What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-01-31 compared with 2023-02-27 · 186 added, 319 removed, 1000 unchanged (34% of the section changed)

82 unchanged sentences

( 4,514 ) ( 3,099 )

Accumulated deficit ( 131 ) ( 1,451 )

Retained earnings (Accumulated deficit) 723 ( 131 )

Accumulated other comprehensive loss ( 10 ) ( 41 )

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Balance, beginning of period $ 16 $ 12 $ 12

Common stock issued under employee equity plans 1 — —

Issuance of common stock as consideration for acquisition — 4 —

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Balance, end of period $ ( 4,514 ) $ ( 3,099 ) $ ( 2,130 )

Accumulated deficit

Retained earnings (Accumulated deficit)

Balance, beginning of period $ ( 131 ) $ ( 1,451 ) $ ( 4,605 )

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Stock-based compensation 1,384 1,081 379

Amortization of debt discount and issuance costs — 5 14

Amortization of operating lease right-of-use assets 98 88 56

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Accounts payable ( 419 ) 931 801

Accrued liabilities and other 546 526 574

Accrued and other liabilities ( 221 ) 546 526

Net cash provided by operating activities 1,667 3,565 3,521

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Proceeds from maturity of short-term investments 2,687 4,310 1,678

Proceeds from sale of short-term investments 300 — —

Cash received from acquisition of Xilinx — 2,366 —

Acquisition of Pensando, net of cash acquired ( 1,544 ) — —

Acquisitions, net of cash acquired ( 131 ) ( 1,544 ) —

Other ( 11 ) ( 16 ) ( 7 )

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Other ( 2 ) ( 2 ) —

Net cash (used in) provided by financing activities ( 3,264 ) ( 1,895 ) 6

Net increase in cash and cash equivalents 2,300 940 125

Net cash used in financing activities

( 1,146 ) ( 3,264 ) ( 1,895 )

Net increase (decrease) in cash and cash equivalents ( 902 ) 2,300 940

Cash and cash equivalents at beginning of year 4,835 2,535 1,595

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Purchases of property and equipment, accrued but not paid $ 106 $ 157 $ 72

Issuance of common stock to settle convertible debt $ — $ 25 $ 217

Issuance of common stock and treasury stock for the acquisition of Xilinx $ — $ 48,514 $ —

Fair value of replacement share-based awards related to acquisition of Xilinx $ — $ 275 $ —

Transfer of assets for the acquisition of property and equipment $ 13 $ 37 $ 111

Non-cash activities for leases:

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and its consolidated subsidiaries.

AMD’s products include x86 microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), and Adaptive SoC products.

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

On February 14, 2022 (the Xilinx Acquisition Date), the Company completed the acquisition of Xilinx, Inc.

On May 26, 2022 (the Pensando Acquisition Date), the Company completed the acquisition of Pensando Systems, Inc.

See Note 5 - Business Combinations for additional information on these acquisitions.

NOTE 2 – Basis of Presentation and Significant Accounting Policies

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Fiscal 2023, 2022 and 2021 ended on December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

Fiscal 2022 consisted of 53 weeks, and fiscal 2021 and 2020 each consisted of 52 weeks.

Fiscal 2023 and 2021 each consisted of 52 weeks, while fiscal 2022 consisted of 53 weeks.

Principles of Consolidation.

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Reclassification.

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

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

Use of Estimates.

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Custom products

Custom products which are associated with the Company’s Gaming 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.

Custom products, which are primarily associated with the Company’s Gaming segment, are 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 or completed 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.

Sales of custom products are not subject to a right of return and arrangements generally involve a single performance obligation.

Generally, there are no variable consideration estimates associated with custom products.

Development and intellectual property licensing agreements

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These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made.

As a result, during the measurement period of up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the Consolidated Statements of Operations.

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.

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If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying value or elects to bypass the qualitative test, a quantitative goodwill impairment test will be performed by comparing the fair value of each reporting unit to its carrying value.

The Company’s quantitative impairment analysis uses a combination of the income approach, which requires estimates of the present value of expected future cash flows of a reporting unit, and the market approach, which uses financial ratios of comparable companies to arrive at an estimated value for the reporting units.

Significant estimates and assumptions used in the income approach include assessments of macroeconomic conditions, growth rates of reporting units in the near- and long-term, expectations of the Company’s ability to execute on roadmaps and projections, and the discount rate applied to cash flows.

Significant estimates used in the market approach include the identification of comparable companies for each reporting unit, and the determination of the appropriate multiples to apply to a reporting unit based on adjustments and consideration of specific attributes of that reporting unit.

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

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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.

Accounts receivable also include unbilled receivables, which primarily represent work completed on development services recognized as revenue but not yet invoiced to customers and 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.

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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.

Classification of available-for-sale debt securities as current or non-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.

Non-marketable Securities.

The Company classifies and accounts for its short-term investments in debt securities as available-for-sale as the Company may sell these securities at any time for use in its current operations or for other purposes.

As a result, the Company classifies its short-term investments, including securities with stated maturities beyond twelve months, within current assets in the Consolidated Balance Sheets.

Non-marketable Equity Securities.

The Company’s investments in non-marketable securities of privately-held companies are 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.

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Property and equipment are stated at cost.

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of one to 15 years for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements.

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of two to 15 years for equipment, 34 to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements.

Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s balance sheet.

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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.

When using the incremental borrowing rate, the Company utilizes the consolidated group incremental borrowing rate.

Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

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Foreign Currency Translation/Transactions

The functional currency of the majority of the Company’s foreign subsidiaries is the U.S.

For certain foreign subsidiaries where the local currency is the functional currency, assets and liabilities are translated from foreign currencies into U.S.

Gains or losses arising from translation of foreign currency denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in stockholders' equity.

The functional currency of the Company’s foreign subsidiaries is the U.S.

Assets and liabilities denominated in non-U.S.

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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.

Global Intangible Low-Taxed Income (GILTI).

In 2022, the Company elected to change its method of accounting for the United States GILTI tax from recording the tax impact in the period it is incurred to recognizing deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years.

The change is considered preferable based on the Company’s facts and circumstances as it provides better and more timely information of expected future income tax liabilities arising from temporary tax differences primarily associated with the Xilinx acquisition.

As a result of the acquisition, the Company recorded $27.3 billion of identified intangible assets (refer to Note 5 - Business Combinations), of which $16.9 billion are related to foreign operations which will be amortized to income from operations over the assets’ estimated useful lives, but for which the Company will not receive a tax deduction under GILTI.

