UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMarch 28,September 26, 2020
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                 
Commission File Number 000-06217
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INTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware94-1672743
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Delaware94-1672743
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2200 Mission College Boulevard,Santa Clara,California95054-1549
(Address of principal executive offices)(Zip Code)
(408) 765-8080
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.001 par valueINTCNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☑    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☑    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer  Non-accelerated filer Smaller reporting company Emerging growth company  
☑
¨¨☐☐
Large Accelerated FilerAccelerated filer  Non-accelerated filer Smaller reporting company Emerging growth company  
☑
¨¨☐☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑
As of March 28,September 26, 2020, the registrant had outstanding 4,2344,098 million shares of common stock.



TABLE OF CONTENTS
THE ORGANIZATION OF OUR QUARTERLY REPORT ON FORM 10-Q
The order and presentation of content in our Form 10-Q differs from the traditional SEC Form 10-Q format. Our format is designed to improve readability and better presentspresent how we organize and manage our business. See "Form 10-Q Cross-Reference Index" within Other Key Information for a cross-reference index to the traditional SEC Form 10-Q format. To reflect our focus on transforming from a PC-centric1 company to a data-centric company, we have presented our data-centric businesses1 first in the "Segment Trends and Results" within MD&A.
We have defined certain terms and abbreviations used throughout our Form 10-Q in "Key Terms" within the Consolidated Condensed Financial Statements and Supplemental Details.
The preparation of our Consolidated Condensed Financial Statements is in conformity with U.S. GAAP. Our Form 10-Q includes key metrics that we use to measure our business, some of which are non-GAAP measures. See "Non-GAAP Financial Measures" within MD&A for an explanation of these measures and why management uses them and believes they provide investors with useful supplemental information.
Page
FORWARD-LOOKING STATEMENTS
1
OUR PANDEMIC RESPONSE
2
A QUARTER IN REVIEW
53
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND SUPPLEMENTAL DETAILS
Consolidated Condensed Statements of Income
65
Consolidated Condensed Statements of Comprehensive Income
76
Consolidated Condensed Balance Sheets
87
Consolidated Condensed Statements of Cash Flows
98
Consolidated Condensed Statements of Stockholders' Equity
109
Notes to Consolidated Condensed Financial Statements
1110
Key Terms
2627
MANAGEMENT'S DISCUSSION AND ANALYSIS
Segment Trends and Results
2728
Consolidated Results of Operations
3235
Liquidity and Capital Resources
3640
Contractual Obligations
3741
Quantitative and Qualitative Disclosures about Market Risk
3741
Non-GAAP Financial Measures
3842
OTHER KEY INFORMATION
Risk Factors
4044
Controls and Procedures
4344
Issuer Purchases of Equity Securities
4345
Exhibits
4446
Form 10-Q Cross-Reference Index
4547





1    Intel's definition is included in "Key Terms" within the Consolidated Condensed Financial Statements and Supplemental Details.

1
Intel's definition is included in "Key Terms" within the Consolidated Condensed Financial Statements and Supplemental Details.

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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipate," "expect," "intend," "pledge,"anticipate," "committed,"plan," "plans,"mission," "opportunities,"opportunity," "future," "to be," "believes," "target," "on-track," "estimates,"estimated," "continue," "likely," "may," "might," "potentially," "will," "would," "should," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to future responses to and effects of COVID-19; projections of our future financial performance and demand; our anticipated growth and trends in our businesses or operations; projected growth and trends in markets relevant to our businesses; business plans; future products and technology and the expected availability and benefits of such products and technology; expectations regarding construction projects; expected timing and impact of acquisitions, divestitures, and other significant transactions;transactions, including statements relating to the pending divestiture of our NAND memory business to SK hynix Inc. (SK hynix), NAND manufacturing and supply arrangements between Intel and SK hynix, and our expected use of proceeds from the divestiture; expected completion of restructuring activities; availability, uses, sufficiency, and cost of capital and capital resources, including expected returns to stockholders such as dividends and share repurchases; our valuation; the settlement of our ASR agreements; accounting estimates and judgments regarding reported matters, events and contingencies and our intentions with respect to such matters, events and contingencies, and the actual results thereof; future production capacity and product supply,supply; the future purchase, use, and availability of products, components and services supplied by third parties, including third-party manufacturing services; tax-related expectations; uncertain events or assumptions,assumptions; and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management's expectations as of the date of this filing, unless an earlier date is specified, and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report, our 2019 Form 10-K, and our Annual Report on Form 10-K10-Q reports for the yearquarters ended DecemberMarch 28, 2019,2020 and June 27, 2020, particularly the "Risk Factors" sections of such reports.reports, as well as the risks and uncertainties described in our Form 8-K announcing our agreement to divest our NAND memory business to SK hynix, filed with the SEC on October 20, 2020. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. Unless specifically indicated otherwise, the forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, unless an earlier date is specified, including expectations based on third-party information and projections that management believes to be reputable, and Intel does not undertake, and expressly disclaims any duty, to update such statements, whether as a result of new information, new developments, or otherwise, except to the extent that disclosure may be required by law.




















Intel, the Intel logo, 3D XPoint, Intel Atom, Intel Core, Intel Optane,Evo, Iris, and Xeon,Intel Optane, are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries.
* Other names and brands may be claimed as the property of others.

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OUR PANDEMIC RESPONSE
Our top priority duringAs we closely monitor the COVID-19 pandemic, isour top priority remains protecting the health and safety of our employees. As governments institute new restrictionsOur Pandemic Leadership Team regularly reviews and adapts our policies based on commercial operations, we are workingevolving research and guidance related to ensure our compliance while also maintaining business continuity forthe virus. While essential operations continue in our factories. At this time, our factories continue to operateand labs around the world, in accordance with guidance issued by localwe have restricted travel and national government authorities. We remain open as we supportmeetings, changed our employees who work in labsbusiness processes, published a wealth of information, and factories criticaladapted to our world’s digital infrastructure.
For the first three months of 2020 we observed strong notebook platform demand driven by the increase in working and learning from home and saw continued strength in data center demand as cloud service providers increased capacity. However, weakness in the industrial and retail verticals drove weaker demanda world where many in our IOTG business.
Our technology runs most of the world’s internet, communications,workforce are remote and government digital infrastructures,those coming on-site are following new safety measures. We have a multi-phase plan to return to working on-site, and our products and capabilities areremain committed to delivering vital computing power for medical research, robotics for assisted patient care, and artificial intelligence and data analytics for public health. Our platforms that support telemedicine have also taken on greater importance since the outbreak of COVID-19 as hospitals and healthcare workers scale to meet the increasing demand for care. The PCs and networking technologies that we and our customers deliver are supporting the unprecedented volume of remote workers and enabling personal connections while social distancing.
We are focused on protecting the health and safety of our employees and we continue to operate to deliver for our customers while contributing toand supporting our communities.
OUR EMPLOYEES
Intel’s Pandemic Leadership Team, established more than 15 years ago to improve Intel’s crisis management response capability, is deeply engaged to keep our employees safe. This specialized team includes medical and safety experts who work to safeguard the well-being of employees and minimize the spread of infection. They also collaborate with local governments and public health organizations and implement their recommendations. In the past, the team has successfully helped us manage through global health issues such as bird flu, SARS, Ebola, Zika, and the H1N1 virus.
Working-from-home and social distancing policies. As we navigate through the effects of the COVID-19 pandemic we are working to ensure compliance with orders and restrictions imposed by government authorities. We have significantly reduced the number of people in our offices, helping to protect our employees who work in our labs and factories and who are essential to keeping our business running. Maintaining safe facilities is core to how we operate, and we are implementing additional practices in our fabs and assembly test plants so manufacturing employees can safely continue performing critical work on site. In addition to increased cleaning of our facilities, our manufacturing sites are taking extra steps to effectively implement social distancing. Some of these measures include staggering shift changes, adjusting meeting locations and schedules, limiting activities that require close proximity, and making thermometers and masks available (in addition to the normal protective gear worn by many factory employees). At our construction sites, we are working closely with our general contractors to implement social distancing, increased cleaning, and other protocols to safeguard the health of all workers on site.
Compensation and expanded benefits. We are investing more than $100 million in additional benefits to aid and support employees, including special recognition for employees that have been working on-site and healthcare coverage changes under the U.S. Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Employees and contractors asked to work from home or self-quarantine due to travel restrictions will be paid their regular pay, and Intel will reimburse up to 30 days of care services for employees who need backup childcare and/or elder care in the case where there are school or care center closures or if an employee or family member is required to be self-quarantined.
To aid in the overall well-being of our employees, we also have our existing global Employee Assistance Plan that provides confidential counseling and work-life services to employees and immediate family members.
OUR CUSTOMERS
We are in the midst of what is likely a historic deployment of remote work and digital access to services. We are committed to our customers to enable the support they need to continue providing vital services, tools, and infrastructure to millions.
Operations. Our factories continue to operate world-wide in compliance with the orders and restrictions imposed by government authorities in each of our locations, and we are working with our customers to meet their specific shipment needs. Our world-class safety standards and supply chain operations have to date allowed our factories to continue to operate safely and with mostly on-time deliveries. We only allow employees in our factories who are essential to the factories’ operations. By design, our “cleanrooms” and factories are among the cleanest places in the world. While most of our construction projects have remained operational, we temporarily paused a few projects due to local government restrictions at a small number of our sites. We currently expect these interruptions to have minimal impact on our product ramps and do not expect them to impact our process technology transition timelines. We remain on-track to add sufficient wafer capacity this year to meet anticipated market demand and restore our PC unit inventory levels.

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Supply chain. Our employees and partners around the world have collaborated and leveraged lessons learned—in recent months and from past challenges—to safely keep the global tech supply chain functioning. Our Pandemic Leadership Team is at the center of these efforts and through our Business Continuity Program we perform ongoing work with our suppliers to review their preparations to handle sudden disruptions to the supply chain. We have taken several actions throughout the pandemic to address our supply chain. For example:
Where feasible and practicable, we increased inventory of raw materials as well as our supply of our finished goods coming out of China in early February. It is our practice to plan for scenarios where supply will be restricted or compromised in our supply chain for 30-60 days or more. 
We activated backup planning to reroute and obtain charter flights if needed into and from China, securing capacity early. As the virus spread, we leveraged the successful methodology used in China for other parts of Asia and Europe.
We evaluated the end-to-end supply line needs for all products ramping this year, worked on securing supply lines and deployed our business continuity plans to mitigate potential risks.
We are working with governments around the world to confirm our compliance with local requirements for continued operation as an essential business. We have also worked closely with our suppliers to help protect their employees' health and safety, to provide supplier assistance to mitigate supply disruptions, and to clarify our continued expectations for labor practices and human rights in line with the Responsible Business Alliance Code of Conduct.
OUR COMMUNITY
Intel has a longstanding commitment to support the local communities where we operate and to create a better world through the power of our technology. We have committed over $60 million to accelerate access to technology needed to combat the crisis and to support the needs of frontline healthcare workers and people in our local communities. We've also been inspired by our employees who have proposed innovative ideas for how we can apply our resources and technology to support our stakeholders throughout this crisis.
Using our technology to help. In April, we pledged $50 million in a Pandemic Response Technology Initiative to combat COVID-19 through accelerating access to technology at the point of patient care, speeding scientific research, and ensuring access to online learning for students. A portion of this amount has been allocated to an additional innovation fund that supports requests from external partners and employee-led relief projects where access to Intel expertise and resources can have immediate impact. This initiative builds on prior announcements of $10 million in donations that are supporting local communities during this critical time.
We are providing access to our intellectual property and partnering with customers to put technology to work towards understanding and fighting COVID-19. For example:
We are giving COVID-19 scientists and researchers free access to our worldwide intellectual property portfolio. We will continue to invent—and protect—our intellectual property, but we offer it freely to those working to protect people from this pandemic.
We are teaming with Lenovo and BGI Genomics to accelerate the analysis of genomic characteristics of COVID-19. Our combined work will further advance the capabilities of BGI’s sequencing tools to help scientists investigate transmission patterns of the virus and create better diagnostic methods.
We are deploying Intel platform-based robots in hospitals to protect doctors and nurses by transporting medical supplies and surgical equipment to reduce human-to-human interactions.
We are working with Dyson and medical consultancy firm TTP to supply FPGAs for CoVent, a new ventilator specifically designed in response to the U.K. government’s request for help.
We are collaborating with Medtronic to add remote monitoring capabilities to their PB980 ventilator, which helps reduce exposure for healthcare providers treating COVID-19 patients.
Philanthropic efforts. We are also committed to providing monetary and non-monetary support to our communities. For example:
We committed a $1 million donation to the International Red Cross to support global relief efforts for the COVID-19 pandemic.
We announced the Intel Foundation is providing $4 million to support COVID-19 relief efforts in communities where we have significant presence. The foundation also offered a special monetary matching opportunity for every regular full-time and part-time employee and U.S. Intel retiree up to a total of $2 million for relief efforts around major Intel sites.
We donated more than 1 million items of personal protective equipment—masks, gloves, and other gear—to healthcare workers that were sourced from our factory stock and emergency supplies.
We also joined the global XPRIZE Pandemic Alliance along with other companies to fuel collaboration on solutions through shared innovation to effectively address the immediate needs of the crisis.

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MOVING FORWARD
There is uncertainty around the impacts the pandemic will have on our business and the additional measures that may be necessary going forward. We will continue to actively monitor the situation including the status ofand review our workforce and factories, supply chain, and customers, suppliers, and vendors, to determine the appropriate actions to protect the health and safety of our employees and our ongoing operations for our customers. This includes actions informed byplans based on the requirements and recommendations of the federal, state, orand local authorities.
Economic and demand uncertainty in the current environment may impact our future results. We continue to assess how the effects of COVID-19 on the economy may offset the immediate catalysts from more remote work and learning, and we recognize that our operations could be disrupted if our employees working in our fabs and factories contract the virus. We expect continued strength from cloud service providers and communications service providers in the second quarter of 2020, and anticipate enterprise and government demand to weaken in the second half of 2020. We also expect lower demand in IOTG and Mobileye for the rest of the year. As global GDP estimates are revised down, we expect PC TAM to decline in the second half of the year. We remain focused on cash flow management, including careful management of operating expenses, capital expenditures, and working capital.

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A QUARTER IN REVIEW
Total revenue of $19.8$18.3 billion was up $3.8 billiondown $857 million year over year as our data-centric businesses anddeclined 10%, partially offset by 1% growth in our PC-centric business grew by 34% and 14% respectively.business. Data-centric revenue was up, driven by growth across alldown primarily due to COVID-related demand impacts. DCG businessASPs declined on higher SoC volume and mix shift from the enterprise and government market segments, strong mix of high-performance Intelsegment to cloud service providers. We also experienced weaker demand for IOTG platform1 ® Xeon® processors, NSG bit growth, and improved NAND pricing.products. Our PC-centric business was slightly up, driven by strength in notebook demand, partially offset by lower desktop demand, and lower notebook ASP resulting from higher demand in consumer and education segments. Lower platform1 volume strength ASP and higher modem sales. Increased platform unit sales, ASP strength, and lower period chargescost resulted in higherlower gross marginsmargin dollars and operating income, partially offset by higher platform unitvolume growth and improved NAND pricing and cost. In the first threenine months, we generated $6.2$25.5 billion of cash flow from operations and returned $5.6$18.4 billion to stockholders, including $1.4$4.2 billion in dividends and $4.2$14.2 billion in buybacks. Buybacks include those repurchased under ASR agreements entered into in Q3, of which $2.0 billion remains to be settled by the end of 2020.
REVENUEOPERATING INCOMEDILUTED EPSCASH FLOWS
■ PC-CENTRIC $B
■ DATA-CENTRIC $B
■ GAAP $B ■ NON-GAAP $B
■ GAAP ■ NON-GAAP
■ OPERATING CASH FLOW $B
■ FREE CASH FLOW $B
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$18.3B$5.1B$5.4B$1.02$1.11$25.5B$15.1B
GAAPGAAP
non-GAAP2
GAAP
non-GAAP2
GAAP
non-GAAP2
Revenue down $857M or 4% from Q3 2019Operating income down $1.4B or 22% from Q3 2019; Q3 2020 operating margin at 28%Operating income down $1.5B or 22% from Q3 2019; Q3 2020 operating margin at 29%Diluted EPS down $0.34 or 25% from Q3 2019Diluted EPS down $0.31 or 22% from Q3 2019Operating cash flow up $2.2B or 10% from YTD Q3 2019Free cash flow up $3.4B or 29% from YTD Q3 2019
Decline in most data-centric businesses, partially offset by growth in our PC-centric businessLower gross margin dollars from platform ASP decline, higher platform unit cost from increased mix of 10nm products, higher platform reserves, and lower sell-through of previously reserved non-qualified platform product, partially offset by higher platform unit volume, improved NAND pricing and cost, and lower spendingLower gross margin dollars and higher tax rate, partially offset by lower shares outstandingHigher net income, partially offset by working capital changes driven by accounts payable and other assets and liabilities; free cash flow increased due to higher operating cash flow and lower capital spending
       
$19.8B   $7.0B $7.5B $1.31 $1.45 $6.2B $2.9B
GAAP   GAAP 
non-GAAP2
 GAAP 
non-GAAP2
 GAAP 
non-GAAP2
Revenue up $3.8B or 23% from Q1 2019 Operating income up $2.9B or 69% from Q1 2019; Q1 2020 operating margin at 35% Operating income up $3.0B or 67% from Q1 2019; Q1 2020 operating margin at 38% Diluted EPS up $0.44 or 51% from Q1 2019 Diluted EPS up $0.56 or 63% from Q1 2019 Operating cash flow up $1.2B or 24% from Q1 2019 Free cash flow up $1.3B or 76% from Q1 2019
             
Growth in most data-centric businesses and growth in the PC-centric business Higher gross margin from increase in platform unit sales and platform ASP strength, lower period charges, NAND market recovery and improved NAND unit cost, partially offset by increase in platform unit cost Higher platform volume, platform ASP strength, lower period charges, NAND market recovery and improved unit cost, and lower shares outstanding, partially offset by higher platform unit cost and higher tax Higher net income offset by working capital changes driven by other assets and liabilities and accounts receivable

BUSINESS SUMMARY
•
We introduced a broad, data-centric portfolio for 5G network infrastructure including the new Intel Atom® P5900, a 10nm SoC for wireless base stations; a next-generation structured ASIC for 5G network acceleration; and the launch of new 2nd Gen Intel® Xeon® Scalable processors.
•
We announced the 10th Gen Intel® Core™ H-series mobile processors, a new family of mobile processors aimed at gamers and creators everywhere, which deliver faster performance with up to 5.3GHz Turbo, eight cores, and 16 threads.
•
We experienced growth in most data-centric businesses. DCG grew across all segments and adjacencies continued to ramp. NSG grew with record revenue driven by NAND and Intel® Optane™ memory bit growth and higher ASP. Mobileye recognized record revenue with increasing ADAS adoption. IOTG declined on COVID-19 impact.
PC-centric growth was driven by notebook demand strength as consumers




1 See "Key Terms" within Consolidated Condensed Financial Statements and businesses are relying on PCs for working and learning at home.Supplemental Details.

2 See "Non-GAAP Financial Measures" within MD&A.

1
See "Key Terms" within Consolidated Condensed Financial Statements and Supplemental Details.
2
See "Non-GAAP Financial Measures" within MD&A.


