Annual report pursuant to Section 13 and 15(d)

Business Combinations and Asset Acquisitions

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Business Combinations and Asset Acquisitions
 12 Months Ended
Dec. 28, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Business Combination Disclosure Business Combinations
Fiscal Year 2024 Acquisitions
Silo AI Acquisition
On August 9, 2024, the Company completed the acquisition of Silo AI Oy (Silo AI), an AI lab based in Finland in an all-cash transaction of $665 million. Net of closing adjustments, transaction costs and deferred cash compensation, the purchase consideration of $553 million was allocated to $19 million of identifiable intangible assets, $43 million of net liabilities assumed, and $577 million to goodwill. Goodwill was attributed to Silo AI’s workforce who will help the Company accelerate the deployment and development of AI models and software solutions on AMD hardware. Silo AI financial results, which were not material, were included in the Company's Statement of Operations from the date of acquisition primarily within the Data Center segment.
Pending Acquisition of ZT Systems
On August 17, 2024, the Company entered into an agreement (the Agreement) to acquire ZT Group Int’l, Inc. (ZT Systems), a provider of AI and general purpose compute infrastructure for hyperscale computing companies, in a cash and stock transaction valued at approximately $4.9 billion (the Acquisition). The aggregate closing consideration payable by the Company consists of 8,335,852 shares of the Company’s common stock and $3.4 billion in cash. Contingent consideration of up to 740,964 shares of the Company’s common stock and up to $300 million of cash is payable by the Company to the extent certain conditions are met. The Agreement provides that if the Acquisition is not completed by August 17, 2025, subject to two automatic extensions until February 17, 2026, the Company will pay a termination fee of $300 million. The Acquisition is expected to close in the first half of 2025, subject to certain regulatory approvals and other customary closing conditions. The Company intends to seek a strategic partner to acquire ZT Systems' manufacturing business.
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. The recorded purchase consideration of $1.7 billion is net of deferred cash compensation requiring future services and other customary closing adjustments. The purchase consideration was allocated to $349 million of intangible assets, $208 million of identifiable net assets, and $1.1 billion of goodwill.
From the acquisition date to December 30, 2022, the Consolidated Statements of Operations include immaterial revenue and operating results attributable to Pensando, which are reported under the Data Center segment.
In 2023 and 2022, Pensando acquisition-related costs of $190 million and $102 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations. Pensando acquisition-related costs were immaterial in 2024. Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.
Xilinx Acquisition
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 purchase consideration was allocated to $27.3 billion of intangible assets, $1.3 billion of identifiable net liabilities, and $22.8 billion of goodwill.
The Consolidated Statements of Operations include the following revenue and operating income attributable to Xilinx in 2022:
2022
(In millions)
Net revenue $ 4,612 
Operating income $ 2,247 
In 2022, 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 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 Company’s Consolidated Statements of Operations. Xilinx acquisition-related costs in 2024 were immaterial. Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.
Supplemental Unaudited Pro Forma Information
Following are the supplemental consolidated financial results of the Company, Xilinx and Pensando on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of the fiscal year 2022.
December 31,
2022
(in millions)
Net revenue $ 24,117 
Net income $ 2,311 
Goodwill Acquisition-related Intangible Assets and Goodwill
Acquisition-related Intangible Assets
The following table summarizes Acquisition-related Intangible Assets:
December 28, 2024 December 30, 2023
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
(In millions) (In millions)
Developed technology $ 13,408  $ (2,529) $ 10,879  $ 13,390  $ (1,583) $ 11,807 
Customer relationships 12,324  (5,124) 7,200  12,324  (3,755) 8,569 
Customer backlog 809  (809) —  809  (809) — 
Corporate trade name 65  (65) —  65  (65) — 
Product trademarks 914  (225) 689  914  (147) 767 
Intangible assets subject to amortization
 27,520  (8,752) 18,768  27,502  (6,359) 21,143 
In-process Research and Development (IPR&D) not subject to amortization 162  —  162  220  —  220 
Total acquisition-related intangible assets $ 27,682  $ (8,752) $ 18,930  $ 27,722  $ (6,359) $ 21,363 
Acquisition-related intangible amortization expense was $2.4 billion and $2.8 billion in fiscal year 2024 and 2023, respectively. During the fourth quarter of fiscal year 2024, the Company determined that the fair value of certain IPR&D recorded within the Data Center segment was not recoverable resulting from actions related to the 2024 Restructuring Plan, and recorded an impairment charge of $58 million within Restructuring charges in the Company’s Consolidated Statement of Operations.
Based on the carrying value of acquisition-related intangibles recorded as of December 28, 2024, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:
Fiscal Year (In millions)
2025 $ 2,225 
2026 2,111 
2027 1,993 
2028 1,885 
2029 1,659 
2030 and thereafter 8,895 
Total $ 18,768 
Goodwill
The following table summarizes changes in the carrying amount of Goodwill:
December 31, 2022 Acquisitions December 30, 2023 Acquisitions
December 28,
2024
(In millions) (In millions)
Data Center $ 2,884  $ 58  $ 2,942  $ 461  $ 3,403 
Client —  18  18  108  126 
Gaming 238  —  238  —  238 
Embedded 21,055  9  21,064  8  21,072 
Total $ 24,177  $ 85  $ 24,262  $ 577  $ 24,839 
During the fourth quarter of fiscal years 2024 and 2023, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.