AMD’s Q3 results on the outside appear to be another barely profitable quarter. But what the raw number are concealing are the significant changes to the company’s finances that occurred this quarter. This biggest of these changes were two deals that injected the company with more cash, reduced total debt by over half billion dollars, and pushed off the balance of its remaining debts until after 2022. One of these deals was $805 million worth of convertible debt and the other was an offering of $690 million dollars worth of common stock for a total of $1.4 billion in capital raised by AMD during Q3.
These two transactions have significantly solidified AMD’s finances and put it in a strong position to take advantage of any potential upside present in its Zen-based processors. If the company’s Zen-based products fail to take hold in the market it won’t be because AMD is short on cash or busy trying to repay outstanding debts. From now until 2019, long after AMD’s Zen-based chips will have been rolled out, AMD won’t have any debt to repay. These financial moves were a critically important step designed to build confidence in AMD’s ability to support its long-term roadmap with the necessary financial resources.
The other important event this quarter was AMD’s new wafer supply agreement with Global Foundries which like AMD’s debt restructuring is aimed at putting the company on a solid footing to exploit the potential of its upcoming products. We covered this agreement in detail about a month ago but essentially it lays out a predictable path for AMD to scale up and down its wafer purchases through 2020 as needed. This new WSA simplifies the at times difficult relationship that AMD and Global Foundries have endured.
The Future is Fusion?
With no pressing debts, plenty of on hand cash, and a committed foundry partner AMD has spent this quarter doing everything they can to stack the deck in their favor so that when Zen finally ships in volume for the server market with the “Naples” chip in the middle of next year the company can market it, produce it in volume, and demonstrate to potential buyers that they’re a valid choice and not just another dying fabless semiconductor company.S|A