AMD Reports 2016 Third Quarter Results

SUNNYVALE, Calif. 10/20/2016

AMD (NASDAQ:AMD) today announ­ced reve­nue for the third quar­ter of 2016 of $1,307 mil­li­on, ope­ra­ting loss of $293 mil­li­on, and net loss of $406 mil­li­on, or $0.50 per share. Non-GAAP1 ope­ra­ting inco­me was $70 mil­li­on and non-GAAP1 net inco­me was $27 mil­li­on, or $0.03 per share.

Our third quar­ter finan­cial results high­light the pro­gress we are making across our busi­ness,” said Lisa Su, AMD pre­si­dent and CEO.  “We now expect to deli­ver hig­her 2016 annu­al reve­nue based on stron­ger demand for AMD semi-cus­tom solu­ti­ons and Pola­ris GPUs. This posi­ti­ons us well to acce­le­ra­te our growth in 2017 as we intro­du­ce new high-per­for­mance com­pu­ting and gra­phics products.”

Q3 2016 Results

  • Q3 2016, Q2 2016, and Q3 2015 were 13-week fis­cal quarters.
  • Reve­nue of $1,307 mil­li­on, up 27 per­cent sequen­ti­al­ly and up 23 per­cent year-over-year pri­ma­ri­ly due to record semi-cus­tom SoC and hig­her GPU and mobi­le APU sales, par­ti­al­ly off­set by cli­ent desk­top pro­ces­sor and chip­set sales.
  • Gross mar­gin was 5 per­cent, down from 31 per­cent from the pre­vious quar­ter due to a $340 mil­li­on char­ge rela­ted to the 6th amend­ment to the Wafer Sup­ply Agree­ment (WSA) with GLOBALFOUNDRIES (GF). Non-GAAP gross mar­gin of 31 per­cent was flat quarter-over-quarter.
  • Ope­ra­ting expen­ses of $376 mil­li­on, com­pa­red to $353 mil­li­on for the pri­or quar­ter. Non-GAAP ope­ra­ting expen­ses of $353 mil­li­on, com­pa­red to non-GAAP ope­ra­ting expen­ses of $342 mil­li­on in Q2 2016, dri­ven by incre­a­sed invest­ments in rese­arch and development.
  • Ope­ra­ting loss of $293 mil­li­on, com­pa­red to an ope­ra­ting loss of $8 mil­li­on in Q2 2016 due to a $340 mil­li­on WSA char­ge. Non-GAAP1 ope­ra­ting inco­me of $70 mil­li­on, com­pa­red to non-GAAP1 ope­ra­ting inco­me of $3 mil­li­on in Q2 2016, pri­ma­ri­ly due to hig­her revenue.
  • Net loss of $406 mil­li­on, net loss per share of $0.50, com­pa­red to net inco­me of $69 mil­li­on, net ear­nings per share of $0.08 in Q2 2016. The decli­ne was dri­ven by a $340 mil­li­on WSA char­ge and a $61 mil­li­on loss on debt redemp­ti­on off­set by incre­a­sed reve­nue. Q2 2016 net inco­me inclu­ded a $150 mil­li­on pre-tax gain on the sale of 85 per­cent of assem­bly, test, mark, and pack (ATMP) faci­li­ties to Nan­tong Fuji­tsu Microelec­tro­nics (NFME).
  • Non-GAAP1 net inco­me of $27 mil­li­on, non-GAAP1 ear­nings per share of $0.03. This com­pa­res to non-GAAP1 net loss of $40 mil­li­on and non-GAAP1 loss per share of $0.05 in Q2 2016, pri­ma­ri­ly due to incre­a­sed reve­nue in Q3 2016.
  • Cash and cash equi­va­lents were $1,258 mil­li­on at the end of the quar­ter, up $301 mil­li­on from the end of the pri­or quar­ter. The quar­ter-end cash balan­ce inclu­des appro­xi­mate­ly $274 mil­li­on of net pro­ceeds from recent capi­tal mar­kets transactions.
  • Total debt at the end of the quar­ter was $1,632 mil­li­on, down $606 mil­li­on from the pri­or quar­ter as a result of the timing and exe­cu­ti­on of Q3 2016 debt reduc­tion actions and due to bifur­ca­ti­on of the new­ly issued 2.125 per­cent Con­ver­ti­ble Notes due 2026 into equi­ty and lia­bi­li­ty com­pon­ents based on GAAP accoun­ting regu­la­ti­ons. We plan to fur­ther redu­ce debt by deploy­ing a signi­fi­cant por­ti­on of the remai­ning cash from our capi­tal mar­kets transactions.

