Quarterly report [Sections 13 or 15(d)]

Operating Segments

v3.25.1
Operating Segments
 3 Months Ended
Mar. 29, 2025
Segment Reporting [Abstract]  
Operating Segments
Note 2 : Operating Segments
In the first quarter of 2025, we made an organizational change to integrate NEX into CCG and DCAI and modified our segment reporting to align to this and certain other business reorganizations. All prior period segment data has been retrospectively adjusted to reflect the way our CODM internally receives information and manages and monitors our operating segment performance starting in fiscal year 2025. There are no changes to our consolidated financial statements for any prior periods.
We manage our business through the following operating segments:
▪Intel Products:
▪Client Computing Group (CCG)
▪Data Center and AI (DCAI)
▪Intel Foundry
▪All Other
▪Altera
▪Mobileye
▪Other
CCG, DCAI, and Intel Foundry qualify as reportable operating segments. When we enter into federal contracts, they are aligned to the sponsoring operating segment.
The accounting policies applied to our segments follow those applied to Intel as a whole. A summary of the basis for which we report our operating segment revenues and operating margin is as follows:
Intel Products: CCG and DCAI
▪Segment revenue: Consists of revenues from external customers. Our Intel Products operating segments represent most of Intel consolidated revenue and are derived from our principal products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package, which are based on Intel architecture.
▪Segment expenses: Consists of intersegment charges for product manufacturing and related services from Intel Foundry, external foundry and other manufacturing expenses, product development costs, allocated expenses as described below, and direct operating expenses.
Intel Foundry
▪Segment revenue: Consists substantially of intersegment product and services revenue for wafer fabrication, substrates and other related products, and services sold to Intel Products, Altera, and certain other Intel internal businesses. We recognize intersegment revenue based on the completion of performance obligations. Product revenue is recognized upon transfer of ownership, which is generally at the completion of wafer sorting. Backend service revenue is recognized upon the completion of assembly and test milestones, which approximates the recognition of revenue over the service period. Intersegment sales are recorded at prices that are intended to approximate market pricing. Intel Foundry also includes certain third-party foundry and assembly and test revenues from external customers that totaled $31 million in the first three months of 2025 and $13 million in the first three months of 2024.
▪Segment expenses: Consists of direct expenses for technology development, product manufacturing and services provided by Intel Foundry to internal and external customers, allocated expenses as described below, and direct operating expenses. Direct expenses for product manufacturing include excess capacity charges, if any.
All Other
Our "all other" category includes the results of operations from other non-reportable segments not otherwise presented, including our Altera and Mobileye businesses, our IMS business, start-up businesses that support our initiatives, and historical results of operations from divested businesses. The financial results of our all other category include intersegment product and services revenue and intersegment expenses.
We allocate operating expenses from our sales and marketing group to the Intel Products operating segments and allocate the significant majority of the operating expenses from our finance and administration groups to our operating segments.
We estimate that the substantial majority of our consolidated depreciation expense was incurred by Intel Foundry in the first three months of 2025 and 2024. Intel Foundry depreciation expense is substantially included in overhead cost pools and then combined with other costs, and subsequently absorbed into inventory as each product passes through the manufacturing process and is sold to Intel Products or other customers. As a result, it is impracticable to determine the total depreciation expense included as a component of each Intel Products operating segment's operating income (loss).
We do not allocate the following corporate operating expenses to our operating segments:
▪restructuring and other charges;
▪share-based compensation;
▪certain impairment charges; and
▪certain acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
We do not allocate the following non-operating items to our operating segments:
▪gains and losses from equity investments;
▪interest and other income; and
▪income taxes.
Our Chief Executive Officer is our CODM. The CODM uses operating income (loss) to evaluate each segment's performance and allocate resources. This measure is utilized during our budgeting and forecasting process to assess profitability and enable decision making regarding strategic initiatives, capital investments, and personnel across all operating segments. Segment operating results regularly reviewed by our CODM also include cost of sales and operating expenses directly attributable to each segment. The financial measures regularly provided to and used by our CODM continue to evolve; currently, our CODM does not regularly review or receive discrete asset information by operating segment.
