UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June ~~27, 2020~~26, 2021


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
						For the transition period from to

Commission File Number 000-06217

INTEL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

94-1672743

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2200 Mission College Boulevard,

Santa Clara,

California

95054-1549

(Address of principal executive offices)

(Zip Code)

(408) 765-8080

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	INTC	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☑

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of June ~~27, 2020,~~26, 2021, the registrant had outstanding ~~4,253~~4,057 million shares of common stock.

~~TABLE OF CONTENTS~~Table of Contents

~~THE ORGANIZATION OF OUR QUARTERLY REPORT ON FORM~~The Organization of Our Quarterly Report on Form 10-Q

The order and presentation of content in our Form 10-Q differs from the traditional SEC Form 10-Q format. Our format is designed to improve readability and better present how we organize and manage our business. See "Form 10-Q Cross-Reference Index" within Other Key Information for a cross-reference index to the traditional SEC Form 10-Q format. ~~To reflect our focus on transforming from a PC-centric~~¹ ~~company to a data-centric company, we have presented our data-centric businesses~~¹ ~~first in "Segment Trends and Results" within MD&A.~~

We have defined certain terms and abbreviations used throughout our Form 10-Q in "Key Terms" within the Consolidated Condensed Financial Statements and Supplemental Details.

The preparation of our Consolidated Condensed Financial Statements is in conformity with U.S. GAAP. Our Form 10-Q includes key metrics that we use to measure our business, some of which are non-GAAP measures. See "Non-GAAP Financial Measures" within MD&A for an explanation of these measures and why management uses them and believes they provide investors with useful supplemental information.


		Page
~~FORWARD-LOOKING STATEMENTS~~			Forward-Looking Statements	1
~~OUR PANDEMIC RESPONSE~~
A Quarter in Review		2
~~A QUARTER IN REVIEW~~Consolidated Condensed Financial Statements and Supplemental Details
	Consolidated Condensed Statements of Income	3
~~CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND SUPPLEMENTAL DETAILS~~
	~~Consolidated Condensed Statements of Income~~		5
	Consolidated Condensed Statements of Comprehensive Income		64
	Consolidated Condensed Balance Sheets		75
	Consolidated Condensed Statements of Cash Flows		86
	Consolidated Condensed Statements of Stockholders' Equity		97
	Notes to Consolidated Condensed Financial Statements		108
	Key Terms		2723

~~MANAGEMENT'S DISCUSSION AND ANALYSIS~~Management's Discussion and Analysis



	Segment Trends and Results		2824





	Consolidated Results of Operations		3531
	Liquidity and Capital Resources		4036
	~~Contractual Obligations~~	41
	~~Quantitative and Qualitative Disclosures about Market Risk~~	41
	Non-GAAP Financial Measures		4237

~~OTHER KEY INFORMATION~~			Other Key Information
	Quantitative and Qualitative Disclosures about Market Risk ~~Factors~~		4440
	Risk Factors	40
	Controls and Procedures		4440

	Issuer Purchases of Equity Securities		4440
	~~Exhibits~~	Disclosure Pursuant to Section 13(r)(of the Securities Exchange Act of 1934	4541
	Exhibits	42
	Form 10-Q Cross-Reference Index		4643

¹~~Intel's definition is included in "Key Terms" within the Consolidated Condensed Financial Statements and Supplemental Details.~~

Table of Contents

~~FORWARD-LOOKING STATEMENTS~~Forward-Looking Statements

This Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipate," "expect," "intend," ~~"pledge," "committed,"~~ "plan," ~~"mission," "opportunities,~~"opportunity," "future," ~~"upcoming,~~"pending," "to be," "believes," ~~"targeted," "estimates,~~"estimated," "continue," "likely," "may," "might," "potentially," "will," "would," "should," "could," “accelerate,” "progress," “goal,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to Intel’s strategy; manufacturing expansion and investment plans, including Intel’s anticipated New Mexico investment; future responses to and effects of COVID-19; projections of our future financial performance and demand; our anticipated growth and trends in our businesses or operations; projected growth and trends in markets relevant to our businesses; business plans; future products and technology and the expected availability and benefits of such products and ~~technology, including our 10nm and 7nm process technologies, products, and product designs; expectations regarding construction projects;~~technology; expected timing and impact of acquisitions, divestitures, and other significant ~~transactions;~~transactions, including statements relating to the pending divestiture of our NAND memory business to SK hynix Inc. (SK hynix), NAND manufacturing and supply arrangements between Intel and SK hynix, and expected additions to held for sale NAND property, plant and equipment; expected completion of restructuring activities; availability, uses, sufficiency, and cost of capital, ~~and~~ capital resources, and funding sources, including expected returns to stockholders such as ~~dividends and share repurchases;~~dividends; accounting estimates and judgments regarding reported matters, events and contingencies and our intentions with respect to such matters, events and contingencies, and the actual results thereof; future production capacity and product supply; the future impact of industry component and substrate constraints; the future purchase, use, and availability of, and payment for, products, components and services supplied by third ~~parties, including third-party manufacturing services;~~parties; tax-related expectations; plans and future impacts related to export licensing and trade policies; uncertain events or assumptions; and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management's expectations as of the date of this filing, unless an earlier date is specified, and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report, our ~~2019~~2020 Form 10-K, and our Form 10-Q for the quarter ended March ~~28, 2020,~~27, 2021, particularly the "Risk Factors" sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. Unless specifically indicated otherwise, the forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that have not been completed as of the date of this filing. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, unless an earlier date is specified, including expectations based on third-party information and projections that management believes to be reputable, and Intel does not undertake, and expressly disclaims any duty, to update such statements, whether as a result of new information, new developments, or otherwise, except to the extent that disclosure may be required by law.

Intel, the Intel logo, ~~3D XPoint, Intel Atom,~~ Intel Core, Intel Evo, Intel Optane, ~~Stratix,~~ and Xeon are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries.

* Other names and brands may be claimed as the property of others.


						1

Table of Contents


~~OUR PANDEMIC RESPONSE~~

As we closely monitor the COVID-19 pandemic, our top priority remains protecting the health and safety of our employees. Our Pandemic Leadership Team regularly reviews and adapts our policies based on evolving research and guidance related to the virus. While essential operations continue in our factories and labs around the world, we have restricted travel and meetings, changed our business processes, published a wealth of information, and adapted to a world where many in our workforce are remote and those coming on-site are following new safety measures. We have a multi-phase plan to return to working on-site, and remain committed to delivering for our customers and supporting our communities.

~~Return to working on-site, at-work social distancing policies, and other safety measures.~~ Since the start of the pandemic, employees who are essential to keeping our business running have continued to work on site in our labs and factories. The additional safety measures and practices we put in place during the first quarter of 2020 to protect these employees continue to be implemented subject to each location’s return on-site processes.

Our plan for returning the remainder of our workforce to work on-site involves multiple phases that gradually allow additional workers to return while practicing social distancing and other safety measures. This plan considers the varying needs of each location and site and depends on local government regulations, community case trends, and recommendations from public health organizations. In the second quarter of 2020, we implemented a telecommuting reimbursement program to help those employees who are still required to work from home improve their workspaces.

Maintaining safe facilities is core to how we operate. Based on the recommendations from national and international health authorities, and the results of recent scientific studies, we are now mandating the use of facemasks for all employees at all Intel sites during all phases of our return to on-site process, except in the final phase when facemasks are recommended rather than mandated.

~~Operations.~~ With our factories continuing to operate world-wide, we are working with our customers to meet their specific shipment needs. Our world-class safety standards and supply chain operations have to date allowed our factories to continue to operate safely and with mostly on-time deliveries. We temporarily paused a few of our construction projects in the first quarter of 2020 due to local government restrictions at a small number of our sites. Construction resumed during the quarter across all projects. We do not expect the interruptions to impact either our ability to support customers or our process technology roadmap.

~~Supply chain.~~ ~~Our existing Business Continuity Program, combined with the additional actions taken throughout the pandemic to address our supply chain, continue to support our operations as an essential business.~~

In the second quarter of 2020, we introduced a COVID-19 channel relief program to help address the unique business challenges our partners are facing. Benefits of this program include customer support and warranty timeline extensions, extending the expiration term for certain programs, financial assistance to our distribution partners, and providing no-cost design reviews and additional technical enablement benefits.

~~Using our technology to help.~~ In April, we committed $50 million towards a Pandemic Response Technology Initiative. Since that announcement, we have worked with over 100 organizations on close to 200 projects aimed at helping to cope with and combat this global pandemic. We have put more than $30 million of this pledge to work on projects spanning healthcare, education, industrial, retail, transportation, academia, and more.

~~We will continue to actively monitor the situation and review our plans based on the requirements and recommendations of the federal, state, and local authorities.~~


~~OUR PANDEMIC RESPONSE~~						2

~~Table of Contents~~

	A Quarter in Review
~~A QUARTER IN REVIEW~~

Total revenue of ~~$19.7~~$19.6 billion was ~~up $3.2 billion~~down $97 million year over year as ~~our data-centric businesses~~DCG declined 9% and ~~PC-centric business~~CCG grew ~~34%~~6%. DCG revenue declined on lower ASPs and ~~7%, respectively. Data-centric~~on lower platform volume compared to a strong, COVID-driven Q2 2020. DCG revenue was also impacted by lower adjacent revenue. CCG revenue was up, ~~driven by growth across all DCG business market segments, strong mix of high-performance Intel~~^® ~~Xeon~~^® ~~processors, NSG bit growth, and improved NAND pricing. Our PC-centric business was up, driven by~~due to continued strength in notebook ~~platform~~¹demand ~~strong platform ASP, higher modem~~ and ~~Wi-Fi sales, partially offset by~~recovery in desktop demand. ~~Increased platform unit sales, ASP strength,~~NSG was down due to lower ASPs and ~~NSG growth resulted in~~lower volume. IOTG and Mobileye were both up on higher ~~gross margins dollars and operating income, partially offset by higher platform unit cost and platform reserves. In~~demand amid recovery from the ~~first six months we generated $17.3 billion~~economic impacts of ~~cash flow from operations and returned $7.0 billion to stockholders, including $2.8 billion in dividends and $4.2 billion in Q1 2020 buybacks.~~COVID-19.

~~REVENUE~~

~~OPERATING INCOME~~Revenue

~~DILUTED~~Operating Income

Diluted EPS

~~CASH FLOWS~~Cash Flows

■ ~~PC-CENTRIC~~GAAP $B

■ ~~DATA-CENTRIC~~Non-GAAP $B

■ GAAP $B ■ ~~NON-GAAP~~Non-GAAP $B

■ ~~GAAP~~■~~NON-GAAP~~

■ ~~OPERATING CASH FLOW~~GAAP $B■ Non-GAAP

■Operating Cash Flow $B

■ ~~FREE CASH FLOW~~Free Cash Flow $B

$19.7B $5.7B $6.1B $1.19 $1.23 $17.3B $10.6B
GAAP GAAP
non-GAAP²
GAAP
non-GAAP²
GAAP
non-GAAP²
Revenue up $3.2B or 20% from Q2 2019 Operating income up $1.1B or 23% from Q2 2019; Q2 2020 operating margin at 29% Operating income up $0.9B or 18% from Q2 2019; Q2 2020 operating margin at 31% Diluted EPS up $0.27 or 29% from Q2 2019 Diluted EPS up $0.17 or 16% from Q2 2019 Operating cash flow up $4.8B or 38% from Q2 2019 Free cash flow up $5B or 88% from Q2 2019
Growth in data-centric businesses primarily driven by DCG and NSG and growth in the PC-centric business Higher gross margin dollars from increase in platform unit sales and platform ASP strength, NAND market recovery and bit growth, partially offset by increase in platform unit cost and higher platform reserves
Higher platform volume, platform ASP strength, NAND market recovery and bit growth, adjacency¹ strength, lower period charges, and lower shares outstanding, partially offset by higher platform unit cost, and higher platform reserves
Higher net income and working capital changes driven by inventory and income taxes, offset by other assets and liabilities

$19.6B

$18.5B

$5.5B

$5.9B

$1.24

$1.28

$14.3B

$6.7B

GAAP

non-GAAP1

GAAP

non-GAAP1

GAAP

non-GAAP1

GAAP

non-GAAP1

Revenue down $97M or 0.5% from Q2 2020

Revenue up $349M or 2% from Q2 2020

Operating income down $151M or 3% from Q2 2020; Q2 2021 operating margin at 28%

Operating income up $221M or 4% from Q2 2020; Q2 2021 operating margin at 32%

Diluted EPS up $0.05 or 4% from Q2 2020

Diluted EPS up $0.14 or 12% from Q2 2020

Operating cash flow down $3.0B or 17% from Q2 2020

Free cash flow down $3.9B or 37% from Q2 2020

Declines in DCG and NSG, partially offset by growth in CCG, IOTG, and Mobileye. Non-GAAP revenue excludes NSG.

Higher operating expenses from additional investments, higher corporate restructuring costs, and lower gross margin from lower platform2 revenue, partially offset by lower period charges driven by absence of reserves on non-qualified platform products taken in Q2 2020, and lower platform unit cost from 10nm cost improvements. Non-GAAP operating income excludes NSG, amortization of acquisition-related intangibles, and restructuring.

Lower effective tax rate and lower shares, partially offset by lower operating income. Non-GAAP results incrementally exclude ongoing mark-to-market adjustments, and tax impacts of non-GAAP adjustments.

Lower net income, net of non-cash adjustments including the Corporate VLSI charge, cash paid to settle a prepaid supply agreement in Q1 2021, and income taxes. Free cash flow decreased due to lower operating cash flow and higher capital spending.

Key Developments

▪We announced a $3.5 billion investment to equip our Rio Rancho, New Mexico site for advanced packaging manufacturing, including our Foveros 3D packaging technology. Foveros technology enables us to build processors with compute tiles stacked vertically, rather than side-by-side, which can provide greater performance in a smaller footprint.

▪We launched the 3rd Gen Intel® Xeon® Scalable CPU (Ice Lake), which boasts up to 40 cores and delivers a significant increase in performance on average compared to the previous generation. The chips include a set of built-in security features, crypto acceleration, and artificial intelligence.

▪We launched the 11th Gen Intel® CoreTM H-series mobile processors (Tiger Lake-H), which deliver high end performance in laptops for gamers, content creators, and business professionals. We also saw broad availability of the first Intel® Evo™ platforms for the commercial segment, based on 11th Gen Intel Core mobile processors.

1 See "Non-GAAP Financial Measures" within MD&A.

¹See "Key Terms" within Consolidated Condensed Financial Statements and Supplemental Details.

²~~See "Non-GAAP Financial Measures" within MD&A.~~


~~A QUARTER IN REVIEW~~						3

~~Table of Contents~~

~~BUSINESS SUMMARY~~

•~~We experienced growth in most of our data-centric businesses, driven by strong demand across all DCG segments, and strength in 5G adjacencies and NAND. We introduced the 3rd Gen Intel~~^® ~~Xeon~~^® ~~Scalable processors and additions to our hardware and software AI portfolio.~~

•Growth in our PC-centric business was driven by strength in notebook demand, strong platform ASP, and continued strength in modem, partially offset by desktop demand. We announced the new 10th Gen Intel^® ~~Core~~^™ ~~vPro~~^® ~~processors for enterprise needs to deliver increased productivity improvements, connectivity, security features, and remote manageability. We also launched the Intel~~^® ~~Core~~^™ ~~processors with Intel~~^® ~~Hybrid Technology, leveraging Intel's Foveros 3D packaging technology.~~

•We acquired Moovit for $915 million to accelerate Mobileye's MaaS offering. Moovit is known for its urban mobility application and brings Mobileye closer to achieving our plan to become a complete mobility provider, including robotaxi services.

•We continue to accelerate our transition to 10nm-based products. We now expect to increase our 10nm-based product shipments for the year by more than 20 percent versus our January expectations. We expect production shipments of our next-generation 10nm client CPU product "Tiger Lake" in Q3 and are targeting initial production shipments of our first 10nm-based Xeon Scalable product, “Ice Lake,” for the end of the year. Our 10nm-based products are positioned for 2021, led by our third-generation client product “Alder Lake” and our second-generation server product “Sapphire Rapids.” Both products are expected to start initial production shipments in the second half of 2021.

•We now expect an approximate six-month delay in our 7nm-based CPU product timing relative to prior expectations. The primary driver is the yield of our 7nm manufacturing process, which based on recent data, is now trending approximately twelve months behind our internal target. We will continue to invest in our future process technology roadmap, but we will be pragmatic and objective in seeking to deploy the process technology that delivers the most predictability and performance for our customers, whether that be our process, external foundry process or a combination of both. Our advanced packaging technologies combined with our disaggregated architecture give us the flexibility to use the process technology that best serves our customers. As an example, we now expect that our data center discrete GPU design, “Ponte Vecchio", which was described in our 2019 Form 10-K, will be released in late 2021 or early 2022 utilizing external and internal process technologies combined with our advanced packaging technologies.

•We now expect to see initial production shipments of our first Intel-based 7nm product, a client CPU, in late 2022 or early 2023. We are also focused on maintaining an annual cadence of significant product improvements independent of our process roadmap, including for holiday 2022. In addition, we expect to see initial production shipments of our first Intel-based 7nm data center CPU design in the first half of 2023.


			A ~~QUARTER IN REVIEW~~Quarter in Review			2

Table of Contents


Consolidated Condensed Statements of Income


	Three Months Ended				Six Months Ended
(In Millions, Except Per Share Amounts; Unaudited)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Net revenue	$	19,631	$	19,728	$	39,304	$	39,556
Cost of sales	8,425		9,221		17,244		17,033
Gross margin	11,206		10,507		22,060		22,523
Research and development	3,715		3,354		7,338		6,629
Marketing, general and administrative	1,599		1,447		2,927		2,988
Restructuring and other charges	346		9		2,555		171
Operating expenses	5,660		4,810		12,820		9,788
Operating income	5,546		5,697		9,240		12,735
Gains (losses) on equity investments, net	295		267		663		156
Interest and other, net	(96)		(29)		(252)		(342)
Income before taxes	5,745		5,935		9,651		12,549
Provision for taxes	684		830		1,229		1,783
Net income	$	5,061	$	5,105	$	8,422	$	10,766
Earnings per share—basic	$	1.25	$	1.20	$	2.08	$	2.53
Earnings per share—diluted	$	1.24	$	1.19	$	2.06	$	2.50

Weighted average shares of common stock outstanding:
Basic	4,049		4,246		4,053		4,256
Diluted	4,084		4,284		4,090		4,298

See accompanying notes.


			Financial Statements			Consolidated Condensed Statements of Income			3

Table of Contents


Consolidated Condensed Statements of Comprehensive Income


	Three Months Ended				Six Months Ended
(In Millions; Unaudited)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Net income	$	5,061	$	5,105	$	8,422	$	10,766
Changes in other comprehensive income, net of tax:


Net unrealized holding gains (losses) on derivatives	6		319		(344)		51
Actuarial valuation and other pension benefits (expenses), net	12		11		25		23
Translation adjustments and other	(10)		59		(25)		54
Other comprehensive income (loss)	8		389		(344)		128
Total comprehensive income	$	5,069	$	5,494	$	8,078	$	10,894

See accompanying notes.


			Financial Statements			Consolidated Condensed Statements of Comprehensive Income			4

Table of Contents


~~CONSOLIDATED CONDENSED STATEMENTS OF INCOME~~Consolidated Condensed Balance Sheets

Three Months Ended Six Months Ended
(In Millions, Except Per Share Amounts; Unaudited) Jun 27, 2020 Jun 29, 2019 Jun 27, 2020 Jun 29, 2019
Net revenue $ 19,728 $ 16,505 $ 39,556 $ 32,566
Cost of sales 9,221 6,627 17,033 13,599
Gross margin 10,507 9,878 22,523 18,967
Research and development 3,354 3,438 6,629 6,770
Marketing, general and administrative 1,447 1,639 2,988 3,222
Restructuring and other charges 9 184 171 184
Operating expenses 4,810 5,261 9,788 10,176
Operating income 5,697 4,617 12,735 8,791
Gains (losses) on equity investments, net 267 170 156 604
Interest and other, net (29) (63) (342) (124)
Income before taxes 5,935 4,724 12,549 9,271
Provision for taxes 830 545 1,783 1,118
Net income $ 5,105 $ 4,179 $ 10,766 $ 8,153
Earnings per share—basic $ 1.20 $ 0.94 $ 2.53 $ 1.82
Earnings per share—diluted $ 1.19 $ 0.92 $ 2.50 $ 1.79
Weighted average shares of common stock outstanding:
Basic 4,246 4,466 4,256 4,479
Diluted 4,284 4,523 4,298 4,543


(In Millions)	Jun 26, 2021		Dec 26, 2020
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	4,746	$	5,865
Short-term investments	3,014		2,292
Trading assets	17,097		15,738
Accounts receivable	7,460		6,782
Inventories	8,817		8,427
Assets held for sale	5,817		5,400
Other current assets	2,421		2,745
Total current assets	49,372		47,249

Property, plant and equipment, net of accumulated depreciation of $81,558 ($77,645 as of December 26, 2020)	58,166		56,584
Equity investments	5,655		5,152
Other long-term investments	1,262		2,192
Goodwill	26,768		26,971
Identified intangible assets, net	8,018		9,026
Other long-term assets	5,356		5,917
Total assets	$	154,597	$	153,091

Liabilities and stockholders’ equity
Current liabilities:
Short-term debt	$	3,695	$	2,504
Accounts payable	5,917		5,581
Accrued compensation and benefits	3,176		3,999


Other accrued liabilities	12,048		12,670
Total current liabilities	24,836		24,754

Debt	31,714		33,897
Contract liabilities	68		1,367
Income taxes payable	4,172		4,578
Deferred income taxes	3,271		3,843
Other long-term liabilities	5,329		3,614
Contingencies (Note 13)	0		0

Stockholders’ equity:

Common stock and capital in excess of par value, 4,057 issued and outstanding (4,062 issued and outstanding as of December 26, 2020)	26,655		25,556
Accumulated other comprehensive income (loss)	(1,095)		(751)
Retained earnings	59,647		56,233
Total stockholders’ equity	85,207		81,038
Total liabilities and stockholders’ equity	$	154,597	$	153,091

See accompanying notes.


