Advanced Micro Devices, Inc.

Greetings and welcome to Advanced Micro Devices' fourth quarter and full year 2018 conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Laura Graves. Please go ahead.

Thank you and welcome to AMD's fourth quarter and fiscal year 2018 conference call. By now, you should have had the opportunity to review a copy of our earnings release and slides. If you have not reviewed these documents, they can be found on the investor relations page of AMD's website, www.amd.com. Participants on today's conference call are Dr. Lisa Su, our President and Chief Executive Officer, and Devinder Kumar, our Senior Vice President, Chief Financial Officer, and Treasurer. This is a live call and will be replayed via webcast on our website. I would like to highlight some important dates for you. Dr. Lisa Su will present at the Goldman Sachs Technology and Internet Conference on Tuesday, February 12th. Also... Ruth Kotter, Senior Vice President of HR, Worldwide Marketing, and Investor Relations, will present at the Susquehanna Annual Technology Conference on Tuesday, March 12th. And our 2019 First Quarter Quiet Time will begin at the close of business on Friday, March 15th, 2019. Today's discussion contains forward-looking statements based on the environment as we currently see it. Those statements are based on current beliefs, assumptions, and expectations speak only as of the current date, and as such, involve risks and uncertainties that could cause actual results to differ materially from our current expectations. We will refer primarily to non-GAAP financial measures during this call, except for revenue, gross margin, and segment operational results, which are reported on a GAAP basis. The non-GAAP financial measures referenced herein are reconciled to their most directly comparable GAAP financial measure in today's press release, which is posted on our website. Please refer to the cautionary statements in our press release for more information. You will also find detailed discussions about our risk factors in our filings with the SEC, and in particular, AMD's quarterly report on Form 10-Q for the quarter ended September 29, 2018. Now with that, I will hand the call over to Lisa. Lisa?

