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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 endedJuly 2, 2022
or
 ☐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
intc-20220702_g1.jpg
INTEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware94-1672743
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2200 Mission College Boulevard, Santa Clara, California95054-1549
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.001 par valueINTCNasdaq 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 FilerAccelerated 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 July 2, 2022, the registrant had outstanding 4,106 million shares of common stock.


Table of Contents
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.
We have defined certain terms and abbreviations used throughout our Form 10-Q in "Key Terms" within 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
A Quarter in Review
Consolidated Condensed Financial Statements and Supplemental Details
Consolidated Condensed Statements of Income
Consolidated Condensed Statements of Comprehensive Income
Consolidated Condensed Balance Sheets
Consolidated Condensed Statements of Cash Flows
Consolidated Condensed Statements of Stockholders' Equity
Notes to Consolidated Condensed Financial Statements
Key Terms
Management's Discussion and Analysis
Segment Trends and Results
Consolidated Results of Operations
Liquidity and Capital Resources
Non-GAAP Financial Measures
Other Key Information
Quantitative and Qualitative Disclosures about Market Risk
Risk Factors
Controls and Procedures
Issuer Purchases of Equity Securities
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
Exhibits
Form 10-Q Cross-Reference Index









Forward-Looking Statements
This Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as "accelerate," "adjust," "allow," "anticipate," "believe," "committed," "continue," "could," "deliver," "estimate," "expect," "focus," "goals," "grow," "guidance," "improve," "increase," "intend," "likely," "manage," "may," "might," "on track," "opportunity," "plans," "position," "potentially," "roadmap," "seeks," "should," "targets," "to be," "will," "would," 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 and its anticipated benefits, including our February 2022 Investor Day financial model, Smart Capital strategy, and updates to our reporting structure; Intel's process and packaging technology, roadmap, and schedules, including future node performance and other metrics; manufacturing expansion and financing plans; investment plans, and impacts of investment plans, including in the U.S. and abroad; future responses to and effects of COVID-19, including manufacturing, transportation, and operational restrictions or disruptions, such as the recent port shutdowns in China; future economic conditions; projections of our future financial performance; future business, social, and environmental performance, goals, measures and strategies; our anticipated growth and trends in our businesses and operations; projected growth and trends in markets relevant to our businesses; business plans; future products, services and technology, and the expected regulation, availability, production, and benefits of such products, services and technology; projected costs and yield trends; product and manufacturing plans, goals, timelines, ramps, progress and future product and process leadership and performance; geopolitical conditions, including the impacts of Russia's war on Ukraine and the suspension of our operations; expected timing and impact of acquisitions, divestitures, and other significant transactions, including statements relating to the pending acquisition of Tower Semiconductor Ltd., the sale of our NAND memory business, the proposed initial public offering of Mobileye, and the wind-down of our Intel® Optane™ memory business; expected completion of restructuring activities; availability, uses, sufficiency, and cost of capital and of capital resources, including expected returns to stockholders such as dividends and share repurchases, and the expected timing of future repurchases; our valuation; future production capacity and product supply; supply expectations, including regarding constraints, limitations, pricing, and industry shortages; the future purchase, use, and availability of products, components and services supplied by third parties, including third-party IP and manufacturing services; tax- and accounting-related expectations; LIBOR-related expectations; uncertain events or assumptions, including statements relating to TAM, product or customer demand or market opportunity; 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 2021 Form 10-K, and our Form 10-Q for the quarter ended April 2, 2022, particularly in "Risk Factors" within Other Key Information, including changes in demand for our products, changes in product mix, the complexity of our manufacturing operations, competition, investments in R&D and our business, products, and technologies, vulnerability to product and manufacturing-related risks, the effects of the COVID-19 pandemic, supply chain risks, cybersecurity and privacy risks, investment and transaction risk, evolving regulatory and legal requirements, and the risks of our global operations, among others. 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, Intel Core, and Intel Optane 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.
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1
A Quarter in Review
Total revenue of $15.3 billion was down $4.3 billion year over year or 22%, as CCG revenue decreased 25% and DCAI revenue decreased 16%. Q2 2022 results were impacted by a weakening and uncertain macroeconomic environment impacted by inflation, higher interest rates and the war in Ukraine, and our customers' adjustment to this new environment. We were also impacted by worse than expected reductions in demand following COVID-driven highs as well as supply dislocations in China and other parts of the supply chain, including following the extended shutdown of ports in China. CCG revenue was down on lower notebook and desktop volume. Notebook ASPs were higher due to a resulting change in product mix. DCAI revenue decreased 16% on lower Server volume, while Server ASPs decreased due to a higher mix of hyperscale customer-related revenue within a competitive environment. CCG and DCAI customers tempered purchases to reduce existing inventories and adjust to a lower demand environment. NEX revenue increased 11% primarily due to increased demand for Ethernet and 5G products and higher ASPs, partially offset by decreased demand for Network Xeon.
RevenueGross MarginDiluted EPSCash Flows
■ GAAP $B ■ Non-GAAP $B
■ GAAP ■ Non-GAAP
■ GAAP ■ Non-GAAP
■ Operating Cash Flow $B
■ Adjusted Free Cash Flow $B
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$15.3B36.5%44.8%$(0.11)$0.29$6.7B$(0.8)B
GAAPGAAP
non-GAAP1
GAAP
non-GAAP1
GAAP
non-GAAP1
Revenue down $4.3B or 22% from Q2 2021Gross margin down 20.6 ppts from Q2 2021Gross margin down 15 ppts from Q2 2021Diluted EPS down $1.35 or 109% from Q2 2021Diluted EPS down $1.07 or 79% from Q2 2021Operating cash flow down $7.4B or 53% from YTD 2021Adjusted free cash flow down $7.5B or 112% from YTD 2021
Lower revenue in CCG and DCAI; higher revenue in NEX; lack of NAND revenue compared to Q2 2021.
Lower gross margin from lower revenue, higher inventory reserves, higher period charges from ramp of Intel 4, higher unit cost, Optane inventory impairment from winding down Intel Optane, and patent settlement charges.
Lower EPS from lower gross margin, higher operating expenses from additional investment in R&D and higher losses on equity investments, partially offset by a tax benefit on the operating loss.
Lower operating cash flow driven by lower income after adjusting for non-cash items, including the gain on the sale of McAfee and the pre-tax gain from the divestiture of our NAND business; also affected by unfavorable working capital changes.
Key Developments
▪We announced the implementation of cost-cutting measures, including a slower pace of hiring, designed to reduce operating expenditures and manage the business towards the long-term financial model set forth at our February Investor Day.
▪We announced that the ramp of Sapphire Rapids is expected to occur later in the year than previously forecasted and upon release, combined with the remainder of our next-gen Intel® Xeon® Scalable processors, it is expected to unleash the data center ecosystem and usher in new progress for AI driven software and security, enabling us to capture new share in fast-growing markets like AI, networking, and cryptography.
▪We launched the 12th Gen Intel® Core™ HX processors – the final products in our Alder Lake family. The 12th Gen Intel Core HX processors utilize desktop-caliber silicon in a mobile package to deliver high levels of performance for professional workflows like CAD, animation and visual effects.
▪We announced a strategic partnership with MediaTek to manufacture chips for a range of smart edge devices using IFS advanced process technologies and global capacity.