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BUSINESS SUMMARY
•Decline in our data-centric businesses was primarily driven by COVID-related demand impacts on the DCG enterprise and government market segment, IOTG, and NSG. DCG ASPs declined on higher SoC volume and mix shift from enterprise and government to cloud service providers. The data-centric decline was partially offset by higher platform volume with continued strength in cloud service providers, and improved NAND pricing and cost.
•Growth in our PC-centric business was driven by strength in notebook demand, partially offset by lower desktop demand, lower notebook ASP resulting from higher demand for consumer and education PCs, and LTE modem volume decline.
•We launched our new processor family for laptops, 11th Gen Intel® CoreTM processors with Intel® Iris® Xe graphics leveraging our new 10nm SuperFin process technology. We also introduced the Intel® EvoTM platform brand for designs powered by 11th Gen Intel® CoreTM processors. Intel® EvoTM technology is verified, measured, and tested against specifications and key experience indicators as part of the next edition of our laptop innovation program Project Athena.
•We announced new IoT enhanced processors, Intel Atom® x6000E Series and 11th Gen Intel® CoreTM for IOT, which are designed to solve customers' challenges at the edge.
•On October 19, 2020, we signed an agreement with SK hynix to divest of our NAND memory business, including our NAND memory fabrication facility in Dalian, China and certain related equipment and tangible assets (the “Fab Assets”), our NAND solid-state drive business (the “NAND SSD Business”), and our NAND memory technology and manufacturing business (the “NAND Business”), for total consideration of $9.0 billion in cash. We intend to use proceeds from the transaction to invest in our long-term growth priorities. The transaction will occur over two closings, the second of which is expected to occur no earlier than March 2025.





























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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
 Three Months Ended Three Months EndedNine Months Ended
(In Millions, Except Per Share Amounts; Unaudited) Mar 28,
2020		 Mar 30,
2019		(In Millions, Except Per Share Amounts; Unaudited)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Net revenue $19,828
 $16,061
Net revenue$18,333 $19,190 $57,889 $51,756 
Cost of sales 7,812
 6,972
Cost of sales8,592 7,895 25,625 21,494 
Gross margin 12,016
 9,089
Gross margin9,741 11,295 32,264 30,262 
Research and development 3,275
 3,332
Research and development3,272 3,208 9,901 9,978 
Marketing, general and administrative 1,541
 1,583
Marketing, general and administrative1,435 1,536 4,423 4,758 
Restructuring and other charges 162
 —
Restructuring and other charges(25)104 146 288 
Operating expenses 4,978
 4,915
Operating expenses4,682 4,848 14,470 15,024 
Operating income 7,038
 4,174
Operating income5,059 6,447 17,794 15,238 
Gains (losses) on equity investments, net (111) 434
Gains (losses) on equity investments, net56 318 212 922 
Interest and other, net (313) (61)Interest and other, net(74)(46)(416)(170)
Income before taxes 6,614
 4,547
Income before taxes5,041 6,719 17,590 15,990 
Provision for taxes 953
 573
Provision for taxes765 729 2,548 1,847 
Net income $5,661
 $3,974
Net income$4,276 $5,990 $15,042 $14,143 
Earnings per share—basic $1.33
 $0.88
Earnings per share—basic$1.02 $1.36 $3.55 $3.18 
Earnings per share—diluted $1.31
 $0.87
Earnings per share—diluted$1.02 $1.35 $3.52 $3.14 
Weighted average shares of common stock outstanding:    Weighted average shares of common stock outstanding:
Basic 4,266
 4,492
Basic4,188 4,391 4,233 4,450 
Diluted 4,312
 4,564
Diluted4,211 4,433 4,269 4,507 
See accompanying notes.

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CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
 Three Months EndedThree Months EndedNine Months Ended
(In Millions; Unaudited) Mar 28,
2020		 Mar 30,
2019		(In Millions; Unaudited)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Net income $5,661
 $3,974
Net income$4,276 $5,990 $15,042 $14,143 
Changes in other comprehensive income, net of tax:    Changes in other comprehensive income, net of tax:
Net unrealized holding gains (losses) on derivatives (268) 102
Net unrealized holding gains (losses) on derivatives206 (115)257 138 
Actuarial valuation and other pension benefits (expenses), net 12
 9
Actuarial valuation and other pension benefits (expenses), net11 9 34 26 
Translation adjustments and other (5) 50
Translation adjustments and other(5)6 49 88 
Other comprehensive income (loss) (261) 161
Other comprehensive income (loss)212 (100)340 252 
Total comprehensive income $5,400
 $4,135
Total comprehensive income$4,488 $5,890 $15,382 $14,395 
See accompanying notes.

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CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions) Mar 28,
2020		 Dec 28,
2019
  (unaudited)  
Assets    
Current assets:    
Cash and cash equivalents $11,380
 $4,194
Short-term investments 1,296
 1,082
Trading assets 8,127
 7,847
Accounts receivable 8,455
 7,659
Inventories 9,246
 8,744
Other current assets 2,997
 1,713
Total current assets 41,501
 31,239
Property, plant and equipment, net of accumulated depreciation of $75,686 ($73,321 as of December 28, 2019) 56,770
 55,386
Equity investments 3,880
 3,967
Other long-term investments 2,943
 3,276
Goodwill 26,276
 26,276
Identified intangible assets, net 10,429
 10,827
Other long-term assets 5,911
 5,553
Total assets $147,710
 $136,524
     
Liabilities, temporary equity, and stockholders’ equity    
Current liabilities:    
Short-term debt $3,464
 $3,693
Accounts payable 4,638
 4,128
Accrued compensation and benefits 2,358
 3,853
Other accrued liabilities 13,435
 10,636
Total current liabilities
23,895
 22,310
Debt 36,455
 25,308
Contract liabilities 1,353
 1,368
Income taxes payable, non-current 4,651
 4,919
Deferred income taxes 2,027
 2,044
Other long-term liabilities 2,975
 2,916
Contingencies (Note 12) 

 

Temporary equity —
 155
Stockholders’ equity:    
Preferred stock —
 —
Common stock and capital in excess of par value, 4,234 issued and outstanding (4,290 issued and outstanding as of December 28, 2019) 25,251
 25,261
Accumulated other comprehensive income (loss) (1,541) (1,280)
Retained earnings 52,644
 53,523
Total stockholders’ equity 76,354
 77,504
Total liabilities, temporary equity, and stockholders’ equity $147,710
 $136,524
See accompanying notes.

CONSOLIDATED CONDENSED BALANCE SHEETS
(In Millions)Sep 26, 2020Dec 28, 2019
(unaudited)
Assets
Current assets:
Cash and cash equivalents$3,356 $4,194 
Short-term investments2,987 1,082 
Trading assets11,910 7,847 
Accounts receivable7,140 7,659 
Inventories9,273 8,744 
Other current assets2,119 1,713 
Total current assets36,785 31,239 
Property, plant and equipment, net of accumulated depreciation of $80,084 ($73,321 as of December 28, 2019)59,205 55,386 
Equity investments3,679 3,967 
Other long-term investments2,720 3,276 
Goodwill26,955 26,276 
Identified intangible assets, net9,881 10,827 
Other long-term assets6,036 5,553 
Total assets$145,261 $136,524 
Liabilities, temporary equity, and stockholders’ equity
Current liabilities:
Short-term debt$504 $3,693 
Accounts payable5,159 4,128 
Accrued compensation and benefits3,197 3,853 
Other accrued liabilities13,252 10,636 
Total current liabilities22,112 22,310 
Debt36,059 25,308 
Contract liabilities1,381 1,368 
Income taxes payable, non-current4,811 4,919 
Deferred income taxes2,995 2,044 
Other long-term liabilities3,349 2,916 
Contingencies (Note 13)
Temporary equity0 155 
Stockholders’ equity:
Preferred stock0 0 
Common stock and capital in excess of par value, 4,098 issued and outstanding (4,290 issued and outstanding as of December 28, 2019)23,335 25,261 
Accumulated other comprehensive income (loss)(940)(1,280)
Retained earnings52,159 53,523 
Total stockholders’ equity74,554 77,504 
Total liabilities, temporary equity, and stockholders’ equity$145,261 $136,524 
See accompanying notes.
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 Three Months Ended Nine Months Ended
(In Millions; Unaudited) Mar 28,
2020		 Mar 30,
2019		(In Millions; Unaudited)Sep 26, 2020Sep 28, 2019
    
Cash and cash equivalents, beginning of period $4,194
 $3,019
Cash and cash equivalents, beginning of period$4,194 $3,019 
Cash flows provided by (used for) operating activities:    Cash flows provided by (used for) operating activities:
Net income 5,661
 3,974
Net income15,042 14,143 
Adjustments to reconcile net income to net cash provided by operating activities:    Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 2,623
 2,229
Depreciation7,925 6,647 
Share-based compensation 449
 389
Share-based compensation1,393 1,290 
Amortization of intangibles 427
 396
Amortization of intangibles1,311 1,211 
(Gains) losses on equity investments, net 134
 (274)(Gains) losses on equity investments, net(105)(395)
Changes in assets and liabilities:    Changes in assets and liabilities:
Accounts receivable (796) (235)Accounts receivable525 (156)
Inventories (548) (512)Inventories(570)(1,376)
Accounts payable 117
 196
Accounts payable355 728 
Accrued compensation and benefits (1,500) (1,620)Accrued compensation and benefits(488)(365)
Prepaid supply agreements (87) (228)Prepaid supply agreements(91)(674)
Income taxes 753
 440
Income taxes493 435 
Other assets and liabilities (1,075) 204
Other assets and liabilities(296)1,769 
Total adjustments 497
 985
Total adjustments10,452 9,114 
Net cash provided by operating activities 6,158
 4,959
Net cash provided by operating activities25,494 23,257 
Cash flows provided by (used for) investing activities:    Cash flows provided by (used for) investing activities:
Additions to property, plant and equipment (3,268) (3,321)Additions to property, plant and equipment(10,392)(11,547)
Purchases of available-for-sale debt investments (513) (872)Purchases of available-for-sale debt investments(6,323)(2,028)
Maturities and sales of available-for-sale debt investments 625
 948
Maturities and sales of available-for-sale debt investments5,037 3,118 
Purchases of trading assets (3,897) (1,869)Purchases of trading assets(14,744)(5,769)
Maturities and sales of trading assets 3,660
 1,554
Maturities and sales of trading assets11,227 5,467 
Sales of equity investments 20
 1,077
Sales of equity investments339 1,414 
Other investing (363) (239)Other investing(256)(575)
Net cash used for investing activities (3,736) (2,722)Net cash used for investing activities(15,112)(9,920)
Cash flows provided by (used for) financing activities:    Cash flows provided by (used for) financing activities:
Increase (decrease) in short-term debt, net —
 1,682
Increase (decrease) in short-term debt, net0 835 
Issuance of long-term debt, net of issuance costs 10,247
 135
Issuance of long-term debt, net of issuance costs10,247 650 
Repayment of debt and debt conversion (1,075) (861)Repayment of debt and debt conversion(4,525)(1,478)
Proceeds from sales of common stock through employee equity incentive plans 503
 290
Proceeds from sales of common stock through employee equity incentive plans897 797 
Repurchase of common stock (4,229) (2,530)Repurchase of common stock(12,229)(10,100)
Accelerated share repurchase forward agreementsAccelerated share repurchase forward agreements(2,000)0 
Payment of dividends to stockholders (1,408) (1,414)Payment of dividends to stockholders(4,215)(4,214)
Other financing 726
 596
Other financing605 1,089 
Net cash provided by (used for) financing activities 4,764
 (2,102)Net cash provided by (used for) financing activities(11,220)(12,421)
Net increase (decrease) in cash and cash equivalents 7,186
 135
Net increase (decrease) in cash and cash equivalents(838)916 
Cash and cash equivalents, end of period $11,380
 $3,154
Cash and cash equivalents, end of period$3,356 $3,935 
    
Supplemental disclosures of noncash investing activities and cash flow information:    Supplemental disclosures of noncash investing activities and cash flow information:
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities $2,294
 $2,259
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities$2,752 $2,376 
Cash paid during the period for:    Cash paid during the period for:
Interest, net of capitalized interest $67
 $109
Interest, net of capitalized interest$459 $312 
Income taxes, net of refunds $211
 $125
Income taxes, net of refunds$1,986 $1,334 
See accompanying notes.

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CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
 Common Stock and Capital in Excess of Par Value Accumulated Other Comprehensive Income (Loss) Retained Earnings TotalCommon Stock and Capital in Excess of Par ValueAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal
(In Millions, Except Per Share Amounts; Unaudited) Shares Amount (In Millions, Except Per Share Amounts; Unaudited)SharesAmount
Three Months Ended          Three Months Ended
          
Balance as of December 29, 2019 4,290
 $25,261
 $(1,280) $53,523
 $77,504
Balance as of June 27, 2020Balance as of June 27, 20204,253 $25,516 $(1,152)$57,646 $82,010 
Net incomeNet income— — — 4,276 4,276 
Other comprehensive income (loss)Other comprehensive income (loss)— — 212 — 212 
Employee equity incentive plans and otherEmployee equity incentive plans and other12 385 — — 385 
Share-based compensationShare-based compensation— 452 — — 452 
Temporary equity reductionTemporary equity reduction— 0 — — 0 
Convertible debtConvertible debt— 0 — —  0 
Repurchase of common stockRepurchase of common stock(166)(993)— (7,007)(8,000)
Accelerated share repurchase forward agreementsAccelerated share repurchase forward agreements— (2,000)— — (2,000)
Restricted stock unit withholdingsRestricted stock unit withholdings(1)(25)— 0 (25)
Cash dividends declared ($0.66 per share)Cash dividends declared ($0.66 per share)— — — (2,756) (2,756)
Balance as of September 26, 2020Balance as of September 26, 20204,098 $23,335 $(940)$52,159 $74,554 
Balance as of June 29, 2019Balance as of June 29, 20194,430 $25,140 $(622)$50,429 $74,947 
Net incomeNet income— — — 5,990 5,990 
Other comprehensive income (loss)Other comprehensive income (loss)— — (100)— (100)
Employee equity incentive plans and otherEmployee equity incentive plans and other13 466 — — 466 
Share-based compensationShare-based compensation— 427 — — 427 
Temporary equity reductionTemporary equity reduction— 80 — — 80 
Convertible debtConvertible debt— (278)— — (278)
Repurchase of common stockRepurchase of common stock(92)(523)— (3,966)(4,489)
Restricted stock unit withholdingsRestricted stock unit withholdings(1)(22)— (6)(28)
Cash dividends declared ($0.63 per share)Cash dividends declared ($0.63 per share)— — — (2,773)(2,773)
Balance as of September 28, 2019Balance as of September 28, 20194,350 $25,290 $(722)$49,674 $74,242 
Nine Months EndedNine Months Ended
Balance as of December 28, 2019Balance as of December 28, 20194,290 $25,261 $(1,280)$53,523 $77,504 
Net incomeNet income— — — 15,042 15,042 
Other comprehensive income (loss)Other comprehensive income (loss)— — 340 — 340 
Employee equity incentive plans and otherEmployee equity incentive plans and other54 1,014 — — 1,014 
Share-based compensationShare-based compensation— 1,393 — — 1,393 
Temporary equity reductionTemporary equity reduction— 155 — — 155 
Convertible debtConvertible debt— (750)— — (750)
Repurchase of common stockRepurchase of common stock(237)(1,413)— (10,696)(12,109)
Accelerated share repurchase forward agreementsAccelerated share repurchase forward agreements— (2,000)— — (2,000)
Restricted stock unit withholdingsRestricted stock unit withholdings(9)(325)— (135)(460)
Cash dividends declared ($1.32 per share)Cash dividends declared ($1.32 per share)— — — (5,575)(5,575)
Balance as of September 26, 2020Balance as of September 26, 20204,098 $23,335 $(940)$52,159 $74,554 
Balance as of December 29, 2018Balance as of December 29, 20184,516 $25,365 $(974)$50,172 $74,563 
Net income —
 —
 —
 5,661
 5,661
Net income— — — 14,143 14,143 
Other comprehensive income (loss) —
 —
 (261) —
 (261)Other comprehensive income (loss)— — 252 — 252 
Employee equity incentive plans and other 17
 620
 —
 —
 620
Employee equity incentive plans and other52 869 — — 869 
Share-based compensation —
 449
 —
 —
 449
Share-based compensation— 1,287 — — 1,287 
Temporary equity reduction —
 155
 —
 —
 155
Temporary equity reduction— 253 — — 253 
Convertible debt —
 (750) —
 —
 (750)Convertible debt— (990)— — (990)
Repurchase of common stock (71) (420) —
 (3,689) (4,109)Repurchase of common stock(209)(1,182)— (8,902)(10,084)
Restricted stock unit withholdings (2) (64) —
 (32) (96)Restricted stock unit withholdings(9)(312)— (137)(449)
Cash dividends declared ($0.66 per share) —
 —
 —
 (2,819) (2,819)
Balance as of March 28, 2020 4,234
 $25,251
 $(1,541) $52,644
 $76,354
          
Balance as of December 28, 2018 4,516
 $25,365
 $(974) $50,172
 $74,563
Net income —
 —
 —
 3,974
 3,974
Other comprehensive income (loss) —
 —
 161
 —
 161
Employee equity incentive plans and other 11
 372
 —
 —
 372
Share-based compensation —
 389
 —
 —
 389
Temporary equity reduction —
 145
 —
 —
 145
Convertible debt —
 (592) —
 —
 (592)
Repurchase of common stock (49) (278) —
 (2,172) (2,450)
Restricted stock unit withholdings (1) (55) —
 (17) (72)
Cash dividends declared ($0.63 per share) —
 —
 —
 (2,829) (2,829)
Balance as of March 30, 2019 4,477
 $25,346
 $(813) $49,128
 $73,661
Cash dividends declared ($1.26 per share)Cash dividends declared ($1.26 per share)— — — (5,602)(5,602)
Balance as of September 28, 2019Balance as of September 28, 20194,350 $25,290 $(722)$49,674 $74,242 
See accompanying notes.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 :BASIS OF PRESENTATION
We prepared our interim Consolidated Condensed Financial Statements that accompany these notes in conformity with U.S. GAAP, consistent in all material respects with those applied in our 2019 Form 10-K for the fiscal year ended December 28, 2019.10-K.
We have made estimates and judgments affecting the amounts reported in our Consolidated Condensed Financial Statements and the accompanying notes. The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates. The actual results that we experience may differ materially from our estimates. The interim financial information is unaudited, and reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This report should be read in conjunction with the Consolidated Financial Statements in our 2019 Form 10-K where we include additional information about our policies and the methods and assumptions used in our estimates.
NOTE 2 :OPERATING SEGMENTS

We manage our business through the following operating segments:
•DCG
IOTG
Mobileye
NSG
PSG
CCG
•IOTG
•Mobileye
•NSG
•PSG
•CCG
We derive a substantial majority of our revenue from platform products, which are our principal products and considered as one class of product. We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package. Platform products are used in various form factors across our DCG, IOTG, and CCG operating segments. Our non-platform, or adjacent products, can be combined with platform products to form comprehensive platform solutions to meet customer needs.
DCG and CCG are our reportable operating segments. IOTG, Mobileye, NSG, and PSG do not meet the quantitative thresholds to qualify as reportable operating segments; however, we have elected to disclose the results of these non-reportable operating segments. Our Internet of Things portfolio, presented as Internet of Things, is comprised of IOTG and Mobileye operating segments.
We have an “all other” category that includes revenue, expenses, and charges such as:
•results of operations from non-reportable segments not otherwise presented;
•
•historical results of operations from divested businesses;
•results of operations of start-up businesses that support our initiatives, including our foundry business;
•amounts included within restructuring and other charges;
•a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and
•
•
results of operations of start-up businesses that support our initiatives, including our foundry business;
•
amounts included within restructuring and other charges;
•
a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and
acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
The CODM, who is our CEO, does not evaluate operating segments using discrete asset information. Operating segments do not record inter-segment revenue. We do not allocate gains and losses from equity investments, interest and other income, or taxes to operating segments. Although the CODM uses operating income to evaluate the segments, operating costs included in one segment may benefit other segments. Except for these differences, theThe accounting policies for segment reporting are the same as for Intel as a whole.