Financial Segment Summary

  • Com­pu­ting and Gra­phics seg­ment reve­nue of $472 mil­li­on incre­a­sed 9 per­cent sequen­ti­al­ly and 11 per­cent from Q3 2015. The sequen­ti­al and year-over-year incre­a­ses were dri­ven pri­ma­ri­ly by incre­a­sed sales of GPUs, off­set by decre­a­sed sales of cli­ent desk­top pro­ces­sors and chip­sets. The year-over-year incre­a­se was also dri­ven by incre­a­sed sales of cli­ent mobi­le processors. 
    • Ope­ra­ting loss was $66 mil­li­on, com­pa­red with an ope­ra­ting loss of $81 mil­li­on in Q2 2016 and an ope­ra­ting loss of $181 mil­li­on in Q3 2015. The sequen­ti­al impro­ve­ment was dri­ven pri­ma­ri­ly by hig­her GPU reve­nue, and the year-over-year impro­ve­ment was pri­ma­ri­ly due to hig­her GPU reve­nue and the absence of an inven­to­ry wri­te-down charge.
    • Cli­ent average sel­ling pri­ce (ASP) decre­a­sed sequen­ti­al­ly dri­ven by lower mobi­le and desk­top pro­ces­sor ASPs and was flat year-over-year.
    • GPU ASP incre­a­sed sequen­ti­al­ly and year-over-year dri­ven by hig­her chan­nel and pro­fes­sio­nal gra­phics ASPs.
  • Enter­pri­se, Embed­ded and Semi-Cus­tom seg­ment reve­nue of $835 mil­li­on incre­a­sed 41 per­cent sequen­ti­al­ly and 31 per­cent year-over-year due to hig­her sales of semi-cus­tom SoCs. 
    1. Ope­ra­ting inco­me was $136 mil­li­on com­pa­red with $84 mil­li­on in Q2 2016 and $84 mil­li­on in Q3 2015. The sequen­ti­al impro­ve­ment was pri­ma­ri­ly due to hig­her reve­nue and the year-over-year impro­ve­ment was pri­ma­ri­ly due to hig­her reve­nue and a $24 mil­li­on IP licen­sing gain.
  • All Other cate­go­ry ope­ra­ting loss was $363 mil­li­on in Q3 2016 com­pa­red with $11 mil­li­on in Q2 2016 and $61 mil­li­on in Q3 2015. The sequen­ti­al incre­a­se was pri­ma­ri­ly dri­ven by a $340 mil­li­on WSA charge.