1 See "Non-GAAP Financial Measures" within MD&A.
2 See "Key Terms" within Consolidated Condensed Financial Statements and Supplemental Details.

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A Quarter in Review
2
Consolidated Condensed Statements of Income
 Three Months EndedSix Months Ended
(In Millions, Except Per Share Amounts; Unaudited)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Net revenue$15,321 $19,631 $33,674 $39,304 
Cost of sales9,734 8,425 18,843 17,244 
Gross margin5,587 11,206 14,831 22,060 
Research and development4,400 3,715 8,762 7,338 
Marketing, general and administrative1,800 1,599 3,552 2,927 
Restructuring and other charges87 346 (1,124)2,555 
Operating expenses6,287 5,660 11,190 12,820 
Operating income (loss)(700)5,546 3,641 9,240 
Gains (losses) on equity investments, net(90)295 4,233 663 
Interest and other, net(119)(96)878 (252)
Income (loss) before taxes(909)5,745 8,752 9,651 
Provision for (benefit from) taxes(455)684 1,093 1,229 
Net income (loss)$(454)$5,061 $7,659 $8,422 
Earnings (loss) per share—basic$(0.11)$1.25 $1.87 $2.08 
Earnings (loss) per share—diluted$(0.11)$1.24 $1.86 $2.06 
Weighted average shares of common stock outstanding:
Basic4,100 4,049 4,095 4,053 
Diluted4,100 4,084 4,120 4,090 
         
See accompanying notes.
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Financial Statements  Consolidated Condensed Statements of Income
3
Consolidated Condensed Statements of Comprehensive Income
Three Months Ended
Six Months Ended
(In Millions; Unaudited)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Net income (loss)$(454)$5,061 $7,659 $8,422 
Changes in other comprehensive income, net of tax:
Net unrealized holding gains (losses) on derivatives(627)6 (742)(344)
Actuarial valuation and other pension benefits (expenses), net9 12 27 25 
Translation adjustments and other(5)(10)(30)(25)
Other comprehensive income (loss)(623)8 (745)(344)
Total comprehensive income (loss)$(1,077)$5,069 $6,914 $8,078 
See accompanying notes.
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Financial Statements  Consolidated Condensed Statements of Comprehensive Income
4
Consolidated Condensed Balance Sheets
(In Millions; Unaudited)
Jul 2, 2022Dec 25, 2021
Assets
Current assets:
Cash and cash equivalents$4,390 $4,827 
Short-term investments22,654 24,426 
Accounts receivable6,063 9,457 
Inventories12,174 10,776 
Assets held for sale32 6,942 
Other current assets5,275 2,130 
Total current assets50,588 58,558 
Property, plant and equipment, net of accumulated depreciation of $89,163 ($85,294 as of December 25, 2021)71,660 63,245 
Equity investments5,929 6,298 
Goodwill27,587 26,963 
Identified intangible assets, net6,427 7,270 
Other long-term assets8,227 6,072 
Total assets$170,418 $168,406 
Liabilities and stockholders’ equity
Current liabilities:
Short-term debt$2,882 $4,591 
Accounts payable7,945 5,747 
Accrued compensation and benefits2,730 4,535 
Other accrued liabilities13,661 12,589 
Total current liabilities27,218 27,462 
Debt32,548 33,510 
Income taxes payable3,684 4,305 
Deferred income taxes572 2,667 
Other long-term liabilities5,178 5,071 
Contingencies (Note 12)
Stockholders’ equity:
Common stock and capital in excess of par value, 4,106 issued and outstanding (4,070 issued and outstanding as of December 25, 2021)29,858 28,006 
Accumulated other comprehensive income (loss)(1,625)(880)
Retained earnings72,985 68,265 
Total stockholders’ equity101,218 95,391 
Total liabilities and stockholders’ equity$170,418 $168,406 
See accompanying notes.
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Financial Statements  Consolidated Condensed Balance Sheets
5
Consolidated Condensed Statements of Cash Flows
 