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Net revenue and operating income (loss) for each period were as follows:
Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Net revenue:
Data Center Group
Platform$5,151 $5,819 $17,759 $14,854 
Adjacent754 564 2,256 1,414 
5,905 6,383 20,015 16,268 
Internet of Things
IOTG677 1,005 2,230 2,901 
Mobileye234 229 634 639 
911 1,234 2,864 3,540 
Non-Volatile Memory Solutions Group1,153 1,290 4,150 3,145 
Programmable Solutions Group411 507 1,431 1,482 
Client Computing Group
Platform8,762 8,379 25,703 24,128 
Adjacent1,085 1,330 3,415 3,008 
9,847 9,709 29,118 27,136 
All other106 67 311 185 
Total net revenue$18,333 $19,190 $57,889 $51,756 
Operating income (loss):
Data Center Group$1,903 $3,115 8,494 $6,756 
Internet of Things
IOTG61 309 374 854 
Mobileye47 67 131 188 
108 376 505 1,042 
Non-Volatile Memory Solutions Group29 (499)285 (1,080)
Programmable Solutions Group40 92 217 233 
Client Computing Group3,554 4,305 10,621 11,114 
All other(575)(942)(2,328)(2,827)
Total operating income$5,059 $6,447 $17,794 $15,238 
  Three Months Ended
(In Millions) Mar 28,
2020		 Mar 30,
2019
Net revenue:    
Data Center Group    
Platform $6,427
 $4,482
Adjacent 566
 420
  6,993
 4,902
Internet of Things    
IOTG 883
 910
Mobileye 254
 209
  1,137
 1,119
     
Non-Volatile Memory Solutions Group 1,338
 915
Programmable Solutions Group 519
 486
Client Computing Group    
Platform 8,712
 7,824
Adjacent 1,063
 762
  9,775
 8,586
     
All other 66
 53
Total net revenue $19,828
 $16,061
     
Operating income (loss):    
Data Center Group $3,492
 $1,841
     
Internet of Things    
IOTG 243
 251
Mobileye 88
 68
  331
 319
     
Non-Volatile Memory Solutions Group (66) (297)
Programmable Solutions Group 97
 89
Client Computing Group 4,225
 3,072
All other (1,041) (850)
Total operating income $7,038
 $4,174







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Disaggregated net revenue for each period was as follows:
Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Platform revenue
DCG platform$5,151 $5,819 $17,759 $14,854 
IOTG platform595 923 2,008 2,639 
CCG desktop platform2,483 2,968 7,691 8,621 
CCG notebook platform6,275 5,393 17,976 15,456 
CCG other platform1
4 18 36 51 
14,508 15,121 45,470 41,621 
Adjacent revenue2
3,825 4,069 12,419 10,135 
Total revenue$18,333 $19,190 $57,889 $51,756 
  Three Months Ended
(In Millions) Mar 28,
2020		 Mar 30,
2019
Platform revenue    
DCG platform $6,427
 $4,482
IOTG platform 795
 825
CCG Desktop platform 2,840
 2,886
CCG Notebook platform 5,857
 4,926
CCG other platform1
 15
 12
  15,934
 13,131
     
Adjacent revenue2
 3,894
 2,930
Total revenue $19,828
 $16,061
1    
Includes our tablet and service provider revenue.
2    1
Includes our tablet and service provider revenue.
2
Includes all of our non-platform products for DCG, IOTG, and CCG such as modem, Ethernet, and silicon photonics, as well as Mobileye, NSG, and PSG products.
Planned Divestiture of our Home Gateway Platform Divisionnon-platform products for DCG, IOTG, and CCG such as modem, Ethernet, and silicon photonics, as well as Mobileye, NSG, and PSG products.
WePlanned divestiture of NAND Memory Business
On October 19, 2020, we signed a definitivean agreement on April 5, 2020with SK hynix Inc. (SK hynix), to selldivest of our NAND memory business, including our NAND memory fabrication facility in Dalian, China and certain related equipment and tangible assets (the “Fab Assets”), our NAND solid-state drive business (the “NAND SSD Business”), and our NAND memory technology and manufacturing business (the “NAND Business”). Our Intel® Optane™ memory business is expressly excluded from the majority of Home Gateway Platform, a division of CCG. transaction.
The transaction contemplateswill occur over two closings for total consideration of $9.0 billion in cash, of which, $7.0 billion will be received upon initial closing and the transferremaining $2.0 billion will be received no earlier than March 2025.
In connection with the first closing, we and certain affiliates of SK hynix will also enter into a NAND wafer manufacturing and sale agreement pursuant to which, we will manufacture and sell to SK hynix, NAND memory wafers to be manufactured using the Fab Assets in Dalian, China, until the second closing.
The consummation of the first closing and the second closing is subject to customary conditions, including the receipt of certain employees, equipment,governmental approvals. The first closing will not occur prior to November 1, 2021, and an on-going supply agreement for future units. We reclassified the assets and liabilities as held-for-sale within other current assets/liabilities. We expectsecond is expected to closeoccur no earlier than March 2025.
Beginning with the transaction in the thirdfirst quarter of 2020.2021, we expect our DCG operating segment to include the results of our Intel® Optane™ memory business, and our NSG segment will be composed of our NAND businesses.
NOTE 3 :EARNINGS PER SHARE

We computed basic earnings per share of common stock based on the weighted average number of shares of common stock outstanding during the period. We computed diluted earnings per share of common stock based on the weighted average number of shares of common stock outstanding plus potentially dilutive shares of common stock outstanding during the period.
  Three Months Ended
(In Millions, Except Per Share Amounts) Mar 28,
2020		 Mar 30,
2019
Net income available to common stockholders $5,661
 $3,974
Weighted average shares of common stock outstanding—basic 4,266
 4,492
Dilutive effect of employee equity incentive plans 46
 53
Dilutive effect of convertible debt —
 19
Weighted average shares of common stock outstanding—diluted 4,312
 4,564
Earnings per share—basic
 $1.33
 $0.88
Earnings per share—diluted
 $1.31
 $0.87
 Three Months EndedNine Months Ended
(In Millions, Except Per Share Amounts)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Net income available to common stockholders$4,276 $5,990 $15,042 $14,143 
Weighted average shares of common stock outstanding—basic4,188 4,391 4,233 4,450 
Dilutive effect of employee equity incentive plans23 30 36 41 
Dilutive effect of convertible debt0 12 0 16 
Weighted average shares of common stock outstanding—diluted4,211 4,433 4,269 4,507 
Earnings per share—basic
$1.02 $1.36 $3.55 $3.18 
Earnings per share—diluted
$1.02 $1.35 $3.52 $3.14 
Potentially dilutive shares of common stock from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding RSUs, and the assumed issuance of common stock under the stock purchase plan. We used the treasury stock method to consider the dilutive effect of the forward contracts related to the ASR transactions entered into in August 2020 and determined that the forward contracts were anti-dilutive in calculating diluted EPS.







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In January 2020, we fully redeemed the remaining principal of our 2009 Debentures. We included our 2009 Debentures in the calculation of diluted earnings per share of common stock in 2019 by applying the treasury stock method because the average market price was above the conversion price.
Securities which would have been anti-dilutive are insignificant and are excluded from the computation of diluted earnings per share in all periods presented.

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NOTE 4 :CONTRACT LIABILITIES

(In Millions) Mar 28,
2020		 Dec 28,
2019
Prepaid supply agreements
 $1,718
 $1,805
Other 271
 236
Total contract liabilities $1,989
 $2,041

(In Millions)Sep 26, 2020Dec 28, 2019
Prepaid supply agreements$1,714 $1,805 
Other264 236 
Total contract liabilities$1,978 $2,041 
Contract liabilities are primarily related to prepayments received from customers on long-term prepaid supply agreements toward future NSG product delivery. The short-term portion of contract liabilities ($597 million as of September 26, 2020 and $673 million as of December 28, 2019) is reported on the Consolidated Condensed Balance Sheets within other accrued liabilities.
The following table shows the changes in contract liability balances relating to long-term prepaid supply agreements during the first threenine months of 2020:
(In Millions)  
Prepaid supply agreements balance as of December 28, 2019 $1,805
Prepayments utilized (87)
Prepaid supply agreements balance as of March 28, 2020 $1,718
(In Millions)
Prepaid supply agreements balance as of December 28, 2019$1,805
Additions
70 
Prepayments utilized(161)
Prepaid supply agreements balance as of September 26, 2020$1,714
If new long-termDuring the second quarter of 2020, we issued a contract termination notification for breach to our largest prepaid supply agreements are entered into and performance obligations are negotiated, this component of thecustomer with a $1.6 billion contract liability balance will increase, and as customers purchase product and utilize their prepaid balances, the balance will decrease.
balance. The timing and amount of future anticipated revenuesrevenue, or reversal of any contract liability balance, resulting from these agreementscontract termination may vary from our expectations due to changes in supply, demand, and market pricing.ongoing customer negotiations.
NOTE 5 :OTHER FINANCIAL STATEMENT DETAILS

INVENTORIES
(In Millions) Mar 28,
2020		 Dec 28,
2019
Raw materials $877
 $840
Work in process 6,654
 6,225
Finished goods 1,715
 1,679
Total inventories $9,246
 $8,744

(In Millions)Sep 26, 2020Dec 28, 2019
Raw materials$975 $840 
Work in process6,313 6,225 
Finished goods1,985 1,679 
Total inventories$9,273 $8,744 
INTEREST AND OTHER, NET
The components of interest and other, net for each period were as follows:
  Three Months Ended
(In Millions) Mar 28,
2020		 Mar 30,
2019
Interest income $93
 $135
Interest expense (135) (138)
Other, net (271) (58)
Total interest and other, net $(313) $(61)

 Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Interest income$53 $114 $229 $374 
Interest expense(160)(107)(481)(381)
Other, net33 (53)(164)(163)
Total interest and other, net$(74)$(46)$(416)$(170)
Interest expense in the preceding table is net of $83$81 million of interest capitalized in the third quarter of 2020 and $251 million in the first threenine months of 2020 ($125122 million in the third quarter of 2019 and $366 million in the first threenine months of 2019).







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ACCELERATED SHARE REPURCHASE
In August 2020, we entered into ASR agreements with financial institutions under which we paid an aggregate of $10.0 billion and received an aggregate initial share delivery of 166 million shares of our common stock, which were immediately retired. In accordance with the terms of the ASR agreements, the final number of shares to be repurchased and the average price paid per share will be determined upon settlement of the agreements by the end of 2020. The final number of shares to be repurchased will be based on the volume-weighted average price of our common stock over the duration of the ASR agreements, less applicable discounts. Upon settlement, the financial institutions may be required to deliver additional shares of common stock to us, or under certain conditions, we may be required to make a cash payment or deliver shares of common stock, at our election, to one or more of the financial institutions. The unsettled portion of each ASR agreement qualifies as a forward contract indexed to our own stock which has been classified within stockholders’ equity as additional paid in capital. The ASR agreements were entered into pursuant to our existing share repurchase program.
NOTE 6 :RESTRUCTURING AND OTHER CHARGES
A restructuring program was approved in the first quarter of 2020, which is ongoing, to further align our workforce with our continuing investments in the business and to execute the planned divestiture of Home Gateway Platform, a division of CCG. We expect theseThese actions are expected to be substantially completecompleted in 2021.
A restructuring program was approved in the second quarter of 2019 to align our workforce with our exit of the 5G smartphone modem business. This action was substantially completed in the third quarter of 2020.
Restructuring and other charges by type for theeach period were as follows:
Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Employee severance and benefit arrangements$(17)$40 $90 $208 
Asset impairment and other charges(8)64 56 80 
Total restructuring and other charges$(25)$104 $146 $288 
  Three Months Ended
(In Millions) Mar 28,
2020
Employee severance and benefit arrangements $105
Asset impairment and other charges 57
Total restructuring and other charges $162







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NOTE 7 :INVESTMENTS

DEBT INVESTMENTS
Trading Assets
Net losses related togains recorded for trading assets still held at the reporting date were $231$205 million in the third quarter of 2020 and $347 million in the first threenine months of 2020 ($1675 million of net losses in the third quarter of 2019 and $21 million of net gains in the first threenine months of 2019). Net gainslosses on the related derivatives were $100$163 million in the third quarter of 2020 and $334 million in the first threenine months of 2020 ($281 million of net gains in the third quarter of 2019 and $7 million of net losses in the first threenine months of 2019).
Available-for-Sale Debt Investments
  March 28, 2020 December 28, 2019
(In Millions) Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Corporate debt $3,656
 $46
 $(9) $3,693
 $2,914
 $44
 $—
 $2,958
Financial institution
instruments		 9,482
 12
 (2) 9,492
 3,007
 15
 (1) 3,021
Government debt 748
 11
 (1) 758
 560
 4
 —
 564
Total available-for-sale debt investments $13,886
 $69
 $(12) $13,943
 $6,481
 $63
 $(1) $6,543

Sep 26, 2020Dec 28, 2019
(In Millions)Adjusted CostGross Unrealized GainsGross Unrealized LossesFair ValueAdjusted CostGross Unrealized GainsGross Unrealized LossesFair Value
Corporate debt$2,077 $92 $0 $2,169 $2,914 $44 $0 $2,958 
Financial institution
instruments		3,431 20 0 3,451 3,007 15 (1)3,021 
Government debt1,604 12 0 1,616 560 4 0 564 
Total available-for-sale
     debt investments
$7,112 $124 $0 $7,236 $6,481 $63 $(1)$6,543 
Government debt includes instruments such as non-U.S. government bonds and U.S. agency securities. Financial institution instruments include instruments issued or managed by financial institutions in various forms such as commercial paper, fixed and floating rate bonds, money market fund deposits, and time deposits. Substantially all time deposits were issued by institutions outside the U.S. as of March 28,September 26, 2020 and December 28, 2019.
The fair value of available-for-sale debt investments, by contractual maturity, as of March 28,September 26, 2020, was as follows:
(In Millions) Fair Value
Due in 1 year or less $3,443
Due in 1–2 years 1,589
Due in 2–5 years 1,354
Due after 5 years —
Instruments not due at a single maturity date 7,557
Total $13,943
(In Millions)Fair Value
Due in 1 year or less$3,504 
Due in 1–2 years1,450 
Due in 2–5 years1,270 
Due after 5 years0 
Instruments not due at a single maturity date1,012 
Total$7,236
EQUITY INVESTMENTS
(In Millions)Sep 26, 2020Dec 28, 2019
Marketable equity securities$481 $450 
Non-marketable equity securities3,189 3,480 
Equity method investments9 37 
Total$3,679 

$3,967 







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EQUITY INVESTMENTS
(In Millions) Mar 28,
2020		 Dec 28,
2019
Marketable equity securities $330
 $450
Non-marketable equity securities 3,522
 3,480
Equity method investments 28
 37
Total $3,880

$3,967

We recognized $143 million of impairment charges on our non-marketable portfolio in the first three months of 2020 based on our assessment of the impact of recent public and private market volatility and tightening of liquidity.
The components of gains (losses) on equity investments, net for each period were as follows:
  Three Months Ended
(In Millions) Mar 28,
2020		 Mar 30,
2019
Ongoing mark-to-market adjustments on marketable equity securities $(103) $253
Observable price adjustments on non-marketable equity securities 79
 8
Impairment charges (143) (23)
Sale of equity investments and other¹ 56
 196
Total gains (losses) on equity investments, net $(111) $434

 Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Ongoing mark-to-market adjustments on marketable equity
     securities
$(146)$114 $(84)$188 
Observable price adjustments on non-marketable equity securities5 84 142 100 
Impairment charges(40)(17)(233)(79)
Sale of equity investments and other¹237 137 387 713 
Total gains (losses) on equity investments, net$56 $318 $212 $922 
1 Sale of equity investments and other includes realized gains (losses) on sales of non-marketable equity investments, our share of equity method investee gains (losses) and distributions, and initial fair value adjustments recorded upon a security becoming marketable.
We recognized higher than historically experienced impairment charges on our non-marketable portfolio in the first nine months of 2020 based on our assessment of the impact of recent public and private market volatility and tightening of liquidity.
Gains and losses for our marketable and non-marketable equity securities during the period were as follows:
  Three Months Ended
(In Millions) Mar 28,
2020		 Mar 30,
2019
Net gains (losses) recognized during the period on equity securities $(140) $263
Less: Net (gains) losses recognized during the period on equity securities sold during the period (7) (190)
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $(147) $73

Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Net gains (losses) recognized during the period on equity securities$19 $281 $102 $366 
Less: Net (gains) losses recognized during the period on equity
     securities sold during the period
(12)(54)(87)(321)
Unrealized gains (losses) recognized during the reporting
     period on equity securities still held at the reporting date
$7 $227 $15 $45 
IMFT
IMFT was formed in 2006 by Micron Technology, Inc. (Micron) and Intel to jointly develop NAND flash memory and 3D XPoint™ technology products. As of March 30,September 28, 2019,, we had a carrying value of $1.5$1.1 billion in IMFT and owned a 49% interest in the unconsolidated variable interest entity. We sold our non-controlling interest in IMFT to Micron in October 2019. We will continue to purchase product manufactured by Micron at the IMFT facility under our supply agreements,agreement, which includeincludes the next generation of 3DXpoint3D XPoint™ technology.
NOTE 8 :BORROWINGSACQUISITIONS AND DIVESTITURES
ACQUISITIONS
Acquisition of Moovit
On May 4, 2020, we acquired Moovit, a MaaS solutions company, for total consideration of $915 million. The fair values of the assets acquired relate to goodwill of $638 million and intangible assets of $331 million. The goodwill arising from the acquisition is attributed to the expected synergies and other benefits that will be generated from the combination of Intel and Moovit. We expect substantially all of the goodwill will not be deductible for local tax purposes. The acquisition-related intangible assets are primarily related to Moovit's monthly active user base and application platform. The goodwill and operating results of Moovit are included in our Mobileye operating segment.
DIVESTITURES
Home Gateway Platform Division
On July 31, 2020, we completed the divestiture of the majority of Home Gateway Platform, a division of CCG, for proceeds of $150 million. The divestiture included the transfer of certain employees, equipment, and an on-going supply agreement for future units.







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NOTE 9 :BORROWINGS
As of March 28,September 26, 2020, our short-term debt was $3.5 billion,$504 million, primarily comprised of the current portion of our long-term debt ($3.7 billion as of December 28, 2019).
We have an ongoing authorization from our Board of Directors to borrow up to $10.0 billion under our commercial paper program.