Q3 2016 Highlights

  • AMD com­ple­ted capi­tal mar­kets tran­sac­tions that rai­sed appro­xi­mate­ly $1.4 bil­li­on in cash, befo­re issu­an­ce cos­ts, to lower over­all debt, redu­ce inte­rest expen­se pay­ments, and fur­ther sup­port gro­wing busi­ness opportunities.
  • AMD announ­ced a five-year amend­ment to the WSA with GF that streng­t­hens the stra­te­gic part­ners­hip, while pro­vi­ding AMD with fle­xi­bi­li­ty in sourcing found­ry ser­vices and grea­ter finan­cial predictability.
  • AMD dis­c­lo­sed new details about its upco­m­ing high-per­for­mance x86 “Zen” core archi­tec­tu­re and “Zen”-based pro­ducts, including: 
    • A public pre­view of the com­pe­ti­ti­ve per­for­mance of the “Zen”-based “Sum­mit Ridge” desk­top processor,
    • A first look at “Nap­les,” its “Zen”-based 32-core, 64-thread ser­ver pro­duct, and
    • A detail­ed tech­ni­cal over­view of the new grounds-up “Zen” core archi­tec­tu­re at the 28th annu­al Hot Chips conference.
  • AMD expan­ded its fami­ly of main­stream and work­sta­tion class gra­phics based on its new Pola­ris archi­tec­tu­re based on 14nm Fin­FET technology. 
    • Laun­ched the new Rade­on™ RX 470 GPU, enab­ling excep­tio­nal HD gaming, true asyn­chro­nous com­pu­te, and sup­port for high dyna­mic ran­ge (HDR) monitors.
    • Laun­ched the Rade­on™ RX 460 GPU for eSports gamers who demand pris­ti­ne HD gaming, smooth bey­ond-HD strea­ming capa­bi­li­ties, and an assort­ment of future-rea­dy gaming technologies.
    • Unvei­led the new Rade­on™ Pro WX Seri­es of pro­fes­sio­nal gra­phics cards, a set of new solu­ti­ons to address modern con­tent crea­ti­on and engineering.
    • Intro­du­ced the upco­m­ing Rade­on™ Pro SSG (Solid Sta­te Gra­phics), a new Rade­on™ Pro solu­ti­on with 1 tera­byte of dedi­ca­ted memo­ry desi­gned for lar­ge data­set app­li­ca­ti­ons, which will be avail­ab­le initi­al­ly as a deve­lo­per kit.
  • Cus­to­mer adop­ti­on of Rade­on™ RX GPUs expan­ded with nota­ble gaming PC design wins with HP and Alienware. 
    • HP announ­ced sup­port for the Rade­onRX 400-Seri­es gra­phics cards and intro­du­ced the HP OMEN X, a ful­ly cus­to­miz­ab­le enthu­si­ast gaming desk­top PC desi­gned for top-end gaming and supe­ri­or VR expe­ri­en­ces that can accom­mo­da­te up to two Rade­on™ R9 Fury X gra­phics cards.
    • Ali­en­wa­re intro­du­ced its latest line of pre­mi­um gaming lap­tops, inclu­ding the new Ali­en­wa­re 15 and new Ali­en­wa­re 17 avail­ab­le with the future-pro­of2 Rade­on™ RX 470 gra­phics card.
  • AMD con­ti­nued to gain momen­tum in vir­tu­al rea­li­ty (VR) with the intro­duc­tion of the most afford­a­ble VR-rea­dy PC to-date, the limi­ted edi­ti­on Cyber­PowerPC, fea­turing the AMD FX 4350 pro­ces­sor and Rade­on™ RX 470 gra­phics. Pri­ced at $499 stan­da­lo­ne or $999 when bund­led with the Ocu­lus Rift headset.
  • AMD streng­t­he­ned its GPUO­pen initia­ti­ve with the addi­ti­on of AMD True­Au­dio Next and Rade­on™ Pro­Ren­der.
    • True­Au­dio Next is an API that lets deve­lo­pers leverage the GPU for audio ren­de­ring, allowing deve­lo­pers and sound desi­gners to add phy­sics-based envi­ron­men­tal audio to games and VR apps across platforms.
    • Rade­on™ Pro­Ren­der is an open source pro­fes­sio­nal GPU-opti­mi­zed pho­to­rea­listic ren­de­rer that gives deve­lo­pers access to the source code and enab­les creators to bring ide­as to life through high-per­for­mance app­li­ca­ti­ons and work­flows enhan­ced by pho­to­rea­listic rendering.
  • AMD announ­ced the avai­la­bi­li­ty of new con­su­mer and com­mer­cial desk­top sys­tems based on 7th Genera­ti­on AMD APUs and the new AM4 platform. 
    • The AMD AM4 socket is a new uni­fied infra­st­ruc­tu­re that sup­ports both 7th Genera­ti­on AMD A‑Series APUs and the upco­m­ing “Zen”-based high-per­for­mance “Sum­mit Ridge” AMD desk­top CPU. AM4 plat­forms fea­ture DDR4 Memo­ry and next-gen I/O and peri­pheral sup­port, inclu­ding PCIe® Gen 3, USB 3.1 Gen 2, NVMe, and SATA Express.
    • AMD 7th Genera­ti­on APU-based con­su­mer desk­top sys­tems are now avail­ab­le from HP, with other glo­bal OEM designs to follow.
    • The com­mer­cial-focu­sed HP Eli­te­Desk 705 G3 Seri­es desk­tops fea­ture the new 7th Genera­ti­on AMD PRO APUs. 
      1. AMD 7th Genera­ti­on AMD PRO APUs deli­ver up to 14 per­cent more com­pu­te and 22 per­cent more gra­phic per­for­mance, and are 32 per­cent more ener­gy effi­ci­ent than the pre­vious genera­ti­on3, while pro­vi­ding a secu­re and sta­ble plat­form to pro­tect cus­to­mers’ IT investments.
  • Sony announ­ced a new, thin­ner and ligh­ter PS4, as well as the PS4 Pro with sup­port for 4K game­play, both powe­red by AMD semi-cus­tom SoCs.
  • AMD announ­ced two new, Pola­ris-based Embed­ded Rade­on™ dis­cre­te GPU pro­ducts with 4K and 3D sup­port – the E9260 and E9550 – tar­ge­ting medi­cal ima­ging, digi­tal signa­ge and casi­no gaming app­li­ca­ti­ons, among others.
  • AMD rein­for­ced its com­mit­ment to open stan­dards by par­ti­ci­pa­ting in three con­sor­tia with the over­ar­ching goal of brin­ging open stan­dards to future ser­vers and dat­a­cen­ters through high-per­for­mance inter­con­nect tech­no­lo­gies. Other tech­no­lo­gy lea­ders taking part in the­se con­sor­tia inclu­de Dell EMC, Goog­le, HPE, IBM, Leno­vo, Qual­comm, Sam­sung and Xilinx.
  • AMD was reco­gni­zed for its com­mit­ment to cor­po­ra­te respon­si­bi­li­ty by recei­ving the Cata­lyst Award by the Green Elec­tro­nics Coun­cil for its 25x20 Ener­gy Effi­ci­en­cy Initia­ti­ve and being named to the Dow Jones Sus­taina­bi­li­ty Index for the 15th con­se­cu­ti­ve year.