Six Months Ended
(In Millions; Unaudited)
Jul 2, 2022Jun 26, 2021
Cash and cash equivalents, beginning of period$4,827 $5,865 
Cash flows provided by (used for) operating activities:
Net income (loss)7,659 8,422 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation5,528 4,862 
Share-based compensation1,599 1,044 
Restructuring and other charges73 2,555 
Amortization of intangibles968 897 
(Gains) losses on equity investments, net(4,230)(555)
(Gains) losses on divestitures(1,072)— 
Changes in assets and liabilities:
Accounts receivable3,397 (678)
Inventories(1,386)(126)
Accounts payable117 425 
Accrued compensation and benefits(1,985)(836)
Prepaid customer supply agreements(12)(1,571)
Income taxes(2,232)114 
Other assets and liabilities(1,724)(404)
Total adjustments(959)5,727 
Net cash provided by operating activities6,700 14,149 
Cash flows provided by (used for) investing activities:
Additions to property, plant and equipment(11,846)(7,574)
Additions to held for sale NAND property, plant and equipment(206)(682)
Purchases of short-term investments(25,514)(16,637)
Maturities and sales of short-term investments25,407 15,062 
Sales of equity investments4,775 149 
Proceeds from divestitures6,579 — 
Other investing(1,667)768 
Net cash used for investing activities(2,472)(8,914)
Cash flows provided by (used for) financing activities:
Payments on finance leases(299)— 
Repayment of debt(1,688)(500)
Proceeds from sales of common stock through employee equity incentive plans589 589 
Repurchase of common stock— (2,415)
Payment of dividends to stockholders(2,986)(2,821)
Other financing(281)(1,207)
Net cash used for financing activities(4,665)(6,354)
Net increase (decrease) in cash and cash equivalents(437)(1,119)
Cash and cash equivalents, end of period$4,390 $4,746 
Supplemental disclosures:
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities$3,286 $2,426 
Cash paid during the period for:
Interest, net of capitalized interest$214 $283 
Income taxes, net of refunds$3,326 $1,110 
See accompanying notes.
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Financial Statements  Consolidated Condensed Statements of Cash Flows
6
Consolidated Condensed Statements of Stockholders' Equity
Common Stock and Capital in Excess of Par Value
Accumulated Other Comprehensive Income (Loss)
Retained Earnings1
Total
(In Millions, Except Per Share Amounts; Unaudited)SharesAmount
Three Months Ended
Balance as of April 02, 20224,089 $29,244 $(1,002)$74,894 $103,136 
Net income (loss)— — — (454)(454)
Other comprehensive income (loss)— — (623)— (623)
Employee equity incentive plans and other22 12 — — 12 
Share-based compensation— 892 — — 892 
Restricted stock unit withholdings(5)(290)— 44 (246)
Cash dividends declared ($0.37 per share)— — — (1,499) (1,499)
Balance as of July 02, 20224,106 $29,858 $(1,625)$72,985 $101,218 
Balance as of March 27, 20214,038 $26,272 $(1,103)$54,638 $79,807 
Net income (loss)— — — 5,061 5,061 
Other comprehensive income (loss)— — 8 — 8 
Employee equity incentive plans and other24 23 — — 23 
Share-based compensation— 619 — — 619 
Restricted stock unit withholdings(5)(259)— (52)(311)
Balance as of June 26, 20214,057 $26,655 $(1,095)$59,647 $85,207 
Six Months Ended
Balance as of December 25, 20214,070 $28,006 $(880)$68,265 $95,391 
Net income (loss)— — — 7,659 7,659 
Other comprehensive income (loss)— — (745)— (745)
Employee equity incentive plans and other42 601 — — 601 
Share-based compensation— 1,599 — — 1,599 
Repurchase of common stock— — — — — 
Restricted stock unit withholdings(6)(348)— 47 (301)
Cash dividends declared ($0.73 per share)— — — (2,986)(2,986)
Balance as of July 02, 20224,106 $29,858 $(1,625)$72,985 $101,218 
Balance as of December 26, 20204,062 $25,556 $(751)$56,268 $81,073 
Net income (loss)— — — 8,422 8,422 
Other comprehensive income (loss)— — (344)— (344)
Employee equity incentive plans and other41 588 — — 588 
Share-based compensation— 1,044 — — 1,044 
Repurchase of common stock(40)(249)— (2,166)(2,415)
Restricted stock unit withholdings(6)(284)— (56)(340)
Cash dividends declared ($0.70 per share)— — — (2,821)(2,821)
Balance as of June 26, 20214,057 $26,655 $(1,095)$59,647 $85,207 
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.
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Financial Statements  Consolidated Condensed Statements of Stockholders' Equity
7
Notes to Consolidated Condensed Financial Statements
Note 1 : 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 2021 Form 10-K and as updated by our Form 10-Q for the quarter ended April 2, 2022.
We have made estimates and judgments affecting the amounts reported in our Consolidated Condensed Financial Statements and the accompanying notes. 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 2021 Form 10-K where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates.
Note 2 : Operating Segments
We previously announced several organizational changes that would accelerate the execution and innovation of our Company by allowing us to capture growth in both large traditional markets and high-growth emerging markets. This includes reorganization of our business units to capture this growth and to provide increased transparency, focus and accountability. As a result, we modified our segment reporting in the first quarter of 2022 to align to the previously-announced business reorganization. All prior-period segment data has been retrospectively adjusted to reflect the way our CODM internally receives information, and manages and monitors our operating segment performance starting in fiscal year 2022.
We now manage our business through the following operating segments:
▪Client Computing (CCG)
▪Datacenter and AI (DCAI)
▪Network and Edge (NEX)
▪Accelerated Computing Systems and Graphics (AXG)
▪Mobileye
▪Intel Foundry Services (IFS)
We derive a substantial majority of our revenue from our principal products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package, which is based on Intel® architecture.
CCG, DCAI and NEX are our reportable operating segments. AXG, Mobileye, and IFS 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. AXG revenue includes integrated graphics royalties from our CCG and NEX operating segments and are recorded as if the sales or transfers were to third parties at prices that approximate market-based selling prices. When we enter into federal contracts, they are aligned to the sponsoring operating segment.
We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments.
We have an "all other" category that includes revenue, expenses, and charges such as:
▪historical results of operations from divested businesses;
▪results of operations of start-up businesses that support our initiatives;
▪amounts included within restructuring and other charges;
▪employee benefits, compensation, impairment charges, and other expenses not allocated to the operating segments (beginning the first quarter of 2022, this includes all of our stock-based compensation); and
▪acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.












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Financial Statements Notes to Financial Statements
8

