UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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| | ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | For the quarterly period ended | OctoberJuly 1, 20222023 |
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 NumberNumber: 000-06217
INTEL CORPORATION
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Delaware | | | 94-1672743 |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | | |
| 2200 Mission College Boulevard, | Santa Clara, | California | | 95054-1549 |
| (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:
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| Title of each class | Trading Symbol(s)symbol(s) | Name of each exchange on which registered |
| Common stock, $0.001 par value | INTC | Nasdaq 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.
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Large Accelerated Fileraccelerated filer | | Accelerated filer | | Non-accelerated filer | | Smaller reporting company | Emerging growth company |
☑
| | ¨ | | ¨ | | ☐ | ☐ |
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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 October 1, 2022,July 21, 2023, the registrant had outstanding 4,1274,188 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 present 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.
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.US 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.
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| Forward-Looking Statements | |
| Availability of Company Information | |
| A Quarter in Review | |
| Consolidated Condensed Financial Statements and Supplemental Details | |
| Consolidated Condensed Statements of Income | |
| Consolidated Condensed Statements of Comprehensive Income | |
| Consolidated Condensed Balance Sheets | |
| Consolidated Condensed Statements of Cash Flows | |
| Consolidated Condensed Statements of Stockholders' Equity | |
| Notes to Consolidated Condensed Financial Statements | |
| Key Terms | |
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| Management's Discussion and Analysis (MD&A) | |
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| Segment Trends and Results | |
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| Consolidated Condensed Results of Operations | |
| Liquidity and Capital Resources | |
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| Non-GAAP Financial Measures | |
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| Other Key Information | |
| Quantitative and Qualitative Disclosures aboutAbout Market Risk | |
| Risk Factors | |
| Controls and Procedures | |
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| Issuer Purchases of Equity Securities | |
| Rule 10b5-1 Trading Arrangements | |
| Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934 | |
| Exhibits | |
| Form 10-Q Cross-Reference Index | |
Forward-Looking Statements
This Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "accelerate," "adjust,"achieve," "allow,"aim," "ambitions," "anticipate," "believe," "committed," "continue," "could," "deliver,"designed," "estimate," "expect," "focus,"forecast," "future," "goals," "grow," "guidance," "improve," "increase," "intend," "likely," "manage," "may," "might," "milestones," "next generation," "objective," "on track," "opportunity," "plans,"outlook," "pending," "plan," "position," "potentially,"potential," "possible," "predict," "progress," "ramp," "roadmap," "seeks," "should," "strive," "targets," "to be," "upcoming," "will," "would," and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements, that refer to Intel’swhich may include statements regarding:
•our business plans and strategy and its anticipated benefits therefrom, including SCIP,with respect to our IDM 2.0 strategy, our partnership with Brookfield, the transition to an internal foundry model, and updates to our reporting structure; Intel'sstructure and our AI strategy;
•projections of our future financial performance, including future revenue, gross margins, capital expenditures, and cash flows;
•projected costs and yield trends;
•future cash requirements and the availability, uses, sufficiency, and cost of capital resources, and sources of funding, including future capital and R&D investments, credit rating expectations, and expected returns to stockholders, such as stock repurchases and dividends;
•future products, services and technologies, and the expected goals, timeline, ramps, progress, availability, production, regulation and benefits of such products, services and technologies, including future process nodes and packaging technology, roadmap,product roadmaps, schedules, future product architectures, expectations regarding process performance, per-watt parity, and schedules, including future node performancemetrics and other metrics; manufacturing expansionexpectations regarding product and financing plans; process leadership;
•investment plans, and impacts of investment plans, including in the U.S.US and abroad;
•internal and external manufacturing plans, including future responsesinternal manufacturing volumes, manufacturing expansion plans and the financing therefor, and external foundry usage;
•future production capacity and product supply;
•supply expectations, including regarding constraints, limitations, pricing, and industry shortages;
•plans and goals related to Intel’s foundry business, including with respect to future manufacturing capacity and effects of COVID-19,foundry service offerings, including manufacturing, transportation, and operational restrictions or disruptions, such as port shutdowns in China; future economic conditions, including regional or global downturns or recessions; projections of our future financial performance; future business, social, and environmental performance, goals, measures and strategies; our anticipated growth and trends in our businesses and operations; projected growth and trends in markets relevant to our businesses; business plans; future products, services and technology and the expected regulation, availability, production, and benefits of such products, services and technology; projected costs and yield trends; product and manufacturing plans, goals, timelines, ramps, progress and future product and process leadership and performance; geopolitical conditions, including the impacts of Russia's war on Ukraine and the suspension of our operations; IP offerings;
•expected timing and impact of acquisitions, divestitures, and other significant transactions, including statements relating to the pendingour proposed acquisition of Tower Semiconductor Ltd., and the sale of our NAND memory business, business;
•the initial public offering of Mobileye, the wind-down of our Intel® Optane™ memory business, and the close of our transactions with Brookfield; expected completion and impacts of restructuring activities and cost-saving or efficiency initiatives, including those related to the 2022 Restructuring Program; availability, uses, sufficiency,
•future social and cost of capitalenvironmental performance goals, measures, strategies and of capital resources, including expected returnsresults;
•our anticipated growth, future market share, and trends in our businesses and operations;
•projected growth and trends in markets relevant to stockholdersour businesses;
•anticipated trends and impacts related to industry component, substrate, and foundry capacity utilization, shortages and constraints;
•expectations regarding government incentives;
•future technology trends and developments, such as dividends; our valuation; AI;
•future production capacitymacro environmental and product supply; supply expectations,economic conditions, including regarding constraints, limitations, pricing,regional or global downturns or recessions;
•future responses to and industry shortages;effects of COVID-19, including as to manufacturing, transportation and operational restrictions and disruptions and broader economic conditions;
•geopolitical conditions, including the future purchase, use,impacts of Russia's war on Ukraine and availability of products, componentsrising tensions between the U.S. and services supplied by third parties, including third-party IP and manufacturing services; China;
•tax- and accounting-related expectations; LIBOR-related expectations; uncertain events or assumptions, including statements relating to total addressable market, product or customer demand or market opportunity;
•expectations regarding our relationships with certain sanctioned parties; 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, including expectations based on third-party information and projections that management believes to be reputable. circumstances.
Such statements 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 2021 Form 10-K, and our Form 10-Q for the quarter ended April 2, 2022, particularly in "Risk Factors" within Other Key Information, including including:
•changes in demand for our products, products;
•changes in product mix, mix;
•the complexity and fixed cost nature of our manufacturing operations,operations;
•the high level of competition and rapid technological change in our industry;
•the significant upfront investments in R&D and our business, products, technologies, and technologies, manufacturing capabilities;
•vulnerability to new product development and manufacturing-related risks, the effects of the COVID-19 pandemic,including product defects or errata, particularly as we develop next generation products and implement next generation process technologies;
•risks associated with a highly complex global supply chain, including from disruptions, delays, trade tensions, or shortages;
•sales-related risks, including customer concentrationand the use of distributors and other third parties;
•potential security vulnerabilities in our products;
•cybersecurity and privacy risks, risks;
•investment and transaction risk, risk;
•IP risks and risks associated with litigation and regulatory proceedings;
•evolving regulatory and legal requirements across many jurisdictions;
•geopolitical and the international trade conditions;
•our debt obligations;
•risks of large scale global operations;
•macroeconomic conditions;
•impacts of the COVID-19 or similar such pandemic;
•other risks and uncertainties described in this report, our global operations, among others. 2022 Form 10-K and our other filings with the SEC.
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. Intel doesIn addition, the forward-looking statements in this Form 10-Q are based on management's expectations 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. We do not undertake, and expressly disclaimsdisclaim 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.
Availability of Company Information
Intel, the Intel logo, Intel Core, and Intel Optane, and Xeon are trademarks of Intel Corporation or its subsidiaries in the U.S.US and/or other countries.
* Other names and brands may be claimed as the property of others.
Total revenue of $15.3$12.9 billion was down $3.9$2.4 billion year over year or 20%,15% from Q2 2022, as CCG revenue decreased 17%12%, DCAI revenue decreased 27%15%, and NEX revenue increased 14%decreased 38%. Q3 2022 results were impacted by an uncertain macroeconomic environment that continues to deteriorate, with slowing consumer demand, persistent inflation, and higher interest rates, that we believe impacts our target markets and creates a high level of uncertainty with our customers. CCG revenue was downdecreased due to lower notebook and desktop volumes on lower demand. Notebook volume in the consumer and education market segments, though Notebook ASPs were higher due to a resulting change in product mix. DCAI Server volume decreased, led by enterprise customers, and due to customers tempering purchases to reduce existing inventories in a softening datacenter market. Server ASPs decreased due to a higher mix of revenue from hyperscale customers withinsmall core products combined with a competitive environment. NEX revenuehigher mix of older generation products, while desktop ASPs increased primarily due to an increased demand for 5G products, higher Ethernet demandmix of product sales to the commercial and ASPs, and accelerated demand for Edge products,gaming market segments. DCAI revenue decreased due to lower server volume resulting from a softening CPU data center market, partially offset by higher ASPs from an increased mix of high core count products. NEX revenue decreased due to lower demand for Network Xeon.across product lines.
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| Revenue | | Gross Margin | | Diluted EPS attributable to Intel | | Cash Flows |
■ GAAP $B ■Non-GAAP $B | | ■ GAAP ■ Non-GAAP | | ■ GAAP ■ Non-GAAP | | ■ Operating Cash Flow $B ■ Adjusted Free Cash Flow $B |
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| $15.3B | | 42.6% | | 45.9% | | $0.25 | | $0.59 | | $7.7B | | $(7.1)B |
| GAAP | | GAAP | | non-GAAP1 | | GAAP | | non-GAAP1 | | GAAP | | non-GAAP1 |
| Revenue down $3.9B or 20% from Q3 2021 | | Gross margin down 13.4 ppts from Q3 2021 | | Gross margin down 12.4 ppts from Q3 2021 | | Diluted EPS down $1.42 or 85% from Q3 2021 | | Diluted EPS down $0.86 or 59% from Q3 2021 | | Operating cash flow down $16.3B or 68% from YTD 2021 | | Adjusted free cash flow down $19.7B or 157% from YTD 2021 |
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| Lower revenue in CCG and DCAI; higher revenue in NEX; lack of NAND revenue compared to Q3 2021. | | Lower gross margin from lower revenue, higher unit cost, higher inventory reserves, and higher period charges from ramp of Intel 4 and Intel 7. | | Lower EPS from lower gross margin, higher operating expenses from additional investment in R&D and higher losses on equity investments, partially offset by a tax benefit on the operating loss. | | Lower operating cash flow driven by lower income after adjusting for non-cash items, including the gain on the sale of McAfee and the pre-tax gain from the divestiture of our NAND business; also affected by unfavorable working capital changes. |
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| $12.9B | | 35.8% | | 39.8% | | $0.35 | | $0.13 | | $1.0B | | $(11.5)B |
| GAAP | | GAAP | | non-GAAP1 | | GAAP | | non-GAAP1 | | GAAP | | non-GAAP1 |
| Revenue down $2.4B or 15% from Q2 2022 | | Gross margin down 0.7 ppt from Q2 2022 | | Gross margin down 5 ppts from Q2 2022 | | Diluted EPS attributable to Intel up $0.46 from Q2 2022 | | Diluted EPS attributable to Intel down $0.15 or 54% from Q2 2022 | | Operating cash flow down $5.7B or 85% from Q2 2022 | | Adjusted free cash flow down $10.7B from Q2 2022 |
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| Lower revenue in CCG, DCAI, and NEX. | | Lower GAAP gross margin from lower revenue, higher unit cost, and higher excess capacity charges, partially offset by a decrease in period charges and the absence of one-time charges recognized in Q2 2022 (Optane inventory impairment and a patent settlement - both excluded from non-GAAP results). | | Higher GAAP EPS attributable to Intel primarily from a tax benefit and reduced operating expenses from various cost-cutting measures. | | Lower operating cash flow driven primarily by a net operating loss. |
Key Developments
▪We began high-volume manufacturingAn important part of Sapphire Rapids, Raptor Lake,our AI strategy is to democratize AI – scaling it and Ponte Vecchio and expect to begin shipping to customers in Q4 2022.
▪We introducedmaking it ubiquitous across the Intel® Data Center GPU Flex Series for the intelligent visual cloud, which provides a GPU solution built to flexibly handle a wide rangefull continuum of workloads and helps lowerusage models. We are championing an open ecosystem with a full suite of silicon and optimize the total cost of ownership for diverse cloud workloads. We also announced the 12thsoftware IP to drive AI in both discrete and integrated solutions. Our 4th Gen Intel® Core™ SoC processors for IoT Edge, a new lineup of purpose-built edge products optimized for IoT applications,Xeon® Scalable processor and we revealedHabana Gaudi2* deep learning accelerator were recognized in MLCommons' AI performance benchmark data as two compelling, open alternatives in the 13th Gen Intel® Core™ processor family with six new unlocked desktop processors with up to 24 coresAI market that compete on both performance and 32 threads and clock speeds up to 5.8 GHz for leading gaming, streaming and recording experiences.price.
▪We announced plans to expand our manufacturing capacity, which include an agreement in principle to build a $25.0 billion chip manufacturing plant in Kiryat Gat, Israel, signing a revised letter of intent to increase our planned investment to be more than $33.0 billion in the Semiconductor Co-Investment Program (SCIP), a program which introduces a new funding modelMagdeburg, Germany wafer fabrication site, and plans to the capital-intensive semiconductor industry. As part of this program, we signed a definitive agreement with Brookfield Asset Management (Brookfield). SCIP isinvest up to $4.6 billion in an element of our Smart Capital approach, which aims to provide innovative ways to fund growthassembly and acceleratetest facility in Poland. These investments further our IDM 2.0 strategy. This arrangement represents an equity partnership whereby westrategy and Brookfield will own 51%are expected to support a resilient semiconductor supply chain and 49%, respectively, of what will beto create the foundation for a newly-formed entity, Arizona Fab LLC (Arizona Fab), which we will fully consolidate into our consolidated financial statements. We expect Arizona Fab will spend up to $30.0 billion of investments in expanded manufacturing infrastructure at our Ocotillo campus in Chandler, Arizona where we will be the sole operator of the two newnext-generation chip factories, which will support long-term demand for our products and provide capacity for IFS customers. The definitive agreement includes provisions that require us to utilize these two new chip factories at specified minimum levels or be subject to penalties.ecosystem.
▪We expect Mobileye to receive net proceeds of approximately $0.9 billion from completing their IPO and concurrent private placement in Q4 2022. At closing, we expect to own roughly 94% of their common stock and to continue to consolidate their results.
1 See "Non-GAAP Financial Measures" within MD&A.
2 See "Key Terms" within Consolidated Condensed Financial Statements and Supplemental Details.
1 See "Non-GAAP Financial Measures" within MD&A.
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| Consolidated Condensed Statements of Income | |
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| | | | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
| (In Millions, Except Per Share Amounts; Unaudited) | (In Millions, Except Per Share Amounts; Unaudited) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | (In Millions, Except Per Share Amounts; Unaudited) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Net revenue | Net revenue | | $ | 15,338 | | | $ | 19,192 | | | $ | 49,012 | | | $ | 58,496 | | Net revenue | | $ | 12,949 | | | $ | 15,321 | | | $ | 24,664 | | | $ | 33,674 | |
| Cost of sales | Cost of sales | | 8,803 | | | 8,446 | | | 27,646 | | | 25,690 | | Cost of sales | | 8,311 | | | 9,734 | | | 16,018 | | | 18,843 | |
| Gross margin | Gross margin | | 6,535 | | | 10,746 | | | 21,366 | | | 32,806 | | Gross margin | | 4,638 | | | 5,587 | | | 8,646 | | | 14,831 | |
| Research and development | Research and development | | 4,302 | | | 3,803 | | | 13,064 | | | 11,141 | | Research and development | | 4,080 | | | 4,400 | | | 8,189 | | | 8,762 | |
| Marketing, general and administrative | | 1,744 | | | 1,674 | | | 5,296 | | | 4,601 | | |
| Marketing, general, and administrative | | Marketing, general, and administrative | | 1,374 | | | 1,800 | | | 2,677 | | | 3,552 | |
| Restructuring and other charges | Restructuring and other charges | | 664 | | | 42 | | | (460) | | | 2,597 | | Restructuring and other charges | | 200 | | | 87 | | | 264 | | | (1,124) | |
| Operating expenses | Operating expenses | | 6,710 | | | 5,519 | | | 17,900 | | | 18,339 | | Operating expenses | | 5,654 | | | 6,287 | | | 11,130 | | | 11,190 | |
| Operating income (loss) | Operating income (loss) | | (175) | | | 5,227 | | | 3,466 | | | 14,467 | | Operating income (loss) | | (1,016) | | | (700) | | | (2,484) | | | 3,641 | |
| Gains (losses) on equity investments, net | Gains (losses) on equity investments, net | | (151) | | | 1,707 | | | 4,082 | | | 2,370 | | Gains (losses) on equity investments, net | | (24) | | | (90) | | | 145 | | | 4,233 | |
| Interest and other, net | Interest and other, net | | 138 | | | (76) | | | 1,016 | | | (328) | | Interest and other, net | | 224 | | | (119) | | | 365 | | | 878 | |
| Income (loss) before taxes | Income (loss) before taxes | | (188) | | | 6,858 | | | 8,564 | | | 16,509 | | Income (loss) before taxes | | (816) | | | (909) | | | (1,974) | | | 8,752 | |
| Provision for (benefit from) taxes | Provision for (benefit from) taxes | | (1,207) | | | 35 | | | (114) | | | 1,264 | | Provision for (benefit from) taxes | | (2,289) | | | (455) | | | (679) | | | 1,093 | |
| Net income | | $ | 1,019 | | | $ | 6,823 | | | $ | 8,678 | | | $ | 15,245 | | |
| Earnings per share—basic | | $ | 0.25 | | | $ | 1.68 | | | $ | 2.11 | | | $ | 3.76 | | |
| Earnings per share—diluted | | $ | 0.25 | | | $ | 1.67 | | | $ | 2.10 | | | $ | 3.73 | | |
| Net income (loss) | | Net income (loss) | | $ | 1,473 | | | $ | (454) | | | $ | (1,295) | | | $ | 7,659 | |
| Less: Net income (loss) attributable to non-controlling interests | | Less: Net income (loss) attributable to non-controlling interests | | (8) | | | — | | | (18) | | | — | |
| Net income (loss) attributable to Intel | | Net income (loss) attributable to Intel | | $ | 1,481 | | | $ | (454) | | | $ | (1,277) | | | $ | 7,659 | |
| Earnings (loss) per share attributable to Intel—basic | | Earnings (loss) per share attributable to Intel—basic | | $ | 0.35 | | | $ | (0.11) | | | $ | (0.31) | | | $ | 1.87 | |
| Earnings (loss) per share attributable to Intel—diluted | | Earnings (loss) per share attributable to Intel—diluted | | $ | 0.35 | | | $ | (0.11) | | | $ | (0.31) | | | $ | 1.86 | |
| | Weighted average shares of common stock outstanding: | Weighted average shares of common stock outstanding: | | | | | | | | | Weighted average shares of common stock outstanding: | | | | | | | | |
| Basic | Basic | | 4,118 | | | 4,061 | | | 4,104 | | | 4,055 | | Basic | | 4,182 | | | 4,100 | | | 4,168 | | | 4,095 | |
| Diluted | Diluted | | 4,125 | | | 4,086 | | | 4,123 | | | 4,089 | | Diluted | | 4,196 | | | 4,100 | | | 4,168 | | | 4,120 | |
See accompanying notes.
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| Financial StatementsA Quarter in Review | Consolidated Condensed Statements of Income | 34 |
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| Consolidated Condensed Statements of Comprehensive Income | |
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| | | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Six Months Ended |
| (In Millions; Unaudited) | (In Millions; Unaudited) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | (In Millions; Unaudited) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Net income | | $ | 1,019 | | | $ | 6,823 | | | $ | 8,678 | | | $ | 15,245 | | |
| Changes in other comprehensive income, net of tax: | | | | | | | | | |
| Net income (loss) | | Net income (loss) | | $ | 1,473 | | | $ | (454) | | | $ | (1,295) | | | $ | 7,659 | |
| Changes in other comprehensive income (loss), net of tax: | | Changes in other comprehensive income (loss), net of tax: | | | | | | | | |
| | Net unrealized holding gains (losses) on derivatives | Net unrealized holding gains (losses) on derivatives | | (436) | | | (46) | | | (1,178) | | | (390) | | Net unrealized holding gains (losses) on derivatives | | (131) | | | (627) | | | 11 | | | (742) | |
| Actuarial valuation and other pension benefits (expenses), net | Actuarial valuation and other pension benefits (expenses), net | | 10 | | | 13 | | | 37 | | | 38 | | Actuarial valuation and other pension benefits (expenses), net | | 2 | | | 9 | | | 3 | | | 27 | |
| Translation adjustments and other | Translation adjustments and other | | — | | | (19) | | | (30) | | | (44) | | Translation adjustments and other | | 4 | | | (5) | | | 4 | | | (30) | |
| Other comprehensive income (loss) | Other comprehensive income (loss) | | (426) | | | (52) | | | (1,171) | | | (396) | | Other comprehensive income (loss) | | (125) | | | (623) | | | 18 | | | (745) | |
| Total comprehensive income | | $ | 593 | | | $ | 6,771 | | | $ | 7,507 | | | $ | 14,849 | | |
| Total comprehensive income (loss) | | Total comprehensive income (loss) | | 1,348 | | | (1,077) | | | (1,277) | | | 6,914 | |
| Less: comprehensive income (loss) attributable to non-controlling interests | | Less: comprehensive income (loss) attributable to non-controlling interests | | (8) | | | — | | | (18) | | | — | |
| Total comprehensive income (loss) attributable to Intel | | Total comprehensive income (loss) attributable to Intel | | $ | 1,356 | | | $ | (1,077) | | | $ | (1,259) | | | $ | 6,914 | |
See accompanying notes.