			~~FINANCIAL STATEMENTS~~Financial Statements			Consolidated Condensed ~~Statements of Income~~Balance Sheets			5

Table of Contents


~~CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME~~Consolidated Condensed Statements of Cash Flows

Three Months Ended Six Months Ended
(In Millions; Unaudited) Jun 27, 2020 Jun 29, 2019 Jun 27, 2020 Jun 29, 2019
Net income $ 5,105 $ 4,179 $ 10,766 $ 8,153
Changes in other comprehensive income, net of tax:
Net unrealized holding gains (losses) on derivatives 319 151 51 253
Actuarial valuation and other pension benefits (expenses), net 11 8 23 17
Translation adjustments and other 59 32 54 82
Other comprehensive income (loss) 389 191 128 352
Total comprehensive income $ 5,494 $ 4,370 $ 10,894 $ 8,505


	Six Months Ended
(In Millions; Unaudited)	Jun 26, 2021		Jun 27, 2020

Cash and cash equivalents, beginning of period	$	5,865	$	4,194
Cash flows provided by (used for) operating activities:
Net income	8,422		10,766
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	4,862		5,248
Share-based compensation	1,044		941

Restructuring and other charges	2,555		171
Amortization of intangibles	897		865
(Gains) losses on equity investments, net	(555)		(92)



Changes in assets and liabilities:
Accounts receivable	(678)		224
Inventories	(126)		(271)
Accounts payable	425		208
Accrued compensation and benefits	(836)		(1,025)
Prepaid supply agreements	(1,571)		(161)
Income taxes	114		1,203
Other assets and liabilities	(259)		(762)
Total adjustments	5,872		6,549
Net cash provided by operating activities	14,294		17,315
Cash flows provided by (used for) investing activities:
Additions to property, plant and equipment	(7,574)		(6,676)
Additions to held for sale NAND property, plant and equipment	(682)		0

Purchases of available-for-sale debt investments	(2,000)		(4,558)

Maturities and sales of available-for-sale debt investments	2,126		1,303
Purchases of trading assets	(14,637)		(11,429)
Maturities and sales of trading assets	12,936		7,430







Other investing	380		(416)
Net cash used for investing activities	(9,451)		(14,346)
Cash flows provided by (used for) financing activities:



Issuance of long-term debt, net of issuance costs	0		10,247
Repayment of debt and debt conversion	(500)		(2,775)
Proceeds from sales of common stock through employee equity incentive plans	589		512
Repurchase of common stock	(2,415)		(4,229)


Payment of dividends to stockholders	(2,821)		(2,811)



Other financing	(815)		629
Net cash provided by (used for) financing activities	(5,962)		1,573

Net increase (decrease) in cash and cash equivalents	(1,119)		4,542
Cash and cash equivalents, end of period	$	4,746	$	8,736

Supplemental disclosures of noncash investing activities and cash flow information:
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities	$	2,426	$	2,836


Cash paid during the period for:
Interest, net of capitalized interest	$	283	$	252
Income taxes, net of refunds	$	1,110	$	574

See accompanying notes.


			~~FINANCIAL STATEMENTS~~Financial Statements			Consolidated Condensed Statements of ~~Comprehensive Income~~Cash Flows			6

Table of Contents


~~CONSOLIDATED CONDENSED BALANCE SHEETS~~Consolidated Condensed Statements of Stockholders' Equity

(In Millions) Jun 27, 2020 Dec 28, 2019
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 8,736 $ 4,194
Short-term investments 4,791 1,082
Trading assets 12,288 7,847
Accounts receivable 7,441 7,659
Inventories 8,969 8,744
Other current assets 2,165 1,713
Total current assets 44,390 31,239
Property, plant and equipment, net of accumulated depreciation of $77,988 ($73,321 as of December 28, 2019) 58,036 55,386
Equity investments 3,901 3,967
Other long-term investments 2,884 3,276
Goodwill 26,943 26,276
Identified intangible assets, net 10,303 10,827
Other long-term assets 6,082 5,553
Total assets $ 152,539 $ 136,524
Liabilities, temporary equity, and stockholders’ equity
Current liabilities:
Short-term debt $ 2,254 $ 3,693
Accounts payable 5,045 4,128
Accrued compensation and benefits 2,833 3,853
Other accrued liabilities 12,349 10,636
Total current liabilities 22,481 22,310
Debt 36,093 25,308
Contract liabilities 1,329 1,368
Income taxes payable, non-current 4,795 4,919
Deferred income taxes 2,723 2,044
Other long-term liabilities 3,108 2,916
Contingencies (Note 13)
Temporary equity — 155
Stockholders’ equity:
Preferred stock — —
Common stock and capital in excess of par value, 4,253 issued and outstanding (4,290 issued and outstanding as of December 28, 2019) 25,516 25,261
Accumulated other comprehensive income (loss) (1,152) (1,280)
Retained earnings 57,646 53,523
Total stockholders’ equity 82,010 77,504
Total liabilities, temporary equity, and stockholders’ equity $ 152,539 $ 136,524


	Common Stock and Capital in Excess of Par Value			Accumulated Other Comprehensive Income (Loss)		Retained Earnings1		Total
(In Millions, Except Per Share Amounts; Unaudited)	Shares	Amount
Three Months Ended

Balance as of March 27, 2021	4,038	$	26,272	$	(1,103)	$	54,638	$	79,807
Net income	—	—		—		5,061		5,061
Other comprehensive income (loss)	—	—		8		—		8
Employee equity incentive plans and other	24	23		—		—		23
Share-based compensation	—	619		—		—		619





Restricted stock unit withholdings	(5)	(259)		—		(52)		(311)

Balance as of June 26, 2021	4,057	$	26,655	$	(1,095)	$	59,647	$	85,207

Balance as of March 28, 2020	4,234	$	25,251	$	(1,541)	$	52,644	$	76,354


Net income	—	—		—		5,105		5,105
Other comprehensive income (loss)	—	—		389		—		389
Employee equity incentive plans and other	25	9		—		—		9
Share-based compensation	—	492		—		—		492




Restricted stock unit withholdings	(6)	(236)		—		(103)		(339)


Balance as of June 27, 2020	4,253	$	25,516	$	(1,152)	$	57,646	$	82,010

Six Months Ended

Balance as of December 26, 2020	4,062	$	25,556	$	(751)	$	56,268	$	81,073
Net income	—	—		—		8,422		8,422
Other comprehensive income (loss)	—	—		(344)		—		(344)
Employee equity incentive plans and other	41	588		—		—		588
Share-based compensation	—	1,044		—		—		1,044
Temporary equity reduction	—	0		—		—		0
Convertible debt	—	0		—		—		0

Repurchase of common stock	(40)	(249)		—		(2,166)		(2,415)

Restricted stock unit withholdings	(6)	(284)		—		(56)		(340)
Cash dividends declared ($0.695 per share)	—	—		—		(2,821)		(2,821)
Balance as of June 26, 2021	4,057	$	26,655	$	(1,095)	$	59,647	$	85,207

Balance as of December 28, 2019	4,290	$	25,261	$	(1,280)	$	53,523	$	77,504
Net income	—	—		—		10,766		10,766
Other comprehensive income (loss)	—	—		128		—		128
Employee equity incentive plans and other	42	629		—		—		629
Share-based compensation	—	941		—		—		941
Temporary equity reduction	—	155		—		—		155
Convertible debt	—	(750)		—		—		(750)
Repurchase of common stock	(71)	(420)		—		(3,689)		(4,109)
Restricted stock unit withholdings	(8)	(300)		—		(135)		(435)
Cash dividends declared ($0.66 per share)	—	—		—		(2,819)		(2,819)
Balance as of June 27, 2020	4,253	$	25,516	$	(1,152)	$	57,646	$	82,010

1The retained earnings balance as of December 26, 2020 includes an opening balance adjustment made as a result of the adoption of a new accounting standard in 2021.

See accompanying notes.


			~~FINANCIAL STATEMENTS~~Financial Statements			Consolidated Condensed ~~Balance Sheets~~Statements of Stockholders' Equity			7

Table of Contents


~~CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS~~

Six Months Ended
(In Millions; Unaudited) Jun 27, 2020 Jun 29, 2019
Cash and cash equivalents, beginning of period $ 4,194 $ 3,019
Cash flows provided by (used for) operating activities:
Net income 10,766 8,153
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 5,248 4,379
Share-based compensation 941 859
Amortization of intangibles 865 800
(Gains) losses on equity investments, net (92) (100)
Changes in assets and liabilities:
Accounts receivable 224 490
Inventories (271) (1,443)
Accounts payable 208 431
Accrued compensation and benefits (919) (1,012)
Prepaid supply agreements (161) (444)
Income taxes 1,203 (15)
Other assets and liabilities (697) 448
Total adjustments 6,549 4,393
Net cash provided by operating activities 17,315 12,546
Cash flows provided by (used for) investing activities:
Additions to property, plant and equipment (6,676) (6,875)
Purchases of available-for-sale debt investments (4,558) (1,721)
Maturities and sales of available-for-sale debt investments 1,303 2,031
Purchases of trading assets (11,429) (4,498)
Maturities and sales of trading assets 7,430 3,808
Sales of equity investments 186 1,331
Other investing (602) (86)
Net cash used for investing activities (14,346) (6,010)
Cash flows provided by (used for) financing activities:
Increase (decrease) in short-term debt, net — 996
Issuance of long-term debt, net of issuance costs 10,247 601
Repayment of debt and debt conversion (2,775) (1,033)
Proceeds from sales of common stock through employee equity incentive plans 512 305
Repurchase of common stock (4,229) (5,579)
Payment of dividends to stockholders (2,811) (2,828)
Other financing 629 850
Net cash provided by (used for) financing activities 1,573 (6,688)
Net increase (decrease) in cash and cash equivalents 4,542 (152)
Cash and cash equivalents, end of period $ 8,736 $ 2,867
Supplemental disclosures of noncash investing activities and cash flow information:
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities $ 2,836 $ 2,678
Cash paid during the period for:
Interest, net of capitalized interest $ 252 $ 243
Income taxes, net of refunds $ 574 $ 1,112

~~See accompanying notes.~~


~~FINANCIAL STATEMENTS~~			Notes to Consolidated Condensed Financial Statements ~~of Cash Flows~~			8

~~Table of Contents~~


~~CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY~~

Common Stock and Capital in Excess of Par Value Accumulated Other Comprehensive Income (Loss) Retained Earnings Total
(In Millions, Except Per Share Amounts; Unaudited) Shares Amount
Three Months Ended
Balance as of March 28, 2020 4,234 $ 25,251 $ (1,541) $ 52,644 $ 76,354
Net income — — — 5,105 5,105
Other comprehensive income (loss) — — 389 — 389
Employee equity incentive plans and other 25 9 — — 9
Share-based compensation — 492 — — 492
Temporary equity reduction — — — — —
Convertible debt — — — — —
Repurchase of common stock — — — — —
Restricted stock unit withholdings (6) (236) — (103) (339)
Balance as of June 27, 2020 4,253 $ 25,516 $ (1,152) $ 57,646 $ 82,010
Balance as of March 30, 2019 4,477 $ 25,346 $ (813) $ 49,128 $ 73,661
Net income — — — 4,179 4,179
Other comprehensive income (loss) — — 191 — 191
Employee equity incentive plans and other 27 31 — — 31
Share-based compensation — 471 — — 471
Temporary equity reduction — 28 — — 28
Convertible debt — (120) — — (120)
Repurchase of common stock (67) (381) — (2,764) (3,145)
Restricted stock unit withholdings (7) (235) — (114) (349)
Balance as of June 29, 2019 4,430 $ 25,140 $ (622) $ 50,429 $ 74,947
Six Months Ended
Balance as of December 28, 2019 4,290 $ 25,261 $ (1,280) $ 53,523 $ 77,504
Net income — — — 10,766 10,766
Other comprehensive income (loss) — — 128 — 128
Employee equity incentive plans and other 42 629 — — 629
Share-based compensation — 941 — — 941
Temporary equity reduction — 155 — — 155
Convertible debt — (750) — — (750)
Repurchase of common stock (71) (420) — (3,689) (4,109)
Restricted stock unit withholdings (8) (300) — (135) (435)
Cash dividends declared ($0.66 per share) — — — (2,819) (2,819)
Balance as of June 27, 2020 4,253 $ 25,516 $ (1,152) $ 57,646 $ 82,010
Balance as of December 29, 2018 4,516 $ 25,365 $ (974) $ 50,172 $ 74,563
Net income — — — 8,153 8,153
Other comprehensive income (loss) — — 352 — 352
Employee equity incentive plans and other¹ 38 403 — — 403
Share-based compensation — 860 — — 860
Temporary equity reduction — 173 — — 173
Convertible debt — (712) — — (712)
Repurchase of common stock (116) (659) — (4,936) (5,595)
Restricted stock unit withholdings (8) (290) — (131) (421)
Cash dividends declared ($0.63 per share) — — — (2,829) (2,829)
Balance as of June 29, 2019 4,430 $ 25,140 $ (622) $ 50,429 $ 74,947

~~See accompanying notes.~~


~~FINANCIAL STATEMENTS~~			~~Consolidated Condensed Statements of Stockholders' Equity~~			9

~~Table of Contents~~


~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~


~~NOTE~~Note 1 :			~~BASIS OF PRESENTATION~~Basis of Presentation

We prepared our interim Consolidated Condensed Financial Statements that accompany these notes in conformity with U.S. GAAP, consistent in all material respects with those applied in our ~~2019~~2020 Form 10-K.

We have made estimates and judgments affecting the amounts reported in our Consolidated Condensed Financial Statements and the accompanying notes. ~~The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.~~ The actual results that we experience may differ materially from our estimates. The interim financial information is unaudited, and reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This report should be read in conjunction with the Consolidated Financial Statements in our ~~2019~~2020 Form 10-K where we include additional information about our policies and the methods and assumptions used in our estimates.


~~NOTE~~Note 2 :			~~OPERATING SEGMENTS~~Operating Segments

We manage our business through the following operating segments:

•▪CCG

▪DCG

•▪IOTG

•▪Mobileye

•▪NSG

•▪PSG

•~~CCG~~

We derive a substantial majority of our revenue from platform products, which are our principal products and considered as one ~~class of product.~~product class. We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package. Platform products are used in various form factors across our CCG, DCG, ~~IOTG,~~ and ~~CCG~~IOTG operating segments. Our non-platform, or adjacent products, can be combined with platform products to form comprehensive platform solutions to meet customer needs.

~~DCG~~CCG and ~~CCG~~DCG 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 IOTG and Mobileye operating segments. In 2021, our DCG operating segment includes the results of our Intel® OptaneTM memory business, and our NSG operating segment is composed of our NAND memory business. Refer to "Note 8: Acquisitions and Divestitures" within Notes to Consolidated Condensed Financial Statements for further information on the pending divestiture of our NAND memory business.

We have an “all other” category that includes revenue, expenses, and charges 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, does not evaluate operating segments using discrete asset information. 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. The accounting policies for segment reporting are the same as for Intel as a whole.


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			108

Table of Contents

Net revenue and operating income (loss) for each period were as follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(In Millions)	(In Millions)	Jun 27, 2020		Jun 29, 2019		Jun 27, 2020		Jun 29, 2019		(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Net revenue:	Net revenue:									Net revenue:
Client Computing Group										Client Computing Group
Platform										Platform	$	9,397	$	8,229	$	19,014	$	16,941
Adjacent										Adjacent	712		1,267		1,700		2,330
											10,109		9,496		20,714		19,271
Data Center Group	Data Center Group									Data Center Group
Platform	Platform	$	6,181	$	4,553	$	12,608	$	9,035	Platform	5,703		6,181		10,514		12,608
Adjacent	Adjacent	936		430		1,502		850		Adjacent	752		936		1,505		1,502
		7,117		4,983		14,110		9,885			6,455		7,117		12,019		14,110
Internet of Things	Internet of Things									Internet of Things
IOTG	IOTG	670		986		1,553		1,896		IOTG	984		670		1,898		1,553
Mobileye	Mobileye	146		201		400		410		Mobileye	327		146		704		400
		816		1,187		1,953		2,306			1,311		816		2,602		1,953

Non-Volatile Memory Solutions Group	Non-Volatile Memory Solutions Group	1,659		940		2,997		1,855		Non-Volatile Memory Solutions Group	1,098		1,659		2,205		2,997
Programmable Solutions Group	Programmable Solutions Group	501		489		1,020		975		Programmable Solutions Group	486		501		972		1,020
Client Computing Group
Platform		8,229		7,925		16,941		15,749
Adjacent		1,267		916		2,330		1,678
		9,496		8,841		19,271		17,427

All other	All other	139		65		205		118		All other	172		139		792		205
Total net revenue	Total net revenue	$	19,728	$	16,505	$	39,556	$	32,566	Total net revenue	$	19,631	$	19,728	$	39,304	$	39,556

Operating income (loss):	Operating income (loss):									Operating income (loss):
Client Computing Group										Client Computing Group	$	3,760	$	2,842	$	7,880	$	7,067
Data Center Group	Data Center Group	$	3,099	$	1,800	6,591		$	3,641	Data Center Group	1,941		3,099		3,214		6,591

Internet of Things	Internet of Things									Internet of Things
IOTG	IOTG	70		294		313		545		IOTG	287		70		499		313
Mobileye	Mobileye	(4)		53		84		121		Mobileye	109		(4)		256		84
		66		347		397		666			396		66		755		397

Non-Volatile Memory Solutions Group	Non-Volatile Memory Solutions Group	322		(284)		256		(581)		Non-Volatile Memory Solutions Group	402		322		573		256
Programmable Solutions Group	Programmable Solutions Group	80		52		177		141		Programmable Solutions Group	82		80		170		177
Client Computing Group		2,842		3,737		7,067		6,809
All other	All other	(712)		(1,035)		(1,753)		(1,885)		All other	(1,035)		(712)		(3,352)		(1,753)
Total operating income	Total operating income	$	5,697	$	4,617	$	12,735	$	8,791	Total operating income	$	5,546	$	5,697	$	9,240	$	12,735

Disaggregated net revenue for each period was as follows:


	Three Months Ended				Six Months Ended
(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Platform revenue
CCG desktop platform	$	2,635	$	2,368	$	5,279	$	5,208
CCG notebook platform	6,743		5,844		13,702		11,701
CCG other platform1	19		16		33		31
DCG platform	5,703		6,181		10,514		12,608
IOTG platform	891		619		1,731		1,414
	15,991		15,028		31,259		30,962

Adjacent revenue2	3,640		4,700		8,045		8,594
Total revenue	$	19,631	$	19,728	$	39,304	$	39,556

1 Includes our tablet and service provider revenue.

2 Includes all of our non-platform products for CCG, DCG, and IOTG such as modem, Ethernet, and silicon photonics, as well as Mobileye, NSG, and PSG products, as well as revenue included in our "all other" category.


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			119

Table of Contents

~~Disaggregated net revenue for each period was as follows:~~

Three Months Ended Six Months Ended
(In Millions) Jun 27, 2020 Jun 29, 2019 Jun 27, 2020 Jun 29, 2019
Platform revenue
DCG platform $ 6,181 $ 4,553 $ 12,608 $ 9,035
IOTG platform 619 891 1,414 1,716
CCG desktop platform 2,368 2,767 5,208 5,653
CCG notebook platform 5,844 5,136 11,701 10,063
CCG other platform¹
16 22 31 33
15,028 13,369 30,962 26,500
Adjacent revenue²
4,700 3,136 8,594 6,066
Total revenue $ 19,728 $ 16,505 $ 39,556 $ 32,566

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.~~


~~NOTE~~Note 3 :			~~EARNINGS PER SHARE~~Earnings Per Share

We computed basic earnings per share of common stock based on the weighted average number of shares of common stock outstanding during the period. We computed diluted earnings per share of common stock based on the weighted average number of shares of common stock outstanding plus potentially dilutive shares of common stock outstanding during the period.


