AMD’s fab FX hedging revamp unleashes strategic treasury
Published: Sep 2024
Best Foreign Exchange Solution
Highly Commended Winner
AMD
Photo of Catherine Otto, Kyriba.
Josh Carbone
Senior Treasury Manager – Capital Markets
For more than 55 years, Advanced Micro Devices (AMD) has driven innovation in high-performance computing, graphics, and visualisation technologies. As a Fortune 500 company, AMD employees are focused on building leadership in high-performance and adaptive products that push the boundaries of what is possible. Billions of people, leading global businesses, and cutting-edge scientific research institutions around the world rely on AMD technology daily to improve how they live, work, and play.
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The challenge
Managing the FX hedging programme at AMD was a time consuming tasks for the chip manufacturer’s treasury team, exacerbated by the company’s rapid organic growth. Adding to the challenge, the ~US$50bn acquisition of Xilinx layered significant integration hurdles on top of existing issues.
The team spent two hours a day manually retrieving trial balances, configuring data, and analysing exposures to ensure the appropriate hedge. The labour intensive and Excel-heavy process, combined with inefficiencies in cash flow forecasting, proved tedious and unscalable. Recognising the need for improvement, AMD embarked on a transformative journey to streamline its hedging processes through a comprehensive solution.
The solution
Josh Carbone, AMD
Partnering with Kyriba, AMD integrated an automated feed from SAP (trial balance) and FXall (hedges). This streamlined FX exposure assessment into a single platform and reduced the time treasury spent on exposures to just 30 minutes a day. Now equipped to make well-informed, real-time decisions, the treasury team has shifted their focus from operational tasks to strategic FX hedging initiatives.
The team has also leveraged an efficient frontier tool to optimise hedging cost vs value at risk (VaR). It led to ~US$2m annual reduction in hedging costs with minimal VaR increase. These strategic initiatives – coupled with AMD’s disciplined approach to daily exposure assessment – have enhanced the company’s overall P&L management.
Transitioning to Kyriba enables AMD to compile forecasts and track changes over time, while identifying any discrepancies. The accounting function has undergone a substantial upgrade, replacing manual mark-to-market (MTM) journal entries and hedge accounting documentation with an automated approach. As a result, highly automated FX accounting responsibilities now sit with accounting rather than treasury.
Best practice and innovation
AMD has streamlined its cash flow and balance sheet hedging programmes resulting in increased efficiencies, hedging cost reduction, improved P&L performance and realignment of FX accounting out of treasury.
AMD estimates applying the FX solution to its daily balance sheet hedging programme represents a 75% improvement in productivity, transforming efficiency and accuracy.
“Overall, our collaboration with Kyriba not only addresses the immediate challenges in FX management and financial operations, but has also laid the foundation for long-term success and growth. The comprehensive nature of the solution produced tangible results across multiple key metrics,” says Josh Carbone, Senior Treasury Manager – Capital Markets.
Key benefits
Cost savings.
Headcount savings.
Process efficiencies.
Return on investment (ROI).
Increased automation.
Risk mitigation.
Improved visibility.
Manual intervention reduction.
Improved key performance indicator (KPI) metrics.
Ability to employ complex derivatives (options).
“The Adam Smith Awards are the industry benchmark for best practices in treasury and AMD is honoured to be recognised for this FX hedging programme solution.”
Zain Kazim, Corporate Vice President of Treasury
We are delighted to sponsor Treasury Today’s Adam Smith Awards. It’s important to support organisations that recognise the achievements of those who are driving change and setting new standards in our field.
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The Adam Smith Awards are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 389 nominations. To find out more please visit treasurytoday.com/adam-smith-awards
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