guarantees or advance payments if deemed necessary. The Company maintains an allowance
for credit loss, consisting of known specific troubled accounts as well as an amount based on overall estimated
potential uncollectible accounts receivable based on historical experience and review of their current credit
quality. The Company does not believe the receivable balance from its customers represents a significant credit
risk.

Investments in Available-for-sale Debt Securities

The Company classifies its investments in debt securities at the date of acquisition as available-for-sale.
Available-for-sale debt securities are reported at fair value with the related unrealized gains and losses included,
net of tax, in accumulated other comprehensive income (loss), a component of stockholders’ equity. If an
available-for-sale debt security’s fair value is less than its amortized cost basis, then the Company evaluates
whether the decline is the result of a credit loss, in which case an impairment is recorded through an allowance
for credit losses. Unrealized gains and losses not attributable to credit losses are included, net of tax, in
accumulated other comprehensive income (loss), a component of stockholders’ equity. The cost of securities sold
is determined based on the specific identification method.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line
basis over the estimated useful lives of the assets. Estimated useful lives of equipment is two to six years, and
leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful
economic lives of the improvements.

Leases
Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the
Company’s balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease
term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease
payments over the lease term. In determining the present value of lease payments, the Company uses the implicit
interest rate if readily determinable. When the implicit interest rate is not readily determinable, the Company
uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar
term of the lease payments. The Company utilizes the consolidated group incremental borrowing rate for all
leases as the Company has centralized treasury operations. Lease expense for operating lease payments is
recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not
recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of
underlying asset. Operating leases are included in operating lease ROU assets, other current liabilities, and long-
term operating lease liabilities on the Company’s consolidated balance sheets. The Company’s finance leases are
immaterial.

60
Foreign Currency Translation/Transactions
The functional currency of all of the Company’s foreign subsidiaries is the U.S. dollar. Assets and liabilities
denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary
assets and liabilities and historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar
denominated transactions have been remeasured at average exchange rates in effect during each period, except
for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been
remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in
earnings.

Marketing and Advertising Expenses

Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses
include certain cooperative advertising funding obligations under customer incentive programs, which costs are
recorded upon agreement with customers and vendor partners. Cooperative advertising expenses are recorded as
marketing, general and administrative expense to the extent the cash paid does not exceed the estimated fair
value of the advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising
benefit received is recorded as a reduction of revenue. Total marketing and advertising expenses for 2021, 2020
and 2019 were approximately $578 million, $314 million and $217 million, respectively.

Stock-Based Compensation
The Company estimates stock-based compensation cost for stock options at the grant date based on the
option’s fair value as calculated by the Black-Scholes model. For time-based restricted stock units (RSUs), fair
value is based on the closing price of the Company’s common stock on the grant date. The Company estimates
the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The
Company estimates the grant-date fair value of stock to be issued under the Company’s Employee Stock
Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized over the vesting
period of the applicable award using the straight-line method, except for the compensation expense related to
RSUs with performance or market conditions (PRSUs), which are recognized ratably for each vesting tranche
from the service inception date to the end of the requisite service period. Forfeiture rates are estimated at the time
of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Income Taxes
The Company computes the provision for income taxes using the liability method and recognizes deferred
tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and
liabilities, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets
and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are
expected to be realized or settled and provides a valuation allowance against deferred tax assets when it cannot
conclude that it is more likely than not that some or all deferred tax assets will be realized. The assessment
requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the
Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be
sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority. The
Company recognizes any accrued interest and penalties to unrecognized tax benefits as interest expense and
income tax expense, respectively.

Recently Adopted Accounting Standards

Income Taxes. In December 2019, the Financial Accounting Standards Board (FASB) issued ASU
2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies various
aspects of accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and

61
clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted
this standard in the first quarter of 2021 using the modified retrospective adoption method through a cumulative-
effect adjustment to accumulated deficit as of the beginning of the period. The adoption of this new standard
resulted in the recognition of an $8.4 million deferred tax liability associated with book-tax differences in foreign
equity method investments.

Recently Issued Accounting Standards

Although there are several other new accounting pronouncements issued by the FASB, the Company does
not believe any of these accounting pronouncements had or will have a material impact on its consolidated
financial statements.

NOTE 3 – Supplemental Financial Statement Information

Short-term Investments
December 25, December 26,
2021 2020
(In millions)
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 880 $295
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 400
Total short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,073 $695

Accounts Receivable, net

As of December 25, 2021 and December 26, 2020, Accounts receivable, net included unbilled accounts
receivable of $329 million and $123 million, respectively. Unbilled accounts receivables primarily represent
work completed for development services and on custom products for which revenue has been recognized but not
yet invoiced. All unbilled accounts receivable are expected to be billed and collected within 12 months.

Inventories
December 25, December 26,
2021 2020
(In millions)
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 82 $ 93
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,676 1,139
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 167
Total inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,955 $1,399

Property and Equipment, net

December 25, December 26,
2021 2020
(In millions)
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 206 $ 208
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,534 1,209
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 136
Property and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,836 1,553
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,134) (912)
Total property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 702 $ 641

62
 Depreciation expense for 2021, 2020 and 2019 was $296 million, $217 million and $142 million,
respectively.

Other Non-current Assets

December 25, December 26,
2021 2020
(In millions)
Prepaid long-term supply agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 916 $ —
Software and technology licenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328 229
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 144
Total other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,478 $373

Prepaid long-term supply agreements relate to payments made to vendors to secure long-term supply
capacity.

Accrued Liabilities
December 25, December 26,
2021 2020
(In millions)
Accrued marketing programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 933 $ 839
Accrued compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705 513
Other accrued and current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786 444
Total accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,424 $1,796

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 December 25, 2021, the aggregate
transaction price allocated to remaining performance obligations under contracts with an original expected
duration of more than one year was $197 million, of which $126 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 23%, 18% and 19% of the Company’s revenue in 2021, 2020 and 2019, respectively.

NOTE 4 – Related Parties—Equity Joint Ventures

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

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

63
 The Company’s purchases from the ATMP JV during 2021 and 2020 amounted to $1.1 billion and
$831 million, respectively. As of December 25, 2021 and December 26, 2020, the amounts payable to the ATMP
JV were $85 million and $78 million, respectively, and are included in Payables to related parties on the
Company’s consolidated balance sheets. The Company’s resales to the ATMP JV during 2021 and 2020
amounted to $28 million for each year. As of December 25, 2021 and December 26, 2020, the Company had
receivables from ATMP JV of $2 million and $10 million, respectively, included in Receivables from related
parties on the Company’s consolidated balance sheets.

During 2021, the Company recorded a gain of $6 million in Equity income in investee on its consolidated
statement of operations. During 2020, the Company recorded a gain of $5 million in Equity income in investee
on its consolidated statement of operations. During 2019, the Company did not record any gain or loss in Equity
income in investee. As of December 25, 2021 and December 26, 2020, the carrying value of the Company’s
investment in the ATMP JV was approximately $69 million and $63 million, respectively.

THATIC Joint Ventures

The Company holds equity interests in two joint ventures (collectively, the THATIC JV) with Higon
Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. As of December 25, 2021 and
December 26, 2020, the carrying value of the investment was zero.

In February 2016, the Company licensed certain of its intellectual property (Licensed IP) to the THATIC
JV, payable over several years upon achievement of certain milestones. The Company also receives a royalty
based on the sales of the THATIC JV’s products developed on the basis of such Licensed IP. The Company
classifies Licensed IP and royalty income associated with the February 2016 agreement as Licensing gain within
operating income. During 2021, the Company recognized $12 million of licensing gain from royalty income
under the agreement. The Company recognized $60 million as licensing gain associated with the Licensed IP
during 2019. As of December 25, 2021 and December 26, 2020, the Company had no receivables from the
THATIC JV.

In June 2019, the Bureau of Industry and Security of the United States Department of Commerce added
certain Chinese entities to the Entity List, including THATIC and the THATIC JV. The Company is complying
with U.S. law pertaining to the Entity List designation.

NOTE 5 – Goodwill
The carrying amount of goodwill as of December 25, 2021 and December 26, 2020 was $289 million, which
was allocated to reporting units within the Company’s Enterprise, Embedded and Semi-Custom segment. During
the fourth quarter of 2021 and 2020, the Company conducted its annual impairment tests of goodwill and
concluded that there was no goodwill impairment with respect to its reporting units.

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NOTE 6 – Debt and Revolving Credit Facility
Debt
The Company’s total debt as of December 25, 2021 and December 26, 2020 consisted of:

December 25, December 26,

2021 2020
(In millions)
7.50% Senior Notes Due 2022 (7.50% Notes) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 312 $312
2.125% Convertible Senior Notes Due 2026 (2.125% Notes) . . . . . . . . . . . . . . . . . . . . 1 26
Total debt (principal amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 338
Unamortized debt discount and issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (8)
Total debt (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 330
Less: current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (312) —
Total long-term debt, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1 $330

2.125% Convertible Senior Notes Due 2026

In September 2016, the Company issued $805 million in aggregate principal amount of 2.125% Convertible
Senior Notes due 2026 (2.125% Notes). The 2.125% Notes are general unsecured senior obligations of the
Company. The interest is payable semi-annually in March and September of each year, commencing in March
2017. During 2021, holders of the 2.125% Notes converted $25 million principal amount of notes in exchange
for approximately 3 million shares of the Company’s common stock at the conversion price of $8.00 per share.
The Company recorded a loss of $7 million from these conversions in Other income (expense), net on its
consolidated statements of operations. As of December 25, 2021, the outstanding aggregate principal amount of
the 2.125% Notes was $1 million.

The Company’s current intent is to deliver shares of its common stock upon conversion of the 2.125%
Notes. As such, no sinking fund is provided for the 2.125% Notes and the Company continued to classify the
carrying value of the liability component of the 2.125% Notes as long-term debt and the equity component of the
2.125% Notes as permanent equity on its consolidated balance sheet as of December 25, 2021. The determination
of whether or not the 2.125% Notes are convertible is performed on a calendar-quarter basis.

Based on the closing price of the Company’s common stock of $146.14 on December 23, 2021, the last
trading day of 2021, the if-converted value of the 2.125% Notes exceeded its principal amount by approximately
$15 million.

The effective interest rate of the liability component of the 2.125% Notes is 8%. This interest rate was based
on the interest rates of similar liabilities at the time of issuance that did not have associated conversion features.

The following table sets forth total interest expense recognized related to the 2.125% Notes for the year
ended December 25, 2021:

December 25, December 26,

2021 2020
(In millions)
Contractual interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $4
Interest cost related to amortization of the debt discount . . . . . . . . . . . . . . . . . . . . . . . $ — $6

The carrying amount of the equity component of the 2.125% Notes was $0 million and $10 million as of
December 25, 2021 and December 26, 2020, respectively.

