2009 ANNUAL REPORT ON FORM 10-K To Our Stockholders: 2009 marked AMD’s 40th anniversary as a semiconductor innovator. It was a year in which we celebrated our rich history while taking great strides toward an even brighter future. We reshaped our company, while achieving every major new product milestone in the year—from industry-leading graphics products, to visually-richer client platforms, to higher-performance six-core server processors. With the formation of GLOBALFOUNDRIES, we made a game-changing move helping to unlock AMD from the capital-intensive burden of funding the leading-edge manufacturing capacity we require. Finally, we reached a historic settlement with Intel, resulting in unprecedented ground-rules for fair competition in the x86-microprocessor industry. We hope the settlement will mark a new era where our customers will realize the benefits of fair and open competition and a renewed focus on customer-centric innovation. We exited 2009 with strong momentum and enter 2010 with a new business model, compelling products and strong customer demand. 2009: Strengthening in a down year Despite a challenging global economic environment and downturn in worldwide PC demand, we made solid progress to strengthen the company financially. First, we resized the company in an effort to achieve consistent profitability. In so doing, we were able to align under a more streamlined organization, with a more focused strategy, poised to deliver our new AMD Fusion™ processor technology. Second, we closed a transaction with the Advanced Technology Investment Corporation (ATIC) and the Mubadala Development Company of Abu Dhabi. This fulfilled a multi-year vision to create two companies capable of delivering innovation and impact to the global technology industry: a leading design innovator in AMD and a leading-edge manufacturing company in GLOBALFOUNDRIES. As a result, AMD retains access to leading-edge manufacturing capacity while mitigating the capital- intensive burden of building and maintaining manufacturing facilities and operations. Third, with improved operating performance, the formation of GLOBALFOUNDRIES and the proceeds of the Intel litigation settlement, we were able to dramatically strengthen our balance sheet. Growing product and platform momentum 2009 was also a year in which we showcased our unique opportunity as the only company in the world that designs and delivers both high-performance x86-microprocessors and leading-edge graphics. We delivered platforms in desktop and notebook markets focused on enabling a better PC experience and solutions to the server market optimized for key applications like cloud computing and virtualization. AMD’s resurgence as a graphics leader comes at a time in the industry when graphics technology is becoming an increasingly important part of computing and the computing experience. In the second half of the year, we launched the ATI Radeon™ HD 5000 Series of discrete graphics that delivered leading-edge performance and enabled our partners to deliver new visual experiences through our ATI Eyefinity technology. Timed with the launch of the new Microsoft® Windows® 7 operating system, we were the only company with DirectX® 11 capable graphics processors shipping that take full advantage of all of the capabilities enabled by this new graphics programming standard. We quickly expanded the ATI Radeon HD 5000 Series product offerings to span the entire graphics price-point stack, delivering advanced performance and features at every price point. Helping consumers “See the Difference” In 2009, we launched an innovative and unprecedented marketing effort called VISION Technology from AMD, a program designed to improve how PC benefits are communicated at the point of sale. In contrast to the traditional marketing emphasis on the technical specifications of individual hardware components, the VISION campaign communicates the value of the whole system, and how the combined capabilities of the CPU and GPU can deliver a superior experience for mainstream PC users. It emphasizes how AMD technology-based PCs can be optimized for video, digital media and content creation activities, among other applications. In short, we believe VISION Technology helps consumers make better informed buying decisions. In response to strong market adoption, we recently expanded VISION Pro Technology to commercial and small business channels. Designing the world’s most vivid digital experiences I am optimistic that we are well-positioned for future success. We have the right business model and strategy, a strong management team, dedicated and talented employees and customers that are enthusiastic about our products today and our technology vision for tomorrow. I am also really excited about our capability to drive the next era in computing with our upcoming AMD Fusion™ processor family. As we prepare for the first products launching in 2011, you will hear more about the user benefits that we expect will be enabled by this technology which leverages the capabilities of microprocessors and graphics processors on the same die. Today’s PC users are increasingly gravitating to multi-media content, whether downloading videos or communicating over video conferences with co-workers, family or friends in another part of the world. Consider these statistics: more than 3 billion photos are uploaded to Facebook each month, 20 hours of video are uploaded to YouTube every minute and there are now almost nine billion video files in high-definition format. In response to this shift in usage, AMD is leveraging our graphics expertise to provide users with a more vivid visual experience. We believe that incorporating the capabilities of the GPU in AMD Fusion can unleash a whole new set of applications that can significantly change the user interface and revolutionize how we communicate with, operate and perceive technology. Users will no longer wonder if the PC is good enough, rather, the question will be, “how good can it get?” We look forward to leading the industry through what we believe will truly be a landmark period in computing. Looking ahead to 2010 and an improving economic environment, we believe that AMD has the right business model to help accelerate our success as a design and marketing leader. In addition, through our continued commitment to innovation, we believe that the first half of 2010 will bring about more product introductions from AMD than any other six-month period in our company’s history. With the same passion and commitment our founders showed when they created AMD, we enter our fifth decade with a new and improved business model focused on semiconductor design, leveraging our unique technology portfolio of x86 microprocessor and graphics technologies. Thank you for your support as we’ve worked to transform the company and position it for long- term growth and success. Regards, Dirk Meyer President and CEO March 2010 Cautionary Statement Regarding Forward-Looking Statements The statements above include forward-looking statements. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “pro forma,” “estimates,” or “anticipates” or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. The forward-looking statements relate to, among other things: the timing and features of new product releases, including AMD Fusion; demand for our products in 2010 and beyond; the growth and competitive landscape of the markets in which we participate; the state of the global economy; our manufacturing costs; and our business model and strategy. Material factors that could cause actual results to differ materially from current expectations include, without limitation, the following: (1) that Intel Corporation’s pricing, marketing and rebating programs, product bundling, standard setting, new product introductions or other activities negatively impact our plans; (2) that we may be unable to develop, launch and ramp new products and technologies in the volumes that are required by the market at mature yields on a timely basis; (3) that our indebtedness could adversely affect our financial position and prevent us from implementing our strategy or fulfilling our contractual obligations; (4) that we will require additional funding and may be unable to raise sufficient capital on favorable terms, or at all; (5) that we may be unable to realize the anticipated benefits of our asset smart strategy or the GLOBALFOUNDRIES joint venture because, among other things, the synergies expected from the transaction may not be fully realized or may take longer to realize than expected; (6) that customers stop buying our products or materially reduce their operations or demand for our products; (7) that we may be unable to maintain the level of investment in research and development that is required to remain competitive; (8) that there may be unexpected variations in market growth and demand for our products and technologies in light of the product mix that we may have