This accounting policy change resulted in the recording of $857 million of deferred tax liabilities in connection with the Xilinx acquisition as disclosed in Note 14 - Income Taxes.

In addition, for the year ended December 31, 2022, it resulted in a decrease in the income tax provision with a corresponding increase to net income of $296 million and an increase in basic and diluted earnings per share of $0.19, as compared to the computation under the previous accounting policy.

This accounting policy change had no material impact on the Company’s historical consolidated financial statements.

Accrued Interest on Unrecognized Tax Benefits.

Prior to 2022, the Company reported any interest expense related to unrecognized tax benefits as a component of Interest expense and reported any related penalties as a component of Income tax provision (benefit).

In 2022, the Company elected to change its method of accounting for tax interest expense from Interest expense to the Income tax provision (benefit) line in the Consolidated Statements of Operations.

This change in classification is considered preferable as it i) better aligns classification of tax interest with the substance of the underlying tax positions, which are managed inclusive of interest, ii) allows for greater visibility to the cost of the Company’s debt and other financing activities, and iii) better aligns with common industry practice and provides increased comparability.

This accounting policy change resulted in a decrease in Interest expense and corresponding increase to i) Income before income taxes and equity income and ii) Income tax provision (benefit) as reported on the Consolidated Statements of Operations of $11 million in 2022.

This accounting policy change had an immaterial effect on the Consolidated Statements of Operations in 2021 and 2020, and the Company did not revise its previously issued consolidated financial statements for these fiscal years.

This accounting policy change had no impact to net income or basic and diluted earnings per share, or to financial statements besides the Consolidated Statements of Operations, for any period, as compared to the computation under the previous accounting policy.

Interest and penalties related to income taxes are recorded in the Income tax provision (benefit) line in the Consolidated Statements of Operations.

The Company is subject to the Global Intangible Low Taxed Income (GILTI) tax in the U.S.

and recognizes deferred taxes for temporary basis differences that are expected to reverse as GILTI tax in future years.

Recently Issued Accounting Standard Updates Not Yet adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses.

This ASU is effective for the Company’s fiscal year 2024 and interim periods in fiscal year 2025.

Early adoption is permitted.

The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

This ASU is effective for the Company’s fiscal year 2025.

Early adoption is permitted.

The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

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

Accounts Receivable, net

As of December 31, 2022 and December 25, 2021, Accounts receivable, net included unbilled accounts receivable of $ 1.1 billion and $ 329 million, respectively.

As of December 30, 2023 and December 31, 2022, Accounts receivable, net included unbilled accounts receivable of $ 1.1 billion.

Unbilled accounts receivables primarily represent work completed for development services and on custom products for which revenue has been recognized but not yet invoiced.

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(In millions)

Land $ 120 $ —

Building and leasehold improvements 594 206

Land, building and leasehold improvements

Equipment 2,346 2,163

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Depreciation expense for 2023, 2022 and 2021 was $ 441 million, $ 439 million and $ 296 million, respectively.

Other Non-current Assets

2022 December 25,

(In millions)

Prepaid long-term supply agreements $ 1,252 $ 916

Software and technology licenses, net 362 323

Other 538 239

Total other non-current assets $ 2,152 $ 1,478

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

Accrued Liabilities

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These performance measures include the allocation of expenses to the reportable segments based on management’s judgment.

In the second quarter of fiscal year 2022, the Company updated its segment reporting structure to align financial reporting with the manner in which the Company manages its business in strategic end markets.

The Company’s disclosed measure of segment operating results has been updated consistent with the revised manner in which the Company’s CODM assesses the company’s financial performance and allocates resources.

All prior-period segment data have been retrospectively adjusted.

The Company’s four reportable segments are:

• the Data Center segment, which primarily includes server CPUs and GPUs, DPUs, FPGAs and Adaptive SoC products for data centers;

• the Client segment, which primarily includes CPUs, accelerated processing units that integrate microprocessors and GPUs (APUs), and chipsets for desktop and notebook personal computers;

• the Gaming segment, which primarily includes discrete GPUs, semi-custom SoC products and development services;

• the Embedded segment, which primarily includes embedded CPUs and GPUs, FPGAs, and Adaptive SoC products.

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

• the Client segment, which primarily includes CPUs, APUs, and chipsets for desktop, notebook and handheld personal computers;

• the Gaming segment, which primarily includes discrete GPUs, and semi-custom SoC products and development services;

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

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

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This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments.

This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation expense, acquisition-related costs and licensing gain.

This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation expense, acquisition-related and other costs, and licensing gain.

Acquisition-related and other costs primarily include transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.

The following table provides a summary of net revenue and operating income (loss) by segment for 2023, 2022 and 2021.

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All Other ( 4,419 ) ( 4,979 ) ( 409 )

Total operating income (loss) $ 1,264 $ 3,648 $ 1,369

Total operating income

$ 401 $ 1,264 $ 3,648

The following table provides items included in All Other category:

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Stock-based compensation expense $ 1,384 $ 1,081 $ 379

Acquisition-related costs 452 42 14

Acquisition-related and other costs 258 452 42

Amortization of acquisition-related intangibles 2,811 3,548 —

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United States $ 7,837 $ 8,049 $ 4,656

China (including Hong Kong) 5,207 4,096 2,329

Japan 4,629 4,177 2,381

China (including Hong Kong) 3,417 5,207 4,096

Singapore 2,231 1,380 1,389

Europe 2,030 1,773 1,249

Taiwan 1,841 2,369 2,091

Singapore 1,380 1,389 1,096

Other countries 695 646 572

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2022 December 25,

Customer A 16 % 14 % *

Customer B * 11 % *

Customer A Gaming 18 % 16 % 14 %

Customer B Client * * 11 %

Less than 10%

Sales to customers A and B consisted of sales of products from the Gaming and Client segments, respectively.

The following table summarizes Property and equipment, net by geographic areas:

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United States $ 1,143 $ 1,102

Canada 80 105

Singapore 144 132

Ireland 46 48

Other countries 44 42

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NOTE 5 – Business Combinations

Fiscal Year 2023 Acquisitions

During the year ended December 30, 2023, the Company completed business acquisitions for a total consideration of $ 134 million that resulted in the recognition of $ 49 million of identifiable net assets and $ 85 million of goodwill.

