0000050863December 312023Q2FALSE0.490.7395,78193,3864,1884,1374,137
Note : Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) by component and related tax effects in the first six months of 2023 were as follows:
(In Millions)Unrealized Holding Gains (Losses) on DerivativesActuarial Valuation and Other Pension ExpensesTranslation Adjustments and OtherTotal
Balance as of December 31, 2022$(299)$(259)$(4)$(562)
Other comprehensive income (loss) before reclassifications(191)— (186)
Amounts reclassified out of accumulated other comprehensive income (loss)218 — 221 
Tax effects(16)— (1)(17)
Other comprehensive income (loss)11 3 4 18 
Balance as of July 1, 2023$(288)$(256)$ $(544)
We estimate that we will reclassify approximately $110 million (before taxes) of net derivative losses from accumulated other comprehensive income (loss) into earnings within the next 12 months.
The changes in accumulated other comprehensive income (loss) by component and related tax effects in the first six months of 2023 were as follows:
(In Millions)Unrealized Holding Gains (Losses) on DerivativesActuarial Valuation and Other Pension ExpensesTranslation Adjustments and OtherTotal
Balance as of December 31, 2022$(299)$(259)$(4)$(562)
Other comprehensive income (loss) before reclassifications(191)— (186)
Amounts reclassified out of accumulated other comprehensive income (loss)218 — 221 
Tax effects(16)— (1)(17)
Other comprehensive income (loss)11 3 4 18 
Balance as of July 1, 2023$(288)$(256)$ $(544)
29925945621915186218322116117113418288256544110
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedJuly 1, 2023
or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File Number: 000-06217
unboxed logo_2020_new.jpg
INTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware94-1672743
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2200 Mission College Boulevard, Santa Clara, California95054-1549
(Address of principal executive offices)(Zip Code)
(408) 765-8080
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.001 par valueINTCNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer  Non-accelerated filer  Smaller reporting company Emerging growth company  

¨¨
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 July 21, 2023, the registrant had outstanding 4,188 million shares of common stock.



Table of Contents
Organization of Our 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 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.
Page
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
Management's Discussion and Analysis (MD&A)
Segment Trends and Results
Consolidated Condensed Results of Operations
Liquidity and Capital Resources
Non-GAAP Financial Measures
Other Key Information
Quantitative and Qualitative Disclosures About Market Risk
Risk Factors
Controls and Procedures
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










Table of Contents

Forward-Looking Statements
This Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "accelerate," "achieve," "aim," "ambitions," "anticipate," "believe," "committed," "continue," "could," "designed," "estimate," "expect," "forecast," "future," "goals," "grow," "guidance," "intend," "likely," "may," "might," "milestones," "next generation," "objective," "on track," "opportunity," "outlook," "pending," "plan," "position," "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, which may include statements regarding:
our business plans and strategy and anticipated benefits therefrom, including with respect to our IDM 2.0 strategy, our partnership with Brookfield, the transition to an internal foundry model, updates to our reporting structure 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, product roadmaps, schedules, future product architectures, expectations regarding process performance, per-watt parity, and metrics and expectations regarding product and process leadership;
investment plans, and impacts of investment plans, including in the US and abroad;
internal and external manufacturing plans, including future internal 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 foundry service offerings, including technology and IP offerings;
expected timing and impact of acquisitions, divestitures, and other significant transactions, including our proposed acquisition of Tower Semiconductor Ltd. and the sale of our NAND memory business;
expected completion and impacts of restructuring activities and cost-saving or efficiency initiatives, including those related to the 2022 Restructuring Program;
future social and environmental performance goals, measures, strategies and results;
our anticipated growth, future market share, and trends in our businesses and operations;
projected growth and trends in markets relevant to our 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 AI;
future macro environmental and economic conditions, including regional or global downturns or recessions;
future responses to and effects of COVID-19, including as to manufacturing, transportation and operational restrictions and disruptions and broader economic conditions;
geopolitical conditions, including the impacts of Russia's war on Ukraine and rising tensions between the U.S. and China;
tax- and accounting-related expectations;
expectations regarding our relationships with certain sanctioned parties; and
other characterizations of future events or circumstances.