LONG-TERM DEBT
Sep 26, 2020Dec 28, 2019
(In Millions)Effective Interest RateAmountAmount
Floating-rate senior notes:
Three-month LIBOR plus 0.08%, due May 20200 %$0 $700 
Three-month LIBOR plus 0.35%, due May 20221.47 %800 800 
Fixed-rate senior notes:
1.85%, due May 20200 %0 1,000 
2.45%, due July 20200 %0 1,750 
1.70%, due May 20211.79 %500 500 
3.30%, due October 20212.98 %2,000 2,000 
2.35%, due May 20221.96 %750 750 
3.10%, due July 20222.70 %1,000 1,000 
4.00%, due December 2022¹3.04 %388 382 
2.70%, due December 20222.28 %1,500 1,500 
4.10%, due November 20233.22 %400 400 
2.88%, due May 20242.31 %1,250 1,250 
2.70%, due June 20242.13 %600 600 
3.40%, due March 20253.46 %1,500 0 
3.70%, due July 20253.15 %2,250 2,250 
2.60%, due May 20261.57 %1,000 1,000 
3.75%, due March 20273.80 %1,000 0 
3.15%, due May 20272.16 %1,000 1,000 
2.45%, due November 20292.39 %2,000 1,250 
3.90%, due March 20303.94 %1,500 0 
4.00%, due December 20322.00 %750 750 
4.60%, due March 20404.62 %750 0 
4.80%, due October 20413.08 %802 802 
4.25%, due December 20422.18 %567 567 
4.90%, due July 20453.11 %772 772 
4.10%, due May 20462.34 %1,250 1,250 
4.10%, due May 20472.29 %1,000 1,000 
4.10%, due August 20471.84 %640 640 
3.73%, due December 20472.57 %1,967 1,967 
3.25%, due November 20493.20 %2,000 1,500 
4.75%, due March 20504.76 %2,250 0 
3.10%, due February 20603.12 %1,000 0 
4.95%, due March 20605.00 %1,000 0 
Oregon and Arizona bonds:
2.40%-2.70%, due December 2035 - 20402.49 %423 423 
5.00%, due March 20492.12 %138 138 
5.00%, due June 20492.15 %438 438 
Junior Subordinated Convertible Debentures:
3.25%, due August 20390 0 372 
Total Senior Notes and Other Borrowings35,185 28,751 
Unamortized Premium/Discount and Issuance Costs(374)(529)
Hedge Accounting Fair Value Adjustments1,752 781 
Long-term debt36,563 29,003 
Current portion of long-term debt(504)(3,695)
Total long-term debt$36,059 $25,308 
1    To manage foreign currency risk associated with the Australian-dollar-denominated notes issued in 2015, we entered into currency interest rate swaps with an aggregate notional amount of $396 million, which effectively converted these notes to U.S.-dollar-denominated notes. For further discussion on our currency interest rate swaps, see "Note 12: Derivative Financial Instruments."







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LONG-TERM DEBT
  Mar 28,
2020		 Dec 28,
2019
(In Millions) Effective Interest Rate Amount Amount
Floating-rate senior notes:      
Three-month LIBOR plus 0.08%, due May 2020 1.93% $700
 $700
Three-month LIBOR plus 0.35%, due May 2022 2.19% 800
 800
Fixed-rate senior notes:      
1.85%, due May 2020 1.88% 1,000
 1,000
2.45%, due July 2020 2.47% 1,750
 1,750
1.70%, due May 2021 1.77% 500
 500
3.30%, due October 2021 2.96% 2,000
 2,000
2.35%, due May 2022 1.95% 750
 750
3.10%, due July 2022 2.68% 1,000
 1,000
4.00%, due December 2022¹ 3.61% 325
 382
2.70%, due December 2022 2.27% 1,500
 1,500
4.10%, due November 2023 3.20% 400
 400
2.88%, due May 2024 2.30% 1,250
 1,250
2.70%, due June 2024 2.12% 600
 600
3.40%, due March 2025 3.46% 1,500
 —
3.70%, due July 2025 3.81% 2,250
 2,250
2.60%, due May 2026 2.28% 1,000
 1,000
3.75%, due March 2027 3.80% 1,000
 —
3.15%, due May 2027 2.84% 1,000
 1,000
2.45%, due November 2029 2.45% 2,000
 1,250
3.90%, due March 2030 3.94% 1,500
 —
4.00%, due December 2032 2.82% 750
 750
4.60%, due March 2040 4.63% 750
 —
4.80%, due October 2041 3.75% 802
 802
4.25%, due December 2042 3.00% 567
 567
4.90%, due July 2045 3.78% 772
 772
4.10%, due May 2046 3.04% 1,250
 1,250
4.10%, due May 2047 3.00% 1,000
 1,000
4.10%, due August 2047 2.58% 640
 640
3.73%, due December 2047 3.30% 1,967
 1,967
3.25%, due November 2049 3.22% 2,000
 1,500
4.75%, due March 2050 4.77% 2,250
 —
3.10%, due February 2060 3.12% 1,000
 —
4.95%, due March 2060 5.02% 1,000
 —
Oregon and Arizona bonds:   

  
2.40%-2.70%, due December 2035 - 2040 2.49% 423
 423
5.00%, due March 2049 2.11% 138
 138
5.00%, due June 2049 2.13% 438
 438
Junior Subordinated Convertible Debentures:     
3.25%, due August 2039 —
 —
 372
Total Senior Notes and Other Borrowings   38,572
 28,751
Unamortized Premium/Discount and Issuance Costs   (379) (529)
Hedge Accounting Fair Value Adjustments   1,726
 781
Long-term debt   39,919
 29,003
Current portion of long-term debt   (3,464) (3,695)
Total long-term debt   $36,455
 $25,308

1
To manage foreign currency risk associated with the Australian-dollar-denominated notes issued in 2015, we entered into currency interest rate swaps with an aggregate notional amount of $396 million, which effectively converted these notes to U.S.-dollar-denominated notes. For further discussion on our currency interest rate swaps, see "Note 11: Derivative Financial Instruments."

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In November 2019,the first nine months of 2020, we issued a noticesettled $3.8 billion in short-term debt. In the first quarter of redemption for2020, the remaining $372 million of 2009 Debentures with a redemption date of January 9, 2020. During the fourth quarter of 2019, the closing stock price conversion right condition of the 2009 Debentures continued to be met and therefore the debentures were convertible at the option of the holders until January 6, 2020. Allour 2009 Debentures were either converted prior to January 6, 2020 or redeemed, onin the redemption date.second quarter of 2020, we settled $1.7 billion of our notes due May 2020, and in the third quarter of 2020, we settled $1.8 billion of our notes due July 2020.
In the first threenine months of 2020, we issued a total of $10.3 billion aggregate principal amount of senior notes. We intend to use the net proceeds from the offering for general corporate purposes, which may include refinancing outstanding debt, funding for working capital and capital expenditures, and repurchasing shares of our common stock. 
Our senior floating rate notes pay interest quarterly and our senior fixed rate notes pay interest semiannually. We may redeem the fixed rate notes prior to their maturity at our option at specified redemption prices and subject to certain restrictions. The obligations under the notes rank equally in right of payment with all of our other existing and future senior unsecured indebtedness and effectively rank junior to all liabilities of our subsidiaries.







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NOTE 910 :FAIR VALUE
ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS
Sep 26, 2020Dec 28, 2019
Fair Value Measured and
Recorded at Reporting Date Using
 
Fair Value Measured and
Recorded at Reporting Date Using
 
(In Millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Cash equivalents:
Corporate debt$0 $0 $0 $0 $0 $713 $0 $713 
Financial institution instruments¹1,012 467 0 1,479 1,064 408 0 1,472 
Government debt²0 50 0 50 0 0 0 0 
Reverse repurchase agreements0 1,250 0 1,250 0 1,500 0 1,500 
Short-term investments:
Corporate debt0 442 0 442 0 347 0 347 
Financial institution instruments¹0 1,547 0 1,547 0 724 0 724 
Government debt²0 998 0 998 0 11 0 11 
Trading assets:
Corporate debt0 3,845 0 3,845 0 2,848 0 2,848 
Financial institution instruments¹220 2,670 0 2,890 87 1,578 0 1,665 
Government debt²0 5,175 0 5,175 0 3,334 0 3,334 
Other current assets:
Derivative assets15 310 0 325 50 230 0 280 
Loans receivable³0 361 0 361 0 0 0 0 
Marketable equity securities357 124 0 481 450 0 0 450 
Other long-term investments:
Corporate debt0 1,727 0 1,727 0 1,898 0 1,898 
Financial institution instruments¹0 425 0 425 0 825 0 825 
Government debt²0 568 0 568 0 553 0 553 
Other long-term assets:
Derivative assets0 1,648 31 1,679 0 690 16 706 
Loans receivable³0 215 0 215 0 554 0 554 
Total assets measured and recorded at fair value$1,604 $21,822 $31 $23,457 $1,651 $16,213 $16 $17,880 
Liabilities
Other accrued liabilities:
Derivative liabilities$52 $556 $0 $608 $3 $287 $0 $290 
Other long-term liabilities:
Derivative liabilities0 26 0 26 0 13 0 13 
Total liabilities measured and recorded at fair value$52 $582 $0 $634 $3 $300 $0 $303 
  March 28, 2020 December 28, 2019
  
Fair Value Measured and
Recorded at Reporting Date Using
  
Fair Value Measured and
Recorded at Reporting Date Using
 
(In Millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets                
Cash equivalents:                
Corporate debt $—
 $1,348
 $—
 $1,348
 $—
 $713
 $—
 $713
Financial institution instruments¹ 7,557
 600
 —
 8,157
 1,064
 408
 —
 1,472
Government debt² —
 199
 —
 199
 —
 —
 —
 —
Reverse repurchase agreements —
 1,150
 —
 1,150
 —
 1,500
 —
 1,500
Short-term investments:                
Corporate debt —
 493
 —
 493
 —
 347
 —
 347
Financial institution instruments¹ —
 803
 —
 803
 —
 724
 —
 724
Government debt² —
 —
 —
 —
 —
 11
 —
 11
Trading assets:                
Corporate debt —
 2,850
 —
 2,850
 —
 2,848
 —
 2,848
Financial institution instruments¹ 78
 2,020
 —
 2,098
 87
 1,578
 —
 1,665
Government debt² —
 3,179
 —
 3,179
 —
 3,334
 —
 3,334
Other current assets:                
Derivative assets 5
 372
 —
 377
 50
 230
 —
 280
Loans receivable³ —
 339
 —
 339
 —
 —
 —
 —
Marketable equity securities 330
 —
 —
 330
 450
 —
 —
 450
Other long-term investments:                
Corporate debt —
 1,852
 —
 1,852
 —
 1,898
 —
 1,898
Financial institution instruments¹ —
 532
 —
 532
 —
 825
 —
 825
Government debt² —
 559
 —
 559
 —
 553
 —
 553
Other long-term assets:                
Derivative assets —
 1,604
 35
 1,639
 —
 690
 16
 706
Loans receivable³ —
 203
 —
 203
 —
 554
 —
 554
Total assets measured and recorded at fair value $7,970
 $18,103
 $35
 $26,108
 $1,651
 $16,213
 $16
 $17,880
Liabilities                
Other accrued liabilities:                
Derivative liabilities $190
 $614
 $—
 $804
 $3
 $287
 $—
 $290
Other long-term liabilities:                
Derivative liabilities —
 106
 —
 106
 —
 13
 —
 13
Total liabilities measured and recorded at fair value $190
 $720
 $—
 $910
 $3
 $300
 $—
 $303
1Level 1 investments consist of money market funds. Level 2 investments consist primarily of commercial paper, certificates of deposit, time deposits, and notes and bonds issued by financial institutions.
2Level 2 investments consist primarily of U.S. agency notes and non-U.S. government debt.
3The fair value of our loans receivable for which we elected the fair value option did not significantly differ from the contractual principal balance based on the contractual currency.







1
Level 1 investments consist of money market funds. Level 2 investments consist primarily of commercial paper, certificates of deposit, time deposits, and notes and bonds issued by financial institutions.
2
Level 2 investments consist primarily of U.S. agency notes and non-U.S. government debt.
3
The fair value of our loans receivable for which we elected the fair value option did not significantly differ from the contractual principal balance based on the contractual currency.

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ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS
Our non-marketable equity securities, equity method investments, and certain non-financial assets, such as intangible assets and property, plant and equipment, are recorded at fair value only if an impairment or observable price adjustment is recognized in the current period. If an observable price adjustment or impairment is recognized on our non-marketable equity securities during the period, we classify these assets as Level 3 within the fair value hierarchy based on the nature of the fair value inputs.
FINANCIAL INSTRUMENTS NOT RECORDED AT FAIR VALUE ON A RECURRING BASIS
Financial instruments not recorded at fair value on a recurring basis include non-marketable equity securities and equity method investments that have not been remeasured or impaired in the current period, grants receivable, loans receivable, reverse repurchase agreements with original maturities greater than three months, and issued debt.
As of March 28,September 26, 2020, the aggregate carrying value of grants receivable loans receivable, and reverse repurchase agreements with original maturities greater than three months was $534$206 million ($543 million as of December 28, 2019). The estimated fair value of these financial instruments approximates their carrying value and is categorized as Level 2 within the fair value hierarchy based on the nature of the fair value inputs.
As of March 28,September 26, 2020, the fair value of our issued debt was $41.341.0 billion ($30.6 billion as of December 28, 2019). These liabilities are classified as Level 2 within the fair value hierarchy based on the nature of the fair value inputs.

NOTE 1011 :OTHER COMPREHENSIVE INCOME (LOSS)
The changes in accumulated other comprehensive income (loss) by component and related tax effects in the first threenine months of 2020 were as follows:
(In Millions) Unrealized Holding Gains (Losses) on Derivatives Actuarial Valuation and Other Pension Expenses Translation Adjustments and Other Total
Balance as of December 29, 2019 $54
 $(1,382) $48
 $(1,280)
Other comprehensive income (loss) before reclassifications (373) 3
 (6) (376)
Amounts reclassified out of accumulated other comprehensive income (loss) 68
 14
 —
 82
Tax effects 37
 (5) 1
 33
Other comprehensive income (loss) (268) 12
 (5) (261)
Balance as of March 28, 2020 $(214) $(1,370) $43
 $(1,541)

(In Millions)Unrealized Holding Gains (Losses) on DerivativesActuarial Valuation and Other Pension ExpensesTranslation Adjustments and OtherTotal
Balance as of December 28, 2019$54 $(1,382)$48 $(1,280)
Other comprehensive income (loss) before reclassifications286 (8)62 340 
Amounts reclassified out of accumulated other comprehensive
income (loss)		48 43 0 91 
Tax effects(77)(1)(13)(91)
Other comprehensive income (loss)257 34 49 340 
Balance as of September 26, 2020$311 $(1,348)$97 $(940)
We estimate that we will reclassify approximately $135$118 million (before taxes) of net derivative lossesgains included in accumulated other comprehensive income (loss) into earnings within the next 12 months.







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NOTE 1112 :DERIVATIVE FINANCIAL INSTRUMENTS
VOLUME OF DERIVATIVE ACTIVITY
Total gross notional amounts for outstanding derivatives (recorded at fair value) at the end of each period were as follows: 
(In Millions) Mar 28,
2020		 Dec 28,
2019		(In Millions)Sep 26, 2020Dec 28, 2019
Foreign currency contracts $27,039
 $23,981
Foreign currency contracts$28,743 $23,981 
Interest rate contracts 13,859
 14,302
Interest rate contracts14,410 14,302 
Other 1,726
 1,753
Other1,946 1,753 
Total $42,624
 $40,036
Total$45,099 $40,036 
FAIR VALUE OF DERIVATIVE INSTRUMENTS
 Sep 26, 2020Dec 28, 2019
(In Millions)
Assets1
Liabilities2
Assets1
Liabilities2
Derivatives designated as hedging instruments:
Foreign currency contracts3
$233 $58 $56 $159 
Interest rate contracts1,677 0 690 9 
Total derivatives designated as hedging instruments1,910 58 746 168 
Derivatives not designated as hedging instruments:
Foreign currency contracts3
76 381 179 78 
Interest rate contracts3 143 11 54 
Equity contracts15 52 50 3 
Total derivatives not designated as hedging instruments94 576 240 135 
Total derivatives$2,004 $634 $986 $303 
  March 28, 2020 December 28, 2019
(In Millions) 
Assets1
 
Liabilities2
 
Assets1
 
Liabilities2
Derivatives designated as hedging instruments:        
Foreign currency contracts3
 $10
 $465
 $56
 $159
Interest rate contracts 1,635
 —
 690
 9
Total derivatives designated as hedging instruments 1,645
 465
 746
 168
Derivatives not designated as hedging instruments:        
Foreign currency contracts3
 362
 135
 179
 78
Interest rate contracts 4
 120
 11
 54
Equity contracts 5
 190
 50
 3
Total derivatives not designated as hedging instruments 371
 445
 240
 135
Total derivatives $2,016
 $910
 $986
 $303
1Derivative assets are recorded as other assets, current and non-current.
2Derivative liabilities are recorded as other liabilities, current and non-current.
3The majority of these instruments mature within 12 months.








1
Derivative assets are recorded as other assets, current and non-current.
2
Derivative liabilities are recorded as other liabilities, current and non-current.
3
The majority of these instruments mature within 12 months.


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AMOUNTS OFFSET IN THE CONSOLIDATED CONDENSED BALANCE SHEETS
The gross amounts of our derivative instruments and reverse repurchase agreements subject to master netting arrangements with various counterparties, and cash and non-cash collateral posted under such agreements at the end of each period were as follows:
Sep 26, 2020
Gross Amounts Not Offset in the Balance Sheet
(In Millions)Gross Amounts RecognizedGross Amounts Offset in the Balance SheetNet Amounts Presented in the Balance SheetFinancial InstrumentsCash and Non-Cash Collateral Received or PledgedNet Amount
Assets:
Derivative assets subject to master
netting arrangements		$1,996 $0 $1,996 $(328)$(1,587)$81 
Reverse repurchase agreements1,250 0 1,250 0 (1,250)0 
Total assets3,246 0 3,246 (328)(2,837)81 
Liabilities:
Derivative liabilities subject to master
netting arrangements		530 0 530 (328)(202)0 
Total liabilities$530 $0 $530 $(328)$(202)$0 
  March 28, 2020
        Gross Amounts Not Offset in the Balance Sheet  
(In Millions) Gross Amounts Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Cash and Non-Cash Collateral Received or Pledged Net Amount
Assets:            
Derivative assets subject to master netting arrangements $2,005
 $—
 $2,005
 $(457) $(1,513) $35
Reverse repurchase agreements 1,500
 —
 1,500
 —
 (1,418) 82
Total assets $3,505
 $—
 $3,505
 $(457) $(2,931) $117
Liabilities:            
Derivative liabilities subject to master netting arrangements $865
 $—
 $865
 $(457) $(221) $187
Total liabilities $865
 $—
 $865
 $(457) $(221) $187
  December 28, 2019
        Gross Amounts Not Offset in the Balance Sheet  
(In Millions) Gross Amounts Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Cash and Non-Cash Collateral Received or Pledged Net Amount
Assets:            
Derivative assets subject to master netting arrangements $974
 $—
 $974
 $(144) $(808) $22
Reverse repurchase agreements 1,850
 —
 1,850
 —
 (1,850) —
Total assets $2,824
 $—
 $2,824
 $(144) $(2,658) $22
Liabilities:            
Derivative liabilities subject to master netting arrangements $262
 $—
 $262
 $(144) $(72) $46
Total liabilities $262
 $—
 $262
 $(144) $(72) $46

Dec 28, 2019
Gross Amounts Not Offset in the Balance Sheet
(In Millions)Gross Amounts RecognizedGross Amounts Offset in the Balance SheetNet Amounts Presented in the Balance SheetFinancial InstrumentsCash and Non-Cash Collateral Received or PledgedNet Amount
Assets:
Derivative assets subject to master
netting arrangements		$974 $0 $974 $(144)$(808)$22 
Reverse repurchase agreements1,850 0 1,850 0 (1,850)0 
Total assets2,824 0 2,824 (144)(2,658)22 
Liabilities:
Derivative liabilities subject to master
netting arrangements		262 0 262 (144)(72)46 
Total liabilities$262 $0 $262 $(144)$(72)$46 
We obtain and secure available collateral from counterparties against obligations, including securities lending transactions and reverse repurchase agreements, when we deem it appropriate.
DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS
The before-tax net gains or losses attributed to cash flow hedges, recognized in other comprehensive income (loss), were $373$267 million net lossesgains in the first three monthsthird quarter of 2020 ($29and $286 million net gains in the first threenine months of 2020 ($203 million net losses in the third quarter of 2019 and $52 million net losses in the first nine months of 2019). Substantially all of our cash flow hedges were foreign currency contracts for all periods presented.
During the first threenine months of 2020 and 2019, the amounts excluded from effectiveness testing were insignificant.