65
7.50% Senior Notes Due 2022
On August 15, 2012, the Company issued $500 million of its 7.50% Senior Notes due 2022 (7.50% Notes).
The 7.50% Notes are general unsecured senior obligations of the Company. Interest is payable on February 15
and August 15 of each year beginning February 15, 2013 until the maturity date of August 15, 2022. The 7.50%
Notes are governed by the terms of an indenture (the 7.50% Indenture) dated August 15, 2012 between the
Company and Wells Fargo Bank, N.A., as trustee. As of December 25, 2021, the outstanding aggregate principal
amount of the 7.50% Notes was $312 million.

Prior to August 15, 2022, the Company may redeem some or all of the 7.50% Notes at a price equal to
100% of the principal amount plus accrued and unpaid interest and a “make whole” premium (as defined in the
7.50% Indenture). Holders have the right to require the Company to repurchase all or a portion of the 7.50%
Notes in the event that the Company undergoes a change of control as defined in the 7.50% Indenture, at a
repurchase price of 101% of the principal amount plus accrued and unpaid interest. Additionally, an event of
default (as defined in the 7.50% Indenture) may result in the acceleration of the maturity of the 7.50% Notes.

Debt Covenants and Seniority

The 7.50% Notes require the Company to comply with certain financial covenants and a number of
restrictive covenants. The 7.50% Notes and 2.125% Notes rank equally with the Company’s existing and future
senior debt and are senior to all of the Company’s future subordinated debt. The 7.50% Notes and 2.125% Notes
rank junior to all of the Company’s future senior secured debt to the extent of the collateral securing such debt
and are structurally subordinated to all existing and future debt and liabilities of the Company’s subsidiaries.

Potential Repurchase of Outstanding Notes

The Company may elect to purchase or otherwise retire the 7.50% Notes and 2.125% Notes with cash, stock
or other assets from time to time in open market or privately negotiated transactions either directly or through
intermediaries or by tender offer when the Company believes the market conditions are favorable to do so.

Revolving Credit Facility

The Company is party to a $500 million unsecured revolving credit facility (the Revolving Credit Facility),
including a $50 million swingline sub-facility and a $75 million sublimit for letters of credit pursuant to a credit
agreement with a syndicate of banks. The Revolving Credit Facility expires in June 2024. Borrowings under the
Revolving Credit Facility bear interest at either the LIBOR rate or the base rate at the Company’s option (in each
case, as customarily defined) plus an applicable margin. As of December 25, 2021, there were no borrowings
outstanding under the Revolving Credit Facility and the Company was in compliance with all required covenants.
As of December 25, 2021, the Company had $14 million of letters of credit outstanding under the Revolving
Credit Facility.

Future Payments on Total Debt

As of December 25, 2021, the Company’s future debt payment obligations were as follows:
Term Debt
(Principal only)
Year (In millions)
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $312
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $313

66
NOTE 7 – Financial Instruments
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except
for non-marketable equity investments in privately-held companies. These equity investments are generally
accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent
observable price changes and are periodically assessed for impairment when events or circumstances indicate
that a decline in value may have occurred.

Fair Value Hierarchy

The fair value framework requires the categorization of assets and liabilities into three levels based upon the
assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that
assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar
assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are
not active; or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the asset or liability.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market
activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and
liabilities include those whose fair value measurements are determined using pricing models, discounted cash
flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

Financial Instruments Recorded at Fair Value on a Recurring Basis

December 25, 2021 December 26, 2020

(In millions) Level 1 Level 2 Total Level 1 Level 2 Total
Cash equivalents
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4 $ — $ 4 $ 1 $— $ 1
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 45 45 — — —
Short-term investments
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 880 880 — 295 295
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 193 193 — 400 400
Other non-current assets
Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 — 66 — — —
Deferred compensation plan investments . . . . . . . . . . . . 72 — 72 46 — 46
Total assets measured at fair value . . . . . . . . . . . . . . . . . . . . . $142 $1,118 $1,260 $ 47 $695 $742

The Company did not have any financial instruments measured at fair value on a recurring basis within
Level 3 fair value measurements as of December 25, 2021 or December 26, 2020.

During the year ended December 25, 2021, the Company recognized a $64 million gain recorded in Other
income in the consolidated statements of operations due to an increase in the fair value of an equity investment.

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

67
Financial Instruments Not Recorded at Fair Value
The Company carries its financial instruments at fair value with the exception of its long-term debt. The
carrying amounts and estimated fair values of the Company’s long-term debt are as follows:

December 25, 2021 December 26, 2020

Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
(In millions)
Current portion of long-term debt, net . . . . . . . . . . . . . . . $312 $326 $ — $ —
Long-term debt, net of current portion . . . . . . . . . . . . . . . 1 15 330 642

The estimated fair value of the Company’s long-term debt are based on Level 2 inputs as the fair value is
based on quoted prices for the Company’s debt and comparable instruments in inactive markets. The Company’s
2.125% Notes, included in Long-term debt, net, above, were convertible at the option of the holder as of
December 25, 2021. The estimated fair value of the 2.125% Notes as of December 25, 2021 takes into account
the value of the Company’s stock price of $146.14 as of December 23, 2021, the last trading date for the year
ended December 25, 2021 and the initial conversion price of approximately $8.00 per share of common stock.

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

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 18 months and are designated as accounting hedges. As of December 25,
2021 and December 26, 2020, the notional values of the Company’s outstanding foreign currency forward
contracts designated as cash flow hedges were $894 million and $501 million, respectively. The fair value of
these contracts was not material as of December 25, 2021 and December 26, 2020.

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
December 25, 2021 and December 26, 2020, the notional values of outstanding contracts were $291 million and
$254 million, respectively. The fair value of these contracts was not material as of December 25, 2021 and
December 26, 2020.

NOTE 8 – Accumulated Other Comprehensive Income (Loss)

Unrealized holding gains or losses on the Company’s available-for-sale debt securities and unrealized
holding gains and losses on derivative financial instruments qualifying as cash flow hedges are included in other
comprehensive income (loss).

68
 The table below summarizes the changes in accumulated other comprehensive income (loss):

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Gains (losses) on cash flow hedges:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17 $ — $ (8)
Net unrealized gains (losses) arising during the period . . . . . . . . . 5 18 2
Net losses (gains) reclassified into income during the period . . . . . (25) (1) 6
Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . (20) 17 8
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3) $ 17 $ —

NOTE 9 – Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily
of investments in time deposits, available-for-sale debt securities and trade receivables.

The Company places its investments with high credit quality financial institutions. At the time an
investment is made, investments in commercial paper of industrial firms and financial institutions are rated A1,
P1, F1 or better. The Company invests in tax-exempt securities including municipal notes and bonds and bonds
that are rated A, A2 or better and repurchase agreements, each of which have securities of the type and quality
listed above as collateral.

The Company believes that concentrations of credit risk with respect to trade receivables are limited
because a large number of geographically diverse customers make up the Company’s customer base, thus
diluting the trade credit risk. The Company’s top three customers with the highest accounts receivable balances
each accounted for approximately 20%, 15% and 9% of the total consolidated accounts receivable balance as of
December 25, 2021 and 18%, 17% and 6%, of the total consolidated accounts receivable balance as of
December 26, 2020. However, the Company does not believe the receivable balance from these customers
represents a significant credit risk based on past collection experience and review of their current credit quality.

The Company is exposed to credit losses from nonperformance by counterparties on foreign currency hedge
contracts. These counterparties are large global institutions, and to date, no such counterparty has failed to meet
its financial obligations to the Company.

NOTE 10 – Earnings Per Share

Basic earnings per share is computed based on the weighted-average number of shares outstanding.

Diluted earnings per share is computed based on the weighted-average number of shares outstanding plus
potentially dilutive shares outstanding during the period. Potentially dilutive shares are determined by applying
the treasury stock method to the Company’s stock options, RSUs (including PRSUs), common stock to be issued
under the ESPP and warrants. Potentially dilutive shares issuable upon conversion of the 2.125% Convertible
Senior Notes due 2026 (2.125% Notes) are calculated using the if-converted method.

69
 The following table sets forth the components of basic and diluted earnings per share:

December 25, December 26, December 28,

2021 2020 2019
(In millions, except per
share amounts)
Numerator
Net income for basic earnings per share . . . . . . . . . . . . . . . . . . . . . $3,162 $2,490 $ 341
Effect of potentially dilutive shares:
Interest expense related to the 2.125% Notes . . . . . . . . . . . . . — 1 —
Net income for diluted earnings per share . . . . . . . . . . . . . . . . . . . $3,162 $2,491 $ 341
Denominator
Basic weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,213 1,184 1,091
Effect of potentially dilutive shares:
Employee equity plans and warrants . . . . . . . . . . . . . . . . . . . . 16 20 29
2.125% Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3 —
Diluted weighted-average shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1,229 1,207 1,120
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.61 $ 2.10 $ 0.31
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.57 $ 2.06 $ 0.30

Potential shares from employee equity plans and the impact from the conversion of the 2.125% Notes up to
the conversion date, totaling 2 million and 22 million shares for 2021 and 2020, respectively, were not included
in the earnings per share calculation because their inclusion would have been anti-dilutive.

NOTE 11 – Common Stock and Stock-Based Compensation

Common Stock
Shares of common stock outstanding were as follows:

Year Ended
December 25, December 26, December 28,
2021 2020 2019
(In millions)
Balance, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,211 1,170 1,005
Common stock issued under employee equity plans . . . . . . . . . . . . . . . 12 14 20
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17) — —
Common stock repurchases for tax withholding on equity awards . . . . (2) (1) —
Issuance of common stock upon warrant exercise . . . . . . . . . . . . . . . . . — — 75
Issuance of common stock to settle convertible debt . . . . . . . . . . . . . . . 3 28 69
Issuance of treasury stock to partially settle debt . . . . . . . . . . . . . . . . . . — — 1
Balance, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,207 1,211 1,170

Stock Repurchase Program

In May 2021, the Company’s Board of Directors approved a stock repurchase program authorizing up to
$4 billion of repurchases of the Company’s outstanding common stock (the Repurchase Program). During the
year ended December 25, 2021, the Company repurchased 16.7 million shares of its common stock under the
Repurchase Program for $1.8 billion. As of December 25, 2021, $2.2 billion remained available for future stock
repurchases under this program. This 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.

70
Stock-Based Compensation
The Company’s employee equity programs are intended to attract, retain and motivate highly qualified
employees. On April 29, 2004, the Company’s stockholders approved the 2004 Equity Incentive Plan, as
amended and restated (the 2004 Plan). In the fourth quarter of 2017, the Company introduced the 2017 ESPP, as
amended and restated (the 2017 Plan).

Under the 2004 Plan, stock options generally vest and become exercisable over a three-year period from the
date of grant and expire within seven years after the grant date. Unvested shares that are reacquired by the
Company from forfeited outstanding equity awards become available for grant and may be reissued as new
awards.