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(In Millions, Except Per Share Amounts)	(In Millions, Except Per Share Amounts)	Jun 27, 2020		Jun 29, 2019		Jun 27, 2020		Jun 29, 2019		(In Millions, Except Per Share Amounts)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Net income available to common stockholders	Net income available to common stockholders	$	5,105	$	4,179	$	10,766	$	8,153	Net income available to common stockholders	$	5,061	$	5,105	$	8,422	$	10,766
Weighted average shares of common stock outstanding—basic	Weighted average shares of common stock outstanding—basic	4,246		4,466		4,256		4,479		Weighted average shares of common stock outstanding—basic	4,049		4,246		4,053		4,256
Dilutive effect of employee equity incentive plans	Dilutive effect of employee equity incentive plans	38		40		42		46		Dilutive effect of employee equity incentive plans	35		38		37		42
Dilutive effect of convertible debt		—		17		—		18

Weighted average shares of common stock outstanding—diluted	Weighted average shares of common stock outstanding—diluted	4,284		4,523		4,298		4,543		Weighted average shares of common stock outstanding—diluted	4,084		4,284		4,090		4,298
Earnings per share—basic	Earnings per share—basic	$	1.20	$	0.94	$	2.53	$	1.82	Earnings per share—basic	$	1.25	$	1.20	$	2.08	$	2.53
Earnings per share—diluted	Earnings per share—diluted	$	1.19	$	0.92	$	2.50	$	1.79	Earnings per share—diluted	$	1.24	$	1.19	$	2.06	$	2.50

Potentially dilutive shares of common stock from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding RSUs, and the assumed issuance of common stock under the stock purchase plan.

In January 2020, we fully redeemed the remaining principal of our 2009 Debentures. We included our 2009 Debentures in the calculation of diluted earnings per share of common stock in 2019 by applying the treasury stock method because the average market price was above the conversion price.

Securities which would have been anti-dilutive are insignificant and are excluded from the computation of diluted earnings per share in all periods presented.


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			12

~~Table of Contents~~


~~NOTE~~Note 4 :			~~CONTRACT LIABILITIES~~Contract Liabilities

(In Millions) Jun 27, 2020 Dec 28, 2019
Prepaid supply agreements $ 1,644 $ 1,805
Other 279 236
Total contract liabilities $ 1,923 $ 2,041

Contract liabilities ~~are primarily related to~~consist of prepayments received from customers on long-term prepaid supply agreements toward future ~~NSG~~ product ~~delivery. The short-term portion~~delivery and other revenue deferrals from regular ongoing business activity. Contract liabilities were $349 million as of ~~contract liabilities is reported on the Consolidated Condensed Balance Sheets within other accrued liabilities.~~June 26, 2021 ($1.9 billion as of December 26, 2020).

The following table shows the changes in contract liability balances relating to long-term prepaid supply agreements during the first six months of ~~2020:~~2021:


(In Millions)
Prepaid supply agreements balance as of December ~~28, 2019~~26, 2020	$	~~1,805~~1,625

~~Prepayments~~Concession payment	(950)
Prepaids utilized	~~(161)~~(621)
Prepaid supply agreements balance as of June ~~27, 2020~~26, 2021	$	~~1,644~~54

During the ~~second~~first quarter of ~~2020,~~2021, we ~~issued a contract termination notification for breach to~~settled an agreement with our largest prepaid ~~supply~~ customer ~~with a~~whose prepayment balance made up $1.6 billion ~~contract liability balance. The timing and amount~~ of ~~future anticipated revenue, or reversal of any~~our contract liability balance ~~resulting~~as of December 26, 2020. We returned $950 million to the customer and recognized $584 million in revenue for having completed performance of the prepaid supply agreement. The prepaid supply agreement is excluded from ~~contract termination may vary due~~the NAND memory business and is recorded as Corporate revenue in the first six months of 2021 in the "all other" category presented in "Note 2: Operating Segments" within Notes to ~~ongoing customer negotiations.~~Consolidated Condensed Financial Statements.


~~NOTE~~Note 5 :			~~OTHER FINANCIAL STATEMENT DETAILS~~Other Financial Statement Details

~~INVENTORIES~~Inventories

(In Millions) Jun 27, 2020 Dec 28, 2019
Raw materials $ 903 $ 840
Work in process 6,093 6,225
Finished goods 1,973 1,679
Total inventories $ 8,969 $ 8,744

~~INTEREST AND OTHER, NET~~

~~The components of interest and other, net for each period were as follows:~~

Three Months Ended Six Months Ended
(In Millions) Jun 27, 2020 Jun 29, 2019 Jun 27, 2020 Jun 29, 2019
Interest income $ 83 $ 125 $ 176 $ 260
Interest expense (186) (135) (321) (273)
Other, net 74 (53) (197) (111)
Total interest and other, net $ (29) $ (63) $ (342) $ (124)

Interest expense in the preceding table is net of $87 million of interest capitalized in the second quarter of 2020 and $170 million in the first six months of 2020 ($120 million in the second quarter of 2019 and $245 million in the first six months of 2019).


(In Millions)	Jun 26, 2021		Dec 26, 2020
Raw materials	$	1,010	$	908
Work in process	5,968		5,693
Finished goods	1,839		1,826
Total inventories	$	8,817	$	8,427


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			1310

Table of Contents

Interest and Other, Net


	Three Months Ended				Six Months Ended
(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Interest income	$	37	$	83	$	74	$	176
Interest expense	(129)		(186)		(319)		(321)
Other, net	(4)		74		(7)		(197)
Total interest and other, net	$	(96)	$	(29)	$	(252)	$	(342)

Interest expense in the preceding table is net of $96 million of interest capitalized in the second quarter of 2021 and $193 million in the first six months of 2021 ($87 million in the second quarter of 2020 and $170 million in the first six months of 2020).


~~NOTE~~Note 6 :			~~RESTRUCTURING AND OTHER CHARGES~~Restructuring and Other Charges

A restructuring program, which is ongoing, was approved in the first quarter of 2020 to further align our workforce with our continuing investments in the business and to execute the planned divestiture of Home Gateway Platform, a division of CCG. ~~We expect these~~These actions are expected to be substantially ~~complete~~completed in 2021.


	Three Months Ended				Six Months Ended
(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Employee severance and benefit arrangements	$	15	$	1	$	22	$	106

Litigation charges and other	49		0		2,251		57
Asset impairment charges	282		8		282		8
Total restructuring and other charges	$	346	$	9	$	2,555	$	171

Litigation charges and other includes a charge of $2.2 billion in the ~~third~~first quarter of ~~2020.~~2021 related to the VLSI litigation, which is recorded as a Corporate charge in the "all other" category presented in "Note 2: Operating Segments" within Notes to Consolidated Condensed Financial Statements. Refer to "Note 13: Contingencies" within Notes to Consolidated Condensed Financial Statements for further information on legal proceedings related to the VLSI litigation.

~~A restructuring program was approved~~Asset impairment charges includes impairments related to the shutdown in the second quarter of ~~2019 to align~~2021 of two of our ~~workforce with our exit~~non-strategic businesses, the results of ~~the smartphone modem business. We expect these actions to be substantially complete~~which are included in the ~~third quarter~~“all other” category presented in “Note 2: Operating Segments” within Notes to Consolidated Condensed Financial Statements. The goodwill related to these businesses was impaired, resulting in a charge of ~~2020.~~

~~Restructuring and~~$237 million recognized in the “all other” category along with other impairment charges ~~by type for each period were as follows:~~

Three Months Ended Six Months Ended
(In Millions) Jun 27, 2020 Jun 29, 2019 Jun 27, 2020 Jun 29, 2019
Employee severance and benefit arrangements $ 1 $ 168 $ 106 $ 168
Asset impairment and other charges 8 16 65 16
Total restructuring and other charges $ 9 $ 184 $ 171 $ 184
related to these businesses.


~~NOTE~~Note 7 :			~~INVESTMENTS~~Investments

~~DEBT INVESTMENTS~~Debt Investments

Trading Assets

For trading assets still held at the reporting date we recorded net gains of ~~$347~~$2 million in the second quarter of ~~2020~~2021 and net ~~gains~~losses of ~~$183~~$226 million in the first six months of ~~2020~~2021 ($99347 million of net gains in the second quarter of ~~2019~~2020 and ~~$117~~$183 million of net gains in the first six months of ~~2019)~~2020). Net ~~losses~~gains on the related derivatives were ~~$251~~$23 million in the second quarter of ~~2020~~2021 and net ~~losses~~gains of ~~$204~~$245 million in the first six months of ~~2020~~2021 ($~~102~~251 million of net losses in the second quarter of ~~2019~~2020 and ~~$104~~$204 million of net losses in the first six months of ~~2019)~~2020).

Available-for-Sale Debt Investments

Jun 27, 2020 Dec 28, 2019
(In Millions) Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Corporate debt $ 3,911 $ 94 $ — $ 4,005 $ 2,914 $ 44 $ — $ 2,958
Financial institution
instruments 7,985 24 — 8,009 3,007 15 (1) 3,021
Government debt 2,491 12 — 2,503 560 4 — 564
Total available-for-sale debt investments $ 14,387 $ 130 $ — $ 14,517 $ 6,481 $ 63 $ (1) $ 6,543

Available-for-sale investments include corporate debt, government debt, and financial institution instruments. Government debt includes instruments such as non-U.S. government bonds and U.S. agency securities. Financial institution instruments include instruments issued or managed by financial institutions in various forms, such as commercial paper, ~~fixed~~fixed- and ~~floating rate~~floating-rate bonds, money market fund deposits, and time deposits. ~~Substantially~~As of June 26, 2021 and December 26, 2020, substantially all time deposits were issued by institutions outside the U.S. The adjusted cost of our available-for-sale investments was $6.8 billion as of June ~~27, 2020~~26, 2021 and $7.8 billion as of December ~~28, 2019.~~

26, 2020. The adjusted cost of our available-for-sale investments approximated the fair value ~~of available-for-sale debt investments, by contractual maturity, as of June 27, 2020, was as follows:~~


~~(In Millions)~~	~~Fair Value~~
~~Due in 1 year or less~~	$for these periods.	~~7,763~~
~~Due in 1–2 years~~	~~1,525~~
~~Due in 2–5 years~~	~~1,359~~
~~Due after 5 years~~	—
~~Instruments not due at a single maturity date~~	~~3,870~~
~~Total~~	$	~~14,517~~


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			1411

Table of Contents

~~EQUITY INVESTMENTS~~The fair value of available-for-sale debt investments, by contractual maturity, as of June 26, 2021, was as follows:

(In Millions) Jun 27, 2020 Dec 28, 2019
Marketable equity securities $ 464 $ 450
Non-marketable equity securities 3,419 3,480
Equity method investments 18 37
Total $ 3,901

$ 3,967


(In Millions)	Fair Value
Due in 1 year or less	$	4,826
Due in 1–2 years	247
Due in 2–5 years	1,015
Due after 5 years	0
Instruments not due at a single maturity date	829
Total	$	6,917

Equity Investments


(In Millions)	Jun 26, 2021		Dec 26, 2020
Marketable equity securities	$	1,615	$	1,830
Non-marketable equity securities	4,023		3,304
Equity method investments	17		18
Total	$	5,655	$	5,152

The components of gains (losses) on equity investments, net for each period were as follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(In Millions)	(In Millions)	Jun 27, 2020		Jun 29, 2019		Jun 27, 2020		Jun 29, 2019		(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Ongoing mark-to-market adjustments on marketable equity securities	Ongoing mark-to-market adjustments on marketable equity securities	$	165	$	(179)	$	62	$	74	Ongoing mark-to-market adjustments on marketable equity securities	$	138	$	165	$	(153)	$	62
Observable price adjustments on non-marketable equity securities	Observable price adjustments on non-marketable equity securities	58		8		137		16		Observable price adjustments on non-marketable equity securities	72		58		623		137
Impairment charges	Impairment charges	(51)		(39)		(193)		(62)		Impairment charges	(35)		(51)		(73)		(193)
Sale of equity investments and other¹	Sale of equity investments and other¹	95		380		150		576		Sale of equity investments and other¹	120		95		266		150
Total gains (losses) on equity investments, net	Total gains (losses) on equity investments, net	$	267	$	170	$	156	$	604	Total gains (losses) on equity investments, net	$	295	$	267	$	663	$	156

¹ Sale of equity investments and other includes realized gains (losses) on sales of non-marketable equity investments, our share of equity method ~~investee~~investees' gains (losses) and distributions, and initial fair value adjustments recorded upon a security becoming marketable.

We recognized higher than historically experienced impairment charges on our non-marketable portfolio in the first six months of 2020 based on our assessment of the impact of recent public and private market volatility and tightening of liquidity.

Gains and losses for our marketable and non-marketable equity securities ~~during the~~for each period were as follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(In Millions)	(In Millions)	Jun 27, 2020		Jun 29, 2019		Jun 27, 2020		Jun 29, 2019		(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Net gains (losses) recognized during the period on equity securities	Net gains (losses) recognized during the period on equity securities	$	223	$	(178)	$	83	$	84	Net gains (losses) recognized during the period on equity securities	$	226	$	223	$	537	$	83
Less: Net (gains) losses recognized during the period on equity securities sold during the period	Less: Net (gains) losses recognized during the period on equity securities sold during the period	(55)		(33)		(58)		(258)		Less: Net (gains) losses recognized during the period on equity securities sold during the period	(26)		(55)		(125)		(58)
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	168	$	(211)	$	25	$	(174)	Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	200	$	168	$	412	$	25

~~IMFT~~Beijing Unisoc Technology Ltd.

~~IMFT was formed~~We account for our interest in ~~2006 by Micron~~Beijing Unisoc Technology ~~Inc. (Micron)~~Ltd. (Unisoc) as a non-marketable equity security. In the first quarter of 2021, we recognized $471 million in observable price adjustments in our investment in Unisoc and ~~Intel to jointly develop NAND flash memory and 3D XPoint™ technology products. As~~as of June ~~29, 2019, we had a carrying~~26, 2021, the net book value of ~~$1.3~~the investment was $1.1 billion in IMFT and owned a 49% interest in the unconsolidated variable interest entity. We sold our non-controlling interest in IMFT to Micron in October 2019. We will continue to purchase product manufactured by Micron at the IMFT facility under supply agreements, which include the next generation($658 million as of ~~3D XPoint™ technology.~~


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			15

December 26, 2020).


~~NOTE~~Note 8 :			~~ACQUISITIONS AND DIVESTITURES~~Acquisitions and Divestitures

~~ACQUISITIONS~~Acquisitions

~~Acquisition of Moovit~~

On May 4, 2020, we acquired Moovit, aMaaS solutions company, for total consideration of ~~$915~~$915 million. The fair values of the assets acquired relate to goodwill of $638 millionand intangible assets of $331 ~~million.~~million. The goodwill arising from the acquisition is attributed to the expected synergies and other benefits that will be generated from the combination of Intel and ~~Moovit. We expect substantially~~Moovit. Substantially all of the goodwill will not be deductible for local tax purposes. The acquisition-related intangible assets are primarily related to Moovit's monthly active user base and application ~~platform.~~platform. The goodwill and operating results of Moovit are included in our Mobileye operating segment.

~~DIVESTITURES~~

~~Planned Divestiture of our Home Gateway Platform Division~~

We signed a definitive agreement on April 5, 2020 to sell the majority of Home Gateway Platform, a division of CCG. The transaction contemplates the transfer of certain employees, equipment, and an on-going supply agreement for future units. We reclassified the assets and liabilities as held-for-sale within other current assets/liabilities. We expect to close the transaction in the third quarter of 2020.


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			16

~~Table of Contents~~


~~NOTE 9 :~~			~~BORROWINGS~~

~~As of June 27, 2020, our short-term debt was $2.3 billion, primarily comprised of the current portion of our long-term debt ($3.7 billion as of December 28, 2019).~~

~~We have an ongoing authorization from our Board of Directors to borrow up to $10.0 billion under our commercial paper program.~~

~~LONG-TERM DEBT~~

Jun 27, 2020 Dec 28, 2019
(In Millions) Effective Interest Rate Amount Amount
Floating-rate senior notes:
Three-month LIBOR plus 0.08%, due May 2020 — % $ — $ 700
Three-month LIBOR plus 0.35%, due May 2022 1.82 % 800 800
Fixed-rate senior notes:
1.85%, due May 2020 — % — 1,000
2.45%, due July 2020 2.48 % 1,750 1,750
1.70%, due May 2021 1.78 % 500 500
3.30%, due October 2021 2.98 % 2,000 2,000
2.35%, due May 2022 1.95 % 750 750
3.10%, due July 2022 2.69 % 1,000 1,000
4.00%, due December 2022¹ 3.11 % 379 382
2.70%, due December 2022 2.28 % 1,500 1,500
4.10%, due November 2023 3.21 % 400 400
2.88%, due May 2024 2.31 % 1,250 1,250
2.70%, due June 2024 2.13 % 600 600
3.40%, due March 2025 3.46 % 1,500 —
3.70%, due July 2025 3.48 % 2,250 2,250
2.60%, due May 2026 1.94 % 1,000 1,000
3.75%, due March 2027 3.80 % 1,000 —
3.15%, due May 2027 2.48 % 1,000 1,000
2.45%, due November 2029 2.39 % 2,000 1,250
3.90%, due March 2030 3.94 % 1,500 —
4.00%, due December 2032 2.30 % 750 750 ��
4.60%, due March 2040 4.62 % 750 —
4.80%, due October 2041 3.53 % 802 802
4.25%, due December 2042 2.48 % 567 567
4.90%, due July 2045 3.45 % 772 772
4.10%, due May 2046 2.76 % 1,250 1,250
4.10%, due May 2047 2.63 % 1,000 1,000
4.10%, due August 2047 2.20 % 640 640
3.73%, due December 2047 2.89 % 1,967 1,967
3.25%, due November 2049 3.19 % 2,000 1,500
4.75%, due March 2050 4.76 % 2,250 —
3.10%, due February 2060 3.12 % 1,000 —
4.95%, due March 2060 5.00 % 1,000 —
Oregon and Arizona bonds:
2.40%-2.70%, due December 2035 - 2040 2.49 % 423 423
5.00%, due March 2049 2.12 % 138 138
5.00%, due June 2049 2.15 % 438 438
Junior Subordinated Convertible Debentures:
3.25%, due August 2039 — — 372
Total Senior Notes and Other Borrowings 36,926 28,751
Unamortized Premium/Discount and Issuance Costs (375) (529)
Hedge Accounting Fair Value Adjustments 1,796 781
Long-term debt 38,347 29,003
Current portion of long-term debt (2,254) (3,695)
Total long-term debt $ 36,093 $ 25,308

¹To manage foreign currency risk associated with the Australian-dollar-denominated notes issued in 2015, we entered into currency interest rate swaps with an aggregate notional amount of $396 million, which effectively converted these notes to U.S.-dollar-denominated notes. For further discussion on our currency interest rate swaps, see "Note 12: Derivative Financial Instruments."


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			1712

Table of Contents

Divestitures

NAND Memory Business

On October 19, 2020, we signed an agreement with SK hynix Inc. (SK hynix) to divest our NAND memory business, including our NAND memory fabrication facility in Dalian, China and certain related equipment and tangible assets (the Fab Assets), our NAND SSD business (the NAND SSD Business), and our NAND memory technology and manufacturing business (the NAND OpCo Business). Our Intel® Optane™ memory business is expressly excluded from the transaction. The transaction will occur over two closings for total consideration of $9.0 billion in cash, of which $7.0 billion will be received upon initial closing, not to occur prior to November 1, 2021, and the remaining $2.0 billion will be received no earlier than March 2025. The consummations of the first closing and the second closing are subject to customary conditions, including the receipt of certain governmental approvals.

At the first closing, Intel will sell to SK hynix the Fab Assets and the NAND SSD Business, and SK hynix will assume from Intel certain liabilities related to the Fab Assets and the NAND SSD Business. In connection with the first closing, we and certain affiliates of SK hynix will also enter into a NAND wafer manufacturing and sale agreement pursuant to which we will manufacture and sell to SK hynix NAND memory wafers to be manufactured using the Fab Assets in Dalian, China, until the second closing.

We will transfer certain employees, IP, and other assets related to the NAND OpCo Business to separately created, wholly owned subsidiaries of Intel at the first closing. The equity interest of these wholly owned subsidiaries will transfer to SK hynix at the second closing. We have concluded based on the terms of the transaction agreements that the subsidiaries will be variable interest entities for which we are not the primary beneficiary, and accordingly will deconsolidate at the first closing.

The carrying amounts of the major classes of NAND assets held for sale included the following:


(In Millions)	Jun 26, 2021		Dec 26, 2020
Inventories	$	699	$	962
Property, plant and equipment, net	5,118		4,363
Total assets held for sale	$	5,817	$	5,325

We ceased recording depreciation on property, plant and equipment as of the date the assets triggered held for sale accounting. Total capital purchases of approximately $1.8 billion expected in 2021 prior to the first closing will be classified as assets held for sale in the Consolidated Condensed Balance Sheets and within additions to held for sale NAND property, plant and equipment on the Consolidated Condensed Statements of Cash Flows.


Note 9 :			Borrowings

In the ~~first six months~~second quarter of ~~2020,~~2021, we settled ~~$2.1 billion in short-term debt.~~ $500 million of our senior notes due May 2021.

In the first quarter of ~~2020, the remaining $372 million of our 2009 Debentures were converted or redeemed, and in the second quarter of 2020,~~2021, we ~~settled $1.7~~entered into a $5.0 billion ~~of our notes due May 2020.~~

~~In the first six months of 2020, we issued a total of $10.3 billion aggregate principal amount of senior notes. We intend~~variable-rate revolving credit facility which, if drawn, is expected to ~~use the net proceeds from the offering~~be used for general corporate ~~purposes, which may include refinancing~~purposes. The revolving credit facility matures in March 2026 and had no borrowings outstanding ~~debt, funding for working capital and capital expenditures, and repurchasing shares~~as of June 26, 2021.