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DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
The effects of derivative instruments designated as fair value hedges, recognized in interest and other, net for each period were as follows:
  Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives
Three Months Ended
(In Millions)
 Mar 28,
2020		 Mar 30,
2019
Interest rate contracts $954
 $485
Hedged items (954) (485)
Total $—
 $—

Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives
Three Months EndedNine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Interest rate contracts$(36)$273 $996 $1,312 
Hedged items36 (273)(996)(1,312)
Total$0 $0 $0 $0 
The amounts recorded on the Consolidated Condensed Balance Sheets related to cumulative basis adjustments for fair value hedges for each period were as follows:
Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included Carrying Amount of the Hedged Item Asset/(Liabilities) Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)
(In Millions) Mar 28,
2020		 Dec 28,
2019		 Mar 28,
2020		 Dec 28,
2019
Long-term debt $(13,632) $(12,678) $(1,635) $(681)

Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is IncludedCarrying Amount of the Hedged Item Asset/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)
(In Millions)Sep 26, 2020Dec 28, 2019Sep 26, 2020Dec 28, 2019
Long-term debt$(13,674)$(12,678)$(1,677)$(681)
The total notional amount of pay variablepay-variable and receive fixedreceive-fixed interest rate swaps was $12.0 billion as of March 28,September 26, 2020 and as of December 28, 2019.
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The effects of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Income for each period were as follows:
    Three Months Ended
(In Millions) 
Location of Gains (Losses)
Recognized in Income on Derivatives
 Mar 28,
2020		 Mar 30,
2019
Foreign currency contracts Interest and other, net $154
 $57
Interest rate contracts Interest and other, net (77) (14)
Other Various (268) 146
Total   $(191) $189

  Three Months EndedNine Months Ended
(In Millions)
Location of Gains (Losses)
Recognized in Income on Derivatives
Sep 26, 2020Sep 28, 2019Sep 26, 2020Sep 28, 2019
Foreign currency contractsInterest and other, net$(166)$150 $(228)$187 
Interest rate contractsInterest and other, net(3)(12)(94)(51)
OtherVarious138 17 95 198 
Total$(31)$155 $(227)$334 
NOTE 1213 :CONTINGENCIES
LEGAL PROCEEDINGS
We are a party to various legal proceedings, including those noted in this section. Although management at present believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations, cash flows, or overall trends, legal proceedings and related government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could include substantial monetary damages. In addition, in matters for which injunctive relief or other conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices, or requiring other remedies. An unfavorable outcome may result in a material adverse impact on our business, results of operations, financial position, and overall trends. We might also conclude that settling one or more such matters is in the best interests of our stockholders, employees, and customers, and any such settlement could include substantial payments. Except as specifically described below, we have not concluded that settlement of any of the legal proceedings noted in this section is appropriate at this time.







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European Commission Competition Matter
In 2001, the EC commenced an investigation regarding claims by Advanced Micro Devices, Inc. (AMD) that we used unfair business practices to persuade customers to buy our microprocessors. We received numerous requests for information and documents from the EC and we responded to each of those requests. The EC issued a Statement of Objections in July 2007 and held a hearing on that Statement in March 2008. The EC issued a Supplemental Statement of Objections in July 2008. In May 2009, the EC issued a decision finding that we had violated Article 82 of the EC Treaty and Article 54 of the European Economic Area Agreement. In general, the EC found that we violated Article 82 (later renumbered as Article 102 by a new treaty) by offering alleged "conditional rebates and payments" that required our customers to purchase all or most of their x86 microprocessors from us. The EC also found that we violated Article 82 by making alleged "payments to prevent sales of specific rival products." The EC imposed a fine in the amount of €1.1 billion ($1.4 billion as of May 2009), which we subsequently paid during the third quarter of 2009, and ordered us to "immediately bring to an end the infringement referred to in" the EC decision.
The EC decision contained no specific direction on whether or how we should modify our business practices. Instead, the decision stated that we should "cease and desist" from further conduct that, in the EC's opinion, would violate applicable law. We took steps, which are subject to the EC's ongoing review, to comply with that decision pending appeal. We had discussions with the EC to better understand the decision and to explain changes to our business practices.
We appealed the EC decision to the Court of First Instance (which has been renamed the General Court) in July 2009. The hearing of our appeal took place in July 2012. In June 2014, the General Court rejected our appeal in its entirety. In August 2014, we filed an appeal with the European Court of Justice. In November 2014, Intervener Association for Competitive Technologies filed comments in support of Intel’s grounds of appeal. The EC and interveners filed briefs in November 2014, we filed a reply in February 2015, and the EC filed a rejoinder in April 2015. The Court of Justice held oral argument in June 2016. In October 2016, Advocate General Wahl, an advisor to the Court of Justice, issued a non-binding advisory opinion that favored Intel on a number of grounds. The Court of Justice issued its decision in September 2017, setting aside the judgment of the General Court and sending the case back to the General Court to examine whether the rebates at issue were capable of restricting competition. The General Court has appointed a panel of five judges to consider our appeal of the EC’s 2009 decision in light of the Court of Justice’s clarifications of the law. In November 2017, the parties filed initial “Observations” about the Court of Justice’s decision and the appeal and were invited by the General Court to offer supplemental comments to each other’s “Observations,” which the parties submitted in March 2018. Responses to other questions posed by the General Court were filed in May and June 2018. The General Court heard oral argument in March 2020. Pending the final decision in this matter, the fine paid by Intel has been placed by the EC in commercial bank accounts where it accrues interest.
Litigation Related to Security Vulnerabilities
In June 2017, a Google research team notified us and other companies that it had identified security vulnerabilities (now commonly referred to as “Spectre” and “Meltdown”) that affect many types of microprocessors, including our products. As is standard when findings like these are presented, we worked together with other companies in the industry to verify the research and develop and validate software and firmware updates for impacted technologies. On January 3, 2018, information on the security vulnerabilities was publicly reported, before software and firmware updates to address the vulnerabilities were made widely available.
Numerous lawsuits relating to the Spectre and Meltdown security vulnerabilities, as well as another variant of these vulnerabilities (“Foreshadow”) that has since been identified, have been filed against Intel and, in certain cases, our current and former executives and directors, in U.S. federal and state courts and in certain courts in other countries.countries relating to the Spectre and Meltdown security vulnerabilities, as well as other variants of these vulnerabilities that have since been identified.
As of April 22,October 21, 2020, consumer class action lawsuits relating to certainthe above class of security vulnerabilities publicly disclosed insince 2018 were pending in the U.S., Canada, and Israel. The plaintiffs, who purport to represent various classes of purchasers of our products, generally claim to have been harmed by Intel's actions and/or omissions in connection with the security vulnerabilities and assert a variety of common law and statutory claims seeking monetary damages and equitable relief. In the U.S., numerous individual class action suits filed in various jurisdictions were consolidated in April 2018 for all pretrial proceedings in the U.S. District Court for the District of Oregon. In March 2020, the court granted Intel's motion to dismiss the complaint in that consolidated action but granted plaintiffs leave to fileamend. Plaintiffs filed an amended complaint.complaint in May 2020, which Intel moved to dismiss in July 2020; argument on the motion is scheduled for December 2020. In Canada, in one case pending in the Superior Court of Justice of Ontario, an initial status conference has not yet been scheduled. In a second case pending in the Superior Court of Justice of Quebec, the court has stayed the case until April 2020.January 2021. In Israel, both consumer class action lawsuits were filed in the District Court of Haifa. In the first case, the District Court denied the parties' joint motion to stay filed in January 2019, but to date has deferred Intel's deadline to respond to the complaint in view of Intel's pending motion to dismiss in the consolidated proceeding in the U.S.complaint. Intel filed a motion to stay the second case pending resolution of the consolidated proceeding in the U.S., and a hearing on that motion has been scheduled for MayNovember 2020. Additional lawsuits and claims may be asserted seeking monetary damages or other related relief. We dispute the pending claims described above and intend to defend those lawsuits vigorously. Given the procedural posture and the nature of those cases, including that the pending proceedings are in the early stages, that alleged damages have not been specified, that uncertainty exists as to the likelihood of a class or classes being certified or the ultimate size of any class or classes if certified, and that there are significant factual and legal issues to be resolved, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, that might arise from those matters.







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In addition to these lawsuits, Intel stockholders filed multiple shareholder derivative lawsuits since January 2018 against certain current and former members of our Board of Directors and certain current and former officers, alleging that the defendants breached their duties to Intel in connection with the disclosure of the security vulnerabilities and the failure to take action in relation to alleged insider trading. The complaints sought to recover damages from the defendants on behalf of Intel. Some of the derivative actions were filed in the U.S. District Court for the Northern District of California and were consolidated, and the others were filed in the Superior Court of the State of California in San Mateo County and were consolidated. The federal court granted defendants' motion to dismiss the consolidated complaint in the federal action in August 2018 on the ground that plaintiffs failed to plead facts sufficient to show they were excused from making a pre-lawsuit demand on the Board. The federal court granted plaintiffs leave to amend their complaint, but subsequently dismissed the cases without prejudice in January 2019 at plaintiffs' request. In August 2018, theThe California Superior Court grantedentered judgment in defendants' motionfavor in August 2020 after granting defendants' motions to dismiss theplaintiffs' consolidated complaint in the state court action on the ground that plaintiffs failedand three successive amended complaints, all for failure to plead facts sufficient to show theyplaintiffs were excused from making a pre-lawsuit demand on the Board, but granted plaintiffs leave to amend. The court subsequently granted defendants' motion to dismiss plaintiffs' first, second, and third amended complaints, on the same ground, and in March 2020 granted defendants' motion to dismiss plaintiffs' third amended complaint without granting plaintiffs leave to amend.Board. Plaintiffs filed a motion for reconsiderationnotice of appeal of the California court's final order of dismissal, which is scheduled for hearingjudgment in JuneOctober 2020.
Institute of Microelectronics, Chinese Academy of Sciences v. Intel China, Ltd., et al.
In February 2018, the Institute of Microelectronics of the Chinese Academy of Sciences (IMECAS) sued Intel China, Ltd., Dell China, Ltd. (Dell) and Beijing JingDong Century Information Technology, Ltd. (JD) for patent infringement in the Beijing High Court. IMECAS alleges that Intel’s Core series processors infringe Chinese patent CN 102956457 (’457 Patent). The complaint demands an injunction and damages of at least RMB 200,000,000 plus the cost of litigation. A trial date is not yet set. In March 2018, Dell tendered indemnity to Intel, which Intel granted in April 2018. JD also tendered indemnity to Intel, which Intel granted in October 2018. In March 2018, Intel filed an invalidation request on the ‘457 patent with the Chinese Patent Reexamination Board (PRB). The PRB held an oral hearing in September 2018 and in February 2019 upheld the validity of the challenged claims. In January 2020, Intel filed a second invalidation request on the ‘457 patent with the PRB.PRB, for which the PRB heard oral argument in July 2020. In September 2018 and March 2019, Intel filed petitions with the United States Patent & Trademark Office (USPTO) requesting institution of inter partes review (IPR) of U.S. Patent No. 9,070,719, the U.S. counterpart to the ‘457 patent. The USPTO denied institution of Intel’s petitions in March and October 2019, respectively. In April 2019, Intel filed a request for rehearing and a petition for Precedential Opinion Panel (POP) in the USPTO to challenge the denial of its first IPR petition, and in November 2019 Intel filed a request for rehearing on the second IPR petition. In January 2020, the USPTO denied the rehearing andPOP petition on the first IPR petition. In June 2020, the Patent Trial and Appeal Board denied Intel's rehearing requests on both petitions.
In October 2019, IMECAS filed second and third lawsuits, in the Beijing IP Court, alleging infringement of Chinese Patent No. CN 102386226 (‘226 Patent) based on the manufacturing and sale of Intel’s Core i3 microprocessors. Defendants in the second case are Lenovo (Beijing) Co., Ltd. (Lenovo) and Beijing Jiayun Huitong Technology Development Co. Ltd. (BJHT). Defendants in the third case are Intel Corp., Intel China Co., Ltd., the Intel China Beijing Branch, Beijing Digital China Co., Ltd. (Digital China), and JD. Both complaints demand injunctions plus litigation costs and reserve the right to claim damages in unspecified amounts. No proceedings have occurred or are yet scheduled in these lawsuits. In December 2019, Lenovo tendered indemnity to Intel, which Intel granted in March 2020. In July 2020, Intel filed two invalidation requests on the '226 patent with the Chinese PRB. Given the procedural posture and the nature of these cases, the unspecified nature and extent of damages claimed by IMECAS, and uncertainty regarding the availability of injunctive relief under applicable law, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, arising from these matters. We dispute IMECAS’s claims and intend to vigorously defend against them.
VLSI Technology LLC v. Intel

In October 2017, VLSI Technology LLC (VLSI) filed a complaint against Intel in the U.S. District Court for the Northern District of California alleging infringement of eight patents acquired from NXP Semiconductors, N.V. (NXP). The patents, which originated at Freescale Semiconductor, Inc. and NXP B.V., are U.S. Patent Nos. 7,268,588; 7,675,806; 7,706,207; 7,709,303; 8,004,922; 8,020,014; 8,268,672; and 8,566,836. VLSI accuses various FPGA and processor products of infringement. VLSI estimated its damages to be as high as $7.1 billion, and its complaint further sought enhanced damages, future royalties, attorneys’ fees, costs, and interest. In May, June, September, and October 2018, Intel filed requests with the Patent Trial and Appeals Board (PTAB) to institute inter partes review of the patentability of claims in all eight of the patents in-suit. The PTAB instituted review of six patents and denied institution on two patents. As a result of the institution decisions, the parties stipulated to stay the District Court action in March 2019. In December 2019 and February 2020, the PTAB found all claims of the '588 and '303 patents, and some claims of the '922 patent, to be unpatentable. The PTAB found the challenged claims of the '014, '672 and '207 patents to be patentable. Intel moved for a continuation of the stay in March 2020 as it appealed certain rulings by the PTAB. In June 2020, the District Court issued an order continuing the stay through August 2021 and setting trial for December 2022.

In June 2018, VLSI filed a second suit against Intel, in U.S. District Court for the District of Delaware, alleging infringement by various Intel processors of five additional patents acquired from NXP: U.S. Patent Nos. 6,212,663; 7,246,027; 7,247,552; 7,523,331; and 8,081,026. VLSI accused Intel of willful infringement and seeks an injunction or, in the alternative, ongoing royalties, enhanced damages, attorneys’ fees and costs, and interest. In March 2019, the District Court dismissed VLSI’s claims for willful infringement as to all the patents-in-suit except the ‘027 patent, and also dismissed VLSI’s allegations of indirect infringement as to the ‘633, ‘331, and ‘026 patents. In June 2019, Intel filed requests for inter partes review of the patentability of claims in all five patents-in-suit. In January 2020, the District Court vacated the November 2020 trial date based on agreement of the parties; no trial date is currently set. In January and February 2020, the PTAB instituted review of the '552, '633, '331 and '026 patents and as a result Intel moved for stay of the District Court proceedings. In May 2020, the District Court stayed the case as to the '026 and '552 patents but allowed the case to proceed on the '027 and '331 patents. For these two patents, VLSI is seeking damages of approximately $4.13 billion. VLSI also alleges willful infringement and seeks enhanced damages as to the '027 patent. VLSI is no longer asserting claims from the '633 patent.







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In March 2019, VLSI filed a third suit against Intel, also in U.S. District Court for the District of Delaware, alleging infringement of six more patents acquired from NXP: U.S. Patent Nos. 6,366,522; 6,663,187; 7,292,485; 7,606,983; 7,725,759; and 7,793,025. In April 2019, VLSI voluntarily dismissed this Delaware case without prejudice. In April 2019, VLSI filed three new infringement suits against Intel in the U.S. District Court for the Western District of Texas (WDTX) accusing various Intel processors of infringement. The three suits collectively assert the same six patents from the voluntarily dismissed Delaware case plus two additional patents acquired from NXP, U.S. Patent Nos. 7,523,373 and 8,156,357. VLSI accuses Intel of willful infringement and seeks an injunction or, in the alternative, ongoing royalties, enhanced damages, attorneys’ fees and costs, and interest. Specifically, VLSI is seeking damages of approximately $11.01 billion collectively in the Texas cases, plus enhanced damages for alleged willful infringement. VLSI seeks approximately $2.5 billion plus enhanced damages for alleged willful infringement in the first Texas case. That case was originally scheduled for trial in November 2020, but the court has now moved trial to January 2021. In October and November 2019, and in February 2020, Intel filed inter partes review requests on certain asserted claims across six of the patents-in-suit in WDTX. Between May and October 2020, the PTAB denied all of these requests, and Intel is asking for a rehearing on these denials.
In May 2019, VLSI filed a case in Shenzhen Intermediate People’s Court against Intel, Intel (China) Co., Ltd., Intel Trading (Shanghai) Co., Ltd., and Intel Products (Chengdu) Co., Ltd. VLSI asserts Chinese Patent 201410094015.9 accusing Intel Core processors of infringement. VLSI requests an injunction as well as RMB 1.3 million in damages. Defendants filed an invalidation petition in October 2019. In May 2020, defendants filed a motion to stay the trial court proceedings pending a determination on invalidity. The court has not yet ruled on the motion to stay.
In May 2019, VLSI filed a second case in Shanghai Intellectual Property Court against Intel (China) Co., Ltd., Intel Trading (Shanghai) Co., Ltd., and Intel Products (Chengdu) Co., Ltd. VLSI asserts Chinese Patent 201080024173.7. The accused Intel products and the claims of VLSI in the Shanghai case are the same as in the Shenzhen case. Defendants filed an invalidation petition in October 2019. In June 2020, defendants filed a motion to stay the trial court proceedings pending a determination on invalidity. The court has not yet ruled on the motion to stay. The court held its first evidentiary hearing in September 2020.
In November 2019, Intel, along with Apple Inc., filed a complaint against Fortress Investment Group LLC, Fortress Credit Co. LLC, Uniloc 2017 LLC, Uniloc USA, Inc., Uniloc Luxembourg S.A.R.L., VLSI, INVT SPE LLC, Inventergy Global, Inc., DSS Technology Management, Inc., IXI IP, LLC, and Seven Networks, LLC. Plaintiffs allege violations of Section 1 of the Sherman Act by certain defendants, Section 7 of the Clayton Act by certain defendants, and California Business and Professions Code section 17200 by all defendants based on defendants' unlawful aggregation of patents. In February 2020, defendants moved to dismiss plaintiffs' complaint. In July 2020, the court granted defendants’ motion to dismiss with leave to amend. The court dismissed antitrust claims related to two DSS patents with prejudice. The plaintiffs filed an amended complaint in August 2020, and defendants moved to dismiss in September 2020. The court will hear defendants' motion to dismiss in December 2020.
In June 2020, affiliates controlled by Fortress Investment Group, which also controls VLSI, acquired Finjan Holdings, Inc. Intel had signed a “Settlement, Release and Patent License Agreement” with Finjan in 2012, acquiring a license to the patents of Finjan and its affiliates, current or future, through a capture period of November 20, 2022. The agreement also contains covenants wherein Finjan agrees to cause its affiliates to comply with the agreement. As such, Intel maintains that it now has a license to the patents of VLSI, which has become a Finjan affiliate, and that Finjan must cause VLSI to dismiss its suits against Intel. In August 2020, Intel started dispute resolution proceedings under the agreement. In September 2020, Intel filed motions to stay the Texas, Delaware, and Shanghai matters pending resolution of its dispute with Finjan. Those motions remain pending.
Given the procedural posture and the nature of these cases and that there are significant factual and legal issues to be resolved, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, arising from these matters. We dispute VLSI’s claims and intend to vigorously defend against them.








