AMD Financial Analyst Day 2015

2015 FINANCIAL ANALYST DAY

CONTENT OVERVIEW

2 | 2015 FINANCIAL ANALYST DAY | MAY 6, 2015

CAUTIONARY STATEMENTThis presentation contains forward-looking statements concerning Advanced Micro Devices, Inc. (“AMD” or the “Company”) including, that AMD’s next-generation technologies will launch on time, in sufficient volume, achieve expected performance gains and drive profitable growth for the company; that AMD will be successful in its use of die-stacked high-bandwidth memory; that AMD will make a significant return to the server market; that AMD will recover market share in traditional PC markets; that AMD’s network-on-chip strategy will meet its stated goals; and that AMD’s 6th Generation APU products will meet their stated goals; 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 press release 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. Risks include that Intel Corporation’s dominance of the microprocessor market and its aggressive business practices may limit AMD’s ability to compete effectively; that AMD relies on GF to manufacture most of its microprocessor and APU products and certain of its GPU and semi-custom products. If GF is not able to satisfy its manufacturing requirements, AMD’s business could be adversely impacted; that 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 its 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; that AMD may not be able to successfully implement its business strategy to refocus its business to address markets beyond AMD’s core PC market to high-growth adjacent markets; the completion and impact of the 2014 restructuring plan and its transformation initiatives could adversely affect AMD; 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 its amended and restated senior secured asset based line of credit for a principal amount up to $500 million (Secured Revolving Line of Credit) impose restrictions on AMD that may adversely affect AMD’s ability to operate its business; the markets in which AMD’s products are sold are highly competitive; the loss of a significant customer may have a material adverse effect on it; AMD’s receipt of revenue from its semi-custom SoC products is dependent upon AMD’s technology being designed into third-party products and the success of those products; 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 AMD’s results of operations; 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, BIOS 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 AMD products could be materially adversely affected; AMD may incur future impairments of goodwill; uncertainties involving the ordering and shipment of AMD’s products could materially adversely affect AMD; AMD’s reliance on third-party distributors and AIB partners subjects AMD 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 all of the 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, AMD’s business in the future; 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 AMD’s business, processes and internal controls; data breaches and cyber-attacks could compromise AMD’s intellectual property or other sensitive information and cause significant damage to AMD’s business and reputation; AMD’s operating results are subject to quarterly and seasonal sales patterns; if essential equipment or materials are not available to manufacture AMD’s products, AMD could be materially adversely affected; if AMD’s products are not compatible with some or all industry-standard software and hardware, AMD 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 AMD’s products, AMD’s 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; acquisitions could disrupt its business, harm its financial condition and operating results or dilute, or adversely affect the price of, its common stock; AMD’s worldwide operations are subject to political, legal and economic risks and natural disasters, which could have a material adverse effect on AMD; 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 AMD; 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, AMD may lose a competitive advantage and incur significant expenses; AMD is 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 prohibits AMD from selling its products; a variety of environmental laws that AMD are subject to could result in additional costs and liabilities; higher health care costs and labor costscould adversely affect AMD’s business; and, AMD’s business is subject to potential tax liabilities. Investors are urged to review in detail the risks and uncertainties in the Company's Securities and Exchange Commission filings, including but not limited to AMD’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2015.