Current Outlook

AMD’s out­look state­ments are based on cur­rent expec­ta­ti­ons. The fol­lowing state­ments are for­ward-loo­king, and actu­al results could dif­fer mate­ri­al­ly depen­ding on mar­ket con­di­ti­ons and the fac­tors set forth under “Cau­tio­na­ry State­ment” below.

For Q4 2016, AMD expects reve­nue to decre­a­se 18 per­cent sequen­ti­al­ly, plus or minus 3 per­cent. The mid­point of gui­d­ance would result in Q4 2016 reve­nue incre­a­sing appro­xi­mate­ly 12 per­cent year-over-year and 2016 reve­nue incre­a­sing 6 per­cent from 2015.

For addi­tio­nal details regar­ding AMD’s results and out­look plea­se see the CFO com­men­ta­ry pos­ted at quarterlyearnings.amd.com.

AMD Teleconference

AMD will hold a con­fe­rence call for the finan­cial com­mu­ni­ty at 2 p.m. PDT (5 p.m. EDT) today to dis­cuss its third quar­ter finan­cial results. AMD will pro­vi­de a real-time audio broad­cast of the telecon­fe­rence on the Inves­tor Rela­ti­ons page of its web­site at www.amd.com. The web­cast will be avail­ab­le for 12 mon­ths after the con­fe­rence call.

