Quarterly report pursuant to Section 13 or 15(d)

Investments

v3.22.2.2
Investments
9 Months Ended
Oct. 01, 2022
Investments and Cash [Abstract]  
Investments
Note 6 : Investments
Short-term Investments
Short-term investments include marketable debt investments in corporate debt, government debt, and financial institution instruments. 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. As of October 1, 2022 and December 25, 2021, substantially all time deposits were issued by institutions outside the U.S.
For certain of our marketable debt investments, we economically hedge market risks at inception with a related derivative instrument or the marketable debt investment itself is used to economically hedge currency exchange rate risk from remeasurement. These hedged investments are reported at fair value with gains or losses from the investments and the related derivative instruments recorded in Interest and other, net. The fair value of our hedged investments was $16.6 billion as of October 1, 2022 and $21.5 billion as of December 25, 2021. For hedged investments still held at the reporting date, we recorded net losses of $861 million in the third quarter of 2022 and net losses of $1.8 billion in the first nine months of 2022 ($144 million of net losses in the third quarter of 2021 and $329 million of net losses in the first nine months of 2021). We recorded net gains on the related derivatives of $916 million in the third quarter of 2022 and net gains of $1.8 billion in the first nine months of 2022 ($156 million of net gains in the third quarter of 2021 and $346 million of net gains in the first nine months of 2021).
Our remaining unhedged marketable debt investments are reported at fair value, with unrealized gains or losses, net of tax, recorded in accumulated other comprehensive income (loss). The adjusted cost of these investments was $3.6 billion as of October 1, 2022 and $5.0 billion as of December 25, 2021, which approximated the fair value for these periods.
The fair value of marketable debt investments, by contractual maturity, as of October 1, 2022, was as follows:
(In Millions) Fair Value
Due in 1 year or less
$ 11,457 
Due in 1–2 years
2,208 
Due in 2–5 years
4,962 
Due after 5 years
720 
Instruments not due at a single maturity date
861 
Total $ 20,208 
Equity Investments
(In Millions) Oct 1, 2022 Dec 25, 2021
Marketable equity securities
$ 1,185  $ 2,171 
Non-marketable equity securities
4,626  4,111 
Equity method investments
11  16 
Total $ 5,822  $ 6,298 
The components of gains (losses) on equity investments, net for each period were as follows:
  Three Months Ended Nine Months Ended
(In Millions)
Oct 1, 2022 Sep 25, 2021 Oct 1, 2022 Sep 25, 2021
Ongoing mark-to-market adjustments on marketable equity securities
$ (244) $ (192) $ (883) $ (345)
Observable price adjustments on non-marketable equity securities
67  79  273  702 
Impairment charges
(45) (38) (112) (111)
Sale of equity investments and other¹ 71  1,858  4,804  2,124 
Total gains (losses) on equity investments, net $ (151) $ 1,707  $ 4,082  $ 2,370 
1 Sale of equity investments and other, includes realized gains (losses) on sales of non-marketable equity investments, our share of equity method investees' gains (losses) and distributions, and initial fair value adjustments recorded upon a security becoming marketable.
Gains and losses for our marketable and non-marketable equity securities for each period were as follows:
Three Months Ended Nine Months Ended
(In Millions) Oct 1, 2022 Sep 25, 2021 Oct 1, 2022 Sep 25, 2021
Net gains (losses) recognized during the period on equity securities
$ (154) $ 346  $ (490) $ 883 
Less: Net (gains) losses recognized during the period on equity securities sold during the period (46) 15  (189)
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ (153) $ 300  $ (475) $ 694 
McAfee Corp.
McAfee Corp. (McAfee) completed its initial public offering in October 2020. Due to our 41% ownership and significant influence as of December 25, 2021, we accounted for our investment in McAfee as an equity method investment. We had no accounting carrying value as of December 25, 2021.
In the first nine months of 2022, the sale of McAfee to an investor group was completed and we received $4.6 billion in cash for the sale of our remaining share of McAfee, recognizing a $4.6 billion gain in Sale of equity investments and other.
Beijing Unisoc Technology Ltd.
We account for our interest in Beijing Unisoc Technology Ltd. (Unisoc) as a non-marketable equity security. In the first nine months of 2021, we recognized $471 million of observable price adjustments for our investment in Unisoc. As of October 1, 2022 the carrying value of the investment was $1.1 billion ($1.1 billion as of December 25, 2021).