Annual report pursuant to Section 13 and 15(d)

Investments

v3.10.0.1
Investments
12 Months Ended
Dec. 29, 2018
Investments [Abstract]  
Investments [Text Block]

DEBT INVESTMENTS
Trading Assets
Net losses related to trading assets still held at the reporting date were $188 million in 2018 (net gains of $414 million in 2017 and net losses of $295 million in 2016). Net gains on the related derivatives were $163 million in 2018 (net losses of $422 million in 2017 and net gains of $300 million in 2016).
Available-for-Sale Debt Investments
 
 
December 29, 2018
 
December 30, 2017

(In Millions)
 
Adjusted
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Adjusted
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Corporate debt
 
$
3,068

 
$
2

 
$
(28
)
 
$
3,042

 
$
2,294

 
$
4

 
$
(13
)
 
$
2,285

Financial institution instruments
 
3,076

 
3

 
(11
)
 
3,068

 
3,387

 
3

 
(9
)
 
3,381

Government debt
 
1,069

 
1

 
(9
)
 
1,061

 
961

 

 
(6
)
 
955

Total available-for-sale debt investments
 
$
7,213

 
$
6

 
$
(48
)
 
$
7,171

 
$
6,642

 
$
7

 
$
(28
)
 
$
6,621


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. Substantially all time deposits were issued by institutions outside the U.S. as of December 29, 2018 and December 30, 2017.
The fair values of available-for-sale debt investments by contractual maturity as of December 29, 2018 were as follows:
(In Millions)
 
Fair Value
Due in 1 year or less
 
$
3,233

Due in 1–2 years
 
404

Due in 2–5 years
 
2,776

Due after 5 years
 
208

Instruments not due at a single maturity date
 
550

Total
 
$
7,171


EQUITY INVESTMENTS
(In Millions)
 
Dec 29,
2018
 
Dec 30,
2017
Marketable equity securities
 
$
1,440

 
$
4,192

Non-marketable equity securities
 
2,978

 
2,613

Equity method investments
 
1,624

 
1,774

Total
 
$
6,042

 
$
8,579


The components of gains (losses) on equity investments, net for each period were as follows:
Years Ended
(In Millions)
 
Dec 29,
2018
 
Dec 30,
2017
 
Dec 31,
2016
Ongoing mark-to-market adjustments on marketable equity securities1
 
$
(129
)
 
$

 
$

Observable price adjustments on non-marketable equity securities1
 
202

 

 

Impairment charges
 
(424
)
 
(833
)
 
(187
)
Sale of equity investments and other 2
 
226

 
3,484

 
693

Total gains (losses) on equity investments, net
 
$
(125
)

$
2,651


$
506


1 
Ongoing mark-to-market adjustments and observable price adjustments relate to the new financial instruments standard adopted in the first quarter of 2018, and are not applicable in prior periods.
2 
Sale of equity investments and other includes realized gains (losses) on sales of non-marketable equity investments, our share of equity method investee gains (losses), and initial fair value adjustments recorded upon a security becoming marketable. In 2017 and 2016, sales of equity investments and other also includes realized gains (losses) on sales of available-for-sale equity securities, which are now reflected in ongoing mark-to-market adjustments on marketable equity securities.
In 2018, we recognized $202 million in upward observable price adjustments and there were no downward adjustments. Observable price adjustments are not applicable to prior periods. We also recognized impairments of $132 million on non-marketable equity securities ($555 million in 2017 and $184 million in 2016).
In 2018, we recognized $153 million in equity method investee losses ($223 million in 2017 and $38 million in 2016).
In 2017 and 2016, we recognized $3.4 billion and $407 million, respectively, in realized gains on sales of a portion of our interest in ASML Holding N.V. (ASML). During the second quarter of 2017, we determined we had an other-than-temporary decline in the fair value of our investment in Cloudera, Inc. and recognized an impairment charge of $278 million.
Gains and losses for our marketable and non-marketable equity securities during the period were as follows:
(In Millions)
 
Dec 29,
2018
Net gains (losses) recognized during the period on equity securities
 
$
298

Less: Net (gains) losses recognized during the period on equity securities sold during the period
 
(445
)
Unrealized gains (losses) recognized during the period on equity securities still held at the reporting date
 
$
(147
)

Equity method investments at the end of each period were as follows:
 
 
December 29, 2018
 
December 30, 2017
(Dollars In Millions)
 
Carrying
Value
 
Ownership
Percentage
 
Carrying
Value
 
Ownership
Percentage
IM Flash Technologies, LLC
 
$
1,574

 
49
%
 
$
1,505

 
49
%
McAfee
 

 
49
%
 
153

 
49
%
Other equity method investments
 
50

 
 
 
116

 
 
Total
 
$
1,624

 
 
 
$
1,774

 
 


IM Flash Technologies, LLC
IM Flash Technologies, LLC (IMFT) was formed in 2006 by Micron Technology, Inc. (Micron) and Intel to jointly develop NAND flash memory and 3D XPoint™ technology products. IMFT is an unconsolidated 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. As of December 29, 2018, we own a 49% interest in IMFT. Our portion of IMFT costs was approximately $494 million in 2018 (approximately $415 million in 2017 and $400 million in 2016).
IMFT depends on Micron and Intel for any additional cash needs to be provided in the form of cash calls or member debt financing (MDF). Extensions of MDF may be converted to a capital contribution at the lender's request, or may be repaid upon availability of funds.
In July 2018, Intel and Micron announced that they agreed to complete joint development for the second generation of 3D XPoint technology, which is expected to occur in the first half of 2019 and technology development beyond that generation will be pursued independently by the two companies to optimize the technology for their respective product and business needs. We recognized an impairment charge of $290 million million during the third quarter of 2018. This reduced the carrying value of our equity method investment in IMFT to $1.6 billion in line with our expectation of future cash flows. In January 2019, Micron exercised its right to call our interest in IMFT. The call transaction will close between six and twelve months from the date Micron exercised the call option. We will continue to purchase product manufactured at the IMFT facility for a period of up to one year following the close date.
McAfee
During the second quarter of 2017, we closed our divestiture of the ISecG business and retained a 49% interest in McAfee as partial consideration. Our investment is accounted for under the equity method of accounting. During the third quarter of 2017, we received a $735 million dividend from McAfee. For further information related to the divestiture of the ISecG business, see "Note 11: Acquisitions and Divestitures."
Beijing Unisoc Technology Ltd. (Unisoc)
During 2014, we entered into an agreement with Tsinghua Unigroup Ltd. (Tsinghua Unigroup), an operating subsidiary of Tsinghua Holdings Co. Ltd., to jointly develop Intel® architecture- and communications-based solutions for phones. During 2015, we invested $966 million for a minority stake of Beijing UniSpreadtrum Technology Ltd, a holding company under Tsinghua Unigroup. During 2017, we reduced our expectation of the company's future operating performance due to competitive pressures, which resulted in an impairment charge of $308 million. During 2018, Beijing UniSpreadtrum Technology Ltd and RDA Microelectronics merged and rebranded themselves as Beijing Unisoc Technology Ltd. (Unisoc). We account for our interest in Unisoc as a non-marketable equity security.