Such statements involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied, including:
changes in demand for our products;
changes in product mix;
the complexity and fixed cost nature of our manufacturing 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 manufacturing capabilities;
vulnerability to new product development and manufacturing-related risks, 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 concentration and the use of distributors and other third parties;
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potential security vulnerabilities in our products;
cybersecurity and privacy risks;
investment and transaction risk;
IP risks and risks associated with litigation and regulatory proceedings;
evolving regulatory and legal requirements across many jurisdictions;
geopolitical and 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 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. In 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 disclaim 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
We use our Investor Relations website, www.intc.com, as a routine channel for distribution of important, and often material, information about us, including our quarterly and annual earnings results and presentations, press releases, announcements, information about upcoming webcasts, analyst presentations, and investor days, archives of these events, financial information, corporate governance practices, and corporate responsibility information. We do not distribute our financial results via a news wire service. All such information is available on our Investor Relations website free of charge. Our Investor Relations website allows interested persons to sign up to automatically receive e-mail alerts when we post financial information and issue press releases, and to receive information about upcoming events. We encourage interested persons to follow our Investor Relations website in addition to our filings with the SEC to timely receive information about the company.
Intel, the Intel logo, Intel Core, Intel Optane, and Xeon are trademarks of Intel Corporation or its subsidiaries in the US and/or other countries.
* Other names and brands may be claimed as the property of others.
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A Quarter in Review
Total revenue of $12.9 billion was down $2.4 billion or 15% from Q2 2022, as CCG revenue decreased 12%, DCAI revenue decreased 15%, and NEX revenue decreased 38%. CCG revenue decreased due to lower notebook and desktop volumes on lower demand. Notebook ASPs decreased due to a higher mix of small core products combined with a higher mix of older generation products, while desktop ASPs increased due to an increased mix of product sales to the commercial and 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 across product lines.
RevenueGross MarginDiluted EPS attributable to IntelCash Flows
GAAP $B
GAAP Non-GAAP
GAAP Non-GAAP
Operating Cash Flow $B
Adjusted Free Cash Flow $B
979 982 985986
$12.9B35.8%39.8%$0.35$0.13$1.0B$(11.5)B
GAAPGAAP
non-GAAP1
GAAP
non-GAAP1
GAAP
non-GAAP1
Revenue down $2.4B or 15% from Q2 2022Gross margin down 0.7 ppt from Q2 2022Gross margin down 5 ppts from Q2 2022Diluted EPS attributable to Intel up $0.46 from Q2 2022Diluted EPS attributable to Intel down $0.15 or 54% from Q2 2022Operating cash flow down $5.7B or 85% from Q2 2022Adjusted free cash flow down $10.7B from Q2 2022
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
An important part of our AI strategy is to democratize AI – scaling it and making it ubiquitous across the full continuum of workloads and usage models. We are championing an open ecosystem with a full suite of silicon and software IP to drive AI in both discrete and integrated solutions. Our 4th Gen Intel® Xeon® Scalable processor and Habana Gaudi2* deep learning accelerator were recognized in MLCommons' AI performance benchmark data as two compelling, open alternatives in the AI market that compete on both performance and 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 Magdeburg, Germany wafer fabrication site, and plans to invest up to $4.6 billion in an assembly and test facility in Poland. These investments further our IDM 2.0 strategy and are expected to support a resilient semiconductor supply chain and to create the foundation for a next-generation chip ecosystem.



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A Quarter in Review
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1 See "Non-GAAP Financial Measures" within MD&A.

Consolidated Condensed Statements of Income
 Three Months EndedSix Months Ended
(In Millions, Except Per Share Amounts; Unaudited)
Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
Net revenue$12,949 $15,321 $24,664 $33,674 
Cost of sales8,311 9,734 16,018 18,843 
Gross margin4,638 5,587 8,646 14,831 
Research and development4,080 4,400 8,189 8,762 
Marketing, general, and administrative1,374 1,800 2,677 3,552 
Restructuring and other charges200 87 264 (1,124)
Operating expenses5,654 6,287 11,130 11,190 
Operating income (loss)(1,016)(700)(2,484)3,641 
Gains (losses) on equity investments, net(24)(90)145 4,233 
Interest and other, net224 (119)365 878 
Income (loss) before taxes(816)(909)(1,974)8,752 
Provision for (benefit from) taxes(2,289)(455)(679)1,093 
Net income (loss)$1,473 $(454)$(1,295)$7,659 
Less: Net income (loss) attributable to non-controlling interests(8) (18) 
Net income (loss) attributable to Intel$1,481 $(454)$(1,277)$7,659 
Earnings (loss) per share attributable to Intel—basic$0.35 $(0.11)$(0.31)$1.87 
Earnings (loss) per share attributable to Intel—diluted$0.35 $(0.11)$(0.31)$1.86 
Weighted average shares of common stock outstanding:
Basic4,182 4,100 4,168 4,095 
Diluted4,196 4,100 4,168 4,120 
         