About AMD

For more than 45 years, AMD has dri­ven inno­va­ti­on in high-per­for­mance com­pu­ting, gra­phics, and visua­liz­a­ti­on tech­no­lo­gies — the buil­ding blocks for gaming, immer­si­ve plat­forms, and the dat­a­cen­ter. Hund­reds of mil­li­ons of con­su­mers, lea­ding For­tu­ne 500 busi­nes­ses, and cut­ting-edge sci­en­ti­fic rese­arch faci­li­ties around the world rely on AMD tech­no­lo­gy dai­ly to impro­ve how they live, work, and play. AMD employees around the world are focu­sed on buil­ding gre­at pro­ducts that push the bounda­ries of what is pos­si­ble. For more infor­ma­ti­on about how AMD is enab­ling today and inspi­ring tomor­row, visit the AMD (NASDAQ: AMD) web­site, blog, Face­book and Twit­ter pages.

Cautionary Statement

This press release con­tains for­ward-loo­king state­ments con­cer­ning Advan­ced Micro Devices, Inc. (AMD) inclu­ding AMD’s expec­ted fourth quar­ter 2016 reve­nue and expec­ted 2016 reve­nue, the fea­tures, func­tio­n­a­li­ty, timing and avai­la­bi­li­ty of AMD’s future pro­ducts; AMD’s expec­ta­ti­on that it will deli­ver hig­her 2016 annu­al reve­nue based on stron­ger demand for AMD semi-cus­tom solu­ti­ons and Pola­ris GPUs; AMD’s abi­li­ty to acce­le­ra­te growth as it intro­du­ces new high-per­for­mance com­pu­ting and gra­phics pro­ducts in 2017; and AMD’s plans to fur­ther redu­ce its debt by deploy­ing a signi­fi­cant por­ti­on of its remai­ning cash from its capi­tal mar­kets tran­sac­tions, which are made pur­suant to the Safe Har­bor pro­vi­si­ons of the Pri­va­te Secu­ri­ties Liti­ga­ti­on Reform Act of 1995. For­ward-loo­king state­ments are com­mon­ly iden­ti­fied by words such as “would,” “may,” “expects,” “belie­ves,” “plans,” “intends,” “pro­jects” and other terms with simi­lar mea­ning. Inves­tors are cau­tio­ned that the for­ward-loo­king state­ments in this docu­ment are based on cur­rent beliefs, assump­ti­ons and expec­ta­ti­ons, speak only as of the date of this docu­ment and invol­ve risks and uncer­tain­ties that could cau­se actu­al results to dif­fer mate­ri­al­ly from cur­rent expec­ta­ti­ons. Such state­ments are sub­ject to cer­tain known and unknown risks and uncer­tain­ties, many of which are dif­fi­cult to pre­dict and gene­ral­ly bey­ond AMD’s con­trol, that could cau­se actu­al results and other future events to dif­fer mate­ri­al­ly from tho­se expres­sed in, or implied or pro­jec­ted by, the for­ward-loo­king infor­ma­ti­on and state­ments. Mate­ri­al fac­tors that could cau­se actu­al results to dif­fer mate­ri­al­ly from cur­rent expec­ta­ti­ons inclu­de, without limi­ta­ti­on, the fol­lowing: Intel Corporation’s domi­nan­ce of the micro­pro­ces­sor mar­ket and its aggres­si­ve busi­ness prac­ti­ces may limit AMD’s abi­li­ty to com­pe­te effec­tively; AMD reli­es on GLOBALFOUNDRIES INC. (GF) to manu­fac­tu­re all of its micro­pro­ces­sor and acce­le­ra­ted pro­ces­sing unit (APU) pro­ducts and a cer­tain por­ti­on of its dis­cre­te gra­phics pro­ces­sing units (GPUs) pro­ducts, with limi­ted excep­ti­ons. If GF is not able to satisfy AMD’s manu­fac­tu­ring requi­re­ments, its busi­ness could be adver­se­ly impac­ted; AMD reli­es on third par­ties to manu­fac­tu­re its pro­ducts, and if they are unab­le to do so on a time­ly basis in suf­fi­ci­ent