The financial results of these acquired businesses, which were not material, were included in the Company's Consolidated Statements of Operations from their respective dates of acquisition under the Data Center, Client and Embedded segments.

Fiscal Year 2022 Acquisitions

Pensando Acquisition

On May 26, 2022, the Company completed the acquisition of all issued and outstanding shares of Pensando, a leader in next-generation distributed computing, for a transaction valued at approximately $ 1.9 billion.

On May 26, 2022 (Pensando Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of Pensando, a leader in next-generation distributed computing, for a transaction valued at approximately $ 1.9 billion.

The recorded purchase consideration of $ 1.7 billion is net of deferred cash compensation requiring future services and other customary closing adjustments.

The acquisition of Pensando and its leading distributed services platform expands the Company’s ability to offer leadership solutions for cloud, enterprise, and edge customers.

The purchase consideration was preliminarily allocated as follows:

The purchase consideration was allocated as follows:

(In millions)

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Total purchase consideration $ 1,655

The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management.

The fair values are subject to adjustment for up to one year after the close of the transaction as additional information is obtained.

Any adjustments to the preliminary purchase price allocation identified during the measurement period are recognized in the period in which the adjustments are determined.

Adjustments to the preliminary purchase price allocation since the completion of the acquisition resulted in an immaterial decrease to goodwill.

The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management.

Goodwill arising from the Pensando acquisition was assigned to the Company’s Data Center segment.

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From the Pensando Acquisition Date to December 30, 2023, the Consolidated Statements of Operations include immaterial revenue and operating results attributable to Pensando, which are reported under the Data Center segment.

In 2022, Pensando acquisition-related costs of $ 102 million was recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations.

In 2023 and 2022, Pensando acquisition-related costs of $ 190 million and $ 102 million was recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations.

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

The Company may incur additional acquisition-related costs in the future related to the acquisition.

Xilinx Acquisition

On February 14, 2022, the Company completed the acquisition of all issued and outstanding shares of Xilinx, a leading provider of adaptive computing solutions, for a total purchase consideration of $ 48.8 billion ($ 46.4 billion, net of cash acquired of $ 2.4 billion).

On February 14, 2022 (Xilinx Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of Xilinx, a leading provider of adaptive computing solutions, for a total purchase consideration of $ 48.8 billion ($ 46.4 billion, net of cash acquired of $ 2.4 billion).

The acquisition of Xilinx expands the Company’s product portfolio to include adaptable hardware platforms that enable hardware acceleration and rapid innovation across a variety of technologies.

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IPR&D consists of projects that have not yet reached technological feasibility as of the acquisition date.

Accordingly, the Company recorded an indefinite-lived intangible asset of $ 970 million for the fair value of these projects, which will initially not be amortized.

Instead, these projects are tested for impairment annually and whenever events or changes in circumstances indicate that these projects may be impaired.

Once the project reaches technological feasibility, the Company will begin to amortize the intangible assets over their estimated useful life.

The Company also assumed unvested restricted stock units with estimated fair value o f $ 1.2 billion, of which $ 275 million was included as a component of the purchase consideration and $ 951 million will be recognized as expense subsequent to the acquisition.

Accordingly, the Company recorded an indefinite-lived intangible asset of $ 970 million for the fair value of these projects, which were initially not amortized.

In the fourth quarter of 2023, these IPR&D assets reached technological feasibility and were reclassified as developed technology, and began amortization over their estimated useful lives of 15 years.

The Company also assumed unvested restricted stock units with estimated fair value o f $ 1.2 billion, of which $ 275 million was included as a component of the purchase co nsideration and $ 951 million will be recognized as expense subsequent to the acquisition.

The Consolidated Statements of Operations include the following revenue and operating income attributable to Xilinx in 2022:

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Operating income attributable to Xilinx recorded under the Embedded and Data Center segments does not include $4.2 billion of amortization of acquisition-related intangibles, employee stock-based compensation expense and acquisition-related costs, which are recorded under the “All Other” segment.

In 2022, Xilinx acquisition-related costs of $ 350 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the C ompany’s Consolidated Statements of Operations.

In 2023 and 2022, Xilinx acquisition-related costs of $ 26 million and $ 350 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the C ompany’s Consolidated Statements of Operations.

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

The Company may incur additional acquisition-related costs in the future related to the Xilinx acquisition.

Supplemental Unaudited Pro Forma Information

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Acquisition-related Intangible Assets

Acquisition-related intangibles as of December 31, 2022 were as follows:

Weighted-average Remaining Useful Life December 31, 2022

Gross Carrying Amount Accumulated Amortization Net Carrying Amount

(In millions)

Developed technology 15 years $ 12,360 $ ( 738 ) $ 11,622

Customer relationships 13 years 12,324 ( 1,973 ) 10,351

Customer backlog 1 month 809 ( 712 ) 97

Corporate trade name 1 month 65 ( 57 ) 8

Product trademarks 11 years 914 ( 68 ) 846

Acquisition-related intangibles as of December 30, 2023 and December 31, 2022 were as follows:

December 30, 2023 December 31, 2022

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

(In millions) (In millions)

Developed technology $ 13,390 $ ( 1,583 ) $ 11,807 $ 12,360 $ ( 738 ) $ 11,622

Customer relationships 12,324 ( 3,755 ) 8,569 12,324 ( 1,973 ) 10,351

Customer backlog 809 ( 809 ) — 809 ( 712 ) 97

Corporate trade name 65 ( 65 ) — 65 ( 57 ) 8

Product trademarks 914 ( 147 ) 767 914 ( 68 ) 846

Identified intangible assets subject to amortization 27,502 ( 6,359 ) 21,143 26,472 ( 3,548 ) 22,924

IPR&D not subject to amortization N/A 1,194 — 1,194

IPR&D not subject to amortization 220 — 220 1,194 — 1,194

Total acquisition-related intangible assets $ 27,722 $ ( 6,359 ) $ 21,363 $ 27,666 $ ( 3,548 ) $ 24,118

Acquisition-related intangible asset balance as of December 25, 2021 was not material.

Acquisition-related intangible amortization expense was $ 3.5 billion in fiscal year 2022.

Acquisition-related intangible amortization expense was $ 2.8 billion and $ 3.5 billion in fiscal year 2023 and 2022, respectively.

In the fourth quarter of 2023, $970 million of IPR&D intangible assets acquired from Xilinx reached technological feasibility and were reclassified as developed technology, and began amortization over their estimated useful lives.