See accompanying notes.
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A Quarter in Review
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Consolidated Condensed Statements of Comprehensive Income
Three Months EndedSix Months Ended
(In Millions; Unaudited)
Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
Net income (loss)$1,473 $(454)$(1,295)$7,659 
Changes in other comprehensive income (loss), net of tax:
Net unrealized holding gains (losses) on derivatives(131)(627)11 (742)
Actuarial valuation and other pension benefits (expenses), net2 9 3 27 
Translation adjustments and other4 (5)4 (30)
Other comprehensive income (loss)(125)(623)18 (745)
Total comprehensive income (loss)1,348 (1,077)(1,277)6,914 
Less: comprehensive income (loss) attributable to non-controlling interests(8) (18) 
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
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Consolidated Condensed Balance Sheets
(In Millions; Unaudited)
Jul 1, 2023Dec 31, 2022
Assets
Current assets:
Cash and cash equivalents$8,349 $11,144 
Short-term investments15,908 17,194 
Accounts receivable, net2,996 4,133 
Inventories11,984 13,224 
Other current assets4,119 4,712 
Total current assets43,356 50,407 
Property, plant, and equipment, net of accumulated depreciation of $95,781 ($93,386 as of December 31, 2022)90,945 80,860 
Equity investments5,893 5,912 
Goodwill27,591 27,591 
Identified intangible assets, net5,173 6,018 
Other long-term assets12,671 11,315 
Total assets$185,629 $182,103 
Liabilities and stockholders’ equity
Current liabilities:
Short-term debt$2,711 $4,367 
Accounts payable8,757 9,595 
Accrued compensation and benefits2,887 4,084 
Income taxes payable2,169 2,251 
Other accrued liabilities10,656 11,858 
Total current liabilities27,180 32,155 
Debt46,335 37,684 
Other long-term liabilities7,643 8,978 
Contingencies (Note 13)
Stockholders’ equity:
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)(544)(562)
Retained earnings67,231 70,405 
Total Intel stockholders' equity101,017 101,423 
Non-controlling interests3,454 1,863 
Total stockholders' equity104,471 103,286 
Total liabilities and stockholders’ equity$185,629 $182,103 
        
See accompanying notes.

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Consolidated Condensed Statements of Cash Flows
 
