Advanced Micro Devices (AMD) is a global semiconductor company with facilities around the world. Within the global semiconductor industry, we offer primarily:

• x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs) and professional graphics processors; and
• server and embedded processors, semi-custom System-on-Chip (SoC) products and technology for game consoles. We also license portions of our intellectual property portfolio.

In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for the quarter and six months ended July 1, 2017 compared to the quarter and six months ended June 25, 2016 , an analysis of changes in our financial condition and a discussion of our contractual obligations.

We believe our financial results for the second quarter of 2017 reflect our continued financial growth and focus on executing our engineering milestones. Net revenue in the second quarter of 2017 was $1.22 billion, a 19% increase compared to the second quarter of 2016. The year-over-year increase was primarily due to a 51% increase in Computing and Graphics net revenue, partially offset by a 5% decrease in Enterprise, Embedded and Semi-Custom net revenue. The increase in Computing and Graphics segment net revenue was primarily due to higher sales from our graphics processors and our AMD Ryzen™ desktop processors. The decrease in Enterprise, Embedded and Semi-Custom segment net revenue was primarily driven by lower sales of our semi-custom SoCs. Our operating income for the second quarter of 2017 was $25 million compared to operating loss of $8 million in the second quarter of 2016. Gross margin, as a percentage of net revenue, for the second quarter of 2017 was 33% compared to 31% in the second quarter of 2016 due to a higher proportion of revenue from the Computing and Graphics segment as well as a richer product mix within the Computing and Graphics segment.

During the second quarter of 2017, we delivered a number of new products. We launched our AMD Ryzen™ 5 desktop processors targeting the mainstream desktop market and our AMD Ryzen PRO desktop processors for the commercial desktop market. We launched the Radeon™ 500 series graphics cards based on our 2nd generation "Polaris" architecture. Apple introduced their newest iMac, featuring our Radeon Pro 500 Series graphics processors that enables ultra-smooth gaming, fluid content creation, and support for GPU acceleration across a broad range of applications. We also announced the world's first professional dual-GPU card, the Radeon Pro Duo, and our first graphics card based on the next-generation "Vega" architecture for machine learning development and advanced visualization, the Radeon Vega Frontier Edition. We launched our AMD EPYC™ 7000 series high-performance datacenter processors, previously codenamed "Naples”, with ecosystem support from leading server members like Hewlett Packard Enterprise and Dell. This full family of high-performance processors for cloud-based and traditional enterprise servers is based on our "Zen" x86 processor core and offers a combination of processor core count, memory footprint, and I/O bandwidth.

With respect to our balance sheet, cash, cash equivalents and marketable securities as of the end of the second quarter of 2017 were $844 million, compared to $1.26 billion at end of 2016, primarily due to changes in working capital, largely driven by wafer purchases in support of anticipated sales in the third quarter of 2017.

We intend the discussion of our financial condition and results of operations that follows to provide information that will assist you in understanding our financial statements, the changes in certain key items in those financial statements from year to year and quarter to quarter, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements.