Annual report pursuant to Section 13 and 15(d)

Investments

v3.22.4
Investments
 12 Months Ended
Dec. 31, 2022
Investments [Abstract]  
Investments [Text Block]
Note 9 : 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-US government bonds and US 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 December 31, 2022 and December 25, 2021, substantially all time deposits were issued by institutions outside the US.
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 $16.2 billion as of December 31, 2022 ($21.5 billion as of December 25, 2021). For hedged investments still held at the reporting date, we recorded net losses of $748 million in 2022 (net losses of $606 million in 2021 and net gains of $694 million in 2020). Net gains on the related derivatives were $752 million in 2022 (net gains of $609 million in 2021 and net losses of $667 million in 2020).
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 our unhedged investments was $10.2 billion as of December 31, 2022 ($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 December 31, 2022, was as follows:
(In Millions) Fair Value
Due in 1 year or less $ 12,680 
Due in 1–2 years 1,844 
Due in 2–5 years 4,139 
Due after 5 years 665 
Instruments not due at a single maturity date 7,095 
Total $ 26,423 
Equity Investments
(In Millions)
 Dec 31, 2022 Dec 25, 2021
Marketable equity securities1
$ 1,341  $ 2,171 
Non-marketable equity securities
 4,561  4,111 
Equity method investments
 10  16 
Total $ 5,912  $ 6,298 
1    Over 90% of our marketable equity securities are subject to trading-volume or market-based restrictions, which limit the number of shares we may sell in a specified period of time, impacting our ability to liquidate these investments. The trading volume restrictions generally apply for as long as we own more than 1% of the outstanding shares. Market-based restrictions result from the rules of the respective exchange.
The components of gains (losses) on equity investments, net for each period were as follows:
Years Ended (In Millions) Dec 31, 2022 Dec 25, 2021 Dec 26, 2020
Ongoing mark-to-market adjustments on marketable equity securities
 $ (787) $ (130) $ (133)
Observable price adjustments on non-marketable equity securities 299  750  176 
Impairment charges (190) (154) (303)
Sale of equity investments and other 1
4,946  2,263  2,164 
Total gains (losses) on equity investments, net $ 4,268  $ 2,729  $ 1,904 
1    Sale of equity investments and other includes initial fair value adjustments recorded upon a security becoming marketable, realized gains (losses) on sales of non-marketable equity investments and equity method investments, and our share of equity method investee gains (losses) and distributions.
In 2022, we recognized impairments of $190 million on non-marketable equity securities ($154 million in 2021 and $290 million in 2020).
As of December 31, 2022, the cumulative amount of impairments for equity securities without readily determinable fair value was $955 million ($916 million as of December 25, 2021) and upward observable price adjustments were $1.4 billion ($1.1 billion as of December 25, 2021).
Net unrealized gains and losses for our marketable and non-marketable equity securities during each period were as follows:
(In Millions) Dec 31, 2022 Dec 25, 2021 Dec 26, 2020
Net unrealized gains (losses) recognized during the period on equity securities $ (314) $ 1,210  $ 1,679 
Less: Net (gains) losses recognized during the period on equity securities sold during the period 1  (259) (254)
Net unrealized gains (losses) recognized during the period on equity securities still held at the reporting date $ (313) $ 951  $ 1,425 
McAfee Corp.
McAfee Corp. (McAfee) completed its IPO 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.
During 2022, the sale of McAfee's consumer business 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. In 2021, we recognized McAfee dividends of $1.3 billion, which included a special dividend of $1.1 billion paid in connection with the sale of McAfee's enterprise business, and recognized $228 million related to the partial sale of our investment in McAfee. We recognized McAfee dividends of $126 million in 2020.
Beijing Unisoc Technology Ltd.
We account for our interest in Beijing Unisoc Technology Ltd. (Unisoc) as a non-marketable equity security. During 2021, we recognized $471 million in observable price adjustments in our investment in Unisoc and as of December 31, 2022, the net book value of the investment was $1.1 billion ($1.1 billion as of December 25, 2021).