Under the 2004 Plan, the Company can grant (i) stock options, and (ii) RSUs, including time-based RSUs
and PRSUs.

Stock Options. Under the 2004 Plan, nonstatutory and incentive stock options may be granted. The exercise
price of the shares subject to each nonstatutory stock option and incentive stock option cannot be less than 100%
of the fair market value of the Company’s common stock on the date of the grant. The exercise price of each
option granted under the 2004 Plan must be paid in full at the time of the exercise.

Time-based RSUs. Time-based RSUs are awards that can be granted to any employee, director or consultant and
that obligate the Company to issue a specific number of shares of the Company’s common stock in the future if
the vesting terms and conditions are satisfied.

PRSUs. PRSUs can be granted to certain of the Company’s senior executives. The performance metrics can
be financial performance, non-financial performance and/or market conditions. Each PRSU award reflects a
target number of shares (Target Shares) that may be issued to an award recipient before adjusting based on the
Company’s financial performance, non-financial performance and/or market conditions. The actual number of
shares that a grant recipient receives at the end of the period may range from 0% to 250% of the Target Shares
granted, depending upon the degree of achievement of the performance target designated by each individual
award.

ESPP. Under the 2017 Plan, eligible employees who participate in an offering period may have up to 15%
of their eligible earnings withheld, up to certain limitations, to purchase shares of common stock at 85% of the
lower of the fair market value on the first or the last business day of the six-month offering period. The offering
periods commence in May and November each year.

As of December 25, 2021, the Company had 50 million shares of common stock that were available for
future grants and 17 million shares reserved for issuance upon the exercise of outstanding stock options or the
vesting of unvested RSUs, including PRSUs, under the 2004 Plan. In addition, the Company had 39 million
shares of common stock that were available for issuance under the 2017 plan.

71
Valuation and Expense
Stock-based compensation expense was allocated in the consolidated statements of operations as follows:

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5 $ 6 $ 6
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 173 129
Marketing, general, and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . 128 95 62
Total stock-based compensation expense before income taxes . . . . . . . 379 274 197
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58) (42) —
Total stock-based compensation expense, net of income taxes . . . . . . . $ 321 $ 232 $ 197

Stock Options. The weighted-average estimated fair value of employee stock options granted for the years
ended December 25, 2021, December 26, 2020 and December 28, 2019 was $46.07, $38.49 and $13.31 per share,
respectively, using the following assumptions:

December 25, December 26, December 28,

2021 2020 2019

Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.77% 57.87% 52.60% - 56.51%

Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.69% 0.18% 1.53% - 2.51%
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % — % — %
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.55 4.30 3.94 - 3.95

The Company uses a combination of the historical volatility of its common stock and the implied volatility
for publicly traded options on the Company’s common stock as the expected volatility assumption. The risk-free
interest rate is based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the
expected life of the option grant at the date closest to the option grant date. The expected dividend yield is zero as
the Company does not expect to pay dividends in the near future. The expected term of employee stock options
represents the weighted-average period the stock options are expected to remain outstanding.

The following table summarizes stock option activity and related information:

Weighted-
Average
Weighted- Remaining
Outstanding Average Aggregate Contractual
Number Exercise Intrinsic Life
of Shares Price Value (in years)
(In millions, except share price)
Balance as of December 26, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . 7 $ 12.91
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 $107.58
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) $ 4.38
Balance as of December 25, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . 5 $ 23.98 $614 2.80
Exercisable December 25, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . 4 $ 13.24 $561 2.23

The total intrinsic value of stock options exercised for 2021, 2020 and 2019 was $277 million, $180 million
and $84 million, respectively.

72
 As of December 25, 2021, the Company had $23 million of total unrecognized compensation expense
related to stock options, which will be recognized over the weighted-average period of 1.76 years.
Time-based RSUs. The weighted-average grant date fair values of time-based RSUs granted during 2021,
2020 and 2019 were $107.02, $78.59 and $32.52 per share, respectively.
The following table summarizes time-based RSU activity and related information:

Weighted-
Weighted- Average
Average Remaining
Grant- Aggregate Contractual
Number Date Fair Intrinsic Life
of Shares Value Value (in years)
(In millions except share price)
Unvested shares as of December 26, 2020 . . . . . . . . . . . . . . . . . . . . 12 $ 43.98
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 $107.02
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) $ 63.99
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) $ 36.37
Unvested shares as of December 25, 2021 . . . . . . . . . . . . . . . . . . . . 10 $ 79.03 $1,460 1.26

The total fair value of time-based RSUs vested during 2021, 2020 and 2019 was $678 million, $642 million
and $395 million, respectively.
As of December 25, 2021, the Company had $704 million of total unrecognized compensation expense
related to time-based RSUs, which will be recognized over the weighted-average period of 1.92 years.
PRSUs. The weighted-average grant date fair values of PRSUs granted during 2021, 2020 and 2019 were
$153.89, $122.95 and $50.00, respectively, using the following assumptions:

December 25, December 26, December 28,

2021 2020 2019

Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57.75% 55.74% - 60.10% 60.54% - 62.52%

Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.43% 0.14% - 1.41% 1.56% - 2.49%
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % — % — %
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.00 2.48 - 3.00 2.48 -5.00

The Company uses the historical volatility of its common stock and risk-free interest rate based on the rate
for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the PRSUs grant
at the date closest to the grant date. The expected dividend yield is zero as the Company does not expect to pay
dividends in the near future. The expected term of PRSUs represents the requisite service periods of these
PRSUs.

The following table summarizes PRSU activity and related information:

Weighted-
Weighted- Average
Average Remaining
Grant- Aggregate Contractual
Number Date Fair Intrinsic Life
of Shares Value Value (in years)
(In millions except share price)
Unvested shares as of December 26, 2020 . . . . . . . . . . . . . . . . . . 3 $ 55.63
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $153.89
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — $ —
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) $ 24.40
Unvested shares as of December 25, 2021 . . . . . . . . . . . . . . . . . . 2 $ 78.59 $ 338 1.50

73
 The total fair value of PRSUs vested during 2021, 2020 and 2019 was $98 million, $76 million and
$65 million, respectively.

As of December 25, 2021, the Company had $103 million of total unrecognized compensation expense
related to PRSUs, which will be recognized over the weighted-average period of 1.50 years.

ESPP. The weighted-average grant date fair value for the ESPP during 2021, 2020 and 2019 was $27.27,
$20.97 and $9.96 per share, respectively, using the following assumptions:

December 25, December 26, December 28,

2021 2020 2019

Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.90% - 39.39% 55.16% - 66.53% 48.95% - 67.02%

Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.04% - 0.07% 0.11% - 0.15% 1.58% - 2.46%
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % — % — %
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.50 0.50 0.50

The Company uses the historical volatility of its common stock and the risk-free interest rate based on the
rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the ESPP
grant at the date closest to the ESPP grant date. The expected dividend yield is zero as the Company does not
expect to pay dividends in the near future. The expected term of the ESPP represents the six-month offering
period.

During 2021, 1 million shares of common stock were purchased under the ESPP at a purchase price
of $65.43 resulting in aggregate cash proceeds of $92 million. As of December 25, 2021, the Company had
$19 million of total unrecognized compensation expense related to the ESPP, which will be recognized over the
weighted-average period of 0.38 years.

NOTE 12 – Retirement Benefit Plans

The Company provides retirement benefit plans in the United States and certain foreign countries. The
Company has a 401(k) retirement plan that allows participating employees in the United States to contribute as
defined by the plan and subject to Internal Revenue Service limitations. The Company matches 75% of
employees’ contributions up to 6% of their eligible compensation. The Company’s contributions to the 401(k)
plan for 2021, 2020 and 2019 were approximately $35 million, $29 million and $25 million, respectively.

NOTE 13 – Income Taxes

Income before income taxes consists of the following:

December 25, December 26, December 28,

2021 2020 2019
(In millions)
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,528 $ 1,213 $ 334
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 67 38
Total pre-tax income including equity income (loss) in investee . . . . . . $ 3,675 $ 1,280 $ 372

74
 The income tax provision (benefit) consists of:

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Current:
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $112 $ — $ (13)
U.S. State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5 1
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 8 50
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 13 38
Deferred:
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 (1,193) —
U.S. State and Local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) (28) —
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (2) (7)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308 (1,223) (7)
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $513 $(1,210) $ 31

The table below displays the reconciliation between statutory federal income taxes and the total income tax
provision (benefit).

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Statutory federal income tax expense at 21% . . . . . . . . . . . . . . . . . . . . . $ 772 $ 269 $ 78
State taxes (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 (6) 1
Foreign withholding taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 22
Foreign rate detriment / (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 (3) 2
Valuation allowance change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (1,301) (59)
Research credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (78) (57) —
Excess tax benefits relating to share-based compensation . . . . . . . . . . . (125) (116) —
Tax Reform Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (13)
Foreign Derived Intangible Income deduction . . . . . . . . . . . . . . . . . . . . (147) — —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (6) —
Income tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 513 $(1,210) $ 31

The Company recorded an income tax provision of $513 million in 2021 and an income tax benefit of
$1.2 billion in 2020, representing effective tax rates of 14% and (95)% respectively. The income tax provision of
$513 million was a result of higher income in the U.S. and increase in foreign taxes, partially offset by
$147 million of foreign-derived intangible income benefit, $78 million of research and development tax credits,
and $125 million of excess tax benefit for stock-based compensation net of non-deductible officers’
compensation.

The income tax benefit in 2020 was primarily due to $1.3 billion of tax benefit from the valuation allowance
release in the U.S. This benefit was partially offset by approximately $10 million of withholding tax expense
related to cross-border transactions, $13 million of state and foreign taxes and $75 million increase in valuation
allowance against certain state and foreign tax credits, which are reflected as part of the state taxes and foreign
rate benefit in the reconciliation table above.

The income tax provision in 2019 was primarily due to $22 million of withholding tax related to cross-
border transactions and $22 million of tax in foreign locations, partially offset by a $13 million benefit for a
reduction of U.S. income taxes accrued in the prior year.