The CODM, who is our CEO, allocates resources to and assesses the performance of each operating segment using information about the operating segment's revenue and operating income (loss). The CODM does not evaluate operating segments using discrete asset information and we do not identify or allocate assets by operating segments. Based on the interchangeable nature of our manufacturing and assembly and test assets, most of the related depreciation expense is not directly identifiable within our operating segments, as it is included in overhead cost pools and subsequently absorbed into inventory as each product passes through our manufacturing process. Because our products are then sold across multiple operating segments, it is impracticable to determine the total depreciation expense included as a component of each operating segment's operating income (loss) results. We do not allocate gains and losses from equity investments, interest and other income, share-based compensation, or taxes to our operating segments. Although the CODM uses operating income (loss) 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. There have been no changes to our segment accounting policies disclosed in our 2021 Form 10-K except for the organizational changes and the change in allocation of stock-based compensation expense described above.
Net revenue and operating income (loss) for each period were as follows:
Three Months EndedSix Months Ended
(In Millions)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Operating segment revenue:
Client Computing
Desktop$2,289 $2,792 $4,930 $5,562 
Notebook4,751 6,734 10,710 13,690 
Other625 727 1,319 1,724 
7,665 10,253 16,959 20,976 
Datacenter and AI4,649 5,547 10,683 10,487 
Network and Edge2,333 2,105 4,546 3,904 
Accelerated Computing Systems and Graphics186 177 405 358 
Mobileye460 327 854 704 
Intel Foundry Services122 264 405 367 
All other32 1,129 99 2,853 
Total operating segment revenue$15,447 $19,802 $33,951 $39,649 
Operating income (loss):
Client Computing$1,085 $4,029 $3,912 8,317 
Datacenter and AI214 2,090 1,900 3,796 
Network and Edge241 605 607 848 
Accelerated Computing Systems and Graphics(507)(168)(897)(344)
Mobileye190 133 338 304 
Intel Foundry Services(155)52 (186)18 
All other(1,768)(1,195)(2,033)(3,699)
Total operating income (loss)$(700)$5,546 $3,641 $9,240 
The following table presents intersegment revenue before eliminations:
Total operating segment revenue$15,447 $19,802 $33,951 $39,649 
Less: Accelerated Computing Systems and Graphics intersegment revenue(126)(171)(277)(345)
Total net revenue$15,321 $19,631 $33,674 $39,304 

In the second quarter of 2022, we initiated the wind-down of our Intel Optane memory business, which is part of our DCAI operating segment. While Intel Optane is a leading technology, it was not aligned to our strategic priorities. Separately, we continue to embrace the CXL standard. As a result, we recognized an inventory impairment of $559 million in Cost of sales on the Consolidated Condensed Statements of Income in the second quarter of 2022. The impairment charge is recognized as a Corporate charge in the "all other" category presented above. As we wind down the Intel Optane business, we expect to continue to meet existing customer commitments.







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Financial Statements Notes to Financial Statements
9
Note 3 : 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 EndedSix Months Ended
(In Millions, Except Per Share Amounts)Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Net income (loss) available to common stockholders$(454)$5,061 $7,659 $8,422 
Weighted average shares of common stock outstanding—basic4,100 4,049 4,095 4,053 
Dilutive effect of employee equity incentive plans— 35 25 37 
Weighted average shares of common stock outstanding—diluted4,100 4,084 4,120 4,090 
Earnings (loss) per share—basic
$(0.11)$1.25 $1.87 $2.08 
Earnings (loss) per share—diluted
$(0.11)$1.24 $1.86 $2.06 
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. Due to our net loss in the second quarter of 2022, 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 had an antidilutive effect on diluted earnings per share. If we had recognized net income during the second quarter, the dilutive effect of employee equity incentive plans would have been 22 million shares.
Securities which would have been anti-dilutive are insignificant and are excluded from the computation of diluted earnings per share in all periods presented.
Note 4 : Other Financial Statement Details
Inventories
(In Millions)
Jul 2, 2022Dec 25, 2021
Raw materials
$1,587 $1,441 
Work in process
6,164 6,656 
Finished goods
4,423 2,679 
Total inventories$12,174 $10,776 
Interest and Other, Net
 Three Months EndedSix Months Ended
(In Millions)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Interest income
$98 $37 $145 $74 
Interest expense
(109)(129)(233)(319)
Other, net
(108)(4)966 (7)
Total interest and other, net$(119)$(96)$878 $(252)
Interest expense is net of $154 million of interest capitalized in the second quarter of 2022 and $296 million in the first six months of 2022 ($96 million in the second quarter of 2021 and $193 million in the first six months of 2021). Other, net in the first six months of 2022 includes a gain of $1.0 billion resulting from the divestiture of our NAND memory business as more fully described in "Note 7: Acquisitions and Divestitures" within Notes to Consolidated Condensed Financial Statements.








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Financial Statements Notes to Financial Statements
10
Note 5 : Restructuring and Other Charges
Three Months EndedSix Months Ended
(In Millions)Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Employee severance and benefit arrangements$38 $15 $43 $22 
Litigation charges and other13 49 (1,203)2,251 
Asset impairment charges36 282 36 282 
Total restructuring and other charges$87 $346 $(1,124)$2,555 
Litigation charges and other includes $1.2 billion in the first quarter of 2022 from the annulled penalty related to an EC fine that was recorded and paid in 2009, and a charge of $2.2 billion in the first quarter of 2021 related to the VLSI litigation. These were recorded as a Corporate benefit and charge, respectively, in the "all other" category presented in "Note 2: Operating Segments" within Notes to Consolidated Condensed Financial Statements. Refer to "Note 12: Contingencies" within Notes to Consolidated Condensed Financial Statements for further information on legal proceedings related to the EC fine and the VLSI litigation.
Asset impairment charges includes $237 million of goodwill and other impairments related to the shutdown in the second quarter of 2021 of two of our non-strategic businesses, the results of which are included in the “all other” category presented in “Note 2: Operating Segments” within Notes to Consolidated Condensed Financial Statements.
Note 6 : Investments
Short-term Investments
Short-term investments include marketable debt investments in 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- and floating-rate bonds, money market fund deposits, and time deposits. As of July 2, 2022 and December 25, 2021, substantially all time deposits were issued by institutions outside the U.S.
For certain of our marketable debt investments, we economically hedge market risks at inception with a related derivative instrument or the marketable debt investment itself is used to economically hedge currency exchange rate risk from remeasurement. These hedged investments are reported at fair value with gains or losses from the investments and the related derivative instruments recorded in interest and other, net. The fair value of our hedged investments was $19.1 billion as of July 2, 2022 and $21.5 billion as of December 25, 2021. For hedged investments still held at the reporting date, we recorded net losses of $1.0 billion in the second quarter of 2022 and net losses of $1.3 billion in the first six months of 2022 ($2 million of net gains in the second quarter of 2021 and $226 million of net losses in the first six months of 2021). We recorded net gains on the related derivatives of $868 million in the second quarter of 2022 and net gains of $1.2 billion in the first six months of 2022 ($23 million of net gains in the second quarter of 2021 and $245 million of net gains in the first six months of 2021).
Our remaining unhedged marketable debt investments are reported at fair value, with unrealized gains or losses, net of tax, recorded in accumulated other comprehensive income (loss). The adjusted cost of these investments was $5.4 billion as of July 2, 2022 and $5.0 billion as of December 25, 2021, which approximated the fair value for these periods.
The fair value of marketable debt investments, by contractual maturity, as of July 2, 2022, was as follows:
(In Millions)
Fair Value
Due in 1 year or less
$14,673 
Due in 1–2 years
3,315 
Due in 2–5 years
5,033 
Due after 5 years
714 
Instruments not due at a single maturity date
713 
Total$24,448 







