Dear Mr. Cascio,

Intel Corporation ("Intel", "we", or "us") has received the comment letter dated June 4, 2015 from the staff of the Division of Corporation Finance ("Staff"), and the following represents our response to the Staff's comments. For your ease of reference, we have included your original comments below and have provided our responses after each comment. We appreciate the ten day extension you graciously provided for us to provide our responses.

Comment No. 1

You disclose that the $1.2 billion decrease in Mobile and Communications Group revenue in 2014 arose from higher cash consideration paid to customers and lower phone component sales partially offset by higher tablet platform unit sales. To help us better understand your disclosure please quantify for us the impact on revenues of lower prices, including the impact of cash consideration paid to customers, and offsetting higher unit sales. In light of the apparent significance of the offsetting components of price and volume in 2014, explain to us how your disclosure considers the guidance about known trends from Item 303(a)(3)(ii) of Regulation S-K.

Intel Corporation

2200 Mission College Blvd.

Santa Clara, CA  95054

www.intel.com

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For 2014, our management identified growing our presence in the tablet market as a strategic objective and set a sizable goal of selling over 40 million tablet platforms. Our platform offering for tablets in 2014 was not optimized for the tablet market and therefore customers who chose to integrate Intel's platform were required to incur a higher bill of materials due to purchasing of third party components (i.e., memory subsystem, power management subsystem, etc.) in order to maintain the same level of functionality as compared to our competitors' offerings. In order to offset a portion of our customers' costs associated with choosing the Intel platform offering, we supplemented the higher incremental cost by offering cash consideration to our customers. Our management believes the cash consideration to our customers is temporary in nature and is not indicative of a material trend. We currently expect to phase out the cash consideration program as we bring an optimized platform to the tablet market.

Our management routinely evaluates the financial impact of growing our presence in the tablet market based on the net impact to gross margin as opposed to the revenue impact from higher unit sales. We believe that our gross margin discussion in our Management's Discussion and Analysis of Financial Condition for our Consolidated Results of Operations of our 2014 Form 10-K allows users of the financial statements to understand the quantitative impact of cash consideration paid to customers as well as higher costs of sales associated with higher tablet unit sales. Our management continues to believe this is the most meaningful metric for understanding the temporary nature of these measures based on information presently available, as viewed by management.

Conversely, in our mature markets, we measure the impact to revenue based on the percentage change in unit sales and average selling prices based on comparison to the prior year comparable period. Instead of providing a comparison of offsetting effects (which we deemed less meaningful because of the expected temporary nature of our cash consideration provided to customers), management focused on their impacts upon gross margin. Accordingly, in the 2014 Form 10-K, we disclosed the quantified impact to gross margin as management viewed such information as the most appropriate metric to inform the reader of the impact to our financial results.

In future filings, we will enhance our disclosure to quantify offsetting discrete events, to the extent material, that can be identified based on their impact to revenue.

Comment No. 2

We note that in 2015 you reorganized your business to combine the PC Client Group segment and Mobile and Communications Group segment to form a new Client Computing Group (CCG) operating segment. We also note that your pre- and post- reorganization segments each include numerous product platforms. To help us better understand how you apply FASB ASC Topic 280 in identifying reportable segments and how the business reorganization lead to the revised segment reporting structure, please respond to the following for both pre- and post-reorganization:

 

Response to Comment No. 2

As the Staff noted in Comment No. 2 above, in November 2014, Intel announced the implementation of a new operating structure, which merged the tablet, phone and modem business from our Mobile and Communications Group (MCG) with the PC Client Group (PCCG) organization, forming the Client Computing Group (CCG). CCG is responsible for all aspects of the full client computing market and our customer and partner relationships. The new structure reflects our strategy to address all aspects of the client computing market segment and utilizes our intellectual property to offer compelling solutions for a wide range of end-user devices. As the platform designs for these end-user devices converge, the new operating structure is designed to ensure that we are able to respond to market demand and provide a more coordinated approach to customers, as well as reduce costs and increase efficiencies by combining competing product roadmaps targeted for the client computing market segment. Additionally, the CCG design and research and development work will be performed by a pooled group of resources benefiting all CCG platforms.

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Based on the factors set forth in ASC 280-10-50-5, Intel's Chief Operating Decision Maker ("CODM") is our CEO, Brian Krzanich. Mr. Krzanich is responsible for making resource allocation decisions and setting performance metrics for all of our segment managers and functional group managers (e.g. sales and marketing, manufacturing, engineering, finance, and administration groups). He maintains regular contact with our segment managers for our material businesses, discussing operating activities, financial results, forecasts, and plans. Mr. Krzanich's direct reports and organizational reporting structure are depicted in Exhibit B, which exhibit we are delivering to the Staff supplementally under Rule 12b-4 of the Securities Exchange Act of 1934, as amended.

In May 2013, we created an Executive Office comprised of both our CEO (CODM) and our President, Renee James. Please be advised that, although Intel's President has been part of the Executive Office, the President reports to the CEO and decisions about the allocation of resources reside with the CEO. The Executive Office does not function as a management committee. The CEO (CODM) effectively controls the Executive Office and has complete decision making authority regarding allocation of resources to the operating segments. On July 2, 2015, Intel announced that Ms. James will depart Intel in January 2016, and accordingly the Executive Office structure is no longer in use at this time. 