Intersegment eliminations: Intersegment sales and related gross margin on inventory recorded at the end of the period or sold through to third-party customers is eliminated for consolidation purposes. The Intel Products operating segments and Intel Foundry are meant to reflect separate fabless semiconductor and foundry companies, respectively. Thus, certain intersegment activity is captured within the intersegment eliminations upon consolidation and presented at the Intel consolidated level. This activity primarily relates to inventory reserves, which are determined and recorded based on our accounting policies for Intel as a whole but are only recorded by the Intel Products operating segments upon transfer of inventory from Intel Foundry. If a reserve is identified which relates to neither Intel Products operating segments nor Intel Foundry, the reserve is recognized as activity within the intersegment eliminations for Intel on a consolidated basis.
Reporting units and goodwill reallocation: As a result of modifying our segment reporting in the first quarter of 2025, we reallocated goodwill among our affected reporting units on a relative fair value basis. We performed a goodwill impairment assessment for each of our reporting units immediately before and after our business reorganization, concluding that goodwill was not impaired.
As a result of modifying our segment reporting in the first quarter of 2024, we reallocated goodwill among our affected reporting units on a relative fair value basis. We performed a quantitative goodwill impairment assessment for each of our reporting units immediately before and after our business reorganization. We concluded based on our pre-reorganization impairment test that goodwill was not impaired. As a result of our post-reorganization impairment test, we recognized a non-cash goodwill impairment loss of $222 million in the first three months of 2024 related to our new Intel Foundry reporting unit as the estimated fair value of the new reporting unit was lower than the assigned carrying value.
Net revenue, cost of sales, operating expenses, and operating income (loss) for each period were as follows:
Three Months Ended
(In Millions)
 Mar 29, 2025
Intel Products
CCG DCAI
Total Intel Products
Intel Foundry
All Other
Corporate Unallocated
Intersegment Eliminations
Total Consolidated
Revenue $ 7,629  $ 4,126  $ 11,755  $ 4,667  $ 943  $ —  $ (4,698) $ 12,667 
Cost of sales 3,984  2,359  6,343  5,946  396  377  (5,067) 7,995 
Operating expenses 1,284  1,192  2,476  1,041  444  883  129  4,973 
Operating income (loss)
 $ 2,361  $ 575  $ 2,936  $ (2,320) $ 103  $ (1,260) $ 240  $ (301)
Three Months Ended
(In Millions)
 Mar 30, 2024
Intel Products
CCG DCAI Total Intel Products
Intel Foundry
 All Other Corporate Unallocated Intersegment Eliminations Total Consolidated
Revenue $ 8,273  $ 3,828  $ 12,101  $ 4,356  $ 643  $ —  $ (4,376) $ 12,724 
Cost of sales 4,004  1,745  5,749  5,617  341  701  (4,901) 7,507 
Operating expenses 1,447  1,666  3,113  1,180  472  1,486  35  6,286 
Operating income (loss) $ 2,822  $ 417  $ 3,239  $ (2,441) $ (170) $ (2,187) $ 490  $ (1,069)
Corporate Unallocated Expenses
Corporate unallocated expenses include certain operating expenses not allocated to specific operating segments. The nature of these expenses may vary, but primarily consist of restructuring and other charges, share-based compensation, certain impairment charges, and certain acquisition-related costs.
Three Months Ended
(In Millions)
 Mar 29, 2025
Cost of Sales
Operating Expenses
Total
Acquisition-related costs $ 114  $ 37  $ 151 
Share-based compensation 175  509  684 
Restructuring and other charges1
—  156  156 
Other 88  181  269 
Total corporate unallocated expenses $ 377  $ 883  $ 1,260 
Three Months Ended
(In Millions)
 Mar 30, 2024
Cost of Sales Operating Expenses Total
Acquisition-related costs $ 224  $ 41  $ 265 
Share-based compensation 298  881  1,179 
Restructuring and other charges1
—  348  348 
Other 179  216  395 
Total corporate unallocated expenses $ 701  $ 1,486  $ 2,187 
1 See "Note 6: Restructuring and Other Charges" within Notes to Consolidated Condensed Financial Statements for further information.