Note 23: Pending agreements with ASML Holding N.V.

Subsequent to the end of the second quarter of 2012, we entered into a series of agreements with ASML Holding N.V. intended to accelerate the development of 450-millimeter (mm) wafer technology and extreme ultra-violet (EUV) lithography. The agreements include Intel providing research and development (R&D) funding totaling €829 million (approximately $1.0 billion as of the date of the agreement) over five years and equity investment commitments totaling €2.5 billion (approximately $3.1 billion as of the date of the agreement). Additionally, as part of the agreements, Intel is also committing to advanced purchase orders for a specified number of tools from ASML. The agreements set forth terms to determine pricing as well as milestones related to 450-mm and EUV development and production tool deliveries. In exchange for making this early commitment, Intel will receive credits to be used towards the purchase price of these tools.

The R&D funding and equity investment is a two-phase multi-party development program. The first and second phases of the program are dependent on regulatory approval and the second phase of the program is also conditioned upon ASML shareholder approval. Upon the completion of this two-phase program, Intel's ownership interest in ASML will not exceed 15% of ASML's post-transaction issued shares and will be subject to lock-up and voting restrictions. We expect to account for our equity interest as an available-for-sale investment. We expect to record the R&D investment as a combination of R&D expense and pre-payments on future tool deliveries. The companies expect both phases of the transaction to close after the ASML shareholder vote in the third quarter of 2012 and satisfaction of standard closing conditions, including customary regulatory approvals.