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Conflict Minerals Report

   

 

Intel Corporation

in accord with Rule 13p-1 under the Securities Exchange Act of 1934

This Conflict Minerals Report ("Report") of Intel Corporation ("Intel" or "we") for the year ended December 31, 2014 is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934, as amended ("Rule").  Numerous terms in this Report are defined in the Rule and our Specialized Disclosure Report on Form SD and the reader is referred to those sources and to SEC Release No. 34-67716 issued by the Securities and Exchange Commission on August 22, 2012 for such definitions.

 

Pursuant to the Rule, we undertook due diligence measures on the source and chain of custody of the necessary conflict minerals in our products which we had reason to believe may have originated from the Democratic Republic of the Congo ("DRC") or an adjoining country (collectively defined as the "Covered Countries") and which may not have come from recycled or scrap sources, to determine whether such products were "DRC conflict free". The term "conflict free" is used in this Report in a broader sense to refer to suppliers, supply chains, smelters and refiners whose sources of conflict minerals did not or do not directly or indirectly finance or benefit armed groups in the Covered Countries.

 

Design of Conflict Minerals Program

 

The design of our conflict minerals program is in conformity with the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition, and related Supplements on Tin, Tantalum and Tungsten and on Gold (collectively, "OECD Guidance"), specifically as it relates to our position in the minerals supply chain as a "downstream" purchaser. Summarized below are the design components of our conflict minerals program as they relate to the five-step framework from the OECD Guidance:

1.	Maintain strong company management systems:

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2.	Identify and assess risks in our supply chain:

3.	Execute a strategy to respond to identified risks:

 

4.	Support the development and implementation of independent third party audits of smelters' and refiners' sourcing:

 

5.	Report on supply chain due diligence:

 

The content of any website referred to in this Report is included for general information only and is not incorporated by reference in this Report.

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Description of Due Diligence Measures Performed

 

Below is a description of the measures we performed for this reporting period to exercise due diligence on the source and chain of custody of the necessary conflict minerals contained in our products which we had reason to believe may have originated from the Covered Countries and may not have come from recycled or scrap sources:

  

Products

 

During this reporting period, we identified the following products which we manufactured or contracted with others to manufacture that may contain necessary conflict minerals (defined as any tantalum, tin, tungsten or gold that is necessary to the functionality or production of our products):

 

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"Client Microprocessors and Chipsets":  Desktop and mobile microprocessors and chipsets that are solely manufactured by Intel, which are comprised of the following: Celeron®, Pentium®, Intel® Core™ M, Intel® Core i3™, Intel® Core™ i5, Intel® Core™ i7, Intel® Quark™, and Intel® Atom™ processors (except Intel® Atom™ processors for servers, storage and communications).

 

●	"All Other": All other Intel® products that may contain necessary conflict minerals that we manufactured or contracted with others to manufacture, which products are comprised of the following:

o	Server: Enterprise branded microprocessors, chipsets, motherboards, server and micro-server systems which contain components manufactured by Intel and other components purchased by Intel including Intel® Xeon Phi™, Intel® Xeon®, Itanium® and Intel® Atom™ processors for servers and storage.

o	Mobile: Wireless platforms including Intel® mobile phone platforms and mobile communications platforms such as Intel® XMM™ slim modems.

o	Networking: Ethernet network adapters, controllers and wireless products which enable the computers and networks to exchange data including Thunderbolt™ technology, Intel® Centrino® technology, Intel® WiMAX and Intel® WiFi products.

o	Boards and Other Components: Desktop printed circuit boards and other components including Intel® Desktop Boards, Intel® Galileo boards, Intel® Edison boards, and Intel® NUC (next unit of computing).

o	Storage and Other: Memory products including Intel® Solid-State Drives (Intel® SSDs) and Intel® Atom™ processors for storage and communications.

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Results of our Due Diligence Measures

 

Inherent Limitations on Due Diligence Measures:

 

As a downstream purchaser of products which contain conflict minerals, our due diligence measures can provide only reasonable, not absolute, assurance regarding the source and chain of custody of the necessary conflict minerals.  Our due diligence processes are based on the necessity of seeking data from our direct suppliers and those suppliers seeking similar information within their supply chains to identify the original sources of the necessary conflict minerals.  We also rely, to a large extent, on information collected and provided by independent third party audit programs.  Such sources of information, as well as our smelters and refiner facility visits, may yield inaccurate or incomplete information and may be subject to fraud.

