Goodwill |
3 Months Ended | ||||||||||||
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Mar. 28, 2026 | |||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||
| Goodwill |
In the first quarter of 2026, we recognized non-cash goodwill impairment charges of $3.9 billion within restructuring and other charges in our Consolidated Condensed Statements of Operations, substantially all of which related to our Mobileye reporting unit.
Our quarterly qualitative impairment assessment for the first quarter of 2026 indicated that a more detailed quantitative analysis was necessary for our Mobileye reporting unit. This conclusion was driven by the presence of impairment indicators, including the sustained decline in Mobileye’s market capitalization since our most recent assessment date in the fourth quarter of 2025, as well as increased uncertainty in the broader macroeconomic and geopolitical environment in which Mobileye operates.
Our quantitative assessment for the first quarter of 2026 was performed by measuring the Mobileye reporting unit's fair value using the income approach. When using the income approach, we tested the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available market data. As part of this first quarter of 2026 quantitative assessment, we determined that a significant increase in the discount rate was required relative to the discount rate used in our quantitative assessment in the fourth quarter of 2025, which resulted from higher market‑based and Mobileye-specific risk premiums arising from changes in global macroeconomic conditions, including heightened geopolitical risks associated with operations in the Middle East, including the current conflict, and increased uncertainty related to Mobileye's evolving competitive landscape. Collectively, these factors increased market‑participant uncertainty regarding Mobileye's ability to execute and optimize revenue from its business pipeline and the long-term competitive positioning of certain Mobileye technologies, particularly with regard to increasingly advanced autonomous driving solutions. As a result, for the forecasted cash flows utilized in our first quarter of 2026 quantitative assessment, greater risk was attributed to the forecasted cash flows in later projection periods, which contributed to the higher discount rate applied in the income‑based valuation.
The increase in the discount rate utilized in our first quarter of 2026 quantitative assessment had a significant adverse effect on the estimated fair value of the Mobileye reporting unit and, as a result of our impairment test, we recognized a non-cash goodwill impairment charge in the first quarter of 2026 as the estimated fair value of the Mobileye reporting unit was lower than the assigned carrying value. To corroborate our estimated fair value of the Mobileye reporting unit, we performed a reconciliation to Mobileye's market capitalization as of March 28, 2026, concluding that the implied control premium was reasonable as compared to relevant market transactions in similar industries. As of March 28, 2026, our Mobileye reporting unit had $4.3 billion in recorded goodwill ($8.2 billion as of December 27, 2025).
Should our estimates change based on Mobileye's operating results, market conditions, long-term growth projections, or other assumptions underlying our forecast, including changes in the discount rate, the Mobileye reporting unit may become subject to further impairment in future periods. For example, an additional 1% increase in the discount rate would have resulted in a further impairment of our Mobileye reporting unit's goodwill of approximately $682 million in the first quarter of 2026. Notwithstanding our Mobileye reporting unit, our quarterly qualitative impairment assessment did not indicate that a more detailed quantitative analysis was necessary for our other reporting units as the most recently calculated fair value substantially exceeded the assigned carrying value for each reporting unit as of March 28, 2026.
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