Thank you, Laura, and good afternoon to all those listening in today. 2018 marked another year of strong financial performance, driven by our expanded high-performance product portfolio, despite near-term graphics weakness. We grew annual revenue by 23%, with Ryzen, Epic, and Data Center GPU product revenue growing by more than $1.2 billion for the year. Our new products gained share and significantly expanded gross margin, leading to our most profitable year since 2011. Looking at the fourth quarter, revenue of $1.42 billion increased 6% from a year ago, with approximately 65% of sales coming from our new products. We reached an important milestone in our business in the quarter as our high-margin data center CPUs and GPUs accounted for a mid-teens percentage of overall revenue. While we expect our data center revenue to be lumpy, the ramp of our data center business is beginning to contribute meaningfully to our financial results. Looking at our computing and graphics segment, we delivered our eighth straight quarter of year-over-year segment revenue growth. Sales of Ryzen desktop and notebook processors and data center GPUs offset lower GPU sales as the channel continued working through elevated levels of graphics inventory. Client processor unit shipments grew by more than 50% from the year-ago period. We had our highest client computing revenue in more than four years, and we believe we gained client CPU unit share for the fifth straight quarter. At CES, Acer, Asus, Dell, HP, Huawei, Lenovo, and Samsung all launch notebooks powered by our new second-generation Ryzen mobile processor with Radeon Vega graphics. The second-gen Ryzen mobile processor delivers more performance, enhanced features, and longer battery life than any mobile processor we have ever built, and is the fastest processor available for ultra-thin notebooks. The industry's first AMD-based Chromebooks launched earlier this quarter from Acer and HP. We expect additional AMD-based Chromebooks to launch later this year as we expand our participation in this growing portion of the PC market. Based on the competitive positioning of our Ryzen processors, we expect the number of Ryzen systems that will launch in 2019 to increase by more than 30% in 2018. with the number of Ryzen notebook systems planned to launch increasing by more than 50%. In graphics, GPU revenue decreased year over year, driven largely by lower channel GPU and memory sales, partially offset by a significant increase in data center GPU sales. We saw an improvement in channel GPU sellout throughout the quarter, as our partners continued to drain their inventories. There is still more work to do, but we remain confident we're taking the right actions to further reduce channel inventory. We set a record for professional GPU revenue in the quarter, driven by multiple high-volume wins for our Vega-based data center GPUs. We started shipping our new 7 nanometer Radeon Instinct accelerators in the quarter and introduced a major set of enhancements to our data center GPU software that make it easier for customers to deploy Radeon GPUs for AI and machine learning workloads. At CES, we highlighted the significant gaming momentum we are generating for Radeon across consoles, PCs, and the cloud. For gamers and creators, we announced our return to the high-end GPU market with the new Radeon VII GPU. Powered by our second-generation Vega graphics core and featuring 16 gigabytes of second-generation high-bandwidth memory, our new 7-nanometer Radeon VII GPU delivers leadership performance in content creation and compute workloads and is very competitively positioned when running the most demanding AAA games at 4K resolution. In cloud gaming, we announced that Google selected Radeon Pro GPUs to power their game streaming initiative, Project Stream. The performance and differentiated virtualization features of our Radeon Pro GPUs enabled Google to deliver an uncompromised, high-definition gaming experience on virtually any PC. Turning to our enterprise, embedded, and semi-custom segments, Revenue was flat from a year ago as a double-digit percentage decrease in semi-custom revenue was offset by strong growth in epic processor sales. As expected, semi-custom sales were down from a year ago based on where we are in the current console cycle. This console generation remains one of the most successful ever, as Microsoft and Sony combined have now shipped well in excess of 120 million AMD-powered consoles. Fourth quarter server unit shipments more than doubled sequentially based on growing demand for our highest-end 32-core EPIC processors with cloud, HPC, and virtualized enterprise customers. As a result, we believe we achieved our goal of mid-single-digit server unit share exiting 2018. We had another strong quarter of cloud adoption, highlighted by industry leader Amazon announcing new versions of their most popular EC2 computing instances powered by EPIC processors. Businesses can easily migrate their AWS instances to AMD and save 10% or more based on the technology advantages of our platform. Microsoft Azure also announced general availability of their AMD-based storage instance in the quarter, as well as a new HPC instance powered by EPYC processors that is 33% faster than competitive x86 offerings. We secured multiple HPC wins in the quarter, including Procter & Gamble, the U.S. Department of Energy, and one of Europe's largest supercomputers at the University of Stuttgart's High Performance Computing Center. Lawrence Livermore Labs also announced a new supercomputer featuring both EPYC processors and Radion Instinct accelerators that will be used for machine learning and big data analytics workloads. Customer interest in our next generation Roam server processor remains very high. Roam is expected to deliver four times the floating point performance and double the compute performance per socket compared to our current generation EPYC processors. We publicly demonstrated a single 64-core next-generation EPIC processor, outperforming two of our competitors' highest-end server processors in multiple workloads. Roam development is proceeding very well, and we are on track to start shipments mid-year. I am also pleased to report that we concluded discussions with Global Foundries on the Seventh Amendment to our wafer supply agreement. The amendment affirms the strategic partnership with GF for products built at 12 nanometers and above and provides AMD with full sourcing flexibility at the 7 nanometer and below nodes. GF continues to be a critical supplier of AMD's current generation products and will play a key role in our next generation Ryzen and EPYC products with our chiplet strategy. In summary, 2018 was another strong year for AMD. Increased adoption of our high-performance products drove a second straight year of double-digit annual revenue growth, expanded gross margins, and improved profitability. I would like to thank the more than 10,000 AMD employees whose dedication to building great products have made these results possible. While headwinds remain in the graphics channel and macro uncertainties are causing some caution in the first half of 2019, We believe we are well positioned to gain share throughout the year and accelerate growth as we ramp our next generation 7 nanometer products. As we enter 2019, we are preparing to launch our strongest product portfolio ever. In gaming, we will launch our high-end Radeon 7 GPU in February, followed by our next generation Navi GPUs later in the year. In client computing, we started the year with our second generation Ryzen mobile processors and we are on track to launch our third generation Ryzen desktop processors in the middle of the year. And in the server market, we expect to deliver a significant step function performance increase with the launch of our next generation Roam processors in the middle of the year. I am very proud of what we accomplished in 2018, and even more excited about how our long-term investments are set to pay off in 2019. Now I'd like to turn the call over to Devinder to provide some additional color on our fourth quarter and full year financial performance. Devinder?