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| Financial Statements | Consolidated Condensed Statements of Comprehensive Income | 45 |
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| Consolidated Condensed Balance Sheets | |
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| | (In Millions; Unaudited) | (In Millions; Unaudited) | | Oct 1, 2022 | | Dec 25, 2021 | (In Millions; Unaudited) | | Jul 1, 2023 | | Dec 31, 2022 |
| | Assets | Assets | | Assets | |
| Current assets: | Current assets: | | Current assets: | |
| Cash and cash equivalents | Cash and cash equivalents | | $ | 4,529 | | | $ | 4,827 | | Cash and cash equivalents | | $ | 8,349 | | | $ | 11,144 | |
| Short-term investments | Short-term investments | | 18,030 | | | 24,426 | | Short-term investments | | 15,908 | | | 17,194 | |
| | Accounts receivable | | 7,469 | | | 9,457 | | |
| Accounts receivable, net | | Accounts receivable, net | | 2,996 | | | 4,133 | |
| Inventories | Inventories | | 12,831 | | | 10,776 | | Inventories | | 11,984 | | | 13,224 | |
| Assets held for sale | | 56 | | | 6,942 | | |
| | Other current assets | Other current assets | | 6,348 | | | 2,130 | | Other current assets | | 4,119 | | | 4,712 | |
| Total current assets | Total current assets | | 49,263 | | | 58,558 | | Total current assets | | 43,356 | | | 50,407 | |
| | Property, plant and equipment, net of accumulated depreciation of $91,417 ($85,294 as of December 25, 2021) | | 75,763 | | | 63,245 | | |
| Property, plant, and equipment, net of accumulated depreciation of $95,781 ($93,386 as of December 31, 2022) | | Property, plant, and equipment, net of accumulated depreciation of $95,781 ($93,386 as of December 31, 2022) | | 90,945 | | | 80,860 | |
| Equity investments | Equity investments | | 5,822 | | | 6,298 | | Equity investments | | 5,893 | | | 5,912 | |
| | Goodwill | Goodwill | | 27,591 | | | 26,963 | | Goodwill | | 27,591 | | | 27,591 | |
| Identified intangible assets, net | Identified intangible assets, net | | 6,268 | | | 7,270 | | Identified intangible assets, net | | 5,173 | | | 6,018 | |
| Other long-term assets | Other long-term assets | | 10,134 | | | 6,072 | | Other long-term assets | | 12,671 | | | 11,315 | |
| Total assets | Total assets | | $ | 174,841 | | | $ | 168,406 | | Total assets | | $ | 185,629 | | | $ | 182,103 | |
| | Liabilities and stockholders’ equity | Liabilities and stockholders’ equity | | Liabilities and stockholders’ equity | |
| Current liabilities: | Current liabilities: | | Current liabilities: | |
| Short-term debt | Short-term debt | | $ | 2,283 | | | $ | 4,591 | | Short-term debt | | $ | 2,711 | | | $ | 4,367 | |
| Accounts payable | Accounts payable | | 7,133 | | | 5,747 | | Accounts payable | | 8,757 | | | 9,595 | |
| Accrued compensation and benefits | Accrued compensation and benefits | | 3,421 | | | 4,535 | | Accrued compensation and benefits | | 2,887 | | | 4,084 | |
| | Income taxes payable | | Income taxes payable | | 2,169 | | | 2,251 | |
| Other accrued liabilities | Other accrued liabilities | | 14,976 | | | 12,589 | | Other accrued liabilities | | 10,656 | | | 11,858 | |
| Total current liabilities | Total current liabilities | | 27,813 | | | 27,462 | | Total current liabilities | | 27,180 | | | 32,155 | |
| | Debt | Debt | | 37,240 | | | 33,510 | | Debt | | 46,335 | | | 37,684 | |
| | Income taxes payable | | 3,782 | | | 4,305 | | |
| Deferred income taxes | | 361 | | | 2,667 | | |
| | Other long-term liabilities | Other long-term liabilities | | 5,760 | | | 5,071 | | Other long-term liabilities | | 7,643 | | | 8,978 | |
| Commitments and Contingencies (Note 12) | | |
| Contingencies (Note 13) | | Contingencies (Note 13) | |
| | Stockholders’ equity: | Stockholders’ equity: | | Stockholders’ equity: | |
| | Common stock and capital in excess of par value, 4,127 issued and outstanding (4,070 issued and outstanding as of December 25, 2021) | | 30,912 | | | 28,006 | | |
| Common stock and capital in excess of par value, 4,188 issued and outstanding (4,137 issued and outstanding as of December 31, 2022) | | Common stock and capital in excess of par value, 4,188 issued and outstanding (4,137 issued and outstanding as of December 31, 2022) | | 34,330 | | | 31,580 | |
| Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) | | (2,051) | | | (880) | | Accumulated other comprehensive income (loss) | | (544) | | | (562) | |
| Retained earnings | Retained earnings | | 71,024 | | | 68,265 | | Retained earnings | | 67,231 | | | 70,405 | |
| Total stockholders’ equity | | 99,885 | | | 95,391 | | |
| Total Intel stockholders' equity | | Total Intel stockholders' equity | | 101,017 | | | 101,423 | |
| Non-controlling interests | | Non-controlling interests | | 3,454 | | | 1,863 | |
| Total stockholders' equity | | Total stockholders' equity | | 104,471 | | | 103,286 | |
| Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | | $ | 174,841 | | | $ | 168,406 | | Total liabilities and stockholders’ equity | | $ | 185,629 | | | $ | 182,103 | |
See accompanying notes.
| | | | | | | | | | | |
| Financial Statements | Consolidated Condensed Balance Sheets | 56 |
| | | | | |
| Consolidated Condensed Statements of Cash Flows | |
| |
| | | | | Nine Months Ended | | | Six Months Ended |
| (In Millions; Unaudited) | (In Millions; Unaudited) | | Oct 1, 2022 | | Sep 25, 2021 | (In Millions; Unaudited) | | Jul 1, 2023 | | Jul 2, 2022 |
| | Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | | $ | 4,827 | | | $ | 5,865 | | Cash and cash equivalents, beginning of period | | $ | 11,144 | | | $ | 4,827 | |
| Cash flows provided by (used for) operating activities: | Cash flows provided by (used for) operating activities: | | | | | Cash flows provided by (used for) operating activities: | | | | |
| Net income | | 8,678 | | | 15,245 | | |
| Net income (loss) | | Net income (loss) | | (1,295) | | | 7,659 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | 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 | Depreciation | | 8,309 | | | 7,357 | | Depreciation | | 3,733 | | | 5,528 | |
| Share-based compensation | Share-based compensation | | 2,392 | | | 1,587 | | Share-based compensation | | 1,661 | | | 1,599 | |
| | Restructuring and other charges | Restructuring and other charges | | 665 | | | 2,597 | | Restructuring and other charges | | 255 | | | 73 | |
| Amortization of intangibles | Amortization of intangibles | | 1,439 | | | 1,361 | | Amortization of intangibles | | 909 | | | 968 | |
| (Gains) losses on equity investments, net | (Gains) losses on equity investments, net | | (4,075) | | | (1,113) | | (Gains) losses on equity investments, net | | (146) | | | (4,230) | |
| (Gains) losses on divestitures | (Gains) losses on divestitures | | (1,072) | | | — | | (Gains) losses on divestitures | | — | | | (1,072) | |
| | Changes in assets and liabilities: | Changes in assets and liabilities: | | Changes in assets and liabilities: | |
| Accounts receivable | Accounts receivable | | 1,991 | | | (1,618) | | Accounts receivable | | 1,137 | | | 3,397 | |
| Inventories | Inventories | | (2,043) | | | (1,212) | | Inventories | | 1,240 | | | (1,386) | |
| Accounts payable | Accounts payable | | (485) | | | 1,095 | | Accounts payable | | (1,102) | | | 117 | |
| Accrued compensation and benefits | Accrued compensation and benefits | | (1,912) | | | (16) | | Accrued compensation and benefits | | (1,340) | | | (1,985) | |
| Prepaid customer supply agreements | | (18) | | | (1,577) | | |
| | Income taxes | Income taxes | | (4,062) | | | (570) | | Income taxes | | (2,186) | | | (2,232) | |
| Other assets and liabilities | Other assets and liabilities | | (2,077) | | | 917 | | Other assets and liabilities | | (1,843) | | | (1,736) | |
| Total adjustments | Total adjustments | | (948) | | | 8,808 | | Total adjustments | | 2,318 | | | (959) | |
| Net cash provided by operating activities | | 7,730 | | | 24,053 | | |
| Net cash provided by (used for) operating activities | | Net cash provided by (used for) operating activities | | 1,023 | | | 6,700 | |
| Cash flows provided by (used for) investing activities: | Cash flows provided by (used for) investing activities: | | | | | Cash flows provided by (used for) investing activities: | | | | |
| Additions to property, plant and equipment | | (19,145) | | | (11,579) | | |
| Additions to held for sale NAND property, plant and equipment | | (206) | | | (1,118) | | |
| Additions to property, plant, and equipment | | Additions to property, plant, and equipment | | (13,301) | | | (11,846) | |
| | | Purchases of short-term investments | Purchases of short-term investments | | (31,669) | | | (30,326) | | Purchases of short-term investments | | (25,696) | | | (25,514) | |
| Maturities and sales of short-term investments | Maturities and sales of short-term investments | | 35,129 | | | 22,270 | | Maturities and sales of short-term investments | | 26,957 | | | 25,407 | |
| | Sales of equity investments | Sales of equity investments | | 4,880 | | | 444 | | Sales of equity investments | | 253 | | | 4,775 | |
| | Proceeds from divestitures | Proceeds from divestitures | | 6,579 | | | — | | Proceeds from divestitures | | — | | | 6,579 | |
| Other investing | Other investing | | (2,614) | | | 766 | | Other investing | | 458 | | | (1,820) | |
| Net cash used for investing activities | Net cash used for investing activities | | (7,046) | | | (19,543) | | Net cash used for investing activities | | (11,329) | | | (2,419) | |
| Cash flows provided by (used for) financing activities: | Cash flows provided by (used for) financing activities: | | | | | Cash flows provided by (used for) financing activities: | | | | |
| | Repayment of commercial paper | | Repayment of commercial paper | | (3,944) | | | — | |
| | Payments on finance leases | Payments on finance leases | | (341) | | | — | | Payments on finance leases | | (96) | | | (299) | |
| Partner contributions | | Partner contributions | | 834 | | | — | |
| Proceeds from sales of subsidiary shares | | Proceeds from sales of subsidiary shares | | 1,573 | | | — | |
| Issuance of long-term debt, net of issuance costs | Issuance of long-term debt, net of issuance costs | | 6,103 | | | 4,974 | | Issuance of long-term debt, net of issuance costs | | 10,968 | | | — | |
| Repayment of debt | Repayment of debt | | (3,088) | | | (500) | | Repayment of debt | | — | | | (1,688) | |
| Proceeds from sales of common stock through employee equity incentive plans | | 972 | | | 1,016 | | |
| Repurchase of common stock | | — | | | (2,415) | | |
| | | Payment of dividends to stockholders | Payment of dividends to stockholders | | (4,488) | | | (4,231) | | Payment of dividends to stockholders | | (2,036) | | | (2,986) | |
| | Other financing | Other financing | | (140) | | | (1,349) | | Other financing | | 212 | | | 255 | |
| Net cash used for financing activities | | (982) | | | (2,505) | | |
| Net cash provided by (used for) financing activities | | Net cash provided by (used for) financing activities | | 7,511 | | | (4,718) | |
| | Net increase (decrease) in cash and cash equivalents | Net increase (decrease) in cash and cash equivalents | | (298) | | | 2,005 | | Net increase (decrease) in cash and cash equivalents | | (2,795) | | | (437) | |
| Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | | $ | 4,529 | | | $ | 7,870 | | Cash and cash equivalents, end of period | | $ | 8,349 | | | $ | 4,390 | |
| | Supplemental disclosures: | Supplemental disclosures: | | Supplemental disclosures: | |
| Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | | $ | 3,386 | | | $ | 2,693 | | Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | | $ | 5,113 | | | $ | 3,286 | |
| | Cash paid during the period for: | Cash paid during the period for: | | Cash paid during the period for: | |
| Interest, net of capitalized interest | Interest, net of capitalized interest | | $ | 315 | | | $ | 271 | | Interest, net of capitalized interest | | $ | 393 | | | $ | 214 | |
| Income taxes, net of refunds | Income taxes, net of refunds | | $ | 3,960 | | | $ | 1,831 | | Income taxes, net of refunds | | $ | 1,520 | | | $ | 3,326 | |
| |
See accompanying notes.
| | | | | | | | | | | |
| Financial Statements | Consolidated Condensed Statements of Cash Flows | 67 |
| | | | | |
| Consolidated Condensed Statements of Stockholders' Equity | |
| |
| | Common Stock and Capital in Excess of Par Value | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings1 | | Total | |
| (In Millions, Except Per Share Amounts; Unaudited) | | (In Millions, Except Per Share Amounts; Unaudited) | | Common Stock and Capital in Excess of Par Value | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings | | Non-Controlling Interests | | Total |
| (In Millions, Except Per Share Amounts; Unaudited) | | Shares | | Amount | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings1 | | Total | | Shares | | Amount | | | |
| Three Months Ended | Three Months Ended | | Three Months Ended | |
| | Balance as of July 02, 2022 | | 4,106 | | | $ | 29,858 | | | $ | (1,625) | | | $ | 72,985 | | | $ | 101,218 | | |
| Net income | | — | | | — | | | — | | | 1,019 | | | 1,019 | | |
| Balance as of April 1, 2023 | | Balance as of April 1, 2023 | | 4,171 | | | $ | 32,829 | | | $ | (419) | | | $ | 65,649 | | | $ | 2,344 | | | $ | 100,403 | |
| | Net income (loss) | | Net income (loss) | | — | | | — | | | — | | | 1,481 | | | (8) | | | 1,473 | |
| Other comprehensive income (loss) | Other comprehensive income (loss) | | — | | | — | | | (426) | | | — | | | (426) | | Other comprehensive income (loss) | | — | | | — | | | (125) | | | — | | | — | | | (125) | |
| Net proceeds from sales of subsidiary shares and partner contributions | | Net proceeds from sales of subsidiary shares and partner contributions | | — | | | 866 | | | — | | | — | | | 1,092 | | | 1,958 | |
| Employee equity incentive plans and other | Employee equity incentive plans and other | | 24 | | | 399 | | | — | | | — | | | 399 | | Employee equity incentive plans and other | | 22 | | | 6 | | | — | | | — | | | — | | | 6 | |
| Share-based compensation | Share-based compensation | | — | | | 793 | | | — | | | — | | | 793 | | Share-based compensation | | — | | | 896 | | | — | | | — | | | 26 | | | 922 | |
| | Restricted stock unit withholdings | | Restricted stock unit withholdings | | (5) | | | (267) | | | — | | | 101 | | | — | | | (166) | |
| | Balance as of July 1, 2023 | | Balance as of July 1, 2023 | | 4,188 | | | $ | 34,330 | | | $ | (544) | | | $ | 67,231 | | | $ | 3,454 | | | $ | 104,471 | |
| | Balance as of April 2, 2022 | | Balance as of April 2, 2022 | | 4,089 | | | $ | 29,244 | | | $ | (1,002) | | | $ | 74,894 | | | $ | — | | | $ | 103,136 | |
| | Net income (loss) | | Net income (loss) | | — | | | — | | | — | | | (454) | | | — | | | (454) | |
| Other comprehensive income (loss) | | Other comprehensive income (loss) | | — | | | — | | | (623) | | | — | | | — | | | (623) | |
| | Employee equity incentive plans and other | | Employee equity incentive plans and other | | 22 | | | 12 | | | — | | | — | | | — | | | 12 | |
| Share-based compensation | | Share-based compensation | | — | | | 892 | | | — | | | — | | | — | | | 892 | |
| Restricted stock unit withholdings | Restricted stock unit withholdings | | (3) | | | (138) | | | — | | | 32 | | | (106) | | Restricted stock unit withholdings | | (5) | | | (290) | | | — | | | 44 | | | — | | | (246) | |
| Cash dividends declared ($0.73 per share) | | — | | | — | | | — | | | (3,012) | | | (3,012) | | |
| Balance as of October 01, 2022 | | 4,127 | | | $ | 30,912 | | | $ | (2,051) | | | $ | 71,024 | | | $ | 99,885 | | |
| Cash dividends declared ($0.37 per share) | | Cash dividends declared ($0.37 per share) | | — | | | — | | | — | | | (1,499) | | | — | | | (1,499) | |
| Balance as of July 2, 2022 | | Balance as of July 2, 2022 | | 4,106 | | | $ | 29,858 | | | $ | (1,625) | | | $ | 72,985 | | | $ | — | | | $ | 101,218 | |
| | Balance as of June 26, 2021 | | 4,057 | | | $ | 26,655 | | | $ | (1,095) | | | $ | 59,647 | | | $ | 85,207 | | |
| Six Months Ended | | Six Months Ended | |
| | Balance as of December 31, 2022 | | Balance as of December 31, 2022 | | 4,137 | | | $ | 31,580 | | | $ | (562) | | | $ | 70,405 | | | $ | 1,863 | | | $ | 103,286 | |
| | Net income | | — | | | — | | | — | | | 6,823 | | | 6,823 | | |
| Net income (loss) | | Net income (loss) | | — | | | — | | | — | | | (1,277) | | | (18) | | | (1,295) | |
| Other comprehensive income (loss) | Other comprehensive income (loss) | | — | | | — | | | (52) | | | — | | | (52) | | Other comprehensive income (loss) | | — | | | — | | | 18 | | | — | | | — | | | 18 | |
| Net proceeds from sales of subsidiary shares and partner contributions | | Net proceeds from sales of subsidiary shares and partner contributions | | — | | | 866 | | | — | | | — | | | 1,541 | | | 2,407 | |
| Employee equity incentive plans and other | Employee equity incentive plans and other | | 11 | | | 427 | | | — | | | — | | | 427 | | Employee equity incentive plans and other | | 58 | | | 665 | | | — | | | — | | | — | | | 665 | |
| Share-based compensation | Share-based compensation | | — | | | 543 | | | — | | | — | | | 543 | | Share-based compensation | | — | | | 1,593 | | | — | | | — | | | 68 | | | 1,661 | |
| | Restricted stock unit withholdings | Restricted stock unit withholdings | | (1) | | | (33) | | | — | | | (4) | | | (37) | | Restricted stock unit withholdings | | (7) | | | (374) | | | — | | | 139 | | | — | | | (235) | |
| Cash dividends declared ($0.70 per share) | | — | | | — | | | — | | | (2,824) | | | (2,824) | | |
| | Balance as of September 25, 2021 | | 4,067 | | | $ | 27,592 | | | $ | (1,147) | | | $ | 63,642 | | | $ | 90,087 | | |
| | Nine Months Ended | | |
| Cash dividends declared ($0.49 per share) | | Cash dividends declared ($0.49 per share) | | — | | | — | | | — | | | (2,036) | | | — | | | (2,036) | |
| Balance as of July 1, 2023 | | Balance as of July 1, 2023 | | 4,188 | | | $ | 34,330 | | | $ | (544) | | | $ | 67,231 | | | $ | 3,454 | | | $ | 104,471 | |
| | Balance as of December 25, 2021 | Balance as of December 25, 2021 | | 4,070 | | | $ | 28,006 | | | $ | (880) | | | $ | 68,265 | | | $ | 95,391 | | Balance as of December 25, 2021 | | 4,070 | | | $ | 28,006 | | | $ | (880) | | | $ | 68,265 | | | $ | — | | | $ | 95,391 | |
| Net income | | — | | | — | | | — | | | 8,678 | | | 8,678 | | |
| | Net income (loss) | | Net income (loss) | | — | | | — | | | — | | | 7,659 | | | — | | | 7,659 | |
| Other comprehensive income (loss) | Other comprehensive income (loss) | | — | | | — | | | (1,171) | | | — | | | (1,171) | | Other comprehensive income (loss) | | — | | | — | | | (745) | | | — | | | — | | | (745) | |
| Employee equity incentive plans and other | Employee equity incentive plans and other | | 66 | | | 1,000 | | | — | | | — | | | 1,000 | | Employee equity incentive plans and other | | 42 | | | 601 | | | — | | | — | | | — | | | 601 | |
| Share-based compensation | Share-based compensation | | — | | | 2,392 | | | — | | | — | | | 2,392 | | Share-based compensation | | — | | | 1,599 | | | — | | | — | | | — | | | 1,599 | |
| Restricted stock unit withholdings | | Restricted stock unit withholdings | | (6) | | | (348) | | | — | | | 47 | | | — | | | (301) | |
| Cash dividends declared ($0.73 per share) | | Cash dividends declared ($0.73 per share) | | — | | | — | | | — | | | (2,986) | | | — | | | (2,986) | |
| Balance as of July 2, 2022 | | Balance as of July 2, 2022 | | 4,106 | | | $ | 29,858 | | | $ | (1,625) | | | $ | 72,985 | | | $ | — | | | $ | 101,218 | |
| | Repurchase of common stock | | — | | | — | | | — | | | — | | | — | | |
| | Restricted stock unit withholdings | | (9) | | | (486) | | | — | | | 79 | | | (407) | | |
| Cash dividends declared ($1.46 per share) | | — | | | — | | | — | | | (5,998) | | | (5,998) | | |
| Balance as of October 01, 2022 | | 4,127 | | | $ | 30,912 | | | $ | (2,051) | | | $ | 71,024 | | | $ | 99,885 | | |
| | Balance as of December 26, 2020 | | 4,062 | | | $ | 25,556 | | | $ | (751) | | | $ | 56,268 | | | $ | 81,073 | | |
| Net income | | — | | | — | | | — | | | 15,245 | | | 15,245 | | |
| Other comprehensive income (loss) | | — | | | — | | | (396) | | | — | | | (396) | | |
| Employee equity incentive plans and other | | 52 | | | 1,015 | | | — | | | — | | | 1,015 | | |
| Share-based compensation | | — | | | 1,587 | | | — | | | — | | | 1,587 | | |
| | Repurchase of common stock | | (40) | | | (249) | | | — | | | (2,166) | | | (2,415) | | |
| | Restricted stock unit withholdings | | (7) | | | (317) | | | — | | | (60) | | | (377) | | |
| Cash dividends declared ($1.39 per share) | | — | | | — | | | — | | | (5,645) | | | (5,645) | | |
| Balance as of September 25, 2021 | | 4,067 | | | $ | 27,592 | | | $ | (1,147) | | | $ | 63,642 | | | $ | 90,087 | | |
1The retained earnings balance as of December 26, 2020 includes an opening balance adjustment made as a result of the adoption of a new accounting standard in 2021.
See accompanying notes.
| | | | | | | | | | | |
| Financial Statements | Consolidated Condensed Statements of Stockholders' Equity | 78 |
| | | | | |
| 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.US GAAP, consistent in all material respects with those applied in our 20212022 Form 10-K and as updated by our Form 10-Q for10-K.
We have a 52- or 53-week fiscal year that ends on the last Saturday in December. Fiscal year 2023 is a 52-week fiscal year; fiscal 2022 was a 53-week fiscal year, with the extra week included in the first quarter ended April 2,of 2022.
We have made estimates and judgments affecting the amounts reported in our Consolidated Condensed Financial Statements and the accompanying notes. 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 20212022 Form 10-K where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates.
| | | | | |
| Note 2 : | Operating Segments |
We previously announced severalthe organizational changes that wouldchange to integrate AXG into CCG and DCAI. This change is intended to drive a more effective go-to-market capability and to accelerate the execution and innovationscale of our Company by allowing us to capture growth in both large traditional markets and high-growth emerging markets. This includes reorganization of our business units to capture this growth and to provide increased transparency, focus and accountability.these businesses, while also reducing costs. As a result, we modified our segment reporting in the first quarter of 20222023 to align to the previously-announcedthis and certain other business reorganization.reorganizations. All prior-period segment data has been retrospectively adjusted to reflect the way our CODM internally receives information and manages and monitors our operating segment performance starting in fiscal year 2022.2023.
We now manage our business through the following operating segments:
▪Client Computing (CCG)
▪DatacenterData Center and AI (DCAI)
▪Network and Edge (NEX)
▪Accelerated Computing Systems and Graphics (AXG)
▪Mobileye
▪Intel Foundry Services (IFS)
We derive a substantial majority of our revenue from our principal products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package, which is based on Intel® architecture.
CCG, DCAI and NEX are our reportable operating segments. AXG, Mobileye and IFS 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. AXG revenue includes integrated graphics royalties from our CCG and NEX operating segments and are recorded as if the sales or transfers were to third parties at prices that approximate market-based selling prices. When we enter into federal contracts, they are aligned to the sponsoring operating segment.
We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the 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, and from start-up businesses that support our initiatives;
▪historical results of operations from divested businesses;
▪results of operations of start-up businesses that support our initiatives;
▪amounts included within restructuring and other charges;charges;
▪employee benefits, compensation, impairment charges, and other expenses not allocated to the operating segments (beginning the first quarter of 2022, this includes all of our stock-based compensation);segments; and
▪acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 8 |
The CODM, who is our CEO, allocates resources to and assesses the performance of each operating segment using information about the operating segment's revenue and operating income (loss). The CODM does not evaluate operating segments using discrete asset information, and we do not identify or allocate assets by operating segments. Based on the interchangeable nature of our manufacturing and assembly and test assets, most of the related depreciation expense is not directly identifiable within our operating segments, as it is included in overhead cost pools and subsequently absorbed into inventory as each product passes through our manufacturing process. Because our products are then sold across multiple operating segments, it is impracticable to determine the total depreciation expense included as a component of each operating segment's operating income (loss) results. We do not allocate gains and losses from equity investments, interest and other income, share-based compensation, or taxes to our operating segments. Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. The accounting policies for segment reporting are the same as for Intel as a whole. There have been no changes to our segment accounting policies disclosed in our 20212022 Form 10-K except for the organizational changes and the change in allocation of stock-based compensation expense described above.