75
 Deferred income taxes reflect the net tax effects of tax carryovers and temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the balances for income tax
purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 25, 2021
and December 26, 2020 were as follows:

December 25, December 26,

2021 2020
(In millions)
Deferred tax assets:
Net operating loss carryovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 920 $ 1,029
Accruals and reserves not currently deductible . . . . . . . . . . . . . . . . . . . . . . . . . . . 631 514
Employee benefits not currently deductible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 122
Federal and state tax credit carryovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 569
Foreign research and development ITC credits . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 489
Capitalized costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 174
Lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 72
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 29
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,853 2,998
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,735) (1,576)
Total deferred tax assets, net of valuation allowance . . . . . . . . . . . . . . . . . . 1,118 1,422
Deferred tax liabilities:
Acquired intangibles and goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50) (1)
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (110) (62)
Discount of convertible notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2)
Undistributed foreign earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24) (114)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15) (9)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (199) (188)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 919 $ 1,234

The movement in the deferred tax valuation allowance was as follows:

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,576 $ 2,867 $2,443
Charges (reductions) to income tax expense/other accounts* . . . . . . . . 3 (1,301) (61)
Net (deductions) recoveries+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 10 485
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,735 $ 1,576 $2,867

* Amounts recorded against other accounts are not material

+ The 2019 and 2021 net recoveries were primarily related to net originating deferred tax assets and newly
generated tax credits

76
 Deferred tax liabilities are included in Other long-term liabilities on the consolidated balance sheets. The
breakdown between deferred tax assets and deferred tax liabilities as of December 25, 2021 and December 26,
2020 is as follows:
December 25, December 26,
2021 2020
(In millions)
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $931 $1,245
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) (11)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $919 $1,234

Through the end of fiscal year 2021, the Company continued to maintain a valuation allowance of
approximately $1.7 billion for certain federal, state, and foreign tax attributes. The federal valuation allowance
maintained is due to limitations under Internal Revenue Code Section 382 or 383, separate return loss year rules,
or dual consolidated loss rules. Certain state and foreign valuation allowance maintained is due to lack of
sufficient sources of future taxable income.

The Company’s United States federal and state net operating losses carryforwards as of December 25, 2021,
were $1.9 billion and $265 million, respectively. Net operating losses may be subject to limitations by the
Internal Revenue Code and similar provisions. The United States federal net operating losses will expire between
2034 and 2037, and the state net operating losses will expire at various dates through 2039. The federal tax
credits of $441.8 million will expire at various dates between 2022 and 2041. The state tax credits of
$288 million will expire at various dates between 2022 through 2036 except for California R&D credit, which
does not expire. The Company also has $552 million of credit carryforward in Canada that will expire between
2026 and 2040.

Under current U.S. tax law the impact of future distributions of undistributed earnings that are indefinitely
reinvested are anticipated to be withholding taxes from local jurisdictions and non-conforming U.S. state
jurisdictions. The amount of cumulative undistributed earnings that are permanently reinvested that could be
subject to withholding taxes are $364 million as of December 25, 2021.

A reconciliation of the Company’s gross unrecognized tax benefits was as follows:

December 25, December 26, December 28,
2021 2020 2019
(In millions)
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $119 $ 65 $ 49
Increases for tax positions taken in prior years . . . . . . . . . . . . . . . . . . . . 14 41 5
Decreases for tax positions taken in prior years . . . . . . . . . . . . . . . . . . . (9) (15) —
Increases for tax positions taken in the current year . . . . . . . . . . . . . . . . 156 30 15
Decreases for settlements with taxing authorities . . . . . . . . . . . . . . . . . . (5) (1) (3)
Decreases for lapsing of the statute of limitations . . . . . . . . . . . . . . . . . — (1) (1)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $275 $119 $ 65

The amount of unrecognized tax benefits that would impact the effective tax rate was $215 million,
$77 million and $17 million as of December 25, 2021, December 26, 2020 and December 28, 2019, respectively.
The Company had $39 million of accrued penalties and interest related to unrecognized tax benefits as of
December 25, 2021. The Company had no material amounts of accrued interest and accrued penalties related to
unrecognized tax benefits as of December 26, 2020 and December 28, 2019.

It is possible the Company may have tax audits close in the next 12 months that could materially change the
balance of the uncertain tax benefits; however, the timing of tax audit closures and settlements are highly

77
uncertain. The Company and its subsidiaries have several foreign and U.S. state audits in process at any one point
in time. The Company has provided for uncertain tax positions that require a liability under the adopted method
to account for uncertainty in income taxes.

The Company is subject to taxation in the United States and foreign jurisdictions. Earnings from non-U.S.
activities are subject to local country income tax. The material jurisdiction in which the Company is subject to
potential examination by the taxing authority is the United States, which is open for years from 2008 onwards
due to the net operating losses.

NOTE 14 – Segment Reporting

Management, including the Chief Operating Decision Maker, who is the Company’s Chief Executive
Officer, reviews and assesses operating performance using segment net revenue and operating income (loss).
These performance measures include the allocation of expenses to the operating segments based on
management’s judgment. The Company has the following two reportable segments:
• the Computing and Graphics segment, which primarily includes desktop and notebook microprocessors,
accelerated processing units that integrate microprocessors and graphics, chipsets, discrete graphics
processing units (GPUs), data center and professional GPUs, and development services. From time to
time, the Company may also sell or license portions of its IP portfolio.
• the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded
processors, semi-custom SoC products, development services and technology for game consoles. 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 management does not consider these expenses and credits in evaluating the
performance of the reportable segments. This category primarily includes employee stock-based compensation
expense and acquisition-related costs.

The following table provides a summary of net revenue and operating income (loss) by segment for 2021,
2020 and 2019.

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Net revenue:
Computing and Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,332 $6,432 $4,709
Enterprise, Embedded and Semi-Custom . . . . . . . . . . . . . . . . . . . . 7,102 3,331 2,022
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,434 $9,763 $6,731
Operating income (loss):
Computing and Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,090 $1,266 $ 577
Enterprise, Embedded and Semi-Custom . . . . . . . . . . . . . . . . . . . . 1,979 391 263
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (421) (288) (209)
Total operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,648 $1,369 $ 631

78
 The following table provides items included in All Other category:
December 25, December 26, December 28,
2021 2020 2019
(In millions)
Operating loss:
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . $(379) $(274) $(197)
Acquisition-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42) (14) —
Loss contingency on legal matter . . . . . . . . . . . . . . . . . . . . . . . . . . — — (12)
Total operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(421) $(288) $(209)

The Company does not discretely allocate assets to its operating segments, nor does management evaluate
operating segments using discrete asset information.

The following table summarizes sales to external customers by geographic regions based on billing location
of the customer:
December 25, December 26, December 28,
2021 2020 2019
(In millions)
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,656 $2,294 $1,764
China (including Hong Kong) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,096 2,329 1,736
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,381 1,033 840
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,249 1,108 762
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,091 1,187 719
Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,389 1,096 597
Other countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 716 313
Total sales to external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,434 $9,763 $6,731

The following table summarizes sales to major customers that accounted for at least 10% of the Company’s
consolidated net revenue for the respective years:
December 25, December 26, December 28,
2021 2020 2019

Customer A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14% * 12%

Customer B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11% * *

* Less than 10%

Sales to customer A consisted of products primarily from the Enterprise, Embedded and Semi-Custom
segment and sales to customer B consisted of products primarily from the Computing and Graphics segment.

The following table summarizes Property and equipment, net by geographic areas:
December 25, December 26,
2021 2020

(In millions)
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $486 $421
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 126
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 34
Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 32
Other countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 28
Total property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $702 $641

79
NOTE 15 – Other Income (Expense), Net
The following table summarizes the components of Other income (expense), net:

December 25, December 26, December 28,

2021 2020 2019
(In millions)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8 $ 8 $ 15
Loss on debt redemption, repurchase and conversion . . . . . . . . . . . . . . (7) (54) (176)
Gains on equity investments, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 2 1
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) (3) (5)
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55 $(47) $(165)

NOTE 16 – Commitments and Guarantees

Operating Leases
The Company has entered into operating and finance leases for its corporate offices, data centers, research
and development facilities and certain equipment. The leases expire at various dates through 2031, some of
which include options to extend the lease for up to ten years.

For 2021, 2020 and 2019, the Company recorded $71 million, $59 million and $56 million, respectively, of
operating lease expense, including short-term lease expense. For 2021 and 2020, the Company recorded
$26 million and $27 million, respectively, of variable lease expense, which primarily included operating
expenses and property taxes associated with the usage of facilities under the operating leases. For 2021 and 2020,
cash paid for operating leases included in operating cash flows was $67 million and $55 million, respectively.
The Company’s finance and short-term leases are immaterial to the Company’s consolidated financial
statements.

Supplemental information related to leases is as follows:

December 25,
2021

Weighted-average remaining lease term in years – operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10

Weighted-average discount rate – operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.70%

Future minimum lease payments under non-cancellable operating lease liabilities as of December 25,
2021 are as follows:

Year (In millions)

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2027 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471
Less: interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (52)
Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71)
Total long-term operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 348

80
 Certain other operating leases contain provisions for escalating lease payments subject to changes in the
consumer price index.

Commitments
The Company’s purchase commitments primarily include the Company’s obligations to purchase wafers
and substrates from third parties and future payments related to certain software and technology licenses and IP
licenses.

Total future unconditional purchase commitments as of December 25, 2021 were as follows:

Year (In millions)

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,765
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,658
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
2027 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383
Total unconditional purchase commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,066

Warranties and Indemnities

The Company generally warrants that its products sold to its customers will conform to its approved
specifications and be free from defects in material and workmanship under normal use and conditions for one
year. The Company may also offer one to three-year limited warranties based on product type and negotiated
warranty terms with certain customers. The Company accrues warranty costs to Cost of sales at the time of sale
of warranted products.

Changes in the Company’s estimated liability for product warranty during the years ended December 25,
2021 and December 26, 2020 are as follows:

December 25, December 26,

2021 2020
(In millions)
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37 $ 15
Provisions during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 82
Settlements during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92) (60)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51 $ 37

In addition to product warranties, the Company from time to time in its normal course of business
indemnifies other parties with whom it enters into contractual relationships, including customers, lessors and
parties to other transactions with the Company, with respect to certain matters. In these limited matters, the
Company has agreed to hold certain third parties harmless against specific types of claims or losses such as those
arising from a breach of representations or covenants, third-party claims that the Company’s products when used
for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third
party, or other specified claims made against the indemnified party. It is not possible to determine the maximum
potential amount of liability under these indemnification obligations due to the unique facts and circumstances
that are likely to be involved in each particular claim and indemnification provision. Historically, payments made
by the Company under these obligations have not been material. In addition, the impact from changes in
estimates for pre-existing warranties has been immaterial.

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NOTE 17 – Contingencies
Shareholder Derivative Lawsuits (Wessels, Hamilton and Ha)
On March 20, 2014, a purported shareholder derivative lawsuit captioned Wessels v. Read, et al., Case
No. 1:14 cv-262486 (Wessels) was filed against the Company (as a nominal defendant only) and certain of its
directors and officers in the Santa Clara County Superior Court of the State of California. The complaint purports
to assert claims against the Company and certain individual directors and officers for breach of fiduciary duty,
waste of corporate assets and unjust enrichment. The complaint seeks damages allegedly caused by alleged
materially misleading statements and/or material omissions by the Company and the individual directors and
officers regarding its 32 nm technology and “Llano” product, which statements and omissions, the plaintiffs
claim, allegedly operated to artificially inflate the price paid for the Company’s common stock during the period.
On April 27, 2015, a similar purported shareholder derivative lawsuit captioned Christopher Hamilton and David
Hamilton v. Barnes, et al., Case No. 5:15 - cv-01890 (Hamilton) was filed against the Company (as a nominal
defendant only) and certain of its directors and officers in the United States District Court for the Northern
District of California.

