This is a summary of the second quarter fiscal 2006 earnings call conducted by Advanced Micro Devices Inc. (AMD: chart) on July 20, 2006

Management:

- Chairman of the Board, Chief Executive Officer Hector Ruiz
- President, Chief Operating Officer Dirk Meyer
-Chief Financial Officer, Senior Vice President Robert J. Rivet
- Executive Vice President, Legal Affairs, Chief Administrative Thomas M. McCoy
- Executive Vice President of Worldwide Sales and Marketing Henri P. Richard
- Director, Finance and Investor Relations Mike Haase

Key Investor Issues:

- The firm achieved sales of $1.22 billion, down 3.4% from $1.25 billion in 2005.
- Net income was $89 million or 18 cents per share, up 688% from $11.3 million or 3 cents a share in the prior year.

Half Year Highlights:

- Sales were $2.5 billion, up marginally from $2.49 billion in the prior year.
- Net income was $273 million or 58 cents a share, from a loss of $6.1 million or 2 cents a share in the prior year.

Second Quarter Highlights:

Sales of $1.22 billion were down 3.4% from $1.25 billion in 2005 driven by growth in all segments.

- Geographically, processor sales were sequentially higher in China, offset by lower sales in North America and Europe.
- Due to quarterly seasonality, the total microprocessor unit shipments were down 4% sequentially, driven by lower shipment of client units and lower client ASPs.
- High-volume desktop processor ASPs were challenged in the quarter due to deep discounting in the marketplace.
- Growth in the server processor business was pleasing, recording a sequential double-digit percentage unit growth and single-digit percentage ASP growth.
- AMD gained market share with 141% year over year AMD Opteron sales growth, and sequential growth of 26%.

Gross margin was 56.8% and was down slightly from the record of 58.5% in the first quarter of 2006 largely due to lower desktop processor ASPs.

- Total operating expenses, were up 13% from the prior quarter, primarily due to the extra week of operations in the quarter and increased marketing expenses in support of the long-term goals to acquire new customers, expand business with existing customers, and increase commercial sales.
- Operating income of $102 million was down 60.6% from the prior quarter and increased by 22.9% from the second quarter of 2005 due to the extra week of operations in the quarter and increased marketing expenses to acquire new customers and increase commercial sales.
-Net income for the quarter was $89 million or 18 cents per share, up 686% from $11.3 million or 3 cents a share in the prior year due to improved gross margins.
- The cash balance was $2.5 billion, down $100 million from the first quarter largely due to increased capital expenditures associated with investments in Fab 36.
- Inventories increased $68 million as planned from the first quarter, driven by the outstanding ramp of capacity and mature yields of Fab 36.

Outlook for third quarter fiscal 2006:

- AMD expects demand for its products to be seasonally strong in the second half of 2006 and third quarter sales to increase sequentially.
- Depreciation and amortization will be approximately $200 million in the third quarter, and $800 million for the year, down slightly from the guidance of 2006 of $825 million.
- 2006 capital expenditures will remain at the prior guidance of approximately $1.7 billion.

Key questions and answers from the second quarter fiscal 2006 earnings call conducted by Advanced Micro Devices Inc. (AMD: chart) on July 20, 2006

Tim Luke Could you give us some framework for some of the different splits and takes we should think about with respect to the gross margins as we move into the third quarter?

Bob Rivet: We forecasted that sales will go up, so you have to play that through the equation. Fab 36 will continue to ramp, but all of the inventory will be valued. We do not give a forecast on gross margin, but to me, everything is moving in the right direction.

Tim Luke With respect to the sales being up, could you remind us how you perceive seasonality and whether we should expect this mix of lower ASPs balanced by strong years in everything other than Opteron?

Henri P. Richard: It is clear the environment will probably remain challenging in the desktop. However, we are confident that our brand positioning and the positive impact of the dual-core Turion launch will help us in the mobile space. We should also expect some offset with the strong continued success of Opteron.

Tim Luke: So units at the desktop and mobile are up, with both having ASPs lower?

Henri P. Richard: No, units in both mobile and servers up, with solid ASP. The market is uncertain on the desktop, as we have seen in the second quarter. I will not make a projection there.

Tim Luke Is it fair to say you have seen your large competitor as aggressive in the early part of this quarter as they were at the end of last quarter?

Henri P. Richard: The issue that we are seeing in the marketplace is not so much the level of aggression but the way it is being communicated and how it is disruptive to the partners.