Based on the carrying value of acquisition-related intangibles recorded as of December 30, 2023, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:

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Total $ 21,143

In the second quarter of fiscal year 2022, the Company reassigned goodwill balances among the updated reportable segments to reflect changes in its segment reporting structure.

The Company performed a goodwill impairment test immediately prior to and after the segment change and determined that no indicators of impairment to goodwill existed.

The carrying amount of goodwill as of December 31, 2022 and December 25, 2021 was $ 24.2 billion and $ 289 million, respectively, and was assigned to reporting units within the following reportable segments:

December 25, 2021 Acquisitions Adjustments and Reassignment due to segment change December 31, 2022

(In millions)

The carrying amount of goodwill as of December 30, 2023 and December 31, 2022 was $ 24.3 billion and $ 24.2 billion, respectively, and was assigned to reporting units within the following reportable segments:

December 25, 2021 Acquisitions Adjustments and Reassignment due to segment change*

December 31, 2022 Acquisitions December 30,

(In millions) (In millions)

Reportable segments before segment change:

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Data Center — 1,094 1,790 2,884 58 2,942

Client — — — — 18 18

Gaming — — 238 238 — 238

1 unchanged sentence

Total $ 289 $ 23,888 $ — $ 24,177 $ 85 $ 24,262

During the fourth quarter of fiscal years 2022 and 2021, the Company conducted its annual impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.

*In the second quarter of fiscal year 2022, the Company reassigned goodwill balances among the updated reportable segments to reflect changes in its segment reporting structure.

During the fourth quarter of fiscal years 2023 and 2022, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.

NOTE 7 – Related Parties—Equity Joint Ventures

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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.

The Company’s purchases from the ATMP JV during 2022 and 2021 amounted to $ 1.7 billion and $ 1.1 billion, respectively.

The Company’s purchases from the ATMP JV during 2023 and 2022 both amounted to $ 1.7 billion.

As of December 30, 2023 and December 31, 2022, the amounts payable to the ATMP JV were $ 363 million and $ 463 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 2023 and 2022 amounted to $ 14 million and $ 15 million, respectively .

As of December 31, 2022 and December 25, 2021, the Company had receivables from ATMP JV of $ 2 million for each year, included in Receivables from related parties on the Company’s consolidated balance sheets.

As of December 30, 2023 and December 31, 2022, the Company had receivables from ATMP JV of $ 9 million and $ 2 million, respectively , included in Receivables from related parties on the Company’s consolidated balance sheets.

During 2023, 2022 and 2021, the Company recorded gains of $ 16 million, $ 14 million and $ 6 million in Equity income in investee on its consolidated statement of operations, respectively.

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The Company classifies Licensed IP and royalty income associated with the February 2016 agreement as Licensing gain within operating income.

During 2022 and 2021, the Company recognized $102 million in licensing gain from a milestone achievement and royalty income and $12 million of licensing gain from royalty income under the agreement, respectively.

During 2023 and 2022, the Company recognized $34 million of licensing gain from royalty income and $102 million of licensing gain from a milestone achievement and royalty income under the agreement, respectively.

As of December 30, 2023 and December 31, 2022, the Company had no receivables from the THATIC JV.

6 unchanged sentences

(In millions)

7.50% Senior Notes Due August 2022 (7.50% Notes)

2.950% Senior Notes Due 2024 (Xilinx 2024 Notes)

2.950 % Senior Notes Due 2024 (2.950% Notes)

2.125 % Convertible Senior Notes Due 2026 ( 2.125 % Notes)

2.375% Senior Notes Due 2030 (Xilinx 2030 Notes)

2.375 % Senior Notes Due 2030 (2.375% Notes)

3.924 % Senior Notes Due 2032 ( 3.924 % Notes)

4.393 % Senior Notes Due 2052 ( 4.393 % Notes)

Total debt (principal amount) 2,500 2,501

Unamortized debt discount and issuance costs ( 34 ) —

Unamortized debt premium, discount and issuance costs, net ( 32 ) ( 34 )

Total debt (net) 2,468 2,467

current portion of long-term debt — ( 312 )

current portion of long-term debt and related unamortized debt premium and issuance costs 751 —

Total long-term debt $ 1,717 $ 2,467

In August 2022, the Company repaid its $312 million 7.50% Senior Notes.

Assumed Xilinx Notes

In connection with the acquisition of Xilinx, the Company assumed $ 1.5 billion in aggregate principal of Xilinx’s 2.950% Notes and 2.375% Notes (together, the Assumed Xilinx Notes ) which were recorded at fair value as of the Xilinx Acquisition Date.

The difference between the fair value at the Xilinx Acquisition Date and the principal outstanding of the Assumed Xilinx Notes is being amortized through interest expense over the remaining term of the debt.

The Assumed Xilinx Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.

The indentures governing the Assumed Xilinx Notes contain various covenants which limit the Company’s ability to, among other things, create certain liens on principal property or the capital stock of certain subsidiaries, enter into certain sale and leaseback transactions with respect to principal property, and consolidate or merge with, or convey, transfer or lease all or substantially all of the Company’s assets to another person.

3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052

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The 3.924 % and 4.393 % Notes are governed by the terms of an indenture dated June 9, 2022 between the Company and US Bank Trust Company, National Association as trustee.

As of December 31, 2022, the outstanding aggregate principal amount of the 3.924 % Notes and 4.393 % Notes was $1.0 billion.

The Company may redeem some or all of the 3.924 % Notes and 4.393 % Notes prior to March 1, 2032 and December 1, 2051, respectively, at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the 3.924 % Notes or 4.393 % Notes or 100% of the principal amount plus accrued and unpaid interest.

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Additionally, an event of default may result in the acceleration of the maturity of the 3.924 % Notes and 4.393 % Notes.

During 2022 , activity on the 2.125% Notes was immaterial.

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).

These notes matured on August 15, 2022.

Future Payments on Total Debt

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Revolving Credit Facility

On April 29, 2022, the Company entered into a Credit Agreement (Revolving Credit Agreement) with Wells Fargo Bank, N.A.

as administrative agent and the other banks identified therein as lenders.

The Revolving Credit Agreement provides for a five-year revolving credit facility in an aggregate principal amount not to exceed $3.0 billion (subject to certain terms and conditions).

Revolving loans under the Revolving Credit Agreement can be Secure Overnight Financing Rate (SOFR) Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option.

Each SOFR Loan will bear interest at a rate per annum equal to the applicable SOFR Rate plus a margin based on the Company's Debt Ratings (as defined in the Revolving Credit Agreement) from time to time of between 0.625% and 1.250%.

Each Base Rate Loan will bear interest at a rate per annum equal to the Base Rate (as defined in the Revolving Credit Agreement) plus a margin based on the Company's Debt Ratings from time to time of between 0.000% and 0.250%.

In addition, the Company has agreed to pay a commitment fee based on the Company's Debt Ratings from time to time of between 0.050% and 0.125% (as defined in the Revolving Credit Agreement).

The Company has $3.0 billion available under a revolving credit agreement, as amended, that expires on April 29, 2027 (Revolving Credit Agreement).

As of December 30, 2023 and December 31, 2022, the Company had no outstanding borrowings under the Revolving Credit Agreement.

Revolving loans under the Revolving Credit Agreement can be either Secure Overnight Financing Rate (SOFR) Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option.

Each SOFR Loan will bear interest at a rate per annum equal to the applicable SOFR plus a margin between 0.575% and 1.20%.

Each Base Rate Loan will bear interest equal to the Base Rate plus a margin between 0.000% and 0.20%.

The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions.

The Revolving Credit Agreement contains customary representations and warranties, and affirmative and negative covenants and events of default applicable to the Company and its subsidiaries.

The Revolving Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default applicable to the Company and its subsidiaries.

As of December 30, 2023, the Company was in compliance with these covenants.

As of December 31, 2022, the Company had no outstanding borrowings under this revolving credit facility but may borrow in the future and use the proceeds for payment of expenses in connection with working capital and general corporate expenses.

Commercial Paper

On November 3, 2022, the Company established a new commercial paper program, under which the Company may issue unsecured commercial paper notes up to a maximum principal amount outstanding at any time of $3 billion with a maturity of up to 397 days from the date of issue.

On November 3, 2022, the Company established a commercial paper program, under which the Company may issue unsecured commercial paper notes up to a maximum principal amount outstanding at any time of $3 billion with a maturity of up to 397 days from the date of issue.

The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of issuance.

As of December 31, 2022, the Company had no commercial paper outstanding.

During 2023 and 2022, the Company did not issue any commercial paper under the program and as of December 30, 2023, the Company had no commercial paper outstanding.

NOTE 9 – Financial Instruments

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Money market funds $ 969 $ — $ 969 $ 3,017 $ — $ 3,017

Commercial paper — 224 224 — 45 45

Corporate debt securities — 753 753 — 224 224

government and agency securities 1,252 — 1,252 — — —

government and agency securities — 135 135 — — —

Time deposits and certificates of deposits — 205 205 — 158 158

Short-term investments

Commercial paper — 441 441 — 880 880

Corporate debt securities — 506 506 — 441 441

Time deposits and certificates of deposits — 9 9 — — —

Asset-backed and mortgage-backed securities — 34 34 — 39 39

Treasury and agency securities 466 — 466 — — —

Foreign government and agency securities — 74 74 — — —

government and agency securities 1,209 28 1,237 466 — 466

government and agency securities — 54 54 — 74 74

Other non-current assets

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The following is a summary of cash equivalents and short-term investments:

December 31, 2022

Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

(in millions)

December 30, 2023 December 31, 2022

Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

(in millions) (in millions)

Asset-backed and mortgage-backed securities $ 35 $ — $ ( 2 ) $ 33 $ 42 $ — $ ( 3 ) $ 39

Commercial paper 669 — ( 4 ) 665

Corporate debt securities 1,259 — — 1,259 669 — ( 4 ) 665

Money market funds 969 — — 969 3,017 — — 3,017

Time deposits and certificates of deposits 214 — — 214 159 — — 159

Treasury and agency securities 471 — ( 5 ) 466

Foreign government and agency securities 74 — — 74

government and agency securities 2,487 3 — 2,490 471 — ( 5 ) 466

government and agency securities 189 — — 189 74 — — 74

$ 5,153 $ 3 $ ( 2 ) $ 5,154 $ 4,432 $ — $ ( 12 ) $ 4,420

As of December 31, 2022, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.

As of December 30, 2023 and December 31, 2022, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.

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

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$ 4,185 $ 4,186 $ 1,424 $ 1,412

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

As of December 30, 2023 and December 31, 2022, the Company had non-marketable securities in privately-held companies of $ 155 million and $ 137 million, respectively.

Financial Instruments Not Recorded at Fair Value

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Amount Estimated

(In millions)

(In millions) (In millions)

Current portion of long-term debt, net $ 751 $ 741 $ — $ —

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

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

As of December 31, 2022, the Company had non-marketable securities in privately-held companies of $ 137 million.

The balance of non-marketable securities in privately-held companies as of December 25, 2021 was not material.

Hedging Transactions and Derivative Financial Instruments

2 unchanged sentences

These contracts generally mature within 24 months and are designated as accounting hedges.

As of December 31, 2022 and December 25, 2021, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $ 1.9 billion and $ 894 million, respectively.

The fair value of these contracts, recorded as a liability, was $ 27 million as of December 31, 2022.

The fair value of these contracts as of December 25, 2021 was not material.

As of December 30, 2023 and December 31, 2022, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $ 2.4 billion and $ 1.9 billion, respectively.

The fair value of these contracts was recorded as an asset of $ 6 million as of December 30, 2023 and as a liability of $ 27 million as of December 31, 2022.

Foreign Currency Forward Contracts Not Designated as Accounting Hedges

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NOTE 10 – 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.

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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.

One customer accounted for approximately 18 % of the total consolidated accounts receivable balance as of December 31, 2022.

Two customers each accounted for approximately 20 % and 15 % of the total consolidated accounts receivable balance as of December 25, 2021.

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.

One customer accounted for approximately 13 % and 18 % of the total consolidated accounts receivable balance as of December 30, 2023 and December 31, 2022, respectively.

However, the Company does not believe the receivable balance from this customer 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.

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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.

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

2 unchanged sentences

Net income for basic earnings per share $ 854 $ 1,320 $ 3,162

Effect of potentially dilutive shares:

Interest expense related to the 2.125% Notes — — 1

Net income for diluted earnings per share $ 1,320 $ 3,162 $ 2,491

Basic weighted-average shares 1,614 1,561 1,213

Effect of potentially dilutive shares:

Employee equity plans and warrants 10 16 20

2.125% Notes — — 3

Effect of potentially dilutive shares from employee equity plans and warrants

Diluted weighted-average shares 1,625 1,571 1,229

2 unchanged sentences

Diluted $ 0.53 $ 0.84 $ 2.57

Potential shares from employee equity plans and the impact from the conversion of the 2.125 % Notes up to the conversion date, totaling 16 million and 2 million shares for 2022 and 2021, respectively, were not included in the earnings per share calculation because their inclusion would have been anti-dilutive.