Net revenue and operating income (loss) for each period were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 |
| Operating segment revenue: | | | | | | | | |
| Client Computing | | | | | | | | |
| Desktop | | $ | 3,222 | | | $ | 3,119 | | | $ | 8,152 | | | $ | 8,682 | |
| Notebook | | 4,410 | | | 5,944 | | | 15,119 | | | 19,634 | |
| Other | | 492 | | | 725 | | | 1,812 | | | 2,448 | |
| | 8,124 | | | 9,788 | | | 25,083 | | | 30,764 | |
| | | | | | | | |
| Datacenter and AI | | 4,209 | | | 5,778 | | | 14,892 | | | 16,265 | |
| Network and Edge | | 2,266 | | | 1,986 | | | 6,812 | | | 5,890 | |
| Accelerated Computing Systems and Graphics | | 185 | | | 171 | | | 590 | | | 529 | |
| Mobileye | | 450 | | | 326 | | | 1,304 | | | 1,030 | |
| Intel Foundry Services | | 171 | | | 174 | | | 576 | | | 541 | |
| All other | | 67 | | | 1,133 | | | 166 | | | 3,986 | |
| Total operating segment revenue | | $ | 15,472 | | | $ | 19,356 | | | $ | 49,423 | | | $ | 59,005 | |
| | | | | | | | |
| Operating income (loss): | | | | | | | | |
| Client Computing | | $ | 1,655 | | | $ | 3,592 | | | $ | 5,567 | | | $ | 11,909 | |
| Datacenter and AI | | 17 | | | 2,293 | | | 1,917 | | | 6,089 | |
| Network and Edge | | 75 | | | 511 | | | 682 | | | 1,359 | |
| Accelerated Computing Systems and Graphics | | (378) | | | (222) | | | (1,275) | | | (566) | |
| Mobileye | | 142 | | | 127 | | | 480 | | | 431 | |
| Intel Foundry Services | | (103) | | | (44) | | | (289) | | | (26) | |
| All other | | (1,583) | | | (1,030) | | | (3,616) | | | (4,729) | |
| Total operating income (loss) | | $ | (175) | | | $ | 5,227 | | | $ | 3,466 | | | $ | 14,467 | |
The following table presents intersegment revenue before eliminations:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total operating segment revenue | | $ | 15,472 | | | $ | 19,356 | | | $ | 49,423 | | | $ | 59,005 | |
| | | | | | | | |
| Less: Accelerated Computing Systems and Graphics intersegment revenue | | (134) | | | (164) | | | (411) | | | (509) | |
| Total net revenue | | $ | 15,338 | | | $ | 19,192 | | | $ | 49,012 | | | $ | 58,496 | |
In the first nine months of 2022, we initiated the wind-down of our Intel Optane memory business, which is part of our DCAI operating segment. While Intel Optane is a leading technology, it was not aligned to our strategic priorities. Separately, we continue to embrace the CXL standard. As a result, we recognized an inventory impairment of $559 million in Cost of sales on the Consolidated Condensed Statements of Income in the first nine months of 2022. The impairment charge is recognized as a Corporate charge in the "all other" category presented above. As we wind down the Intel Optane business, we expect to continue to meet existing customer commitments.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 9 |
Net revenue and operating income (loss) for each period were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Net revenue: | | | | | | | | |
| Client Computing | | | | | | | | |
| Desktop | | $ | 2,370 | | | $ | 2,289 | | | $ | 4,249 | | | $ | 4,930 | |
| Notebook | | 3,896 | | | 4,751 | | | 7,303 | | | 10,710 | |
| Other | | 514 | | | 638 | | | 995 | | | 1,360 | |
| | 6,780 | | | 7,678 | | | 12,547 | | | 17,000 | |
| | | | | | | | |
| Data Center and AI | | 4,004 | | | 4,695 | | | 7,722 | | | 10,769 | |
| Network and Edge | | 1,364 | | | 2,211 | | | 2,853 | | | 4,350 | |
| Mobileye | | 454 | | | 460 | | | 912 | | | 854 | |
| Intel Foundry Services | | 232 | | | 57 | | | 350 | | | 213 | |
| All other | | 115 | | | 220 | | | 280 | | | 488 | |
| Total net revenue | | $ | 12,949 | | | $ | 15,321 | | | $ | 24,664 | | | $ | 33,674 | |
| | | | | | | | |
| Operating income (loss): | | | | | | | | |
| Client Computing | | $ | 1,039 | | | $ | 876 | | | $ | 1,559 | | | $ | 3,598 | |
| Data Center and AI | | (161) | | | (80) | | | (679) | | | 1,313 | |
| Network and Edge | | (187) | | | 294 | | | (487) | | | 710 | |
| Mobileye | | 129 | | | 190 | | | 252 | | | 338 | |
| Intel Foundry Services | | (143) | | | (134) | | | (283) | | | (157) | |
| All other | | (1,693) | | | (1,846) | | | (2,846) | | | (2,161) | |
| Total operating income (loss) | | $ | (1,016) | | | $ | (700) | | | $ | (2,484) | | | $ | 3,641 | |
In the second quarter of 2022, we initiated the wind-down of our Intel® Optane™ memory business, which is part of our DCAI operating segment, resulting in an inventory impairment of $559 million in Cost of sales on the Consolidated Condensed Statements of Income in the second quarter of 2022. The impairment charge was recognized as a Corporate charge in the "all other" category presented above.
| | | | | |
| Note 3 : | Non-Controlling Interests |
Semiconductor Co-Investment Program
In 2022, we closed a transaction with Brookfield Asset Management (Brookfield) resulting in the formation of Arizona Fab LLC (Arizona Fab), a VIE for which we and Brookfield own 51% and 49%, respectively. Because we are the primary beneficiary of the VIE, we fully consolidate the results of Arizona Fab into our consolidated financial statements. Generally, contributions will be made to, and distributions will be received from, Arizona Fab based on both parties' proportional ownership. We will be sole operator and majority owner of two new chip factories that will be constructed by Arizona Fab, and we will have the right to purchase 100% of the related factory output. Once production commences, we will be required to operate Arizona Fab at minimum production levels measured in wafer starts per week and will be required to limit excess inventory held on site or we will be subject to certain penalties.
We have an unrecognized commitment to fund our respective share of the total construction costs of Arizona Fab of $29.0 billion.
As of July 1, 2023, a substantial majority of the assets of Arizona Fab consisted of property, plant, and equipment. The assets held by Arizona Fab, which can be used only to settle obligations of the VIE and are not available to us, were $3.5 billion as of July 1, 2023 ($1.8 billion as of December 31, 2022).
Non-controlling interest in Arizona Fab was $1.7 billion as of July 1, 2023 ($874 million as of December 31, 2022). Net loss attributable to non-controlling interest in Arizona Fab was $3 million in the second quarter of 2023 and $8 million in the first six months of 2023; there was no net income (loss) attributable to non-controlling interest in the first six months of 2022.
Mobileye
In October 2022, Mobileye completed its IPO and certain other equity financing transactions that resulted in net proceeds of $1.0 billion. During the second quarter of 2023, we converted $38.5 million of class B shares into class A shares, representing 5% of Mobileye’s outstanding capital stock, and subsequently sold the class A shares for $42 per share as part of a secondary offering. We received net proceeds of $1.6 billion and increased our capital in excess of par value by $866 million as a result of the secondary offering.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 10 |
As of July 1, 2023, Intel held approximately 88% (94% as of December 31, 2022) of the outstanding equity interest in Mobileye. Non-controlling interest in Mobileye was $1.8 billion as of July 1, 2023 ($1.0 billion as of December 31, 2022). Net loss attributable to non-controlling interest in Mobileye was $5 million in the second quarter of 2023 and $10 million in the first six months of 2023; there was no net income (loss) attributable to non-controlling interest in the first six months of 2022.
IMS Nanofabrication
In June 2023, we signed an agreement with Bain Capital Special Situations to sell an approximately 20% minority stake in our IMS Nanofabrication GmbH (IMS) business, a business within our IFS operating segment. Following the closure of the transaction, which is expected to occur in the third quarter of 2023, we will continue to consolidate the results of IMS into our consolidated financial statements. The transaction is expected to accelerate the innovation of critical technologies and foster deeper cross-industry collaboration.
| | | | | |
| Note 4 : | Earnings (Loss) Per Share |
We computed basic earnings (loss) per share of common stock based on the weighted average number of shares of common stock outstanding during the period. We computed diluted earnings (loss) 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 | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
| (In Millions, Except Per Share Amounts) | (In Millions, Except Per Share Amounts) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | (In Millions, Except Per Share Amounts) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Net income available to common stockholders | | $ | 1,019 | | | $ | 6,823 | | | $ | 8,678 | | | $ | 15,245 | | |
| Net income (loss) | | Net income (loss) | | $ | 1,473 | | | $ | (454) | | | $ | (1,295) | | | $ | 7,659 | |
| Less: Net income (loss) attributable to non-controlling interests | | Less: Net income (loss) attributable to non-controlling interests | | (8) | | | — | | | (18) | | | — | |
| Net income (loss) attributable to Intel | | Net income (loss) attributable to Intel | | 1,481 | | | (454) | | | (1,277) | | | 7,659 | |
| Weighted average shares of common stock outstanding—basic | Weighted average shares of common stock outstanding—basic | | 4,118 | | | 4,061 | | | 4,104 | | | 4,055 | | Weighted average shares of common stock outstanding—basic | | 4,182 | | | 4,100 | | | 4,168 | | | 4,095 | |
| Dilutive effect of employee equity incentive plans | Dilutive effect of employee equity incentive plans | | 7 | | | 25 | | | 19 | | | 34 | | Dilutive effect of employee equity incentive plans | | 14 | | | — | | | — | | | 25 | |
| | Weighted average shares of common stock outstanding—diluted | Weighted average shares of common stock outstanding—diluted | | 4,125 | | | 4,086 | | | 4,123 | | | 4,089 | | Weighted average shares of common stock outstanding—diluted | | 4,196 | | | 4,100 | | | 4,168 | | | 4,120 | |
Earnings per share—basic
| | $ | 0.25 | | | $ | 1.68 | | | $ | 2.11 | | | $ | 3.76 | | |
Earnings per share—diluted
| | $ | 0.25 | | | $ | 1.67 | | | $ | 2.10 | | | $ | 3.73 | | |
Earnings (loss) per share attributable to Intel—basic
| | Earnings (loss) per share attributable to Intel—basic
| | $ | 0.35 | | | $ | (0.11) | | | $ | (0.31) | | | $ | 1.87 | |
Earnings (loss) per share attributable to Intel—diluted
| | Earnings (loss) per share attributable to Intel—diluted
| | $ | 0.35 | | | $ | (0.11) | | | $ | (0.31) | | | $ | 1.86 | |
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. Due to our net losses for the six months ended July 1, 2023 and for the three months ended July 2, 2022, 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 had an anti-dilutive effect on diluted loss per share for those periods and were excluded.
Securities which would have beenthat were anti-dilutive arewere insignificant and arewere excluded from the computation of diluted earnings per share in all periods presented.
| | | | | |
Note 45 : | Other Financial Statement Details |
Inventories
| | | | | | | | | | | | | | |
| (In Millions) | | Oct 1, 2022 | | Dec 25, 2021 |
| Raw materials | | $ | 1,635 | | | $ | 1,441 | |
| Work in process | | 7,030 | | | 6,656 | |
| Finished goods | | 4,166 | | | 2,679 | |
| Total inventories | | $ | 12,831 | | | $ | 10,776 | |
Interest and Other, Net
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 |
| Interest income | | $ | 170 | | | $ | 37 | | | $ | 315 | | | $ | 111 | |
| Interest expense | | (114) | | | (144) | | | (347) | | | (463) | |
| Other, net | | 82 | | | 31 | | | 1,048 | | | 24 | |
| Total interest and other, net | | $ | 138 | | | $ | (76) | | | $ | 1,016 | | | $ | (328) | |
Interest expenseWe sell certain of our accounts receivable on a non-recourse basis to third-party financial institutions. We record these transactions as sales of receivables and present cash proceeds as is net of $220 million of interest capitalized in the third quarter of 2022 and $516 million in the first nine months of 2022 ($95 million in the third quarter of 2021 and $288 million in the first nine months of 2021). Other, netcash provided by operating activities in the Consolidated Condensed Statements of Cash Flows. Accounts receivable sold under non-recourse factoring arrangements were $1.0 billion during the first ninesix months of 2022 includes a gain2023, and we did not factor accounts receivable during the first six months of $1.0 billion resulting2022. After the sale of our accounts receivable, we expect to collect payment from the divestiturecustomers and remit it to the third-party financial institution.
Inventories
| | | | | | | | | | | | | | |
| (In Millions) | | Jul 1, 2023 | | Dec 31, 2022 |
| Raw materials | | $ | 1,284 | | | $ | 1,517 | |
| Work in process | | 6,638 | | | 7,565 | |
| Finished goods | | 4,062 | | | 4,142 | |
| Total inventories | | $ | 11,984 | | | $ | 13,224 | |
Other Accrued Liabilities
Other accrued liabilities include deferred compensation of our NAND memory business$2.7 billion as more fully described in "Note 7: Acquisitions and Divestitures" within Notes to Consolidated Condensed Financial Statements.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 1011 |
Interest and Other, Net | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Interest income | | $ | 313 | | | $ | 98 | | | $ | 647 | | | $ | 145 | |
| Interest expense | | (214) | | | (109) | | | (407) | | | (233) | |
| Other, net | | 125 | | | (108) | | | 125 | | | 966 | |
| Total interest and other, net | | $ | 224 | | | $ | (119) | | | $ | 365 | | | $ | 878 | |
Interest expense is net of $381 million of interest capitalized in the second quarter of 2023 and $744 million in the first six months of 2023 ($154 million in the second quarter of 2022 and $296 million in the first six months of 2022). Other, net includes a gain in 2022 of $1.0 billion resulting from the first closing of the divestiture of our NAND memory business.
Property, Plant, and Equipment
Effective January 2023, we increased the estimated useful life of certain production machinery and equipment from 5 years to 8 years. We estimate this change resulted in an approximate $570 million increase to gross margin and an approximate $110 million decrease in R&D expense in the second quarter of 2023 when compared to what the impact would have been using the estimated useful life in place prior to this change. We estimate this change resulted in an approximate $930 million increase to gross margin and an approximate $210 million decrease in R&D expenses in the first six months of 2023. As of July 1, 2023, we estimate this change resulted in an approximate $910 million decrease in ending inventory values. This estimate is based on the assets in use and under construction as of the beginning of 2023.
| | | | | |
Note 56 : | Restructuring and Other Charges |
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Six Months Ended |
| (In Millions) | (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Employee severance and benefit arrangements | Employee severance and benefit arrangements | | $ | 607 | | | $ | 21 | | | $ | 650 | | | $ | 43 | | Employee severance and benefit arrangements | | $ | 171 | | | $ | 38 | | | $ | 132 | | | $ | 43 | |
| | Litigation charges and other | Litigation charges and other | | 4 | | | 16 | | | (1,199) | | | 2,267 | | Litigation charges and other | | 20 | | | 13 | | | 97 | | | (1,203) | |
| Asset impairment charges | Asset impairment charges | | 53 | | | 5 | | | 89 | | | 287 | | Asset impairment charges | | 9 | | | 36 | | | 35 | | | 36 | |
| Total restructuring and other charges | Total restructuring and other charges | | $ | 664 | | | $ | 42 | | | $ | (460) | | | $ | 2,597 | | Total restructuring and other charges | | $ | 200 | | | $ | 87 | | | $ | 264 | | | $ | (1,124) | |
InThe 2022 Restructuring Program was approved in the third quarter of 2022 the 2022 Restructuring Program was approved to rebalance our workforce and operations to create efficiencies and improve our product execution in alignment with our IDM 2.0 strategy. Restructuring charges are recorded as Corporate charges in the "all other" category presented in Note 2: Operating Segments within Notes to Consolidated Condensed Financial Statements and are primarily comprised of employee severance and benefits arrangements. As of October 1, 2022 we recorded $537 million as a current liability within Accrued compensation and benefits on the Consolidated Condensed Balance Sheets. We expect these actions to be substantially completed by the end of the first half of 2023, but they arethis is subject to change. Any changes to the estimates or timing of executing the 2022 Restructuring Program will be reflected in our future results of operations.
| | | | | | | | | | | | |
| Restructuring activity for the 2022 Restructuring Program during the first six months of 2023 was as follows: |
| | | | | | |
| (In Millions) | | | | | | |
| Accrued restructuring balance as of December 31, 2022 | | $ | 873 | | | | | |
| Additional accruals | | 101 | | | | | |
| Adjustments | | 26 | | | | | |
| Cash payments | | (742) | | | | | |
| | | | | | |
| Accrued restructuring balance as of July 1, 2023 | | $ | 258 | | | | | |
The accrued restructuring balances as of July 1, 2023 and December 31, 2022 were recorded as current liabilities within accrued compensation and benefits on theConsolidated Condensed Balance Sheets. The cumulative cost of the 2022 Restructuring Program as of July 1, 2023 was $1.2 billion.
Litigation charges and other includes a $1.2 billion benefit in the first ninesix months of 2022 from the annulled penalty related to an EC fine that was recorded and paid in 2009, and a charge of $2.2 billion in the first nine months of 2021 related to the VLSI litigation. These were recorded as a Corporate benefit and charge in the "all other" category presented in "Note 2: Operating Segments" within Notes to Consolidated Condensed Financial Statements.2009. Refer to "Note 12: Commitments and13: Contingencies" within the Notes to Consolidated Condensed Financial Statements for further information on legal proceedings related to the EC finefine.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 12 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Income (loss) before taxes | | $ | (816) | | | $ | (909) | | | $ | (1,974) | | | $ | 8,752 | |
| Provision for (benefit from) taxes | | $ | (2,289) | | | $ | (455) | | | $ | (679) | | | $ | 1,093 | |
| Effective tax rate | | 280.5 | % | | 50.1 | % | | 34.4 | % | | 12.5 | % |
Our provision for, or benefit from, income taxes for an interim period has historically been determined using an estimated annual effective tax rate, adjusted for discrete items, if any. Under certain circumstances where we are unable to make a reliable estimate of the annual effective tax rate, we use the actual effective tax rate for the year-to-date period. In the second quarter of 2023, we used this approach due to the variability of the rate as a result of fluctuations in forecasted income and the VLSI litigation.
Asset impairment charges includes $237 millioneffects of goodwill and other impairments related to the shutdownbeing taxed in the first nine months of 2021 of two of our non-strategic businesses, the results of which are included in the “all other” category presented in “Note 2: Operating Segments” within Notes to Consolidated Condensed Financial Statements.multiple tax jurisdictions.
Short-term Investments
Short-term investments include marketable debt investments in corporate debt, government debt, and financial institution instruments. Government debt includes instruments such as non-U.S.non-US government bonds and U.S.US 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. As of OctoberJuly 1, 20222023, and December 25, 2021,31, 2022, substantially all time deposits were issued by institutions outside the U.S.US.
For certain of our marketable debt investments, we economically hedge market risks at inception with a related derivative instrument or the marketable debt investment itself is used to economically hedge currency exchange rate risk from remeasurement. These hedged investments are reported at fair value with gains or losses from the investments and the related derivative instruments recorded in Interestinterest and other, net. The fair value of our hedged investments was $16.6$14.7 billion as of OctoberJuly 1, 2022 and $21.52023 ($16.2 billion as of December 25, 2021.31, 2022). For hedged investments still held at the reporting date, we recorded net losses of $861$183 million in the thirdsecond quarter of 20222023 and net losses of $1.8 billion$91 million in the first ninesix months of 20222023 ($144 million1.0 billion of net losses in the thirdsecond quarter of 20212022 and $329 million$1.3 billion of net losses in the first ninesix months of 2021)2022). We recorded net gains on the related derivatives of $916$237 million in the thirdsecond quarter of 2023 and net gains of $124 million in the first six months of 2023 ($868 million of net gains in the second quarter of 2022 and net gains of $1.8$1.2 billion in the first ninesix months of 2022 ($156 million of net gains in the third quarter of 2021 and $346 million of net gains in the first nine months of 2021)2022).
Our remaining unhedged marketable debt investments are reported at fair value, with unrealized gains or losses, net of tax, recorded in accumulated other comprehensive income (loss). The adjusted cost of theseour unhedged investments was $3.6$6.9 billion as of OctoberJuly 1, 2022 and $5.02023 ($10.2 billion as of December 25, 2021,31, 2022), which approximated the fair value for these periods.
The fair value of marketable debt investments, by contractual maturity, as of OctoberJuly 1, 2022,2023, was as follows:
| | | | | | | | |
| (In Millions) | | Fair Value |
| Due in 1 year or less | | $ | 11,45710,441 | |
| Due in 1–2 years | | 2,2081,958 | |
| Due in 2–5 years | | 4,9625,352 | |
| Due after 5 years | | 720725 | |
Instruments not due at a single maturity date1 | | 8613,142 | |
| Total | | $ | 20,20821,618 | |
1 Instruments not due at a single maturity date is comprised of money market fund deposits, which are classified as either short-term investments or cash and cash equivalents.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 1113 |
Equity Investments
| | (In Millions) | (In Millions) | | Oct 1, 2022 | | Dec 25, 2021 | (In Millions) | | Jul 1, 2023 | | Dec 31, 2022 |
| Marketable equity securities | | $ | 1,185 | | | $ | 2,171 | | |
Marketable equity securities1 | | Marketable equity securities1 | | $ | 1,295 | | | $ | 1,341 | |
| Non-marketable equity securities | Non-marketable equity securities | | 4,626 | | | 4,111 | | Non-marketable equity securities | | 4,589 | | | 4,561 | |
| Equity method investments | Equity method investments | | 11 | | | 16 | | Equity method investments | | 9 | | | 10 | |
| Total | Total | | $ | 5,822 | | | $ | 6,298 | | Total | | $ | 5,893 | | | $ | 5,912 | |
1 Over 90% of our marketable equity securities are subject to trading-volume or market-based restrictions, which limit the number of shares we may sell in a specified period of time, impacting our ability to liquidate these investments. The trading volume restrictions generally apply for as long as we own more than 1% of the outstanding shares. Market-based restrictions result from the rules of the respective exchange.
The components of gains (losses) on equity investments, net for each period were as follows:
| | | | | Three Months Ended | | Nine Months Ended | | | | Three Months Ended | | Six Months Ended |
| (In Millions) | (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | | (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Ongoing mark-to-market adjustments on marketable equity securities | Ongoing mark-to-market adjustments on marketable equity securities | | $ | (244) | | | $ | (192) | | | $ | (883) | | | $ | (345) | | | Ongoing mark-to-market adjustments on marketable equity securities | | $ | (85) | | | $ | (209) | | | $ | 103 | | | $ | (639) | |
| Observable price adjustments on non-marketable equity securities | Observable price adjustments on non-marketable equity securities | | 67 | | | 79 | | | 273 | | | 702 | | | Observable price adjustments on non-marketable equity securities | | — | | | 135 | | | 10 | | | 206 | |
| Impairment charges | Impairment charges | | (45) | | | (38) | | | (112) | | | (111) | | | Impairment charges | | (38) | | | (44) | | | (74) | | | (67) | |
| Sale of equity investments and other¹ | | 71 | | | 1,858 | | | 4,804 | | | 2,124 | | | |
Sale of equity investments and other1 | | Sale of equity investments and other1 | | 99 | | | 28 | | | 106 | | | 4,733 | |
| Total gains (losses) on equity investments, net | Total gains (losses) on equity investments, net | | $ | (151) | | | $ | 1,707 | | | $ | 4,082 | | | $ | 2,370 | | | Total gains (losses) on equity investments, net | | $ | (24) | | | $ | (90) | | | $ | 145 | | | $ | 4,233 | |
1 Sale of equity investments and other includes initial fair value adjustments recorded upon a security becoming marketable, realized gains (losses) on sales of non-marketable equity investments and equity method investments, and our share of equity method investees'investee gains (losses) and distributions, and initial fair value adjustments recorded upon a security becoming marketable.distributions.
GainsNet unrealized gains and losses for our marketable and non-marketable equity securities for each period were as follows:
| | | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | Six Months Ended | |
| (In Millions) | (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | | (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 | |
| Net gains (losses) recognized during the period on equity securities | | $ | (154) | | | $ | 346 | | | $ | (490) | | | $ | 883 | | | |
| Net unrealized gains (losses) recognized during the period on equity securities | | Net unrealized gains (losses) recognized during the period on equity securities | | $ | (26) | | | $ | (93) | | | $ | 141 | | | $ | (337) | | |
| Less: Net (gains) losses recognized during the period on equity securities sold during the period | Less: Net (gains) losses recognized during the period on equity securities sold during the period | | 1 | | | (46) | | | 15 | | | (189) | | | Less: Net (gains) losses recognized during the period on equity securities sold during the period | | 28 | | | (19) | | | (7) | | | (11) | | |
| Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | | $ | (153) | | | $ | 300 | | | $ | (475) | | | $ | 694 | | | |
| Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | | Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | | $ | 2 | | | $ | (112) | | | $ | 134 | | | $ | (348) | | |
McAfee Corp.