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Financial Statements Notes to Financial Statements
11
Equity Investments
(In Millions)
Jul 2, 2022Dec 25, 2021
Marketable equity securities
$1,456 $2,171 
Non-marketable equity securities
4,460 4,111 
Equity method investments
13 16 
Total$5,929 $6,298 
The components of gains (losses) on equity investments, net for each period were as follows:
 Three Months EndedSix Months Ended
(In Millions)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Ongoing mark-to-market adjustments on marketable equity securities
$(209)$138 $(639)$(153)
Observable price adjustments on non-marketable equity securities
135 72 206 623 
Impairment charges
(44)(35)(67)(73)
Sale of equity investments and other¹28 120 4,733 266 
Total gains (losses) on equity investments, net$(90)$295 $4,233 $663 
1 Sale of equity investments and other includes realized gains (losses) on sales of non-marketable equity investments, our share of equity method investees' gains (losses) and distributions, and initial fair value adjustments recorded upon a security becoming marketable.
Gains and losses for our marketable and non-marketable equity securities for each period were as follows:
Three Months EndedSix Months Ended
(In Millions)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Net gains (losses) recognized during the period on equity securities
$(93)$226 $(337)$537 
Less: Net (gains) losses recognized during the period on equity securities sold during the period(19)(26)(11)(125)
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date$(112)$200 $(348)$412 
McAfee Corp.
McAfee Corp. (McAfee) completed its initial public offering in October 2020. Due to our 41% ownership and significant influence as of December 25, 2021, we accounted for it as an equity method investment. We had no accounting carrying value as of December 25, 2021.
In the first quarter of 2022, the sale of McAfee to an investor group was completed and we received $4.6 billion in cash for the sale of the remaining share of McAfee, recognizing $4.6 billion of gains in Sale of equity investments and other.
Beijing Unisoc Technology Ltd.
We account for our interest in Beijing Unisoc Technology 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. As of July 2, 2022 the net book value of the investment was $1.1 billion ($1.1 billion as of December 25, 2021).
Note 7 : Acquisitions and Divestitures
Acquisitions
Pending acquisition of Tower Semiconductor
During the first quarter of 2022, we entered into a definitive agreement to acquire Tower Semiconductor Ltd. (Tower) in a cash for stock transaction expected to close within twelve months from the date of the agreement. Tower is a leading foundry for analog semiconductor solutions. The acquisition is expected to advance Intel's IDM 2.0 strategy by accelerating our global end-to-end foundry business. Tower will be included in our IFS operating segment. Upon completion of the acquisition, each issued and outstanding ordinary share of Tower will be converted into the right to receive $53.00 per share in cash, representing a total enterprise value of approximately $5.4 billion as of the agreement date. This transaction is subject to certain regulatory approvals and customary closing conditions. If the agreement is terminated under certain circumstances involving the failure to obtain required regulatory approvals, we will be obligated to pay Tower a termination fee of $353 million.







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Financial Statements Notes to Financial Statements
12
Divestitures
NAND Memory Business
In October 2020, we signed an agreement with SK hynix Inc. (SK hynix) to divest our NAND memory business for $9.0 billion in cash. The NAND memory business includes 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). The transaction will be completed in two closings.
The first closing was completed on December 29, 2021. At first closing, SK hynix paid $7.0 billion of consideration, with the remaining $2.0 billion to be received by the second closing of the transaction, expected to be no earlier than March 2025. In connection with the first closing, we recognized a pre-tax gain of $1.0 billion within Interest and other, net, and tax expense of $495 million. Based on our ongoing obligation under the NAND wafer manufacturing and sale agreement, $583 million of the first closing consideration was deferred and will be recognized between the first and second closing within interest and other, net.
At the first closing, we sold to SK hynix the Fab Assets and the NAND SSD Business and transferred certain employees, IP, and other assets related to the NAND OpCo Business to separately created wholly owned subsidiaries of Intel. The equity interest of the NAND OpCo Business will transfer to SK hynix at the second closing. In connection with the first closing, we and certain affiliates of SK hynix also entered 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 have concluded based on the terms of the transaction agreements that the subsidiaries are variable interest entities for which we are not the primary beneficiary, because the governance structure of these entities does not allow us to direct the activities that would most significantly impact their economic performance. In line with this conclusion, we fully deconsolidated our ongoing interests in the NAND OpCo Business, and recorded a receivable for the remaining proceeds of $1.9 billion in Other long-term assets, which remains outstanding as of July 2, 2022.
The carrying amounts of the major classes of NAND assets as of the first closing date included the following:
(In Millions)Dec 29, 2021
Inventories$941 
Property, plant and equipment, net6,018 
Total sold$6,959 
The wafer manufacturing and sale agreement includes incentives and penalties that are contingent on the cost of operation and output of the NAND OpCo Business. These incentives and penalties present a maximum exposure of up to $500 million annually, and $1.5 billion in the aggregate. We are currently in negotiations with SK hynix to update the operating plan of the NAND OpCo Business in light of the current business environment and projections, which may impact the metrics associated with the incentives and penalties and our expectations of the performance of the NAND OpCo Business against those metrics.
Our transactions with the NAND OpCo Business between the first and second closings are considered related party transactions due to our equity interests and the wafer manufacturing and sales agreement. Related party transactions include certain assets that transferred at first closing between Intel and the NAND OpCo Business, or costs that we incurred on behalf of the NAND OpCo Business, for which we are entitled to be reimbursed. As of July 2, 2022, we have a receivable due to Intel of $475 million recorded within Other current assets on our Consolidated Condensed Balance Sheets. We will be reimbursed for costs of approximately $35 million per quarter for 2022 for corporate function services, which include human resources, information technology, finance, supply chain, and other compliance requirements associated with being wholly owned subsidiaries.
Note 8 : Borrowings
In the second quarter of 2022, we settled, in cash, $1.6 billion of our senior notes due May 2022.
In the first quarter of 2022, we amended our $5.0 billion variable-rate revolving credit facility agreement, extending the maturity date by one year to March 2027 and transitioning the interest terms from LIBOR to term SOFR. The revolving credit facility had no borrowings outstanding as of July 2, 2022.
We have an ongoing authorization from our Board of Directors to borrow up to $10.0 billion under our commercial paper program.
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 our notes rank equally in the right of payment with all of our other existing and future senior unsecured indebtedness and effectively rank junior to all liabilities of our subsidiaries.