We have an ongoing authorization from our ~~common stock.~~ Board of Directors to borrow up to $10.0 billion under our commercial paper program.

Our senior floating rate notes pay interest quarterly and our senior fixed rate notes pay interest semiannually. We may redeem the fixed rate notes prior to their maturity at our option at specified redemption prices and subject to certain restrictions. The obligations under ~~the~~our notes rank equally in right of payment with all of our other existing and future senior unsecured indebtedness and effectively rank junior to all liabilities of our subsidiaries.


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			1813

Table of Contents


~~NOTE~~Note 10 :			~~FAIR VALUE~~Fair Value

~~ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS~~Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis


		Jun 27, 2020														Dec 28, 2019															Jun 26, 2021					Dec 26, 2020
		Fair Value Measured and Recorded at Reporting Date Using												Fair Value Measured and Recorded at Reporting Date Using													Fair Value Measured and Recorded at Reporting Date Using								Fair Value Measured and Recorded at Reporting Date Using
(In Millions)	(In Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		(In Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets																	Assets
Cash equivalents:	Cash equivalents:																	Cash equivalents:
Corporate debt	Corporate debt	$	—	$	715	$	—	$	715	$	—	$	713	$	—	$	713	Corporate debt	$	0	$	648	$	0	$	648	$	0	$	50	$	0	$	50
Financial institution instruments¹	Financial institution instruments¹	3,870		1,591		—		5,461		1,064		408		—		1,472		Financial institution instruments¹	829		1,064		0		1,893		2,781		636		0		3,417
Government debt²	Government debt²	—		666		—		666		—		—		—		—		Government debt²	0		100		0		100		0		0		0		0
Reverse repurchase agreements	Reverse repurchase agreements	—		1,400		—		1,400		—		1,500		—		1,500		Reverse repurchase agreements	0		1,350		0		1,350		0		1,900		0		1,900
Short-term investments:	Short-term investments:																	Short-term investments:
Corporate debt	Corporate debt	—		1,426		—		1,426		—		347		—		347		Corporate debt	0		960		0		960		0		428		0		428
Financial institution instruments¹	Financial institution instruments¹	—		2,096		—		2,096		—		724		—		724		Financial institution instruments¹	0		1,484		0		1,484		0		1,179		0		1,179
Government debt²	Government debt²	—		1,269		—		1,269		—		11		—		11		Government debt²	0		570		0		570		0		685		0		685
Trading assets:	Trading assets:																	Trading assets:

Corporate debt	Corporate debt	—		3,605		—		3,605		—		2,848		—		2,848		Corporate debt	0		4,537		0		4,537		0		3,815		0		3,815
Financial institution instruments¹	Financial institution instruments¹	206		2,304		—		2,510		87		1,578		—		1,665		Financial institution instruments¹	218		3,568		0		3,786		131		2,847		0		2,978
Government debt²	Government debt²	—		6,173		—		6,173		—		3,334		—		3,334		Government debt²	0		8,774		0		8,774		0		8,945		0		8,945
Other current assets:	Other current assets:																	Other current assets:
Derivative assets	Derivative assets	30		250		—		280		50		230		—		280		Derivative assets	39		300		0		339		48		644		0		692
Loans receivable³	Loans receivable³	—		348		—		348		—		—		—		—		Loans receivable³	0		213		0		213		0		439		0		439
Marketable equity securities	Marketable equity securities	464		—		—		464		450		—		—		450		Marketable equity securities	90		1,525		0		1,615		136		1,694		0		1,830
Other long-term investments:	Other long-term investments:																	Other long-term investments:

Corporate debt	Corporate debt	—		1,864		—		1,864		—		1,898		—		1,898		Corporate debt	0		892		0		892		0		1,520		0		1,520
Financial institution instruments¹	Financial institution instruments¹	—		452		—		452		—		825		—		825		Financial institution instruments¹	0		216		0		216		0		257		0		257
Government debt²	Government debt²	—		568		—		568		—		553		—		553		Government debt²	0		154		0		154		0		415		0		415
Other long-term assets:	Other long-term assets:																	Other long-term assets:
Derivative assets	Derivative assets	—		1,679		35		1,714		—		690		16		706		Derivative assets	0		1,029		16		1,045		0		1,520		30		1,550
Loans receivable³	Loans receivable³	—		212		—		212		—		554		—		554		Loans receivable³	0		0		0		0		0		157		0		157
Total assets measured and recorded at fair value	Total assets measured and recorded at fair value	$	4,570	$	26,618	$	35	$	31,223	$	1,651	$	16,213	$	16	$	17,880	Total assets measured and recorded at fair value	$	1,176	$	27,384	$	16	$	28,576	$	3,096	$	27,131	$	30	$	30,257
Liabilities	Liabilities																	Liabilities
Other accrued liabilities:	Other accrued liabilities:																	Other accrued liabilities:
Derivative liabilities	Derivative liabilities	$	48	$	432	$	—	$	480	$	3	$	287	$	—	$	290	Derivative liabilities	$	5	$	613	$	0	$	618	$	0	$	810	$	0	$	810

Other long-term liabilities:	Other long-term liabilities:																	Other long-term liabilities:
Derivative liabilities	Derivative liabilities	—		22		—		22		—		13		—		13		Derivative liabilities	0		4		0		4		0		5		0		5
Total liabilities measured and recorded at fair value	Total liabilities measured and recorded at fair value	$	48	$	454	$	—	$	502	$	3	$	300	$	—	$	303	Total liabilities measured and recorded at fair value	$	5	$	617	$	0	$	622	$	0	$	815	$	0	$	815

¹Level 1 investments consist of money market funds. Level 2 investments consist primarily of commercial paper, certificates of deposit, time deposits, and notes and bonds issued by financial institutions.

²Level 2 investments consist primarily of U.S. agency notes and non-U.S. government debt.

³The fair value of our loans receivable for which we elected the fair value option did not significantly differ from the contractual principal ~~balance based~~balance.

Assets Measured and Recorded at Fair Value on ~~the contractual currency.~~


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			19

~~Table of Contents~~

~~ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS~~a Non-Recurring Basis

Our non-marketable equity securities, equity method investments, and certain non-financial assets, such as intangible assets and property, plant and equipment, are recorded at fair value only if an impairment or observable price adjustment is recognized in the current period. If an observable price adjustment or impairment is recognized on our non-marketable equity securities during the period, we classify these assets as Level ~~3 within the fair value hierarchy based~~3.


			Financial Statements			Notes to Financial Statements			14

Table of Contents

Financial Instruments Not Recorded at Fair Value on ~~the nature of the fair value inputs.~~

~~FINANCIAL INSTRUMENTS NOT RECORDED AT FAIR VALUE ON A RECURRING BASIS~~a Recurring Basis

Financial instruments not recorded at fair value on a recurring basis include non-marketable equity securities and equity method investments that have not been remeasured or impaired in the current period, grants receivable, ~~loans receivable, reverse repurchase agreements with original maturities greater than three months,~~ and issued debt.

~~As of June 27, 2020,~~We classify the ~~aggregate carrying~~fair value of grants receivable ~~and reverse repurchase agreements with original maturities greater than three months was $301 million ($543 million~~ as ~~of December 28, 2019).~~Level 2. The estimated fair value of these financial instruments approximates their carrying value. The aggregate carrying value ~~and is categorized~~of grants receivable as ~~Level 2 within the fair value hierarchy based on the nature of the fair value inputs.~~

As of June ~~27,~~26, 2021 was $260 million (the aggregate carrying value of grants receivable as of December 26, 2020 was $139 million).

We classify the fair value of ~~our~~ issued debt (excluding commercial paper and drafts payable) as Level 2. The fair value of these instruments was~~$42.5~~ $39.0 billion~~($30.6~~ as of June 26, 2021 ($40.9 billion as of December ~~28, 2019)~~26, 2020). ~~These liabilities are classified as Level 2 within the fair value hierarchy based on the nature of the fair value inputs.~~


~~NOTE~~Note 11 :			~~OTHER COMPREHENSIVE INCOME (LOSS)~~Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component and related tax effects in the first six months of ~~2020~~2021 were as follows:


(In Millions)	(In Millions)	Unrealized Holding Gains (Losses) on Derivatives		Actuarial Valuation and Other Pension Expenses		Translation Adjustments and Other		Total		(In Millions)	Unrealized Holding Gains (Losses) on Derivatives		Actuarial Valuation and Other Pension Expenses		Translation Adjustments and Other		Total
Balance as of December 28, 2019		$	54	$	(1,382)	$	48	$	(1,280)
Balance as of December 26, 2020										Balance as of December 26, 2020	$	731	$	(1,565)	$	83	$	(751)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	19		(2)		69		86		Other comprehensive income (loss) before reclassifications	(285)		3		(32)		(314)
Amounts reclassified out of accumulated other comprehensive income (loss)	Amounts reclassified out of accumulated other comprehensive income (loss)	60		28		—		88		Amounts reclassified out of accumulated other comprehensive income (loss)	(161)		31		0		(130)
Tax effects	Tax effects	(28)		(3)		(15)		(46)		Tax effects	102		(9)		7		100
Other comprehensive income (loss)	Other comprehensive income (loss)	51		23		54		128		Other comprehensive income (loss)	(344)		25		(25)		(344)
Balance as of June 27, 2020		$	105	$	(1,359)	$	102	$	(1,152)
Balance as of June 26, 2021										Balance as of June 26, 2021	$	387	$	(1,540)	$	58	$	(1,095)

We estimate that we will reclassify approximately ~~$48~~$115 million (before taxes) of net derivative gains included in accumulated other comprehensive income (loss) into earnings within the next 12 months.


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			20

~~Table of Contents~~


~~NOTE~~Note 12 :			~~DERIVATIVE FINANCIAL INSTRUMENTS~~Derivative Financial Instruments

~~VOLUME OF DERIVATIVE ACTIVITY~~Volume of Derivative Activity

Total gross notional amounts for outstanding derivatives ~~(recorded at fair value)~~ at the end of each period were as follows:

(In Millions) Jun 27, 2020 Dec 28, 2019
Foreign currency contracts $ 29,129 $ 23,981
Interest rate contracts 14,349 14,302
Other 1,787 1,753
Total $ 45,265 $ 40,036

~~FAIR VALUE OF DERIVATIVE INSTRUMENTS~~

Jun 27, 2020 Dec 28, 2019
(In Millions)
Assets¹
Liabilities²
Assets¹
Liabilities²
Derivatives designated as hedging instruments:
Foreign currency contracts³
$ 76 $ 81 $ 56 $ 159
Interest rate contracts 1,713 — 690 9
Total derivatives designated as hedging instruments 1,789 81 746 168
Derivatives not designated as hedging instruments:
Foreign currency contracts³
171 224 179 78
Interest rate contracts 4 149 11 54
Equity contracts 30 48 50 3
Total derivatives not designated as hedging instruments 205 421 240 135
Total derivatives $ 1,994 $ 502 $ 986 $ 303

¹~~Derivative assets are recorded as other assets, current and non-current.~~

²~~Derivative liabilities are recorded as other liabilities, current and non-current.~~

³~~The majority of these instruments mature within 12 months.~~


(In Millions)	Jun 26, 2021		Dec 26, 2020
Foreign currency contracts	$	30,726	$	31,209
Interest rate contracts	14,652		14,461
Other	2,274		2,026
Total	$	47,652	$	47,696


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			2115

Table of Contents

~~AMOUNTS OFFSET IN THE CONSOLIDATED CONDENSED BALANCE SHEETS~~Fair Value of Derivative Instruments


	Jun 26, 2021				Dec 26, 2020
(In Millions)	Assets1		Liabilities2		Assets1		Liabilities2
Derivatives designated as hedging instruments:
Foreign currency contracts3	$	143	$	95	$	551	$	2
Interest rate contracts	1,021		0		1,498		0
Total derivatives designated as hedging instruments	1,164		95		2,049		2
Derivatives not designated as hedging instruments:
Foreign currency contracts3	173		428		142		685
Interest rate contracts	8		94		3		128
Equity contracts	39		5		48		0
Total derivatives not designated as hedging instruments	220		527		193		813
Total derivatives	$	1,384	$	622	$	2,242	$	815

1Derivative assets are recorded as other assets, current and non-current.

2Derivative liabilities are recorded as other liabilities, current and non-current.

3The majority of these instruments mature within 12 months.

Amounts Offset in the Consolidated Condensed Balance Sheets

The gross amounts of our derivative instruments and reverse repurchase agreements subject to master netting arrangements with various counterparties, and cash and non-cash collateral posted under such agreements at the end of each period were as follows:

Jun 27, 2020
Gross Amounts Not Offset in the Balance Sheet
(In Millions) Gross Amounts Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Cash and Non-Cash Collateral Received or Pledged Net Amount
Assets:
Derivative assets subject to master netting arrangements $ 1,985 $ — $ 1,985 $ (318) $ (1,641) $ 26
Reverse repurchase agreements 1,500 — 1,500 — (1,489) 11
Total assets $ 3,485 $ — $ 3,485 $ (318) $ (3,130) $ 37
Liabilities:
Derivative liabilities subject to master netting arrangements $ 397 $ — $ 397 $ (318) $ (79) $ —
Total liabilities $ 397 $ — $ 397 $ (318) $ (79) $ —

Dec 28, 2019
Gross Amounts Not Offset in the Balance Sheet
(In Millions) Gross Amounts Recognized Gross Amounts Offset in the Balance Sheet Net Amounts Presented in the Balance Sheet Financial Instruments Cash and Non-Cash Collateral Received or Pledged Net Amount
Assets:
Derivative assets subject to master netting arrangements $ 974 $ — $ 974 $ (144) $ (808) $ 22
Reverse repurchase agreements 1,850 — 1,850 — (1,850) —
Total assets $ 2,824 $ — $ 2,824 $ (144) $ (2,658) $ 22
Liabilities:
Derivative liabilities subject to master netting arrangements $ 262 $ — $ 262 $ (144) $ (72) $ 46
Total liabilities $ 262 $ — $ 262 $ (144) $ (72) $ 46

~~We obtain and secure available collateral from counterparties against obligations, including securities lending transactions and reverse repurchase agreements, when we deem it appropriate.~~

~~DERIVATIVES IN CASH FLOW HEDGING RELATIONSHIPS~~

~~The before-tax net gains or losses attributed to cash flow hedges, recognized in other comprehensive income (loss), were $392 million net~~ ~~gains~~ ~~in the second quarter of 2020 and $19 million net gains in the first six months of 2020 ($122 million net gains in the second quarter of 2019 and $151 million net~~ ~~gains~~ ~~in the first six months of 2019). Substantially all of our cash flow hedges were foreign currency contracts for all periods presented.~~

~~During the first six months of 2020 and 2019, the amounts excluded from effectiveness testing were insignificant.~~


	Jun 26, 2021
							Gross Amounts Not Offset in the Balance Sheet
(In Millions)	Gross Amounts Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments		Cash and Non-Cash Collateral Received or Pledged		Net Amount
Assets:
Derivative assets subject to master netting arrangements	$	1,378	0		$	1,378	$	(343)	$	(1,033)	$	2
Reverse repurchase agreements	1,350		0		1,350		0		(1,350)		0
Total assets	2,728		0		2,728		(343)		(2,383)		2
Liabilities:
Derivative liabilities subject to master netting arrangements	495		0		495		(343)		(152)		0
Total liabilities	$	495	$	0	$	495	$	(343)	$	(152)	$	0


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			2216

Table of Contents

~~DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS~~


	Dec 26, 2020
							Gross Amounts Not Offset in the Balance Sheet
(In Millions)	Gross Amounts Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments		Cash and Non-Cash Collateral Received or Pledged		Net Amount
Assets:
Derivative assets subject to master netting arrangements	$	2,235	$	0	$	2,235	$	(264)	$	(1,904)	$	67
Reverse repurchase agreements	1,900		0		1,900		0		(1,900)		0
Total assets	4,135		0		4,135		(264)		(3,804)		67
Liabilities:
Derivative liabilities subject to master netting arrangements	711		0		711		(264)		(447)		0
Total liabilities	$	711	$	0	$	711	$	(264)	$	(447)	$	0

We obtain and secure available collateral from counterparties against obligations, including securities lending transactions and reverse repurchase agreements, when we deem it appropriate.

Derivatives in Cash Flow Hedging Relationships

The before-tax net gains or losses attributed to cash flow hedges, recognized in other comprehensive income (loss), were $49 million net gains in the second quarter of 2021 and $285 million net losses in the first six months of 2021 ($392 million net gains in the second quarter of 2020 and $19 million net gains in the first six months of 2020). Substantially all of our cash flow hedges were foreign currency contracts for all periods presented.

During the first six months of 2021 and 2020, the amounts excluded from effectiveness testing were insignificant.

Derivatives in Fair Value Hedging Relationships

The effects of derivative instruments designated as fair value hedges, recognized in interest and other, net for each period were as follows:


		Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives															Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives
		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(In Millions)	(In Millions)	Jun 27, 2020		Jun 29, 2019		Jun 27, 2020		Jun 29, 2019		(In Millions)	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Interest rate contracts	Interest rate contracts	$	78	$	554	$	1,032	$	1,039	Interest rate contracts	$	35	$	78	$	(477)	$	1,032
Hedged items	Hedged items	(78)		(554)		(1,032)		(1,039)		Hedged items	(35)		(78)		477		(1,032)
Total	Total	$	—	$	—	$	—	$	—	Total	$	0	$	0	$	0	$	0

The amounts recorded on the Consolidated Condensed Balance Sheets related to cumulative basis adjustments for fair value hedges for each period were as follows:


Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included	Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Item Asset/(Liabilities)						Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)						Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included	Carrying Amount of the Hedged Item Asset/(Liabilities)				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)
(In Millions)	(In Millions)	Jun 27, 2020		Dec 28, 2019		Jun 27, 2020		Dec 28, 2019		(In Millions)	Jun 26, 2021		Dec 26, 2020		Jun 26, 2021		Dec 26, 2020
Long-term debt	Long-term debt	$	(13,710)	$	(12,678)	$	(1,713)	$	(681)	Long-term debt	$	(13,018)	$	(13,495)	$	(1,021)	$	(1,498)

The total notional amount of pay-variable and receive-fixed interest rate swaps was $12.0 billion as of June ~~27, 2020~~26, 2021 and as of December ~~28, 2019.~~26, 2020.

~~DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS~~


			Financial Statements			Notes to Financial Statements			17

Table of Contents

Derivatives Not Designated as Hedging Instruments

The effects of derivative instruments not designated as hedging instruments on the Consolidated Condensed Statements of Income for each period were as follows:


			Three Months Ended						Six Months Ended								Three Months Ended				Six Months Ended
(In Millions)	(In Millions)	Location of Gains (Losses) Recognized in Income on Derivatives	Jun 27, 2020		Jun 29, 2019		Jun 27, 2020		Jun 29, 2019		(In Millions)	Location of Gains (Losses) Recognized in Income on Derivatives	Jun 26, 2021		Jun 27, 2020		Jun 26, 2021		Jun 27, 2020
Foreign currency contracts	Foreign currency contracts	Interest and other, net	$	(216)	$	(20)	$	(62)	$	37	Foreign currency contracts	Interest and other, net	$	(22)	$	(216)	$	212	$	(62)
Interest rate contracts	Interest rate contracts	Interest and other, net	(14)		(25)		(91)		(39)		Interest rate contracts	Interest and other, net	(2)		(14)		21		(91)
Other	Other	Various	225		35		(43)		181		Other	Various	140		225		195		(43)
Total	Total		$	(5)	$	(10)	$	(196)	$	179	Total		$	116	$	(5)	$	428	$	(196)


~~NOTE~~Note 13 :			~~CONTINGENCIES~~Contingencies

~~LEGAL PROCEEDINGS~~Legal Proceedings

We are a party to various legal proceedings, including those noted in this section. ~~Although~~In the first quarter of 2021, we accrued a charge of $2.2 billion related to litigation involving VLSI, described below. Excluding this charge, management at present believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations, cash flows, or overall ~~trends,~~trends; however, legal proceedings and related government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could include substantial monetary damages. In addition, in matters for which injunctive relief or other conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices, or requiring other remedies. An unfavorable outcome may result in a material adverse impact on our business, results of operations, financial position, and overall trends. We might also conclude that settling one or more such matters is in the best interests of our stockholders, employees, and customers, and any such settlement could include substantial payments. Except as specifically described below, we have not concluded that settlement of any of the legal proceedings noted in this section is appropriate at this time.


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			23

~~Table of Contents~~

European Commission Competition Matter

In 2001, the EC commenced an investigation regarding claims by Advanced Micro Devices, Inc. (AMD) that we used unfair business practices to persuade customers to buy our microprocessors. We received numerous requests for information and documents from the EC and we responded to each of those requests. The EC issued a Statement of Objections in July 2007 and held a hearing on that Statement in March 2008. The EC issued a Supplemental Statement of Objections in July 2008. In May 2009, the EC issued a decision finding that we had violated Article 82 of the EC Treaty and Article 54 of the European Economic Area Agreement. In general, the EC found that we violated Article 82 (later renumbered as Article 102 by a new treaty) by offering alleged "conditional rebates and payments" that required our customers to purchase all or most of their x86 microprocessors from us. The EC also found that we violated Article 82 by making alleged "payments to prevent sales of specific rival products." The EC imposed a fine in the amount of €1.1 billion ($1.4 billion as of May 2009), which we subsequently paid during the third quarter of 2009, and ordered us to "immediately bring to an end the infringement referred to in" the EC decision.