Potential shares from employee equity plans totaling 6 million, 16 million and 2 million weighted-average shares for 2023, 2022 and 2021, respectively, were not included in the earnings per share calculation because their inclusion would have been anti-dilutive.

NOTE 12 – Common Stock and Stock-Based Compensation

8 unchanged sentences

Common stock repurchases for tax withholding on equity awards ( 4 ) ( 5 ) ( 2 )

Issuance of common stock upon warrant exercise 1 — —

Issuance of common stock to settle convertible debt — — 3

1 unchanged sentence

Stock Repurchase Program

In May 2021, the Company’s Board of Directors approved a stock repurchase program authorizing up to $4 billion of the Company’s common stock (Existing Repurchase Program).

In February 2022, the Company’s Board of Directors approved a new stock repurchase program in addition to the Existing Repurchase Program to purchase up to $8 billion of outstanding common stock in the open market (collectively referred to as the “Repurchase Program”).

During the year ended December 31, 2022, the Company repurchased 36.3 million shares of its common stock under the Repurchase Program for $ 3.7 billion.

The Company has an approved stock repurchase program authorizing repurchases of up to $12 billion of the Company’s common stock (Repurchase Program).

During the year ended December 30, 2023, the Company repurchased 9.7 million shares of its common stock under the Repurchase Program for $ 985 million.

As of December 30, 2023, $ 5.6 billion remained available for future stock repurchases under this program.

2 unchanged sentences

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.

On May 18, 2023, the Company’s stockholders approved the AMD 2023 Equity Incentive Plan (the 2023 Plan), which supersedes the AMD 2004 Equity Incentive Plan and the Xilinx, Inc.

2007 Equity Incentive Plan (the Prior Plans).

Outstanding awards granted under the Prior Plans will continue to be governed by the terms of the Prior Plans but no awards may be made under the Prior Plans on or after May 18, 2023.

Under the 2023 Plan, 87,645,874 shares of the Company’s common stock are reserved and available for delivery pursuant to awards granted under the 2023 Plan.

Generally, stock options granted under the 2023 Plan vest and become exercisable over a four-year period from the date of grant and expire within seven years after the grant date.

Unvested shares from the 2023 Plan that are reacquired by the Company from forfeited outstanding equity awards become available for grant and may be reissued as new awards.

Under the 2023 Plan, the Company can grant (i) stock options, and (ii) RSUs, including time-based RSUs and PRSUs.

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The offering periods commence in May and November each year.

As of December 31, 2022, the Company had 32 million shares of common stock that were available for future grants and 28 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 36 million shares of common stock that were available for issuance under the 2017 plan.

With the acquisition of Xilinx, the Company assumed the Xilinx, Inc.

2007 Equity Incentive Plan (2007 Plan) and may grant stock options and awards under this plan.

As of December 31, 2022, the Company had 18 million shares of common stock that were available for future grants under the 2007 Plan.

As of December 30, 2023, the Company had 74 million shares of common stock that were available for future grants and 37 million shares reserved for issuance upon the exercise of outstanding stock options or the vesting of unvested RSUs, including PRSUs, under the 2023 Plan and the Prior Plans.

Valuation and Expense

12 unchanged sentences

Expected volatility 52.36 % - 52.42%

51.28 % 51.77 %

Risk-free interest rate 3.93 % - 4.11 %

3.00 % 0.69 %

Expected dividends — % — % — %

12 unchanged sentences

Granted 1 $ 108.19

Canceled — $ 98.54

Exercised ( 2 ) $ 18.22

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The following table summarizes time-based RSU activity and related information:

of Shares Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life

(In millions except share price)

of Shares Weighted- Average Grant Date Fair Value

(In millions)

Unvested shares as of December 31, 2022 28 $ 95.49

Assumed with acquisition of Xilinx 12 $ 103.35

Granted 16 $ 106.28

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Unvested shares as of December 30, 2023 32 $ 100.65

The total fair value of time-based RSUs vested during 2022, 2021 and 2020 was $ 889 million, $ 678 million and $ 642 million, respectively.

The total fair value of time-based RSUs vested during 2023, 2022 and 2021 was $ 1.1 billion, $ 889 million and $ 678 million, respectively.

As of December 30, 2023, the Company had $ 2.3 billion of total unrecognized compensation expense related to time-based RSUs, which will be recognized over the weighted-average period of 2.59 years.

7 unchanged sentences

Expected term (in years) 2.17 - 3.00

3.00 2.48 - 3.00

The Company uses the historical volatility of its common stock and risk-free interest rate based on the rate for a U.S.

4 unchanged sentences

of Shares Weighted-Average

Grant Date Fair Value Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life

(In millions except share price)

Grant Date Fair Value

(In millions)

Unvested shares as of December 31, 2022 2 $ 110.31

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Statutory federal income tax expense at 21% $ 107 $ 252 $ 772

State taxes (benefit) ( 3 ) 1 ( 6 )

Foreign rate detriment (benefit) 195 71 ( 3 )

GILTI and other foreign inclusion ( 138 ) ( 96 ) —

1 unchanged sentence

Research credits ( 169 ) ( 241 ) ( 78 )

Interest and penalty

Foreign rate detriment (benefit)

( 11 ) 195 71

Stock-based and non-deductible compensation 1 10 ( 125 )

Valuation allowance change — 3 ( 1,301 )

Other ( 4 ) ( 14 ) ( 15 )

Income tax provision (benefit) $ ( 346 ) $ ( 122 ) $ 513

The Company recorded an income tax benefit of $ 122 million in 2022 and an income tax provision of $ 513 million in 2021, representing effective tax rates of (10%) and 14%, respectively.

The reduction in income tax expense in 2022 was primarily due to the lower pre-tax income coupled with a $ 261 million FDII tax benefit and $241 million of research and development (R&D) tax credits.

The Company recorded an income tax benefit of $ 346 million and $ 122 million in 2023 and 2022, respectively, representing effective tax rates of ( 68 %) and ( 10 %), respectively.