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Financial Statements Notes to Financial Statements
13
Note 9 : Fair Value
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Jul 2, 2022Dec 25, 2021
Fair Value Measured and Recorded at Reporting Date Using
 
Fair Value Measured and Recorded at Reporting Date Using 
(In Millions)
Level 1
Level 2
Level 3
TotalLevel 1Level 2Level 3Total
Assets
Cash equivalents:
Corporate debt$— $48 $— $48 $— $65 $— $65 
Financial institution instruments¹484 1,262 — 1,746 1,216 763 — 1,979 
Reverse repurchase agreements— 2,002 — 2,002 — 1,595 — 1,595 
Short-term investments:
Corporate debt— 7,301 — 7,301 — 6,367 — 6,367 
Financial institution instruments¹229 6,886 — 7,115 154 5,162 — 5,316 
Government debt²48 8,190 — 8,238 50 12,693 — 12,743 
Other current assets:
Derivative assets— 1,661 — 1,661 80 576 — 656 
Loans receivable³— — — — — 152 — 152 
Marketable equity securities4
1,369 87 — 1,456 1,854 317 — 2,171 
Other long-term assets:
Derivative assets— 40 — 40 —772 7 779 
Loans receivable³— 73 — 73 —57 —57 
Total assets measured and recorded at fair value$2,130 $27,550 $— $29,680 $3,354 $28,519 $7 $31,880 
Liabilities
Other accrued liabilities:
Derivative liabilities$119 $1,120 $— $1,239 $4 $516 $— $520 
Other long-term liabilities:
Derivative liabilities— 194 49 243 — 9 — 9 
Total liabilities measured and recorded at fair value$119 $1,314 $49 $1,482 $4 $525 $— $529 
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 1 investments consist primarily of U.S. Treasury securities. Level 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.
4Level 2 investments consist of marketable equity securities subject to security-specific restrictions.
Assets Measured and Recorded at Fair Value on 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.
Financial Instruments Not Recorded at Fair Value on 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, reverse repurchase agreements with original maturities greater than three months, and issued debt.







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Financial Statements Notes to Financial Statements
14
We classify the fair value of grants receivable and reverse repurchase agreements with original maturities greater than three months as Level 2. The estimated fair value of these financial instruments approximates their carrying value. The aggregate carrying value of grants receivable as of July 2, 2022 was $357 million (the aggregate carrying value as of December 25, 2021 was $317 million). The aggregate carrying value of reverse repurchase agreements with original maturities greater than three months as of July 2, 2022 was $400 million (the aggregate carrying value as of December 25, 2021 was $0).
We classify the fair value of issued debt (excluding any commercial paper, drafts payable, and finance leases) as Level 2. The fair value of our issued debt was $33.3 billion as of July 2, 2022 ($41.5 billion as of December 25, 2021).
Note 10 : Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss) by component and related tax effects in the first six months of 2022 were as follows:
(In Millions)Unrealized Holding Gains (Losses) on DerivativesActuarial Valuation and Other Pension ExpensesTranslation Adjustments and OtherTotal
Balance as of December 25, 2021$211 $(1,114)$23 $(880)
Other comprehensive income (loss) before reclassifications(897)— (38)(935)
Amounts reclassified out of accumulated other comprehensive income (loss)49 22 — 71 
Tax effects106 5 8 119 
Other comprehensive income (loss)(742)27 (30)(745)
Balance as of July 2, 2022$(531)$(1,087)$(7)$(1,625)
We estimate that we will reclassify approximately $457 million (before taxes) of net derivative losses included in accumulated other comprehensive income (loss) into earnings within the next 12 months.
Note 11 : Derivative Financial Instruments
Volume of Derivative Activity
Total gross notional amounts for outstanding derivatives at the end of each period were as follows: 
(In Millions)
Jul 2, 2022Dec 25, 2021
Foreign currency contracts
$40,046 $38,024 
Interest rate contracts
16,803 15,209 
Other
2,109 2,517 
Total$58,958 $55,750 







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Financial Statements Notes to Financial Statements
15
Fair Value of Derivative Instruments
 
Jul 2, 2022Dec 25, 2021
(In Millions)
Assets1
Liabilities2
Assets1
Liabilities2
Derivatives designated as hedging instruments:
Foreign currency contracts3
$5 $768 $80 $163 
Interest rate contracts
65 238 774 — 
Total derivatives designated as hedging instruments
70 1,006 854 163 
Derivatives not designated as hedging instruments:
Foreign currency contracts3
1,458 320 475 297 
Interest rate contracts
173 37 26 65 
Equity contracts
— 119 80 4 
Total derivatives not designated as hedging instruments1,631 476 581 366 
Total derivatives$1,701 $1,482 $1,435 $529 
1Derivative assets are recorded as other assets, current and long-term.
2Derivative liabilities are recorded as other liabilities, current and long-term.
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:
Jul 2, 2022
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 InstrumentsCash and Non-Cash Collateral Received or PledgedNet Amount
Assets:
Derivative assets subject to master netting arrangements$1,651 $— $1,651 $(595)$(1,044)$12 
Reverse repurchase agreements
2,400 — 2,400 — (2,400)— 
Total assets4,051 — 4,051 (595)(3,444)12 
Liabilities:
Derivative liabilities subject to master netting arrangements1,373 — 1,373 (595)(759)19 
Total liabilities$1,373 $— $1,373 $(595)$(759)$19 







