Annual report pursuant to Section 13 and 15(d)

Investments

v3.19.3.a.u2
Investments
 12 Months Ended
Dec. 28, 2019
Investments [Abstract]  
Investments [Text Block]
NOTE 10 :
INVESTMENTS

DEBT INVESTMENTS
Trading Assets
Net gains related to trading assets still held at the reporting date were $26 million in 2019 (net losses of $188 million in 2018 and net gains of $414 million in 2017). Net gains on the related derivatives were $22 million in 2019 (net gains of $163 million in 2018 and net losses of $422 million in 2017).
Available-for-Sale Debt Investments
 
 
December 28, 2019
 
December 29, 2018
(In Millions)
 
Adjusted
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Adjusted
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Corporate debt
 
$
2,914

 
$
44

 
$
—

 
$
2,958

 
$
3,068

 
$
2

 
$
(28
)
 
$
3,042

Financial institution instruments
 
3,007

 
15

 
(1
)
 
3,021

 
3,076

 
3

 
(11
)
 
3,068

Government debt
 
560

 
4

 
—

 
564

 
1,069

 
1

 
(9
)
 
1,061

Total available-for-sale debt investments
 
$
6,481

 
$
63

 
$
(1
)
 
$
6,543

 
$
7,213

 
$
6

 
$
(48
)
 
$
7,171


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 28, 2019 and December 29, 2018.
The fair values of available-for-sale debt investments by contractual maturity as of December 28, 2019 were as follows:
(In Millions)
 
Fair Value
Due in 1 year or less
 
$
2,203

Due in 1–2 years
 
1,065

Due in 2–5 years
 
2,171

Due after 5 years
 
40

Instruments not due at a single maturity date
 
1,064

Total
 
$
6,543


EQUITY INVESTMENTS
(In Millions)
 
Dec 28,
2019
 
Dec 29,
2018
Marketable equity securities
 
$
450

 
$
1,440

Non-marketable equity securities
 
3,480

 
2,978

Equity method investments
 
37

 
1,624

Total
 
$
3,967

 
$
6,042


The components of gains (losses) on equity investments, net for each period were as follows:
Years Ended (In Millions)
 
Dec 28,
2019
 
Dec 29,
2018
 
Dec 30,
2017
Ongoing mark-to-market adjustments on marketable equity securities1
 
$
277

 
$
(129
)
 
—

Observable price adjustments on non-marketable equity securities1
 
293

 
202

 
—

Impairment charges
 
(122
)
 
(424
)
 
(833
)
Sale of equity investments and other 2
 
1,091

 
226

 
3,484

Total gains (losses) on equity investments, net
 
$
1,539

 
$
(125
)
 
$
2,651


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, sales of equity investments and other also included realized gains (losses) on sales of available-for-sale equity securities, which are reflected in ongoing mark-to-market adjustments on marketable equity securities subsequent to 2017.
In 2019, we recognized $293 million in observable price adjustments ($202 million in observable price adjustments in 2018).
In 2019, we also recognized impairments of $122 million on non-marketable equity securities ($132 million in 2018 and $555 million in 2017). 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.
In 2019, we recognized no equity method investee losses ($153 million in 2018 and $223 million in 2017).
Gains and losses for our marketable and non-marketable equity securities during each period were as follows:
(In Millions)
 
Dec 28,
2019
 
Dec 29,
2018
Net gains (losses) recognized during the period on equity securities
 
$
734

 
$
298

Less: Net (gains) losses recognized during the period on equity securities sold during the period
 
(424
)
 
(445
)
Unrealized gains (losses) recognized during the period on equity securities still held at the reporting date
 
$
310

 
$
(147
)

ASML
As of December 29, 2018, Intel owned $1.1 billion of shares in ASML, all of which we sold in 2019. During 2017, we recognized $3.4 billion in realized gains on sales of a portion of our interest in ASML.
IMFT
IMFT was formed in 2006 by Micron and Intel to jointly develop NAND flash memory and 3D XPoint™ technology products. IMFT was an unconsolidated variable interest entity and all costs of IMFT were passed on to Micron and Intel through sale of products or services in proportional share of ownership. IMFT depended on Micron and Intel for any additional cash needs to be provided in the form of cash calls or MDF. During the third quarter of 2018, we recognized an impairment charge of $290 million related to IMFT. As of December 29, 2018, we had a carrying value of $1.6 billion in IMFT and owned a 49% interest in the entity. Our proportional share of IMFT costs was approximately $550 million in 2019 (approximately $494 million in 2018 and $415 million in 2017).
In January 2019, Micron exercised its right to call our interest in IMFT and on October 31, 2019, Intel sold its non-controlling interest in IMFT to Micron. With the sale of our interest in IMFT and MDF repayment throughout the year, we received $1.7 billion in cash proceeds during 2019. With the sale of our interest, we reported a gain of $107 million in the fourth quarter of 2019. We will continue to purchase products manufactured by Micron at the IMFT facility under established supply agreements.
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 2019, we received $632 million in dividend distributions from McAfee. During 2017, we received $735 million in dividend distributions from McAfee. As of December 28, 2019, we had no accounting carrying value in McAfee. For further information related to the divestiture of the ISecG business, see "Note 11: Acquisitions and Divestitures."
Beijing Unisoc Technology Ltd. (Unisoc)
During 2015, we invested $966 million for a minority stake of Beijing UniSpreadtrum Technology Ltd., a holding company under Tsinghua Unigroup Ltd. 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. Beijing UniSpreadtrum Technology Ltd. and RDA Microelectronics subsequently merged and rebranded themselves as Unisoc. We account for our interest in Unisoc as a non-marketable equity security. The second phase of the investment required additional funding of approximately $500 million. However, as of October 2019, this obligation has been terminated by mutual agreement.