Quarterly report pursuant to Section 13 or 15(d)

Investments

v3.7.0.1
Investments
 3 Months Ended
Apr. 01, 2017
Investments and Cash [Abstract]  
Investments [Text Block]
Note 7: Investments
Available-for-Sale Investments
 
 
April 1, 2017
 
December 31, 2016
(In Millions)
 
Adjusted Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Adjusted Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
Corporate debt
 
$
4,396

 
$
7

 
$
(10
)
 
$
4,393

 
$
3,847

 
$
4

 
$
(14
)
 
$
3,837

Financial institution instruments
 
4,708

 
8

 
(10
)
 
4,706

 
6,098

 
5

 
(11
)
 
6,092

Government debt
 
1,417

 
1

 
(7
)
 
1,411

 
1,581

 
—

 
(8
)
 
1,573

Marketable equity securities
 
2,649

 
4,182

 
—

 
6,831

 
2,818

 
3,363

 
(1
)
 
6,180

Total available-for-sale investments
 
$
13,170

 
$
4,198

 
$
(27
)
 
$
17,341

 
$
14,344

 
$
3,372

 
$
(34
)
 
$
17,682


Government debt includes instruments such as non-U.S. government bonds and U.S. 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. A substantial majority of time deposits were issued by institutions outside the U.S. as of April 1, 2017 (most time deposits were issued by institutions outside the U.S. as of December 31, 2016).
During the first three months of 2017, we sold available-for-sale investments for proceeds of $499 million ($2.9 billion in the first three months of 2016). The gross realized gains on sales of available-for-sale investments were $266 million in the first three months of 2017 ($86 million in the first three months of 2016).
The fair value of available-for-sale debt investments, by contractual maturity, as of April 1, 2017, were as follows:
(In Millions)
 
Fair Value
Due in 1 year or less
 
$
4,287

Due in 1–2 years
 
1,647

Due in 2–5 years
 
3,357

Due after 5 years
 
145

Instruments not due at a single maturity date
 
1,074

Total
 
$
10,510


Equity Method Investments
IM Flash Technologies, LLC
Since the inception of IM Flash Technologies, LLC (IMFT) in 2006, Micron Technology, Inc. (Micron) and Intel have jointly developed NAND flash memory and, most recently, 3D XPoint™ technology products. Intel also purchases jointly developed products directly from Micron under certain supply agreements.
As of April 1, 2017, we own a 49% interest in IMFT. The carrying value of our investment was $849 million as of April 1, 2017 ($849 million as of December 31, 2016) and is classified within other long-term assets.
IMFT is a variable interest entity and all costs of IMFT are passed on to Micron and Intel through sale of products or services in proportional share of ownership. Our portion of IMFT costs, primarily related to product purchases and production-related services, was approximately $130 million in the first three months of 2017 (approximately $100 million in the first three months of 2016). The amount due to IMFT for product purchases and services provided was approximately $117 million as of April 1, 2017 (approximately $95 million as of December 31, 2016).
IMFT depends on Micron and Intel for any additional cash needs. Our known maximum exposure to loss approximated the carrying value of our investment balance in IMFT. Except for the amount due to IMFT for product purchases and production-related services, we did not have any additional liabilities recognized on our consolidated condensed balance sheets in connection with our interests in this joint venture as of April 1, 2017. Our potential future losses could be higher than the carrying amount of our investment, as Intel and Micron are liable for other future operating costs or obligations of IMFT. Future cash calls could also increase our investment balance and the related exposure to loss. In addition, because we are currently committed to purchasing 49% of IMFT’s production output and production-related services, we may be required to purchase products at a cost in excess of realizable value.
Cloudera, Inc.
Our investment in Cloudera, Inc. (Cloudera) is accounted for under the equity and cost methods of accounting based on the rights associated with different instruments we own, and is classified within other long-term assets. Our fully diluted ownership interest in Cloudera is 16% as of April 1, 2017. The carrying value of our equity method investment was $215 million and of our cost method investment was $454 million as of April 1, 2017 ($225 million for our equity method investment and $454 million for our cost method investment as of December 31, 2016).
Non-marketable Cost Method Investments
Beijing UniSpreadtrum Technology Ltd.
During 2014, we entered into a series of agreements with Tsinghua Unigroup Ltd. (Tsinghua Unigroup), an operating subsidiary of Tsinghua Holdings Co. Ltd., to, among other things, jointly develop Intel® architecture- and communications-based solutions for phones. We agreed to invest up to 9.0 billion Chinese yuan (approximately $1.5 billion as of the date of the agreement) for a minority stake of approximately 20% of Beijing UniSpreadtrum Technology Ltd., a holding company under Tsinghua Unigroup. During 2015, we invested $966 million to complete the first phase of the equity investment and accounted for our interest using the cost method of accounting.
Trading Assets
Net gains related to trading assets still held at the reporting date were $217 million in the first three months of 2017 (net gains of $243 million in the first three months of 2016). Net losses on the related derivatives were $186 million in the first three months of 2017 (net losses of $234 million in the first three months of 2016).