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Financial Statements Notes to Financial Statements
16
Dec 25, 2021
Gross Amounts Not Offset in the Balance Sheet
(In Millions)Gross Amounts RecognizedGross Amounts Offset in the Balance SheetNet Amounts Presented in the Balance SheetFinancial InstrumentsCash and Non-Cash Collateral Received or PledgedNet Amount
Assets:
Derivative assets subject to master netting arrangements$1,427 $— $1,427 $(332)$(986)$109 
Reverse repurchase agreements1,595 — 1,595 — (1,595)— 
Total assets3,022 — 3,022 (332)(2,581)109 
Liabilities:
Derivative liabilities subject to master netting arrangements392 — 392 (332)(60)— 
Total liabilities$392 $— $392 $(332)$(60)$— 
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 $782 million net losses in the second quarter of 2022 and $897 million net losses in the first six months of 2022 ($49 million net gains in the second quarter of 2021 and $285 million net losses in the first six months of 2021). Substantially all of our cash flow hedges were foreign currency contracts for all periods presented.
During the first six months of 2022 and 2021, 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
Three Months EndedSix Months Ended
(In Millions)
Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Interest rate contracts
$(236)$35 $(947)$(477)
Hedged items
236 (35)947 477 
Total$— $— $— $— 
The amounts recorded on the Consolidated Condensed Balance Sheets related to cumulative basis adjustments for fair value hedges for each period were as follows:
Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is IncludedCarrying Amount of the Hedged Item Asset/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities)
(In Millions)
Jul 2, 2022Dec 25, 2021Jul 2, 2022Dec 25, 2021
Long-term debt$(11,825)$(12,772)$172 $(775)
The total notional amount of pay-variable and receive-fixed interest rate swaps was $12.0 billion as of July 2, 2022 and $12.0 billion as of December 25, 2021.







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Financial Statements Notes to Financial Statements
17
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 EndedSix Months Ended
(In Millions)
Location of Gains (Losses)
Recognized in Income on Derivatives		Jul 2, 2022Jun 26, 2021Jul 2, 2022Jun 26, 2021
Foreign currency contracts
Interest and other, net
$1,023 $(22)$1,181 $212 
Interest rate contracts
Interest and other, net
31 (2)125 21 
Other
Various
(331)140 (465)195 
Total$723 $116 $841 $428 
Note 12 : Contingencies
Legal Proceedings
We are a party to various legal proceedings, including those noted in this section. 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; 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.
European Commission Competition Matter
In 2001, the European Commission (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. 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.
We appealed the EC decision to the Court of First Instance (which has been renamed the General Court) in July 2009. 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. In September 2017, the Court of Justice issued its decision 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 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, and in January 2022, the General Court issued a decision annulling the EC's findings against Intel regarding rebates as well as the fine imposed on Intel, which was returned to Intel in February 2022. In April 2022, the EC appealed the General Court's decision to the Court of Justice, seeking an order that would require a further proceeding and decision by the General Court. In June 2022, Intel filed a response in opposition to the EC appeal, and in July 2022, the Intervener Association for Competitive Technologies filed a response in opposition to the EC appeal. Given the procedural posture and the nature of this proceeding we are unable to make a reasonable estimate of the potential loss or range of losses, if any, that might arise from this matter.
In a related matter, Intel filed applications with the General Court in April 2022 seeking an order requiring the EC to pay Intel approximately €593 million in default interest.








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Financial Statements Notes to Financial Statements
18
Litigation Related to Security Vulnerabilities
In June 2017, a Google research team (GPZ) 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 2, 2018, information on the security vulnerabilities was publicly reported, before software and firmware updates to address the vulnerabilities were made widely available.
Following various lawsuits that allege a variety of common law and statutory claims, including claims sounding in fraud and unfair trade practices, and in anticipation of defending against those claims, we evaluated the potential impact on our business and operations from the aforesaid litigation and security vulnerabilities. To date, we do not expect a material financial impact on our business or operations.
Numerous lawsuits 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 relating to the Spectre and Meltdown security vulnerabilities, as well as other variants of these vulnerabilities that have since been identified.
As of July 27, 2022, consumer class action lawsuits relating to the above class of security vulnerabilities publicly disclosed since 2018 were pending in the United States, Canada, Israel, and Argentina. 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 United States, numerous individual class action suits filed in various jurisdictions were consolidated in April 2018 for all pretrial proceedings in the United States District Court for the District of Oregon. In January 2022, the court dismissed with prejudice all claims relating to Intel's alleged conduct before September 1, 2017, and in July 2022 dismissed with prejudice all remaining claims. 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, a stay of the case is in effect until November 2022. In Israel, two consumer class action lawsuits were filed in the District Court of Haifa. The plaintiff voluntarily dismissed the first lawsuit in July 2021, Intel filed a motion to stay the second case pending resolution of the consolidated proceeding in the United States, and a hearing on that motion has been scheduled for September 2022. In Argentina, Intel Argentina was served with, and filed a response to, a class action complaint in June 2022. 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.
In addition to these lawsuits, Intel stockholders filed multiple 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 United States 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 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 in January 2019 at plaintiffs' request. The California Superior Court entered judgment in defendants' favor in August 2020 after granting defendants' motions to dismiss plaintiffs' consolidated complaint and three successive amended complaints, all for failure to plead facts sufficient to show plaintiffs were excused from making a pre-lawsuit demand on the Board. Plaintiffs appealed, and in March 2022 the California Court of Appeal affirmed the judgment of the California Superior Court.
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 demand was wrongfully refused. In May 2021, the court granted defendants' motion to stay the action pending the outcome of any litigation plaintiff may choose to file in Delaware where Intel’s bylaws require such claims be filed. In May 2022 the stockholder voluntarily dismissed the lawsuit.