quan­ti­ties and using com­pe­ti­ti­ve tech­no­lo­gies, AMD’s busi­ness could be mate­ri­al­ly adver­se­ly affec­ted; fail­u­re to achie­ve expec­ted manu­fac­tu­ring yiel­ds for AMD’s pro­ducts could nega­tively impact its finan­cial results; the suc­cess of AMD’s busi­ness is depen­dent upon its abi­li­ty to intro­du­ce pro­ducts on a time­ly basis with fea­tures and per­for­mance levels that pro­vi­de value to its cus­to­mers while sup­por­ting and coin­ci­ding with signi­fi­cant indus­try tran­si­ti­ons; if AMD can­not gene­ra­te suf­fi­ci­ent reve­nue and ope­ra­ting cash flow or obtain exter­nal finan­cing, it may face a cash short­fall and be unab­le to make all of its plan­ned invest­ments in rese­arch and deve­lo­p­ment or other stra­te­gic invest­ments; the loss of a signi­fi­cant cus­to­mer may have a mate­ri­al adver­se effect on AMD; AMD’s rece­i­pt of reve­nue from its semi-cus­tom SoC pro­ducts is depen­dent upon its tech­no­lo­gy being desi­gned into third-par­ty pro­ducts and the suc­cess of tho­se pro­ducts; glo­bal eco­no­mic uncer­tain­ty may adver­se­ly impact AMD’s busi­ness and ope­ra­ting results; AMD may not be able to gene­ra­te suf­fi­ci­ent cash to ser­vice its debt obli­ga­ti­ons or meet its working capi­tal requi­re­ments; AMD has a sub­stan­ti­al amount of indeb­ted­ness which could adver­se­ly affect its finan­cial posi­ti­on and pre­vent it from imple­men­ting its stra­te­gy or ful­fil­ling its con­trac­tu­al obli­ga­ti­ons; the agree­ments gover­ning AMD’s notes and the Secu­red Revol­ving Line of Credit impo­se restric­tions on AMD that may adver­se­ly affect its abi­li­ty to ope­ra­te its busi­ness; the mar­kets in which AMD’s pro­ducts are sold are high­ly com­pe­ti­ti­ve; uncer­tain­ties invol­ving the orde­ring and ship­ment of AMD’s pro­ducts could mate­ri­al­ly adver­se­ly affect it; the demand for AMD’s pro­ducts depends in part on the mar­ket con­di­ti­ons in the indus­tries into which they are sold. Fluc­tua­tions in demand for AMD’s pro­ducts or a mar­ket decli­ne in any of the­se indus­tries could have a mate­ri­al adver­se effect on its results of ope­ra­ti­ons; the com­ple­ti­on and impact of the 2015 Rest­ruc­tu­ring Plan, its trans­for­ma­ti­on initia­ti­ves and any future rest­ruc­tu­ring actions could adver­se­ly affect it; AMD’s abi­li­ty to design and intro­du­ce new pro­ducts in a time­ly man­ner is depen­dent upon third-par­ty intel­lec­tu­al pro­per­ty; AMD depends on third-par­ty com­pa­nies for the design, manu­fac­tu­re and sup­ply of mother­boards, soft­ware and other com­pu­ter plat­form com­pon­ents to sup­port its busi­ness; if AMD loses Micro­soft Corporation’s sup­port for its pro­ducts or other soft­ware ven­dors do not design and deve­lop soft­ware to run on AMD’s pro­ducts, its abi­li­ty to sell its pro­ducts could be mate­ri­al­ly adver­se­ly affec­ted; AMD’s reli­an­ce on third-par­ty dis­tri­bu­tors and AIB part­ners sub­jects it to cer­tain risks; AMD’s ina­bi­li­ty to con­ti­nue to attract and retain qua­li­fied per­son­nel may hin­der its pro­duct deve­lo­p­ment pro­grams; in the event of a chan­ge of con­trol, AMD may not be able to repurcha­se its out­stan­ding debt as requi­red by the app­li­ca­ble inden­tures and its Secu­red Revol­ving Line of Credit, which would