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 FINANCIAL STATEMENTS  Notes to Financial Statements26
Table of Contents

KEY TERMS
We use terms throughout our document that are specific to Intel or that are abbreviations that may not be commonly known or used. Below is a list of these terms used in our document.
TERMDEFINITION
TERMDEFINITION
2009 Debentures3.25% junior subordinated convertible debentures due 2039
5G
2019 Form 10-KOur Annual Report on Form 10-K for the fiscal year ended December 28, 2019
5GThe next-generation mobile network, which is expected to bring dramatic improvements in network speeds and latency, and which we view as a transformative technology and opportunity for many industriesindustries.
ADAS
ADASAdvanced driver-assistance systems
Adjacent productsAll of our non-platform products for CCG, DCG, and IOTG, such as modem, Ethernet and silicon photonics, as well as Mobileye, Non-Volatile Memory Solutions Group (NSG), and Programmable Solutions Group (PSG) products. Combined with our platform products, adjacent products form comprehensive platform solutions to meet customer needsneeds.
ASIC
ASICApplication-specific integrated circuit
ASPAverage Selling Price
CODMASRAccelerated Share Repurchase
CODMChief operating decision maker
COVID-19
COVID-19The infectious disease caused by the most recently discovered coronavirus (aka coronavirus 2 or SARS-CoV-2), which was declared a global pandemic by the World Health OrganizationOrganization.
CPUProcessor or central processing unit
Data-centric businessesIncludes our Data Center Group (DCG), Internet of Things Group (IOTG), Mobileye, Non-Volatile Memory Solutions Group (NSG), Programmable Solutions Group (PSG), and all other businesses
ECEuropean Commission
Edge
ECEuropean Commission
EdgeAllocated resources that move, store, and process data closer to the source or point of service deliverydelivery.
Form 10-KAnnual Report on Form 10-K
Form 10-QQuarterly Report on Form 10-Q
FPGAField-programmable gate array
IMFT
IMFTIM Flash Technologies, LLC
Internet of ThingsRefers to the Internet of Things market in which we sell our IOTG and Mobileye products
IPIOTIntellectual propertyInternet of Things portfolio
McAfeeIOTGInternet of Things Group operating segment
IPIntellectual property
MaaSMobility-as-a-Service
McAfeeBusiness, post divestiture of Intel Security Group in Q2 2017, which we retained an interest in as part of our investment strategy
MD&AManagement's Discussion & Analysis
MG&AMarketing, general and administrative
NAND
MoovitMoovit App Global Ltd, a MaaS solutions company acquired in Q2 2020
NANDNAND flash memory
nmNanometer
OEM
OEMOriginal equipment manufacturer
PC-centric businessOur Client Computing Group (CCG) business, including both platform and adjacent products
Platform products
A microprocessor (CPU) and chipset, a stand-alone SoC, or a multichip package, based on Intel®Intel® architecture. Platform products are primarily used in solutions sold through the CCG, DCG, and IOTG segmentssegments.
PRQProduct Release Qualification, which is the milestone when costs to manufacture a product are included in inventory valuation
QLCQuad-level cell
R&DResearch and development
RSURestricted stock unit
SECU.S. Securities and Exchange Commission
SoCSystem-on-Chip
SSDSolid-state drive
TAMTotal addressable market
TLCTriple-level cell
U.S. GAAPU.S. Generally Accepted Accounting Principles


QLCQuad-level cell
R&DResearch and development
RSURestricted stock unit
SECU.S. Securities and Exchange Commission
SoCA System-on-a-Chip, integrates most of the components of a computer or other electronic system into a single silicon chip. We offer a range of SoC platform products in DCG, IOTG, and CCG. In our DCG business, we offer SoCs across many market segments for a variety of applications, including products targeted for 5G base stations and network infrastructure.
SSDSolid-state drive
TLCTriple-level cell
U.S. GAAPU.S. Generally Accepted Accounting Principles







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 FINANCIAL STATEMENTS  Notes to Financial Statements2627



MANAGEMENT'S DISCUSSION AND ANALYSIS
For additional key highlights of our results of operations, see "A Quarter in Review" and "Our Pandemic Response.Review."
DATA CENTER GROUP
DCG develops workload-optimized platforms for compute, storage, and network functions. Market segments include cloud service providers, enterprise and government, and communications service providers. We offer customers an unmatched, broad portfolio of platforms and technologies designed to provide workload-optimized performance across compute, storage, and network. These offerings span the full spectrum from the data center core to the network edge.
DCG REVENUE $BDCG OPERATING INCOME $B

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■ Platform
■ Adjacent
REVENUE SUMMARY
Revenue in Q1Q3 2020 was up 43%down 7% compared to Q1Q3 2019, driven by increasedlower ASPs on higher SoC volume and strong mix ofshift from the enterprise and government market segment to cloud service providers. The decline was partially offset by higher platform products resultingvolume overall, and growth in higher ASPs. In Q1 2020,adjacencies driven by 5G networking deployment. Year over year revenue in the cloud service providers market segment was up 53% as cloud service providers added capacity15% on continued demand to serve demand. The enterprisesupport a work and government market segment was up 34%,learn-at-home environment, and the communications service providers market segment was up 33% year over year.4%. The enterprise and government market segment was down 47% driven by weaker macroeconomic conditions due to COVID-19.
We expect continued strength fromRevenue was up 23% YTD 2020 compared to YTD 2019 due to increased platform volume as cloud service providers added capacity to serve demand, and continued growth in the communications service providers market segment. We also experienced growth in Q2 2020,adjacencies driven by 5G networking deployment.
In Q4, we anticipate COVID-19 impacts will drive weaker demand in our data-centric businesses and anticipate demand in the enterprise and governmentcloud service providers market segment to weaken in the second half of 2020.moderate.

Q3 2020 vs. Q3 2019YTD 2020 vs. YTD 2019
(In Millions)%$ Impact%$ Impact
Platform volumeup4%$242 up19%$2,870 
Platform ASPdown(15)%(910)up—%35 
Adjacent productsup34%190 up60%842 
Total change in revenue$(478)$3,747 
 Q1 2020 vs. Q1 2019
(Dollars in Millions)% $ Impact
     
Platform volumeup27% $1,230
Platform ASPup13% 715
Adjacent productsup35% 146
     
Total change in revenue   $2,091
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MD&A28
Table of Contents

OPERATING INCOME SUMMARY
Operating income in Q1Q3 2020 increased 90%decreased 39% from Q1Q3 2019, with an operating margin of 50%32%. Operating income YTD 2020 increased 26%, with an operating margin of 42%.
(In Millions)  
$3,492
 Q1 2020 DCG Operating Income
1,785
 Higher gross margin from platform revenue
(80) Higher operating expenses
(54) Other
$1,841
 Q1 2019 DCG Operating Income

(In Millions)
$1,903Q3 2020 DCG Operating Income
(695)Lower gross margin from platform revenue
(280)Lower DCG adjacent product margin
(135)Higher period charges due to reserved non-qualified platform products associated with our 10nm process technology
(130)Higher operating expenses
(95)Higher platform unit cost
135 Lower period charges due to lower factory start-up costs associated with the initial ramp of 10nm
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(12)Other
$3,115 MD&A27Q3 2019 DCG Operating Income
$8,494YTD 2020 DCG Operating Income
2,540 Higher gross margin from platform revenue
280 Lower period charges due to lower factory start-up costs associated with the initial ramp of 10nm
(440)Lower DCG adjacent product margin
(220)Higher platform unit cost
(205)Higher operating expenses
(145)Higher period charges due to reserved non-qualified platform products associated with our 10nm process technology
(72)Other
$6,756YTD 2019 DCG Operating Income

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MD&A29

INTERNET OF THINGS
As more intelligence is moving to the edge, more industries are harnessing the power of data to create business value, to innovate, and to grow. We are using our architecture, accelerators, and software assets, combined with scale and partners, to develop a growing Internet of Things portfolio. Our Internet of Things portfolio is comprised of our IOTG and Mobileye businesses.
IOTG develops high-performance compute for targeted verticals and embedded markets. Our customers include retailers, manufacturers, health care providers, energy companies, automakers, and governments. We facilitate our customers creating, storing, and processing data generated by connected devices to accelerate business transformations.
Mobileye is the global leader in driving assistance and automation solutions. Our product portfolio employs a broad set of technologies, covering computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology for ADAS and autonomous driving. Mobileye’s ADAS products form the building blocks for higher levels of autonomy. Our customers and strategic partners include major global OEMs and Tier 1 automotive system integrators.
INTERNET OF THINGS REVENUE $BINTERNET OF THINGS OPERATING INCOME $B
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INTERNET OF THINGS REVENUE $BINTERNET OF THINGS OPERATING INCOME $B
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■ IOTG
■ Mobileye
■ IOTG
■ Mobileye
REVENUE AND OPERATING INCOME SUMMARY
Q1Q3 2020 vs. Q1Q3 2019
IOTG revenue was $883$677 million, down $27$328 million, driven by weaker demand for IOTG platform products in industrial and retailprimarily due to economic impacts of COVID-19. We expect this weakeningDemand was also negatively affected by trade restrictions related to continue for the rest of the year.U.S. government Entity List impacts. Operating income was $243$61 million, down $8$248 million year over year.
Mobileye recognized record revenue of $254was $234 million, up $45$5 million due to our growing market share and the increasing adoption of our ADAS solutions. Operatingdriven by improvement in global vehicle production. Mobileye operating income was $88$47 million, updown $20 million. We expect demand will soften in 2020 as the effects of COVID-19 continue to slow automotive production.million year over year.

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28
IOTG revenue was $2.2 billion, down $671 million, driven by weaker demand for IOTG platform products due to COVID-19. Demand was also negatively affected by trade restrictions related to the U.S. government Entity List impacts. Operating income was $374 million, down $480 million compared to YTD 2019.
Mobileye revenue was $634 million, down $5 million, due to lower demand as a result of significant decline in global vehicle production related to COVID-19 with improvement in Q3 2020. Operating income was $131 million, down $57 million.
We expect continued negative COVID-19 related impacts on demand for IOTG in Q4.


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MD&A30

NON-VOLATILE MEMORY SOLUTIONS GROUP
NSG is a technology leader in next-generation memory and storage products based on breakthrough Intel® Optane™ technology and Intel® 3D NAND technology. NSG is disrupting the memory and storage hierarchy with new tiers that balance capacity, performance, and cost. We offer 96-layer and 64-layer TLC NAND high-capacity SSDs, and 64-layer QLC NAND high-capacity SSDs, andSSDs. We also provide unparalleled low latency and high performance with Intel® Optane™ technology—bothtechnology. Our products are available in innovative new form factors and densities to address the memory and storage challenges our customers face in a rapidly evolving technological landscape. Our customers include enterprise and cloud-based data centers, and users of business and consumer desktops and laptops.
On October 19, 2020, we signed an agreement with SK hynix to divest of our NAND memory business, including our NAND memory fabrication facility in Dalian, China and certain related Fab Assets, our NAND SDD Business, and our NAND Business. The transaction will occur over two closings. The consummation of the first closing and the second closing is subject to customary conditions, including the receipt of certain governmental approvals. The first closing will not occur prior to November 1, 2021, and the second is expected to occur no earlier than March 2025. In connection with the first closing, the parties will enter into a NAND wafer manufacturing and sale agreement pursuant to which, we will continue to manufacture and sell to SK hynix, NAND wafers to be manufactured at the Dalian memory fabrication facility, until final closing. Our Intel® Optane™ memory business is expressly excluded from the transaction.
NSG REVENUE $BNSG OPERATING INCOME $B
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REVENUE AND OPERATING INCOME SUMMARY
Q1Q3 2020 vs. Q1Q3 2019
NSG recognized recorddelivered revenue of $1.3$1.2 billion, up $423down $137 million from Q1Q3 2019, driven by $358$460 million lower volume, with COVID-19 impacts contributing to the decrease in demand, partially offset by $323 million higher ASPs from improved NAND pricing. Operating income was $29 million, up $528 million from an operating loss in Q3 2019 due to continued improvements in unit cost and market pricing recovery.
YTD 2020 vs. YTD 2019
NSG delivered revenue of $4.2 billion, up $1.0 billion, driven by $868 million higher ASP from improved NAND pricing and $138 million higher volume due to strong demand for Intel® Optane™ and NAND products. Our lowerOperating income was $285 million, up $1.4 billion from an operating loss of $66 million in Q1 2020, wasYTD 2019, due to market pricing recovery and continued improvements in unit cost, market pricing recovery, and strong demand.cost.



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MD&A2931


PROGRAMMABLE SOLUTIONS GROUP
PSG offers programmable semiconductors, primarily FPGAs, structured ASICs, and related products, for a broad range of market segments, including communications, data center, industrial, and military. The PSG product portfolio delivers FPGA acceleration in tandem with Intel microprocessors and enables Intel to combine the benefits of its broad portfolio of technologies to allow more flexibility for systems to operate with increased efficiency and higher performance.
PSG REVENUE $BPSG OPERATING INCOME $B
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REVENUE AND OPERATING INCOME SUMMARY
Q1Q3 2020 vs. Q1Q3 2019
Revenue was $519$411 million, up $33down $96 million due to weakness in embedded and communications market segments, partially offset by growth in the cloud and enterprise market segment, partially offset by weaker embedded and communications. PSG experienced growth in advanced products.segment. Operating income was $97$40 million, up $8down $52 million.





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30
Revenue was $1.4 billion, down $51 million due to decline in the embedded and communications market segments, partially offset by growth in the cloud and enterprise market segment. Operating income was $217 million, down $16 million.


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MD&A32

CLIENT COMPUTING GROUP
As we evolve to deliver leading end-to-end products across architectures and workloads for the data explosion, CCG’s contribution is the human touchpoint of this new data-centric era—the PC. As the largest business unit at Intel, CCG deploys platforms that connect people to data, allowing each person to focus, create, and engage in ways that unlock their individual potential. The PC market remains a critical facet of our business, providing an important source of IP, scale, and cash flow. Our mission is to continue to deliver leadership products in our PC business as well as our adjacent businesses. The PC is more essential than ever before with more people working and learning from home due to COVID-19-related shelter-in-place orders. We are dedicated to helping people around the world overcome this crisis.
impacts.
CCG REVENUE $BCCG OPERATING INCOME $B
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■ Platform
■ Adjacent
REVENUE SUMMARY
Revenue in Q1Q3 2020 was up 14%1% compared to Q1Q3 2019, driven by strongstrength in notebook demand, partially offset by lower desktop demand, lower notebook ASP resulting from higher demand for notebook platform productsconsumer and incrementaleducation PCs, and LTE modem volume decline. YTD 2020 revenue was up 7% compared to YTD 2019, driven by strength in notebook demand and higher LTE modem and Wi-Fi sales, partially offset slightly by lower ASPs due to increased small core mix.desktop demand and lower notebook ASP resulting from higher demand for consumer and education PCs. Strength in notebook platform products reflects the increased reliance on PCs as more people are workingcontinue to work and learninglearn from home due to COVID-19.home. As this dynamic continues into Q4, we expect continued strength in consumer notebook PCs.
We expect this strength to continue for the first half of the year but anticipate PC TAM to decline in the second half of 2020.
Q3 2020 vs. Q3 2019YTD 2020 vs. YTD 2019
(In Millions)%$ Impact%$ Impact
Desktop platform volumedown(18)%$(485)down(12)%$(1,090)
Desktop platform ASPdown—%— up2%160 
Notebook platform volumeup25%1,360 up19%2,872 
Notebook platform ASPdown(7)%(478)down(2)%(352)
Adjacent products and other(259)392 
Total change in revenue$138 $1,982 











  Q1 2020 vs. Q1 2019
(Dollars in Millions) % $ Impact
      
Desktop platform volume down(4)% $(143)
Desktop platform ASP up4% 97
Notebook platform volume up22% 1,100
Notebook platform ASP down(3)% (169)
Adjacent products and other    304
      
Total change in revenue    $1,189
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MD&A33
Table of Contents

OPERATING INCOME SUMMARY
Operating income in Q1Q3 2020 increased 38%decreased 17% from Q1Q3 2019, with an operating margin of 43%36%.
Operating income YTD 2020 decreased 4%, with an operating margin of 36%.
(In Millions)  
$4,225
 Q1 2020 CCG Operating Income
710
 Higher gross margin from platform revenue
700
 Lower period charges primarily due to 2019 reserved non-qualified platform product
305
 Lower operating expenses driven by lower investments in modem
(590) Higher platform unit cost due to ramp of 10nm products
28
 Other
$3,072
 Q1 2019 CCG Operating Income

(In Millions)
$3,554Q3 2020 CCG Operating Income
(795)Higher platform unit cost primarily from increased mix of 10nm products
(200)Higher period charges primarily due to lower sell-through of previously reserved non-qualified platform product related to our 10nm process technology
105 Lower operating expenses
85 Higher CCG adjacent product margin
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31


CONSOLIDATED RESULTS OF OPERATIONS
  Three Months Ended
  Q1 2020 Q1 2019
(Dollars in Millions, Except Per Share Amounts) Amount % of Net
Revenue		 Amount % of Net
Revenue
Net revenue $19,828
 100.0 % $16,061
 100.0 %
Cost of sales 7,812
 39.4 % 6,972
 43.4 %
Gross margin 12,016
 60.6 % 9,089
 56.6 %
Research and development 3,275
 16.5 % 3,332
 20.7 %
Marketing, general and administrative 1,541
 7.8 % 1,583
 9.9 %
Restructuring and other charges 162
 0.8 % —
 — %
Operating income 7,038
 35.5 % 4,174
 26.0 %
Gains (losses) on equity investments, net (111) (0.6)% 434
 2.7 %
Interest and other, net (313) (1.6)% (61) (0.4)%
Income before taxes 6,614
 33.4 % 4,547
 28.3 %
Provision for taxes 953
 4.8 % 573
 3.6 %
Net income $5,661
 28.6 % $3,974
 24.7 %
         