The increase in income tax benefit in 2023 was primarily due to the lower pre-tax income coupled with a $ 185 million FDII tax benefit and $ 169 million of research and development (R&D) tax credits.

Beginning in 2022, provisions in the U.S.

Tax Cuts and Jobs Act of 2017 require the Company to capitalize and amortize R&D expenditures rather than deducting the costs as incurred.

The capitalization resulted in an increase in 2022 taxable income which also increased the income eligible for the FDII tax benefit.

Additionally, there was a pre-tax loss incurred outside of the U.S.

primarily due to the GAAP amortization of Xilinx acquisition-related items and therefore, the Company recorded a corresponding tax benefit associated with the reversal of the previously established GILTI deferred tax liability.

The capitalization resulted in an increase in 2023 and 2022 taxable income which also increased the income eligible for the FDII tax benefit.

As a part of the Xilinx acquisition and as a result of certain employment and operational commitments the Company has made in Singapore, the Company has been granted a Development and Expansion Incentive (DEI) that is effective through 2031.

The DEI reduces the local tax on Singapore income from a statutory rate of 17% to 5% through 2031.

Due to the current year pre-tax loss, the Company did not receive any income tax or EPS benefit.

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 in 2021 was a result of higher income in the U.S.

and increase in foreign taxes, partially offset by $ 147 million of FDII benefit, $ 78 million of R&D 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.

Due to the current year pre-tax loss in Singapore, the Company did not receive any income tax or earnings per share benefit.

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.

8 unchanged sentences

Foreign R&D and investment tax credits 597 578

Capitalized costs 65 121

Foreign tax credits

Lease liability 181 161

6 unchanged sentences

Right-of-use assets ( 175 ) ( 151 )

Undistributed foreign earnings ( 35 ) ( 24 )

GILTI ( 524 ) ( 633 )

2 unchanged sentences

Net deferred tax assets (liabilities) $ ( 836 ) $ ( 1,876 )

As a result of the acquisition of Xilinx, the Company recorded $4.3 billion of net deferred tax liabilities primarily on the excess of book basis over the tax basis of the acquired intangible assets, including $857 million of GILTI net deferred tax liability.

Additionally, as the result of the new R&D capitalization tax law effective in 2022, the capitalized amounts resulted in increased current year taxable income, but which are deductible as amortized in future periods.

Therefore, the Company recorded a deferred tax asset for the capitalized R&D expenditures.

As a result of the R&D capitalization tax law that became effective in 2022, the capitalization of R&D expense amounts resulted in increased taxable income in 2023 and 2022.

The capitalized R&D will be amortized and become deductible in future periods.

Therefore, the Company has recorded a deferred tax asset for the capitalized R&D expenditures.

As a result of the acquisition of Xilinx in 2022, the Company recorded $4.3 billion of net deferred tax liabilities primarily on the excess of book basis over the tax basis of the acquired intangible assets, including $857 million of GILTI net deferred tax liability.

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

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Balance at beginning of year $ 2,078 $ 1,735 $ 1,576

Charges (reductions) to income tax expense and other accounts* 112 3 ( 1,301 )

Charges to income tax expense and other accounts

Acquisition-related 5 231 —

1 unchanged sentence

Balance at end of year $ 2,124 $ 2,078 $ 1,735

* Amounts recorded in 2020 reflect release of valuation allowances.

+ The net recoveries for all were primarily related to net originating deferred tax assets and newly generated tax credits.

Under current U.S.

tax law, the impact of future distributions of undistributed earnings that are indefinitely reinvested are anticipated to be subject to 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 $460 million as of December 31, 2022.

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

Through the end of fiscal year 2023, the Company continued to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes.

2 unchanged sentences

The Company’s U.S.

federal and state net operating losses carryforwards as of December 31, 2022, were $ 435 million and $ 476 million, respectively.

Net operating losses (NOLs) may be subject to limitations by the Internal Revenue Code and similar provisions.

federal and state net operating losses (NOLs) carryforwards as of December 30, 2023, were $ 295 million and $ 343 million, respectively.

NOLs may be subject to limitations by the Internal Revenue Code and similar provisions.

$46 million of U.S.

federal NOLs will expire between 2023 and 2037, and $364 million of federal NOLs have no expiration date, and the state NOLs will expire at various dates through 2042.

federal NOLs will expire between 2024 and 2037, and $249 million of federal NOLs have no expiration date.

State NOLs will expire at various dates through 2042.

The difference between the amount of federal NOLs which are recorded on the Company’s balance sheet as deferred tax assets and their related valuation allowance, and the amounts reported on the Company’s tax returns are the result of uncertain tax positions the Company has taken during the current year and for which an income tax reserve has been recorded.

The federal tax credits of $ 12 million will expire at various dates between 2037 and 2042.

The state tax credits of $722 million will expire at various dates between 2023 through 2038 except for California R&D credit, which does not expire.

The state tax return credits of $ 757 million will expire at various dates between 2024 and 2039, except for the California R&D credit, which does not expire.

The Company also has $ 624 million of credit carryforward in Canada that will expire between 2027 and 2042.

The Company also recorded $142 million of current tax payable as of the Xilinx acquisition date.

In 2022, the Company also recorded $142 million of current tax payable as of the Xilinx acquisition date.

Additionally, the Company assumed $203 million of long-term liabilities for uncertain tax positions, including $12 million of interest, as well as $321 million of long-term liabilities for transition tax payable over three years.

11 unchanged sentences

Balance at end of year $ 1,463 $ 1,361 $ 275

The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 1.2 billion, $ 215 million and $ 77 million as of December 31, 2022, December 25, 2021 and December 26, 2020, respectively.

The Company’s policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the Consolidated Statements of Operations.

The Company had $81.3 million of accrued penalties and interest related to unrecognized tax benefits as of December 31, 2022 including $12 million assumed from the Xilinx acquisition.

The Company had no material amounts of accrued interest and accrued penalties related to unrecognized tax benefits as of December 25, 2021 and December 26, 2020.

As of December 31, 2022 and December 25, 2021, the Company had long-term income tax liabilities of $1.3 billion and $189 million, respectively, recorded under Other long-term liabilities in the Consolidated Balance Sheets.

The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 1.3 billion, $ 1.2 billion and $ 215 million as of December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

The Company had $142 million, $81 million and $35 million of accrued penalties and interest related to unrecognized tax benefits as of December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

As of December 30, 2023 and December 31, 2022, the Company had long-term income tax liabilities related to unrecognized tax benefits of $ 1.4 billion and $ 1.3 billion, respectively, recorded under Other long-term liabilities in the Consolidated Balance Sheets.