McAfee Corp. (McAfee) completed its initial public offering in October 2020. Due to our 41% ownership and significant influence as of December 25, 2021, we accounted for our investment in McAfee as an equity method investment. We had no accounting carrying value as of December 25, 2021.
InDuring the first nine monthsquarter of 2022, the sale of the McAfee to an investor groupconsumer business was completed and we received $4.6 billion in cash for the sale of our remaining share of McAfee, recognizing a $4.6 billion gain in Salesale of equity investments and other.
Beijing Unisoc Technology Ltd.
We account for our interest in Beijing Unisoc Technology Ltd. (Unisoc) as a non-marketable equity security. In the first nine months of 2021, we recognized $471 million of observable price adjustments for our investment in Unisoc. As of October 1, 2022 the carrying value of the investment was $1.1 billion ($1.1 billion as of December 25, 2021).
| | | | | |
Note 79 : | Acquisitions and Divestitures |
Acquisitions
Pending acquisitionAcquisition of Tower Semiconductor
During the first quarter of 2022, we entered into a definitive agreement to acquire Tower Semiconductor Ltd. (Tower) in a cash for stock transaction expected to close within twelve months from the date of the agreement.cash-for-stock transaction. Tower is a leading foundry for analog semiconductor solutions. The acquisition is expectedintended to advance our IDM 2.0 strategy by accelerating our global end-to-end foundry business. Tower will be included in our IFS operating segment. Upon completion ofUnder the acquisition,agreement, each issued and outstanding ordinary share of Tower willwould be converted at closing into the right to receive $53 per share in cash, representing a total enterprise value of approximately $5.4 billion as of the agreement date. ThisWe continue to work to close the transaction, iswhich remains subject to certain regulatory approvals and customary closing conditions. If regulatory approvals are not received prior to August 15, 2023, and the agreement is terminated under certain circumstances involving the failure to obtain required regulatory approvals,by either party, we willmay be obligated to pay Tower a termination fee of $353 million. If the acquisition is completed, Tower will be included in our IFS operating segment.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 1214 |
Divestitures
NAND Memory Business
In October 2020, On December 29, 2021, we signed anclosed the first phase of our agreement with SK hynix Inc. (SK hynix) to divest our NAND memory business for $9.0 billion in cash. TheOur NAND memory business includes our NAND memory fabrication facility in Dalian, China and certain related equipment and tangible assets (the Fab Assets), our NAND SSD business (the NAND SSD Business), and our NAND memory technology and manufacturing business (the NAND OpCo Business), of which we deconsolidated our ongoing interests in as part of the sale. The transaction will be completed in two closings.
Theclosings and upon the first closing was completed on December 29, 2021. At in the first closing,quarter of 2022, SK hynix paid $7.0 billion of consideration withand we recognized a pre-tax gain of $1.0 billion within interest and other, net, and tax expense of $495 million. We recorded a receivable in other long-term assets for the remaining $2.0proceeds of $1.9 billion towhich remains outstanding as of July 1, 2023, and will be received byupon the second closing of the transaction, expected to be no earlier than March 2025. In connection with the first closing, we recognized a pre-tax gain of $1.0 billion within Interest and other, net, and tax expense of $495 million. Based on our ongoing obligation under the NAND wafer manufacturing and sale agreement, $583 million of the first closing consideration was deferred and will be recognized between the first and second closing within Interest and other, net.
At the first closing, we sold to SK hynix the Fab Assets and the NAND SSD Business and transferred certain employees, IP, and other assets related to the NAND OpCo Business to separately created wholly owned subsidiaries of Intel. The equity interest of the NAND OpCo Business will transfer to SK hynix at the second closing. In connection with the first closing, we and certain affiliates of SK hynix also entered 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. We have concluded based on the terms of the transaction agreements that the subsidiaries are variable interest entities for which we are not the primary beneficiary, because the governance structure of these entities does not allow us to direct the activities that would most significantly impact their economic performance. In line with this conclusion, we fully deconsolidated our ongoing interests in the NAND OpCo Business, and recorded a receivable for the remaining proceeds of $1.9 billion in Other long-term assets, which remains outstanding as of October 1, 2022.
The carrying amounts of the major classes of NAND assets as of the first closing date included the following:
| | | | | | | | | | | | | | |
(In Millions) | | | | Dec 29, 2021 |
Inventories | | | | $ | 941 | |
Property, plant and equipment, net | | | | 6,018 | |
Total sold | | | | $ | 6,959 | |
The wafer manufacturing and sale agreement includes incentives and penalties that are contingent on the cost of operation and output of the NAND OpCo Business. These incentives and penalties present a maximum exposure of up to $500 million annually, and $1.5 billion in the aggregate. We are currently in negotiations with SK hynix to update the operating plan of the NAND OpCo Business in light of the current business environment and projections, which may impact the metrics associated with the incentives and penalties and our expectations of the performance of the NAND OpCo Business against those metrics.
Our transactions withAs of July 1, 2023, we also have a receivable due from the NAND OpCo Business, between the first and second closings are considered related party transactions due to our equity interests and the wafer manufacturing and sales agreement. Related party transactions include certain assets that transferred at first closing between Intel and the NAND OpCo Business, or costs that we incurred on behalfa deconsolidated entity, of the NAND OpCo Business, for which we are entitled to be reimbursed. As of October 1, 2022, we have a receivable due to Intel of $346$201 million recorded within Otherother current assets on ourthe Consolidated Condensed Balance Sheets. We will be reimbursed for costs of approximately $35$32 million per quarter for 2022in 2023 for corporate function services, which include human resources, information technology, finance, supply chain, and other compliance requirements associated with being wholly owned subsidiaries.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 13 |
In the thirdfirst quarter of 2022, we settled in cash $1.0 billion of our senior notes due July 2022 and $400 million of our senior notes due November 2023. In the second quarter of 2022, we settled in cash $1.6 billion of our senior notes due May 2022.
In the third quarter of 2022,2023, we issued a total of $6.0$11.0 billion aggregate principal amount of senior notes, includingnotes. We also amended both our inaugural green bond issuance of $1.3 billion principal amount.
During the third quarter of 2022, we received proceeds of $140 million in the aggregate for the sale of bonds issued by the Industrial Development Authority of the City of Chandler, Arizona (CIDA). The bonds are our unsecured general obligations in accordance with the loan agreement we entered into with the CIDA. The bonds mature in 2042 and carry an interest rate of 5.0%. The bonds are subject to mandatory tender in September 2027, at which time we can re-market the bonds as either fixed-rate bonds for a specified period or as variable rate-bonds until another fixed-rate period is selected or until their final maturity date.
In the first quarter of 2022, we amended our5-year $5.0 billion variable-rate revolving credit facility agreement, extending the maturity date by one year to March 20272028, and transitioningour 364-day $5.0 billion credit facility agreement, extending the interest terms from LIBORmaturity date to term SOFR.March 2024. The revolving credit facilityfacilities had no borrowings outstanding as of OctoberJuly 1, 2022.2023.
We have an ongoing authorization from our Board of Directors to borrow up to $10.0 billion under our commercial paper program. In the first six months of 2023, we settled in cash $3.9 billion of our commercial paper. We had no outstanding commercial paper as of July 1, 2023 ($3.9 billion as of December 31, 2022).
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 our senior fixed rate notes rank equally in the right of payment with all of our other existing and future senior unsecured indebtedness and effectively rank junior to all liabilities of our subsidiaries.
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 1415 |
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
| | | Oct 1, 2022 | | Dec 25, 2021 | | | Jul 1, 2023 | | Dec 31, 2022 | |
| | Fair Value Measured and Recorded at Reporting Date Using | | | | Fair Value Measured and Recorded at Reporting Date Using | | | | | Fair Value Measured and Recorded at Reporting Date Using | | | | Fair Value Measured and Recorded at Reporting Date Using | | | |
| (In Millions) | (In Millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | (In Millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | |
| Assets | Assets | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | |
| Cash equivalents: | Cash equivalents: | | | Cash equivalents: | | |
| Corporate debt | Corporate debt | | $ | — | | | $ | 103 | | | $ | — | | | $ | 103 | | | $ | — | | | $ | 65 | | | $ | — | | | $ | 65 | | | Corporate debt | | $ | — | | | $ | 1,077 | | | $ | — | | | $ | 1,077 | | | $ | — | | | $ | 856 | | | $ | — | | | $ | 856 | | |
| Financial institution instruments¹ | Financial institution instruments¹ | | 644 | | | 1,431 | | | — | | | 2,075 | | | 1,216 | | | 763 | | | — | | | 1,979 | | | Financial institution instruments¹ | | 3,046 | | | 1,587 | | | — | | | 4,633 | | | 6,899 | | | 1,474 | | | — | | | 8,373 | | |
| | Reverse repurchase agreements | Reverse repurchase agreements | | — | | | 1,750 | | | — | | | 1,750 | | | — | | | 1,595 | | | — | | | 1,595 | | | Reverse repurchase agreements | | — | | | 1,700 | | | — | | | 1,700 | | | — | | | 1,301 | | | — | | | 1,301 | | |
| Short-term investments: | Short-term investments: | | | Short-term investments: | | |
| Corporate debt | Corporate debt | | — | | | 6,457 | | | — | | | 6,457 | | | — | | | 6,367 | | | — | | | 6,367 | | | Corporate debt | | — | | | 6,158 | | | — | | | 6,158 | | | — | | | 5,381 | | | — | | | 5,381 | | |
| Financial institution instruments¹ | Financial institution instruments¹ | | 217 | | | 5,615 | | | — | | | 5,832 | | | 154 | | | 5,162 | | | — | | | 5,316 | | | Financial institution instruments¹ | | 96 | | | 3,731 | | | — | | | 3,827 | | | 196 | | | 4,729 | | | — | | | 4,925 | | |
| Government debt² | Government debt² | | 48 | | | 5,693 | | | — | | | 5,741 | | | 50 | | | 12,693 | | | — | | | 12,743 | | | Government debt² | | 49 | | | 5,874 | | | — | | | 5,923 | | | 48 | | | 6,840 | | | — | | | 6,888 | | |
| Other current assets: | Other current assets: | | | Other current assets: | | |
| Derivative assets | Derivative assets | | — | | | 2,003 | | | — | | | 2,003 | | | 80 | | | 576 | | | — | | | 656 | | | Derivative assets | | 197 | | | 963 | | | — | | | 1,160 | | | — | | | 1,264 | | | — | | | 1,264 | | |
| Loans receivable³ | | — | | | — | | | — | | | — | | | — | | | 152 | | | — | | | 152 | | | |
Marketable equity securities4 | | 1,100 | | | 85 | | | — | | | 1,185 | | | 1,854 | | | 317 | | | — | | | 2,171 | | | |
| Loans receivable | | Loans receivable | | — | | | 55 | | | — | | | 55 | | | — | | | 53 | | | — | | | 53 | | |
| Marketable equity securities | | Marketable equity securities | | 1,295 | | | — | | | — | | | 1,295 | | | 1,341 | | | — | | | — | | | 1,341 | | |
| Other long-term assets: | Other long-term assets: | | | Other long-term assets: | | |
| Derivative assets | Derivative assets | | — | | | 10 | | | — | | | 10 | | | — | | 772 | | | 7 | | | 779 | | | Derivative assets | | — | | | 5 | | | — | | | 5 | | | — | | | 10 | | | — | | | 10 | | |
| Loans receivable³ | | — | | | 48 | | | — | | | 48 | | | — | | 57 | | | — | | 57 | | | |
| | Total assets measured and recorded at fair value | Total assets measured and recorded at fair value | | $ | 2,009 | | | $ | 23,195 | | | $ | — | | | $ | 25,204 | | | $ | 3,354 | | | $ | 28,519 | | | $ | 7 | | | $ | 31,880 | | | Total assets measured and recorded at fair value | | $ | 4,683 | | | $ | 21,150 | | | $ | — | | | $ | 25,833 | | | $ | 8,484 | | | $ | 21,908 | | | $ | — | | | $ | 30,392 | | |
| Liabilities | Liabilities | | | | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | | | | | | |
| Other accrued liabilities: | Other accrued liabilities: | | | Other accrued liabilities: | | |
| Derivative liabilities | Derivative liabilities | | $ | 151 | | | $ | 1,386 | | | $ | — | | | $ | 1,537 | | | $ | 4 | | | $ | 516 | | | $ | — | | | $ | 520 | | | Derivative liabilities | | $ | — | | | $ | 446 | | | $ | 101 | | | $ | 547 | | | $ | 111 | | | $ | 485 | | | $ | 89 | | | $ | 685 | | |
| | Other long-term liabilities: | Other long-term liabilities: | | | Other long-term liabilities: | | |
| Derivative liabilities | Derivative liabilities | | — | | | 689 | | | 89 | | | 778 | | | — | | | 9 | | | — | | | 9 | | | Derivative liabilities | | — | | | 722 | | | — | | | 722 | | | — | | | 699 | | | — | | | 699 | | |
| Total liabilities measured and recorded at fair value | Total liabilities measured and recorded at fair value | | $ | 151 | | | $ | 2,075 | | | $ | 89 | | | $ | 2,315 | | | $ | 4 | | | $ | 525 | | | $ | — | | | $ | 529 | | | Total liabilities measured and recorded at fair value | | $ | — | | | $ | 1,168 | | | $ | 101 | | | $ | 1,269 | | | $ | 111 | | | $ | 1,184 | | | $ | 89 | | | $ | 1,384 | | |
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 1 investments consist primarily of U.S.US Treasury securities. Level 2 investments consist primarily of U.S. agency notes and non-U.S.non-US 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.
4Level 2 investments consist of marketable equity securities subject to security-specific restrictions.
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.
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| Financial Statements | Notes to Financial Statements | 15 |
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, reverse repurchase agreements with original maturities greater than three months, and issued debt.
We classify the fair value of grants receivable and reverse repurchase agreements with original maturities greater than three months as Level 2. The estimated fair value of these financial instruments approximates their carrying value. The aggregate carrying value of grants receivable as of OctoberJuly 1, 20222023 was $569$512 million (the aggregate carrying value as of December 25, 202131, 2022 was $317$437 million). The aggregate carrying value ofWe have no reverse repurchase agreements with original maturities greater than three months as of OctoberJuly 1, 2022 was $400 million2023 (the aggregate carrying value as of December 25, 202131, 2022 was $0)$400 million).
We classify the fair value of issued debt (excluding any commercial paper, drafts payable, and finance leases)paper) as Level 2. The fair value of our issued debt was $34.8$45.4 billion as of OctoberJuly 1, 20222023 ($41.534.3 billion as of December 25, 2021)31, 2022).
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| Note 10 :Financial Statements | Other Comprehensive Income (Loss) Notes to Financial Statements | 16 |
The changes in accumulated other comprehensive income (loss) by component and related tax effects in the first nine months
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In Millions) | | | | | | Unrealized Holding Gains (Losses) on Derivatives | | Actuarial Valuation and Other Pension Expenses | | Translation Adjustments and Other | | Total |
| Balance as of December 25, 2021 | | | | | | $ | 211 | | | $ | (1,114) | | | $ | 23 | | | $ | (880) | |
| Other comprehensive income (loss) before reclassifications | | | | | | (1,575) | | | — | | | (38) | | | (1,613) | |
| Amounts reclassified out of accumulated other comprehensive income (loss) | | | | | | 205 | | | 34 | | | | | 239 | |
| Tax effects | | | | | | 192 | | | 3 | | | 8 | | | 203 | |
| Other comprehensive income (loss) | | | | | | (1,178) | | | 37 | | | (30) | | | (1,171) | |
| Balance as of October 1, 2022 | | | | | | $ | (967) | | | $ | (1,077) | | | $ | (7) | | | $ | (2,051) | |
We estimate that we will reclassify approximately $623 million (before taxes) of net derivative losses included in accumulated other comprehensive income (loss) into earnings within the next 12 months.
| | | | | |
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) | | Oct 1, 2022 | | Dec 25, 2021 | | |
| Foreign currency contracts | | $ | 32,561 | | | $ | 38,024 | | | |
| Interest rate contracts | | 16,760 | | | 15,209 | | | |
| Other | | 2,055 | | | 2,517 | | | |
| Total | | $ | 51,376 | | | $ | 55,750 | | | |
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 16 |
| | | | | | | | | | | | | | | | |
| (In Millions) | | Jul 1, 2023 | | Dec 31, 2022 | | |
| Foreign currency contracts | | $ | 27,267 | | | $ | 31,603 | | | |
| Interest rate contracts | | 17,356 | | | 16,011 | | | |
| Other | | 2,058 | | | 2,094 | | | |
| Total | | $ | 46,681 | | | $ | 49,708 | | | |
Fair Value of Derivative Instruments in the Consolidated Condensed Balance Sheets
| | | | | Oct 1, 2022 | | Dec 25, 2021 | | | Jul 1, 2023 | | Dec 31, 2022 |
| (In Millions) | (In Millions) | | Assets1 | | Liabilities2 | | Assets1 | | Liabilities2 | (In Millions) | | Assets1 | | Liabilities2 | | Assets1 | | Liabilities2 |
| Derivatives designated as hedging instruments: | Derivatives designated as hedging instruments: | | | | | | | | | Derivatives designated as hedging instruments: | | | | | | | | |
Foreign currency contracts3 | Foreign currency contracts3 | | $ | 1 | | | $ | 1,164 | | | $ | 80 | | | $ | 163 | | Foreign currency contracts3 | | $ | 144 | | | $ | 347 | | | $ | 142 | | | $ | 290 | |
| Interest rate contracts | Interest rate contracts | | — | | | 762 | | | 774 | | | — | | Interest rate contracts | | — | | | 798 | | | — | | | 777 | |
| Total derivatives designated as hedging instruments | Total derivatives designated as hedging instruments | | 1 | | | 1,926 | | | 854 | | | 163 | | Total derivatives designated as hedging instruments | | $ | 144 | | | $ | 1,145 | | | $ | 142 | | | $ | 1,067 | |
| Derivatives not designated as hedging instruments: | Derivatives not designated as hedging instruments: | | | | | | | | | Derivatives not designated as hedging instruments: | | | | | | | | |
Foreign currency contracts3 | Foreign currency contracts3 | | 1,703 | | | 215 | | | 475 | | | 297 | | Foreign currency contracts3 | | $ | 497 | | | $ | 118 | | | $ | 866 | | | $ | 194 | |
| Interest rate contracts | Interest rate contracts | | 309 | | | 23 | | | 26 | | | 65 | | Interest rate contracts | | 327 | | | 6 | | | 266 | | | 12 | |
| Equity contracts | Equity contracts | | — | | | 151 | | | 80 | | | 4 | | Equity contracts | | 197 | | | — | | | — | | | 111 | |
| Total derivatives not designated as hedging instruments | Total derivatives not designated as hedging instruments | | 2,012 | | | 389 | | | 581 | | | 366 | | Total derivatives not designated as hedging instruments | | $ | 1,021 | | | $ | 124 | | | $ | 1,132 | | | $ | 317 | |
| Total derivatives | Total derivatives | | $ | 2,013 | | | $ | 2,315 | | | $ | 1,435 | | | $ | 529 | | Total derivatives | | $ | 1,165 | | | $ | 1,269 | | | $ | 1,274 | | | $ | 1,384 | |
1Derivative assets are recorded as other assets, current and long-term.
2Derivative liabilities are recorded as other liabilities, current and long-term.
3TheA substantial majority of these instruments mature within 12 months.
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:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Oct 1, 2022 | | | | |
| | | | | | | | 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 | | $ | 1,965 | | | $ | — | | | $ | 1,965 | | | $ | (653) | | | $ | (1,300) | | | $ | 12 | | | | | |
| Reverse repurchase agreements | | 2,150 | | | — | | | 2,150 | | | — | | | (2,150) | | | — | | | | | |
| Total assets | | 4,115 | | | — | | | 4,115 | | | (653) | | | (3,450) | | | 12 | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | |
| Derivative liabilities subject to master netting arrangements | | 2,237 | | | — | | | 2,237 | | | (653) | | | (1,350) | | | 234 | | | | | |
| Total liabilities | | $ | 2,237 | | | $ | — | | | $ | 2,237 | | | $ | (653) | | | $ | (1,350) | | | $ | 234 | | | | | |
| | | | | | | | | | | |
| Financial Statements | Notes to Financial Statements | 17 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec 25, 2021 |
| | | | | | | | 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 | | $ | 1,427 | | | $ | — | | | $ | 1,427 | | | $ | (332) | | | $ | (986) | | | $ | 109 | |
| Reverse repurchase agreements | | 1,595 | | | — | | | 1,595 | | | — | | | (1,595) | | | — | |
| Total assets | | 3,022 | | | — | | | 3,022 | | | (332) | | | (2,581) | | | 109 | |
| Liabilities: | | | | | | | | | | | | |
| Derivative liabilities subject to master netting arrangements | | 392 | | | — | | | 392 | | | (332) | | | (60) | | | — | |
| Total liabilities | | $ | 392 | | | $ | — | | | $ | 392 | | | $ | (332) | | | $ | (60) | | | $ | — | |
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:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Jul 1, 2023 | | | | |
| | | | | | | | 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 | | $ | 1,070 | | | $ | — | | | $ | 1,070 | | | $ | (548) | | | $ | (522) | | | $ | — | | | | | |
| Reverse repurchase agreements | | 1,700 | | | — | | | 1,700 | | | — | | | (1,700) | | | — | | | | | |
| Total assets | | $ | 2,770 | | | $ | — | | | $ | 2,770 | | | $ | (548) | | | $ | (2,222) | | | $ | — | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | |
| Derivative liabilities subject to master netting arrangements | | $ | 1,260 | | | $ | — | | | $ | 1,260 | | | $ | (548) | | | $ | (692) | | | $ | 20 | | | | | |
| Total liabilities | | $ | 1,260 | | | $ | — | | | $ | 1,260 | | | $ | (548) | | | $ | (692) | | | $ | 20 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec 31, 2022 |
| | | | | | | | 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 | | $ | 1,231 | | | $ | — | | | $ | 1,231 | | | $ | (546) | | | $ | (682) | | | $ | 3 | |
| Reverse repurchase agreements | | 1,701 | | | — | | | 1,701 | | | — | | | (1,701) | | | — | |
| Total assets | | $ | 2,932 | | | $ | — | | | $ | 2,932 | | | $ | (546) | | | $ | (2,383) | | | $ | 3 | |
| Liabilities: | | | | | | | | | | | | |
| Derivative liabilities subject to master netting arrangements | | $ | 1,337 | | | $ | — | | | $ | 1,337 | | | $ | (546) | | | $ | (712) | | | $ | 79 | |
| Total liabilities | | $ | 1,337 | | | $ | — | | | $ | 1,337 | | | $ | (546) | | | $ | (712) | | | $ | 79 | |
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 $678 million net losses in the third quarter of 2022 and $1.6 billion net losses in the first nine months of 2022 ($28$245 million net losses in the thirdsecond quarter of 20212023 and $313$191 million net losses in the first ninesix months of 2021)2023 ($782 million net losses in the second quarter of 2022 and $897 million net losses in the first six months of 2022). Substantially all of our cash flow hedges were foreign currency contracts for all periods presented.
During the first ninesix months of 20222023 and 2021,2022, the amounts excluded from effectiveness testing were insignificant.
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 | | Nine Months Ended | | | | |
| (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 | | Oct 1, 2022 | | Sep 25, 2021 | | | | | | | | |
| Interest rate contracts | | $ | (589) | | | $ | (55) | | | $ | (1,536) | | | $ | (532) | | | | | | | | | |
| Hedged items | | 589 | | | 55 | | | 1,536 | | | 532 | | | | | | | | | |
| Total | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | |
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 Sheets 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) | | Oct 1, 2022 | | Dec 25, 2021 | | Oct 1, 2022 | | Dec 25, 2021 | |
| Long-term debt | | $ | (11,236) | | | $ | (12,772) | | | $ | 761 | | | $ | (775) | | |
The total notional amount of pay-variable and receive-fixed interest rate swaps was $12.0 billion as of October 1, 2022 and $12.0 billion as of December 25, 2021.