The EC decision contained no specific direction on whether or how we should modify our business practices. Instead, the decision stated that we should "cease and desist" from further conduct that, in the EC's opinion, would violate applicable law. We took steps, which are subject to the EC's ongoing review, to comply with that decision pending appeal. We had discussions with the EC to better understand the decision and to explain changes to our business practices.

We appealed the EC decision to the Court of First Instance (which has been renamed the General Court) in July 2009. The hearing of our appeal took place in July 2012. In June 2014, the General Court rejected our appeal in its entirety. In August 2014, we filed an appeal with the European Court of Justice. In November 2014, Intervener Association for Competitive Technologies filed comments in support of Intel’s grounds of appeal. The EC and interveners filed briefs in November 2014, we filed a reply in February 2015, and the EC filed a rejoinder in April 2015. The Court of Justice held oral argument in June 2016. In October 2016, Advocate General Wahl, an advisor to the Court of Justice, issued a non-binding advisory opinion that favored Intel on a number of grounds. The Court of Justice issued its decision in September 2017, setting aside the judgment of the General Court and sending the case back to the General Court to examine whether the rebates at issue were capable of restricting competition. The General Court has appointed a panel of five judges to consider our appeal of the EC’s 2009 decision in light of the Court of Justice’s clarifications of the law. In November 2017, the parties filed initial “Observations” about the Court of Justice’s decision and the appeal and were invited by the General Court to offer supplemental comments to each other’s “Observations,” which the parties submitted in March 2018. Responses to other questions posed by the General Court were filed in May and June 2018. The General Court heard oral argument in March 2020. Pending the final decision in this matter, the fine paid by Intel has been placed by the EC in commercial bank accounts where it accrues interest.


			Financial Statements			Notes to Financial Statements			18

Table of Contents

Litigation Related to Security Vulnerabilities

In June 2017, a Google research team notified us and other companies that it had identified security vulnerabilities (now commonly referred to as “Spectre” and “Meltdown”) that affect many types of microprocessors, including our products. As is standard when findings like these are presented, we worked together with other companies in the industry to verify the research and develop and validate software and firmware updates for impacted technologies. On January 3, 2018, information on the security vulnerabilities was publicly reported, before software and firmware updates to address the vulnerabilities were made widely available.

Numerous lawsuits ~~relating to the Spectre and Meltdown security vulnerabilities, as well as another variant of these vulnerabilities (“Foreshadow”) that has since been identified,~~ have been filed against Intel and, in certain cases, our current and former executives and directors, in U.S. federal and state courts and in certain courts in other ~~countries.~~countries relating to the Spectre and Meltdown security vulnerabilities, as well as other variants of these vulnerabilities that have since been identified.

As of July ~~22, 2020,~~21, 2021, consumer class action lawsuits relating to ~~certain~~the above class of security vulnerabilities publicly disclosed insince 2018 were pending in the ~~U.S.,~~United States, Canada, and Israel. The plaintiffs, who purport to represent various classes of purchasers of our products, generally claim to have been harmed by Intel's actions and/or omissions in connection with the security vulnerabilities and assert a variety of common law and statutory claims seeking monetary damages and equitable relief. In the ~~U.S.,~~United States, numerous individual class action suits filed in various jurisdictions were consolidated in April 2018 for all pretrial proceedings in the U.S. District Court for the District of Oregon. In March 2020, the court granted Intel's motion to dismiss the complaint in that consolidated action but granted plaintiffs leave to ~~file an~~amend. In March 2021, the court granted Intel’s motion to dismiss the amended complaint, but granted plaintiffs leave to further amend in part. Plaintiffs filed a further amended complaint in May 2021 which ~~they did~~Intel moved to dismiss in ~~April 2020.~~July 2021. In Canada, in one case pending in the Superior Court of Justice of Ontario, an initial status conference has not yet been scheduled. In a second case pending in the Superior Court of Justice of Quebec, ~~the court has stayed~~a stay of the case is in effect until ~~January~~July 2021. In Israel, ~~both~~two consumer class action lawsuits were filed in the District Court of Haifa. In the first case, the District Court denied the parties' joint motion to stay filed in January 2019, ~~but to date has deferred Intel's~~and subsequently set a July 2021 deadline for Intel to respond to the ~~complaint in view of Intel's pending motion to dismiss in the consolidated proceeding in the U.S.~~complaint. Intel filed a motion to stay the second case pending resolution of the consolidated proceeding in the ~~U.S.,~~United States, and a hearing on that motion has been scheduled for ~~November 2020.~~October 2021. Additional lawsuits and claims may be asserted seeking monetary damages or other related relief. We dispute the pending claims described above and intend to defend those lawsuits vigorously. Given the procedural posture and the nature of those cases, including that the pending proceedings are in the early stages, that alleged damages have not been specified, that uncertainty exists as to the likelihood of a class or classes being certified or the ultimate size of any class or classes if certified, and that there are significant factual and legal issues to be resolved, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, that might arise from those matters.


~~FINANCIAL STATEMENTS~~			~~Notes to Financial Statements~~			24

~~Table of Contents~~

In addition to these lawsuits, Intel stockholders filed multiple shareholder derivative lawsuits since January 2018 against certain current and former members of our Board of Directors and certain current and former officers, alleging that the defendants breached their duties to Intel in connection with the disclosure of the security vulnerabilities and the failure to take action in relation to alleged insider trading. The complaints sought to recover damages from the defendants on behalf of Intel. Some of the derivative actions were filed in the U.S. District Court for the Northern District of California and were consolidated, and the others were filed in the Superior Court of the State of California in San Mateo County and were consolidated. The federal court granted defendants' motion to dismiss ~~the consolidated complaint in the federal action~~ in August 2018 on the ground that plaintiffs failed to plead facts sufficient to show they were excused from making a pre-lawsuit demand on the Board. The federal court granted plaintiffs leave to amend their complaint, but subsequently dismissed the cases ~~without prejudice~~ in January 2019 at plaintiffs' request. ~~In August 2018, the~~The California Superior Court ~~granted~~entered judgment in defendants' ~~motion~~favor in August 2020 after granting defendants' motions to dismiss ~~the~~plaintiffs' consolidated complaint ~~in the state court action on the ground that plaintiffs failed~~and three successive amended complaints, all for failure to plead facts sufficient to show ~~they~~plaintiffs were excused from making pre-lawsuit demand on the Board. Plaintiffs filed a notice of appeal of the California court's judgment in October 2020.

In January 2021, another Intel stockholder filed a derivative lawsuit in the Superior Court in San Mateo County against certain current and former officers and members of our Board of Directors. The lawsuit asserts claims similar to those dismissed in August 2020, except that it alleges that the stockholder made a pre-lawsuit demand on our Board of Directors and that the ~~Board, but granted plaintiffs leave to amend. The~~demand was wrongfully refused. In May 2021, the court ~~subsequently~~ granted defendants' motion to ~~dismiss plaintiffs' first, second, and third amended complaints, on~~stay the ~~same ground, and~~action pending the outcome of any litigation plaintiff may choose to file in ~~March 2020 granted defendants' motion to dismiss plaintiffs' third amended complaint without granting plaintiffs leave to amend. Plaintiffs filed a motion for reconsideration~~Delaware where Intel’s bylaws require such claims be filed.


			Financial Statements			Notes to Financial Statements			19

Table of ~~the court's final order of dismissal, which is scheduled for hearing on July 31, 2020.~~Contents

Institute of Microelectronics, Chinese Academy of Sciences v. Intel China, Ltd., et al.

In February 2018, the Institute of Microelectronics of the Chinese Academy of Sciences (IMECAS) sued Intel China, Ltd., Dell China, Ltd. (Dell), and Beijing JingDong Century Information Technology, Ltd. (JD) for patent infringement in the Beijing High Court. IMECAS alleges that Intel’s Core series processors infringe Chinese patent CN 102956457 (’457 Patent). The complaint demands an injunction and damages of at least RMB ~~200,000,000~~200 million plus the cost of litigation. A trial date is not yet set. In March 2018, Dell tendered indemnity to Intel, which Intel granted in April 2018. JD also tendered indemnity to Intel, which Intel granted in October 2018. In March 2018, Intel filed an invalidation request on the ‘457 patent with the Chinese Patent ~~Reexamination~~Review Board (PRB). The PRB held an oral hearing in September 2018 and in February 2019 upheld the validity of the challenged claims. Intel filed a complaint in April 2019 with the Beijing Intellectual Property Court challenging the February 2019 PRB ruling. The Beijing IP Court has since scheduled a hearing for July 2021. In January 2020, Intel filed a second invalidation request on the ‘457 patent with the ~~PRB.~~PRB, for which the PRB heard oral argument in July 2020 and in November 2020 held the challenged apparatus claims invalid. IMECAS filed a complaint in February 2021 with the Beijing IP Court challenging the November 2020 PRB ruling. In December 2020, Intel filed a third invalidation request on the ’457 patent with the PRB, which heard oral argument in June 2021.  In September 2018 and March 2019, Intel filed petitions with the ~~United States~~U.S. Patent & Trademark Office (USPTO) requesting institution of inter partes review (IPR) of U.S. Patent No. 9,070,719, the U.S. counterpart to the ‘457 patent. The USPTO denied institution of Intel’s petitions in March and October 2019, respectively. In April 2019, Intel filed a request for rehearing and a petition for a Precedential Opinion Panel (POP) in the USPTO to challenge the denial of its first IPR petition, and in November 2019 Intel filed a request for rehearing on the second IPR petition. In January 2020, the USPTO denied the POP petition on the first IPR petition. In June 2020, the Patent Trial and Appeal Board denied Intel's rehearing requests on both petitions.

In October 2019, IMECAS filed second and third lawsuits, in the Beijing IP Court, alleging infringement of Chinese Patent No. CN 102386226 (‘226 Patent) based on the manufacturing and sale of Intel’s Core i3 microprocessors. Defendants in the second case are Lenovo (Beijing) Co., Ltd. (Lenovo) and Beijing Jiayun Huitong Technology Development Co. Ltd. (BJHT). Defendants in the third case are Intel Corp., Intel China Co., Ltd., the Intel China Beijing Branch, Beijing Digital China Co., Ltd. (Digital China), and JD. Both complaints demand injunctions plus litigation ~~costs and reserve~~costs. The complaint in the second lawsuit reserves the right to claim damages in unspecified amounts. The complaint in the third lawsuit claims damages of RMB 10 million. Intel China's jurisdictional challenge was denied in June 2021. No trial proceedings have occurred or are yet scheduled in these lawsuits. In December 2019, Lenovo tendered indemnity to Intel, which Intel granted in March 2020. In July 2020, Intel and Lenovo filed ~~two~~ invalidation requests on the '226 patent with the Chinese PRB. The PRB heard oral argument in December 2020, during which IMECAS proposed amendments to two claims. The PRB ruled in April 2021 on both invalidation requests, finding the two amended claims as well as the unamended claims not invalid. Intel and Lenovo filed complaints in July 2021 with the Beijing IP Court challenging the April 2021 PRB rulings. Given the procedural posture and the nature of these cases, the unspecified nature and extent of damages claimed by IMECAS, and uncertainty regarding the availability of injunctive relief under applicable law, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, arising from these matters. We dispute IMECAS’s claims and intend to vigorously defend against them.

VLSI Technology LLC v. Intel

In October 2017, VLSI ~~Technology LLC (VLSI)~~ filed a complaint against Intel in the U.S. District Court for the Northern District of California alleging infringement of eight patents acquired from NXP Semiconductors, N.V. (NXP). The patents, which originated at Freescale Semiconductor, Inc. and NXP B.V., are U.S. Patent Nos. 7,268,588; 7,675,806; 7,706,207; 7,709,303; 8,004,922; 8,020,014; 8,268,672; and 8,566,836. VLSI accuses various FPGA and processor products of infringement. VLSI estimated its damages to be as high as $7.1 billion, and its complaint further sought enhanced damages, future royalties, attorneys’ fees, ~~and~~ costs, and interest. In May, June, September, and October 2018, Intel filed ~~requests with the Patent Trial and Appeals Board (PTAB) to institute inter partes review of~~IPR petitions challenging the patentability of certain claims in all eight of the patents in-suit. The PTAB instituted review of six patents and denied institution on two patents. As a result of the institution decisions, the parties stipulated to stay the District Court action in March 2019. In December 2019 and February 2020, the PTAB found all claims of the '588 and '303 patents, and some claims of the '922 patent, to be unpatentable. The PTAB found the challenged claims of the '014, '672, and '207 patents to be patentable. Intel moved for a continuation of the stay in March 2020 as it appealed certain rulings by the PTAB. In June 2020, the District Court issued an order continuing the stay through August 2021 and setting trial for December 2022. The Federal Circuit has thus far affirmed the PTAB’s decisions as to the ‘207 and ‘672 patents, and reversed the PTAB’s decision as to the ‘014 patent.

In June 2018, VLSI filed a second suit against Intel, in U.S. District Court for the District of Delaware, alleging infringement by various Intel processors of five additional patents acquired from NXP: U.S. Patent Nos. 6,212,663; 7,246,027; 7,247,552; 7,523,331; and 8,081,026. VLSI accused Intel of willful infringement and seeks an injunction or, in the alternative, ongoing royalties, enhanced damages, attorneys’ fees and costs, and interest. In March 2019, the District Court dismissed VLSI’s claims for willful infringement as to all the patents-in-suit except the ‘027 patent, and also dismissed VLSI’s allegations of indirect infringement as to the ‘633, ‘331, and ‘026 patents. In June 2019, Intel filed requests for inter partes review of the patentability of claims in all five patents-in-suit. In January 2020, the District Court vacated ~~the~~an earlier November 2020 trial date based on agreement of the parties; no trial date is currently set. In January 2020, VLSI said that it was no longer asserting any claims of the ‘633 patent. In January and February 2020, the PTAB instituted review of the '552, '633, '331, and '026 patents, ~~and as~~but declined to institute review on the '027 patent. As a result, Intel moved for stay of the District Court proceedings. In May 2020, the District Court stayed the case as to the '026 and '552 patents but allowed the case to proceed on the '027 and '331 patents. In January 2021, the PTAB invalidated certain asserted claims of the ‘026 patent, and in February the PTAB invalidated all asserted claims of the ‘552 patent. Intel filed a notice of appeal regarding the PTAB’s decision as to the ‘026 patent in March 2021, and the case remains stayed as to that patent and the '552 patent. For the '027 and '331 patents, VLSI is ~~no longer asserting claims from~~seeking damages of approximately $4.13 billion plus enhanced damages for the ~~'633~~'027 patent.


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			2520

Table of Contents

In March 2019, VLSI filed a third suit against Intel, also in U.S. District Court for the District of Delaware, alleging infringement of six more patents acquired from NXP: U.S. Patent Nos. 6,366,522; 6,663,187; 7,292,485; 7,606,983; 7,725,759; and 7,793,025. In April 2019, VLSI voluntarily dismissed this Delaware case without ~~prejudice, in favor of asserting these patents in~~prejudice. In April 2019, VLSI filed three new ~~cases~~infringement suits against Intel in the U.S. District Court for the Western District of Texas (WDTX)~~. Specifically, in April 2019, VLSI filed three new infringement suits against Intel in WDTX~~ accusing various Intel processors of infringement. The three suits collectively assert the same six patents from the voluntarily dismissed Delaware case plus two additional patents acquired from NXP, U.S. Patent Nos. 7,523,373 and 8,156,357. VLSI accuses Intel of willful infringement and seeks an injunction or, in the alternative, ongoing royalties, enhanced damages, attorneys’ fees and costs, and interest. In the first Texas case, VLSI asserted the ‘373 and ‘759 patents (in December 2020 the court granted Intel summary judgment of non-infringement on the ‘357 patent, which had also been asserted in the first Texas case). That case went to trial in February 2021, and the jury awarded a “lump sum” to VLSI of $1.5 billion for literal infringement of the ‘373 patent and $675 million for infringement under the doctrine of equivalents of the ‘759 patent. The ~~District Court has set~~jury found that Intel had not willfully infringed either patent. Intel plans to challenge the verdict in post-trial motions and on appeal. The second Texas case went to trial in April 2021, and the jury found that Intel does not infringe the ‘522 and ‘187 patents. VLSI had sought approximately $3 billion for ~~November 2020.~~alleged infringement of those patents, plus enhanced damages for willful infringement. The third case is scheduled for trial in December 2021, and VLSI seeks over $1.9 billion for alleged infringement of the ‘983, ‘025 and ‘485 patents, plus enhanced damages for willful infringement. In October and November 2019, and in February 2020, Intel filed ~~inter partes~~ ~~review requests~~IPR petitions on certain asserted claims across six of the patents-in-suit in WDTX. InBetween May and ~~June~~October 2020, the PTAB denied ~~Intel's~~all of these requests ~~on four of those patents,~~ and Intel ~~has asked for~~requested a rehearing, onas well as review from the POP as to all petitions. All requests for POP review were denied in October and December 2020, and all requests for rehearing were denied as to all petitions between December 2020 and February 2021. Intel filed notices of appeal regarding the discretionary denials for all petitions in February and March of 2021, and VLSI moved to dismiss those ~~matters.~~appeals in March 2021. The Court dismissed the appeals in May 2021, and Intel petitioned for hearing en banc in June 2021.

In May 2019, VLSI filed a case in Shenzhen Intermediate People’s Court against Intel, Intel (China) Co., Ltd., Intel Trading (Shanghai) Co., Ltd., and Intel Products (Chengdu) Co., Ltd. VLSI asserts Chinese Patent 201410094015.9 accusing certain Intel Core processors of infringement. VLSI requests an injunction as well as RMB ~~1.3~~1 million in ~~damages.~~damages and RMB 300 thousand in expenses. Defendants filed an invalidation petition in October ~~2019.~~2019 with the PRB, and a hearing date in September 2021 has been set before the PRB. In May 2020, defendants filed a motion to stay the trial court proceedings pending a determination on invalidity. The court ~~has not yet ruled on~~held the ~~motion to stay.~~first evidentiary hearing in November 2020 and the second in July 2021. The court also held trial proceedings in the hearing in July 2021 and concluded that further trial proceedings were needed but would be stayed pending the outcome of defendants’ invalidity challenge at the PRB.

In May 2019, VLSI filed a second case in Shanghai Intellectual Property Court against Intel (China) Co., Ltd., Intel Trading (Shanghai) Co., Ltd., and Intel Products (Chengdu) Co., Ltd. VLSI asserts Chinese Patent 201080024173.7. ~~The accused~~VLSI accuses certain Intel ~~products~~Core processors and ~~the claims of VLSI~~seeks an injunction, as well as RMB 1 million in ~~Shanghai case are the same as~~damages and RMB 300 thousand in ~~the Shenzhen case.~~expenses. Defendants filed with the PRB an invalidation petition in October 2019. A hearing date in September 2021 has been set before the PRB. In June 2020, defendants filed a motion to stay the trial court proceedings pending a determination on invalidity. The court held its first evidentiary hearing in September 2020. The court held a second evidentiary hearing in December 2020, and a trial the same month. At trial, VLSI dropped its monetary damages claim, but still requested expenses (RMB 300 thousand) and an injunction. The court held a second evidentiary hearing in December 2020. The court has not yet ~~ruled~~issued a decision following the trial. Rather, the court stayed the case in December 2020 pending a determination on invalidity by the ~~motion to stay.~~PRB.

In October 2019, Intel filed a complaint against Fortress Investment Group LLC, Fortress Credit Co. LLC, VLSI, and DSS Technology Management, Inc. for violations of the Sherman Act, the Clayton Act, and California Business and Professions Code section 17200. In November 2019, Intel, ~~voluntarily dismissed that complaint and,~~ along with Apple Inc., filed a ~~new~~ complaint against Fortress Investment Group LLC, Fortress Credit Co. LLC, Uniloc 2017 LLC, Uniloc USA, Inc., Uniloc Luxembourg S.A.R.L., VLSI, INVT SPE LLC, Inventergy Global, Inc., DSS Technology Management, Inc., IXI IP, LLC, and Seven Networks, LLC. Plaintiffs allege violations of Section 1 of the Sherman Act by certain defendants, Section 7 of the Clayton Act by certain defendants, and California Business and Professions Code section 17200 by all defendants based on defendants' unlawful aggregation of patents. ~~Apple alone also alleges certain violations of California Business and Professions Code section 17200 by some defendants.~~ In February 2020, defendants moved to dismiss plaintiffs' complaint. In July 2020, the court granted defendants’ motion to dismiss ~~giving plaintiffs~~with leave to ~~amend by August 2020.~~amend. The court dismissed antitrust claims related to two DSS patents with prejudice. The plaintiffs filed an amended complaint in August 2020, and defendants moved to dismiss in September 2020. The court heard defendants' motion to dismiss the amended complaint in December 2020 and dismissed plaintiffs’ amended complaint in January 2021, with leave to further amend. In December 2020, the court granted a joint motion by Apple and Seven Networks to dismiss with prejudice Apple’s claims against Seven Networks. Plaintiffs filed a second amended complaint in March 2021. Defendants moved to dismiss the Second Amended Complaint in May 2021. That motion will be heard in September 2021. Apple withdrew from the case and dismissed its claims in June 2021.

