Intel Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Operating Segments

Operating Segments

12 Months Ended

Dec. 29, 2018



NOTE 4 :	OPERATING SEGMENTS

We manage our business through the following operating segments:

• Client Computing Group (CCG)

• Data Center Group (DCG)

• Internet of Things Group (IOTG)

• Non-Volatile Memory Solutions Group (NSG)

• Programmable Solutions Group (PSG)

• All other

We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. A platform product may be enhanced by additional hardware, software, and services offered by Intel. Platform products are used in various form factors across our CCG, DCG, and IOTG 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.

CCG and DCG are our reportable operating segments. IOTG, 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.

We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments.

The "all other" category includes revenue and expenses such as:


•	results of operations from non-reportable segments not otherwise presented, including Mobileye results;


•	historical results of operations from divested businesses, including Intel Security Group (ISecG) results;


•	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 Chief Operating Decision Maker (CODM), which is our Chief Executive Officer (CEO), allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss). The CODM does not evaluate operating segments using discrete asset information and we do not identify or allocate assets by operating segments. Based on the interchangeable nature of our manufacturing and assembly and test assets, most of the related depreciation expense is not directly identifiable within our operating segments, as it is included in overhead cost pools and subsequently absorbed into inventory as each product passes through our manufacturing process. As our products are then sold across multiple operating segments, it is impracticable to determine the total depreciation expense included as a component of each operating segment’s operating income (loss) results. 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. Except for these differences, 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:



Years Ended (In Millions)	Dec 29, 2018			Dec 30, 2017			Dec 31, 2016
Net revenue:
Client Computing Group
Platform	$	33,234		$	31,226		$	30,751
Adjacent	3,770			2,777			2,157
	37,004			34,003			32,908
Data Center Group
Platform	21,155			17,439			15,895
Adjacent	1,836			1,625			1,341
	22,991			19,064			17,236
Internet of Things Group
Platform	3,065			2,645			2,290
Adjacent	390			524			348
	3,455			3,169			2,638
Non-Volatile Memory Solutions Group	4,307			3,520			2,576
Programmable Solutions Group	2,123			1,902			1,669
All other	968			1,103			2,360
Total net revenue	$	70,848		$	62,761		$	59,387

Operating income (loss):
Client Computing Group	$	14,222		$	12,919		$	10,646
Data Center Group	11,476			8,395			7,520
Internet of Things Group	980			650			585
Non-Volatile Memory Solutions Group	(5		)	(260		)	(544		)
Programmable Solutions Group	466			458			(104		)
All other	(3,823		)	(4,112		)	(4,970		)
Total operating income	$	23,316		$	18,050		$	13,133

Disaggregated net revenue for each period was as follows:



Years Ended (In Millions)	Dec 29, 2018		Dec 30, 2017		Dec 31, 2016
Platform revenue
Desktop platform	$	12,220	$	11,647	$	12,371
Notebook platform	20,930		19,414		18,203
DCG platform	21,155		17,439		15,895
Other platform¹	3,149		2,810		2,467
	57,454		51,310		48,936

Adjacent revenue²	13,394		10,917		8,290
ISecG divested business	—		534		2,161
Total revenue	$	70,848	$	62,761	$	59,387


¹	Includes our tablet, service provider, and IOTG platform revenue.


²	Includes all of our non-platform products for CCG, DCG, and IOTG, such as modem, Ethernet, and silicon photonics, as well as NSG, PSG, and Mobileye products

Net revenue by country as presented below is based on the billing location of the customer. Revenue from unaffiliated customers for each period was as follows:



Years Ended (In Millions)	Dec 29, 2018		Dec 30, 2017		Dec 31, 2016
China (including Hong Kong)	$	18,824	$	14,796	$	13,977
Singapore	15,409		14,285		12,780
United States	14,303		12,543		12,957
Taiwan	10,646		10,518		9,953
Other countries	11,666		10,619		9,720
Total net revenue	$	70,848	$	62,761	$	59,387