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| Financial Statements | Notes to Financial Statements | 18 |
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) on Derivatives Recognized in Consolidated Condensed Statements of Income |
| | Three Months Ended | | Six Months Ended |
| (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Interest rate contracts | | $ | (213) | | | $ | (236) | | | $ | (21) | | | $ | (947) | |
| Hedged items | | 213 | | | 236 | | | 21 | | | 947 | |
| Total | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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 Sheets in Which the Hedged Item is Included | | Carrying Amount of the Hedged Item Assets/(Liabilities) | | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities) | |
| (In Millions) | | Jul 1, 2023 | | Dec 31, 2022 | | Jul 1, 2023 | | Dec 31, 2022 | |
| Long-term debt | | $ | (11,200) | | | $ | (11,221) | | | $ | 797 | | | $ | 776 | | |
The total notional amount of outstanding pay-variable, receive-fixed interest rate swaps was $12.0 billion as of July 1, 2023 and December 31, 2022.
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 | | | Nine Months Ended | | | Three Months Ended | | Six Months Ended |
| (In Millions) | (In Millions) | | Location of Gains (Losses)
Recognized in Income on Derivatives | | Oct 1, 2022 | | Sep 25, 2021 | | | Oct 1, 2022 | | Sep 25, 2021 | (In Millions) | | Location of Gains (Losses)
Recognized in Income on Derivatives | | Jul 1, 2023 | | Jul 2, 2022 | | Jul 1, 2023 | | Jul 2, 2022 |
| Foreign currency contracts | Foreign currency contracts | | Interest and other, net | | $ | 771 | | | $ | 170 | | | | $ | 1,952 | | | $ | 382 | | Foreign currency contracts | | Interest and other, net | | $ | 211 | | | $ | 1,023 | | | $ | 212 | | | $ | 1,181 | |
| Interest rate contracts | Interest rate contracts | | Interest and other, net | | 164 | | | (7) | | | | 289 | | | 14 | | Interest rate contracts | | Interest and other, net | | 124 | | | 31 | | | 90 | | | 125 | |
| Other | Other | | Various | | (97) | | | 84 | | | | (562) | | | 279 | | Other | | Various | | 100 | | | (331) | | | 215 | | | (465) | |
| Total | Total | | $ | 838 | | | $ | 247 | | | | $ | 1,679 | | | $ | 675 | | Total | | $ | 435 | | | $ | 723 | | | $ | 517 | | | $ | 841 | |
| | | | | |
Note 1213 : | Commitments and Contingencies |
Commitments
In the third quarter of 2022, we signed a definitive agreement with Brookfield Asset Management (Brookfield). This arrangement represents an equity partnership whereby we and Brookfield own 51% and 49%, respectively, of what will be a newly-formed entity, Arizona Fab LLC (Arizona Fab), which we will fully consolidate into our consolidated financial statements. We expect Arizona Fab to spend up to $30.0 billion of investments in expanded manufacturing infrastructure at our Ocotillo campus in Chandler, Arizona. Generally, contributions will be made to, and distributions will be received from, Arizona Fab based upon our and Brookfield’s proportional ownership, subject to the terms and conditions within the definitive agreement. The definitive agreement includes provisions that require us to utilize Arizona Fab’s expanded manufacturing capacity at specified minimum levels or be subject to penalties. Brookfield’s ownership stake as a non-controlling interest holder in Arizona Fab will be shown as a separate component of equity within our consolidated balance sheet. The transaction with Brookfield is expected to close by the end of 2022, subject to customary closing conditions.
Legal Proceedings
We are aregularly party to various legalongoing claims, litigation, and other proceedings, including those noted in this section. In the first quarter of 2021, weWe have accrued a charge of $2.2 billion related to litigation involving VLSI, described below. Excluding this charge,the VLSI claims, 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; however, legal proceedings and related government investigations are subject to inherent uncertainties, and unfavorable rulings, excessive verdicts, or other events could occur. Unfavorable resolutions could include substantial monetary damages.damages, fines, or penalties. Certain of these outstanding matters include speculative, substantial, or indeterminate monetary awards. 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 asUnless specifically described below, we have not concluded that settlement of any of the legal proceedings noted in this section is appropriate at this time.
European Commission Competition Matter
In 2001, the European Commission (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. 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.
We appealed the EC decision to the Court of First Instance (which has been renamed the General Court) in July 2009. 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 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.
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| Financial Statements | Notes to Financial Statements | 19 |
European Commission Competition Matter
In 2009, the EC found that we had used unfair business practices to persuade customers to buy microprocessors in violation of Article 82 of the EC Treaty (later renumbered Article 102) and Article 54 of the European Economic Area Agreement. In general, the EC found that we violated Article 82 by offering alleged “conditional rebates and payments” that required customers to purchase all or most of their x86 microprocessors from us and by making alleged “payments to prevent sales of specific rival products.” The EC ordered us to end the alleged infringement referred to in its decision and imposed a €1.1 billion fine, which we paid in the third quarter of 2009.
We appealed the EC decision to the European Court of Justice in 2014, after the General Court appointed a panel(then called the Court of five judges to considerFirst Instance) rejected our appeal of the EC’s 2009EC decision in light ofits entirety. In September 2017, the Court of Justice’s clarificationsJustice sent the case back to the General Court to examine whether the rebates at issue were capable of the law, and inrestricting competition.
In January 2022, the General Court issued a decision annullingannulled the EC'sEC’s 2009 findings against Intelus regarding rebates, as well as the fine imposed on Intel, which was returned to Intelus in February 2022. In April 2022, the EC appealed the General Court'sCourt’s decision to the Court of Justice, seeking an orderJustice. A hearing date on the appeal has not been scheduled. The General Court’s January 2022 decision did not annul the EC’s 2009 finding that would require a further proceedingwe made payments to prevent sales of specific rival products, and decision by the General Court. In June 2022, Intel filed a response in opposition toJanuary 2023 the EC appeal, and in July 2022, the Intervener Association for Competitive Technologies filedreopened its administrative procedure to determine a response in opposition to the EC appeal.fine against us based on that alleged conduct. Given the procedural posture and the nature of this proceeding we are unable to make a reasonable estimate of the potential loss or range of losses, if any, that might arise from this matter.
In a related matter, Intelin April 2022 we filed applications with the General Court in April 2022 seeking an order requiring the EC to pay Intelus approximately €593 million in default interest.interest, which applications have been stayed pending the EC’s appeal of the General Court’s January 2022 decision.
Litigation Related to Security Vulnerabilities
In June 2017, a Google research team notified Intel 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. OnIn January 2, 2018, information on the security vulnerabilities was publicly reported, before software and firmware updates to address the vulnerabilities were made widely available.
Numerous lawsuits have been filed against Intelus relating to Spectre, Meltdown, and other variants of the security vulnerabilities that have been identified since 2018. As of OctoberJuly 26, 2022,2023, consumer class action lawsuits against Intelus were pending in the United States,US, Canada, Israel, and Argentina. The plaintiffs, who purport to represent various classes of purchasers of our products, generally claim to have been harmed by Intel'sour 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 United States,US, class action suits filed in various jurisdictions were consolidated for all pretrial proceedings in the United StatesUS District Court for the District of Oregon, which entered final judgment in favor of Intel in July 2022 based on plaintiffs'plaintiffs’ failure to plead a viable claim. Plaintiffs have appealed that decision to the Ninth Circuit Court of Appeals. In Canada, an initial status conference has not yet been scheduled in one case pending in the Superior Court of Justice of Ontario, and a stay of a second case pending in the Superior Court of Justice of Quebec is in effect until November 2022. In Israel, the plaintiff in a lawsuit pending in the District Court of Haifa advised the court in September 2022 that it intends to seek leave in October 2022 to withdraw its motion for class certification and voluntarily dismiss the action. effect.In Argentina, Intel Argentina was served with, and responded to, a class action complaint in June 2022. The Argentinian court dismissed plaintiffs’ claims for lack of standing in May 2023, and plaintiffs have appealed. 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.
VLSI Technology LLC v. Intel
In October 2017, VLSI Technology LLC (VLSI)Litigation Related to 7nm Product Delay Announcement
Multiple securities class action lawsuits were filed a complaint against Intel in the U.S.US District Court for the Northern District of California alleging infringementagainst us and certain officers following our July 2020 announcement of eight patents7nm product delays. The court consolidated the lawsuits and appointed lead plaintiffs in October 2020, and in January 2021 plaintiffs filed a consolidated complaint. Plaintiffs purport to represent all persons who purchased or otherwise acquired our common stock from NXP Semiconductors, N.V. (NXP). The patents, which originated at Freescale Semiconductor, Inc.October 25, 2019 through October 23, 2020, 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;they generally allege that defendants violated the federal securities laws by making false or misleading statements about the timeline for 7nm products. In March 2023, the court granted the defendants’ motion to dismiss the consolidated complaint, and 8,566,836. VLSI accuses various FPGAin April 2023 entered judgment. Plaintiffs have appealed. Given the procedural posture and processor products of infringement. VLSI estimated its damages to be at least $5.5 billion, and its complaint further sought enhanced damages, future royalties, attorneys’ fees, and costs and interest. In May, June, September, and October 2018, Intel filed Inter Partes Review (IPR) petitions challenging the patentability of claims in all eightnature of the patents in-suit. The Patent Trial and Appeal Board (PTAB) instituted review of six patents and denied institution on two patents. As a result ofcase, including that it is in 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 appealed the PTAB's decision as to '014, '672 and '207 patents. The Federal Circuit affirmed the PTAB's decisionearly stages, that alleged damages have not been specified, that uncertainty exists as to the '672likelihood of a class being certified or the ultimate size of any class if certified, and '207 patents, but reversedthat there are significant factual and remanded aslegal issues to the '014 patent. Intel moved forbe resolved, we are unable to make a continuationreasonable estimate of the stay in March 2020 pendingpotential loss or range of losses, if any, that might arise from the appeal.matter. In June 2020,July 2021, we introduced a new process node naming structure, and the District Court issued an order continuing the stay through August 2021. The court lifted the stay in September 2021, and scheduled a trial for March 2024.
In June 2018, VLSI filed a second suit against7nm process is now called 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 IPR petitions challenging the patentability of certain claims in all five patents-in-suit. In January 2020, VLSI said that it was no longer asserting any claims of the ‘633 patent. In January and February 2020, the PTAB instituted review of the '552, '633, '331 and '026 patents, but declined to institute review on the '027 patent. As a result, 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. In January 2021, the PTAB invalidated certain asserted claims of the ‘026 patent, and in February the PTAB invalidated all asserted claims of the ‘552 patent. Both parties filed notices of appeal regarding the PTAB’s decision as to the ‘026 patent in March 2021, and in April 2021, VLSI filed a notice of appeal of the PTAB's decision as to the '552 patent. The case remains stayed as to both of those patents. For the '027 and '331 patents, VLSI is seeking damages of approximately $4.13 billion plus enhanced damages for the '027 patent. The parties have completed summary judgment and expert witness testimony briefing.4.
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| Financial Statements | Notes to Financial Statements | 20 |
Litigation Related to Patent and IP Claims
We have had IP infringement lawsuits filed against us, including but not limited to those discussed below. Most involve claims that certain of our products, services, and technologies infringe others' IP rights. Adverse results in these lawsuits may include awards of substantial fines and penalties, costly royalty or licensing agreements, or orders preventing us from offering certain features, functionalities, products, or services. As a result, we may have to change our business practices, and develop non-infringing products or technologies, which could result in a loss of revenue for us and otherwise harm our business. In June 2022,addition, certain agreements with our customers require us to indemnify them against certain IP infringement claims, which can increase our costs as a result of defending such claims, and may require that we pay significant damages, accept product returns, or supply our customers with non-infringing products if there were an adverse ruling in any such claims. In addition, our customers and partners may discontinue the court granteduse of our products, services, and technologies, as a result of injunctions or otherwise, which could result in partloss of revenue and denied in part Intel’s motion to exclude testimony of VLSI’s technical expert, barring him from testifying regarding Intel’s purported litigation misconduct and the alleged benefits of certain claims of the ‘027 patent. In August 2022, the court stayed the case in light of VLSI's failure to fully disclose its investors pursuant to the court's standing order.adversely affect our business.
VLSI Technology LLC v. Intel
In March 2019,October 2017, VLSI Technology LLC (VLSI) filed a third suitcomplaint against Intel, alsous in U.S.the US District Court for the Northern District of Delaware,California alleging infringement of six morethat various Intel FPGA and processor products infringe eight patents that VLSI acquired from NXP: U.S.NXP Semiconductors, N.V. (NXP). Four patents remain at issue in the case, and VLSI estimates its damages to be approximately $860 million, and seeks enhanced damages, future royalties, attorneys’ fees, costs, and interest. We filed Inter Partes Review (IPR) petitions with the Patent Nos. 6,366,522; 6,663,187; 7,292,485; 7,606,983; 7,725,759;Trial and 7,793,025. In April 2019, VLSI voluntarily dismissed this Delaware case without prejudice. Appeal Board (PTAB) in 2018 challenging patentability, and the parties stipulated to stay the district court action pending the PTAB’s review. The PTAB subsequently found all claims of two patents, and some claims of two other patents, to be unpatentable. The district court lifted the stay in September 2021, and scheduled trial for March 2024 on the claims that were found patentable by the PTAB.
In April 2019, VLSI filed three new infringement suits against Intelus in the US District Court for the Western District of Texas (WDTX) accusing various Intelof our processors of infringement. The three suits collectively assert the same six patents from the voluntarily dismissed Delaware case plus twoinfringement of eight additional patents it had 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. In theNXP:
▪The first Texas case, VLSI asserted the ‘373 and ‘759 patents (in December 2020 the court granted Intel summary judgment of non-infringement on the ‘357 patent, which had also been asserted in the first Texas case). That case went to trial in February 2021, and the jury awarded a “lump sum” to VLSI of $1.5 billion for literal infringement of the ‘373one patent and $675 million for infringement of another patent under the doctrine of equivalents of the ‘759 patent. The jury found that Intel had not willfully infringed either patent. Intel challenged the verdict with post-trial motions, including filing in May 2021 a motion for a new trial, which the court denied in August, a motion for judgment as a matter of law that the ‘373 and ‘759 patents are not infringed and the ‘759 patent is invalid, and a motion that VLSI is entitled to no damages, both of which the court denied in March 2022.equivalents. In April 2022, the court entered final judgment, and awardedawarding VLSI $2.175$2.2 billion in damages and approximately $162.3 million in pre-judgment interest, and post-judgment interest atinterest. We have appealed the Treasury Bill rate, compounded annually. Intel filedjudgment to the Federal Circuit Court of Appeals, including its opening appellate briefclaim to have a license from Fortress Investment Group’s acquisition of Finjan. In December 2021 and January 2022 the PTAB instituted IPRs on the claims found to have been infringed in September 2022.the first Texas case, and in May and June 2023 found all of those claims unpatentable; VLSI may appeal the PTAB’s decisions.
▪The second Texas case went to trial in April 2021, and the jury found that Intel doeswe do not infringe the ‘522 and ‘187asserted patents. VLSI had sought approximately $3.0 billion for alleged infringement, of those patents, plus enhanced damages for willful infringement. The court has not yet entered final judgment following second trial in Texas.judgment.
▪The third Texas case was set forwent to trial in AprilNovember 2022, but was cancelled afterwith VLSI asserting one remaining patent. The jury found the first day due topatent valid and infringed, and awarded VLSI approximately $949 million in damages, plus a COVID-19 outbreak. Arunning royalty. The court has not yet entered final judgment. In February 2023, we filed motions for a new trial date has been setand for November 2022. In that case, VLSI initially sought approximately $2.2 - $2.4 billion for alleged infringementjudgment as a matter of law notwithstanding the ‘983, ‘025 and ‘485 patents, plus enhanced damages for willful infringement. In April 2022, VLSI informed the court that it would not present an infringement case at trial for the '025 patent. Later in April 2022, VLSI informed the court that it would not present willful infringement or an infringement case for the '485 patent at trial. This limits VLSI's damages demand to approximately $1.0 billion for the alleged infringement of the remaining '983 patent.verdict on various grounds. Further appeals are possible.
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 accusingone patent against certain Intel Core processors of infringement. VLSI requests an injunction as well as RMB 1 million in damages and RMB 300 thousand in expenses.processors. Defendants filed an invalidation petition in October 2019 with the CNIPA,China National Intellectual Property Administration (CNIPA) which held a hearing in September 2021. The CNIPA has not yet issued a decision. In May 2020, defendants filed a motion to stay the trialThe Shenzhen court proceedings pending a determination on invalidity. The court held the first evidentiary hearing in November 2020 and the second in July 2021. The court also held trial proceedings in the hearing in July 2021 and concludedstated that further trial proceedings were needed but indicated those would be stayed pending the outcome of defendants’ invalidity challenge at the CNIPA. In July 2021, VLSI dismissed its case, but refiled it in August 2021. VLSI seeks an injunction in its newly filed case, as well as RMB 1.3 million in reasonable costs and expenses, but no damages. In November 2021, Intel moved for a stay of the August 2021 action pending a ruling on invalidity. The court has not yet ruled on that motion.
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. VLSI accusesasserting one patent against certain Intel Core processors and seeks an injunction, as well as RMB 1 million in damages and RMB 300 thousand in expenses. Defendants filed with the CNIPA an invalidation petition in October 2019, and the CNIPA held a hearing in September 2021, but has not yet issued a decision. In June 2020, defendants filed a motion to stay the trial court proceedings pending a determination on invalidity. The court held its first evidentiary hearing in September 2020.core processors. The court held a second evidentiarytrial hearing in December 2020, and a trial the same month. At trial,where VLSI dropped its monetary damages claim, but still requested expenses (RMB 300 thousand) and an injunction. The court has not yet issued a decision following the trial. Rather, the court stayed the case in December 2020 pending a determination on invalidity by the CNIPA. In March 2022, the CNIPA issued an order holding the claims of the patent to be valid. The court held a second trial hearing in May 2022, following the CNIPA ruling, but has yet to issue its final decision.
In November 2019, Intel, along with Apple Inc.,December 2022, we filed a complaintpetition to invalidate the patent at issue.
We have accrued a charge of approximately $2.2 billion related to the VLSI litigation. While we dispute VLSI’s claims and intend to vigorously defend 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,them, we are unable to make a reasonable estimate of losses in excess of recorded amounts given recent developments 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 2020 and 2021, the court twice dismissed plaintiffs' complaint with leave to amend. In December 2020, the court granted a joint motion by Apple and Seven Networks to dismiss with prejudice Apple’s claims against Seven Networks. Plaintiffs filed a second amended complaint in March 2021. Defendants moved to dismiss the Second Amended Complaint in May 2021. Apple withdrew from the case and dismissed its claims in June 2021. The court heard defendants’ motion to dismiss the Second Amended Complaint in September 2021, and dismissed Intel’s claims with prejudice that same month, entering judgment in favor of defendants. Intel filed a notice of appeal in December 2021. Appellate briefing concluded in June 2022 and oral argument was held in October 2022.
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| Financial Statements | Notes to Financial Statements | 21 |
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. As a part of this dispute resolution process, Intel and Finjan held a mediation in December 2020, but failed to resolve their differences. Intel filed suit to enforce its rights under the License Agreement with Finjan in January 2021 in Delaware Chancery Court. In March 2021, defendants filed motions to dismiss the Chancery Court proceedings. The court heard those motions in May 2021, and dismissed all of Intel’s claims—except the breach of contract claim—with prejudice in September 2021 for lack of jurisdiction because, the court reasoned, Intel’s license defense has been raised in the other U.S. suits between Intel and VLSI and could be adjudicated in one of those actions. The court stayed Intel’s breach of contract claim pending a determination on whether Intel is licensed to VLSI’s patents. In September 2020, Intel filed motions to stay the Texas, Delaware, and Shanghai matters pending resolution of its dispute with Finjan. In November 2020, Intel filed a motion to stay the Shenzhen matter pending resolution of its dispute with Finjan. In November 2020, the Delaware Court denied Intel’s motion to stay. The other stay motions remain pending. Finally, Intel filed a motion to amend its answer in the Texas matters to add a license defense in November 2020, and filed a motion to amend its answer in the Delaware matter to add a license defense in February 2021. The Delaware Court granted Intel's motion in July 2021, but in March 2022, the Texas Court denied Intel's motion, holding, among other things, that it would be futile for Intel to add the license defense as it would not be meritorious. Intel has appealed this ruling as a part of its appeal of the verdict in the first VLSI Texas trial.
In October and November 2019, and in February 2020, Intel filed IPR petitions on certain asserted claims across six of the patents-in-suit in WDTX. Between May and October 2020, the PTAB denied all of these petitions on a discretionary basis and without reviewing the merits. Intel requested a rehearing, and review from the POP as to all petitions. All requests for POP review and rehearing were denied. Intel filed notices of appeal regarding the discretionary denials for all petitions in February and March of 2021. The Federal Circuit dismissed the appeals in May 2021 for lack of jurisdiction. The Federal Circuit denied Intel’s petition for hearing en banc in August 2021. In March 2022, the Supreme Court denied Intel’s petition for writ of certiorari.
In June 2021, OpenSky Industries LLC (OpenSky) requested IPR of certain claims of the '373 and '759 patents at-issue in the first Texas case, including those claims found to be infringed in that judgment. Both petitions copied Intel's earlier petitions, and used the expert declarations previously submitted by Intel. Another entity named Patent Quality Assurance LLC (PQA) also petitioned for IPR of certain claims of the '373 patent, those claims found to be infringed in the first Texas case judgment. PQA also largely copied Intel's petition, but (1) added a challenge to an additional claim and (2) included newly signed declarations from Intel's experts. In December 2021, the PTAB instituted OpenSky's petition on the '759 patent, but declined to institute on the '373 patent. In December 2021, Intel filed a motion to join OpenSky's '759 IPR. In January 2022, the PTAB instituted PQA's petition on the '373 patent. In February, Intel filed a motion to join PQA's petition. Both of Intel's joinder motions were granted in June 2022, allowing Intel to participate in the IPRs. Hearings were held in September 2022 for the OpenSky petition and in October 2022 for the PQA petition. PTAB decisions are expected in December 2022 on the '759 patent, and January 2023 on the '373 patent. At the same time, the Director of the United States Patent & Trademark Office is reviewing both the OpenSky and PQA IPRs to determine if they should be allowed to proceed to final written decisions. The Director has said that that process may delay the final written decision of the '759 patent IPR, but has not made any similar statement regarding the timeline for the '373 patent IPR.
After consideration of the verdicts in the WDTX cases and the additional pending lawsuits filed by VLSI, Intel accrued a charge of $2.2 billion in the first quarter of 2021 and anticipates losses, if any, in excess of this amount would be immaterial to the financial statements. We dispute VLSI’s claims and intend to vigorously defend against them.
Litigation Related to 7nm Product Delay Announcement
Starting in July 2020, five securities class action lawsuits were filed in the United States District Court for the Northern District of California against Intel and certain current and former officers based on Intel’s July 2020 announcement of 7nm product delays. The plaintiffs, who purport to represent classes of acquirers of Intel stock between October 2019 and July 2020, generally allege that the defendants violated securities laws by making false or misleading statements about the timeline for 7nm products in light of subsequently announced delays. In October 2020, the court consolidated the lawsuits, appointed lead plaintiffs, and in January 2021 the lead plaintiffs filed a consolidated complaint. Defendants moved to dismiss the consolidated complaint in March 2021. We dispute the claims described above and intend to defend the 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. In July 2021, Intel introduced a new process node naming structure, and the 7nm process is now Intel 4.
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| Financial Statements | Notes to Financial Statements | 22 |
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.