 

Another complicating factor is the unavailability of country of origin and chain of custody information from our suppliers on a continuous, real-time basis. Under the Dodd-Frank Act and the Rule, a product is "DRC conflict free" if it meets the required standard every day of the reporting year; conversely, a product would "not be found to be DRC conflict free" if it does not meet the required standard even one day of the reporting year. The supply chain of commodities such as conflict minerals is a multi-step process operating more or less on a daily basis, with ore being delivered to smelters and refiners, with smelters and refiners smelting or refining ores into metal containing derivatives such as ingots, with the derivatives being shipped, sold and stored in numerous market locations around the world and with distributors and purchasers holding varying amounts of the derivatives in inventory for use.  Since we do not have direct contractual relationships with smelters and refiners, we rely on our direct suppliers and the entire supply-chain to gather and provide specific information about the date when the ore is smelted into a derivative and later shipped, stored, sold and first entered the stream of commerce. We directly seek sourcing data on a periodic basis from our direct suppliers as well as certain smelters and refiners.  We ask that the data cover the entire reporting year, and we seek to use contract provisions requiring the suppliers to promptly update us in the event that the sourcing data changes.

Supply Chain Survey Responses

We conducted a supply-chain survey of the 324 direct suppliers that we identified may contribute necessary conflict minerals to our products. The overall response rate to this survey was approximately 99% compared to the 83% response rate attained in 2013; and 100% of our direct suppliers that contribute necessary conflict minerals to our Client Microprocessor and Chipset products responded to our 2014 supply chain survey. Our supplier requirements related to providing DRC conflict free products to Intel include:

1.	publish a conflict mineral sourcing policy on the supplier's public website;

2.	participate annually in our conflict minerals supply-chain survey using the CMRT;

3.	accurately identify all smelters and refiners facilities which process the conflict minerals contained in the products provided to Intel; and

4.	verify the smelters or refiners which process the conflict minerals contained in the products provided to Intel have received a "conflict free" designation from the CFSP or other independent third party audit program.

Smelter and Refiner Due Diligence Summary

In response to our supply-chain survey, our suppliers identified 229 operational smelter and refiner facilities which may process the necessary conflict minerals contained in the materials provided to Intel. Of those facilities, as of May 15, 2015:

To our knowledge, none of these 229 facilities directly or indirectly finance or benefit armed groups in the Covered Countries.

Additional information regarding such smelter and refiner facilities is available in Table 1 below. 

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Product Determination

 

On the basis of our due diligence measures as described in this Report, we have concluded in good faith that during this reporting period, the necessary conflict minerals contained in our products that originated or may have originated from the Covered Countries are either DRC conflict free or DRC conflict undeterminable as described below.

 

 

Our Client Microprocessor and Chipset products are DRC conflict free.  Our suppliers have identified the smelters and refiners in the supply chain that are sources of the necessary conflict minerals for our Client Microprocessor and Chipset products.  All of these smelters and refiners have received a "conflict free" designation from the CFSP or other independent third party audit program which resulted in our reasonable determination that our Client Microprocessor and Chipset products are DRC conflict free.

 

 

All Other products are DRC conflict undeterminable.  We are making this determination because we have insufficient information from suppliers or other sources regarding all of the smelters and refiners that processed the necessary conflict minerals in All Other products to conclude whether those conflict minerals originated in the Covered Countries and, if so, whether those conflict minerals were from recycled or scrap sources or other conflict free sources.

