2015 FINANCIAL ANALYST DAY LISA SU, PRESIDENT AND CEO

Transcription

1 2015 FINANCIAL ANALYST DAY LISA SU, PRESIDENT AND CEO

2 CAUTIONARY STATEMENT This presentation contains forward-looking statements concerning Advanced Micro Devices, Inc. ( AMD or the Company ) including, AMD s 2015 expectations; AMD s game plan for ; AMD s ability to participate in intelligent controllers, infrastructure and cloud/datacenter markets; AMD s planned future investments, including markets, technology and key decisions; AMD s growth opportunities in gaming, immersive platforms and datacenters; AMD s ability to grow margin accretive market share in the datacenter market; share growth opportunities and the timing of those growth opportunities in AMD s Enterprise, Embedded and Semi-custom and Computing and Graphics businesses; AMD s market share drivers in years ; AMD s ability to achieve its targeted long-term earnings per share; AMD s ability to achieve profitable growth; AMD s expanding market opportunity; the features, functionality, timing and availability of AMD s future products; AMD s product roadmaps; AMD s ability to re-enter the x86 server market, drive GPU and APU technologies for HPC and Machine Learning Leadership and achieve rapid innovation; Computing and Graphic tenets; AMD s Computing and Graphics business future technology innovations; that AMD will be able to successfully achieve its GCN enhancements and optimizations; AMD s 20 x 25 energy efficiency initiative; AMD s financial outlook for 2015 and long-term financial model including, revenue, non-gaap gross margin, non-gaap operating expense, non-gaap net income, free cash flow, revenue ratio, non-gaap operating margin and earnings per share; AMD s ability to return to profitability in the second half of 2015 and its ability to achieve consistent profitability in 2016; its cash and cash equivalents and marketable securities balances; AMD s 2015 financial focus; AMD s long-term capital structure and liquidity; AMD s long-term target model regarding revenue and operating margin; AMD s long-term financial target; and AMD s ability to successfully sharpen its financial and strategic execution, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 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. 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 costs could 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, FINANCIAL ANALYST DAY MAY 6, 2015

3 TODAY S DISCUSSION Progress to Date Market Opportunities Sharpening AMD s Focus Technology Innovation Execution Priorities FINANCIAL ANALYST DAY MAY 6, 2015

4 BUILT ON A FOUNDATION SPANNING INNOVATION AND LEADERSHIP HERITAGE SPANNING OVER 45 YEARS First proprietary device: Am2501 logic counter introduced World s first x86-64 bit architecture First to break teraflop performance barrier Brings World s first APUs to market Inside every major next generation gaming console First to break the historic 1GHz barrier with the AMD Athlon World s first x86 dual-core processor Breaks 1GHz GPU Barrier with Radeon HD 4890 Industry s first quad-core x86 SoCs Powered the World s most efficient Super Computer FINANCIAL ANALYST DAY MAY 6, 2015

5 TRANSITIONED FOCUS Enterprise, Embedded and Semi-Custom segment revenue Computing and Graphics segment revenue DIVERSIFYING REVENUE BASE AND GROWING IN NEW MARKETS FINANCIAL ANALYST DAY MAY 6, 2015

6 CURRENT ASSESSMENT RECENT CHALLENGES Weak PC market Channel inventory Market share losses Consumer PCs, Desktop Graphics and Server Investments not sufficiently focused HIGHLIGHTS Grew in new markets EESC annual revenue $2B+ Gained share in profitable areas Commercial PCs, OEM Graphics, Gaming, Professional Graphics and Embedded Strengthened balance sheet FINANCIAL ANALYST DAY MAY 6, 2015

7 2015 EXPECTATIONS BUSINESS DRIVERS 1H15 Weak PC market Channel inventory re-balancing Legacy products 2H15 Seasonal improvement in PCs/game consoles Windows 10 demand catalyst New product ramps PROFITABILITY* LOSS PROFITABLE CASH ~$800M ~$800M - $1B FINANCIAL ANALYST DAY MAY 6, 2015 * Non-GAAP

8 OUR GAME PLAN 2015 PC Market Stabilization Prioritize Investments Return to Profitability in 2H* 2016 Gain Profitable Graphics, PC, and Embedded Market Share New Semi-Custom Products Ramp Consistent Profitability* 2017/2018 Server/Infrastructure Market Share Gains Margin Expansion Improved Profitability and Cash Generation* FINANCIAL ANALYST DAY MAY 6, 2015 * Non-GAAP

9 FROM AN INTERNET OF THINGS TO IMMERSIVE PLATFORMS ENDPOINTS Sensor and Compute-Driven Data Collection and Data Interaction INFRASTRUCTURE Data Transmission CLOUD/DATACENTER Store/Analyze Data and Serve Information 50B DEVICES By 2020 Networking/ Telecom FINANCIAL ANALYST DAY MAY 6, 2015 Source: Cisco

10 FROM AN INTERNET OF THINGS TO IMMERSIVE PLATFORMS INTELLIGENT CONTROLLERS AND IMMERSIVE DEVICES Compute-Driven Data Collection and Data Interaction INFRASTRUCTURE Data Transmission CLOUD/DATACENTER Store/Analyze Data and Serve Information 50B DEVICES By 2020 ENDPOINTS Sensor-Driven Data Collection Networking/ Telecom FINANCIAL ANALYST DAY MAY 6, 2015 Source: Cisco

11 FROM AN INTERNET OF THINGS TO IMMERSIVE PLATFORMS INTELLIGENT CONTROLLERS AND IMMERSIVE DEVICES Compute-Driven Data Collection and Data Interaction INFRASTRUCTURE Data Transmission CLOUD/DATACENTER Store/Analyze Data and Serve Information 50B DEVICES By 2020 ENDPOINTS Sensor-Driven Data Collection Networking/ Telecom WHERE AMD WILL PLAY $60B+ TAM FINANCIAL ANALYST DAY MAY 6, 2015 Source: Cisco and AMD Estimates