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| 5G | | The fifth-genfifth-generation mobile network, which is expected to bringbrings dramatic improvements in network speeds and latency, and which we view as a transformative technology and opportunity for many industries |
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| ADAS | | Advanced driver-assistance systems |
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| AI | | Artificial intelligence |
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| ASP | | Average selling price |
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| AXG | | Advanced Computing and Graphics operating segment |
| CCG | | Client Computing Group operating segment |
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| CODM | | Chief operating decision maker |
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COVID-19 | | The infectious disease caused by the most recently discovered coronavirus (aka SARS-CoV-2), which was declared a global pandemic by the World Health Organization |
CPU | | Processor or central processing unit |
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CXL standard | | Compute Express Link standard | | |
| DCAI | | DatacenterData Center and AIArtificial Intelligence operating segment |
| EC | | European Commission |
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| EPS | | Earnings per share | | |
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| Form 10-K | | Annual Report on Form 10-K for the year ended December 31, 2022 |
| Form 10-Q | | Quarterly Report on Form 10-Q for the quarter ended July 1, 2023 |
| FPGA | | Field-programmable gate array |
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GPU | | Graphics processing unit |
| IDM | | Integrated device manufacturer, a semiconductor company that both designs and builds chips |
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| IDM 2.0 | | Evolution of our IDM model that combines our internal factory network, strategic use of foundry capacity and our IFS business to position us to drive technology and product leadership |
| IFS | | Intel Foundry Services operating segment |
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| IP | | Intellectual property |
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LIBORIPO | | London Inter-Bank Offered Rate, an interest rate average calculated from estimates by the leading banks in London |
MBMWInitial public offering | | Multi-Beam Mask Writer |
| MD&A | | Management's Discussion &and Analysis |
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| MG&A | | Marketing, general, and administrative |
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| MNC | | Multinational corporation | | |
| NAND | | NAND flash memory |
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| NEX | | Networking and Edge operating segment |
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| nm | | Nanometer |
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ODM | | Original design manufacturer |
OEM | | Original equipment manufacturer |
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| R&D | | Research and development |
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| RSU | | Restricted stock unit |
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SCIP | | Semiconductor Co-Investment Program | | |
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| SEC | | U.S.US Securities and Exchange Commission |
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| SoC | | A System-on-a-Chip,system on a chip, which integrates most of the components of a computer or other electronic system into a single silicon chip. We offer a range of SoC products in CCG, DCAI, and NEX. In our DCAI and NEX businesses, we offer SoCs across many market segments for a variety of applications, including products targeted for 5G base stations and network infrastructure |
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SOFR | | Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated derivatives and loans, replacing LIBOR |
| SSD | | Solid-state drive |
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Tax Reform | | U.S. Tax Cuts and Jobs Act | | |
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U.S.US | | United States | | |
| US GAAP | | U.S.US Generally Accepted Accounting Principles |
| VIE | | Variable interest entity |
| VLSI | | VLSI Technology LLC |
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| Financial Statements | Notes to Financial Statements | 2322 |
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| Management's Discussion and Analysis | |
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This report should be read in conjunction with the Consolidated Financial Statements in our 2021 Form 10-K where we include additional information on our business, operating segments, risk factors, critical accounting estimates, policies, and the methods and assumptions used in our estimates, among other important information.We previously announced severalthe organizational changes that we believe will acceleratechange to integrate AXG into CCG and DCAI to drive a more effective go-to-market capability, accelerating the execution and innovationscale of our Company by allowing us to capture growth in both large traditional markets and high-growth emerging markets. These changes include the reorganization of our business units to be positioned to capture this growth and to provide increased transparency, focus and accountability.these businesses while further reducing costs. As a result, we modified our segment reporting in Q1 2022the first quarter of 2023 to align to this previously announcedand certain other business reorganization.reorganizations. All prior-period segment data has been retrospectively adjusted to reflect the way we internally manage and monitor segment performance starting in fiscal year 2022.2023.
"Note 2: Operating Segments” within Notes to Consolidated Condensed Financial Statements of this Form 10-Q reconciles our segment revenues presented below to our total revenues, and our segment operating margin (loss) presented below to our total operating margin (loss), for each of the periods presented.
For additional key highlights of our results of operations, see "A Quarter in Review."
Client Computing
We are committed to advancing PC experiences by delivering an annual cadence of leadership products and deepening our relationships with industry partners to co-engineer and deliver leading platform innovation. We focusengage in an intentional effort focused on a long-term operating systems,system, system architecture, hardware, and application integration that enables industry-leading PC experiences. We intend to embraceare embracing these opportunities by investing more heavily in thesimplifying and focusing our roadmap, ramping PC ramping its capabilities even more aggressively, and designing the PC experienceexperiences even more deliberately. By doing this, we believe we will continue to fuel innovation across Intel, providing a growing source of IP, scale, and cash flow.
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| CCG Revenue $B | | CCG Operating Income $B |
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| ■| ■Notebook | ■ |■ Desktop | ■ |■ Other | |
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Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 | | | | |
■▪Notebook revenue was $4.4$3.9 billion, down $1.5 billion$855 million from Q3 2021.Q2 2022. Notebook unit salesvolume decreased 28% driven by13% in Q2 2023 due to lower demand and customers tempering purchases to reduce existing inventories. Notebook ASPs decreased 5% in Q2 2023 due to a higher mix of small core products attributable to relative strength in the consumer and education market segments. Notebookcombined with a higher mix of older generation products.
▪Desktop revenue was $2.4 billion, up $81 million from Q2 2022. Desktop volume decreased 11% in Q2 2023 due to lower demand and customers tempering purchases to reduce existing inventories. Desktop ASPs increased 3%16% in Q2 2023 due to an increased mix of product sales to the commercial products and lower mix of consumer and education products.gaming market segments.
■Desktop revenue was $3.2 billion, up $103 million from Q3 2021. Desktop unit sales increased 2% partially due to increased demand for Enthusiast and gaming products, while ASPs remained flat.
■▪Other revenue was $492$514 million, down $233$124 million from Q2 2022, primarily driven by the continued ramp down from the exit of our 5G smartphone modem business and lower demand for our wireless and connectivity products.product sales as a result of lower notebook volume.
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YTD 2023 vs YTD 2022 vs. YTD 2021 |
■▪Notebook revenue was $15.1$7.3 billion, down $4.5$3.4 billion from YTD 2021.2022. Notebook unit salesvolume decreased 34%26% in YTD 2023 due to lower demand and due to customers tempering purchases to reduce existing inventories. Notebook ASPs decreased 8% in YTD 2023 due to relative strength in the education market segment resulting in a higher mix of small core products combined with a higher mix of older generation products.
▪Desktop revenue was $4.2 billion, down $681 million from YTD 2022. Desktop volume decreased 22% in YTD 2023, driven by lower demand in the consumer and education market segments, and Notebookdue to customers tempering purchases to reduce existing inventories. Desktop ASPs increased 17%10% in YTD 2023 due to an increased mix of product sales to the commercial and consumer products and lower mixgaming market segments.
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Desktop revenue was $8.2 billion, down $530 million from YTD 2021. Desktop unit sales decreased 9% driven by lower demand for consumer and education products, and Desktop ASPs increased 3%, primarily from an increased mix of commercial products compared to YTD 2021.
■▪Other revenue was $1.8 billion,$995 million, down $636$365 million from YTD 20212022, primarily driven by the continued ramp down from the exit of our 5G smartphone modem business and lower demand for our wireless and connectivity products.product sales as a result of lower notebook volumes.
Operating income increased 19% from Q2 2022, with an operating margin of 15%.
Operating income decreased 57% from YTD 2022, with an operating margin of 12%.
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| (In Millions) | | | | |
| $ | 1,039 | | | Q2 2023 CCG Operating Income | | |
| 428 | | | Lower operating expenses driven by various cost-cutting measures | | |
| 402 | | | Lower period charges driven by the sell-through of previously reserved inventory and lower reserves taken in Q2 2023 | | |
| 148 | | | Higher product margin from desktop revenue | | |
| 93 | | | Lower period charges primarily driven by a decrease in product ramp costs | | |
| (585) | | | Lower product margin from notebook revenue | | |
| (186) | | | Higher unit costs primarily from increased mix of Intel 7 products | | |
| (77) | | | Higher period charges related to excess capacity charges | | |
| (60) | | | Other | | |
| $ | 876 | | | Q2 2022 CCG Operating Income | | |
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| $ | 1,559 | | | YTD 2023 CCG Operating Income | | |
| (2,861) | | | Lower product margin primarily from notebook and desktop revenue | | |
| (344) | | | Higher unit cost primarily from increased mix of Intel 7 products | | |
| (197) | | | Higher period charges related to excess capacity charges | | |
| 628 | | | Lower operating expenses driven by various cost-cutting measures | | |
| 412 | | | Lower period charges driven by the sell-through of previously reserved inventory and lower reserves taken in 2023 | | |
| 323 | | | Lower period charges primarily driven by a decrease in product ramp costs | | |
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| $ | 3,598 | | | YTD 2022 CCG Operating Income | | |
Operating income decreased 54% from Q3 2021, with an operating margin of 20%.
Operating income decreased 53% from YTD 2021, with an operating margin of 22%.
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(In Millions) | | |
$ | 1,655 | | | Q3 2022 CCG Operating Income |
(801) | | | Lower gross margin from revenue, primarily driven by Notebook |
(490) | | | Higher Desktop and Notebook unit cost primarily from increased mix of Intel 7 products |
(400) | | | Higher operating expenses driven by increased investments in leadership products |
(160) | | | Higher period charges primarily driven by inventory reserves taken in Q3 2022 |
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(86) | | | Other |
$ | 3,592 | | | Q3 2021 CCG Operating Income |
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$ | 5,567 | | | YTD 2022 CCG Operating Income |
(2,160) | | | Lower gross margin from revenue, primarily driven by Notebook and Desktop |
(1,715) | | | Higher Desktop and Notebook unit cost primarily from increased mix of Intel 7 products |
(1,190) | | | Higher operating expenses driven by increased investments in leadership products |
(625) | | | Higher period charges primarily driven by inventory reserves taken in 2022 |
(345) | | | Higher period charges primarily associated with the ramp up of Intel 4 |
(180) | | | Lower gross margin primarily driven by the continued ramp down from the exit of our 5G smartphone modem business |
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(127) | | | Other |
$ | 11,909 | | | YTD 2021 CCG Operating Income |
Datacenter
Data Center and AI
DCAI delivers industry-leading workload-optimized platformssolutions to empower datacentercloud service providers and hyperscale solutionsenterprise customers, along with silicon devices for diversecommunications service providers and high-performance computing needs.customers. We are focused on deliveringuniquely positioned to deliver solutions to help solve our customers’ most complex challenges with the depth and breadth of our hardware and software portfolio our customers need to supportcombined with silicon and platforms, advanced packaging, and at-scale manufacturing made possible by being the increased demand for high performance computing and processing of increasingly complex workloads. DCAI offers a portfolio of leadership products, including CPUs, FPGAs, and AI accelerators, and a broad portfolio of software and solutions that enable our hardware’s differentiated features to deliver performance to our customers.world’s only IDM at scale. Our customers and partners include hyperscale customers, OEM/ODMs, enterprises,cloud hyperscalers, MNCs, small and medium-sized businesses, independent software vendors, systemsystems integrators, communications service providers, and governments.governments around the world.
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| DCAI Revenue $B | | DCAI Operating Income (Loss) $B |
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Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 |
Revenue was $4.2$4.0 billion, down $1.6 billion$691 million from Q3 2021,Q2 2022, driven by a decrease in Serverserver revenue. Server volume decreased 29%, led34% in Q2 2023, due to lower demand in a softening CPU data center market. Server ASPs increased 17% primarily due to a higher mix of high core count products. The decrease in server revenue was partially offset by enterprise customers,an increase in revenue from the FPGA product line.
Revenue was $7.7 billion, down $3.0 billion from YTD 2022, driven by a decrease in server revenue. Server volume decreased 43% in YTD 2023, due to lower demand and due tofrom customers tempering purchases to reduce existing inventories in a softening datacenterCPU data center market. TheServer ASPs increased 8% primarily due to a higher mix of revenue from hyperscale customers within a competitive environment, drove a 7% decrease in Server ASPs.high core count products. The decrease in Serverserver revenue was partially offset by an increase in other DCAI revenue in Q3 2022 due to growth in ourfrom the FPGA business.product line.
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YTD 2022 vs. YTD 2021Operating Income (Loss) Summary |
Revenue was $14.9Operating loss increased 101% from Q2 2022, with an operating margin of (4)%.
We had an operating loss of $679 million in YTD 2023, compared to operating income of $1.3 billion down $1.4 billion fromin YTD 2021, due to a decrease in Server revenue. Server volume decreased 6% from YTD 2021, led by enterprise customers, and due to customers tempering purchases to reduce existing inventories in a softening datacenter market. Server ASPs decreased 6% from YTD 2021 primarily due to customer and product mix. Other DCAI revenue increased from YTD 2021 due to growth in our FPGA business.2022.
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| (In Millions) | | |
| $ | (161) | | | Q2 2023 DCAI Operating Income (Loss) |
| (394) | | | Lower product margin due to lower server revenue, partially offset by an increase in product margin from higher DCAI other product revenue |
| (270) | | | Higher server unit cost primarily from increased mix of Intel 7 products |
| (100) | | | Higher period charges related to excess capacity charges |
| 386 | | | Lower operating expenses driven by various cost-cutting measures |
| 186 | | | Lower period charges primarily driven by a decrease in product ramp costs |
| 111 | | | Lower period charges driven by the sell-through of previously reserved inventory |
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| $ | (80) | | | Q2 2022 DCAI Operating Income (Loss) |
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| $ | (679) | | | YTD 2023 DCAI Operating Income (Loss) |
| (2,314) | | | Lower product margin due to lower server revenue, partially offset by an increase in product margin from higher DCAI other product revenue |
| (542) | | | Higher server unit cost primarily from increased mix of Intel 7 products |
| (254) | | | Higher period charges related to excess capacity charges |
| 584 | | | Lower operating expenses driven by various cost-cutting measures |
| 288 | | | Lower period charges primarily driven by a decrease in product ramp costs |
| 246 | | | Lower period charges driven by the sell-through of previously reserved inventory |
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| $ | 1,313 | | | YTD 2022 DCAI Operating Income (Loss) |
Operating income decreased 99% from Q3 2021, with an operating margin of 0%.
Operating income decreased 69% from YTD 2021, with an operating margin of 13%.
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(In Millions) | | |
$ | 17 | | | Q3 2022 DCAI Operating Income |
(1,350) | | | Lower gross margin from Server revenue |
(320) | | | Higher operating expenses driven by increased investments in leadership products |
(235) | | | Higher period charges primarily associated with the ramp up of Intel 4 |
(235) | | | Higher Server unit cost from increased mix of 10nm SuperFin products |
(205) | | | Higher period charges primarily driven by inventory reserves taken in Q3 2022, and lack of sell-through of reserves compared to Q3 2021 |
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69 | | | Other |
$ | 2,293 | | | Q3 2021 DCAI Operating Income |
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$ | 1,917 | | | YTD 2022 DCAI Operating Income |
(1,535) | | | Lower gross margin from Server revenue |
(985) | | | Higher period charges primarily associated with the ramp up of Intel 4 |
(915) | | | Higher operating expenses driven by increased investments in leadership products |
(610) | | | Higher period charges driven by inventory reserves taken in 2022 |
(555) | | | Higher Server unit cost from increased mix of 10nm SuperFin products |
275 | | | Higher gross margin from DCAI other product revenue |
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153 | | | Other |
$ | 6,089 | | | YTD 2021 DCAI Operating Income |
Network & Edge
NEX lifts the world's networks and edge compute systems from fixed functioninflexible fixed-function hardware into opento general-purpose compute, acceleration, and networking devices running cloud native software running on programmable hardware. We work with partners and customers to deliver and deploy intelligent edge platforms that allow software developers to continuously evolve, improve,achieve agility and tailor systems to gain more control, security, and flexibility.drive automation using AI for efficient operations while securing the integrity of their data at the edge. We have a broad portfolio of hardware and software platforms, tools, and ecosystem partnerships for the rapid digital transformation happening from edgethe cloud to cloud.the edge. We are leveraging our core strengths in process, software, and manufacturing at scale and software, to grow traditional markets and to accelerate entry into emerging ones.
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| NEX Revenue $B | | NEX Operating Income (Loss) $B |
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Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 |
Revenue was $2.3$1.4 billion, up $280down $847 million from Q3 2021, driven by increased demand for 5G products, higher Ethernet demandQ2 2022, as customers tempered purchases to reduce existing inventories and ASPs, and accelerated demand for Edge products, partially offset byadjust to a lower demand for Network Xeon.
environment across product lines.
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YTD 20222023 vs. YTD 20212022 |
Revenue was $6.8$2.9 billion, up $922 milliondown $1.5 billion from YTD 2021, driven by increased demand for Ethernet2022, as customers tempered purchases to reduce existing inventories and 5G products, accelerated demand for Edge products, and higher ASPs, partially offset byadjust to a lower demand for Network Xeon.
environment across product lines.
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| Operating Income (Loss) Summary |
Operating income decreased 85% from Q3 2021, withWe had an operating marginloss of 3%.$187 million in Q2 2023, compared to operating income of $294 million in Q2 2022.
Operating income decreased 50% from YTD 2021, withWe had an operating marginloss of 10%.
$487 million in YTD 2023, compared to operating income of $710 million in YTD 2022.
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| (In Millions) | | | | |
| $ | 75(187) | | | Q2 2023 NEX Operating Income (Loss) | | |
| (569) | | | Lower product margin driven by lower revenue across NEX product lines | | |
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| 88 | | | Other, including lower operating expenses driven by various cost-cutting measures | | |
| $ | 294 | | | Q3Q2 2022 NEX Operating Income (Loss) | | |
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| $ | (487) | | | YTD 2023 NEX Operating Income (Loss) | | |
(200)(1,074) | | | Lower product margin driven by lower revenue across NEX product lines | | |
| (143) | | | Higher period charges primarily driven by inventory reserves taken in Q3 2022 and lack of sell-through of reserves compared to Q3 2021 | | |
(190) | | | Higher operating expenses driven by increased investments in leadership products | | |
(160) | | | Lower gross margin from Network Xeon revenue | | |
(105) | | | Higher period charges primarily associated with the ramp of Intel 4 | | |
183 | | | Higher gross margin from Ethernet and Edge revenue2023 | | |
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3620 | | | Other, including lower operating expenses driven by various cost-cutting measures | | |
| $ | 511 | | | Q3 2021 NEX Operating Income | | |
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$ | 682710 | | | YTD 2022 NEX Operating Income | | |
(450) | | | Higher operating expenses driven by increased investments in leadership products | | |
(365) | | | Higher period charges primarily associated with the ramp up of Intel 4 | | |
(375) | | | Higher period charges driven by reserves taken in 2022 and lack of sell-through of reserves compared to 2021 | | |
(150) | | | Higher period charges primarily due to other product enhancements | | |
(100) | | | Lower gross margin from Network Xeon revenue | | |
425 | | | Higher gross margin from Ethernet revenue | | |
250 | | | Lower unit cost primarily from increased mix of 10nm SuperFin products | | |
205 | | | Higher gross margin from Edge revenue | | |
(117) | | | Other | | |
$ | 1,359 | | | YTD 2021 NEX Operating Income (Loss) | | |
Accelerated Computing Systems and Graphics
AXG delivers products and technologies designed to help our customers solve the toughest computational problems. Our vision is to enable persistent and immersive computing, at scale, and accessible by billions of people within milliseconds, which drives an incredible demand for compute - from endpoints to data centers.
Our portfolio includes CPUs for high performance computing and GPUs targeted for a range of workloads and platforms from gaming and content creation on client devices to delivering media and gaming in the cloud, and the most demanding HPC and AI workload on supercomputers. To address new market opportunities and emerging workloads, we also develop custom accelerators with blockchain acceleration, as an example.
| | | | | | | | | | | |
| AXG Revenue $B | | AXG Operating Income (Loss) $B |
| | |
Revenue and Operating Income (Loss) Summary |
Revenue was $185 million, up $14 million from Q3 2021. We had an operating loss of $378 million, compared to an operating loss of $222 million in Q3 2021, due to increased inventory reserves taken and investments in our product roadmap.
Revenue was $590 million, up $61 million from YTD 2021. We had an operating loss of $1.3 billion, compared to an operating loss of $566 million from YTD 2021, due to increased inventory reserves taken and investments in our product roadmap.
Mobileye
Mobileye is a global leader in driving assistance and self-driving solutions. Mobileye'sOur product portfolio coversis designed to encompass the entire stack required for assisted and autonomous driving, including compute platforms, computer vision, and machine learning-based sensing,perception, mapping and localization, driving policy, and active sensors in development. Mobileye'sWe pioneered ADAS technology more than 20 years ago, and have continuously expanded the scope of our ADAS offerings while leading the evolution to autonomous driving solutions. Our unique assets in ADAS allow for building a scalable self-driving stack that meets the requirements for both Robotaxirobotaxi and consumer-level autonomy. Customersconsumer-owned autonomous vehicles. Our customers and strategic partners include major global OEMs,original equipment manufacturers, Tier 1 automotive system integrators, and public transportation operators.
| | | | | | | | | | | |
| Mobileye Revenue $B | | Mobileye Operating Income $B |
| | |
| Revenue and Operating Income Summary |
| | |
Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 |
Revenue was $450$454 million, up $124down $6 million from Q3 2021 primarily driven by higher demand for EyeQ products.Q2 2022. Operating income was $142$129 million, up $15down $61 million from Q3 2021,Q2 2022, primarily due to higher revenue, partially offset by increased investments in leadership products.
| | |
YTD 20222023 vs. YTD 20212022 |
Revenue was $1.3 billion,$912 million, up $274$58 million from YTD 2021 2022 primarily driven by higher demand for EyeQEyeQ® products and Mobileye SuperVision. YTD operatingTM systems. Operating income was $480$252 million, up $49down $86 million from YTD 2021, 2022, primarily due to higher revenue, partially offset by increased investments in leadership products.
Intel Foundry Services
IFS seeks to empower ourAs the first Open System Foundry, we offer customers by delivering industry-leading silicondifferentiated full stack solutions created from the best of Intel and packaging services with a differentiated IP portfolio viathe foundry industry ecosystem, delivered from a secure and sustainable source of supply with an array of semiconductors. We intendflexible business models to leverageenable customers to lead in their industry. In addition to a world-class foundry offering enabled by a rich ecosystem, customers have access to our decades-long investment in advancing Moore’s Law to spark innovationexpertise and customization for our customers on leading edge nodestechnologies, including cores, accelerators, and mature specialty processes, through support of an open multi-Intel System Architecture ecosystem.advanced packaging such as Embedded Multi-die Interconnect Bridge. Our early customers and strategic partners include traditional fabless customers, cloud service providers, automotive customers, and military, aerospace, and defense firms. We also offer a combination of leading-edge packaging and process technology services, world-class differentiated internal IPs (e.g., x86, graphics, AI), broad third party ecosystem and silicon design support. Additionally, our IFS offerings include mask-making equipment for advanced lithography used by mostmany of the world’s leading-edge foundries.
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| IFS Revenue $B | | IFS Operating Income (Loss) $B |
| | |
Revenue and Operating Income (Loss) Summary |
| | | | | | | | | | | | | | |
Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 |
Revenue was $171$232 million, down $3up $175 million from Q3 2021.Q2 2022 driven by higher packaging revenue and multi-beam mask writer tool sales. We had an operating loss of $103$143 million, compared to an operating loss of $44$134 million in Q3 2021,Q2 2022.
Revenue was $350 million, up $137 million from YTD 2022 driven by higher packaging revenue. We had an operating loss of $283 million, compared to an operating loss of $157 million in YTD 2022, primarily due to increased spending to drive strategic growth.
