Annual report pursuant to Section 13 and 15(d)

Operating Segments

v3.19.3.a.u2
Operating Segments
12 Months Ended
Dec. 28, 2019
Segment Reporting [Abstract]  
Operating Segments
NOTE 4 :
OPERATING SEGMENTS
We manage our business through the following operating segments:
DCG
IOTG
Mobileye
NSG
PSG
CCG
All other
We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone 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 DCG, IOTG, and CCG 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.
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 the IOTG and Mobileye 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;
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, allocates resources to and assesses the performance of each operating segment using information about the operating segment's 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. Because 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 28,
2019
 
Dec 29,
2018
 
Dec 30,
2017
Net revenue:
 
 
 
 
 
 
Data Center Group
 
 
 
 
 
 
Platform
 
$
21,441

 
$
21,155

 
$
17,439

Adjacent
 
2,040

 
1,836

 
1,625

 
 
23,481

 
22,991

 
19,064

Internet of Things
 
 
 
 
 
 
IOTG
 
3,821

 
3,455

 
3,169

Mobileye
 
879

 
698

 
210

 
 
4,700

 
4,153

 
3,379

 
 
 
 
 
 
 
Non-Volatile Memory Solutions Group
 
4,362

 
4,307

 
3,520

Programmable Solutions Group
 
1,987

 
2,123

 
1,902

Client Computing Group
 
 
 
 
 
 
Platform
 
32,681

 
33,234

 
31,226

Adjacent
 
4,465

 
3,770

 
2,777

 
 
37,146

 
37,004

 
34,003

All other
 
289

 
270

 
893

Total net revenue
 
$
71,965

 
$
70,848

 
$
62,761

 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
Data Center Group
 
$
10,227

 
$
11,476

 
$
8,395

 
 
 
 
 
 
 
Internet of Things
 
 
 
 
 
 
IOTG
 
1,097

 
980

 
650

Mobileye
 
245

 
143

 
(28
)
 
 
1,342

 
1,123

 
622

 
 
 
 
 
 
 
Non-Volatile Memory Solutions Group
 
(1,176
)
 
(5
)
 
(260
)
Programmable Solutions Group
 
318

 
466

 
458

Client Computing Group
 
15,202

 
14,222

 
12,919

All other
 
(3,878
)
 
(3,966
)
 
(4,084
)
Total operating income
 
$
22,035

 
$
23,316

 
$
18,050


Disaggregated net revenue for each period was as follows:
Years Ended (In Millions)
 
Dec 28,
2019
 
Dec 29,
2018
 
Dec 30,
2017
Platform revenue
 
 
 
 
 
 
DCG platform
 
$
21,441

 
$
21,155

 
$
17,439

IOTG platform
 
3,440

 
3,065

 
2,645

CCG desktop platform
 
11,822

 
12,220

 
11,647

CCG notebook platform
 
20,779

 
20,930

 
19,414

Other platform1
 
80

 
84

 
165

 
 
57,562

 
57,454

 
51,310

 
 
 
 
 
 
 
Adjacent revenue2
 
14,403

 
13,394

 
10,917

ISecG divested business
 

 

 
534

Total revenue
 
$
71,965

 
$
70,848

 
$
62,761

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
In 2019, our three largest customers accounted for 41% of our net revenue (39% in 2018, 40% in 2017), with Dell Inc. accounting for 17% (16% in 2018, 16% in 2017), Lenovo Group Limited accounting for 13% (12% in 2018, 13% in 2017), and HP Inc. accounting for 11% (11% in 2018, 11% in 2017). These three customers accounted for 39% of our accounts receivable as of December 28, 2019 (45% as of December 29, 2018). Substantially all of the revenue from these customers was from the sale of platforms and other components by the CCG and DCG operating segments.
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 28,
2019
 
Dec 29,
2018
 
Dec 30,
2017
China (including Hong Kong)
 
$
20,026

 
$
18,824

 
$
14,796

Singapore
 
15,650

 
15,409

 
14,285

United States
 
15,617

 
14,303

 
12,543

Taiwan
 
10,058

 
10,646

 
10,518

Other countries
 
10,614

 
11,666

 
10,619

Total net revenue
 
$
71,965

 
$
70,848

 
$
62,761