In June 2020, affiliates controlled by Fortress Investment Group, which also controls VLSI, acquired Finjan Holdings, Inc. Intel had signed a “Settlement, Release and Patent License Agreement” with Finjan in 2012, acquiring a license to the patents of Finjan and its affiliates, current or future, through a capture period of November 20, 2022. The agreement also contains covenants wherein Finjan agrees to cause its affiliates to comply with the agreement. As such, Intel maintains that it now has a license to the patents of VLSI, which has become a Finjan affiliate, and that Finjan must cause VLSI to dismiss its suits against Intel. In August 2020, Intel started dispute resolution proceedings under the agreement. As a part of this dispute resolution process, Intel and Finjan held a mediation in December 2020, but failed to resolve their differences. Intel filed suit to enforce its rights under the License Agreement with Finjan in January 2021 in Delaware Chancery Court. In March 2021, defendants filed motions to dismiss the Chancery Court proceedings. The court heard those motions in May 2021, but has not yet ruled on them. In September 2020, Intel filed motions to stay the Texas, Delaware, and Shanghai matters pending resolution of its dispute with Finjan. In November 2020, Intel filed a motion to stay the Shenzhen matter pending resolution of its dispute with Finjan. In November 2020, the Delaware court denied Intel’s motion to stay. The other stay motions remain pending. Finally, Intel filed a motion to amend its answer in the Texas matters to add a license defense in November 2020, and filed a motion to amend its answer in the Delaware matter to add a license defense in February 2021. The Texas court has not yet ruled on Intel’s motion to amend, but the Delaware court granted Intel’s motion in July 2021.


			Financial Statements			Notes to Financial Statements			21

Table of Contents

After consideration of the verdicts in the WDTX cases and the additional pending lawsuits filed by VLSI, Intel accrued a charge of $2.2 billion in the first quarter of 2021. We dispute VLSI’s claims and intend to vigorously defend against them.

Litigation Related to 7nm Product Delay Announcement

Starting in July 2020, five securities class action lawsuits were filed in the U.S. District Court for the Northern District of California against Intel and certain current and former officers based on Intel’s July 2020 announcement of 7nm product delays. The plaintiffs, who purport to represent classes of acquirers of Intel stock between October 2019 and July 2020, generally allege that the defendants violated securities laws by making false or misleading statements about the timeline for 7nm products in light of subsequently announced delays. In October 2020, the court consolidated the lawsuits and appointed lead plaintiffs, and in January 2021 the lead plaintiffs filed a consolidated complaint. Defendants moved to dismiss the consolidated complaint in March 2021. We dispute the claims described above and intend to defend the lawsuits vigorously. Given the procedural posture and the nature of ~~these~~those cases, including that the pending proceedings are in the early stages, that alleged damages have not been specified, that uncertainty exists as to the likelihood of a class or classes being certified or the ultimate size of any class or classes if certified, and that there are significant factual and legal issues to be resolved, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, ~~arising~~that might arise from ~~these~~those matters. ~~We dispute VLSI’s claims and intend to vigorously defend against them.~~


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			2622

Table of Contents


~~KEY TERMS~~Key Terms

We use terms throughout our document that are specific to Intel or that are abbreviations that may not be commonly known or used. Below is a list of these terms used in our document.


~~TERM~~Term						~~DEFINITION~~Definition



2009 Debentures						3.25% junior subordinated convertible debentures due 2039





~~2019 Form 10-K~~						~~Our Annual Report on Form 10-K for the fiscal year ended December 28, 2019~~
5G						The ~~next-generation~~fifth-generation mobile network, which is expected to bring dramatic improvements in network speeds and latency, and which we view as a transformative technology and opportunity for many industries

ADAS						Advanced driver-assistance systems
Adjacent products						All of our non-platform products for CCG, DCG, and IOTG, such as modem, Ethernet and silicon photonics, as well as Mobileye, ~~Non-Volatile Memory Solutions Group (NSG),~~NSG, and ~~Programmable Solutions Group (PSG)~~PSG products. Combined with our platform products, adjacent products form comprehensive platform solutions to meet customer needs


ASIC						Application-specific integrated circuit
ASP						Average ~~Selling Price~~selling price

AV						Autonomous vehicle


CCG
						Client Computing Group operating segment



CODM						Chief operating decision maker

COVID-19						The infectious disease caused by the most recently discovered coronavirus (aka SARS-CoV-2), which was declared a global pandemic by the World Health Organization
CPU						Processor or central processing unit

~~Data-centric businesses~~						~~Includes our Data Center Group (DCG), Internet of Things Group (IOTG), Mobileye, Non-Volatile Memory Solutions Group (NSG), Programmable Solutions Group (PSG), and all other businesses~~


DCG						Data Center Group operating segment
EC						European Commission
~~Edge~~						~~Allocated resources that move, store, and process data closer to the source or point of service delivery~~






Form 10-K						Annual Report on Form 10-K
Form 10-Q						Quarterly Report on Form 10-Q
FPGA						Field-programmable gate array



~~IMFT~~						~~IM Flash Technologies, LLC~~


Internet of Things						~~Refers to the~~The Internet of Things market in which we sell our IOTG and Mobileye products
~~IOT~~						~~Internet of Things portfolio~~
IOTG						Internet of Things Group operating segment

IP						Intellectual property











~~MaaS~~						~~Mobility-as-a-Service~~
~~McAfee~~						~~Business, post divestiture of Intel Security Group in Q2 2017, which we retained an interest in as part of our investment strategy~~
MD&A						Management's Discussion & Analysis

MG&A						Marketing, general and administrative

~~Moovit~~						~~Moovit App Global Ltd, a MaaS solutions company acquired in Q2 2020~~
NAND						NAND flash memory
nm						Nanometer
NSG						Non-Volatile Memory Solutions Group operating segment


OEM						Original equipment manufacturer




~~PC-centric business~~						~~Our Client Computing Group (CCG) business, including both platform and adjacent products~~
Platform products						A microprocessor (CPU) and chipset, a stand-alone SoC, or a multichip package, based on Intel^® architecture. Platform products are primarily used in solutions sold through the CCG, DCG, and IOTG segments





~~QLC~~PSG						~~Quad-level cell~~Programmable Solutions Group operating segment


R&D						Research and development



RSU						Restricted stock unit




SEC						U.S. Securities and Exchange Commission

SoC						~~System-on-Chip~~A System-on-a-Chip, which integrates most of the components of a computer or other electronic system into a single silicon chip. We offer a range of SoC platform products in CCG, DCG, and IOTG. In our DCG business, we offer SoCs across many market segments for a variety of applications, including products targeted for 5G base stations and network infrastructure


SSD						Solid-state drive



~~TLC~~						~~Triple-level cell~~





U.S. GAAP						U.S. Generally Accepted Accounting Principles
VLSI						VLSI Technology LLC


			~~FINANCIAL STATEMENTS~~Financial Statements			Notes to Financial Statements			2723

Table of Contents


~~MANAGEMENT'S DISCUSSION AND ANALYSIS~~Management's Discussion and Analysis

For additional key highlights of our results of operations, see "A Quarter in ~~Review" and "Our Pandemic Response.~~Review."

~~DATA CENTER GROUP~~Client Computing Group

~~DCG develops workload-optimized platforms~~The PC is more essential than ever, enriching lives by helping people focus, create, and connect with friends, family, and coworkers around the world. Working with our partners across the industry, we intend to continue to advance PC experiences with innovations like our Intel® Evo™ platform which delivers exceptional mobile computing experiences for ~~compute, storage,~~PC customers. As the largest business unit at Intel, CCG is investing more heavily in the PC, ramping its capabilities even more aggressively, and ~~network functions. Market segments include cloud service providers, enterprise~~designing the PC experience even more deliberately, including delivering a predictable cadence of leadership products. As a result, we are able to fuel innovation across Intel, providing an important source of IP, scale, and government, and communications service providers. We offer customers an unmatched, broad portfolio of platforms and technologies designed to provide workload-optimized performance across compute, storage, and network. These offerings span the full spectrum from the data center core to the network edge.cash flow.


			~~DCG REVENUE~~CCG Revenue $B						~~DCG OPERATING INCOME~~CCG Operating Income $B


			■ Platform			■ Adjacent


~~REVENUE SUMMARY~~Revenue Summary

Revenue in Q2 ~~2020~~2021 was up ~~43%~~6% compared to Q2 ~~2019, while~~2020, and YTD ~~2020~~2021 revenue was ~~also~~ up ~~43%~~7% compared to YTD ~~2019,~~2020. Revenue increased due to continued strong demand in notebook and strength in desktop driven by ~~increased volume, strong mix of platform products resulting in higher~~consumer and commercial recovery from COVID-19 lows, with lower notebook and desktop ASPs ~~and growth in adjacencies driven by 5G networking deployment. Year over year revenue~~due to strength in the ~~cloud service providers~~consumer and education market ~~segment~~segments. Adjacent revenue was ~~up 47% as cloud service providers added capacity~~down compared to ~~serve demand. The enterprise~~Q2 2020 and ~~government market segment was up 34%,~~compared to YTD 2020 due to the continued ramp down from the exit of our 5G smartphone modem and ~~the communications service providers market segment was up 44% year over year.~~Home Gateway Platform businesses, partially offset by strength in our wireless business.

We ~~anticipate~~expect strong demand ~~in the enterprise~~for PCs will continue to be tempered by ongoing industry-wide component and ~~government market segment to weaken in the second half of 2020 and demand in the cloud service providers market segment to moderate later in the year.~~substrate constraints.

Q2 2020 vs. Q2 2019 YTD 2020 vs. YTD 2019
(In Millions) % $ Impact % $ Impact
Platform volume up 29% $ 1,326 up 28% $ 2,555
Platform ASP up 5% 302 up 9% 1,018
Adjacent products up 118% 506 up 77% 652
Total change in revenue $ 2,134 $ 4,225


	Q2 2021 vs. Q2 2020				YTD 2021 vs. YTD 2020
(In Millions)	%		$ Impact		%		$ Impact

Desktop platform volume	up	15%	$	391	up	5%	$	337
Desktop platform ASP	down	(5)%	(124)		down	(5)%	(266)
Notebook platform volume	up	40%	2,303		up	47%	5,490
Notebook platform ASP	down	(17)%	(1,404)		down	(20)%	(3,489)
Adjacent products and other			(553)				(629)

Total change in revenue			$	613			$	1,443


			MD&A						2824

Table of Contents


~~OPERATING INCOME SUMMARY~~Operating Income Summary

Operating income in Q2 ~~2020~~2021 increased ~~72%~~32% from Q2 ~~2019,~~2020, with an operating margin of ~~44%~~37%. Operating income YTD ~~2020~~2021 increased ~~81%~~12%, with an operating margin of ~~47%~~38%.


(In Millions)
$	3,760	Q2 2021 CCG Operating Income
540		Lower platform unit cost due to cost improvements in 10nm
530		Lower period charges driven by absence of reserves taken on non-qualified platform products in Q2 2020, partially offset by sell-through of other reserves in 2020
185		Higher gross margin from platform revenue
(210)		Higher operating expenses
(65)		Higher period charges primarily associated with the ramp down of 14nm
(55)		Lower adjacent product margin driven by exit of our 5G smartphone modem and Home Gateway Platform businesses
(7)		Other
$	2,842	Q2 2020 CCG Operating Income

$	7,880	YTD 2021 CCG Operating Income
615		Lower period charges driven by absence of reserves, including reserves taken on non-qualified platform products in 2020, partially offset by sell-through of other reserves in 2020
540		Lower platform unit cost due to cost improvements in 10nm
75		Higher adjacent product margin
70		Higher gross margin from platform revenue
(320)		Higher operating expenses
(165)		Higher period charges primarily associated with the ramp down of 14nm


(2)		Other
$	7,067	YTD 2020 CCG Operating Income


			MD&A			25

Table of Contents

Data Center Group

DCG develops workload-optimized platforms for compute, storage, and network functions. With unmatched scale, portfolio breadth, and ecosystem support, we are uniquely positioned to enable the world to unleash the potential of data, unlocking value for people, business, and society on a global scale. Market segments include cloud service providers, enterprise and government, and communications service providers. We serve the global appetite for cloud computing and enable transformation of the network and edge. In 2021, our DCG operating segment includes the results of our Intel Optane memory business.


			DCG Revenue $B						DCG Operating Income $B


			■Platform			■Adjacent


Revenue Summary

Revenue in Q2 2021 was down 9% on lower ASPs in a competitive environment, and on lower platform volume compared to a strong, COVID-driven Q2 2020. Revenue was also impacted by lower adjacent revenue, primarily due to accelerated 5G networking related purchases in Q2 2020, partially offset by growth in Optane and Ethernet in Q2 2021. Year over year, the cloud service providers market segment was down 20%, communications service providers was down 6%, and the enterprise and government market segment was up 6%.

Revenue YTD 2021 was down 15% compared to YTD 2020 on lower ASPs in a competitive environment, and on lower platform volume compared to a strong, COVID-driven YTD 2020.


	Q2 2021 vs. Q2 2020				YTD 2021 vs. YTD 2020
(In Millions)	%		$ Impact		%		$ Impact

Platform volume	down	(1)%	$	(72)	down	(7)%	$	(893)
Platform ASP	down	(7)%	(406)		down	(10)%	(1,201)
Adjacent products	down	(20)%	(184)		up	—%	3

Total change in revenue			$	(662)			$	(2,091)


			MD&A			26

Table of Contents


Operating Income Summary

Operating income in Q2 2021 decreased 37% from Q2 2020, with an operating margin of 30%. Operating income YTD 2021 decreased 51%, with an operating margin of 27%.


(In Millions)
$	~~3,099~~1,941			Q2 2021 DCG Operating Income
(465)				Lower gross margin from platform revenue
(375)				Higher operating expenses
(165)				Higher platform unit cost primarily from increased mix of 10nm products
(115)				Higher period charges primarily associated with the ramp up of 7nm
(75)				Higher period charges primarily associated with the ramp down of 14nm
40				Higher adjacent gross margin


(3)				Other
$	3,099			Q2 2020 DCG Operating Income

~~1,450~~ $	3,214			~~Higher~~YTD 2021 DCG Operating Income
(1,975)				Lower gross margin from platform revenue
~~100~~		(615)			~~Lower~~Higher operating expenses
(360)				Higher platform unit cost primarily from increased mix of 10nm products
(240)				Higher period charges primarily associated with ramp up of 7nm
(180)				Higher period charges primarily associated with the ~~initial~~ ramp down of ~~10nm~~
~~(110)~~				~~Lower DCG adjacency gross margin~~
~~(105)~~				~~Higher platform unit cost~~14nm







~~(36)~~(7)				Other
$	~~1,800~~ 6,591		~~Q2 2019 DCG Operating Income~~

$	~~6,591~~			YTD 2020 ~~DCG Operating Income~~
~~3,235~~				~~Higher gross margin from platform revenue~~
~~135~~				~~Lower period charges, primarily associated with the initial ramp of 10nm~~
~~(165)~~				~~Lower DCG adjacency gross margin~~
~~(120)~~				~~Higher platform unit cost~~
~~(75)~~				~~Higher operating expenses~~






~~(60)~~				~~Other~~
$	~~3,641~~			~~YTD 2019~~ DCG Operating Income


			MD&A						2927

Table of Contents

~~INTERNET OF THINGS~~Internet of Things

~~As more intelligence is moving to the edge, more~~More industries are harnessing the power of data to create business value, to innovate, and grow. This requires that intelligence move closer to ~~grow. We~~the edge, allowing data to be acted on where it is created. Working with our partners, we are using our architecture, accelerators, and software ~~assets, combined with scale and partners,~~ to develop and scale a growing Internet of Things ~~portfolio.~~portfolio and ecosystem. Our Internet of Things portfolio is comprised of our IOTG and Mobileye businesses.

IOTG develops high-performance compute platforms that solve for ~~targeted verticals~~technology and business use cases that can scale across vertical industries and embedded markets. Our customers include retailers, manufacturers, health ~~care providers, energy companies, automakers,~~ and ~~governments.~~life sciences, governments, and education providers. We ~~facilitate~~reduce complexity in the ecosystem with a common architecture and software to help enable our customers ~~creating, storing,~~to create and ~~processing~~process data ~~generated by connected devices~~at the edge to ~~accelerate business transformations.~~analyze it faster and to act on it sooner.

Mobileye is the global leader in driving assistance and ~~automation~~self-driving solutions. Our product portfolio employs a broad set of technologies, covering computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology for ADAS and ~~autonomous driving. Mobileye’s~~AVs. Mobileye's ADAS products form the building blocks for higher levels of autonomy. Our customers and strategic partners include major global OEMs, ~~and~~ Tier 1 automotive system ~~integrators.~~integrators, fleet managers, and transportation operators.


			~~INTERNET OF THINGS REVENUE~~Internet of Things Revenue $B						~~INTERNET OF THINGS OPERATING INCOME~~Internet of Things Operating Income $B

■ IOTG

■Mobileye

■ IOTG

■Mobileye


~~REVENUE AND OPERATING INCOME SUMMARY~~Revenue and Operating Income Summary


Q2 ~~2020~~2021 vs. Q2 ~~2019~~2020

IOTG revenue was ~~$670~~$984 million, ~~down $316~~up $314 million, driven by ~~weaker~~higher demand for IOTG platform products ~~in industrial, retail, and vision, primarily due to~~amid recovery from the economic impacts of COVID-19. ~~Demand was also negatively impacted by trade restrictions related to the U.S. government's Entity List publication.~~ Operating income was ~~$70~~$287 million, ~~down $224~~up $217 million year over year.

Mobileye revenue was ~~$146~~$327 million, ~~down $55~~up $181 million ~~due to lower demand as a result of significant decline~~driven by improvement in global vehicle production ~~related to COVID-19. Mobileye had an operating loss of $4~~year over year. Operating income was $109 million, ~~down $57~~up $113 million ~~from an operating income in 2019.~~year over year.


YTD ~~2020~~2021 vs. YTD ~~2019~~2020

IOTG revenue was ~~$1.6~~$1.9 billion, ~~down $343~~up $345 million, driven by ~~weaker~~higher demand for IOTG platform products amid recovery from the economic impacts of COVID-19, partially offset by lower ASPs. Operating income was $499 million, up $186 million.

Mobileye revenue was $704 million, up $304 million, driven by improvement in ~~industrial, retail, and vision due to COVID-19. Demand was also negatively impacted by trade restrictions related~~global vehicle production compared to the ~~U.S. government's Entity List publication, the effects of which are expected to continue~~same period in ~~the second half of~~ 2020. Operating income was ~~$313~~$256 million, ~~down $232 million compared to YTD 2019.~~

~~Mobileye revenue was $400 million, down $10 million, due to lower demand as a result of significant decline in global vehicle production related to COVID-19. Operating income was $84 million, down $37~~up $172 million.

~~We expect continued negative COVID-19 related impacts on demand for our IOT portfolio in the second half of 2020.~~


			MD&A						3028

Table of Contents

~~NON-VOLATILE MEMORY SOLUTIONS GROUP~~Non-Volatile Memory Solutions Group

On October 19, 2020, we signed an agreement with SK hynix Inc. (SK hynix) to divest our NAND memory business. The transaction will occur over two closings as described in detail in "Note 8: Acquisitions and Divestitures" in Notes to Consolidated Condensed Financial Statements.

~~NSG is a technology leader in next-generation memory and~~Our NAND business continues to develop storage ~~products based on breakthrough~~solutions using our innovative Intel^® ~~Optane™ technology and Intel~~^® 3D NAND ~~technology. NSG is disrupting the memory and storage hierarchy with new tiers that balance capacity,~~Technology. Our data center products are optimized to deliver world-class performance and ~~cost. We offer 96-layer~~drive lower total cost of ownership, and ~~64-layer TLC~~our client SSDs provide a fast and productive computing environment for a variety of segments. Our Intel Optane memory business is expressly excluded from the sale to SK hynix, and beginning in 2021, the results of our Intel Optane memory business are included in our DCG operating segment, and our NSG operating segment is composed entirely of our NAND ~~high-capacity SSDs, and 64-layer QLC NAND high-capacity SSDs. We also provide unparalleled low latency and high performance with Intel~~^® ~~Optane™ technology. Our products are available in innovative new form factors and densities to address the~~ memory and storage challenges our customers face in a rapidly evolving technological landscape. Our customers include enterprise and cloud-based data centers, and users of business and consumer desktops and laptops.business.


			NSG ~~REVENUE~~Revenue $B						NSG ~~OPERATING INCOME~~Operating Income $B


~~REVENUE AND OPERATING INCOME SUMMARY~~Revenue and Operating Income Summary


Q2 ~~2020~~2021 vs. Q2 ~~2019~~2020

~~NSG delivered record revenue of $1.7~~Revenue was $1.1 billion, ~~up $719~~down $561 million from Q2 ~~2019,~~2020, driven by ~~$379~~$323 million ~~higher volume~~lower ASPs due to ~~strong demand for NAND products~~market softness and ~~$341~~pricing pressure, $123 million ~~higher ASPs from improved NAND pricing.~~lower volume primarily due to raw material constraints, and due to the transfer of the Intel Optane memory business to DCG ($116 million in Q2 2020). Operating income was ~~$322~~$402 million, up ~~$606~~$80 million from ~~an operating loss in~~ Q2 ~~2019,~~2020 due to ~~continued~~$401 million improvements in unit cost, ~~market pricing recovery,~~primarily driven by the absence of depreciation expense from NAND property, plant and ~~strong demand.~~equipment that is held for sale, partially offset by $437 million lower revenue on ASP decline. Operating income also benefited from the transfer of the Intel Optane memory business from Q2 2021 NSG results (a loss of $101 million in Q2 2020).