Revenue was $576 million, up $35 million from YTD 2021, primarily driven by higher sales of MBMW tools. We had an operating loss of $289 million, compared to an operating loss of $26 million from YTD 2021,primarily due to increased spending to drive strategic growth.
| | | | | |
| Consolidated Condensed Results of Operations | |
| |
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended | | Six Months Ended |
| | Q3 2022 | | Q3 2021 | | YTD 2022 | | YTD 2021 | | Q2 2023 | | Q2 2022 | | YTD 2023 | | YTD 2022 |
| (In Millions, Except Per Share Amounts) | (In Millions, Except Per Share Amounts) | | Amount | | % of Net
Revenue | | Amount | | % of Net
Revenue | | Amount | | % of Net
Revenue | | Amount | | % of Net
Revenue | (In Millions, Except Per Share Amounts) | | Amount | | % of Net
Revenue | | Amount | | % of Net
Revenue | | Amount | | % of Net
Revenue | | Amount | | % of Net
Revenue |
| Net revenue | Net revenue | | $ | 15,338 | | | 100.0 | % | | $ | 19,192 | | | 100.0 | % | | $ | 49,012 | | | 100.0 | % | | $ | 58,496 | | | 100.0 | % | Net revenue | | $ | 12,949 | | | 100.0 | % | | $ | 15,321 | | | 100.0 | % | | $ | 24,664 | | | 100.0 | % | | $ | 33,674 | | | 100.0 | % |
| Cost of sales | Cost of sales | | 8,803 | | | 57.4 | % | | 8,446 | | | 44.0 | % | | 27,646 | | | 56.4 | % | | 25,690 | | | 43.9 | % | Cost of sales | | 8,311 | | | 64.2 | % | | 9,734 | | | 63.5 | % | | 16,018 | | | 64.9 | % | | 18,843 | | | 56.0 | % |
| Gross margin | Gross margin | | 6,535 | | | 42.6 | % | | 10,746 | | | 56.0 | % | | 21,366 | | | 43.6 | % | | 32,806 | | | 56.1 | % | Gross margin | | 4,638 | | | 35.8 | % | | 5,587 | | | 36.5 | % | | 8,646 | | | 35.1 | % | | 14,831 | | | 44.0 | % |
| Research and development | Research and development | | 4,302 | | | 28.0 | % | | 3,803 | | | 19.8 | % | | 13,064 | | | 26.7 | % | | 11,141 | | | 19.0 | % | Research and development | | 4,080 | | | 31.5 | % | | 4,400 | | | 28.7 | % | | 8,189 | | | 33.2 | % | | 8,762 | | | 26.0 | % |
| Marketing, general and administrative | | 1,744 | | | 11.4 | % | | 1,674 | | | 8.7 | % | | 5,296 | | | 10.8 | % | | 4,601 | | | 7.9 | % | |
| Marketing, general, and administrative | | Marketing, general, and administrative | | 1,374 | | | 10.6 | % | | 1,800 | | | 11.7 | % | | 2,677 | | | 10.9 | % | | 3,552 | | | 10.5 | % |
| Restructuring and other charges | Restructuring and other charges | | 664 | | | 4.3 | % | | 42 | | | 0.2 | % | | (460) | | | (0.9) | % | | 2,597 | | | 4.4 | % | Restructuring and other charges | | 200 | | | 1.5 | % | | 87 | | | 0.6 | % | | 264 | | | 1.1 | % | | (1,124) | | | (3.3) | % |
| Operating income (loss) | Operating income (loss) | | (175) | | | (1.1) | % | | 5,227 | | | 27.2 | % | | 3,466 | | | 7.1 | % | | 14,467 | | | 24.7 | % | Operating income (loss) | | (1,016) | | | (7.8) | % | | (700) | | | (4.6) | % | | (2,484) | | | (10.1) | % | | 3,641 | | | 10.8 | % |
| Gains (losses) on equity investments, net | Gains (losses) on equity investments, net | | (151) | | | (1.0) | % | | 1,707 | | | 8.9 | % | | 4,082 | | | 8.3 | % | | 2,370 | | | 4.1 | % | Gains (losses) on equity investments, net | | (24) | | | (0.2) | % | | (90) | | | (0.6) | % | | 145 | | | 0.6 | % | | 4,233 | | | 12.6 | % |
| Interest and other, net | Interest and other, net | | 138 | | | 0.9 | % | | (76) | | | (0.4) | % | | 1,016 | | | 2.1 | % | | (328) | | | (0.6) | % | Interest and other, net | | 224 | | | 1.7 | % | | (119) | | | (0.8) | % | | 365 | | | 1.5 | % | | 878 | | | 2.6 | % |
| Income (loss) before taxes | Income (loss) before taxes | | (188) | | | (1.2) | % | | 6,858 | | | 35.7 | % | | 8,564 | | | 17.5 | % | | 16,509 | | | 28.2 | % | Income (loss) before taxes | | (816) | | | (6.3) | % | | (909) | | | (5.9) | % | | (1,974) | | | (8.0) | % | | 8,752 | | | 26.0 | % |
| Provision for (benefit from) taxes | Provision for (benefit from) taxes | | (1,207) | | | (7.9) | % | | 35 | | | 0.2 | % | | (114) | | | (0.2) | % | | 1,264 | | | 2.2 | % | Provision for (benefit from) taxes | | (2,289) | | | (17.7) | % | | (455) | | | (3.0) | % | | (679) | | | (2.8) | % | | 1,093 | | | 3.2 | % |
| Net income | | $ | 1,019 | | | 6.6 | % | | $ | 6,823 | | | 35.6 | % | | $ | 8,678 | | | 17.7 | % | | $ | 15,245 | | | 26.1 | % | |
| Net income (loss) | | Net income (loss) | | 1,473 | | | 11.4 | % | | (454) | | | (3.0) | % | | $ | (1,295) | | | (5.3) | % | | $ | 7,659 | | | 22.7 | % |
| Less: Net income (loss) attributable to non-controlling interests | | Less: Net income (loss) attributable to non-controlling interests | | (8) | | | (0.1) | % | | — | | | — | % | | (18) | | | (0.1) | % | | — | | | — | % |
| Net income (loss) attributable to Intel | | Net income (loss) attributable to Intel | | $ | 1,481 | | | 11.4 | % | | $ | (454) | | | (3.0) | % | | $ | (1,277) | | | (5.2) | % | | $ | 7,659 | | | 22.7 | % |
| | Earnings per share—diluted | | $ | 0.25 | | | | | $ | 1.67 | | | | | $ | 2.10 | | | | | $ | 3.73 | | | | |
| Earnings (loss) per share attributable to Intel—diluted | | Earnings (loss) per share attributable to Intel—diluted | | $ | 0.35 | | | $ | (0.11) | | | $ | (0.31) | | | $ | 1.86 | | |
|
Revenue
Q3Q2 2023 vs. Q2 2022 and YTD 2022 results were impacted by an uncertain macroeconomic environment that continues to deteriorate, with slowing consumer demand, persistent inflation, and higher interest rates, and that we believe impacts our target markets and creates a high level of uncertainty with our customers. We expect the macroeconomic uncertainty and the challenging market environment will extend into 2023.
Q3 20222023 vs. Q3 2021YTD 2022
Our Q3 2022Q2 2023 revenue was $15.3$12.9 billion, down $3.9$2.4 billion or 20%15% from Q3 2021.Q2 2022. Our YTD 2023 revenue was $24.7 billion, down $9.0 billion or 27% from YTD 2022. CCG revenue decreased 17%12% from Q3 2021Q2 2022 and 26% from YTD 2022 due primarily to lower Notebook volume in the consumernotebook and education market segments, though Notebook ASPs increased due to a resulting change in product mix. CCG also haddesktop volumes on lower revenue due to the continued ramp downdemand and from the exit of our 5G smartphone modem business. DCAI revenue decreased 27% from Q3 2021. Server volume decreased, led by enterprise customers, and due to customers tempering purchases to reduce existing inventories in a softening datacenter market. Serverinventories. Notebook ASPs decreased due to the relative strength in the education market segment resulting in a higher mix of revenue from hyperscale customers withinsmall core products combined with a competitive environment. NEX revenue increased 14% from Q3 2021, primarily due to increased demand for 5Ghigher mix of older generation products, higher Ethernet demand and ASPs, and accelerated demand for Edge products, partially offset by decreased demand for Network Xeon. The decrease in "all other" revenue reflects revenue of $1.1 billion in Q3 2021 related to the divested NAND memory business for which historical results are recorded in “all other."
Incentives offered to certain customers to accelerate purchases and to strategically position our products with customers for market segment share purposes, particularly in CCG, as well as increased demand from customers in advance of fourth quarter 2022 price increases, contributed approximately $1.5 billion to our revenue during the third quarter of 2022, the impacts of which were contemplated in our financial guidance for the fourth quarter and full year of 2022 as included in our Form 8-K dated October 27, 2022.
YTD 2022 vs. YTD 2021
Our YTD 2022 revenue was $49.0 billion, down $9.5 billion or 16% from YTD 2021. CCG revenue was down 18% from YTD 2021 due to lower Notebook and Desktop volume, and lower revenue due to the continued ramp down from the exit of our 5G smartphone modem business. Notebook volume decreased driven by lower demand in the consumer and education market segments, thoughwhile desktop ASPs increased due to an increased mix of product sales to the resulting product mix. Desktop volume decreased driven by lower demand for consumercommercial and education products.gaming market segments. DCAI revenue decreased 8%15% from Q2 2022 and decreased 28% from YTD 2021 led by enterprise customers, and2022 due to lower server volume resulting from a softening CPU data center market, partially offset by higher server ASPs from an increased mix of high core count products and an increase in revenue from the FPGA product line. NEX revenue decreased 38% from Q2 2022 and decreased 34% from YTD 2022 as customers temperingtempered purchases to reduce existing inventories inand adjust to a softening datacenter market. Server ASPs decreased due to customer and product mix. NEX revenue increased 16%, driven by increased demand for Ethernet and 5G products, accelerated demand for Edge products, and higher ASPs, partially offset by lower demand for Network Xeon. Mobileye revenue increased 27% from YTD 2021 primarily driven by higher demand for EyeQ products. The decrease in our "all other" revenue is due to revenue from the divested NAND memory business of $3.3 billion recognized in YTD 2021 for which historical results are recorded in “all other”, and $584 million of revenue recognized in YTD 2021 from a prepaid customer supply customer.environment across product lines.
Historically,We expect our net revenue has typically beento improve sequentially throughout 2023 with higher net revenue in the second half of the year, than inwhich generally aligns to the first half of the year, accelerating in the third quarter and peaking in the fourth quarter. In 2021, continued strong COVID-driven Notebook demand in the first half of the year contributed to a flatter trend thanhistorical seasonality trends that we historically observe. For the remainder of 2022, we continue to expect a flatter trend than we historically observed as wetypically experience the uncertainty and impacts, including on demand and the supply chain, of current macroeconomic conditions, the potential for a recession, and the risk for continued COVID-related disruptions or shutdowns.our business.
Gross Margin
We derived a substantial majoritysubstantially all of our overall gross margin in Q3 2022,Q2 2023, and most of our gross margin in YTD 2022,2023, from the sale of products in the CCG and DCAI operating segments. Our overall gross margin dollars in Q3 2022Q2 2023 decreased by $4.2$949 million, or 17% compared to Q2 2022, and YTD 2023 decreased by $6.2 billion, or 39% compared to Q3 2021, and YTD 2022, decreased by $11.4 billion, or 35%,42% compared to YTD 2021.2022.
(Percentages in chart indicate gross margin as a percentage of total revenue)
| | | | | | | | |
| (In Millions) | | |
| $ | 6,5354,638 | | | Q3 2022Q2 2023 Gross Margin |
(1,350)(569) | | | Lower grossproduct margin from Serverdriven by lower revenue across NEX product lines |
(801) | | | Lower gross margin from CCG revenue, driven by lower Notebook and Desktop revenue |
(725)(456) | | | Higher unit cost primarily from increased mix of 10nm SuperFin and Intel 7 products |
(616)(437) | | | Lower grossproduct margin related to the divested NAND memory businessfrom notebook revenue, partially offset by higher product margin from desktop revenue |
(565)(394) | | | Lower product margin due to lower server revenue, partially offset by an increase in product margin due to higher FPGA product line revenue |
| (223) | | | Higher period charges primarily driven by inventory reserves taken in Q3 2022related to excess capacity charges |
(329)559 | | | Higher period charges primarily associated withAbsence of the ramp up of Intel 4 and Intel 7 |
152 | | | Lower incentive-based cash compensation charges |
| | |
| | |
| | |
23 | | | Other |
$ | 10,746 | | | Q3 2021 Gross Margin |
| | |
$ | 21,366 | | | YTD 2022 Gross Margin |
(2,340) | | | Lower gross margin from CCG revenue, primarily driven by Notebook and Desktop revenue |
(2,020) | | | Higher unit cost primarily from increased mix of 10nm SuperFin and Intel 7 products |
(1,967) | | | Higher period charges primarily driven byOptane inventory reservesimpairment charge taken in Q2 2022 including reserves on non-qualified products |
(1,845) | | | Higher period charges primarily associated with the ramp up of Intel 4 and other product enhancements |
(1,535) | | | Lower gross margin from Server revenue |
(1,477) | | | Lower gross margin related to the divested NAND memory business |
(584) | | | Lack of revenue recognized in Q1 2021 from a prepaid customer supply contract |
(559) | | | Optane inventory impairment related to the wind down of our Intel Optane memory business |
(238)512 | | | Higher stock-based compensationLower period charges driven by the sell-through of previously reserved inventory and lower reserves taken in Q2 2023 |
(205)279 | | | CorporateLower period charges from patent settlement |
| | |
| | |
325 | | | Higher gross margin from Ethernet revenue, partially offsetprimarily driven by Network Xeon revenue |
275 | | | Higher gross margin primarily from DCAI othera decrease in product revenueramp costs |
| 205 | | | Higher gross marginAbsence of corporate charges from Edge revenuea patent settlement in Q2 2022 |
193 | | | Lower incentive-based cash compensation charges |
332 (425) | | | Other |
| $ | 32,8065,587 | | | Q2 2022 Gross Margin |
| | |
| $ | 8,646 | | | YTD 20212023 Gross Margin |
| (2,861) | | | Lower product margin primarily from notebook and desktop revenue |
| (2,314) | | | Lower product margin due to lower server revenue, partially offset by an increase in product margin due to higher FPGA product line revenue |
| (1,074) | | | Lower product margin driven by lower revenue across NEX product lines |
| (886) | | | Higher unit cost primarily from increased mix of Intel 7 products |
| (575) | | | Higher period charges related to excess capacity charges |
| 611 | | | Lower period charges primarily driven by a decrease in product ramp costs |
| 559 | | | Absence of the Optane inventory impairment charge taken in Q2 2022 related to the wind down of our Intel Optane memory business |
| 514 | | | Lower period charges driven by the sell-through of previously reserved inventory and lower reserves taken in 2023 |
| 205 | | | Absence of corporate charges from a patent settlement in Q2 2022 |
| (364) | | | Other |
| $ | 14,831 | | | YTD 2022 Gross Margin |
Effective January 2023, we increased the estimated useful life of certain production machinery and equipment from 5 years to 8 years. When compared to the estimated useful life in place as of the end of 2022, we expect total depreciation expense in 2023 to be reduced by $4.2 billion. We expect this change will result in an approximately $2.5 billion increase to gross margin, a $400 million decrease in R&D expenses, and a $1.3 billion decrease in ending inventory values. This estimate is based on the assets in use and under construction as of the beginning of 2023 and is calculated at that point in time. Because most of the depreciation expense associated with this useful life change is included in overhead cost pools and is combined with other costs and other depreciation expense from assets placed into service after this calculation was performed, for which such costs are subsequently absorbed into inventory as each product passes through our manufacturing process, the actual amount of impact from the useful life change that is included in our 2023 operating results and financial position is impractical to individually and specifically quantify on a year-over-year basis.
Operating Expenses
Total R&D and MG&A expenses for Q3Q2 2023 were $5.5 billion, down 12% from Q2 2022, were $6.0 billion, up 10% from Q3 2021, and $18.4$10.9 billion for YTD 2022, up 17%2023, down 12% from YTD 2021.2022. These expenses represent 39%42.1% of revenue for Q3 2022Q2 2023 and 29%40.5% of revenue for Q3 2021,Q2 2022, and 37%44.1% of revenue for YTD 20222023 and 27%36.6% of revenue for YTD 2021.2022. In support of our IDM 2.0 strategy, described in our 20212022 Form 10-K, we continue to make significant investments to accelerate our process technology roadmap. This requires increasedcontinued investments in R&D and an intensified effortfocused efforts to attract and retain talent. We expect to complete the year with total R&D and MG&A expenses roughly flat in the second half of 2022 relative to the first half of 2022, as we continue to implementhave implemented certain cost-cutting measures including slowing the pace of hiring, while at the same time continuingwe continue to improve our product execution in response to the continued decline in the broader macroeconomic environment.
execution.
| | | | | | | | | | | |
| Research and Development $B | | Marketing, General, and Administrative $B |
| |
(Percentages in chart indicate operating expenses as a percentage of total revenue)
Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 | | | | | |
R&D increaseddecreased by $499$320 million, or 13%7%, driven by the following: |
| |
+- | Investments in our process technologyThe effects of various cost-cutting measures |
| + | Investments in our businesses to drive strategic growth |
+ | Increase in corporate spending |
- | Incentive-basedHigher incentive-based cash compensation |
| |
| |
| |
YTD 20222023 vs. YTD 2021
2022 | | | | | | | |
R&D spending increaseddecreased by $1.9 billion,$573 million, or 17%7%, driven by the following: | | |
| | | |
+- | Investments in our process technology | | |
+ | Investments in our businessesThe effects of various cost-cutting measures, partially offset by increased corporate spending to drive strategic growth | | |
+- | Increase in corporate spendingLower incentive-based cash compensation | | |
- | Incentive-based cash compensation | | |
| | | |
| | | |
| | |
| Marketing, General, and Administrative |
Q3Q2 2023 vs. Q2 2022 vs. Q3 2021 | | | | | |
MG&A increaseddecreased by $70$426 million, or 4%24%, driven by the following: |
| |
+- | Increase inLower corporate spending as a result of various cost-cutting measures |
-+ | Incentive-basedHigher incentive-based cash compensation |
| |
| |
| |
YTD 20222023 vs. YTD 2021
2022
| | | | | | | |
MG&A spending increaseddecreased by $695$875 million, or 15%25%, driven by the following: | | |
| | | |
+- | Increase inLower corporate spending as a result of various cost-cutting measures | | |
| - | Incentive-basedLower incentive-based cash compensation | | |
| | | |
| | | |
| | | |
Gains (Losses) on Equity Investments and Interest and Other, Net
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In Millions) | | Q3 2022 | | Q3 2021 | | YTD 2022 | | YTD 2021 | | | | | | | | |
| Ongoing mark-to-market adjustments on marketable equity securities | | $ | (244) | | | $ | (192) | | | $ | (883) | | | $ | (345) | | | | | | | | | |
| Observable price adjustments on non-marketable equity securities | | 67 | | | 79 | | | 273 | | | 702 | | | | | | | | | |
| Impairment charges | | (45) | | | (38) | | | (112) | | | (111) | | | | | | | | | |
Sale of equity investments and other | | 71 | | | 1,858 | | | 4,804 | | | 2,124 | | | | | | | | | |
| Gains (losses) on equity investments, net | | $ | (151) | | | $ | 1,707 | | | $ | 4,082 | | | $ | 2,370 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Interest and other, net | | $ | 138 | | | $ | (76) | | | $ | 1,016 | | | $ | (328) | | | | | | | | | |
Gains (losses) on equity investments, net
Ongoing mark-to-market adjustments for YTD 2022 and YTD 2021 were primarily related to our interest in Montage Technology, Co. Ltd and others.
In YTD 2021, we recognized $471 million of observable price adjustments related to our investment in Beijing Unisoc Technology Ltd.
In YTD 2022, the sale of McAfee to an investor group was completed and we received $4.6 billion in cash for the sale of our remaining share of McAfee, recognizing a $4.6 billion gain in Sale of equity investments and other. InQ3 2021 and YTD 2021 we recognized a McAfee special dividend of $1.1 billion paid in connection with the sale to the investor group, and $447 million of initial fair value adjustments in Sale of equity investments and other related to four companies that went public.
Interest and other, net
In YTD 2022, we recognized a gain of $1.0 billion from the first closing of the divestiture of our NAND memory business.
Restructuring and Other Charges
| | | (In Millions) | (In Millions) | | Q3 2022 | | Q3 2021 | | YTD 2022 | | YTD 2021 | | (In Millions) | | Q2 2023 | | Q2 2022 | | YTD 2023 | | YTD 2022 | |
| Employee severance and benefit arrangements | Employee severance and benefit arrangements | | $ | 607 | | | $ | 21 | | | $ | 650 | | | $ | 43 | | | Employee severance and benefit arrangements | | $ | 171 | | | $ | 38 | | | $ | 132 | | | $ | 43 | | |
| | Litigation charges and other | Litigation charges and other | | 4 | | | 16 | | | (1,199) | | | 2,267 | | | Litigation charges and other | | 20 | | | 13 | | | 97 | | | (1,203) | | |
| Asset impairment charges | Asset impairment charges | | 53 | | | 5 | | | 89 | | | 287 | | | Asset impairment charges | | 9 | | | 36 | | | 35 | | | 36 | | |
| Total restructuring and other charges | Total restructuring and other charges | | $ | 664 | | | $ | 42 | | | $ | (460) | | | $ | 2,597 | | | Total restructuring and other charges | | $ | 200 | | | $ | 87 | | | $ | 264 | | | $ | (1,124) | | |
In Q3 2022, theThe 2022 Restructuring Program was approved in Q3 2022 to rebalance our workforce and operations to create efficiencies and improve our product execution in alignment with our IDM 2.0 strategy. In YTD 2023, activity related to the 2022 Restructuring Program substantially related to cash settlement of previously accrued employee severance and benefit arrangements as well as additional actions in Q2 2023. We expect actions pursuant to the 2022 Restructuring Program to be substantially completed by the end of 2023, but this is subject to change. We expect that our 2022 Restructuring Plan, in conjunction with other initiatives, will reduce our cost structure and allow us to reinvest certain of these cost savings in resources and capacity to develop, manufacture, market, sell, and deliver our products in furtherance of our IDM 2.0 strategy.
Employee severance and benefit arrangements includes charges incurred to date under The cumulative cost of the 2022 Restructuring Program as of $607 million, whichJuly 1, 2023 was approved in Q3 2022 and expected to be substantially completed by the end of the first half of 2023, but is subject to change.$1.2 billion.
Litigation charges and other includes a $1.2 billion benefit in YTD 2022 from the annulled penalty related to an EC fine that was recorded and paid in 2009,2009.
Gains (Losses) on Equity Investments and a chargeInterest and Other, Net
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| (In Millions) | | Q2 2023 | | Q2 2022 | | | YTD 2023 | | YTD 2022 |
| Ongoing mark-to-market adjustments on marketable equity securities | | $ | (85) | | | $ | (209) | | | | $ | 103 | | | $ | (639) | |
| Observable price adjustments on non-marketable equity securities | | — | | | 135 | | | | 10 | | | 206 | |
| Impairment charges | | (38) | | | (44) | | | | (74) | | | (67) | |
Sale of equity investments and other | | 99 | | | 28 | | | | 106 | | | 4,733 | |
| Total gains (losses) on equity investments, net | | $ | (24) | | | $ | (90) | | | | $ | 145 | | | $ | 4,233 | |
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| Interest and other, net | | $ | 224 | | | $ | (119) | | | | $ | 365 | | | $ | 878 | |
Gains (losses) on equity investments, net
Ongoing mark-to-market adjustments for YTD 2023 and YTD 2022 were primarily related to our interest in Montage Technology Co., Ltd and others.
In YTD 2022, the sale of $2.2McAfee to an investor group was completed and we received $4.6 billion in cash for the sale of our remaining share of McAfee, recognizing a $4.6 billion gain in sale of equity investments and other.
Interest and other, net
In YTD 2021 related to2022, we recognized a gain of $1.0 billion from the VLSI litigation.first closing of the divestiture of our NAND memory business.
Provision for (Benefit from) Taxes
| | (In Millions) | (In Millions) | | Q3 2022 | | Q3 2021 | | YTD 2022 | | YTD 2021 | (In Millions) | | Q2 2023 | | Q2 2022 | | YTD 2023 | | YTD 2022 |
| Income (loss) before taxes | Income (loss) before taxes | | $ | (188) | | | $ | 6,858 | | | $ | 8,564 | | | $ | 16,509 | | Income (loss) before taxes | | $ | (816) | | | $ | (909) | | | $ | (1,974) | | | $ | 8,752 | |
| Provision for (benefit from) taxes | Provision for (benefit from) taxes | | $ | (1,207) | | | $ | 35 | | | $ | (114) | | | $ | 1,264 | | Provision for (benefit from) taxes | | $ | (2,289) | | | $ | (455) | | | $ | (679) | | | $ | 1,093 | |
| Effective tax rate | Effective tax rate | | 642.0 | % | | 0.5 | % | | (1.3) | % | | 7.7 | % | Effective tax rate | | 280.5 | % | | 50.1 | % | | 34.4 | % | | 12.5 | % |
In Q3 2022Q2 2023, we recognized a benefit fromfor taxes as we applied our estimated annualyear-to-date actual effective tax rate to our year-to-date measure of ordinary income. In (loss) before taxes, which reflects our jurisdictional mix of ordinary income and losses. Our effective tax rate increased in YTD 2023 compared to YTD 2022, due to the application of our actual YTD effective tax rate, and our jurisdictional mix of ordinary income and losses.
we recognized aOur provision for, or benefit from, income taxes as comparedfor an interim period has historically been determined using an estimated annual effective tax rate, adjusted for discrete items, if any. Under certain circumstances where we are unable to make a provisionreliable estimate of the annual effective tax rate, we use the actual effective tax rate for taxes in YTD 2021the year-to-date period. In the second quarter of 2023, we used this approach due to lowerthe variability of the rate as a result of fluctuations in forecasted income before taxes, a higher proportionand the effects of our income being taxed in non-U.S. jurisdictions, and a change inmultiple tax law from 2017 Tax Reform related to the capitalization of R&D expenses that went into effect in January 2022. These YTD 2022 impacts were partially offset by the unfavorable tax rate effects associated with the gains recognized in YTD 2022 from the equity sale of McAfee and the divestiture of our NAND memory business. In Q3 2021 and YTD 2021, we recognized one-time tax benefits from the restructuring of certain non-U.S. subsidiaries.jurisdictions.