Progress to Date

Sharpening AMD’s Focus

Technology Innovation

Market Opportunities

Market Share Drivers

Financial Execution

TODAY’S DISCUSSION


Brings World’s first APUs to market

2011

Breaks 1GHz GPU Barrier with Radeon HD 4890

2009

First proprietary device: Am2501 logic counter introduced

1970

First to break the historic 1GHz barrier with the AMD Athlon™

2000

World’s first x86-64 bit architecture

2003

World’s first x86 dual-core processor

2004 2014

First to break teraflop performance barrier

2006

2012

Industry’s firstquad-core x86 SoCs

Inside every major next generation gaming console

2013

BUILT ON A FOUNDATION SPANNING INNOVATION AND LEADERSHIPHERITAGE SPANNING OVER 45 YEARS

Powered the World’s most efficient Super Computer


TRANSITIONED FOCUS

Enterprise, Embedded and Semi-Custom segment revenue

DIVERSIFYING REVENUE BASE AND GROWING IN NEW MARKETS

2012

$5.4B

~10%

~90%

~30%

~70%

2013

$5.3B

Computing and Graphics segment revenue

2014

~40%

~60%

$5.5B


OUR GAME PLAN

PC Market Stabilization

Prioritize Investments

Return to Profitability in 2H*

2015

Server/Infrastructure Market Share Gains

Margin Expansion

Improved Profitability and Cash Generation*

2017/2018

2016

Gain Profitable Graphics, PC, and Embedded Market Share

New Semi-Custom Products Ramp

Consistent Profitability*

* non-GAAP


FROM AN INTERNET OF THINGS TO IMMERSIVE PLATFORMS

CLOUD/DATACENTER

Store/Analyze Data and Serve Information

INFRASTRUCTURE

Data Transmission

ENDPOINTS

Sensor and Compute-Driven Data Collection and Data Interaction

Networking/Telecom

50BDEVICES

By 2020

Source: Cisco


FROM AN INTERNET OF THINGS TO IMMERSIVE PLATFORMS

CLOUD/DATACENTER

Store/Analyze Data and Serve Information

INFRASTRUCTURE

Data Transmission

INTELLIGENT CONTROLLERS AND IMMERSIVE DEVICES

Compute-Driven Data Collection and Data Interaction

ENDPOINTS

Sensor-Driven Data Collection

Networking/Telecom

50BDEVICES

By 2020

Source: Cisco and AMD Estimates

WHERE AMD WILL PLAY

$60B+ TAM


New generation x86 and ARM cores

High performance, power efficient scalable design

Multi-Generation roadmap

CPU TECHNOLOGY

Performance/Watt leadership

Unique Virtual Reality features

Leadership API performance

First to High Bandwidth Memory

GRAPHICS TECHNOLOGY

Modular design

Open software investments

Expanded IP ecosystem with partners

PLATFORM SOLUTIONS

HOW DO WE WIN – BIG TECHNOLOGY INVESTMENTS


TECHNOLOGY TO SOLVE TODAY’S COMPLEX CHALLENGES

CPU CORES

GPU CORES

SOFTWARE ENABLEMENT

ACCELERATORS

SECURITY


NEXT-GENERATION, HIGH-PERFORMANCE x86 CORE

“ZEN”

Totally New High-performance Core Design

Simultaneous Multithreading (SMT) for High Throughput

New High-Bandwidth, Low Latency Cache System

Energy-efficient FinFET Design Scales from Client to Enterprise-class Products

Availability in 2016


AMD x86 CORES: DRIVING COMPETITIVE PERFORMANCE

“Bulldozer” Core

“Excavator” Core

“Zen+” Cores

INST

RU

CTI

ON

S P

ER C

LOC

K

MORE INSTRUCTIONS PER CLOCK140%

“Zen” Core

2015 20162012 2013 2014


CUSTOM, HIGH-PERFORMANCE ARM® CORE

“K12”

Extends ARM to New Server and Embedded Applications and Performance Levels

Highly-leveraged with x86 Core Development

Availability in 2017


GRAPHICS TECHNOLOGY LEADERSHIP

2012: GRAPHICS CORE NEXT (GCN) LAUNCH

Efficient and Scalable Architecture Optimized for Graphics and Parallel Compute

Easier for Software to Use Unique Asynchronous Compute Capability

2013-2015: GCN ENHANCEMENTS

High-performance API Support (Mantle, DirectX®12, and Vulkan™)

Advanced Memory Techniques Virtual Reality Enablement

2016: GCN OPTIMIZATIONS

High-performance with 2x Energy Efficiency2

FinFET Process Technology


GRAPHICS TECHNOLOGY LEADERSHIP

HIGH BANDWIDTH MEMORY

First in the Industry with High Bandwidth Memory (HBM) Technology

3D HBM DRAM Die Stack on Silicon Interposer

>3X Performance/Watt Compared to GDDR53

>50% Power Savings Versus GDDR54


PLATFORM ENABLEMENT: ENERGY EFFICIENCY

25x20 ENERGY EFFICIENCY INITIATIVE

High Performance, Power Efficient IP

World Class Power Management

Leadership Power Features

TYP

ICA

L-U

SE E

NER

GY

EFFI

CIE

NC

Y5

ADDITIONAL ENERGY EFFICIENCY BY 2020(2014-2020)5

25X

INCREASE IN ENERGY EFFICIENCY(2008-2014)

10X

2009 2010 2011 2012 2013 2014 2015

“Carrizo”

“Kaveri”

“Richland”

“Trinity”“Llano”

“Danube”“Tigris”


PLATFORM ENABLEMENT: SECURITY TECHNOLOGY

HARDWARE-BASED SECURITY

Root-of-Trust

Dedicated, AMD Secure Processor

SOFTWARE-BASED SECURITY

Open Standards-based Architecture

ARM® TrustZone® Technology Isolates and Protects Sensitive Applications and Interfaces