On September 29, 2015, a similar purported shareholder derivative lawsuit captioned Jake Ha v Caldwell, et
al., Case No. 3:15-cv-04485 (Ha) was filed against the Company (as a nominal defendant only) and certain of its
directors and officers in the United States District Court for the Northern District of California. The lawsuit also
seeks a court order voiding the stockholder vote on the Company’s 2015 proxy. The case was transferred to the
judge handling the Hamilton Lawsuit and is now Case No. 4:15-cv-04485.

The Wessels, Hamilton and Ha shareholder derivative lawsuits were stayed pending resolution of a class
action lawsuit captioned Hatamian v. AMD, et al., C.A. No. 3:14-cv-00226 filed against the Company in the
United States District Court for the Northern District of California (the Hatamian Lawsuit). The Hatamian
Lawsuit asserted claims against the Company and certain of its officers for alleged violations of Section 10(b) of
the Exchange Act of 1934, as amended (the Exchange Act), and SEC Rule 10b-5 concerning certain statements
regarding its 32 nm technology and “Llano” products. On October 9, 2017, the parties signed a definitive
settlement agreement resolving the Hatamian Lawsuit and submitted it to the Court for approval. Under the terms
of this agreement, the settlement was funded entirely by certain of the Company’s insurance carriers and the
defendants continued to deny any liability or wrongdoing. On March 2, 2018, the court approved the settlement
and entered a final judgment in the Hatamian Lawsuit.

On July 23, 2018, the Santa Clara Superior Court sustained the Company’s demurrer in the Wessels case,
dismissing all claims in that matter with prejudice. The California Court of Appeal affirmed this decision on
August 27, 2020 and issued its remittitur on September 9, 2020, which foreclosed further appeals in the state
court litigation. On October 4, 2018, the district court issued an order dismissing the Hamilton and Ha amended
complaints and both plaintiffs appealed. On March 16, 2020, the Ninth Circuit affirmed the district court’s
dismissal of the Ha complaint and the time to seek further appeals has since expired. On the same day, the Ninth
Circuit also reversed and remanded the district court’s dismissal of the Hamilton complaint for further
consideration of defendants’ motion to dismiss. Following supplemental briefing, the district court entered an
order on April 5, 2021 dismissing with prejudice all claims in the Hamilton action as precluded by the decision in
the Wessels case.

Quarterhill Inc. Litigation

On July 2, 2018, three entities named Aquila Innovations, Inc. (Aquila), Collabo Innovations, Inc.
(Collabo), and Polaris Innovations, Ltd. (Polaris), filed separate patent infringement complaints against the
Company in the United States District Court for the Western District of Texas. Aquila alleges that the Company
infringes two patents (6,239,614 and 6,895,519) relating to power management; Collabo alleges that the
Company infringes one patent (7,930,575) related to power management; and Polaris alleges that the Company
infringes two patents (6,728,144 and 8,117,526) relating to control or use of dynamic random-access memory, or

82
DRAM. Each of the three complaints seeks unspecified monetary damages, interest, fees, expenses, and costs
against the Company; Aquila and Collabo also seek enhanced damages. Aquila, Collabo, and Polaris each appear
to be related to a patent assertion entity named Quarterhill Inc. (formerly WiLAN Inc.). On May 14, 2020, at the
request of Polaris, the Court dismissed all claims related to one of the two patents in suite in the Polaris case. On
June 10, 2020, the Court granted AMD’s motions to stay the Polaris and Aquila cases pending the completion of
inter partes review of each of the patents-in-suit in those cases by the Patent Trial and Appeal Board. On
February 22, 2021, February 26, 2021, and March 10, 2021, the Patent Trial and Appeal Board issued final
written decisions in inter partes reviews invalidating all asserted claims of the remaining Polaris and Aquila
patents. On May 10, 2021, Aquila filed a notice of appeal to the Court of Appeals for the Federal Circuit for the
IPR decision regarding U.S. Patent No. 6,895,519. On April 30, 2021, Polaris filed a notice of appeal to the Court
of Appeals for the Federal Circuit for the IPR decision regarding U.S. Patent No. 8,117,526. On May 14, 2021,
AMD filed a notice of cross-appeal to the Court of Appeals for the Federal Circuit for the IPR decision regarding
U.S. Patent No. 8,117,526. Appellate briefing is underway.

Monterey Research Litigation

On November 15, 2019, Monterey Research, LLC filed a patent infringement complaint against the
Company in the United States District Court for the District of Delaware (Case. No. 1:19-cv-02149). Monterey
Research alleges that the Company infringes six U.S. patents: 6,534,805 (related to SRAM cell design);
6,629,226 (related to read interface protocols); 6,651,134 (related to memory devices); 6,765,407 (related to
programmable digital circuits); 6,961,807 (related to integrated circuits and associated memory systems); and
8,373,455 (related to output buffer circuits). Monterey Research seeks unspecified monetary damages, enhanced
damages, interest, fees, expenses, costs, and injunctive relief against the Company. On January 22, 2020, the
Company filed a motion to dismiss part of Monterey Research’s complaint. On February 5, 2020, Monterey
Research filed an amended complaint. On February 19, 2020, the Company filed a renewed motion to dismiss
part of Monterey Research’s complaint. On October 13, 2020, the Court granted in part, and denied in part, the
Company’s renewed motion to dismiss. On October 27, 2020, the Company filed its answer to Monterey’s
complaint and also filed counterclaims based on Monterey’s breach of the parties’ pre-suit non-disclosure
agreement. On December 1, 2020, Monterey filed a motion to dismiss the Company’s counterclaims. On
January 5, 2021, the Court granted the Company’s motion to stay the litigation pending inter partes review of the
patents-in-suit by the Patent Trial and Appeals Board. In November and December 2021 and January 2022, the
USPTO issued five final written decisions in the inter partes reviews cancelling all challenged claims of five
patents in suit.

On August 12, 2021, Monterey filed two patent infringement complaints in the United States District Court
for the Western District of Texas (Case. No. 6:21-cv-00839 and Case. No. 6:21-cv-00840). In the first complaint,
Monterey alleges that the Company infringes two patents (8,694,776 and 9,767,303) related to memory
controllers, three patents (8,572,297, 7,609,799, and 7,899,145) related to circuit designs, and one patent
(6,979,640) related to semiconductor processing. In the second complaint, Monterey alleges that the Company
infringes one patent (6,680,516) related to semiconductor processing. In both complaints, Monterey Research
seeks unspecified monetary damages, enhanced damages, interest, fees, expenses, costs, and injunctive relief
against the Company. On October 22, 2021, Monterey Research filed an amended complaint in Case. No.
6:21-cv-00840 withdrawing its infringement claims for the ’776 and ’303 patents, and asserting an additional
infringement claim for a patent related to circuit design (8,103,497).On November 15, 2021, the Company filed a
motion to dismiss the complaint. On December 8, 2021, Monterey filed its response. On December 20, 2021, the
Company filed a motion to transfer the case to Austin division.

City of Pontiac Police and Fire Retirement System Litigation

On September 29, 2020, the City of Pontiac Police and Fire Retirement System, an AMD shareholder, filed
a shareholder derivative complaint (the “Complaint”) against AMD and the members of its Board of Directors
(collectively, “Defendants”) in the United States District Court for the Northern District of California. See City
of Pontiac Police and Fire Retirement System v. Caldwell, et al., No. 5:20-cv-6794 (N.D. Cal.). The Complaint

83
alleges that Defendants breached their fiduciary duties, violated Section 14(a) of the Exchange Act of 1934, and
were unjustly enriched by misrepresenting the Company’s commitment to diversity, particularly with respect to
the composition of the membership of AMD’s Board of Directors and senior leadership team. On December 18,
2020, Defendants filed a motion to dismiss the Complaint. On February 12, 2021, Plaintiff filed an opposition to
Defendants’ motion to dismiss, and on March 12, 2021, Defendants filed a reply brief in support of the motion to
dismiss. On July 1, 2021, the Court granted Defendants’ motion to dismiss, without prejudice. On August 2,
2021, the parties filed a joint stipulation to dismiss the case with prejudice, and the court approved the joint
stipulation on August 3, 2021.

Xilinx Acquisition Litigation

On October 26, 2020, the Company, its wholly-owned subsidiary, Thrones Merger Sub, Inc., and Xilinx,
Inc. (“Xilinx”) entered a definitive agreement (the “Merger Agreement”) in which the Company will acquire
Xilinx by merging Thrones Merger Sub, Inc. with and into Xilinx, with Xilinx continuing as the surviving
corporation and becoming a wholly-owned subsidiary of the Company (the “Proposed Transaction”). See Note
13 of Notes to Consolidated Financial Statements for additional information. On December 3, 2020, the
Company and Xilinx filed a Registration Statement on Form S-4 (together with the joint proxy statement and
prospectus contained therein, the “Registration Statement”) describing the Proposed Transaction and other
related matters. On December 11, 2020, a Xilinx shareholder filed a putative class action in the New York State
Supreme Court, New York County, regarding the Proposed Transaction. Nunez v. Xilinx, Case No. 656971/2020
(N.Y. Sup. Ct.) (“Nunez”). The lawsuit alleges that the Board of Directors of Xilinx breached their fiduciary
duties to Xilinx shareholders in connection with the Proposed Transaction by allegedly failing to obtain fair,
adequate and maximum consideration for Xilinx shareholders in connection with the Proposed Transaction and
by not disclosing certain material information about the Proposed Transaction in the Registration Statement. The
lawsuit asserts a single claim against the Company, alleging that it aided and abetted the Xilinx directors’ breach
of their fiduciary duties. The lawsuit seeks to enjoin or rescind any transaction with Xilinx as well as certain
other equitable relief, unspecified damages and attorneys’ fees and costs.

On December 15, 2020, a Xilinx shareholder filed a lawsuit in the United States District Court for the
Southern District of New York, regarding the Proposed Transaction. Shumacher v. Xilinx, Case No.
1:20-cv-10595 (S.D.N.Y.) (“Shumacher”). The lawsuit alleges that Xilinx and its Board of Directors
disseminated a false and misleading Registration Statement that omitted material information regarding the
Proposed Transaction, thereby violating Section 14(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). The lawsuit also asserts a single claim against the Company, alleging that it acted as a
controlling person of Xilinx within the meaning of Section 20(a) of the Exchange Act by virtue of its supervisory
control over the composition of the Registration Statement. The lawsuit seeks to enjoin or rescind any transaction
with Xilinx as well as certain other equitable relief, unspecified damages and attorneys’ fees and costs.

