Some of the heaviest criticism you can level against Advanced Micro Devices (NYSE: AMD) is that its balance sheet isn't exactly squeaky-clean. Even after spinning out its manufacturing operations under an umbrella of Arab capital, AMD still holds only $1.9 billion of cash equivalents against a long-term debt load of $2.4 billion.

However, help is on the way. AMD is offering to buy back some $800 million of senior debt that carries a 6% interest rate, using $300 million of cash and the proceeds from a new senior debt offering in the $500 million range. The reshuffling of debt notes moves the due date from 2015 to 2020 and eliminates the possible dilutive effect of convertible notes going forward. There's no word yet on the interest rates of the new debt, but you have to assume the whole waltz would be pointless unless the new terms were better.

AMD is constantly fighting two separate wars: against Intel (Nasdaq: INTC) in the processor space and NVIDIA (Nasdaq: NVDA) in graphics chips. Even without having to worry about expensive manufacturing facilities, it's not cheap to develop and sell two such high-volume product lines in perhaps the most cutthroat business sector I know. Lightening the debt load is always a good idea for heavily cyclical industries, and shoveling cash into the furnaces of retiring debt is fine as long as the remaining cash balance is enough to run the day-to-day business and provide a cushion of security.

It also tells us that AMD isn't looking to go acquisition shopping or dividend flaunting anytime soon. You get what you see, which is a rising business with good long-term prospects but still an imperfect balance sheet. If you want a mid-cap chip stock with no debt in your portfolio, you'll have to wait another few years for AMD to meet your criteria.

Or if you're looking for mid-cap semiconductor stocks with cleaner balance sheets and growth on the menu, you could look into something like Marvell Technology Group (Nasdaq: MRVL) or Maxim Integrated Products (Nasdaq: MXIM), both of which fit that description and also sport much higher CAPS ratings than AMD. It's your call.

Is low debt really that important to chip stocks? Discuss in the comments below.