12 PORTFOLIO DECISIONS MARKETS WHERE WE WILL FURTHER INVEST Gaming Immersive Platforms Datacenter/Infrastructure WHERE WE WILL NOT INVEST IoT Endpoints Low-End Tablets/Mobile Smartphones TECHNOLOGY KEY DECISIONS High-Performance Cores Immersive Technologies 2.5D/3D Packaging Software/APIs Increased x86 Investment Focused ARM Investment Simplified Roadmap Customized Process Technology Commodity IP Reduce Low-End PC Exposure Exit SeaMicro Dense Server Systems Business FINANCIAL ANALYST DAY MAY 6, 2015

13 GROWTH OPPORTUNITIES: GROWING BEYOND THE TRADITIONAL PC GAMING NEW LEVELS OF REALITY FINANCIAL ANALYST DAY MAY 6, 2015 IMMERSIVE PLATFORMS INTELLIGENT AND INTERACTIVE EXPERIENCES DATACENTER INFRASTRUCTURE FOR THE NEXT WAVE

14 GAMING 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 The international games market will rocket past the $100 Billion mark in the next three years to reach $102.9 Billion by Newzoo #1 CONSOLE TECHNOLOGY LEADER 1.7B GAMERS WORLDWIDE FINANCIAL ANALYST DAY MAY 6, 2015

15 IMMERSIVE PLATFORMS 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 Augmented and virtual reality to grow to $150B by Digi-Capital INTELLIGENT & INTERACTIVE EXPERIENCES FINANCIAL ANALYST DAY MAY 6, 2015

16 DATACENTER 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 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 FINANCIAL ANALYST DAY MAY 6, 2015

17 WHERE DO WE PLAY GAMING IMMERSIVE PLATFORMS DATACENTER PC Platforms PC Platforms Workstation Graphics COMPUTING AND GRAPHICS Consumer Graphics Consumer Graphics Virtual Reality ENTERPRISE, EMBEDDED AND SEMI-CUSTOM Game Consoles Casino Gaming Cloud Gaming Augmented Reality Digital Signage Thin Clients Medical Imaging Devices Servers Networking & Comms Storage HPC FINANCIAL ANALYST DAY MAY 6, 2015

18 WHERE DO WE PLAY #1 SHARE POSITION GAMING IMMERSIVE PLATFORMS DATACENTER PC Platforms PC Platforms Workstation Graphics COMPUTING AND GRAPHICS Consumer Graphics Consumer Graphics Virtual Reality ENTERPRISE, EMBEDDED AND SEMI-CUSTOM Game Consoles Casino Gaming Cloud Gaming Augmented Reality Digital Signage Thin Clients Medical Imaging Devices Servers Networking & Comms Storage HPC FINANCIAL ANALYST DAY MAY 6, 2015

19 WHERE DO WE PLAY NEAR-TERM SHARE GROWTH OPPORTUNITY GAMING IMMERSIVE PLATFORMS DATACENTER PC Platforms PC Platforms Workstation Graphics COMPUTING AND GRAPHICS Consumer Graphics Consumer Graphics Virtual Reality ENTERPRISE, EMBEDDED AND SEMI-CUSTOM Game Consoles Casino Gaming Cloud Gaming Augmented Reality Digital Signage Thin Clients Medical Imaging Devices Servers Networking & Comms Storage HPC FINANCIAL ANALYST DAY MAY 6, 2015

20 WHERE DO WE PLAY MEDIUM-TERM SHARE GROWTH OPPORTUNITY GAMING IMMERSIVE PLATFORMS DATACENTER PC Platforms PC Platforms Workstation Graphics COMPUTING AND GRAPHICS Consumer Graphics Consumer Graphics Virtual Reality ENTERPRISE, EMBEDDED AND SEMI-CUSTOM Game Consoles Casino Gaming Cloud Gaming Augmented Reality Digital Signage Thin Clients Medical Imaging Devices Servers Networking & Comms Storage HPC FINANCIAL ANALYST DAY MAY 6, 2015

21 HOW DO WE WIN BIG TECHNOLOGY INVESTMENTS CPU TECHNOLOGY New generation x86 and ARM cores High performance, power efficient scalable design Multi-Generation roadmap GRAPHICS TECHNOLOGY Performance/Watt leadership Unique Virtual Reality features Leadership API performance First to High Bandwidth Memory PLATFORM SOLUTIONS Modular design Open software investments Expanded IP ecosystem with partners FINANCIAL ANALYST DAY MAY 6, 2015

22 MARKET SHARE DRIVERS H15 Product Ramps Seasonal Improvement in PCs and Game Consoles Inventory Re-Balanced 2016 Semi-Custom and Embedded Products Ramp Graphics and Commercial Client Growth New High Performance CPUs 2017/2018 Strong Datacenter Portfolio Additional Semi-Custom Design Wins Ramp Multi-Generation Roadmap Investments Deployed FINANCIAL ANALYST DAY MAY 6, 2015

23 LONG-TERM TARGET MODEL PROFITABLE GROWTH Enterprise, Embedded and Semi-Custom segment revenue Computing and Graphics segment revenue FINANCIAL ANALYST DAY MAY 6, 2015

24 OUR TEAM S MISSION FINANCIAL ANALYST DAY MAY 6, 2015

25 KEY TAKEAWAYS Significant Market Opportunities Prioritized Technology Investments Roadmap for Profitable and Sustained Growth FINANCIAL ANALYST DAY MAY 6, 2015

26 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 FINANCIAL ANALYST DAY MAY 6, 2015