The Company is subject to taxation in the U.S.

7 unchanged sentences

however, the timing of tax audit closures and settlements are highly uncertain.

The Company and its subsidiaries have several foreign and U.S.

state audits in process at any one point in time.

Under current U.S.

state jurisdictions.

There were no cumulative undistributed earnings that are indefinitely reinvested that could be subject to withholding taxes as of December 30, 2023.

NOTE 15 – Other Income (Expense), Net

51 unchanged sentences

NOTE 17 – Contingencies

Quarterhill Inc.

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 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.

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.

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.

On July 18, 2022, the Court of Appeals for the Federal Circuit affirmed the Patent Trial and Appeal Board’s decision.

On February 8, 2022, Polaris filed a lawsuit against Xilinx, Inc.

alleging infringement of four patents related to memory chips and memory interfaces.

On February 22, 2022, the Company was served with the complaint.

On April 14, 2022, the Company filed a motion to dismiss the complaint.

On April 28, 2022, Polaris filed an amended complaint.

On May 12, 2022, the Company filed an answer to the amended complaint.

On June 1, 2022, Polaris filed two lawsuits against the Company and Hewlett-Packard GmbH, HP Deutschland GmbH in the Hamburg and Munich Courts in Germany, alleging infringement of two patents related to memory chips and memory interfaces.

On July 15, 2022, Polaris filed a lawsuit against the Company, ASUSTeK Computer Inc., and ASUS Computer GmbH, alleging infringement of a patent related to memory chips and memory interfaces.

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

Monterey Research Litigation

On November 15, 2019, Monterey Research, LLC (Monterey) filed a patent infringement complaint against the Company in the United States District Court for the District of Delaware.

Monterey alleges that the Company infringes six U.S.

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).

On August 12, 2021, Monterey filed two patent infringement complaints in the United States District Court for the Western District of Texas.

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.

On March 31, 2022, the Company entered into an agreement which will provide the Company a license to the Monterey Research patents.

The agreement did not have a material adverse effect on the Company’s financial condition, cash flows, or results of operation.

Analog Devices Litigation

On December 5, 2019, Analog Devices, Inc.

(ADI) filed a lawsuit against Xilinx alleging infringement of eight patents related to switching circuits, comparators, analog to digital convertors, signal conditioners, and switched capacitors.

On January 21, 2020, Xilinx filed its answer and counterclaims alleging infringement by ADI of eight patents related to digital to analog converters, serializing data paths, transceivers, networks on chip, termination circuits, and data transmitters.

In November 2022, the Company and Analog Devices, Inc.

resolved all ongoing patent litigations, based on mutually agreed upon terms.

As part of this resolution, the two companies have committed to pursue technology collaborations to bring next generation solutions to their communications and data center customers.

The agreement did not have a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

Future Link Systems Litigation

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

Future Link alleges that the Company infringes three U.S.

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).

On December 21, 2021, Future Link filed a lawsuit alleging infringement of two U.S.

patents (8,099,614 and 7,685,439) related to power management.

On December 28, 2021, Future Link 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 March 31, 2022, the Company entered into an agreement which will provide the Company a license to the Future Link patents.

The agreement did not have a material adverse effect on the Company’s financial condition, cash flows, or results of operations.

Litigation and Other Legal Matters

As of December 30, 2023, there were no material legal proceedings.

The Company is a defendant or plaintiff in various actions that arose in the normal course of business.

With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Environmental Matters

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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.

Report of Independent Registered Public Accounting Firm

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(the Company) as of December 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, 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 31, 2022 and December 25, 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023, 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 31, 2022, 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 27, 2023 expressed an unqualified opinion thereon.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has elected to change its method of accounting for the United States Global Intangible Low-Taxed Income (GILTI) tax to recognize deferred taxes for temporary tax basis differences expected to reverse as GILTI tax in future years.

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 30, 2023, 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 January 31, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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

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As discussed in Note 2 to the consolidated financial statements, the Company adjusts the inventory carrying value to the lower of actual cost or the estimated net realizable value after completing ongoing reviews of on-hand inventory quantities exceeding forecasted demand, and by considering recent historical activity as well as anticipated 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.

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.

Business Combination

Description of the Matter

During fiscal year 2022, the Company completed the acquisition of Xilinx, Inc.

(“Xilinx”) for consideration of $48.8 billion, as disclosed in Note 5 to the consolidated financial statements.

The transaction was accounted for as a business combination.

Auditing the Company's accounting for its acquisition of Xilinx was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of certain identified intangible assets, principally consisting of developed technology and customer relationships.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired business.

The Company used a discounted cash flow model to measure the developed technology and customer relationship intangible assets.

The significant assumptions used to estimate the value of these intangible assets included certain assumptions that form the basis of the forecasted results, specifically, revenue growth rates, technology migration curves, and time to recreate customer relationships.

Auditing management’s inventory excess and obsolescence reserves 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 excess and obsolescence reserves, management developed certain assumptions, including forecasted demand 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 controls over the Company’s accounting for the acquisition.

This included testing controls over the estimation process supporting the recognition and measurement of the developed technology and customer relationships intangible assets, including the valuation models and underlying assumptions used to develop such estimates.

To test the estimated fair value of the developed technology and customer relationships intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

For example, we compared the significant assumptions to current industry, market and economic trends and to the Company's budgets and forecasts, and Xilinx’s historical operating results.

We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.

Our valuation specialists’ procedures included, among others, developing a range of independent estimates for the discount rates used in the valuation models and comparing those to the discount rates selected by management.

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 excess and obsolescence reserves estimation process, including the basis for developing the above-described assumptions and management’s judgments.

We compared the quantities and carrying value of on-hand inventories to related unit sales, both historical and forecasted, 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.

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 forecasted demand used by management to determine necessary changes in the inventory excess and obsolescence reserves.

/s/ Ernst & Young LLP

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San Jose, California

February 27, 2023

January 31, 2024

Report of Independent Registered Public Accounting Firm

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 30, 2023, 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 31, 2022 and December 25, 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 27, 2023 expressed an unqualified opinion thereon.

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 30, 2023 and December 31, 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 30, 2023, and the related notes and our report dated January 31, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

16 unchanged sentences

San Jose, California

February 27, 2023

January 31, 2024

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data