Note 25: Operating Segment and Geographic Information

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As of December 27, 2008, our operating segments included the Digital Enterprise Group, Mobility Group, NAND Solutions Group, Digital Home Group, Digital Health Group, and Software and Services Group.

In the second quarter of 2008, we completed a reorganization that transferred the revenue and costs associated with a portion of the Digital Home Group's consumer PC components business to the Digital Enterprise Group. The Digital Home Group now focuses on the consumer electronics components business. We adjusted our historical results to reflect this reorganization. Prior-period amounts have also been adjusted retrospectively to reflect other minor reorganizations.

The Chief Operating Decision Maker (CODM), as defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131), is our President and CEO. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest and taxes.

We report the financial results of the following operating segments:

• Digital Enterprise Group. Includes microprocessors and related chipsets and motherboards designed for the desktop (including high-end enthusiast PCs), nettop, and enterprise computing market segments; microprocessors and related chipsets for embedded applications; communications infrastructure components such as network processors and communications boards; wired connectivity devices; and products for network and server storage.
• Mobility Group. Includes microprocessors and related chipsets designed for the notebook and netbook market segments, wireless connectivity products, and products designed for the ultra-mobile market segment, which includes mobile Internet devices. In the fourth quarter of 2006, we completed the sale of certain assets of our communications and application processor business lines to Marvell. Related to the sale, we entered into a manufacturing and transition services agreement with Marvell. As a result, our sales of application and cellular baseband processors in 2007 and 2008 were only to Marvell.

The NAND Solutions Group, Digital Home Group, Digital Health Group, and Software and Services Group operating segments do not meet the quantitative thresholds for reportable segments as defined by SFAS No. 131 and are included within the all other category.

We have sales and marketing, manufacturing, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments, and the expenses are included in the operating results reported below. Additionally, in the first quarter of 2007, we started including share-based compensation in the computation of operating income (loss) for each operating segment and adjusted prior results to reflect this change. Revenue for the all other category is primarily related to the sale of NAND flash memory products, microprocessors and related chipsets by the Digital Home Group, and NOR flash memory products. In the second quarter of 2008, we completed the divestiture of our NOR flash memory assets to Numonyx. At that time, we entered into supply and service agreements to provide products, services, and support to Numonyx following the close of the transaction. Revenue and expenses related to the supply and service agreements are included in the all other category. For further information on Numonyx, see "Note 6: Equity Method and Cost Method Investments."

The all other category includes certain corporate-level operating expenses and charges. These expenses and charges include:

• a portion of profit-dependent bonuses and other expenses not allocated to the operating segments;
• results of operations of seed businesses that support our initiatives;
• acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill;
• charges for purchased in-process research and development; and
• amounts included within restructuring and asset impairment charges.

With the exception of goodwill, we do not identify or allocate assets by operating segment, nor does the CODM evaluate operating segments using discrete asset information. Operating segments do not record inter-segment revenue, and, accordingly, there is none to be reported. We do not allocate gains and losses from equity investments, interest and other income, or taxes to operating segments. Although the CODM uses operating income to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for Intel as a whole.

Operating segment net revenue and operating income (loss) for the three years ended December 27, 2008 were as follows:

(In Millions)		2008			2007			2006
Net revenue
Digital Enterprise Group
Microprocessor revenue		$	16,078		$	15,945		$	15,248
Chipset, motherboard, and other revenue			4,554			5,359			5,437
			20,632			21,304			20,685
Mobility Group
Microprocessor revenue			11,439			10,660			9,212
Chipset and other revenue			4,209			4,021			3,097
			15,648			14,681			12,309
All other			1,306			2,349			2,388
Total net revenue		$	37,586		$	38,334		$	35,382
Operating income (loss)
Digital Enterprise Group		$	6,462		$	5,295		$	3,299
Mobility Group			5,199			5,611			4,602
All other			(2,707)			(2,690)			(2,249)
Total operating income		$	8,954		$	8,216		$	5,652

In 2008, one customer accounted for 20% of our net revenue (17% in 2007 and 16% in 2006), while another customer accounted for 18% of our net revenue (18% in 2007 and 19% in 2006). The majority of the revenue from these customers was from the sale of microprocessors, chipsets, and other components by the Digital Enterprise Group and Mobility Group operating segments.

Geographic revenue information for the three years ended December 27, 2008 is based on the location of the customer. Revenue from unaffiliated customers was as follows:

(In Millions)		2008			2007			2006
Asia-Pacific (geographic region/country)
Taiwan		$	9,868		$	8,606		$	7,200
China (including Hong Kong)			4,974			5,295			4,969
Other Asia-Pacific			4,202			5,531			5,308
			19,044			19,432			17,477
Americas (geographic region/country)
United States			5,462			6,015			5,486
Other Americas			1,981			1,700			2,026
			7,443			7,715			7,512
Europe			7,116			7,262			6,587
Japan			3,983			3,925			3,806
Total net revenue		$	37,586		$	38,334		$	35,382

Revenue from unaffiliated customers outside the U.S. totaled $32,124 million in 2008 ($32,319 million in 2007 and $29,896 million in 2006).

Net property, plant and equipment by country was as follows:

(In Millions)		2008			2007			2006
United States		$	11,224		$	10,647		$	11,558
Israel			2,965			2,473			1,183
Ireland			1,536			2,076			2,860
Other countries			1,819			1,722			2,001
Total property, plant and equipment, net		$	17,544		$	16,918		$	17,602

Net property, plant and equipment outside the U.S. totaled $6,320 million in 2008 ($6,271 million in 2007 and $6,044 million in 2006).