YTD ~~2020~~2021 vs. YTD ~~2019~~2020

~~NSG delivered revenue of $3.0~~Revenue was $2.2 billion, ~~up $1.1 billion from Q2 2019,~~down $792 million, driven by ~~$738~~$657 million lower ASPs due to market softness and pricing pressure, and due to the transfer of the Intel Optane memory business to DCG ($212 million YTD 2020), partially offset by $77 million higher volume ~~due to~~on strong ~~demand for NAND products and $405 million higher ASP from improved NAND pricing.~~demand. Operating income was ~~$256~~$573 million, up ~~$837~~$317 million from ~~an operating loss in~~ YTD ~~2019,~~2020, due to ~~continued~~$687 million improvements in unit cost, ~~market pricing recovery,~~primarily driven by the absence of depreciation expense from NAND property, plant and ~~strong demand.~~

equipment that is held for sale, and $286 million of lower period charges, partially offset by $748 million lower revenue on ASP decline. Operating income also benefited from the transfer of the Intel Optane memory business from YTD 2021 NSG results (a loss of $357 million YTD 2020).


			MD&A						3129

Table of Contents

~~PROGRAMMABLE SOLUTIONS GROUP~~Programmable Solutions Group

PSG offers programmable semiconductors, primarily FPGAs, structured ASICs, and related products, for a broad range of applications across our embedded, communications, and cloud and enterprise market ~~segments, including communications, data center, industrial, and military. The PSG~~segments. Our product portfolio delivers FPGA acceleration in tandem with Intel microprocessors, ~~and~~which enables ~~Intel~~us to combine the benefits of ~~its~~our broad portfolio of technologies to allow more flexibility for systems to operate with increased efficiency and higher performance.


			PSG ~~REVENUE~~Revenue $B						PSG ~~OPERATING INCOME~~Operating Income $B


~~REVENUE AND OPERATING INCOME SUMMARY~~Revenue and Operating Income Summary


Q2 ~~2020~~2021 vs. Q2 ~~2019~~2020

Revenue was ~~$501~~$486 million, ~~up $12~~down $15 million due to ~~growth in the cloud~~customer inventory digestion, and ~~enterprise market segment, partially offset~~PSG was also impacted by ~~weakness in the embedded and communications market segments. PSG experienced growth in advanced products.~~supply constraints. Operating income was ~~$80~~$82 million, up ~~$28~~$2 million.


YTD ~~2020~~2021 vs. YTD ~~2019~~2020

Revenue was ~~$1.0 billion, up $45~~$972 million, down $48 million due to ~~growth in the cloud~~customer inventory digestion, and ~~enterprise market segment, partially offset~~PSG was also impacted by ~~weakness in the embedded and communications market segments.~~supply constraints. Operating income was ~~$177~~$170 million, ~~up $36~~down $7 million.


			MD&A						3230

Table of Contents

~~CLIENT COMPUTING GROUP~~

As we evolve to deliver leading end-to-end products across architectures and workloads for the data explosion, CCG’s contribution is the human touchpoint of this new data-centric era—the PC. As the largest business unit at Intel, CCG deploys platforms that connect people to data, allowing each person to focus, create, and engage in ways that unlock their individual potential. The PC market remains a critical facet of our business, providing an important source of IP, scale, and cash flow. Our mission is to continue to deliver leadership products in our PC business as well as our adjacent businesses. The PC is more essential than ever before with more people working and learning from home due to COVID-19-related impacts. We are dedicated to helping people around the world overcome this crisis.


			~~CCG REVENUE $B~~						~~CCG OPERATING INCOME $B~~Consolidated Results of Operations


			■~~Platform~~			■~~Adjacent~~


~~REVENUE SUMMARY~~

Revenue in Q2 2020 was up 7% compared to Q2 2019, driven by strength in notebook platform demand, strong ASP and higher LTE modem and Wi-Fi sales, partially offset by desktop demand. YTD 2020 up 11% compared to YTD 2019, driven by strong demand for notebook platform products and higher LTE modem and Wi-Fi sales. Strength in notebook platform products reflects the increased reliance on PCs as more people are working and learning from home due to COVID-19.

~~While we expect notebook strength in Q3 2020, desktop demand is expected to remain weak in the second half of 2020 as a result of weaker global economic conditions due to COVID-19.~~

Q2 2020 vs. Q2 2019 YTD 2020 vs. YTD 2019
(In Millions) % $ Impact % $ Impact
Desktop platform volume down (14)% $ (460) down (9)% $ (607)
Desktop platform ASP up 3% 61 up 3% 162
Notebook platform volume up 9% 434 up 15% 1,501
Notebook platform ASP up 5% 274 up 1% 138
Adjacent products and other 346 650
Total change in revenue $ 655 $ 1,844


	Three Months Ended								Six Months Ended
	Q2 2021				Q2 2020				YTD 2021				YTD 2020
(In Millions, Except Per Share Amounts)	Amount		% of Net Revenue		Amount		% of Net Revenue		Amount		% of Net Revenue		Amount		% of Net Revenue
Net revenue	$	19,631	100.0	%	$	19,728	100.0	%	$	39,304	100.0	%	$	39,556	100.0	%
Cost of sales	8,425		42.9	%	9,221		46.7	%	17,244		43.9	%	17,033		43.1	%
Gross margin	11,206		57.1	%	10,507		53.3	%	22,060		56.1	%	22,523		56.9	%
Research and development	3,715		18.9	%	3,354		17.0	%	7,338		18.7	%	6,629		16.8	%
Marketing, general and administrative	1,599		8.1	%	1,447		7.3	%	2,927		7.4	%	2,988		7.6	%
Restructuring and other charges	346		1.8	%	9		—	%	2,555		6.5	%	171		0.4	%
Operating income	5,546		28.3	%	5,697		28.9	%	9,240		23.5	%	12,735		32.2	%
Gains (losses) on equity investments, net	295		1.5	%	267		1.4	%	663		1.7	%	156		0.4	%
Interest and other, net	(96)		(0.5)	%	(29)		(0.1)	%	(252)		(0.6)	%	(342)		(0.9)	%
Income before taxes	5,745		29.3	%	5,935		30.1	%	9,651		24.6	%	12,549		31.7	%
Provision for taxes	684		3.5	%	830		4.2	%	1,229		3.1	%	1,783		4.5	%
Net income	$	5,061	25.8	%	$	5,105	25.9	%	$	8,422	21.4	%	$	10,766	27.2	%

Earnings per share—diluted	$	1.24			$	1.19			$	2.06			$	2.50


			MD&A						3331

Table of Contents

Revenue

Segment Revenue Walk $B

Q2 2021 vs. Q2 2020

Our Q2 2021 revenue was $19.6 billion, down $97 million from Q2 2020. DCG revenue declined 9% on lower ASPs in a competitive environment, and on lower platform volume compared to a strong, COVID-driven Q2 2020. DCG revenue was also impacted by lower adjacent revenue, primarily due to accelerated 5G networking related purchases in Q2 2020. NSG was down 34% due to lower ASPs and lower volume. CCG was up 6% year over year due to continued strength in notebook demand and recovery in desktop demand, with lower notebook and desktop ASPs due to strength in the consumer and education market segments. IOTG and Mobileye were both up on higher demand amid recovery from the economic impacts of COVID-19.

YTD 2021 vs. YTD 2020

Our YTD 2021 revenue was $39.3 billion, down $252 million or 1% from YTD 2020. DCG declined 15% on lower ASPs in a competitive environment, and on lower platform volume compared to a strong, COVID-driven YTD 2020. NSG was down 26% due to lower ASPs, partially offset by strong demand. CCG was up 7% due to continued strength in notebook demand and recovery in desktop demand, with lower notebook and desktop ASPs due to strength in the consumer and education market segments. Our "all other" revenue increased primarily due to $584 million from a prepaid supply agreement settled in Q1 2021. IOTG and Mobileye were both up 22% and 76%, respectively, on higher demand amid recovery from the economic impacts of COVID-19.


			MD&A			32

Table of Contents

Gross Margin

We derived a substantial majority of our overall gross margin from the sale of platform products in the CCG and DCG operating segments. Our overall gross margin dollars in Q2 2021 increased by $699 million, or 7% compared to Q2 2020.


~~OPERATING INCOME SUMMARY~~Gross Margin $B

~~Operating income~~ (Percentages in ~~Q2 2020 decreased 24% from Q2 2019, with an operating~~chart indicate gross margin as a percentage of ~~30%. Operating income YTD 2020 increased 4%, with an operating margin of 37%.~~total revenue)


(In Millions)
$	~~2,842~~ 11,206			Q2 ~~2020 CCG Operating Income~~2021 Gross Margin
~~(1,115)~~		590		~~Higher~~Lower period charges driven by absence of reserves taken on non-qualified platform products in Q2 2020, partially offset by sell-through of other reserves
380			Lower platform unit cost due to ~~ramp of~~cost improvements in 10nm ~~products~~
~~(550)~~180			Higher gross margin from adjacent businesses primarily due to increased volume amidst improvement in global vehicle production
(145)			Higher period charges primarily ~~due to reserved non-qualified platform product related to our 10nm process technology~~associated with the ramp up of 7nm
~~325~~ (140)			Higher period charges associated with the ramp down of 14nm
(95)			Lower gross margin from platform revenue
~~285~~			~~Lower operating expenses driven by lower investment in modem~~
~~205~~			~~Higher CCG adjacency product margin~~






~~(45)~~(71)			Other
$	~~3,737~~ 10,507			Q2 ~~2019 CCG Operating Income~~2020 Gross Margin

$	~~7,067~~ 22,060			YTD ~~2020 CCG Operating Income~~2021 Gross Margin
~~1,040~~		(1,720)		~~Higher~~Lower gross margin from platform revenue
~~590~~ (350)			Higher period charges associated with the ramp down of 14nm
(260)			Higher period charges primarily associated with the ramp up of 7nm
675			Lower ~~operating expenses~~period charges driven by ~~lower investment~~absence of reserves taken on non-qualified platform products in ~~modem~~Q2 2020, partially offset by sell-through of other reserves
~~265~~		585		~~Higher CCG adjacency product margin~~Prepaid supply agreement settled and recognized to revenue in Q1 2021
~~(1,710)~~530			~~Higher platform unit cost due to ramp of 10nm products~~







73			~~Other~~
$	~~6,809~~		~~YTD 2019 CCG Operating Income~~


~~MD&A~~						34

~~Table of Contents~~


~~CONSOLIDATED RESULTS OF OPERATIONS~~

Three Months Ended Six Months Ended
Q2 2020 Q2 2019 YTD 2020 YTD 2019
(In Millions, Except Per Share Amounts) Amount % of Net
Revenue Amount % of Net
Revenue Amount % of Net
Revenue Amount % of Net
Revenue
Net revenue $ 19,728 100.0 % $ 16,505 100.0 % $ 39,556 100.0 % $ 32,566 100.0 %
Cost of sales 9,221 46.7 % 6,627 40.2 % 17,033 43.1 % 13,599 41.8 %
Gross margin 10,507 53.3 % 9,878 59.8 % 22,523 56.9 % 18,967 58.2 %
Research and development 3,354 17.0 % 3,438 20.8 % 6,629 16.8 % 6,770 20.8 %
Marketing, general and administrative 1,447 7.3 % 1,639 9.9 % 2,988 7.6 % 3,222 9.9 %
Restructuring and other charges 9 — % 184 1.1 % 171 0.4 % 184 0.6 %
Operating income 5,697 28.9 % 4,617 28.0 % 12,735 32.2 % 8,791 27.0 %
Gains (losses) on equity investments, net 267 1.4 % 170 1.0 % 156 0.4 % 604 1.9 %
Interest and other, net (29) (0.1) % (63) (0.4) % (342) (0.9) % (124) (0.4) %
Income before taxes 5,935 30.1 % 4,724 28.6 % 12,549 31.7 % 9,271 28.5 %
Provision for taxes 830 4.2 % 545 3.3 % 1,783 4.5 % 1,118 3.4 %
Net income $ 5,105 25.9 % $ 4,179 25.3 % $ 10,766 27.2 % $ 8,153 25.0 %
Earnings per share—diluted $ 1.19 $ 0.92 $ 2.50 $ 1.79


~~MD&A~~						35

~~Table of Contents~~

~~REVENUE~~

~~SEGMENT REVENUE WALK $B~~

~~Q2 2020 vs. Q2 2019~~

Our Q2 2020 revenue was $19.7 billion, up $3.2 billion or 20% from Q2 2019. Compared to a year ago, our data-centric businesses were collectively up 34% as demand from data center customers continued to strengthen as cloud service providers increased capacity to serve customer demand. We also saw NSG bit growth and improved NAND pricing, partially offset by weaker demand in IOTG. Revenue in our PC-centric business was up 7% year over year driven by strength in notebook platform ASP and higher LTE modem and Wi-Fi sales.

~~YTD 2020 vs. YTD 2019~~

Our YTD 2020 revenue was $39.6 billion, up $7.0 billion or 21% from YTD 2019. Our data-centric businesses were collectively up 34% as demand from data center customers continued to strengthen as cloud service providers increased capacity to serve customer demand. We also saw NSG bit growth and improved NAND pricing, partially offset from weaker demand in IOTG. Our PC-centric business was up 11% year over year driven by strong demand for notebook platform products and higher LTE modem and Wi-Fi sales.


~~MD&A~~						36

~~Table of Contents~~

~~GROSS MARGIN~~

We derived most of our overall gross margin from the sale of platform products in the DCG and CCG operating segments. Our overall gross margin dollars in Q2 2020 increased by $629 million, or 6.4% compared to Q2 2019. Our gross margin percentage was down as the increase in platform revenue was offset by higher platform unit costs, platform reserves and a higher proportion of our revenue from lower margin adjacent businesses.


~~GROSS MARGIN $B~~

~~(Percentages in chart indicate gross margin as a percentage of total revenue)~~


~~(In Millions)~~
$	~~10,507~~			~~Q2 2020 Gross Margin~~
~~1,550~~				~~Higher gross margin from platform revenue~~
~~815~~				Higher gross margin from adjacent businesses primarily due to higher margins on wireless and connectivity, improved NAND unit cost and ~~modem~~increased volume amidst improvement in global vehicle production
~~(1,215)~~		175			~~Higher~~Lower platform unit cost ~~primarily from increased mix of 10nm and performance products~~
~~(440)~~				~~Higher period charges primarily~~ due to ~~reserved non-qualified platform product related to our~~cost improvements in 10nm ~~process technology, partially offset by lower factory start-up costs associated with our 10nm products~~







~~(81)~~(98)				Other
$	~~9,878~~ 22,523		~~Q2 2019 Gross Margin~~

$	~~22,523~~			YTD 2020 ~~Gross Margin~~
~~4,025~~				~~Higher gross margin from platform revenue~~
~~1,150~~				~~Higher gross margin from adjacent businesses primarily due to higher margins on NAND and modem partially offset by lower margins on DCG adjacencies~~
~~320~~				~~Lower period charges primarily due to lower factory start-up costs associated with our 10nm products~~
~~(1,800)~~				~~Higher platform unit cost primarily from increased mix of 10nm and performance products~~







~~(139)~~				~~Other~~
$	~~18,967~~			~~YTD 2019~~ Gross Margin


			MD&A						3733

Table of Contents

~~OPERATING EXPENSES~~Operating Expenses

Total R&D and MG&A expenses for Q2 ~~2020~~2021 were ~~$4.8~~$5.3 billion, ~~down 5%~~up 11% from Q2 ~~2019,~~2020, and ~~$9.6~~$10.3 billion for YTD ~~2020, down 4%~~2021, up 7% from YTD ~~2019.~~2020. These expenses represent 27.1% of revenue for Q2 2021 and 24.3% of revenue for Q2 2020, and ~~30.8%~~26.1% of revenue for ~~Q2 2019,~~YTD 2021 and 24.3% of revenue ~~in the first six months of 2020 and 30.7% of revenue in the first six months of 2019.~~for YTD 2020.


			~~RESEARCH AND DEVELOPMENT~~Research and Development $B						~~MARKETING, GENERAL AND ADMINISTRATIVE~~Marketing, General, and Administrative $B

(Percentages indicate expenses as a percentage of total revenue)


~~RESEARCH AND DEVELOPMENT~~Research and Development

Q2 ~~2020~~2021 vs. Q2 ~~2019~~2020


R&D ~~decreased $84~~increased by $361 million, or ~~2.4%~~10.8%, driven by the following:

-			~~Ramp down of 5G smartphone modem business~~
+			Investments in ~~our PC~~CCG, DCG, and ~~data-centric businesses~~Mobileye
+			Investments in our process technology
+-			~~Profit dependent~~Incentive-based cash compensation

YTD ~~2020~~2021 vs. YTD ~~2019~~2020

R&D ~~decreased~~spending increased by ~~$141~~$709 million, or ~~2.1%~~10.7%, driven by the following:

~~Ramp down of 5G smartphone modem business~~

Investments in ~~our PC~~CCG, DCG, and ~~data-centric businesses~~Mobileye

Investments in our process technology

~~Profit dependent~~Incentive-based cash compensation


~~MARKETING, GENERAL AND ADMINISTRATIVE~~Marketing, General, and Administrative

Q2 ~~2020~~2021 vs. Q2 ~~2019~~2020


MG&A ~~decreased $192M,~~increased by $152 million, or ~~11.7%~~10.5%, driven by the following:

-+			~~Corporate~~Increase in corporate spending ~~efficiencies~~
+-			~~Profit dependent~~Incentive-based cash compensation

YTD ~~2020~~2021 vs. YTD ~~2019~~2020

MG&A spending decreased by ~~$234~~$61 million, or ~~7.3%~~2.0%, driven by the following:

Corporate spending efficiencies

Incentive-based cash compensation

~~Profit dependent compensation~~


			MD&A						3834

Table of Contents

~~GAINS (LOSSES) ON EQUITY INVESTMENTS AND INTEREST AND OTHER, NET~~Gains (Losses) on Equity Investments and Interest and Other, Net


(In Millions)	(In Millions)	Q2 2020		Q2 2019		YTD 2020		YTD 2019		(In Millions)	Q2 2021		Q2 2020		YTD 2021		YTD 2020
Ongoing mark-to-market adjustments on marketable equity securities	Ongoing mark-to-market adjustments on marketable equity securities	$	165	$	(179)	$	62	$	74	Ongoing mark-to-market adjustments on marketable equity securities	$	138	$	165	$	(153)	$	62
Observable price adjustments on non-marketable equity securities	Observable price adjustments on non-marketable equity securities	58		8		137		16		Observable price adjustments on non-marketable equity securities	72		58		623		137
Impairment charges	Impairment charges	(51)		(39)		(193)		(62)		Impairment charges	(35)		(51)		(73)		(193)
Sale of equity investments and other	Sale of equity investments and other	95		380		150		576		Sale of equity investments and other	120		95		266		150
Gains (losses) on equity investments, net	Gains (losses) on equity investments, net	$	267	$	170	$	156	$	604	Gains (losses) on equity investments, net	$	295	$	267	$	663	$	156

Interest and other, net	Interest and other, net	$	(29)	$	(63)	$	(342)	$	(124)	Interest and other, net	$	(96)	$	(29)	$	(252)	$	(342)

Gains (losses) on equity investments, net

Ongoing mark-to-market adjustments during the first six months of ~~2020~~2021 were primarily related to our interest in ~~Cloudera Inc. (Cloudera).~~Montage Technology, Co. Ltd. During the first six months of ~~2019,~~2020, ongoing mark-to-market adjustments were primarily driven by our ~~interests~~interest in ~~ASML Holdings N.V.~~Cloudera Inc.

In the first quarter of 2021, we recognized $471 million in observable price adjustments in our investment in Beijing Unisoc Technology Ltd.

Interest and ~~Cloudera.~~other, net

~~We recognized higher than historically experienced impairment charges on our non-marketable portfolio in~~During the first six months of 2020, ~~based on our assessment of the impact of recent public and private market volatility and tightening of liquidity.~~

~~We recognized McAfee dividends of $340 million during Q2 2019 and $494 million during the first six months of 2019.~~

~~Interest and other, net~~

~~For the six months ended June 27, 2020,~~ we paid $1.1 billion to fully satisfy conversion obligations for $372 million of our $2.0 billion 2009 Debentures and recognized a loss of $109 million in interest and other, net and $750 million as a reduction in stockholders' equity related to the conversion feature. ~~For the six months ended June 29, 2019, we paid $1.0 billion to satisfy conversion obligations for $400 million of our $2.0 billion 2009 Debentures~~

Restructuring and ~~recognized a loss of $91 million in interest~~Other Charges


(In Millions)	Q2 2021		Q2 2020		YTD 2021		YTD 2020
Employee severance and benefit arrangements	$	15	$	1	$	22	$	106

Litigation charges and other	49		—		2,251		57
Asset impairment charges	282		8		282		8
Total restructuring and other charges	$	346	$	9	$	2,555	$	171

Litigation charges and other ~~net and $712 million as~~includes a ~~reduction~~charge of $2.2 billion in ~~stockholders' equity~~the first three months of 2021 related to the ~~conversion feature.~~VLSI litigation, and Asset impairment charges includes impairments related to the shutdown of two of our non-strategic businesses in Q2 2021. Refer to "Note 6: Restructuring and Other Charges" and "Note 13: Contingencies" within Notes to Consolidated Condensed Financial Statements for further information.