Earnings per share—diluted $1.31
   $0.87
  

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32


REVENUE
54 Other
$4,305Q3 2019 CCG Operating Income
$10,621YTD 2020 CCG Operating Income
(2,545)Higher platform unit cost primarily from increased mix of 10nm products
(150)Higher period charges primarily due to reserved non-qualified platform product, partially offset by sell-through of previously reserved platform products related to our 10nm process technology
1,115 Higher gross margin from platform revenue
695 Lower operating expenses
350 Higher CCG adjacent product margin
42 Other
$11,114YTD 2019 CCG Operating Income
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MD&A34
Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS
Three Months EndedNine Months Ended
Q3 2020Q3 2019YTD 2020YTD 2019
(In Millions, Except Per Share Amounts)Amount% of Net
Revenue		Amount% of Net
Revenue		Amount% of Net
Revenue		Amount% of Net
Revenue
Net revenue$18,333 100.0 %$19,190 100.0 %$57,889 100.0 %$51,756 100.0 %
Cost of sales8,592 46.9 %7,895 41.1 %25,625 44.3 %21,494 41.5 %
Gross margin9,741 53.1 %11,295 58.9 %32,264 55.7 %30,262 58.5 %
Research and development3,272 17.8 %3,208 16.7 %9,901 17.1 %9,978 19.3 %
Marketing, general and administrative1,435 7.8 %1,536 8.0 %4,423 7.6 %4,758 9.2 %
Restructuring and other charges(25)(0.1)%104 0.5 %146 0.3 %288 0.6 %
Operating income5,059 27.6 %6,447 33.6 %17,794 30.7 %15,238 29.4 %
Gains (losses) on equity investments, net56 0.3 %318 1.7 %212 0.4 %922 1.8 %
Interest and other, net(74)(0.4)%(46)(0.2)%(416)(0.7)%(170)(0.3)%
Income before taxes5,041 27.5 %6,719 35.0 %17,590 30.4 %15,990 30.9 %
Provision for taxes765 4.2 %729 3.8 %2,548 4.4 %1,847 3.6 %
Net income$4,276 23.3 %$5,990 31.2 %$15,042 26.0 %$14,143 27.3 %
Earnings per share—diluted$1.02 $1.35 $3.52 $3.14 
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MD&A35
Table of Contents

REVENUE
SEGMENT REVENUE WALK $B

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Q1Q3 2020 vs. Q1Q3 2019
Our Q1Q3 2020 revenue was $19.8$18.3 billion, down $857 million or 4% from Q3 2019, primarily due to COVID-related demand impacts on the DCG enterprise and government market segment, IOTG, and NSG. Our data-centric businesses were collectively down 10% year over year driven by lower DCG ASPs on higher SoC volume and mix shift from the enterprise and government market segment to cloud service providers, partially offset by higher DCG platform volume overall. Our PC-centric business was up 1% year over year driven by strength in notebook demand, partially offset by lower desktop demand, lower notebook ASPs resulting from higher demand for consumer and education PCs, and LTE modem volume decline.
YTD 2020 vs. YTD 2019
Our YTD 2020 revenue was $57.9 billion, up $3.8$6.1 billion or 23%12% from Q1YTD 2019. Compared to a year ago, ourOur data-centric businesses were collectively up 34% as demand from data center customers continued17% due to strengthenincreased platform volume as cloud service providers increased capacity to serve customer demand.demand, and growth in DCG adjacencies driven by 5G networking deployment. We also saw higher volume from strong demand forNSG bit growth and improved NAND products and anpricing, partially offset fromby weaker demand in IOTG. Revenue in ourIOTG platform products due to COVID-19. Our PC-centric business was up 14% year over year7% driven by strongstrength in notebook platform demand and higher LTE modem and Wi-Fi sales, slightly offset by lower desktop demand and lower notebook ASPs resulting from an increase in workinghigher demand for consumer and learning from home, and incremental growth in LTE modem.education PCs.


















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MD&A36
Table of Contents


GROSS MARGIN
We derived most of our overall gross margin from the sale of platform products in the CCGDCG and DCGCCG operating segments. Our overall gross margin dollars in Q1Q3 2020 increaseddecreased by $2.9$1.6 billion, or 32.2%14% compared to Q1Q3 2019.
Our YTD gross margin percentage was down as the increase in YTD platform revenue was offset by higher platform unit cost, platform reserves and a higher proportion of our revenue from lower margin adjacent businesses.
GROSS MARGIN $B
(Percentages    (Percentages in chart indicate gross margin as a percentage of total revenue)
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(In Millions)  
$12,016
 Q1 2020 Gross Margin
2,470
 Higher gross margin from platform revenue
770
 Lower period charges primarily due to 2019 reserved non-qualified platform product
335
 Higher gross margin from adjacent businesses primarily due to NAND
(585) Higher platform unit cost primarily from increased mix of 10nm and performance products
(63) Other
$9,089
 Q1 2019 Gross Margin
   

(In Millions)
$9,741Q3 2020 Gross Margin
(965)Lower gross margin from platform revenue
(885)Higher platform unit cost primarily from increased mix of 10nm products
(295)Higher period charges due to reserved non-qualified platform product and lower sell-through of previously reserved non-qualified platform product related to our 10nm process technology
430 Higher gross margin from adjacent businesses primarily due to higher margins on NAND and modem, partially offset by lower margins on DCG adjacencies
165 Lower period charges due to lower factory start-up costs associated with our 10nm products
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(4)Other
$11,295 MD&A33Q3 2019 Gross Margin
$32,264YTD 2020 Gross Margin
3,105 Higher gross margin from platform revenue
1,580 Higher gross margin from adjacent businesses primarily due to higher margins on NAND, modem, and Wi-Fi, partially offset by lower margins on DCG adjacencies
450 Lower period charges due to lower factory startup costs associated with our 10nm products
(2,730)Higher platform unit cost primarily from increased mix of 10nm products
(255)Higher period charges due to reserved non-qualified platform product and lower sell-through of previously reserved non-qualified platform product associated with 10nm
(148)Other
$30,262YTD 2019 Gross Margin

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MD&A37

OPERATING EXPENSES
Total R&D and MG&A expenses for Q1Q3 2020 were $4.8$4.7 billion, down 2%1% from Q1Q3 2019, and $14.3 billion for YTD 2020, down 3% from YTD 2019. These expenses represent 24.3%25.7% of revenue for Q1Q3 2020 and 30.6%24.7% of revenue for Q1Q3 2019, and 24.7% of revenue in the first nine months of 2020 and 28.5% of revenue in the first nine months of 2019.
RESEARCH AND DEVELOPMENT $BMARKETING, GENERAL AND ADMINISTRATIVE $B
(Percentages indicate expenses as a percentage of total revenue)
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RESEARCH AND DEVELOPMENT
Q1Q3 2020 vs. Q1Q3 2019
R&D increased by $64 million, or 2%, driven by the following:
R&D decreased by $57 million, or 1.7%, driven by the following:+Investments in our PC and data-centric businesses
+Investments in our process technology
-Profit dependent compensation
-Ramp down of 5G smartphone modem business
+
YTD 2020 vs. YTD 2019
R&D decreased by $77 million, or 1%, driven by the following:
-Ramp down of 5G smartphone modem business
-Profit dependent compensation
+Investments in our PC and data-centric businesses
+Investments in our process technology
+Profit dependent compensation
MARKETING, GENERAL AND ADMINISTRATIVE
Q1Q3 2020 vs. Q1Q3 2019
MG&A decreased by $101 million, or 7%, driven by the following:
-Corporate spending efficiencies
-Profit dependent compensation
YTD 2020 vs. YTD 2019
MG&A decreased by $42$335 million, or 2.7%7%, driven by the following:
-Corporate spending efficiencies
+Profit dependent compensation

-Corporate spending efficiencies
-Profit dependent compensation
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MD&A3438


GAINS (LOSSES) ON EQUITY INVESTMENTS AND INTEREST AND OTHER, NET
(In Millions) Q1 2020 Q1 2019(In Millions)Q3 2020Q3 2019YTD 2020YTD 2019
Ongoing mark-to-market adjustments on marketable equity securities $(103) $253
Ongoing mark-to-market adjustments on marketable equity
securities		$(146)$114 $(84)$188 
Observable price adjustments on non-marketable equity securities 79
 8
Observable price adjustments on non-marketable equity securities5 84 142 100 
Impairment charges (143) (23)Impairment charges(40)(17)(233)(79)
Sale of equity investments and other
 56
 196
Sale of equity investments and other
237 137 387 713 
Gains (losses) on equity investments, net $(111) $434
Gains (losses) on equity investments, net$56 $318 $212 $922 
    
Interest and other, net $(313) $(61)Interest and other, net$(74)$(46)$(416)$(170)
Gains (losses) on equity investments, net
We recognized a $103 million ongoingOngoing mark-to-market lossadjustments during the first threenine months of 2020 were primarily related to our interest in Cloudera Inc. During the first threenine months of 2019, we recognized ongoing mark-to-market gains of $253 million,adjustments were primarily driven by our interestinterests in ASML HoldingHoldings N.V. (ASML).and Cloudera Inc.
We recognized $143 million ofhigher than historically experienced impairment charges on our non-marketable portfolio in the first threenine months of 2020 based on our assessment of the impact of recent public and private market volatility and tightening of liquidity.
In sale of equity investments and other, we recognized $166 million on initial fair value adjustments from an initial public offering related to an equity investment that went public in August 2020. We recognized $154 million of McAfee dividends of $515 million during the first threenine months of 2019.
Interest and other, net
ForIn the threefirst nine months ended March 28,of 2020, we paid $1.1 billion to satisfy conversion obligations for $372 million of our $2.0 billion 2009 Debentures and recognized a loss of $109 million in interest and other, net and $750 million as a reduction in stockholders' equity related to the conversion feature. For the threenine months ended March 30,September 28, 2019, we paid $862 million$1.5 billion to satisfy conversion obligations for $337$590 million of our $2.0 billion 2009 Debentures and recognized a loss of $76$148 million in interest and other, net and $593$990 million as a reduction in stockholders' equity related to the conversion feature.
PROVISION FOR TAXES
(In Millions)Q3 2020Q3 2019YTD 2020YTD 2019
Income before taxes$5,041 $6,719 $17,590 $15,990 
Provision for taxes$765 $729 $2,548 $1,847 
Effective tax rate15.2 %10.8 %14.5 %11.6 %
(Dollars in Millions) Q1 2020 Q1 2019
Income before taxes $6,614
 $4,547
Provision for taxes $953
 $573
Effective tax rate 14.4% 12.6%
TheFor the first nine months of 2020, the increase in effective tax rate was driven by a lower U.S. tax benefit derived from sales to non-U.S. customers, andlower foreign tax credits, a one-time tax charge associated with a valuation allowance against a net operating loss deferred tax asset.asset, and a one-time tax charge due to a new interpretation of a tax law in a non-U.S. jurisdiction.


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MD&A3539


LIQUIDITY AND CAPITAL RESOURCES
We consider the following when assessing our liquidity and capital resources:
(Dollars in Millions) Mar 28,
2020		 Dec 28,
2019
(In Millions)(In Millions)Sep 26, 2020Dec 28, 2019
Cash and cash equivalents, short-term investments, and trading assets $20,803
 $13,123
Cash and cash equivalents, short-term investments, and trading assets$18,253 $13,123 
Other long-term investments $2,943
 $3,276
Other long-term investments$2,720 $3,276 
Loans receivable and other $1,294
 $1,239
Loans receivable and other$1,298 $1,239 
Reverse repurchase agreements with original maturities greater than three months $350
 $350
Reverse repurchase agreements with original maturities greater than three months$— $350 
Total debt $39,919
 $29,001
Total debt$36,563 $29,001 
Temporary equity $—
 $155
Temporary equity$— $155 
Debt as percentage of permanent stockholders’ equity 52.3% 37.4%
Cash generated by operations is our primary source of liquidity. When assessing our sources of liquidity, we include investments as shown in the preceding table. We maintain a diverse investment portfolio that we continually analyze based on issuer, industry, and country. Substantially all of our investments in debt instruments and financing receivables are in investment-grade securities.
Other potential sources of liquidity include our commercial paper program and our automatic shelf registration statement on file with the SEC, pursuant to which we may offer an unspecified amount of debt, equity, and other securities. Under our commercial paper program, we have an ongoing authorization from our Board of Directors to borrow up to $10.0 billion. As of March 28,September 26, 2020, we had no outstanding commercial paper.
We believe we have sufficient financial resources to meet our business requirements in the next 12 months, including capital expenditures for worldwide manufacturing and assembly and test; working capital requirements; and potential acquisitions, strategic investments, and dividends. As we enter a period of economic uncertainty, we took actions this quarter that further strengthen our liquidity. During the first three months of 2020 we issued a total of $10.3 billion aggregate principal amount of senior notes. Additionally, onOn March 24, 2020, we suspended the use of our financial resources for stock repurchases, havingrepurchases. On August 19, 2020, in response to our belief that our stock was trading well below its intrinsic valuation at that time, we entered into ASR agreements to repurchase an aggregate of $10.0 billion of our common stock. Following settlement of these agreements by the end of 2020, we will have repurchased a total of approximately $7.6$17.6 billion in shares as part of our planned $20.0 billion share repurchases announced in October 2019. The suspensionWe intend to complete the remaining $2.4 billion balance of stockthese planned repurchases will not impact dividend paymentsand return to stockholders and the company has the ability to reinstate stock repurchases as circumstances warrant.our historical capital return practices when markets stabilize.
CASH FROM OPERATIONS $BCAPITAL EXPENDITURES $BCASH TO STOCKHOLDERS $B
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■ Dividends ■ Buybacks1
Nine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019
Net cash provided by operating activities$25,494 $23,257 
Net cash used for investing activities(15,112)(9,920)
Net cash provided by (used for) financing activities(11,220)(12,421)
Net increase (decrease) in cash and cash equivalents$(838)$916 


1Buybacks include those repurchased under ASR agreements entered into in Q3 2020, of which $2.0 billion remains to be settled by the end of 2020.
  Three Months Ended
(In Millions) Mar 28,
2020		 Mar 30,
2019
Net cash provided by operating activities $6,158
 $4,959
Net cash used for investing activities (3,736) (2,722)
Net cash provided by (used for) financing activities 4,764
 (2,102)
Net increase (decrease) in cash and cash equivalents $7,186
 $135

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MD&A3640

Table of Contents


Operating Activities
Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
For the first threenine months of 2020 compared to the first threenine months of 2019, the increase in cash provided by operations was primarily due to higher net income, net of non-cash adjustments, offset by changesa decrease in working capital. Changes in working capital were driven by accounts payable and other assets and liabilities and accounts receivable.liabilities.
Investing Activities
Investing cash flows consist primarily of capital expenditures;expenditures, investment purchases, sales, maturities, and disposals;disposals, and proceeds from divestitures and cash used for acquisitions.
Cash used for investing activities was higher in the first threenine months of 2020 compared to the first threenine months of 2019 primarily due to decreasedan increase in purchases of available-for-sale debt investments and trading assets, offset by an increase in maturities and sales of equityavailable-for-sale debt investments (substantially all from ASML sales).and trading assets, and a decrease in capital expenditures.
Financing Activities
Financing cash flows consist primarily of repurchases of common stock, payment of dividends to stockholders, issuance and repayment of short-term and long-term debt, and proceeds from the sale of shares of common stock through employee equity incentive plans.
Cash was provided byused for financing activities was lower in the first threenine months of 2020 compared to cash used for financing activities in the first threenine months of 2019 primarily due to increasedan increase in long-term debt issuances offset by increasedan increase in repurchases of common stock and reduced proceeds from short-term debt.debt repayments.
CONTRACTUAL OBLIGATIONS
During Q1In the first nine months of 2020, we issued a total of $10.3 billion aggregate principal amount of senior notes. Our remaining total cash payments over the life of these long-term debt obligations are expected to be approximately $19.1$18.9 billion. These payments include anticipated interest on fixed rate debt that is not recorded on the Consolidated Condensed Balance Sheets. For further information, see "Note 8:9: Borrowings" within the Consolidated Condensed Financial Statements and Supplemental Details.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are affected by changes in currency exchange and interest rates, as well as equity and commodity prices. Our risk management programs are designed to reduce, but may not entirely eliminate, the impacts of these risks. We performed sensitivity analyses of these risks to our financial positions as of December 28, 2019, and updated that sensitivity analysis as of March 28,September 26, 2020, to determine whether material changes in market risks pertaining to currency exchange and interest rates or equity and commodity prices have occurred as a result of the ongoing economic uncertainty resulting from the COVID-19 pandemic. No material revisions were noted since disclosing "Quantitative and Qualitative Disclosures About Market Risk" within MD&A in our 2019 Form 10-K. Risks related to a slowdown or recession are described below under “Risk Factors.”

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MD&A3741


NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial results in accordance with U.S. GAAP, this document contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financialour operating performance, of our business, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.
Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects where applicable. Income tax effects have been calculated using an appropriate tax rate for each adjustment. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated.
Non-GAAP adjustment or measureDefinitionUsefulness to management and investors
Acquisition-related adjustmentsAmortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our U.S. GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years.We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends.
Restructuring and other chargesRestructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include asset impairments, pension charges, and costs associated with restructuring activity.We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our current operating performance and are significantly impacted by the timing of restructuring activity. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.
Gains (losses) from divestitureGains or losses are recognized at the close of a divestiture.We exclude gains or losses resulting from divestitures for purposes of calculating certain non-GAAP measures because they do not reflect our current operating performance and are impacted by the timing of our divestitures. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results.
Ongoing mark-to-market on marketable equity securitiesAfter the initial mark-to-market adjustment is recorded upon a security becoming marketable, gains and losses are recognized from ongoing mark-to-market adjustments of our marketable equity securities.We exclude these ongoing gains and losses for purposes of calculating certain non-GAAP measures because we do not believe this volatility correlates to our core operational performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results.
Free cash flowWe reference a non-GAAP financial measure of free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Free cash flow is operating cash flow adjusted to exclude additions to property, plant, and equipment.This non-GAAP financial measure is helpful in understanding our capital requirements and provides an additional means to evaluate the cash flow trends of our business.