Six Months Ended
(In Millions; Unaudited)
Jul 1, 2023Jul 2, 2022
Cash and cash equivalents, beginning of period$11,144 $4,827 
Cash flows provided by (used for) operating activities:
Net income (loss)(1,295)7,659 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation3,733 5,528 
Share-based compensation1,661 1,599 
Restructuring and other charges255 73 
Amortization of intangibles909 968 
(Gains) losses on equity investments, net(146)(4,230)
(Gains) losses on divestitures (1,072)
Changes in assets and liabilities:
Accounts receivable1,137 3,397 
Inventories1,240 (1,386)
Accounts payable(1,102)117 
Accrued compensation and benefits(1,340)(1,985)
Income taxes(2,186)(2,232)
Other assets and liabilities(1,843)(1,736)
Total adjustments2,318 (959)
Net cash provided by (used for) operating activities1,023 6,700 
Cash flows provided by (used for) investing activities:
Additions to property, plant, and equipment(13,301)(11,846)
Purchases of short-term investments(25,696)(25,514)
Maturities and sales of short-term investments26,957 25,407 
Sales of equity investments253 4,775 
Proceeds from divestitures 6,579 
Other investing458 (1,820)
Net cash used for investing activities(11,329)(2,419)
Cash flows provided by (used for) financing activities:
Repayment of commercial paper(3,944) 
Payments on finance leases(96)(299)
Partner contributions834  
Proceeds from sales of subsidiary shares1,573  
Issuance of long-term debt, net of issuance costs10,968  
Repayment of debt (1,688)
Payment of dividends to stockholders(2,036)(2,986)
Other financing212 255 
Net cash provided by (used for) financing activities7,511 (4,718)
Net increase (decrease) in cash and cash equivalents(2,795)(437)
Cash and cash equivalents, end of period$8,349 $4,390 
Supplemental disclosures:
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities$5,113 $3,286 
Cash paid during the period for:
Interest, net of capitalized interest$393 $214 
Income taxes, net of refunds$1,520 $3,326 
See accompanying notes.
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Consolidated Condensed Statements of Stockholders' Equity
(In Millions, Except Per Share Amounts; Unaudited)Common Stock and Capital in Excess of Par ValueAccumulated Other Comprehensive Income (Loss)Retained EarningsNon-Controlling InterestsTotal
SharesAmount
Three Months Ended
Balance as of April 1, 20234,171 $32,829 $(419)$65,649 $2,344 $100,403 
Net income (loss)— — — 1,481 (8)1,473 
Other comprehensive income (loss)— — (125)— — (125)
Net proceeds from sales of subsidiary shares and partner contributions— 866 — — 1,092 1,958 
Employee equity incentive plans and other22 6 — — — 6 
Share-based compensation— 896 — — 26 922 
Restricted stock unit withholdings(5)(267)— 101 — (166)
Balance as of July 1, 20234,188 $34,330 $(544)$67,231 $3,454 $104,471 
Balance as of April 2, 20224,089 $29,244 $(1,002)$74,894 $ $103,136 
Net income (loss)— — — (454)— (454)
Other comprehensive income (loss)— — (623)— — (623)
Employee equity incentive plans and other22 12 — — — 12 
Share-based compensation— 892 — — — 892 
Restricted stock unit withholdings(5)(290)— 44 — (246)
Cash dividends declared ($0.37 per share)— — — (1,499)— (1,499)
Balance as of July 2, 20224,106 $29,858 $(1,625)$72,985 $ $101,218 
Six Months Ended
Balance as of December 31, 20224,137 $31,580 $(562)$70,405 $1,863 $103,286 
Net income (loss)— — — (1,277)(18)(1,295)
Other comprehensive income (loss)— — 18 — — 18 
Net proceeds from sales of subsidiary shares and partner contributions— 866 — — 1,541 2,407 
Employee equity incentive plans and other58 665 — — — 665 
Share-based compensation— 1,593 — — 68 1,661 
Restricted stock unit withholdings(7)(374)— 139 — (235)
Cash dividends declared ($0.49 per share)— — — (2,036)— (2,036)
Balance as of July 1, 20234,188 $34,330 $(544)$67,231 $3,454 $104,471 
Balance as of December 25, 20214,070 $28,006 $(880)$68,265 $ $95,391 
Net income (loss)— — — 7,659 — 7,659 
Other comprehensive income (loss)— — (745)— — (745)
Employee equity incentive plans and other42 601 — — — 601 
Share-based compensation— 1,599 — — — 1,599 
Restricted stock unit withholdings(6)(348)— 47 — (301)
Cash dividends declared ($0.73 per share)— — — (2,986)— (2,986)
Balance as of July 2, 20224,106 $29,858 $(1,625)$72,985 $ $101,218 

See accompanying notes.

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Notes to Consolidated Condensed Financial Statements
Note 1 : Basis of Presentation
We prepared our interim Consolidated Condensed Financial Statements that accompany these notes in conformity with US GAAP, consistent in all material respects with those applied in our 2022 Form 10-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 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 2022 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 the organizational change to integrate AXG into CCG and DCAI. This change is intended to drive a more effective go-to-market capability and to accelerate the scale of these businesses, while also reducing costs. As a result, we modified our segment reporting in the first quarter of 2023 to align to this and certain other business 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 2023.
We manage our business through the following operating segments:
Client Computing (CCG)
Data Center and AI (DCAI)
Network and Edge (NEX)
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. Mobileye and IFS do not qualify as reportable operating segments; however, we have elected to disclose the results of these non-reportable operating segments. 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;
amounts included within restructuring and other charges;
employee benefits, compensation, impairment charges, and other expenses not allocated to the operating segments; and
acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
The CODM, who is our CEO, 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 2022 Form 10-K except for the organizational change described above.







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Net revenue and operating income (loss) for each period were as follows:
Three Months EndedSix Months Ended
(In Millions)
Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
Net revenue:
Client Computing
Desktop$2,370 $2,289 $4,249 $4,930 
Notebook3,896 4,751 7,303 10,710 
Other514 638 995 1,360 
6,780 7,678 12,547 17,000 
Data Center and AI4,004 4,695 7,722 10,769 
Network and Edge1,364 2,211 2,853 4,350 
Mobileye454 460 912 854 
Intel Foundry Services232 57 350 213 
All other115 220 280 488 
Total net revenue$12,949 $15,321 $24,664 $33,674 
Operating income (loss):
Client Computing$1,039 $876 $1,559 $3,598 
Data Center and AI(161)(80)(679)1,313 
Network and Edge(187)294 (487)710 
Mobileye129 190 252 338 
Intel Foundry Services(143)(134)(283)(157)
All other(1,693)(1,846)(2,846)(2,161)
Total operating income (loss)$(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.