result in a default under the inden­tures and its Secu­red Revol­ving Line of Credit; the semi­con­duc­tor indus­try is high­ly cycli­cal and has expe­ri­en­ced seve­re down­turns that have mate­ri­al­ly adver­se­ly affec­ted, and may con­ti­nue to mate­ri­al­ly adver­se­ly affect its busi­ness in the future; acqui­si­ti­ons, dive­s­ti­tures and/or joint ven­tures could dis­rupt its busi­ness, harm its finan­cial con­di­ti­on and ope­ra­ting results or dilu­te, or adver­se­ly affect the pri­ce of, its com­mon stock; AMD’s busi­ness is depen­dent upon the pro­per func­tio­n­ing of its inter­nal busi­ness pro­ces­ses and infor­ma­ti­on sys­tems and modi­fi­ca­ti­on or inter­rup­ti­on of such sys­tems may dis­rupt its busi­ness, pro­ces­ses and inter­nal con­trols; data breaches and cyber-attacks could com­pro­mi­se AMD’s intel­lec­tu­al pro­per­ty or other sen­si­ti­ve infor­ma­ti­on, be cos­t­ly to reme­dia­te and cau­se signi­fi­cant dama­ge to its busi­ness and repu­ta­ti­on; AMD’s ope­ra­ting results are sub­ject to quar­ter­ly and sea­so­nal sales pat­terns; if essen­ti­al equip­ment, mate­ri­als or manu­fac­tu­ring pro­ces­ses are not avail­ab­le to manu­fac­tu­re its pro­ducts, AMD could be mate­ri­al­ly adver­se­ly affec­ted; if AMD’s pro­ducts are not com­pa­ti­ble with some or all indus­try-stan­dard soft­ware and hard­ware, it could be mate­ri­al­ly adver­se­ly affec­ted; cos­ts rela­ted to defec­ti­ve pro­ducts could have a mate­ri­al adver­se effect on AMD; if AMD fails to main­tain the effi­ci­en­cy of its sup­ply chain as it responds to chan­ges in cus­to­mer demand for its pro­ducts, its busi­ness could be mate­ri­al­ly adver­se­ly affec­ted; AMD out­sour­ces to third par­ties cer­tain sup­ply-chain logistics func­tions, inclu­ding por­ti­ons of its pro­duct dis­tri­bu­ti­on, trans­por­ta­ti­on manage­ment and infor­ma­ti­on tech­no­lo­gy sup­port ser­vices; AMD may incur future impairments of good­will; AMD’s world­wi­de ope­ra­ti­ons are sub­ject to poli­ti­cal, legal and eco­no­mic risks and natu­ral dis­as­ters, which could have a mate­ri­al adver­se effect on it; world­wi­de poli­ti­cal con­di­ti­ons may adver­se­ly affect demand for AMD’s pro­ducts; unfa­vor­able cur­ren­cy exchan­ge rate fluc­tua­tions could adver­se­ly affect AMD; AMD’s ina­bi­li­ty to effec­tively con­trol the sales of its pro­ducts on the gray mar­ket could have a mate­ri­al adver­se effect on it; if AMD can­not ade­qua­te­ly pro­tect its tech­no­lo­gy or other intel­lec­tu­al pro­per­ty in the United Sta­tes and abroad, through patents, copy­rights, tra­de secrets, trade­marks and other mea­su­res, it may lose a com­pe­ti­ti­ve advan­ta­ge and incur signi­fi­cant expen­ses; AMD is a par­ty to liti­ga­ti­on and may beco­me a par­ty to other claims or liti­ga­ti­on that could cau­se it to incur sub­stan­ti­al cos­ts or pay sub­stan­ti­al dama­ges or pro­hi­bit it from sel­ling its pro­ducts; AMD’s busi­ness is sub­ject to poten­ti­al tax lia­bi­li­ties; and AMD is 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. Inves­tors are urged to review in detail the risks and uncer­tain­ties in AMD’s Secu­ri­ties and Exchan­ge Com­mis­si­on filings, inclu­ding but not limi­ted to AMD’s Quar­ter­ly Report on Form 10‑Q for the quar­ter ended June 25, 2016.