 

Our efforts to determine the mine or location of origin of the necessary conflict minerals in our products that are DRC conflict undeterminable with the greatest possible specificity consisted of the due diligence measures described in this Report. In particular, because independent third party audit programs validate whether sufficient evidence exists regarding country, mine and/or location of origin of the conflict minerals that the audited smelter or refiner facilities have processed, we relied on the information made available by such programs for the smelters and refiners in our supply chain. For smelters or refiners in our supply chain that had not received a "conflict free" designation by any independent third party audit programs, we attempted to contact such facilities to request country, mine and/or location of origin of the conflict minerals processed by them, and in certain cases, visited the facilities to perform an on-site review of this information.  We were unable to ascertain the country of origin and/or chain of custody of all necessary conflict minerals processed by facilities that contribute to All Other products because, for this reporting period, certain smelter and refiner facilities (1) had not yet received a "conflict free" designation from an independent third party audit program, (2) did not respond to our requests for country of origin or chain of custody information, (3) were unwilling to allow us to visit the facility to conduct an on-site review of such information, or (4) did not have contact details available to establish communication to request country of origin or chain of custody information.

 

Table 1 below lists the facilities which, to the extent known, processed the necessary conflict minerals in All Other products.

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Future Due Diligence Measures

 

During the reporting period for the calendar year ending December 31, 2015, we are continuing to engage in the activities described above in "Design of Conflict Minerals Program" and "Description of Due Diligence Measures Performed." In our efforts to attain a conflict free supply chain for our products, we intend to continue to contact smelters and refiners identified in our supply chain survey process that have not yet received a "conflict free" designation and request their participation in the CFSP or other independent third party audit program in order for them to obtain such a "conflict free" designation.

 

Independent Private Sector Audit of this Report

 

We obtained an independent private sector audit of this Report by Ernst & Young LLP, which is set forth as Exhibit A to this Report.

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Intel and the Intel logo, Intel Atom, Intel Core, Intel Xeon, Intel Xeon Phi, Centrino, Celeron, Itanium, Pentium, Quark, Thunderbolt, and XMM are trademarks of Intel Corporation in the U.S. and/or other countries.

 

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Report of Independent Accountants

 

Board of Directors and Stockholders of Intel Corporation

 

We have examined whether the design of Intel Corporation's (the "Company") due diligence framework as set forth in the Design of Conflict Minerals Program section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2014, is in conformity, in all material respects, with the criteria set forth in the Organisation of Economic Co-Operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition 2013 ("OECD Due Diligence Guidance"), and whether the Company's description of the due diligence measures it performed, as set forth in Description of Due Diligence Measures Performed section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2014, is consistent, in all material respects, with the due diligence process that the Company undertook.

 

Management is responsible for the design of the Company's due diligence framework and the description of the Company's due diligence measures set forth in the Conflict Minerals Report, and performance of the due diligence measures. Our responsibility is to express an opinion on the design of the Company's due diligence framework and on the description of the due diligence measures the Company performed, based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States, and, accordingly, included examining, on a test basis, evidence about the design of the Company's due diligence framework and the description of the due diligence measures the Company performed, and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion.

 

Our examination was not conducted for the purpose of evaluating:

►	The consistency of the due diligence measures that the Company performed with either the design of the Company's due diligence framework or the OECD Due Diligence Guidance

►	The completeness of the Company's description of the due diligence measures performed

►	The suitability of the design or operating effectiveness of the Company's due diligence process

►	Whether a third party can determine from the Conflict Minerals Report if the due diligence measures the Company performed are consistent with the OECD Due Diligence Guidance

►	The Company's reasonable country of origin inquiry (RCOI), including the suitability of the design of the RCOI, its operating effectiveness, or the results thereof

►	The Company's conclusions about the source or chain of custody of its conflict minerals, those products subject to due diligence, or the DRC Conflict Free status of its products

 

Accordingly, we do not express an opinion or any other form of assurance on the aforementioned matters or any other matters included in any section of the Conflict Minerals Report other than the design of the Company's due diligence framework as set forth in the Design of Conflict Minerals Program section and the Company's description of the due diligence measures it performed, as set forth in the Description of Due Diligence Measures Performed section referenced in the first paragraph above.

 

In our opinion, the design of the Company's due diligence framework for the reporting period from January 1 to December 31, 2014, as set forth in the Design of Conflict Minerals Program section of the Conflict Minerals Report is in conformity, in all material respects, with the OECD Due Diligence Guidance, and the Company's description of the due diligence measures it performed as set forth in the Description of Due Diligence Measures Performed section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2014, is consistent, in all material respects, with the due diligence process that the Company undertook.

 

/s/ Ernst & Young LLP

 

San Jose, California

May 21, 2015