On December 23, 2020, a shareholder of the Company filed a lawsuit in the United States District Court of
the Southern District of New York regarding the Proposed Transaction. Vazirani v. Advanced Micro Devices,
Case No. 1:20-cv-10894 (S.D.N.Y) (“Vazirani”). The lawsuit alleges that the Company and its Board of
Directors disseminated a false and misleading Registration Statement that omitted material information regarding
the Proposed Transaction, thereby violating Sections 14(a) and 20(a) of the Exchange Act. The lawsuit seeks to
enjoin or rescind any transaction with Xilinx as well as certain other equitable relief, unspecified damages and
attorneys’ fees and costs.

On March 22, 2021, the Nunez complaint was voluntarily dismissed, and on March 25, 2021, the Vazirani
complaint was voluntarily dismissed. The Shumacher complaint was voluntarily dismissed on April 9, 2021.

Future Link Systems Litigation

On December 21, 2020, Future Link Systems, LLC filed a patent infringement complaint against the Company in
the United States District Court for the Western District of Texas. Future Link Systems alleges that the Company

84
infringes three U.S. patents: 7,983,888 (related to simulated PCI express circuitry); 6,363,466 (related to out of
order data transactions); and 6,622,108 (related to interconnect testing). Future Link Systems seeks unspecified
monetary damages, enhanced damages, interest, fees, expenses, costs, and injunctive relief against the Company.
On March 22, 2021, the Company filed its answer to Future Link Systems’ complaint and also filed
counterclaims based on Future Link Systems’ breach of the parties’ pre-suit non-disclosure agreement. On
April 12, 2021, Future Link Systems filed its answer to the Company’s counterclaims. On June 3, 2021, the
Company filed a motion to transfer the case to Austin, Texas. On October 14, 2021, the Court issued an order
construing certain terms in the asserted patents. On November 22, 2021, the case was reassigned to the Austin
division. On January 5, 2022, the Company filed a motion to strike Future Link System’s infringement
contentions, and Future Link Systems filed a response on January 19, 2022. On January 14, 2022, the USPTO
instituted an IPR trial for one of the three patents in suit.

On December 21, 2021, Future Link Systems LLC filed a lawsuit alleging infringement of two patents
related to power management. The Company was served with the complaint on December 28, 2021. On
December 28, 2021, Future Link Systems LLC filed a complaint at the United States International Trade
Commission alleging infringement of the same two power management patents. Several of the Company’s
customers were also named as respondents. On January 26, 2022, the USITC announced that it would institute
the investigation.

Based upon information presently known to management, the Company believes that the potential liability
of the above listed legal proceedings, if any, will not have a material adverse effect on its financial condition,
cash flows or results of operations.

Environmental Matters
The Company is named as a responsible party on Superfund clean-up orders for three sites in Sunnyvale,
California that are on the National Priorities List. Since 1981, the Company has discovered hazardous material
releases to the groundwater from former underground tanks and proceeded to investigate and conduct
remediation at these three sites. The chemicals released into the groundwater were commonly used in the
semiconductor industry in the United States in the wafer fabrication process prior to 1979.

In 1991, the Company received Final Site Clean-up Requirements Orders from the California Regional
Water Quality Control Board relating to the three sites. The Company has 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. The Company remains 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.

To address anticipated future remediation costs under the orders, the Company has computed and recorded
an estimated environmental liability of approximately $3.8 million and has not recorded any potential insurance
recoveries in determining the estimated costs of the cleanup. The progress of future remediation efforts cannot be
predicted with certainty and these costs may change. The Company believes that any amount in addition to what
has already been accrued would not be material.

Other Legal Matters

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 the 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.

85
NOTE 18 – Pending Acquisition
On October 26, 2020, the Company entered into an Agreement and Plan of Merger (the Merger Agreement)
with Thrones Merger Sub, Inc., the Company’s wholly owned subsidiary (Merger Sub), and Xilinx, Inc. (Xilinx),
whereby Merger Sub will merge with and into Xilinx (the Merger), with Xilinx surviving such Merger as a
wholly owned subsidiary of the Company. Under the Merger Agreement, at the effective time of the Merger (the
Effective Time), each share of common stock of Xilinx (Xilinx Common Stock) issued and outstanding
immediately prior to the Effective Time (other than treasury shares and any shares of Xilinx Common Stock held
directly by the Company or Merger Sub) will be converted into the right to receive 1.7234 fully paid and
non-assessable shares of the Company’s common stock and, if applicable, cash in lieu of fractional shares,
subject to any applicable withholding. As of the signing of the Merger Agreement, the transaction was valued at
$35 billion. The actual valuation of the transaction could differ significantly from the estimated amount due to
movements in the price of the Company’s common stock, the number of shares of Xilinx common stock
outstanding on the closing date of the Merger and other factors.
Under the Merger Agreement, the Company will be required to pay a termination fee to Xilinx equal to
$1.5 billion if the Merger Agreement is terminated in certain circumstances, including if the Merger Agreement
is terminated because the Company’s board of directors has changed its recommendation. The Company will be
required to pay a termination fee equal to $1.0 billion if the Merger Agreement is terminated in certain
circumstances related to the failure to obtain required regulatory approvals prior to October 26, 2021 (subject to
automatic extension first to January 26, 2022 and then to April 26, 2022, in each case, to the extent the regulatory
closing conditions remain outstanding).
On April 7, 2021, the Company’s stockholders voted to approve all the proposals relating to the Merger at a
special meeting of stockholders. Xilinx stockholders also voted to approve their respective proposals relating to
the Merger at a Xilinx special meeting held on the same day. The closing of the Merger is subject to customary
conditions, including regulatory approval. The Merger is currently expected to close in the first quarter of 2022.

NOTE 19 – Subsequent Events

Subsequent to December 25, 2021, through the date of issuance of these consolidated financial statements
(the “issuance date”), the Company repurchased $1.0 billion of its common stock under the Repurchase Program.
As of the issuance date, $1.2 billion remained available for future stock repurchases under the Repurchase
Program.

86
 Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

Advanced Micro Devices, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Advanced Micro Devices, Inc. (the
Company) as of December 25, 2021 and December 26, 2020, the related consolidated statements of operations,
comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended
December 25, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In
our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company as of December 25, 2021 and December 26, 2020, and the results of its operations and its cash
flows for each of the three years in the period ended December 25, 2021, in conformity with U.S. generally
accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of December 25, 2021,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) and our report dated February 3, 2022 expressed
an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the
risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the
financial statements that was communicated or required to be communicated to the audit committee and that:
(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in
any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.

Inventory Valuation
Description of the Matter
At December 25, 2021, the Company’s net inventory balance was $1,955 million. As discussed in Note 2 of
the consolidated financial statements, the Company adjusts the inventory carrying value to the lower of actual

87
cost or the estimated net realizable value after completing ongoing reviews of on-hand inventory quantities
exceeding forecasted demand, by considering recent historical activity as well as anticipated or forecasted
demand.

Auditing management’s inventory carrying value adjustments involved significant judgment because the
estimates are based on several factors that are affected by market, industry, and competitive conditions outside
the Company’s control. In estimating inventory carrying value adjustments, management developed assumptions
such as forecasts of future sales quantities and the selling prices, which are sensitive to the competitiveness of
product offerings, customer requirements, and product life cycles. These significant assumptions are forward-
looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal
controls over the Company’s inventory carrying value adjustment determination process, including the basis for
developing the above-described assumptions and management’s judgments.

Our audit procedures included, among others, testing the reasonableness of management’s key assumptions
and judgments and testing the accuracy and completeness of the underlying data used to determine the amount of
inventory carrying value adjustments. For instance, we compared the quantities and carrying value of on-hand
inventories to related unit sales, both historical and forecasted, assessed the reasonableness of management’s
estimates of future sales prices by analyzing historical sales and evaluating any factors that may impact sales
prices, and evaluated the appropriateness and adequacy of management’s adjustments to such sales forecasts by
analyzing potential technological changes in line with product life cycles and/or identified alternative customer
uses. We also assessed the accuracy of forecasts underlying management’s estimates by comparing
management’s historical forecasts to actual results, evaluated industry and market factors and performed
sensitivity analyses over the significant assumptions used by management to evaluate necessary changes in the
inventory carrying value adjustments.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1970.

San Jose, California

February 3, 2022

88
 Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of

Advanced Micro Devices, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Advanced Micro Devices, Inc.’s internal control over financial reporting as of
December 25, 2021, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In
our opinion, Advanced Micro Devices, Inc. (the Company) maintained, in all material respects, effective internal
control over financial reporting as of December 25, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 25, 2021 and
December 26, 2020, the related consolidated statements of operations, comprehensive income, stockholders’
equity and cash flows for each of the three years in the period ended December 25, 2021, and the related notes
and our report dated February 3, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

89
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

February 3, 2022

90
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed with the objective of providing reasonable
assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this
Annual Report on Form 10-K is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow 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 December 25, 2021, 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 Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). This type of evaluation is performed on a quarterly
basis so that conclusions of management, including our Chief Executive Officer and Chief Financial Officer,
concerning the effectiveness of the disclosure controls can be reported in our periodic reports on Form 10-Q and
Form 10-K. The overall goals of these evaluation activities are to monitor our disclosure controls and to modify
them as necessary. We intend to maintain the disclosure controls as dynamic systems that we adjust as
circumstances merit. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the
period covered by this report.

Management’s Report on Internal Control over Financial Reporting

Internal control over financial reporting refers to the process designed by, or under the supervision of, our
Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and
other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting
principles, and includes those policies and procedures that:
1. Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and
directors of the Company; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements. Internal control
over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of
its inherent limitations.

Internal control over financial reporting is a process that involves human diligence and compliance and is
subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial

91
reporting also can be circumvented by collusion or improper management override. Because of such limitations,
there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control
over financial reporting. However, these inherent limitations are known features of the financial reporting
process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management is responsible for establishing and maintaining adequate internal control over financial reporting for
the Company.

Management has used the 2013 framework set forth in the report entitled “Internal Control—Integrated
Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate
the effectiveness of the Company’s internal control over financial reporting. Management has concluded that the
Company’s internal control over financial reporting was effective as of December 25, 2021 at the reasonable
assurance level. Our independent registered public accounting firm, Ernst & Young LLP, has issued an
attestation report on the Company’s internal control over financial reporting as of December 25, 2021, which is
included in Part II, Item 8, above.

Changes in Internal Control over Financial Reporting

There has been no change in our internal controls over financial reporting during our most recently
completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.

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 PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information under the captions “Item 1—Election of Directors” (including “Consideration of
Stockholder Nominees for Director”), “Corporate Governance,” “Meetings and Committees of the Board of
Directors,” “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our proxy
statement for our 2022 annual meeting of stockholders (our 2022 Proxy Statement) is incorporated herein by
reference. There were no material changes to the procedures by which stockholders may recommend nominees to
our board of directors. See also, “Part 1, Item 1-Website Access to Company Reports and Corporate Governance
Documents,” above.