GROWTH OPPORTUNITIES: GROWING BEYOND THE TRADITIONAL PC

NEW LEVELS OF REALITY

GAMING

INTELLIGENT AND INTERACTIVE EXPERIENCES

IMMERSIVE PLATFORMS DATACENTER

INFRASTRUCTURE FOR THE NEXT WAVE


Visualization requirements increasing exponentially

AMD Gaming leadership from casinos to consoles to PCs

Virtual Reality a key driver for future platforms

AMD Technology Enablers:– High-Performance CPUs, Graphics, Software APIs– Semi-Custom business model

AMD Business:– Annual revenue ~$3B today

GAMING

The international games market will rocket past the $100 Billion mark in the next three years to reach $102.9 Billion by 2017.”

Newzoo

#1 CONSOLE

TECHNOLOGY LEADER

1.7B GAMERS

WORLDWIDE


Fast growing segment of IoT Connected Devices

New user interfaces and experiences enabled with VR/AR – the importance of “Presence”

Broad set of applications in traditional and new areas

AMD Technology Enablers:

– High-performance x86 and ARM CPUs, Graphics & Visualization, software/APIs, ecosystem partners

AMD Business:

– Annual revenue ~$1.5B today

IMMERSIVE PLATFORMS

Augmented and virtual reality to grow to $150B by 2020.”

Digi-Capital

INTELLIGENT &INTERACTIVE EXPERIENCES


Explosive data growth with IoT and immersive content

Software defined everything disrupting the datacenter

AMD history of innovation and success: x86 64-bit, multicore, silicon virtualization

AMD Technology Enablers:– High-performance x86 and ARM CPUs, GPU compute, Security,

Enterprise class development

AMD Business:– Annual revenues <$300M today

DATACENTER

The datacenter must serve as the primary point of engagement and information exchange with employees, partners, and customers in today's interconnected world.” IDC

