Annual report pursuant to Section 13 and 15(d)

Operating Segments and Geographic Information

v3.6.0.2
Operating Segments and Geographic Information
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Operating Segments and Geographic Information [Text Block]
Note 4: Operating Segments and Geographic Information
Our operating segments as of December 31, 2016 included:
•    Client Computing Group (CCG)
  
•    Intel Security Group (ISecG)
•    Data Center Group (DCG)
  
•    Programmable Solutions Group (PSG)
•    Internet of Things Group (IOTG)
  
•    All Other
•    Non-Volatile Memory Solutions Group (NSG)
  
•    New Technology Group (NTG)
During the first quarter of 2016, we formed PSG as a result of our acquisition of Altera Corporation (Altera). For further information, see "Note 10: Acquisitions and Divestitures." All prior-period amounts have been retrospectively adjusted to reflect the way we internally manage and monitor segment performance starting in fiscal year 2016.
In the third quarter of 2016, we announced our planned divestiture of ISecG, which we expect to complete in the second quarter of 2017. For further information, see "Note 10: Acquisitions and Divestitures."
The Chief Operating Decision Maker (CODM) is our Chief Executive Officer (CEO). The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss).
We manage our business activities primarily based on a product segmentation basis. We derive a substantial majority of our revenue from platforms, which is our principal product and source of revenue across our CCG, DCG, and IOTG operating segments.
CCG and DCG are our reportable operating segments. IOTG, NSG, ISecG, and PSG do not meet the quantitative thresholds to qualify as reportable operating segments; however, we have elected to disclose the results of these non-reportable operating segments. The NTG operating segment does not meet the quantitative thresholds to qualify as a reportable segment and NTG results are included within the "all other" category.
We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments.
The "all other" category includes revenue and expenses such as:
•
results of operations from NTG;
•
amounts included within restructuring and other charges;
•
a portion of employee benefits, compensation, and other expenses not allocated to the operating segments;
•
divested businesses for which discrete operating results are not regularly reviewed by our CODM;
•
results of operations of start-up businesses that support our initiatives, including our foundry business; and
•
acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
The CODM does not evaluate operating segments using discrete asset information. 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. As 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. Operating segments do not record inter-segment revenue. 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 for these differences, the accounting policies for segment reporting are the same as for Intel as a whole.
Net revenue and operating income (loss) for each period were as follows:
Years Ended
(In Millions)
 
Dec 31,
2016
 
Dec 26,
2015
 
Dec 27,
2014
Net revenue:
 
 
 
 
 
 
Client Computing Group
 
 
 
 
 
 
Platform

$
30,751


$
30,680


$
33,235

Other

2,157


1,539


1,637

 
 
32,908

 
32,219

 
34,872

Data Center Group
 
 
 
 
 
 
Platform
 
15,895

 
14,856

 
13,341

Other
 
1,341

 
1,125

 
1,055

 
 
17,236

 
15,981

 
14,396

Internet of Things Group
 
 
 
 
 
 
Platform
 
2,290

 
1,976

 
1,814

Other
 
348

 
322

 
328

 
 
2,638

 
2,298

 
2,142

Non-Volatile Memory Solutions Group
 
2,576

 
2,597

 
2,146

Intel Security Group
 
2,161

 
1,985

 
2,010

Programmable Solutions Group
 
1,669

 
—

 
—

All other
 
199

 
275

 
304

Total net revenue
 
$
59,387

 
$
55,355

 
$
55,870

 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
Client Computing Group
 
$
10,646

 
$
8,166

 
$
10,327

Data Center Group
 
7,520

 
7,847

 
7,380

Internet of Things Group
 
585

 
515

 
583

Non-Volatile Memory Solutions Group
 
(544
)
 
239

 
255

Intel Security Group
 
400

 
213

 
164

Programmable Solutions Group
 
(104
)
 
—

 
—

All other
 
(5,629
)
 
(2,978
)
 
(3,362
)
Total operating income
 
$
12,874

 
$
14,002

 
$
15,347


For 2016, our three largest customers accounted for 38% of our net revenue, with Dell Inc. (Dell) accounting for 15%, Lenovo Group Limited (Lenovo) accounting for 13%, and HP Inc. accounting for 10%. These three customers accounted for 31% of our accounts receivable as of December 31, 2016. Hewlett-Packard Company, our largest customer in 2014, separated into HP Inc. and Hewlett Packard Enterprise Company on November 1, 2015. In 2015, Hewlett-Packard Company, HP Inc., and Hewlett Packard Enterprise Company collectively accounted for 18% of our net revenue (18% in 2014), Dell accounted for 15% (16% in 2014), and Lenovo accounted for 13% (12% in 2014). Combined, these customers accounted for 46% of our net revenue in 2015 (46% in 2014) and 49% of our accounts receivable as of December 26, 2015. Substantially all of the revenue from these customers was from the sale of platforms and other components by the CCG and DCG operating segments.
Net revenue by country as presented below is based on the billing location of the customer. Revenue from unaffiliated customers for each period was as follows:
Years Ended
(In Millions)
 
Dec 31,
2016
 
Dec 26,
2015
 
Dec 27,
2014
China (including Hong Kong)
 
$
13,977

 
$
11,679

 
$
11,197

United States
 
12,957

 
11,121

 
9,828

Singapore
 
12,780

 
11,544

 
11,573

Taiwan
 
9,953

 
10,661

 
8,955

Other countries
 
9,720

 
10,350

 
14,317

Total net revenue
 
$
59,387

 
$
55,355

 
$
55,870


Net property, plant and equipment by country at the end of each period was as follows:
(In Millions)
 
Dec 31,
2016
 
Dec 26,
2015
 
Dec 27,
2014
United States
 
$
23,598

 
$
22,611

 
$
24,020

Ireland
 
4,865

 
5,789

 
5,433

Israel
 
3,923

 
1,661

 
1,957

Other countries
 
3,785

 
1,797

 
1,828

Total property, plant and equipment, net
 
$
36,171

 
$
31,858

 
$
33,238