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Financial Statements Notes to Financial Statements
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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 EndedSix Months Ended
(In Millions, Except Per Share Amounts)Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
Net income (loss)$1,473 $(454)$(1,295)$7,659 
Less: Net income (loss) attributable to non-controlling interests(8) (18) 
Net income (loss) attributable to Intel1,481 (454)(1,277)7,659 
Weighted average shares of common stock outstanding—basic4,182 4,100 4,168 4,095 
Dilutive effect of employee equity incentive plans14   25 
Weighted average shares of common stock outstanding—diluted4,196 4,100 4,168 4,120 
Earnings (loss) per share attributable to Intel—basic

$0.35 $(0.11)$(0.31)$1.87 
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 that were anti-dilutive were insignificant and were excluded from the computation of diluted earnings per share in all periods presented.
Note 5 : Other Financial Statement Details
Accounts Receivable
We 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 cash 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 six months of 2023, and we did not factor accounts receivable during the first six months of 2022. After the sale of our accounts receivable, we expect to collect payment from the customers and remit it to the third-party financial institution.
Inventories
(In Millions)
Jul 1, 2023Dec 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 $2.7 billion as of July 1, 2023 ($2.4 billion as of December 31, 2022).







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Interest and Other, Net
 Three Months EndedSix Months Ended
(In Millions)
Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 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 6 : Restructuring and Other Charges
Three Months EndedSix Months Ended
(In Millions)Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
Employee severance and benefit arrangements$171 $38 $132 $43 
Litigation charges and other20 13 97 (1,203)
Asset impairment charges9 36 35 36 
Total restructuring and other charges$200 $87 $264 $(1,124)
The 2022 Restructuring Program was approved in the third quarter of 2022 to rebalance our workforce and operations to create efficiencies and improve our product execution in alignment with our strategy. We expect these actions to be substantially completed by the end of 2023, but this is subject to change. Any changes to the estimates or timing of executing the 2022 Restructuring Program will be reflected in our 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 accruals101 
Adjustments26 
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 the Consolidated 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 six months of 2022 from the annulled penalty related to an EC fine that was recorded and paid in 2009. Refer to "Note 13: Contingencies" within the Notes to Consolidated Condensed Financial Statements for further information on legal proceedings related to the EC fine.










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Note 7 : Income Taxes
Three Months EndedSix Months Ended
(In Millions)
Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 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 effects of being taxed in multiple tax jurisdictions.
Note 8 : Investments
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-US government bonds and 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 July 1, 2023, and December 31, 2022, substantially all time deposits were issued by institutions outside the 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 interest and other, net. The fair value of our hedged investments was $14.7 billion as of July 1, 2023 ($16.2 billion as of December 31, 2022). For hedged investments still held at the reporting date, we recorded net losses of $183 million in the second quarter of 2023 and net losses of $91 million in the first six months of 2023 ($1.0 billion of net losses in the second quarter of 2022 and $1.3 billion of net losses in the first six months of 2022). We recorded net gains on the related derivatives of $237 million in the second 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 $1.2 billion in the first six months of 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 our unhedged investments was $6.9 billion as of July 1, 2023 ($10.2 billion as of December 31, 2022), which approximated the fair value for these periods.
The fair value of marketable debt investments, by contractual maturity, as of July 1, 2023, was as follows:
(In Millions)Fair Value
Due in 1 year or less
$10,441 
Due in 1–2 years
1,958 
Due in 2–5 years
5,352 
Due after 5 years
725 
Instruments not due at a single maturity date1
3,142 
Total$21,618 
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.