~~PROVISION FOR TAXES~~Provision for Taxes


(In Millions)	(In Millions)	Q2 2020			Q2 2019			YTD 2020			YTD 2019			(In Millions)	Q2 2021			Q2 2020			YTD 2021			YTD 2020
Income before taxes	Income before taxes	$	5,935		$	4,724		$	12,549		$	9,271		Income before taxes	$	5,745		$	5,935		$	9,651		$	12,549
Provision for taxes	Provision for taxes	$	830		$	545		$	1,783		$	1,118		Provision for taxes	$	684		$	830		$	1,229		$	1,783
Effective tax rate	Effective tax rate	14.0		%	11.5		%	14.2		%	12.1		%	Effective tax rate	11.9		%	14.0		%	12.7		%	14.2		%

For the first six months ~~ended June 27, 2020,~~of 2021, the ~~increase~~decrease in the effective tax rate was ~~driven by~~primarily due to a ~~lower~~higher U.S. tax benefit derived from sales to non-U.S. customers ~~a one-time~~and tax ~~charge associated with a valuation allowance against a net operating loss deferred tax asset, and a one-time tax charge due to a new interpretation of a tax law~~incentives realized in a non-U.S. ~~jurisdiction.~~

In June 2020, the U.S. Supreme Court declined to hear our appeal of a ruling by the U.S. Court of Appeals for the Ninth Circuit regarding the treatment of stock-based compensation expense in an inter-company cost-sharing transaction for certain pre-acquisition Altera tax years. We expect to incur an immaterial tax liability which we have previously reserved.jurisdictions.


			MD&A						3935

Table of Contents

~~LIQUIDITY AND CAPITAL RESOURCES~~Liquidity and Capital Resources

We consider the following when assessing our liquidity and capital resources:


(In Millions)	(In Millions)	Jun 27, 2020		Dec 28, 2019		(In Millions)	Jun 26, 2021		Dec 26, 2020
Cash and cash equivalents, short-term investments, and trading assets		$	25,815	$	13,123
Cash and cash equivalents						Cash and cash equivalents	$	4,746	$	5,865
Short-term investments						Short-term investments	3,014		2,292
Trading assets						Trading assets	17,097		15,738
Other long-term investments	Other long-term investments	$	2,884	$	3,276	Other long-term investments	1,262		2,192
Loans receivable and other	Loans receivable and other	$	1,295	$	1,239	Loans receivable and other	374		947
Reverse repurchase agreements with original maturities greater than three months		$	100	$	350
Total cash and investments1						Total cash and investments1	$	26,493	$	27,034

Total debt	Total debt	$	38,347	$	29,001	Total debt	$	35,409	$	36,401
Temporary equity		$	—	$	155

Cash generated by operations is our primary source of liquidity. When assessing our sources of liquidity, we include our total cash and investments1 as shown in the preceding table. We maintain a diverse investment portfolio that we continually analyze based on issuer, industry, and country. Substantially all of our investments in debt instruments and financing receivables are in investment-grade securities.

In the first quarter of 2021, we entered into a $5.0 billion variable-rate revolving credit facility which matures in March 2026. Other potential sources of liquidity include our commercial paper program and our automatic shelf registration statement on file with the SEC, pursuant to which we may offer an unspecified amount of debt, equity, and other securities. Under our commercial paper program, we have an ongoing authorization from our Board of Directors to borrow up to $10.0 billion. As of June ~~27, 2020,~~26, 2021, we had no outstanding commercial ~~paper.~~paper or borrowings on the revolving credit facility.

In the first quarter of 2021, we repurchased the remaining $2.4 billion in shares of our planned $20.0 billion share repurchases announced in October 2019.

We believe we have sufficient ~~financial resources~~sources of funding to meet our business requirements in the next 12 months, including capital expenditures for worldwide manufacturing and assembly and test; working capital requirements; and ~~potential~~ acquisitions, strategic investments, and dividends. We have taken actions this year to further strengthen our liquidity. During the first six months of 2020, we issued a total of $10.3 billion aggregate principal amount of senior notes. Additionally, on March 24, 2020 we suspended the use of our financial resources for stock repurchases, having repurchased approximately $7.6 billion of our planned $20.0 billionrepurchases announced in October 2019. Dividend payments to stockholders remain unaffected by the suspension of stock repurchases and the company intends to reinstate stock repurchases when market dynamics stabilize.

~~CASH FROM OPERATIONS~~Cash from Operations $B

~~CAPITAL EXPENDITURES~~Capital Expenditures $B

~~CASH TO STOCKHOLDERS~~Cash to Stockholders $B

■ Dividends ~~Dividends~~ ■ Buybacks

Six Months Ended
(In Millions) Jun 27, 2020 Jun 29, 2019
Net cash provided by operating activities $ 17,315 $ 12,546
Net cash used for investing activities (14,346) (6,010)
Net cash provided by (used for) financing activities 1,573 (6,688)
Net increase (decrease) in cash and cash equivalents $ 4,542 $ (152)


~~MD&A~~						40

~~Table of Contents~~


	Six Months Ended
(In Millions)	Jun 26, 2021		Jun 27, 2020
Net cash provided by operating activities	$	14,294	$	17,315
Net cash used for investing activities	(9,451)		(14,346)
Net cash provided by (used for) financing activities	(5,962)		1,573

Net increase (decrease) in cash and cash equivalents	$	(1,119)	$	4,542

Operating Activities

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.

For the first six months of ~~2020~~2021 compared to the first six months of ~~2019,~~2020, the ~~increase~~decrease in cash provided by operations was ~~due to higher net income and changes in working capital. Changes in working capital were~~ primarily driven by ~~declines~~lower net income, net of non-cash adjustments including the Corporate VLSI charge, a prepaid supply agreement payment in ~~inventory spending~~the first quarter of 2021, and ~~a higher effective tax rate, offset by other assets and liabilities.~~income taxes.

1 See "Non-GAAP Financial Measures" within MD&A.


			MD&A			36

Table of Contents

Investing Activities

Investing cash flows consist primarily of capital ~~expenditures;~~expenditures, investment purchases, sales, maturities, and ~~disposals;~~disposals, and proceeds from divestitures and cash used for acquisitions.

Cash used for investing activities was ~~higher~~lower in the first six months of ~~2020~~2021 compared to the first six months of ~~2019~~2020, primarily ~~due to increased purchases of~~driven by an increase in sales and maturities for available-for-sale debt investments and trading assets, and ~~decreased sales~~a decrease in purchases of ~~equity investments.~~available-for-sale debt investments, partially offset by an increase in purchases of trading assets and increased capital expenditures.

Financing Activities

Financing cash flows consist primarily of repurchases of common stock, payment of dividends to stockholders, issuance and repayment of short-term and long-term debt, and proceeds from the sale of shares of common stock through employee equity incentive plans.

Cash was used for financing activities in the first six months of 2021 compared to cash provided by financing activities in the first six months of 2020 ~~compared to cash used for financing activities in the first six months of 2019 primarily~~ due to ~~increased issuance of~~a decrease in cash provided by long-term debt issuances, partially offset by a ~~reduction~~decrease in repurchases of ~~repayments~~common stock and a decrease in repayment of debt and debt ~~conversions, and a reduction in repurchases of common stock.~~conversion.

~~CONTRACTUAL OBLIGATIONS~~

In the first six months of 2020, we issued a total of $10.3 billion aggregate principal amount of senior notes. Our remaining total cash payments over the life of these long-term debt obligations are expected to be approximately $19.1 billion. These payments include anticipated interest on fixed rate debt that is not recorded on the Consolidated Condensed Balance Sheets. For further information, see "Note 9: Borrowings" within the Consolidated CondensedNon-GAAP Financial ~~Statements and Supplemental Details.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

We are affected by changes in currency exchange and interest rates, as well as equity and commodity prices. Our risk management programs are designed to reduce, but may not entirely eliminate, the impacts of these risks. We performed sensitivity analyses of these risks to our financial positions as of December 28, 2019, and updated that sensitivity analysis as of June 27, 2020, to determine whether material changes in market risks pertaining to currency and interest rates or equity and commodity prices have occurred as a result of the ongoing economic uncertainty resulting from the COVID-19 pandemic. No material revisions were noted since disclosing "Quantitative and Qualitative Disclosures About Market Risk" within MD&A in our 2019 Form 10-K.


~~MD&A~~						41

~~Table of Contents~~

~~NON-GAAP FINANCIAL MEASURES~~Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this document contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. Certain of these non-GAAP financial measures are used in our performance-based RSUs and our annual cash bonus plan.

Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects where applicable. Income tax effects have been calculated using an appropriate tax rate for each adjustment. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated.


			MD&A			37

Table of Contents


Non-GAAP adjustment or measure	Definition	Usefulness to management and investors
NAND memory business	Our NAND memory business is subject to a pending sale to SK hynix, as announced in October 2020.	We exclude the impact of our NAND memory business in certain non-GAAP measures because these adjustments reflect how management currently views the core operations of the company. While the sale of the NAND memory business is still pending and subject to closing conditions, management does not currently view the business as part of the company’s core operations or its long-term strategic direction. We believe these adjustments provide investors with a useful view, through the eyes of management, of the company’s core business model and how management currently evaluates core operational performance. We believe they also provide investors with an additional means to understand the potential impact of the divestiture over time. In making these adjustments, we have not made any changes to our methods for measuring and calculating revenue or other financial statement amounts.
Acquisition-related adjustments	Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our U.S. GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years.	We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends.
Restructuring and other charges	Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include goodwill and asset impairments, pension charges, and costs associated with restructuring activity.	We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our ~~current~~core operating ~~performance and are significantly impacted by the timing of restructuring activity.~~performance. These adjustments facilitate a useful evaluation of our ~~current~~core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.

Ongoing mark-to-market on marketable equity securities	After the initial mark-to-market adjustment is recorded upon a security becoming marketable, gains and losses are recognized from ongoing mark-to-market adjustments of our marketable equity securities.	We exclude these ongoing gains and losses for purposes of calculating certain non-GAAP measures because we do not believe this volatility correlates to our core operational performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results.
Free cash flow	We reference a non-GAAP financial measure of free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Free cash flow is operating cash flow adjusted to exclude additions to property, plant and equipment.	This non-GAAP financial measure is helpful in understanding our capital requirements and provides an additional means to evaluate the cash flow trends of our business. In calculating free cash flow, we do not subtract additions to held for sale NAND property, plant and equipment because the additions are not representative of our long-term capital requirements and we expect these assets to be sold.
Total cash and investments	Total cash and investments is used by management when assessing our sources of liquidity, which includes cash and cash equivalents, short-term investments, trading assets, other long-term investments, and loans receivable and other.	This non-GAAP measure is helpful in understanding our capital resources and liquidity position.


			MD&A						4238

Table of Contents

Following are the reconciliations of our most comparable U.S. GAAP measures to our non-GAAP measures presented:


		Three Months Ended										Three Months Ended
(In Millions, Except Per Share Amounts)	(In Millions, Except Per Share Amounts)	Jun 27, 2020			Jun 29, 2019			(In Millions, Except Per Share Amounts)	Jun 26, 2021			Jun 27, 2020

Net revenue								Net revenue	$	19,631		$	19,728
NAND memory business								NAND memory business	(1,098)			(1,544)
Non-GAAP net revenue								Non-GAAP net revenue	$	18,533		$	18,184

Operating income	Operating income	$	5,697		$	4,617		Operating income	$	5,546		$	5,697
Acquisition-related adjustments	Acquisition-related adjustments	352			337			Acquisition-related adjustments	366			352

Restructuring and other charges	Restructuring and other charges	9			184			Restructuring and other charges	346			9
NAND memory business								NAND memory business	(402)			(423)
Non-GAAP operating income	Non-GAAP operating income	$	6,058		$	5,138		Non-GAAP operating income	$	5,856		$	5,635

Operating margin	Operating margin	28.9		%	28.0		%	Operating margin	28.3		%	28.9		%
Acquisition-related adjustments	Acquisition-related adjustments	1.8		%	2.0		%	Acquisition-related adjustments	1.9		%	1.8		%

Restructuring and other charges	Restructuring and other charges	—		%	1.1		%	Restructuring and other charges	1.8		%	—		%
Non-GAAP operating margin		30.7		%	31.1		%
NAND memory business								NAND memory business	(0.3)		%	0.4		%
Non-GAAP operating margin1								Non-GAAP operating margin1	31.6		%	31.0		%

Earnings per share—diluted	Earnings per share—diluted	$	1.19		$	0.92		Earnings per share—diluted	$	1.24		$	1.19
Acquisition-related adjustments	Acquisition-related adjustments	0.08			0.08			Acquisition-related adjustments	0.09			0.08

Restructuring and other charges	Restructuring and other charges	—			0.04			Restructuring and other charges	0.08			—

Ongoing mark-to-market on marketable equity securities	Ongoing mark-to-market on marketable equity securities	(0.04)			0.04			Ongoing mark-to-market on marketable equity securities	(0.03)			(0.04)

Income tax effect		—			(0.02)
NAND memory business								NAND memory business	(0.09)			(0.10)
Income tax effects								Income tax effects	(0.01)			0.01

Non-GAAP earnings per share—diluted	Non-GAAP earnings per share—diluted	$	1.23		$	1.06		Non-GAAP earnings per share—diluted	$	1.28		$	1.14

		Six Months Ended
(In Millions)		Jun 27, 2020			Jun 29, 2019
Net cash provided by operating activities		$	17,315		$	12,546
Additions to property, plant and equipment		(6,676)			(6,875)
Free cash flow		$	10,639		$	5,671

Net cash used for investing activities		$	(14,346)		$	(6,010)
Net cash provided by (used for) financing activities		$	1,573		$	(6,688)

1 Our reconciliation of GAAP to non-GAAP operating margin percentage reflects the exclusion of our NAND memory business from net revenue.


	Six Months Ended
(In Millions)	Jun 26, 2021		Jun 27, 2020
Net cash provided by operating activities	$	14,294	$	17,315
Additions to property, plant and equipment	(7,574)		(6,676)
Free cash flow	$	6,720	$	10,639

Net cash used for investing activities	$	(9,451)	$	(14,346)
Net cash provided by (used for) financing activities	$	(5,962)	$	1,573


			MD&A						4339

Table of Contents


~~OTHER KEY INFORMATION~~Other Key Information

~~RISK FACTORS~~Quantitative and Qualitative Disclosures About Market Risk

We are affected by changes in currency exchange and interest rates, as well as equity and commodity prices. Our risk management programs are designed to reduce, but may not entirely eliminate, the impacts of these risks. For discussion about market risk and sensitivity analysis related to changes in currency exchange rates, interest rates, equity prices, and commodity prices refer to "Quantitative and Qualitative Disclosures About Market Risk" within MD&A in our 2020 Form 10-K.

Risk Factors

The risks described in "Risk Factors" within Other Key Information in our ~~2019~~2020 Form 10-K and our Form 10-Q for ~~the quarter ended March 28, 2020 (Q1 2020 Form 10-Q)~~Q1 2021 could materially and adversely affect our business, financial condition, and results of operations, and the trading price of our common stock could decline. ~~The Risk Factors section in our 2019 Form 10-K, as updated by our Q1 2020 Form 10-Q and the discussions of the COVID-19 pandemic in this report, remains current in all material respects.~~ These risk factors do not identify all risks that we face—our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. Refer also to the other information set forth in this Form 10-Q, including in the Forward-Looking Statements, MD&A, and Consolidated Condensed Financial Statements and Supplemental Details sections.

~~CONTROLS AND PROCEDURES~~Controls and Procedures

Inherent Limitations on Effectiveness of Controls

Our management, including the principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

Evaluation of Disclosure Controls and Procedures

Due to the COVID-19 pandemic, a significant portion of our employees are working from home. Established business continuity plans remain activated in order to mitigate the impact to our control environment, operating procedures, data and internal controls. The design of our processes and controls allow for remote execution with accessibility to secure data.

Based on management’s evaluation (with the participation of our principal executive officer and principal financial officer), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June ~~27, 2020~~26, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~ISSUER PURCHASES OF EQUITY SECURITIES~~Issuer Purchases of Equity Securities

We have an ongoing authorization, originally approved by our Board of Directors in 2005 and subsequently amended, to repurchase shares of our common stock in open market or negotiated transactions. ~~On March 24, 2020, we suspended stock repurchases in light of the COVID-19 pandemic and no~~No shares were repurchased during the quarter ~~ended~~ending June ~~27, 2020. We intend to reinstate repurchases when market dynamics stabilize.~~26, 2021. As of June ~~27, 2020,~~26, 2021, we were authorized to repurchase up to $110.0 billion, of which ~~$19.7~~$7.2 billion remained available.

We issue RSUs as part of our equity incentive plans. In our Consolidated Condensed Financial Statements, we treat shares of common stock withheld for tax purposes on behalf of our employees in connection with the vesting of RSUs as common stock repurchases because they reduce the number of shares that would have been issued upon vesting. These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase program.


~~OTHER KEY INFORMATION~~			Other Key Information			4440

Table of Contents

~~EXHIBITS~~Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934

Incorporated by Reference
Exhibit
Number Exhibit Description Form File Number Exhibit Filing
Date Filed or
Furnished
Herewith
3.1
Third Restated Certificate of Incorporation of Intel Corporation, dated May 17, 2006
8-K 000-06217 3.1 5/22/2006
3.2
Intel Corporation Bylaws, as amended and restated on January 16, 2019
8-K 000-06217 3.2 1/17/2019
10.1^†
Intel Corporation 2006 Employee Stock Purchase Plan, as amended and restated, effective May 14, 2020
X
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
X
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
X
32.1
Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350
X
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH XBRL Taxonomy Extension Schema Document X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB XBRL Taxonomy Extension Label Linkbase Document X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101 X
Section 13(r) of the Exchange Act requires an issuer to disclose certain information in its periodic reports if it or any of its affiliates knowingly engaged in certain activities, transactions or dealings with individuals or entities subject to specific U.S. economic sanctions during the reporting period, even when the activities, transactions, or dealings are conducted in compliance with applicable law. On March 2, 2021, the U.S. Secretary of State designated the Federal Security Service of the Russian Federation (FSB) as a party subject to one such sanction. From time to time, our local subsidiary is required to engage with the FSB as a licensing authority and file documents in order to conduct business within the Russian Federation. All such dealings are explicitly authorized by General License 1B issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control, and there are no gross revenues or net profits directly associated with any such dealings by us with the FSB. We plan to continue these activities as required to conduct business in the Russian Federation to the extent permitted by applicable law.


			Other Key Information			41

Table of Contents

Exhibits

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File Number

Exhibit

Filing
Date

Filed or
Furnished
Herewith

3.1

Third Restated Certificate of Incorporation of Intel Corporation, dated May 17, 2006

8-K

000-06217

3.1

5/22/2006

3.2

Intel Corporation Bylaws, as amended and restated on March 10, 2021

8-K

000-06217

3.2

3/16/2021

10.1†

Offer Letter between Intel Corporation and Sandra Rivera, dated June 21, 2021

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act

32.1

Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101

† Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.


~~OTHER KEY INFORMATION~~			Other Key Information			4542

Table of Contents

~~FORM~~Form 10-Q ~~CROSS-REFERENCE INDEX~~Cross-Reference Index


Item Number	Item
Part I - Financial Information
Item 1.	Financial Statements	Pages 53 - 2723
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations:
	Results of operations	Pages 2 - 4, 2824 - 3935
	Liquidity and capital resources	Pages 4036 - 4137

	Off-balance sheet arrangements	(a)
	Contractual obligations	~~Page~~ (b)41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	Page 4140
Item 4.	Controls and Procedures	Page 4440

Part II - Other Information
Item 1.	Legal Proceedings	Pages 2318 - 2622
Item 1A.	Risk Factors	Page 4440
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	Page 4440
Item 3.	Defaults Upon Senior Securities	Not applicable
Item 4.	Mine Safety Disclosures	Not applicable
Item 5.	Other Information
	~~Not applicable~~Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934	Page 41
Item 6.	Exhibits	Page 4542

Signatures		Page 4744

(a) As of June ~~27, 2020,~~26, 2021, we did not have any significant off-balance sheet arrangements, as previously defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

(b) There were no material changes to our significant contractual obligations from those disclosed in our 2020 Form 10-K.


~~OTHER KEY INFORMATION~~			Other Key Information			4643

Table of Contents

~~SIGNATURES~~Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INTEL CORPORATION
(Registrant)

Date:

July ~~23, 2020~~22, 2021

By:

/s/ GEORGE S. DAVIS

George S. Davis

Executive Vice President, Chief Financial Officer and Principal Financial Officer

Date:

July ~~23, 2020~~22, 2021

By:

/s/ KEVIN T. MCBRIDE

Kevin T. McBride

Vice President of Finance, Corporate Controller and Principal Accounting Officer


						4744


	Q2 2020 vs. Q2 2019							YTD 2020 vs. YTD 2019
(In Millions)	%				$ Impact		%			$ Impact

Platform volume	up	29%	$	1,326		up	28%	$	2,555
Platform ASP	up	5%	302			up	9%	1,018
Adjacent products	up	118%	506			up	77%	652

Total change in revenue			$	2,134				$	4,225