GROW MARGIN ACCRETIVE

MARKET SHARE


NEW CPU CORES FULLY LEVERAGE

AMD IP

PURSUE INNOVATIVE, DIFFERENTIATED DESIGNS

BUILD GREAT PROCESSORS

COMPUTING & GRAPHICS TENETS

WIN GAMING INFLECTION POINTS

GROW GRAPHICS SHARE CREATE PLATFORMS FOR

INDUSTRY INNOVATION


2015 2016

DESIGNING WITH AMD GETS EVEN SIMPLERNEW CPU CORES ADD MAJOR PERFORMANCE UPLIFT

DESKTOP

MOBILE

7th Gen A-Series Mobile APUs

FT3b

FP4

AM3“Vishera” AMD FX CPUs

7th Gen A-Series Desktop APUs

All New AMD FX CPU

FM2+“Kaveri” APUs

6th Gen A-Series“Carrizo” APUs

“Carrizo-L” APUs

“Mullins” APUs

AM4“Zen” CPU cores

AM4

FP4


COMPUTING AND GRAPHICS ROADMAP: 2016

Software Enablement

Security

FX CPUs 7th Generation APUsHigh-Performance

GPUs

Based on Next-Gen x86 “Zen” Core

Performance-per-Watt Efficiency Gains

2x Performance-per-Watt Efficiency

High Core Count with Multi-Threading

HSA 1.0, OpenCL 2.0FinFET Process Technology

AM4 Platform Shared with Desktop APUs

FP4 Mobile InfrastructureAM4 for Desktop

VR/AR Acceleration

DDR4 CompatibilityDDR3/DDR4 Compatibility

2nd Gen HBM


ENTERPRISE, EMBEDDED, & SEMI-CUSTOM TENETS

FOCUS ON KEY

VERTICALSOLUTIONS

GPU + CPU COMPUTE

OPEN APPROACH

TAKING AN

CUSTOM PLATFORMS

SCALABLE CAPABILITIES ENABLING

HIGH PERFORMANCE


DATACENTER ROADMAP: 2016 - 2017

Semi-Custom Capability Enabling End-Customer Innovation

Security

Next GenerationOpteron

Next Generation ARM

High-Performance Server APU

Based on Next Gen x86 “Zen” Core

Based onCustom “K12” Core

Multi-Teraflops for HPC and Workstation

High Core Count with Multi-Threading

Highest Performance ARM Servers

HSA Performance Delivered

Disruptive Memory Bandwidth

Storage, Networking, & Embedded Apps

Transformational Memory Architecture

High Native I/O Capacity

Designed for Efficiency

Scale-Up Graphics Performance


MARKET SHARE DRIVERS

2H15 Product Ramps Seasonal Improvement in PCs

and Game Consoles Inventory Re-Balanced

2015

2017/2018

2016 Semi-Custom and Embedded

Products Ramp Graphics and Commercial

Client Growth New High Performance CPUs

Strong Datacenter Portfolio Additional Semi-Custom

Design Wins Ramp Multi-Generation Roadmap

Investments Deployed


2015 FINANCIAL FOCUS

STABILIZE THE PC BUSINESS

INVEST IN ENTERPRISE, EMBEDDED AND SEMI-CUSTOM BUSINESSES

CONTINUE OPEX DISCIPLINE WHILE FUNDING THE ROADMAP

MANAGE CASH AND LIQUIDITY

LAY FOUNDATION FOR GROWTH AND PROFITABILITY


OUR TEAM’S MISSION


SHARPENING FINANCIAL AND STRATEGIC EXECUTION

Significant Market Opportunities

Prioritized Technology Investments

Roadmap for Profitable and Sustained

Growth


APPENDICESRECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES

Reconciliation of GAAP to Non-GAAP Operating Income (Loss)

(Millions) 2014 2013 2012

GAAP operating expenses $ 1,994 $ 1,875 $ 2,291

Goodwill Impairment 233 - -

Restructuring and other special charges (gains), net 71 30 101

Amortization of acquired intangible assets 14 18 13

Workforce rebalancing severance charges 14 - -

Legal settlements, net - (48) -

SeaMicro acquisition costs - - 6

Stock-based compensation* 78 86 89

Non-GAAP operating expenses $ 1,584 $ 1,789 $ 2,082

*Beginning in Q1 2015, AMD started excluding the impact of stock-based compensation from Non-GAAP results. Prior periods have been adjusted accordingly.

(Millions) Q4-14 Q3-14 Q2-14 Q1-14 Q4-13 Q3-13 Q2-13 Q1-13 Q4-12 Q3-12 Q2-12 Q1-12

GAAP operating expenses $ 690 $ 431 $ 435 $ 438 $ 418 $ 426 $ 488 $ 543 $ 600 $ 523 $ 561 $ 607

Goodwill Impairment 233 - - - - - - - - - - -

Restructuring and other special charges (gains), net 71 - - - - (22) 5 47 90 3 - 8

Amortization of acquired intangible assets 4 3 4 3 4 5 4 5 4 4 4 1

Workforce rebalancing severance charges - - - 14 - - - - - - - -

Legal settlements, net - - - - (48) - - - - - - -

SeaMicro acquisition costs - - - - - - - - - - - 6

Stock-based compensation* 16 20 20 22 23 22 19 22 21 25 24 19

Non-GAAP operating expenses $ 366 $ 408 $ 411 $ 399 $ 439 $ 421 $ 460 $ 469 $ 485 $ 491 $ 533 $ 573


FOOTNOTES

1. Based on internal AMD estimates for “Zen” x86 CPU core compared to “Excavator” x86 CPU core.

2. Based on internal AMD estimates for 2016 Graphics Core Next GPU compared to previous generation GPU.

3. Based on internal AMD estimates.

4. Based on internal AMD estimates.

5. 25x20 Initiative: AMD has an improvement goal to achieve 25x typical-use energy efficiency for mobile platforms from 2014-2020.


DISCLAIMER & ATTRIBUTION

The information presented in this document is for informational purposes only and may contain technical inaccuracies, omissions and typographical errors.

The information contained herein is subject to change and may be rendered inaccurate for many reasons, including but not limited to product and roadmap changes, component and motherboard version changes, new model and/or product releases, product differences between differing manufacturers, software changes, BIOS flashes, firmware upgrades, or the like. AMD assumes no obligation to update or otherwise correct or revise this information. However, AMD reserves the right to revise this information and to make changes from time to time to the content hereof without obligation of AMD to notify any person of such revisions or changes.

AMD MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE CONTENTS HEREOF AND ASSUMES NO RESPONSIBILITY FOR ANY INACCURACIES, ERRORS OR OMISSIONS THAT MAY APPEAR IN THIS INFORMATION.

AMD SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. IN NO EVENT WILL AMD BE LIABLE TO ANY PERSON FOR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES ARISING FROM THE USE OF ANY INFORMATION CONTAINED HEREIN, EVEN IF AMD IS EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

ATTRIBUTION

© 2015 Advanced Micro Devices, Inc. All rights reserved. AMD, the AMD Arrow logo and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United States and/or other jurisdictions. Other names are for informational purposes only and may be trademarks of their respective owners.

AMD Financial Analyst Day 2015

Technology

Transcript of AMD Financial Analyst Day 2015