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MD&A3842

Table of Contents


Following are the reconciliations of our most comparable U.S. GAAP measures to our non-GAAP measures presented:
Three Months Ended
(In Millions, Except Per Share Amounts)Sep 26, 2020Sep 28, 2019
Operating income$5,059 $6,447 
Acquisition-related adjustments362 338 
Restructuring and other charges(25)104 
Non-GAAP operating income$5,396 $6,889 
Operating margin27.6 %33.6 %
Acquisition-related adjustments2.0 %1.8 %
Restructuring and other charges(0.1)%0.5 %
Non-GAAP operating margin29.4 %35.9 %
Earnings per share—diluted$1.02 $1.35 
Acquisition-related adjustments0.09 0.08 
Restructuring and other charges(0.01)0.02 
(Gains) losses from divestiture— — 
Ongoing mark-to-market on marketable equity securities0.03 (0.02)
Income tax effect(0.02)(0.01)
Non-GAAP earnings per share—diluted$1.11 $1.42 
Nine Months Ended
(In Millions)Sep 26, 2020Sep 28, 2019
Net cash provided by operating activities$25,494 $23,257 
Additions to property, plant and equipment(10,392)(11,547)
Free cash flow$15,102 $11,710 
Net cash used for investing activities$(15,112)$(9,920)
Net cash provided by (used for) financing activities$(11,220)$(12,421)
  Three Months Ended
(In Millions, Except Per Share Amounts) Mar 28,
2020		 Mar 30,
2019
Operating income $7,038
 $4,174
Acquisition-related adjustments 339
 331
Restructuring and other charges 162
 —
Non-GAAP operating income $7,539
 $4,505
     
Operating margin 35.5% 26.0%
Acquisition-related adjustments 1.7% 2.1%
Restructuring and other charges 0.8% —%
Non-GAAP operating margin 38.0% 28.0%
     
Earnings per share—diluted $1.31
 $0.87
Acquisition-related adjustments 0.08
 0.07
Restructuring and other charges 0.04
 —
Ongoing mark-to-market on marketable equity securities 0.03
 (0.05)
Income tax effect (0.01) —
Non-GAAP earnings per share—diluted $1.45
 $0.89
     
Net cash provided by operating activities $6,158
 $4,959
Additions to property, plant and equipment (3,268) (3,321)
Free cash flow $2,890
 $1,638
     
Net cash used for investing activities $(3,736) $(2,722)
Net cash provided by (used for) financing activities $4,764
 $(2,102)

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MD&A43
Table of Contents

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OTHER KEY INFORMATION
RISK FACTORS
The risks described in "Risk Factors" within Other Key Information in our 2019 Form 10-K and our Form 10-Q for the quarter ended March 28, 2020 (Q1 2020 Form 10-Q) could materially and adversely affect our business, financial condition, and results of operations, and the trading price of our common stock could decline. In addition to our discussion in “Our Pandemic Response,” MD&A, and other sections of this report to address effects of the COVID-19 pandemic, we have provided an additional risk factor regarding COVID-19 below and have updated the risk factors included in our 2019 Form 10-K titled "Global or regional conditions can harm our financial results" and "Catastrophic events can have a material adverse effect on our operations and financial results." As discussed below, the impact of COVID-19 can also exacerbate other risks discussed in the Risk Factors sections of our 2019 Form 10-K and this report, which could in turn have a material adverse effect on us. The Risk Factors section in our 2019 Form 10-K, otherwiseas updated by our Q1 2020 Form 10-Q and the discussions of the COVID-19 pandemic in our Form 10-Q for the quarter ended June 27, 2020, remains current in all material respects. These risk factors do not identify all risks that we face—our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.
The COVID-19 pandemic could materially adversely affect our financial condition and results of operations. The novel strain of the coronavirus identified in China in late 2019 (COVID-19) has globally spread throughout other areas such as Asia, Europe, the Middle East, and North America and has resulted in authorities imposing, and businesses and individuals implementing, numerous unprecedented measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, and shutdowns. These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners. We have significant manufacturing operations in the U.S., Ireland, Israel, China, Malaysia, and Vietnam, and each of these countries has been affected by the outbreak and taken measures to try to contain it. The ultimate impact and efficacy of government measures and potential future measures is currently unknown.
There is considerable uncertainty regarding the business impacts from such measures and potential future measures. While we have been able to operate our factories on a relatively normal basis to date, shelter-in-place orders and other measures, including work-from-home and social distancing policies implemented to protect employees, have resulted in reduced workforce availability at some of our sites, construction delays, and reduced capacity at some of our vendors and suppliers. Restrictions on our access to or operation of our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, can impact our ability to meet customer demand and could have a material adverse effect on our financial condition and results of operations, particularly if prolonged. Similarly, current and future restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, can also impact our ability to meet demand and could materially adversely affect us. Our customers have experienced, and may continue to experience, disruptions in their operations and supply chains, which can result in delayed, reduced, or canceled orders, or collection risks, and which may adversely affect our results of operations. We have paused new construction projects at several of our manufacturing sites due to local government restrictions. Our current expectation that these interruptions will have a minimal impact on our product ramps and will not affect our timelines for process technology transitions could prove to be inaccurate, and it is possible our plans could be adversely affected to the extent these interruptions are prolonged, additional projects are paused, or other unexpected consequences impacting production occur.
The pandemic has significantly increased economic and demand uncertainty. It is likely that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession. There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or recession. Risks related to a slowdown or recession are described in our risk factor titled “Global or regional conditions can harm our financial results,” below, and include the risk that demand for our products will be significantly harmed. We are currently seeing negative impacts on demand in some of our businesses, and are expecting slowing economic conditions to adversely affect those and certain other segments in the second half of 2020, as discussed in the “Our Pandemic Response” section of this report. Given the significant economic uncertainty and volatility created by the pandemic, it is difficult to predict the nature and extent of impacts on demand for our products. These expectations are subject to change without warning and investors are cautioned not to place undue reliance on them.
The pandemic has led to increased disruption and volatility in capital markets and credit markets. We issued over $10 billion in new debt in Q1 2020 and announced the suspension of our stock repurchases on March 24, 2020 to strengthen our liquidity position given the uncertainty regarding the length and severity of the pandemic and ongoing economic uncertainty. Unanticipated consequences of the pandemic and resulting economic uncertainty could adversely affect our liquidity and capital resources in the future. Market volatility has negatively impacted, and may continue to negatively impact, our equity investment portfolio.
The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, cancellation of physical participation in meetings, events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our product development, validation, and qualification, customer support, and other activities, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.

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40


The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, other actions taken by governments, businesses, and individuals in response to the virus and resulting economic disruption, and how quickly and to what extent normal economic and operating conditions can resume. We are similarly unable to predict the degree to which the pandemic impacts our customers, suppliers, vendors, and other partners, and their financial conditions, but a material effect on these parties could also adversely affect us. The impact of COVID-19 can also exacerbate other risks discussed in the Risk Factors sections of our 2019 Form 10-K and this report, which could in turn have a material adverse effect on us. Developments related to COVID-19 have been rapidly changing, and additional impacts and risks may arise that we are not aware of or able to appropriately respond to currently.
Global or regional conditions can harm our financial results.We have manufacturing, assembly and test, R&D, sales, and other operations in many countries, and some of our business activities are concentrated in one or more geographic areas. Moreover, sales outside the U.S. accounted for approximately 78% of our revenue for the fiscal year ended December 28, 2019, with revenue from billings to China, including Hong Kong, contributing approximately 28% of our total revenue. As a result, our operations and our financial results, including our ability to manufacture, assemble and test, design, develop, or sell products, and the demand for our products, are at times adversely affected by a number of global and regional factors outside of our control.
Adverse changes in global or regional economic conditions, including recession or slowing growth, changes or uncertainty in fiscal, monetary, or trade policy, higher interest rates, tighter credit, inflation, lower capital expenditures by businesses including on IT infrastructure, increases in unemployment, and lower consumer confidence and spending, periodically occur. The COVID-19 pandemic has significantly increased economic and demand uncertainty. It is likely that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession. Adverse changes in economic conditions, including as a result of the pandemic, can significantly harm demand for our products and make it more challenging to forecast our operating results and make business decisions, including regarding prioritization of investments in our business. An economic downturn or increased uncertainty may also lead to increased credit and collectability risks, higher borrowing costs or reduced availability of capital markets, reduced liquidity, adverse impacts on our suppliers, failures of counterparties including financial institutions and insurers, asset impairments, and declines in the value of our financial instruments.
International trade disputes at times result in increased tariffs, trade barriers, and other protectionist measures that can increase our manufacturing costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain customers, limit our ability to procure components or raw materials, or impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policy, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, some markets.
Escalating trade tensions between the U.S. and China have led to increased tariffs and trade restrictions, including tariffs applicable to some of our products, and have affected customer ordering patterns. The U.S. has imposed restrictions on the export of U.S.-regulated products and technology to certain Chinese technology companies, including certain of our customers. These restrictions have reduced our sales, and continuing or future restrictions could adversely affect our financial results, result in reputational harm to us due to our relationship with such companies, or lead such companies to develop or adopt technologies that compete with our products. It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions. For example, U.S. legislation has expanded the power of the U.S. Department of Commerce to restrict the export of “emerging and foundational technologies” yet to be identified, which could impact our current or future products.
Trade disputes and protectionist measures, or continued uncertainty about such matters, could result in declining consumer confidence and slowing economic growth or recession, and could cause our customers to reduce, cancel, or alter the timing of their purchases with us. Sustained trade tensions could lead to long-term changes in global trade and technology supply chains, which could adversely affect our business and growth prospects.
We can be adversely affected by other global and regional factors that periodically occur, including:
geopolitical and security issues, such as armed conflict and civil or military unrest, political instability, human rights concerns, and terrorist activity, including, for example, geopolitical tensions and conflict affecting Israel, where our Mobileye business headquarters and certain of our fabrication facilities are located;
natural disasters, public health issues (including the COVID-19 pandemic discussed further in the risk factor “The COVID-19 pandemic could materially adversely affect our financial condition and results of operations,” above), and other catastrophic events;
inefficient infrastructure and other disruptions, such as supply chain interruptions and large-scale outages or unreliable provision of services from utilities, transportation, data hosting, or telecommunications providers;
formal or informal imposition of new or revised export, import, or doing-business regulations, including trade sanctions, tariffs, and changes in the ability to obtain export licenses, which could be changed without notice;
government restrictions on, or nationalization of, our operations in any country, or restrictions on our ability to repatriate earnings from a particular country;
adverse changes relating to government grants, tax credits, or other government incentives;
differing employment practices and labor issues;
ineffective legal protection of our IP rights in certain countries;

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41


local business and cultural factors that differ from our current standards and practices;
continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad, including as a result of the United Kingdom's withdrawal from the European Union;
fluctuations in the market values of our domestic and international investments, which can be negatively affected by liquidity, credit deterioration or losses, interest rate changes, financial results, political risk, sovereign risk, or other factors; and
uncertainty regarding LIBOR—certain of our interest rate derivatives and investments are based on LIBOR, and a portion of our indebtedness bears interest at variable interest rates, primarily based on LIBOR: LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform, which may cause LIBOR to disappear entirely after 2021 or to perform differently than in the past, and while we expect that reasonable alternatives to LIBOR will be implemented prior to the 2021 target date, we cannot predict the consequences and timing of these developments, and they could include an increase in our interest expense and/or a reduction in our interest income.
We are subject to laws and regulations worldwide that differ among jurisdictions, affecting our operations in areas including, but not limited to: IP ownership and infringement; tax; import and export requirements; anti-corruption; foreign exchange controls and cash repatriation restrictions; data privacy requirements; competition; advertising; employment; product regulations; environment, health, and safety requirements; and consumer laws. Compliance with such requirements can be onerous and expensive, and may otherwise impact our business operations negatively. For example, unfavorable developments with evolving laws and regulations worldwide related to 5G or autonomous driving technology may limit global adoption, impede our strategy, and negatively impact our long-term expectations for our investments in these areas. Expanding privacy legislation and compliance costs of privacy-related and data protection measures could adversely affect our customers and their products and services, particularly in cloud, Internet of Things, and AI applications, which could in turn reduce demand for our products used for those workloads.
Although we have policies, controls, and procedures designed to help ensure compliance with applicable laws, there can be no assurance that our employees, contractors, suppliers, or agents will not violate such laws or our policies. Violations of these laws and regulations can result in fines; criminal sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation. The technology industry is subject to intense media, political, and regulatory scrutiny, which can increase our exposure to government investigations, legal actions, and penalties.
Catastrophic events can have a material adverse effect on our operations and financial results.Our operations and business, and those of our customers and suppliers, can be disrupted by natural disasters; industrial accidents; public health issues (including the COVID-19 pandemic discussed further in the risk factor “The COVID-19 pandemic could materially adversely affect our financial condition and results of operations,” above); cybersecurity incidents; interruptions of service from utilities, transportation, telecommunications, or IT systems providers; manufacturing equipment failures; or other catastrophic events. For example, we have at times experienced disruptions in our manufacturing processes as a result of power outages, improperly functioning equipment, and disruptions in supply of raw materials or components, including due to cybersecurity incidents affecting our suppliers. Our headquarters and many of our operations and facilities are in locations that are prone to earthquakes and other natural disasters. Global climate change can result in certain natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and flooding, and could disrupt the availability of water necessary for the operation of our fabrication facilities located in semi-arid regions. Catastrophic events could make it difficult or impossible to manufacture or deliver products to our customers, receive production materials from our suppliers, or perform critical functions, which could adversely affect our revenue and require significant recovery time and expenditures to resume operations. While we maintain business recovery plans that are intended to enable us to recover from natural disasters or other events that can be disruptive to our business, some of our systems are not fully redundant and we cannot be sure that our plans will fully protect us from all such disruptions. Furthermore, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations due to a catastrophic event, they may reduce or cancel their orders, which may adversely affect our results of operations.
We maintain a program of insurance coverage for a variety of property, casualty, and other risks. The types and amounts of insurance we obtain vary depending on availability, cost, and decisions with respect to risk retention. Some of our policies have large deductibles and broad exclusions. In addition, one or more of our insurance providers may be unable or unwilling to pay a claim. Losses not covered by insurance may be large, which could harm our results of operations and financial condition.


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CONTROLS AND PROCEDURES
Inherent Limitations on Effectiveness of Controls
Our management, including the principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
Evaluation of Disclosure Controls and Procedures
Due to the COVID-19 pandemic, a significant portion of our employees are now working from home, while also under shelter-in-place orders or other restrictions.home. Established business continuity plans wereremain activated in order to mitigate the impact to our control environment, operating procedures, data and internal controls. The design of our processes and controls allow for remote execution with accessibility to secure data.
Based on management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 28,September 26, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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OTHER KEY INFORMATION44
Table of Contents

ISSUER PURCHASES OF EQUITY SECURITIES
We have an ongoing authorization, originally approved by our Board of Directors in 2005 and subsequently amended, to repurchase shares of our common stock in open market or negotiated transactions. On March 24, 2020, we suspended stock repurchases in light of the COVID-19 pandemic andpandemic. On August 19, 2020, we have the abilityentered into ASR agreements to reinstate repurchases as circumstances warrant.repurchase $10.0 billion of our common stock. As of March 28,September 26, 2020, we were authorized to repurchase up to $110.0 billion, of which $19.7$9.7 billion remained available.available, which reflects the deduction of the $10.0 billion in ASR agreements.
Common stock repurchase activity under our publicly announced stock repurchase program during the firstthird quarter of 2020 was as follows:
Period Total Number
of Shares
Purchased
(In Millions)		 Average Price
Paid Per Share		 Dollar Value of
Shares That May
Yet Be Purchased
Under the Program
(In Millions)
December 29, 2019 - January 25, 2020 17.9
 $60.39
 $22,687
January 26, 2020 - February 22, 2020 17.2
 $66.27
 $21,547
February 23, 2020 - March 28, 2020 36.2
 $52.11
 $19,658
Total 71.3
    
PeriodTotal Number
of Shares
Purchased
(In Millions)		Average Price
Paid Per Share		Dollar Value of
Shares That May
Yet Be Purchased
Under the Program
(In Millions)
June 28, 2020 - July 25, 2020— $— $19,658 
July 26, 2020 - August 22, 2020
Accelerated Share Repurchases1
166 $— $9,658 
August 23, 2020 - September 26, 2020— $— $9,658 
Total166 
1 In August 2020, we entered into ASR agreements under which we paid an aggregate of $10.0 billion and received an aggregate initial share delivery of 166 million shares of our common stock, which were immediately retired. The final number of shares to be repurchased under the ASR agreements and the average price paid per share will be determined upon settlement of the agreements by the end of 2020.
We issue RSUs as part of our equity incentive plans. In our Consolidated Condensed Financial Statements, we treat shares of common stock withheld for tax purposes on behalf of our employees in connection with the vesting of RSUs as common stock repurchases because they reduce the number of shares that would have been issued upon vesting. These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase program and accordingly are not included in the common stock repurchase totals in the preceding table.


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OTHER KEY INFORMATION4345


EXHIBITS
  Incorporated by Reference 
Exhibit
Number		Exhibit DescriptionFormFile NumberExhibitFiling
Date		Filed or
Furnished
Herewith
3.18-K000-062173.15/22/2006
3.28-K000-062173.21/17/2019
10.1†
8-K000-0621710.18/14/2020
31.1X
31.2X
32.1X
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentX
101.SCHXBRL Taxonomy Extension Schema DocumentX
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABXBRL Taxonomy Extension Label Linkbase DocumentX
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101X
    Incorporated by Reference  
Exhibit
Number
 Exhibit Description Form File Number Exhibit 
Filing
Date
 
Filed or
Furnished
Herewith
3.1 
Third Restated Certificate of Incorporation of Intel Corporation, dated May 17, 2006
 8-K 000-06217 3.1 5/22/2006  
3.2 
Intel Corporation Bylaws, as amended and restated on January 16, 2019
 8-K 000-06217 3.2 1/17/2019  
4.1 
Fourteenth Supplemental Indenture, dated as of February 13, 2020, between Intel Corporation and Wells Fargo Bank, National Association, as successor trustee
 8-K 000-06217 4.1 2/13/2020  
4.2 
Fifteenth Supplemental Indenture, dated as of February 13, 2020, between Intel Corporation and Wells Fargo Bank, National Association, as successor trustee
 8-K 000-06217 4.2 2/13/2020  
4.3 
Sixteenth Supplemental Indenture, dated as of March 25, 2020, between Intel Corporation and Wells Fargo Bank, National Association, as successor trustee
 8-K 000-06217 4.1 3/25/2020  
10.1†
 
Intel Corporation Form of Restricted Stock Unit Grant Agreement under the 2006 Equity Incentive Plan (for performance-based RSUs granted to non-grandfathered executives on or after January 30, 2019)
         X
10.2†
 
Intel Corporation Executive Annual Performance Bonus Plan
 8-K 000-06217 10.1 1/22/2020  
10.3†
 
Intel Corporation Sheltered Employee Retirement Plan Plus, as amended and restated effective January 1, 2020
         X
31.1 
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
         X
31.2 
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
         X
32.1 
Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350
         X
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document         X
101.SCH XBRL Taxonomy Extension Schema Document         X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document         X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document         X
101.LAB XBRL Taxonomy Extension Label Linkbase Document         X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document         X
104 Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101         X
† Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.


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OTHER KEY INFORMATION4446


FORM 10-Q CROSS-REFERENCE INDEX
Item NumberItem
Part I - Financial Information
Item 1.Financial Statements
Pages 65 - 2627
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations:
Results of operations
Pages 2 - 54, 2728 - 3539
Liquidity and capital resources
Pages 3640 - 3741
Off-balance sheet arrangements(a)
Contractual obligations
Page 3741
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Page 3741
Item 4.Controls and Procedures
Page 4344
Part II - Other Information
Item 1.Legal Proceedings
Pages 23 - 2526
Item 1A.Risk Factors
PagesPage 4044 - 42
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Page 4345
Item 3.Defaults Upon Senior SecuritiesNot applicable
Item 4.Mine Safety DisclosuresNot applicable
Item 5.Other InformationNot applicable
Item 6.Exhibits
Page 44
Signatures
Page 46
(a)As of March 28, 2020, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.


Signatures
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(a)    As of September 26, 2020, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

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OTHER KEY INFORMATION4547


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INTEL CORPORATION
(Registrant)
Date:October 22, 2020INTEL CORPORATION
(Registrant)
By:
Date:April 23, 2020By:/s/ GEORGE S. DAVIS
George S. Davis
Executive Vice President, Chief Financial Officer and Principal Financial Officer
Date:April 23,October 22, 2020By:/s/ KEVIN T. MCBRIDE
Kevin T. McBride
Vice President of Finance, Corporate Controller and Principal Accounting Officer

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4648