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Equity Investments
(In Millions)Jul 1, 2023Dec 31, 2022
Marketable equity securities1
$1,295 $1,341 
Non-marketable equity securities
4,589 4,561 
Equity method investments
9 10 
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 EndedSix Months Ended
(In Millions)
Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
Ongoing mark-to-market adjustments on marketable equity securities
$(85)$(209)$103 $(639)
Observable price adjustments on non-marketable equity securities
 135 10 206 
Impairment charges
(38)(44)(74)(67)
Sale of equity investments and other1
99 28 106 4,733 
Total gains (losses) on equity investments, net$(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 investee gains (losses) and distributions.
Net unrealized gains and losses for our marketable and non-marketable equity securities for each period were as follows:
Three Months EndedSix Months Ended
(In Millions)Jul 1, 2023Jul 2, 2022Jul 1, 2023Jul 2, 2022
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 period28 (19)(7)(11)
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date$2 $(112)$134 $(348)
McAfee Corp.
During the first quarter of 2022, the sale of the McAfee consumer 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 sale of equity investments and other.
Note 9 : Acquisitions and Divestitures
Acquisitions
Acquisition 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. Tower is a leading foundry for analog semiconductor solutions. The acquisition is intended to advance our IDM 2.0 strategy by accelerating our global end-to-end foundry business. Under the agreement, each issued and outstanding ordinary share of Tower would 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. We continue to work to close the transaction, which 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 by either party, we may 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.







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Divestitures
NAND Memory Business
On December 29, 2021, we closed the first phase of our agreement with SK hynix Inc. (SK hynix) to divest our NAND memory business for $9.0 billion in cash. Our NAND memory business includes 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 and upon the first closing in the first quarter of 2022, SK hynix paid $7.0 billion of consideration and 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 proceeds of $1.9 billion which remains outstanding as of July 1, 2023, and will be received upon the second closing of the transaction, expected to be no earlier than March 2025.
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.
As of July 1, 2023, we also have a receivable due from the NAND OpCo Business, a deconsolidated entity, of $201 million recorded within other current assets on the Consolidated Condensed Balance Sheets. We will be reimbursed for costs of $32 million per quarter in 2023 for corporate function services, which include human resources, information technology, finance, supply chain, and other compliance requirements associated with being wholly owned subsidiaries.
Note 10 : Borrowings
In the first quarter of 2023, we issued a total of $11.0 billion aggregate principal amount of senior notes. We also amended both our 5-year $5.0 billion revolving credit facility agreement, extending the maturity date by one year to March 2028, and our 364-day $5.0 billion credit facility agreement, extending the maturity date to March 2024. The revolving credit facilities had no borrowings outstanding as of July 1, 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.







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Note 11 : Fair Value
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Jul 1, 2023Dec 31, 2022
Fair Value Measured and Recorded at Reporting Date Using
 
Fair Value Measured and Recorded at Reporting Date Using 
(In Millions)
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Cash equivalents:
Corporate debt$ $1,077 $ $1,077 $ $856 $ $856 
Financial institution instruments¹3,046 1,587  4,633 6,899 1,474  8,373 
Reverse repurchase agreements 1,700  1,700  1,301  1,301 
Short-term investments:
Corporate debt 6,158  6,158  5,381  5,381 
Financial institution instruments¹96 3,731  3,827 196 4,729  4,925 
Government debt²49 5,874  5,923 48 6,840  6,888 
Other current assets:
Derivative assets197 963  1,160  1,264  1,264 
Loans receivable 55  55  53  53 
Marketable equity securities1,295   1,295 1,341   1,341 
Other long-term assets:
Derivative assets 5  5  10  10 
Total assets measured and recorded at fair value$4,683 $21,150 $ $25,833 $8,484 $21,908 $ $30,392 
Liabilities
Other accrued liabilities:
Derivative liabilities$ $446 $101 $547 $111 $485 $89 $685 
Other long-term liabilities:
Derivative liabilities 722  722  699  699 
Total liabilities measured and recorded at fair value$ $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 certificates of deposit, time deposits, and notes and bonds issued by financial institutions.
2Level 1 investments consist primarily of US Treasury securities. Level 2 investments consist primarily of non-US government debt.

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.
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 July 1, 2023 was $512 million (the aggregate carrying value as of December 31, 2022 was $437 million). We have no reverse repurchase agreements as of July 1, 2023 (the aggregate carrying value as of December 31, 2022 was $400 million).
We classify the fair value of issued debt (excluding any commercial paper) as Level 2. The fair value of our issued debt was $45.4 billion as of July 1, 2023 ($34.3 billion as of December 31, 2022).







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Note 12 : 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)
Jul 1, 2023Dec 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
 
Jul 1, 2023Dec 31, 2022
(In Millions)
Assets1
Liabilities2
Assets1
Liabilities2
Derivatives designated as hedging instruments:
Foreign currency contracts3
$144 $347 $142 $290 
Interest rate contracts
 798  777 
Total derivatives designated as hedging instruments
$144 $1,145 $142 $