Investments |
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| Investments [Text Block] |
Note 9: Investments
Available-for-Sale Investments
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. Most time deposits were issued by institutions outside the U.S. as of December 31, 2016 (substantially all as of December 26, 2015).
During 2016, we sold available-for-sale investments for proceeds of $4.1 billion, ($2.2 billion in 2015 and $1.7 billion in 2014). The gross realized gains on sales of available-for-sale investments were $538 million in 2016 ($133 million in 2015 and $136 million in 2014).
The fair value of available-for-sale debt investments, by contractual maturity, as of December 31, 2016 were as follows:
Equity Method Investments
Equity method investments, classified within other long-term assets, at the end of each period were as follows:
IM Flash Technologies, LLC
Since the inception of IM Flash Technologies, LLC (IMFT) in 2006, Micron Technology, Inc. (Micron) and Intel have jointly developed NAND flash memory and, most recently, 3D XPoint technology products. Intel also purchases jointly developed products directly from Micron under certain supply agreements.
The IMFT operating agreement, most recently amended in January 2016, continues through 2024 unless earlier terminated under certain terms and conditions, and provides for certain buy-sell rights of the joint venture. Intel has the right to cause Micron to buy our interest in IMFT. If we exercise this right, Micron would set the closing date of the transaction within two years following such election and could elect to receive financing from us for one to two years. Subsequent to our put right, and commencing in January 2019, Micron has the right to call our interest in IMFT with the closing date to be effective within one year.
IMFT is a 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. Our portion of IMFT costs, primarily related to product purchases and production-related services, was approximately $400 million in 2016 (approximately $400 million in 2015 and approximately $400 million in 2014). The amount due to IMFT for product purchases and services provided was approximately $95 million as of December 31, 2016 (approximately $20 million as of December 26, 2015). IMFT returned $71 million to Intel in 2016, which is reflected within investing activities on the consolidated statements of cash flows (none in 2015 and $6 million in 2014).
IMFT depends on Micron and Intel for any additional cash needs. Our known maximum exposure to loss approximated the carrying value of our investment balance in IMFT, which was $849 million as of December 31, 2016. Except for the amount due to IMFT for product purchases and production-related services, we did not have any additional liabilities recognized on our consolidated balance sheets in connection with our interests in this joint venture as of December 31, 2016. Our potential future losses could be higher than the carrying amount of our investment, as Intel and Micron are liable for other future operating costs or obligations of IMFT. Future cash calls could also increase our investment balance and the related exposure to loss. In addition, because we are currently committed to purchasing 49% of IMFT’s production output and production-related services, we may be required to purchase products at a cost in excess of realizable value.
We have determined that we do not have the characteristics of a consolidating investor in the variable interest entity and, therefore, we account for our interest in IMFT using the equity method of accounting.
Cloudera, Inc.
Our investment in Cloudera, Inc. (Cloudera) is accounted for under the equity and cost methods of accounting based on the rights associated with different instruments we own, and is classified within other long-term assets. The carrying value of our equity method investment was $225 million and of our cost method investment was $454 million as of December 31, 2016 ($256 million for our equity method investment and $454 million for our cost method investment as of December 26, 2015).
Non-marketable Cost Method Investments
The carrying value of our non-marketable cost method investments was $3.1 billion as of December 31, 2016 ($2.9 billion as of December 26, 2015), of which $454 million and $966 million related to our cost method investments in Cloudera and Beijing UniSpreadtrum Technology Ltd. (UniSpreadtrum), respectively. In 2016, we recognized impairments of $178 million on non-marketable cost method investments ($164 million in 2015 and $130 million in 2014).
Beijing UniSpreadtrum Technology Ltd.
During 2014, we entered into a series of agreements with Tsinghua Unigroup Ltd. (Tsinghua Unigroup), an operating subsidiary of Tsinghua Holdings Co. Ltd., to, among other things, jointly develop Intel architecture- and communications-based solutions for phones. We agreed to invest up to 9.0 billion Chinese yuan (approximately $1.5 billion as of the date of the agreement) for a minority stake of approximately 20% of UniSpreadtrum, a holding company under Tsinghua Unigroup. During 2015, we invested $966 million to complete the first phase of the equity investment and accounted for our interest using the cost method of accounting.
Trading Assets
Net losses related to trading assets still held at the reporting date were $295 million in 2016 (net losses of $152 million in 2015 and net losses of $530 million in 2014). Net gains on the related derivatives were $300 million in 2016 (net gains of $137 million in 2015 and $525 million in 2014).
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