ITEM 11. EXECUTIVE COMPENSATION

The information under the captions “Directors’ Compensation and Benefits” (including “2021
Non-Employee Director Compensation”), “Compensation Discussion and Analysis,” “Compensation Policies
and Practices,” “Executive Compensation” (including “2021 Summary Compensation Table,” “2021
Nonqualified Deferred Compensation,” “Outstanding Equity Awards at 2021 Fiscal Year-End,” “Grants of Plan-
Based Awards in 2021” and “Option Exercises and Stock Vested in 2021) and “Severance and Change in Control
Arrangements” in our 2022 Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS
The information under the captions “Principal Stockholders,” “Security Ownership of Directors and
Executive Officers” and “Equity Compensation Plan Information” in our 2022 Proxy Statement is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR

INDEPENDENCE
The information under the captions “Corporate Governance—Independence of Directors” and “Certain
Relationships and Related Transactions” in our 2022 Proxy Statement is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information under the captions “Item 2—Ratification of Appointment of Independent Registered Public
Accounting Firm—Independent Registered Public Accounting Firm’s Fees” in our 2022 Proxy Statement is
incorporated herein by reference.

With the exception of the information specifically incorporated by reference in Part III of this Annual
Report on Form 10-K from our 2022 Proxy Statement, our 2022 Proxy Statement will not be deemed to be filed
as part of this report. Without limiting the foregoing, the information under the captions “Compensation
Committee Report” and “Audit Committee Report” in our 2022 Proxy Statement is not incorporated by reference
in this Annual Report on Form 10-K.

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 PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. Financial Statements
The financial statements of AMD are set forth in Item 8 of this Annual Report on Form 10-K, as indexed
below.

Index to Consolidated Financial Statements

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Consolidated Statements of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) . . . . . . . . . . . . . . . . . . . . . . . . . 87

All schedules have been omitted because the information is not required, is not applicable, or is included in the
Notes to the Consolidated Financial Statements.

2. Exhibits
The exhibits listed in the accompanying Index to Exhibits are filed as part of, or incorporated by reference into,
this Annual Report on Form 10-K. The following is a list of such Exhibits:

Exhibit Description of Exhibits

2.1 Agreement and Plan of Merger by and among Advanced Micro Devices, Inc., Thrones Merger
Sub, Inc., and Xilinx, Inc. dated October 26, 2020, filed as exhibit 2.1 to AMD’s Current Report
on Form 8-K dated October 26, 2020, is hereby incorporated by reference.
3.1 Amended and Restated Certificate of Incorporation of Advanced Micro Devices, Inc., dated
May 2, 2018, filed as Exhibit 3.1 to AMD’s Quarterly Report on Form 10-Q for the period
ended June 30, 2018, is hereby incorporated by reference.
3.2 Advanced Micro Devices, Inc. Amended and Restated Bylaws, as amended on January 29, 2021.
4.1 Description of Advanced Micro Devices, Inc. Common Stock, filed as Exhibit 4.1 to AMD’s
Annual Report on Form 10-K for the period ended December 28, 2019, is hereby incorporated
by reference.
4.2 Indenture governing 7.50% Senior Notes due 2022, including the Form of 7.50% Note, between
Advanced Micro Devices, Inc. and Wells Fargo Bank, N.A., dated as of August 15, 2012, filed
as Exhibit 4.1 to AMD’s Current Report on Form 8-K dated August 15, 2012, is hereby
incorporated by reference.
4.3 Indenture by and among Advanced Micro Devices, Inc. and Wells Fargo Bank N.A., dated
September 14, 2016, filed as Exhibit 4.1 to AMD’s Current Report on Form 8-K dated
September 14, 2016, is hereby incorporated by reference.
4.4 First Supplemental Indenture governing 2.125% Convertible Senior Notes due 2026, including
Form of 2.125% Note, between Advanced Micro Devices, Inc. and Wells Fargo Bank, N.A.
dated September 14, 2016, filed as Exhibit 4.2 to AMD’s Current Report on Form 8-K dated
September 14, 2016, is hereby incorporated by reference.

94
Exhibit Description of Exhibits

4.5 First Supplemental Indenture by and among Advanced Micro Devices, Inc. and Wells Fargo
Bank N.A., dated September 23, 2016, filed as Exhibit 4.1 to AMD’s Quarterly Report on Form
10-Q for the fiscal quarter ended September 24, 2016, is hereby incorporated by reference.
*10.1 2011 Executive Incentive Plan, filed as Exhibit 10.2 to AMD’s Quarterly Report on Form 10-Q
for the period ended April 2, 2011, is hereby incorporated by reference.
*10.2 SeaMicro, Inc. Amended and Restated 2007 Equity Incentive Plan, filed as Exhibit 10.1 on
AMD’s Registration Statement on Form S-8, filed with the SEC on March 23, 2012, is hereby
incorporated by reference.
*10.3 AMD Executive Severance Plan and Summary Plan Description for Senior Vice Presidents,
effective June 1, 2013, filed as Exhibit 10.1 to AMD’s Current Report on Form 8-K dated
June 7, 2013, is hereby incorporated by reference.
*10.4 AMD Deferred Income Account Plan, as amended and restated, effective January 1, 2008, filed
as Exhibit 10.18 to AMD’s Annual Report on Form 10-K for the fiscal year ended December 29,
2007, is hereby incorporated by reference.
*10.5 Amendment No. 1 to the AMD Deferred Income Account Plan, as amended and restated,
effective July 1, 2012, filed as Exhibit 10.16(a) to AMD’s Annual Report on Form 10-K for the
period ended December 29, 2012, is hereby incorporated by reference.
*10.6 Form of Indemnity Agreement, between Advanced Micro Devices, Inc. and its officers and
directors, filed as Exhibit 10.1 to AMD’s Current Report on Form 8-K dated October 6, 2008, is
hereby incorporated by reference.
*10.7 Form of Management Continuity Agreement, as amended and restated, filed as Exhibit 10.13(b)
to AMD’s Annual Report on Form 10-K for the fiscal year ended December 29, 2007, is hereby
incorporated by reference.
*10.8 Form of Change in Control Agreement, filed as Exhibit 10.11 to AMD’s Annual Report on Form
10-K for the fiscal year ended December 26, 2009, is hereby incorporated by reference.
*10.9 Amended and Restated Management Continuity Agreement, between Advanced Micro Devices,
Inc. and Devinder Kumar, filed as Exhibit 10.3 to AMD’s Quarterly Report on Form 10-Q for
the period ended September 29, 2012, is hereby incorporated by reference.
*10.10 Offer Letter, between Advanced Micro Devices, Inc. and Mark D. Papermaster, dated October 7,
2011, filed as Exhibit 10.63 to AMD’s Annual Report on Form 10-K for the period ended
December 31, 2011, is hereby incorporated by reference.
10.11 Settlement Agreement, between Advanced Micro Devices, Inc. and Intel Corporation, dated
November 11, 2009, filed as Exhibit 10.1 to AMD’s Current Report on Form 8-K dated
November 11, 2009, is hereby incorporated by reference.
**10.12 Patent Cross License Agreement, between Advanced Micro Devices, Inc. and Intel Corporation
filed, dated November 11, 2009, as Exhibit 10.2 to AMD’s Current Report on Form 8-K dated
November 17, 2009, is hereby incorporated by reference.
10.13 Sublease Agreement, between Lantana HP, LTD and Advanced Micro Devices, Inc., dated
March 26, 2013, filed as Exhibit 10.2 to AMD’s Quarterly Report on Form 10-Q for the period
ended March 30, 2013, is hereby incorporated by reference.
10.14 Master Landlord’s Consent to Sublease, between 7171 Southwest Parkway Holdings, L.P.,
Lantana HP, Ltd. and Advanced Micro Devices, Inc., dated March 26, 2013, filed as Exhibit
10.3 to AMD’s Quarterly Report on Form 10-Q for the period ended March 30, 2013, is hereby
incorporated by reference.

95
Exhibit Description of Exhibits

10.15 Lease Agreement, between 7171 Southwest Parkway Holdings, L.P. and Lantana HP, Ltd., dated
March 26, 2013, filed as Exhibit 10.4 to AMD’s Quarterly Report on Form 10-Q for the period
ended March 30, 2013, is hereby incorporated by reference.
*10.16 Employment Agreement by and between Lisa T. Su and Advanced Micro Devices, Inc. effective
October 8, 2014, filed as Exhibit 10.2 to AMD’s Current Report on Form 8-K/A dated
October 14, 2014, is hereby incorporated by reference.
*10.17 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive Plan, filed as Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended September 27, 2014, is hereby incorporated by reference.
*10.18 Offer Letter, between Advanced Micro Devices, Inc. and Forrest E. Norrod, dated October 20,
2014, filed as Exhibit 10.66 to AMD’s Annual Report on Form 10-K for the fiscal year ended
December 27, 2014, is hereby incorporated by reference.
*10.19 Advanced Micro Devices, Inc. Executive Severance Plan and Summary Plan Description for
Senior Vice Presidents effective December 31, 2014, filed as Exhibit 10.68 to AMD’s Annual
Report on Form 10-K for the fiscal year ended December 27, 2014, is hereby incorporated by
reference.
*10.20 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive Plan, filed as Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended September 26, 2015, is hereby incorporated by reference.
10.21 Equity Interest Purchase Agreement by and between Advanced Micro Devices, Inc. and
Nantong Fujitsu Microelectronics Co., Ltd. dated as of October 15, 2015, filed as Exhibit 10.1 to
AMD’s Current Report on Form 8-K dated October 15, 2015, is hereby incorporated by
reference.
*10.22 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive Plan, filed as Exhibit 10.78 to AMD’s Annual Report on Form 10-K for the fiscal year
ended December 26, 2015, is hereby incorporated by reference.
*10.23 Form of Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004
Equity Incentive Plan, filed as Exhibit 10.79 to AMD’s Annual Report on Form 10-K for the
fiscal year ended December 26, 2015, is hereby incorporated by reference.
*10.24 Form of Performance-Based Restricted Stock Unit Agreement for Senior Vice Presidents and
Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.80 to AMD’s Annual Report on
Form 10-K for the fiscal year ended December 26, 2015, is hereby incorporated by reference.
*10.25 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive Plan, filed as Exhibit 10.88 to AMD’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, is hereby incorporated by reference.
*10.26 Form of Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004
Equity Plan, filed as Exhibit 10.89 to AMD’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, is hereby incorporated by reference.
*10.27 Form of Performance-Based Restricted Stock Unit Agreement for Senior Vice Presidents and
Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.90 to AMD’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2016, is hereby incorporated by reference.
*10.28 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive Plan, filed as Exhibit 10.2 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended April 4, 2017, is hereby incorporated by reference.