While the timing and types of information reviewed during our financial close and financial planning cycles have remained consistent pre- and post-reorganization, the segment information included in these cycles now reflects the CCG operating segment whereas previously segment results for both PCCG and MCG operating segments were provided.

Intel's budget cycle for the following fiscal year begins in July each year. External market trends are incorporated into the planning cycle and initial product group business plans are utilized to set product roadmaps. These roadmaps are then used to build a spending profile for the business, including sizing of additional market opportunities and potential revenue growth. Each segment manager then presents their proposed three year business plan to the CEO (CODM) for discussion and approval.

 

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As highlighted by management in our most recent 2014 Investor Meeting, our intellectual property (IP) is shared across our platforms and operating segments. Our IP is the foundational building block for our platforms as evident by its use across personal computers (PC), tablets, phones data center, Internet of Things, and other devices. For example, most of the IP used in the data center is either developed or modified from our PC platforms. A data center platform includes multiple cores to drive the performance that is required in the high-performance compute segment. While we offer functionality delineations, the core of our products (the CPU) share a single microprocessor architecture and perform the same core processing functions. The same holds true for the tablet and phone market segments. We are reusing the lower power and connectivity IP that we developed for the tablet and phone market segments into PCs and we leverage IP developed for one platform into alternate platforms to increase functionality. The combination of our shared IP portfolio and our interchangeable manufacturing and assembly and test assets allows us to seamlessly shift our production capabilities to respond to market demand.

FASB ASC 280-10-50-40 states "a public entity shall report the revenues from external customers for each product and service or each group of similar products and services." Our advanced integrated digital technology platform is the only class of product that exceeds 10% of revenues in each of the last three fiscal years pursuant to Item 101 (c)(i) of Regulation S-K. Historically, in our footnotes to our financial statements, we have disclosed a measure of magnitude of our platform revenue through the use of words such as "substantial majority" to describe the amount of revenue recognized from the sale of our platforms in our reportable operating segments. In addition, in Item 1. Business of our 2014 Form 10-K, we provide a graphic representation titled "Revenue by Major Operating Segment" of our revenue by principle product for each of our reportable operating segments.

We further disaggregate our revenue in our operating segment footnote where we voluntarily provide the financial results of our non-reportable operating segments for the "Internet of Things Group" and the aggregated "software and services operating segments."

Notwithstanding the foregoing disclosures, we acknowledge the Staff's comment regarding our product line disclosure in the notes to our financial statements and, in future filings, we will enhance the disclosure to quantify the amount of "platforms" revenue separately from all other product lines (i.e. "other" revenue) for our reportable and reported operating segments. If at some time in the future another product and service or each group of similar products and services exceeds 10 percent of our total consolidated revenue, we would make the appropriate disclosure at that time.

 

Comment No. 4

We note that you cite several factors in describing the overall decrease in net revenue for the CCG operating segment during the first quarter of 2015. Please quantify for us the impact on revenues of each of the factors cited in the disclosure. Also, quantify for us the impact on revenues from changes in prices and changes in volume during the quarter. To enhance an investor's understanding, please revise the discussion in future filings to include this information.

Response to Comment No. 4

We believe the percentage quantification of unit sales and average selling prices we disclose are key metrics valued by the investing community because the percentage quantification allows the reader to understand the relative unit and average selling price growth for our target markets. However, in response to the Staff's comments, we will expand our future disclosures to quantify the impact of material drivers to describe the overall change in net revenue for the CCG operating segment.

To illustrate the expanded disclosures, we have redrafted that portion of our Management Discussion and Analysis addressing our CCG operating segment results from our March 2015 Form 10-Q as follows (key changes are underlined):

Client Computing Group

The revenue and operating income for the CCG operating segment for each period were as follows:

	(In Millions)		Q1 2015				Q1 2014
	Platforms revenue		$	7,046			$	7,672
	Other revenue			374				425
	Net revenue			7,420				8,097
	Operating income		$	1,410			$	1,847

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Comment No. 5

We note the CCG segment is approximately 60% of your revenues and includes numerous products and product platforms as described in your filings. However, we see that your discussion does not provide quantification to clarify the underlying composition of the segment's revenues or to quantify concentrations from any particular product or product platform. Accordingly, in future filings, please revise the section to quantify the components of the segment's revenues.

Response to Comment No. 5

As discussed in our response to Comment No. 3, our platforms are a single class of product and is the only class of product that exceeds 10% of revenues in each of the periods presented in the March 2015 Form 10-Q.

We acknowledge the Staff's comment regarding quantification to clarify the underlying composition of our CCG operating segment's revenue and, in future filings, we will enhance our disclosure to quantify the amount of "platforms" revenue separately from all other product lines (i.e. "other" revenue). Additionally, we will quantify the material drivers when it is meaningful to the reader to understand our CCG operating segment results. Please refer to our response to the Staff's Comment No. 4 for our proposed new disclosure.