Invest in Stock Advanced Micro Devices (AMD)

Advanced Micro Devices

Advanced Micro Devices Inc. (AMD) is the main semiconductor company with customers around the world. The company designs and develops a microprocessor (CPU), Graphic Processing Unit (GPU), a server and embedded processor, semi-custom-on-chip (SOC) product, and technology for game consoles. It also offers development services and sometimes sell or license part of the Intellectual Wealth Portfolio (IP). AMD products focus on providing high performance computing capabilities for 5G infrastructure and communication, AI and analytic, games, cloud computing, and more.

AMD was founded by eight people, including Jeremiah Sanders, in 1969 as a Silicon Valley startup focused on the development of semiconductor products. This released its first product in 1970 and Go Public two years later through the first public offering (IPO) on September 27, 1972. Throughout the mid-1970s, the company began producing computer chips and was the second source chip manufacturer. But in 2008, AMD began a new path. The company announced that they separated into two companies. One company maintains the name AMD and focuses on designing a microprocessor. Others are separated from AMD and become Globalfoundries Inc. (GFS), which focuses on expensive businesses from chip manufacturing.

At present, AMD is developing high -performance semiconductor products, which are then made into chips by contract producers, for data centers, personal computers (PCs), and game markets. The head office is in Santa Clara, California and Chief Executive Officer (CEO) and the chairman is Dr. Lisa Su. The company is classified as a member of the technology sector. This operates in the semiconductor and its main rival industries including Intel Corp (INTC) and Nvidia Corp. (NVDA). AMD generates a net profit of $ 3.2 billion at $ 16.4 billion in net income in fiscal year 2021 (TA), which ended December 25 2021.

Recent Developments

  • On April 4, 2022, AMD announced that it has agreed to acquire Pensando Systems, which operates a distributed services platform offering cloud infrastructure services, for approximately $1.9 billion. The acquisition is aimed at boosting AMD’s high-performance technology portfolio that already includes CPUs, GPUs, field programmable gate array (FPGA), and SoC solutions. The acquisition is expected to close in the second quarter of 2022.
  • On Feb. 24, 2022, AMD announced that its board of directors has approved a new $8 billion share repurchase program, which augments the $4 billion share buyback program announced in May 2021. The company has repurchased about $3 billion worth of its common stock since the original program began. The new program has no termination date and does not require AMD to purchase any of its common stock.
  • On Feb. 14, 2022, AMD announced that it completed its acquisition of Xilinx, a semiconductor company and inventor of the FPGA and Adaptive SoCs, in a deal valued at approximately $50 billion. FPGAs are capable of being reprogrammed for specific functionality after being manufactured, unlike Application Specific Integrated Circuits (ASICS), which are custom manufactured to perform specific tasks. The acquisition agreement was first announced in late October 2020 and was originally valued at $35 billion, but AMD’s rising stock value pushed up the final deal price.

What’s happening with AMD regarding the chip shortage?

The COVID-19 pandemic has disrupted supply chains and led to soaring demand for electronic goods as millions of people worldwide sheltered at home. The surge in demand disrupted and placed unusual strain on the global semiconductor industry, contributing to a global chip shortage. The shortage has made it difficult to purchase a broad range of products that are manufactured with chips embedded in them, such as video game consoles and automobiles. But demand is just one side of the story.

Supply has also been strained for various reasons. A fire at a factory owned by Japan-based Renesas Electronics Corp., a leading global auto-chip maker, exacerbated the chip shortage. The ongoing U.S.-China trade war has aggravated the problem. These disruptions have highlighted a key weakness in the chip manufacturing process. It can take 2-3 months to make a single chip and up to six months from the start of the manufacturing process to the time when the chip is actually embedded in an electronic device. Building a new manufacturing facility can cost anywhere from $7 billion to $15 billion and take years to build.

AMD, which no longer manufactures its own chips and relies on foundry companies to build them, has been navigating the chip shortage well so far. It has even been able to take some of the market share away from Intel in both the PC and server markets. In November 2021, one of the company’s top executives said that the company has avoided most of the problems related to the shortage through forecasting the demand outlook years in advance. AMD is also focused on more advanced chips that have been less affected by the shortage compared to mass-produced older types of chips.

CEO Su said in February, following the acquisition of Xilinx, that she sees global chip supplies remaining tight for the first half of 2022, but then easing by the second half of the year. Su added that AMD is focusing on working more closely with its customers and is planning with them over multi-quarter and multi-year time horizons. This helps to improve the efficiency of those supply chains. Aided by the Xilinx acquisition, AMD’s position as a large player in the industry helps to ensure that the company gets its fair share of capacity and support within the industry.

Who Is AMD’s CEO?

AMD’s CEO is Dr. Lisa Su, who also serves as the company’s chairperson. Before serving as CEO, Su was chief operating officer (COO). She joined AMD in 2012 as senior vice president and general manager of the global business units.

Has AMD Ever Split Its Stock?

Yes. AMD has split its stock six times:

(Record dates below)

  • Aug. 7, 2000: 2-for-1 stock split
  • July 22, 1983: 2-for-1 stock split
  • Sept. 27, 1982: 3-for-2 stock split
  • Sept. 22, 1980: 2-for-1 stock split
  • Sept. 24, 1979: 3-for-2 stock split
  • Sept. 27, 1978: 3-for-2 stock split

Who Owns The Most AMD Shares?

The Vanguard Group Inc. owns the most shares of AMD. As of April 15, 2022, it owns approximately 137.2 million, or 8.4%, of the company’s total shares outstanding. The total value of Vanguard’s holding of AMD shares is approximately $15 billion.

Is AMD Going To Pay A Dividend?

AMD is a growth-oriented company and does not plan to offer a dividend.

Is AMD An American Company?

Yes. AMD is a U.S. company founded in Silicon Valley and currently headquartered in Santa Clara, California.