96
Exhibit Description of Exhibits

*10.29 2004 Equity Incentive Plan, as amended and restated, filed as Exhibit 10.1 to AMD’s
Registration Statement on Form S-8 filed with the SEC on May 8, 2017, is hereby incorporated
by reference.
*10.30 Amended and Restated 2017 Employee Stock Purchase Plan dated August 23, 2018, filed as
Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 29, 2018, is hereby incorporated by reference.
*10.31 2017 Employee Stock Purchase Plan, as amended and restated October 12, 2017, filed as Exhibit
10.98 to AMD’s Annual Report on Form 10-K for the fiscal year ended December 30, 2017, is
hereby incorporated by reference.
*10.32 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive Plan, filed as Exhibit 10.99 to AMD’s Annual Report on Form 10-K for the fiscal year
ended December 30, 2017, is hereby incorporated by reference.
*10.33 Form of Restricted Stock Unit Award Agreement for Senior Vice Presidents and Above under
the 2004 Equity Incentive Plan, filed as Exhibit 10.100 to AMD’s Annual Report on Form 10-K
for the fiscal year ended December 30, 2017, is hereby incorporated by reference.
*10.34 Form of Performance-Based Restricted Stock Unit Agreement for Senior Vice Presidents and
Above under the 2004 Equity Incentive Plan filed as Exhibit 10.101 to AMD’s Annual Report
on Form 10-K for the fiscal year ended December 30, 2017, is hereby incorporated by reference.
*10.35 Amendment to Advanced Micro Devices, Inc. Executive Incentive Plan dated as of February 8,
2018, filed as Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2018, is hereby incorporated by reference.
*10.36 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive plan, filed as Exhibit 10.103 to AMD’s Annual Report on Form 10-K for the fiscal
year ended December 29, 2018, is hereby incorporated by reference.
*10.37 Form of Performance-based Restricted Stock Unit Agreement for Senior Vice Presidents and
Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.104 to AMD’s Annual Report
on Form 10-K for the fiscal year ended December 29, 2018, is hereby incorporated by reference.
*10.38 Form of Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004
Equity Incentive Plan, filed as Exhibit 10.105 to AMD’s Annual Report on Form 10-K for the
fiscal year ended December 29, 2018, is hereby incorporated by reference.
10.39 Credit Agreement dated as of June 7, 2019 by and among Advanced Micro Devices, Inc., as
borrower, the lenders as referred to therein, as lenders, and Wells Fargo Bank, National
Association, as administrative agent, swingline agent and an issuing lender, filed as Exhibit 10.1
to AMD’s Current Report on Form 8-K dated June 10, 2019, is hereby incorporated by
reference.
*10.40 Offer Letter between Advanced Micro Devices, Inc. and Rick Bergman dated August 1, 2019,
filed as Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 28, 2019, is hereby incorporated by reference.
*10.41 Sign-On Bonus Letter between Advanced Micro Devices, Inc. and Rick Bergman dated
August 1, 2019, filed as Exhibit 10.2 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended September 28, 2019, is hereby incorporated by reference.
*10.42 Value Creation Performance-Based Restricted Stock Unit Grant Notice between Advanced
Micro Devices, Inc. and Lisa T. Su, dated August 9, 2019, filed as Exhibit 10.3 to AMD’s
Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2019, is hereby
incorporated by reference.

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 Exhibit Description of Exhibits

*10.43 Value Creation Performance-Based Restricted Stock Unit Grant Notice between Advanced
Micro Devices, Inc. and Mark Papermaster, dated August 9, 2019, filed as Exhibit 10.4 to
AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2019, is
hereby incorporated by reference.
*10.44 Amendment to Advanced Micro Devices, Inc. Executive Incentive Plan dated as of August 21,
2019, filed as Exhibit 10.6 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter
ended September 28, 2019, is hereby incorporated by reference.
*10.45 2004 Equity Incentive Plan, as amended and restated, dated August 21, 2019, filed as Exhibit
10.7 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2019,
is hereby incorporated by reference.
*10.46 Outside Director Equity Compensation Policy, as amended and restated, dated as of
February 12, 2020, filed as Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended March 28, 2020, is hereby incorporated by reference.
*10.47 Form of Performance-based Restricted Stock Unit Agreement for Senior Vice Presidents and
Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.1 to AMD’s Quarterly Report
on Form 10-Q for the fiscal quarter ended June 27, 2020, is hereby incorporated by reference.
*10.48 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive plan, filed as Exhibit 10.2 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 27, 2020, is hereby incorporated by reference.
*10.49 Form of Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004
Equity Incentive Plan, filed as Exhibit 10.3 to AMD’s Quarterly Report on Form 10-Q for the
fiscal quarter ended June 27, 2020, is hereby incorporated by reference.
***10.50 Wafer Supply Agreement, among Advanced Micro Devices, Inc., The Foundry Company and
AMD Fab Technologies US, Inc., dated March 2, 2009, filed as Exhibit 10.1 to AMD’s
Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2020, is hereby
incorporated by reference.
***10.51 Wafer Supply Agreement Amendment No. 1, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES Inc., GLOBALFOUNDRIES U.S. Inc. and GLOBALFOUNDRIES
Singapore. Pte. Ltd., dated March 29, 2011, filed as Exhibit 10.2 to AMD’s Quarterly Report on
Form 10-Q for the fiscal quarter ended September 26, 2020, is hereby incorporated by reference.
***10.52 Wafer Supply Agreement Amendment No. 2, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES Inc., GLOBALFOUNDRIES U.S. Inc., Advanced Technology
Investment Company LLC and ATIC International Investment Company LLC, dated March 4,
2012, filed as Exhibit 10.3 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter
ended September 26October 28, 2020, is hereby incorporated by reference.
***10.53 Wafer Supply Agreement Amendment No. 3, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES Inc. and GLOBALFOUNDRIES U.S. Inc., dated December 6, 2012,
filed as Exhibit 10.4 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 26October 28, 2020, is hereby incorporated by reference.
***10.54 Wafer Supply Agreement Amendment No. 4, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES Inc. and GLOBALFOUNDRIES U.S. Inc., dated March 30, 2014, filed
as Exhibit 10.5 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 26October 28, 2020, is hereby incorporated by reference.

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 Exhibit Description of Exhibits

***10.55 Wafer Supply Agreement Amendment No. 5, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES Inc. and GLOBALFOUNDRIES U.S. Inc., dated as of April 16, 2015,
filed as Exhibit 10.6 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 26October 28, 2020, is hereby incorporated by reference.
***10.56 Wafer Supply Agreement Amendment No. 6, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES, Inc. and GLOBALFOUNDRIES U.S., Inc., dated August 30, 2016,
filed as Exhibit 10.7 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
September 26October 28, 2020, is hereby incorporated by reference.
**10.57 Wafer Supply Agreement Amendment No. 7, among Advanced Micro Devices, Inc.,
GLOBALFOUNDRIES Inc. and GLOBALFOUNDRIES U.S. Inc., dated January 28, 2019,
filed as Exhibit 10.1 to AMD’s Quarterly Report on Form 10-Q for the fiscal quarter ended
March 30, 2019, is hereby incorporated by reference.
10.58 Company-Provided Business Aircraft Usage and Commercial Travel by Personal Guests Policy
revised as of January 25, 2021, filed as Exhibit 10.58 to AMD’s Annual Report on Form 10-K
for the fiscal year ended December 26, 2020, is hereby incorporated by reference.
*10.59 Form of Performance-based Restricted Stock Unit Agreement for Senior Vice Presidents and
Above under the 2004 Equity Incentive Plan, filed as Exhibit 10.1 to AMD’s Quarterly Report
on Form 10-Q for the fiscal quarter ended June 26, 2021, is hereby incorporated by reference.
*10.60 Form of Restricted Stock Unit Agreement for Senior Vice Presidents and Above under the 2004
Equity Incentive Plan, filed as Exhibit 10.2 to AMD’s Quarterly Report on Form 10-Q for the
fiscal quarter ended June 26, 2021, is hereby incorporated by reference.
*10.61 Form of Stock Option Agreement for Senior Vice Presidents and Above under the 2004 Equity
Incentive plan, filed as Exhibit 10.3 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 26, 2021, is hereby incorporated by reference.
***10.62 Amended and Restated Wafer Supply Agreement Amendment No. 7, among Advanced Micro
Devices, Inc., GLOBALFOUNDRIES, Inc. and GLOBALFOUNDRIES U.S. Inc., dated as of
May 12, 2021, filed as Exhibit 10.4 to AMD’s Quarterly Report on Form 10-Q for the fiscal
quarter ended June 26, 2021, is hereby incorporated by reference.
***10.63 First Amendment to Amended and Restated Wafer Supply Agreement No. 7, among Advanced
Micro Devices, Inc., GLOBALFOUNDRIES, Inc. and GLOBALFOUNDRIES U.S. Inc., dated
December 23, 2021.
21 List of AMD subsidiaries.
23 Consent of Independent Registered Public Accounting Firm.
24 Power of Attorney.
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 -the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document

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 Exhibit Description of Exhibits

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 Interactive Data File does not appear in the
Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

* Management contracts and compensatory plans or arrangements.

** Portions of this exhibit have been omitted pursuant to a request for confidential treatment, which has been
granted. These portions have been filed separately with the SEC.
*** Portions of this exhibit have been omitted because they are both (i) not material and (ii) would be
competitively harmful if publicly disclosed.
AMD will furnish a copy of any exhibit on request and payment of AMD’s reasonable expenses of
furnishing such exhibit.

ITEM 16. FORM 10-K SUMMARY

Not applicable.

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 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

February 3, 2022 ADVANCED MICRO DEVICES, INC.

By: /s/ Devinder Kumar

Devinder Kumar
Executive Vice President, Chief Financial Officer, and
Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons, on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Lisa T. SU President and Chief Executive Officer February 3, 2022

Lisa T. Su (Principal Executive Officer),
Director
/s/ Devinder Kumar Executive Vice President, Chief February 3, 2022
Devinder Kumar Financial Officer and Treasurer
(Principal Financial Officer)
/s/ Darla Smith Corporate Vice President, Chief February 3, 2022
Darla Smith Accounting Officer
(Principal Accounting Officer)
* Director, Chairman of the Board February 3, 2022
John E. Caldwell

* Director February 3, 2022

Nora M. Denzel

* Director February 3, 2022

Dermot Mark Durcan

* Director February 3, 2022

Michael P. Gregoire

* Director February 3, 2022

Joseph A. Householder

* Director February 3, 2022

John W. Marren

* Director February 3, 2022

Abhi Y. Talwalkar

*By: /s/ Devinder Kumar

Devinder Kumar, Attorney-in-Fact

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AMD-221214652