Quarterly report pursuant to Section 13 or 15(d)

Operating Segments

Operating Segments
9 Months Ended
Sep. 26, 2020
Segment Reporting [Abstract]  
Operating Segments [Text Block]
We manage our business through the following operating segments:
We derive a substantial majority of our revenue from platform products, which are our principal products and considered as one class of product. We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package. Platform products are used in various form factors across our DCG, IOTG, and CCG operating segments. Our non-platform, or adjacent products, can be combined with platform products to form comprehensive platform solutions to meet customer needs.
DCG and CCG are our reportable operating segments. IOTG, Mobileye, NSG, 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. Our Internet of Things portfolio, presented as Internet of Things, is comprised of IOTG and Mobileye 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;
historical results of operations from divested businesses;
results of operations of start-up businesses that support our initiatives, including our foundry business;
amounts included within restructuring and other charges;
a portion of employee benefits, compensation, 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, does not evaluate operating segments using discrete asset information. 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. 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:
Three Months Ended Nine Months Ended
(In Millions)
Sep 26, 2020 Sep 28, 2019 Sep 26, 2020 Sep 28, 2019
Net revenue:
Data Center Group
Platform $ 5,151  $ 5,819  $ 17,759  $ 14,854 
Adjacent 754  564  2,256  1,414 
5,905  6,383  20,015  16,268 
Internet of Things
IOTG 677  1,005  2,230  2,901 
Mobileye 234  229  634  639 
911  1,234  2,864  3,540 
Non-Volatile Memory Solutions Group 1,153  1,290  4,150  3,145 
Programmable Solutions Group 411  507  1,431  1,482 
Client Computing Group
Platform 8,762  8,379  25,703  24,128 
Adjacent 1,085  1,330  3,415  3,008 
9,847  9,709  29,118  27,136 
All other 106  67  311  185 
Total net revenue $ 18,333  $ 19,190  $ 57,889  $ 51,756 
Operating income (loss):
Data Center Group $ 1,903  $ 3,115  8,494  $ 6,756 
Internet of Things
IOTG 61  309  374  854 
Mobileye 47  67  131  188 
108  376  505  1,042 
Non-Volatile Memory Solutions Group 29  (499) 285  (1,080)
Programmable Solutions Group 40  92  217  233 
Client Computing Group 3,554  4,305  10,621  11,114 
All other (575) (942) (2,328) (2,827)
Total operating income $ 5,059  $ 6,447  $ 17,794  $ 15,238 
Disaggregated net revenue for each period was as follows:
Three Months Ended Nine Months Ended
(In Millions)
Sep 26, 2020 Sep 28, 2019 Sep 26, 2020 Sep 28, 2019
Platform revenue
DCG platform $ 5,151  $ 5,819  $ 17,759  $ 14,854 
IOTG platform 595  923  2,008  2,639 
CCG desktop platform 2,483  2,968  7,691  8,621 
CCG notebook platform 6,275  5,393  17,976  15,456 
CCG other platform1
18  36  51 
14,508  15,121  45,470  41,621 
Adjacent revenue2
3,825  4,069  12,419  10,135 
Total revenue $ 18,333  $ 19,190  $ 57,889  $ 51,756 
1    Includes our tablet and service provider revenue.
2    Includes all of our non-platform products for DCG, IOTG, and CCG such as modem, Ethernet, and silicon photonics, as well as Mobileye, NSG, and PSG products.
Planned divestiture of NAND Memory Business
On October 19, 2020, we signed an agreement with SK hynix Inc. (SK hynix), to divest of our NAND memory business, including our NAND memory fabrication facility in Dalian, China and certain related equipment and tangible assets (the “Fab Assets”), our NAND solid-state drive business (the “NAND SSD Business”), and our NAND memory technology and manufacturing business (the “NAND Business”). Our Intel® Optane™ memory business is expressly excluded from the transaction.
The transaction will occur over two closings for total consideration of $9.0 billion in cash, of which, $7.0 billion will be received upon initial closing and the remaining $2.0 billion will be received no earlier than March 2025.
In connection with the first closing, we and certain affiliates of SK hynix will also enter into a NAND wafer manufacturing and sale agreement pursuant to which, we will manufacture and sell to SK hynix, NAND memory wafers to be manufactured using the Fab Assets in Dalian, China, until the second closing.
The consummation of the first closing and the second closing is subject to customary conditions, including the receipt of certain governmental approvals. The first closing will not occur prior to November 1, 2021, and the second is expected to occur no earlier than March 2025.
Beginning with the first quarter of 2021, we expect our DCG operating segment to include the results of our Intel® Optane™ memory business, and our NSG segment will be composed of our NAND businesses.