Liquidity and Capital Resources
We consider the following when assessing our liquidity and capital resources:
| | (In Millions) | (In Millions) | | Oct 1, 2022 | | Dec 25, 2021 | (In Millions) | | Jul 1, 2023 | | Dec 31, 2022 |
| Cash and cash equivalents | Cash and cash equivalents | | $ | 4,529 | | | $ | 4,827 | | Cash and cash equivalents | | $ | 8,349 | | | $ | 11,144 | |
| Short-term investments | Short-term investments | | 18,030 | | | 24,426 | | Short-term investments | | 15,908 | | | 17,194 | |
| | Loans receivable and other | Loans receivable and other | | 469 | | | 240 | | Loans receivable and other | | 64 | | | 463 | |
Total cash and investments1 | Total cash and investments1 | | $ | 23,028 | | | $ | 29,493 | | Total cash and investments1 | | $ | 24,321 | | | $ | 28,801 | |
| | Total debt | Total debt | | $ | 39,523 | | | $ | 38,101 | | Total debt | | $ | 49,046 | | | $ | 42,051 | |
1 See "Non-GAAP Financial Measures" within MD&A.
We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term. Cash generated by operations, supplemented byand our total cash and investments1, as shown in the preceding table, is our primary source of liquidity for funding our strategic business requirements. These sources are further supplemented by the company's committed credit facilities and other borrowing capacity. Our short-term funding requirements include capital expenditures for worldwide manufacturing and assembly and test, including investments in our process technology roadmap; working capital requirements; and potential and pending acquisitions, strategic investments, and dividends. This includes athe commitment of $5.4 billion associated with our pending acquisition of Tower. Our long-term funding requirements incrementally contemplate additional investments in the significant manufacturing expansion plans we announced as part of our IDM 2.0 strategy and additional investments to accelerate our process technology.
Our total cash and investments1and related cash flows may be affected by certain discretionary actions we may take with customers and suppliers to accelerate or delay certain cash receipts or payments to manage liquidity for our strategic business requirements. These actions can include, among others, negotiating with suppliers to optimize our payment terms and conditions, adjusting the timing of cash flows associated with customer sales programs and collections, managing inventory levels and purchasing practices, and beginning in Q3 2022, selling certain of our accounts receivables on a non-recourse basis to third party financial institutions.
We expect to benefit from government incentives, and any incentives above our current expectations would enable us to increase the pace and size of our IDM 2.0 investments. Conversely, incentives below our expectations would increase our anticipated cash requirements.requirements and/or potentially curtail planned investments.
In the thirdfirst quarter of 2022,2023, we declared a reduced quarterly dividend on our common stock. This dividend reduction reflects our deliberate approach to capital allocation, is expected to support the critical investments needed to execute our business strategy, and is designed to position us to create long-term value.
In the first quarter of 2023, we issued a total of $6.0$11.0 billion aggregate principal amount of senior notes including our inaugural green bond issuance of $1.3 billion principal amount. We are using the proceeds from the green bond offering to fund projects that support our investments in sustainable operations. We intend to use the proceeds from the remainder of the offering for general corporate purposes, including, but not limited to, refinancing of outstanding debt and funding for working capital and capital expenditures. We also received proceeds of $140 million in the aggregate from the sale of bonds issued by the Industrial Development Authority of the City of Chandler, Arizona (CIDA). In the first quarter of 2022 we amended both our 5-year $5.0 billion variable-rate revolving credit facility agreement, extending the maturity date by one year to March 20272028, and transitioningour 364-day $5.0 billion credit facility agreement, extending the interest terms from LIBORmaturity date to term SOFR. OtherMarch 2024. We have other potential sources of liquidity includeincluding 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 OctoberJuly 1, 2022,2023, we had no outstanding commercial paper or borrowings on the revolving credit facility.facilities.
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 arewere in investment-grade securities.
Our sources of liquidityin the second quarter of 2023 included net proceeds of $1.6 billion from a secondary offering of Mobileye class A common stock, after which we retained 88% of Mobileye’s capital stock.
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| Cash from Operations $B | | Capital Expenditures $B | | Cash to StockholdersDividends $B |
1 See "Non-GAAP Financial Measures" within MD&A. | | | | | | | | | | | | | | |
| | | | ■ Dividends ■ Dividends
■ Buybacks
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| | Nine Months Ended |
| (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 |
| Net cash provided by operating activities | | $ | 7,730 | | | $ | 24,053 | |
| Net cash used for investing activities | | (7,046) | | | (19,543) | |
| Net cash used for financing activities | | (982) | | | (2,505) | |
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| Net increase (decrease) in cash and cash equivalents | | $ | (298) | | | $ | 2,005 | |
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| | Six Months Ended |
| (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 |
| Net cash provided by operating activities | | $ | 1,023 | | | $ | 6,700 | |
| Net cash used for investing activities | | (11,329) | | | (2,419) | |
| Net cash provided by (used for) financing activities | | 7,511 | | | (4,718) | |
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| Net increase (decrease) in cash and cash equivalents | | $ | (2,795) | | | $ | (437) | |
Operating Activities
Cash provided by operating activities isOperating cash flows consist of net income adjusted for certain non-cash items and changes in certain assets and liabilities.
The decrease in cash provided by operations in YTD 2022the first six months of 2023 was primarily driven by lowerour net operating loss in comparison to our net operating income after adjusting for non-cash items, including the gain on the salefirst six months of McAfee and the pre-tax gain from the divestiture of our NAND business; and was also affected by cash-unfavorable working capital changes.2022.
Investing Activities
Investing cash flows consist primarily of capital expenditures; investment purchases, sales, maturities, and disposals; cash used for acquisitions; and proceeds from divestitures.
Cash used for investing activities was lowerhigher in YTD 2022the first six months of 2023 compared to YTD 2021,the first six months of 2022, primarily due to increased maturities and salesthe absence of short-term investments, proceeds from the divestiture of our NAND business and proceeds from the sale offor our remaining share of McAfee, both of which occurred in the first six months of 2022; as well as higher capital expenditures in the first six months of 2023. These unfavorable cash impacts during the first six months of 2023 were partially offset by the favorable cash impacts of higher capital expenditures.maturities and sales of short-term investments, net of purchases, and lower investment activity in other investments and acquisitions during the first six months of 2023.
Financing Activities
Financing cash flows consist primarily of payment of dividends to stockholders, issuance and repayment of short-term and long-term debt, proceeds fromand partner contributions.
Cash provided by financing activities in the salefirst six months of shares of common stock through employee equity incentive plans, and repurchases of common stock.
Cash2023 compared to cash used for financing activities was lower in YTDthe first six months of 2022 compared to YTD 2021,and was primarily due to net proceeds from our curtailment of common stock repurchases and higher debt issuance, offset by higher debt repayments.net of commercial paper repayments, and proceeds from sales of subsidiary shares in the first six months of 2023.
Non-GAAP Financial Measures
In addition to disclosing financial results in accordance with US 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 our operating performance, 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. These non-GAAP financial measures are used in our performance-based RSUs and our cash bonus plans.
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. Incomeeffects. Beginning in 2023, income tax effects are calculated using a fixed long-term projected tax rate across all adjustments. We project this long-term non-GAAP tax rate on an annual basis using a five-year non-GAAP financial projection that excludes the income tax effects of each adjustment. The projected non-GAAP tax rate also considers factors such as our tax structure, our tax positions in various jurisdictions, and key legislation in significant jurisdictions where we operate. This long-term non-GAAP tax rate may be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or changes to our strategy or business operations. Management uses this non-GAAP tax rate in managing internal short- and long-term operating plans and in evaluating our performance; we believe this approach facilitates comparison of our operating results and provides useful evaluation of our current operating performance. Prior-period non-GAAP results have been calculated using an appropriate tax rate for each adjustment, as applicable. retroactively adjusted to reflect this updated approach.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated.
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| Non-GAAP adjustment or measure | Definition | Usefulness to management and investors |
NAND memory business | We completed the first closing of the divestiture of our NAND memory business to SK hynix on December 29, 2021 and fully deconsolidated our ongoing interests in the NAND OpCo Business in the first quarter of 2022. | We exclude the impact of our NAND memory business in certain non-GAAP measures. While the second closing of the sale is still pending and subject to closing conditions, we deconsolidated this business in Q1 2022 and management does not view the historical results of the business as a part of our core operations. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model and how management currently evaluates core operational performance. In making these adjustments, we have not made any changes to our methods for measuring and calculating revenue or other financial statement amounts. |
| Acquisition-related adjustments | Amortization 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 US 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 charges | Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include periodic goodwill and 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 core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. |
| Share-based compensation | Share-based compensation consists of charges related to our employee equity incentive plans. | We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these adjustments provide better comparability to peer company results and because these charges are not viewed by management as part of our core operating performance. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends, including in comparison to other peer companies. |
| Patent settlement | A portion of the charge from our IP settlements represents a catch-up of cumulative amortization that would have been incurred for the right to use the related patents in prior periods. This charge related to prior periods is excluded from our non-GAAP results; amortization related to the right to use the patents in the current and ongoing periods is included. | We exclude the catch-up charge related to prior periods for purposes of calculating certain non-GAAP measures because this adjustment facilitates comparison to past operating results and provides a useful evaluation of our current operating performance. |
| Optane inventory impairment | In 2022, we initiated the wind-down of our Intel Optane memory business. | We exclude these impairments for purposes of calculating certain non-GAAP measures because these charges do not reflect our current operating performance. This adjustment facilitates a useful evaluation of our current operating performance and comparisons to past operating results. |
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Non-GAAP adjustment or measureRestructuring and other charges | DefinitionRestructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges may include periodic goodwill and asset impairments, certain pension charges, and costs associated with restructuring activity. | UsefulnessWe 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 core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. |
| (Gains) losses on equity investments, net | (Gains) losses on equity investments, net consists of ongoing mark-to-market adjustments on marketable equity securities, observable price adjustments on non-marketable equity securities, related impairment charges, and the sale of equity investments and other. | We exclude these non-operating gains and losses for purposes of calculating certain non-GAAP measures because it provides better comparability between periods. The exclusion reflects how management and investorsevaluates the core operations of the business. |
| Gains (losses) from divestiture | Gains or losses(losses) are recognized at the close of a divestiture, or over a specified deferral period when deferred consideration is received at the time of closing. Based on our ongoing obligation under the NAND wafer manufacturing and sale agreement entered into in connection with the first closing of the sale of our NAND memory business on December 29, 2021, a portion of the initial closing consideration was deferred and will be recognized between first and second closing. | 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. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results. |
(Gains) losses on equity investments, net | (Gains) losses on equity investments, net consists of ongoing mark-to-market adjustments on marketable equity securities, observable price adjustments on non-marketable equity securities, related impairment charges, and the sale of equity investments and other. | We exclude these non-operating gains and losses for better comparability between periods. The exclusion reflects how management evaluates the core operations of the business. |
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Tax Reform | Adjustments for Tax Reform reflect the impact of a change in tax law from 2017 Tax Reform related to the capitalization of R&D costs. | We exclude the impacts of this 2022 change in U.S. tax treatment of R&D costs for purposes of calculating certain non-GAAP measures as we believe these adjustments facilitate a better evaluation of our current operating performance and comparison to past operating results. |
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| Adjusted free cash flow | We reference a non-GAAP financial measure of adjusted free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Adjusted free cash flow is operating cash flow adjusted for 1)(1) additions to property, plant, and equipment, net of proceeds from capital grants 2)and partner contributions, (2) payments on finance leases, and 3)(3) proceeds from the McAfee equity sale. | This non-GAAP financial measure is helpful in understanding our capital requirements and sources of liquidity by providing an additional means to evaluate the cash flow trends of our business. Since the 2017 divestiture, McAfee equity distributions and sales have contributed to prior operating and free cash flow, and while the McAfee equity sale in Q1 2022 would have typically bebeen excluded from adjusted free cash flow as an equity sale, we believe including the sale proceeds in adjusted free cash flow facilitate a better, more consistent comparison to past presentations of liquidity. |
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| Total cash and investments | Total cash and investments is used by management when assessing our sources of liquidity, which includesinclude cash and cash equivalents, short-term investments, and loans receivable and other. | This non-GAAP measure is helpful in understanding our capital resources and liquidity position. |
Following are the reconciliations of our most comparable U.S. GAAP measures to our non-GAAP measures presented:
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| | Three Months Ended | | |
| (In Millions, Except Per Share Amounts) | | Oct 1, 2022 | | Sep 25, 2021 | | | | |
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| Net revenue | | $ | 15,338 | | | $ | 19,192 | | | | | |
| NAND memory business | | — | | | (1,105) | | | | | |
| Non-GAAP net revenue | | $ | 15,338 | | | $ | 18,087 | | | | | |
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| Gross margin percentage | | 42.6 | % | | 56.0 | % | | | | |
| Acquisition-related adjustments | | 2.2 | % | | 1.7 | % | | | | |
| Share-based compensation | | 1.1 | % | | 0.5 | % | | | | |
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| NAND memory business | | — | % | | 0.1 | % | | | | |
Non-GAAP gross margin percentage1 | | 45.9 | % | | 58.3 | % | | | | |
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| Earnings per share—diluted | | $ | 0.25 | | | $ | 1.67 | | | | | |
| Acquisition-related adjustments | | 0.09 | | | 0.09 | | | | | |
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| Restructuring and other charges | | 0.16 | | | 0.01 | | | | | |
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| Share-based compensation | | 0.19 | | | 0.13 | | | | | |
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| (Gains) losses from divestiture | | (0.01) | | | — | | | | | |
| (Gains) losses on equity investments, net | | 0.03 | | | (0.42) | | | | | |
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| NAND memory business | | — | | | (0.10) | | | | | |
| Tax Reform | | (0.05) | | | — | | | | | |
| Income tax effects | | (0.07) | | | 0.07 | | | | | |
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| Non-GAAP earnings per share—diluted | | $ | 0.59 | | | $ | 1.45 | | | | | |
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1 Our reconciliation of GAAP to non-GAAP prior year operating and gross margin percentages reflects the exclusion of our NAND memory business from net revenue.
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| | Nine Months Ended |
| (In Millions) | | Oct 1, 2022 | | Sep 25, 2021 |
| Net cash provided by operating activities | | $ | 7,730 | | | $ | 24,053 | |
Net additions to property, plant and equipment1 | | (19,089) | | | (11,486) | |
| Payments on finance leases | | (341) | | | — | |
| Sale of equity investment | | 4,561 | | | — | |
| Adjusted free cash flow | | $ | (7,139) | | | $ | 12,567 | |
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| Net cash used for investing activities | | $ | (7,046) | | | $ | (19,543) | |
| Net cash used for financing activities | | $ | (982) | | | $ | (2,505) | |
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1 The calculation of adjusted free cash flow includes additions to property, plant and equipment net of proceeds from capital grants.
Following are the reconciliations of our most comparable US GAAP measures to our non-GAAP measures presented:
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| | Three Months Ended | | |
| | Jul 1, 2023 | | Jul 2, 2022 | | | | |
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| Gross margin percentage | | 35.8 | % | | 36.5 | % | | | | |
| Acquisition-related adjustments | | 2.4 | % | | 2.2 | % | | | | |
| Share-based compensation | | 1.6 | % | | 1.2 | % | | | | |
| Patent settlement | | — | % | | 1.3 | % | | | | |
| Optane inventory impairment | | — | % | | 3.6 | % | | | | |
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| Non-GAAP gross margin percentage | | 39.8 | % | | 44.8 | % | | | | |
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| Earnings (loss) per share attributable to Intel—diluted | | $ | 0.35 | | | $ | (0.11) | | | | | |
| Acquisition-related adjustments | | 0.08 | | | 0.09 | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Share-based compensation | | 0.22 | | | 0.22 | | | | | |
| | | | | | | | |
| Patent settlement | | — | | | 0.05 | | | | | |
| Optane inventory impairment | | — | | | 0.14 | | | | | |
| Restructuring and other charges | | 0.05 | | | 0.02 | | | | | |
| (Gains) losses on equity investments, net | | 0.01 | | | 0.02 | | | | | |
| (Gains) losses from divestiture | | (0.01) | | | — | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Adjustments attributable to non-controlling interest | | — | | | — | | | | | |
| Income tax effects | | (0.57) | | | (0.15) | | | | | |
| | | | | | | | |
| Non-GAAP earnings (loss) per share attributable to Intel—diluted | | $ | 0.13 | | | $ | 0.28 | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | |
| | Six Months Ended |
| (In Millions) | | Jul 1, 2023 | | Jul 2, 2022 |
| Net cash provided by (used for) operating activities | | $ | 1,023 | | | $ | 6,700 | |
| Net additions to property, plant, and equipment | | (12,418) | | | (11,793) | |
| Payments on finance leases | | (96) | | | (299) | |
| Sale of equity investment | | — | | | 4,561 | |
| Adjusted free cash flow | | $ | (11,491) | | | $ | (831) | |
| | | | |
| Net cash used for investing activities | | $ | (11,329) | | | $ | (2,419) | |
| Net cash provided by (used for) financing activities | | $ | 7,511 | | | $ | (4,718) | |
| | | | |
| | | | |
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. For a discussion about market risk and sensitivity analysis related to changes in currency exchange rates, interest rates, equity prices, and commodity prices refer to "Quantitative and Qualitative Disclosures About Market Risk" within MD&A in our 20212022 Form 10-K.
Risk Factors
The risks described in "Risk Factors" within Other Key Information in our 20212022 Form 10-K and our Form 10-Q for the quarter ended April 2, 2022 (Q1 2022 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. The Risk Factors section in our 2021 Form 10-K, as updated by our Q1 2022 Form 10-Q, 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. Refer also to the other information set forth in this Form 10-Q, including in the Forward-Looking Statements, MD&A, and the Consolidated Condensed Financial Statements and Supplemental Details sections.
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
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)), arewere 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 OctoberJuly 1, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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. No shares were repurchased during the quarter ending OctoberJuly 1, 2022.2023. As of OctoberJuly 1, 2022,2023, we were authorized to repurchase up to $110.0 billion, of which $7.2 billion remained available.
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 in a similar manner 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.
Rule 10b5-1 Trading Arrangements
Our directors and officers (as defined in Rule 16a-1 under the Exchange Act) may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended July 1, 2023, no such plans or arrangements were adopted or terminated, including by modification.
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| Other Key Information | 4340 |
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
Section 13(r) of the Exchange Act requires an issuer to disclose certain information in its periodic reports if it or any of its affiliates knowingly engaged in certain activities, transactions or dealings with individuals or entities subject to specific U.S.US economic sanctions during the reporting period, even when the activities, transactions, or dealings are conducted in compliance with applicable law. On March 2, 2021, the U.S.US Secretary of State designated the Federal Security Service of the Russian Federation (FSB) as a party subject to one such sanction. From time to time, our local subsidiaries are required to engage with the FSB as a licensing authority and file documents in order to conduct business within the Russian Federation. All such dealings are explicitly authorized by general licenses issued by the U.S.US Department of the Treasury’s Office of Foreign Assets Control (OFAC), and there are no gross revenues or net profits directly associated with any such dealings by us with the FSB. As announced on April 5, 2022, Intel suspended all business operations in Russia until further notice, and we plan to continue limited activities as required to conduct business in the Russian Federation to the extent permitted by applicable law.
On April 15, 2021, the U.S.US Department of the Treasury designated Pozitiv Teknolodzhiz, AO (Positive Technologies), a Russian IT security firm, as a party subject to one of the sanctions specified in Section 13(r). Prior to the designation, we communicated with Positive Technologies regarding its IT security research and coordinated disclosure of security vulnerabilities identified by the firm. Based on a license issued by OFAC, we resumed such communications. There are no gross revenues or net profits directly associated with any such activities. We plan to continue these communications in accordance with the terms and conditions of the OFAC license.
| | | | | | | | |
| Other Key Information | 4441 |
Exhibits
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Incorporated by Reference | | |
Exhibit
Number | | Exhibit Description | | Form | | File Number | | Exhibit | | Filing
Date | | Filed or
Furnished
Herewith |
| 3.1 | | | | 8-K | | 000-06217 | | 3.1 | | 5/22/2006 | | |
| 3.2 | | | | 8-K | | 000-06217 | | 3.2 | | 3/16/2021 | | |
| 4.1 | | | | 8-K | | 000-06217 | | 4.1 | | 8/5/2022 | | |
| 10.1 | | | | 8-K | | 000-06217 | | 10.1 | | 8/23/2022 | | |
| 10.2 | | | | 8-K | | 000-06217 | | 10.2 | | 8/23/2022 | | |
10.3† | | | | | | | | | | | | X |
| 31.1 | | | | | | | | | | | | X |
| 31.2 | | | | | | | | | | | | X |
| | | | | | | | | | | | |
| 32.1 | | | | | | | | | | | | X |
| 101 | | Inline XBRL Document Set for the consolidated condensed financial statements and accompanying notes in Consolidated Condensed Financial Statements and Supplemental Details | | | | | | | | | | X |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| 104 | | Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101 | | | | | | | | | | X |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Incorporated by Reference | | |
Exhibit
Number | | Exhibit Description | | Form | | File Number | | Exhibit | | Filing
Date | | Filed or
Furnished
Herewith |
| 3.1 | | | | 8-K | | 000-06217 | | 3.1 | | 5/22/2006 | | |
| 3.2 | | | | 8-K | | 000-06217 | | 3.2 | | 3/16/2021 | | |
10.1† | | | | | | | | | | | | X |
| 31.1 | | | | | | | | | | | | X |
| 31.2 | | | | | | | | | | | | X |
| | | | | | | | | | | | |
| 32.1 | | | | | | | | | | | | X |
| 101 | | Inline XBRL Document Set for the consolidated condensed financial statements and accompanying notes in Consolidated Condensed Financial Statements and Supplemental Details | | | | | | | | | | 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.
| | | | | | | | |
| Other Key Information | 4542 |
Form 10-Q Cross-Reference Index
| | | | | | | | |
| Item Number | Item | |
| Part I - Financial Information | |
| Item 1. | Financial Statements | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations: | |
| Liquidity and capital resources | |
| Results of operations | |
| | |
| | |
| Critical accounting estimates | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
| Item 4. | Controls and Procedures | |
| | |
| Part II - Other Information | |
| Item 1. | Legal Proceedings | |
| Item 1A. | Risk Factors | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| Item 3. | Defaults Upon Senior Securities | Not applicable |
| Item 4. | Mine Safety Disclosures | Not applicable |
| Item 5. | Other Information | |
| Rule 10b5-1 Trading Arrangements | |
| Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934 | |
| Item 6. | Exhibits | |
| | |
| Signatures | |
| | | | | | | | |
| Other Key Information | 4643 |
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: | OctoberJuly 27, 20222023 | | By: | | /s/ DAVID ZINSNER |
| | | | | David Zinsner |
| | | | | Executive Vice President, and
Chief Financial Officer, (Principaland
Principal Financial Officer)Officer |
| | | | | |
| Date: | OctoberJuly 27, 20222023 | | By: | | /s/ SCOTT GAWEL |
| | | | | Scott Gawel |
| | | | | Corporate Vice President, and Chief Accounting Officer, and
(Principal Accounting Officer)Officer |