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Financial Statements Notes to Financial Statements
19
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., and Beijing Jingdong Century Information Technology, Ltd. (JD) for patent infringement in the Beijing Higher People's Court. IMECAS alleges that Intel's Core processors infringe Chinese patent CN 102956457 (’457 Patent). The complaint demands an injunction and damages of at least RMB 200,000,000 plus the cost of litigation. Intel is indemnifying Dell and JD. The Beijing Higher People’s Court held a final trial hearing in September 2021. No ruling has been issued. In March 2018, Intel filed an invalidation request on the ‘457 patent with the China National Intellectual Property Administration (CNIPA). The CNIPA 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 (IP) Court challenging the February 2019 CNIPA ruling. The Beijing IP Court held oral arguments in July and October 2021 and in November 2021 affirmed the CNIPA ruling. In December 2021, Intel filed an appeal with the Supreme People's Court (SPC) challenging the Beijing IP Court's affirmance of the CNIPA ruling. The SPC heard oral argument on this appeal in April 2022. In January 2020, Intel filed a second invalidation request on the ‘457 patent with the CNIPA, for which the CNIPA 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 CNIPA ruling. In December 2020, Intel filed a third invalidation request on the ’457 patent with the CNIPA. The CNIPA held an oral hearing in June 2021 and in September 2021 upheld the validity of the challenged claims. Intel filed a complaint in December 2021 with the Beijing IP Court challenging the September 2021 CNIPA ruling. In September 2018 and March 2019, Intel filed petitions with the United States 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 (PTAB) 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 Beijing Jingdong Century Information Technology Col., Ltd. (JD). The complaint in the second lawsuit demands an injunction plus litigation costs and reserves the right to claim damages in unspecified amounts. Intel is indemnifying Lenovo in the second lawsuit. The Beijing IP Court held a trial hearing in the second lawsuit in November 2021, but no ruling has been issued. The complaint in the third lawsuit demands an injunction plus litigation costs and claims damages of RMB 10 million. Intel China's jurisdictional challenge in the third lawsuit was denied in June 2021 by the Beijing IP Court and in November 2021 by the Supreme People's Court (SPC). A trial hearing in the third lawsuit was held in January 2022, but no ruling has been issued. In July 2020, Intel and Lenovo filed invalidation requests on the '226 patent with the CNIPA. The CNIPA heard oral arguments in December 2020, during which IMECAS proposed amendments to two claims. In April 2021, the CNIPA upheld the validity of the challenged and amended claims on both invalidation requests. Intel and Lenovo filed complaints in July 2021 with the Beijing IP Court challenging the April 2021 CNIPA rulings; the Beijing IP Court held oral arguments in October 2021.
In July 2022, the parties entered into a confidential agreement that resolves all pending litigation, licenses certain IMECAS patents, and provides for long-term patent peace on the remainder of IMECAS’ patent portfolio. In connection with the settlement, we recorded a current period charge and will amortize the fair value of the licenses for the grants under IMECAS’ patents over an established term.

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 at least $5.5 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 IPR petitions challenging the patentability of 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 appealed the PTAB's decision as to '014, '672 and '207 patents. The Federal Circuit affirmed the PTAB's decision as to the '672 and '207 patents, but reversed and remanded as to the '014 patent. Intel moved for a continuation of the stay in March 2020 pending the appeal. In June 2020, the District Court issued an order continuing the stay through August 2021. The court lifted the stay in September 2021, and scheduled a trial for March 2024.












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Financial Statements Notes to Financial Statements
20
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 IPR petitions challenging the patentability of certain claims in all five patents-in-suit. 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, but declined to institute review on the '027 patent. As a result, 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. Both parties filed notices of appeal regarding the PTAB’s decision as to the ‘026 patent in March 2021, and in April 2021, VLSI filed a notice of appeal of the PTAB's decision as to the '552 patent. The case remains stayed as to both of those patents. For the '027 and '331 patents, VLSI is seeking damages of approximately $4.13 billion plus enhanced damages for the '027 patent. The parties have completed summary judgment and expert witness testimony briefing. In June 2022, the court granted in part and denied in part Intel’s motion to exclude testimony of VLSI’s technical expert, barring him from testifying regarding Intel’s purported litigation misconduct and the alleged benefits of certain claims of the ‘027 patent.
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 April 2019, VLSI filed three new infringement suits against Intel in the Western District of Texas (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 jury found that Intel had not willfully infringed either patent. Intel challenged the verdict with post-trial motions, including filing in May 2021 a motion for a new trial, which the court denied in August, a motion for judgment as a matter of law that the ‘373 and ‘759 patents are not infringed and the ‘759 patent is invalid, and a motion that VLSI is entitled to no damages, both of which the court denied in March 2022. In April 2022, the court entered final judgment and awarded VLSI $2.175 billion in damages, approximately $162.3 million in pre-judgment interest, and post-judgment interest at the Treasury Bill rate, compounded annually. Intel filed a notice of appeal in May 2022 and its opening appellate brief will be filed in September 2022.
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 $3.0 billion for alleged infringement of those patents, plus enhanced damages for willful infringement. The court has not yet entered final judgment following second trial in Texas.
The third Texas case was set for trial in April 2022 but was cancelled after the first day due to a COVID-19 outbreak. A new trial date has been set for November 2022. In that case, VLSI initially sought approximately $2.2 - $2.4 billion for alleged infringement of the ‘983, ‘025 and ‘485 patents, plus enhanced damages for willful infringement. In April 2022, VLSI informed the court that it would not present an infringement case at trial for the '025 patent. Later in April 2022, VLSI informed the Court that it would not present willful infringement or an infringement case for the '485 patent at trial. This limits VLSI's damages demand to approximately $1.0 billion for the alleged infringement of the '983 patent.
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 million in damages and RMB 300 thousand in expenses. Defendants filed an invalidation petition in October 2019 with the CNIPA, which held a hearing in September 2021. The CNIPA has not yet issued a decision. In May 2020, defendants filed a motion to stay the trial court proceedings pending a determination on invalidity. The court held the 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 indicated those would be stayed pending the outcome of defendants’ invalidity challenge at the CNIPA. In July 2021, VLSI dismissed its case, but refiled it in August 2021. VLSI seeks an injunction in its newly filed case, as well as RMB 1.3 million in reasonable costs and expenses, but no damages. In November 2021, Intel moved for a stay of the August 2021 action pending a ruling on invalidity. The court has not yet ruled on that motion.
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. VLSI accuses certain Intel Core processors and seeks an injunction, as well as RMB 1 million in damages and RMB 300 thousand in expenses. Defendants filed with the CNIPA an invalidation petition in October 2019, and the CNIPA held a hearing in September 2021, but has not yet issued a decision. 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 has not yet issued a decision following the trial. Rather, the court stayed the case in December 2020 pending a determination on invalidity by the CNIPA. In March 2022, the CNIPA issued an order holding the claims of the patent to be valid. The court held a second trial in May 2022 following the CNIPA ruling, but has yet to issue its final decision.








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Financial Statements Notes to Financial Statements
21
In November 2019, Intel, along with Apple Inc., filed a 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. In 2020 and 2021, the court twice dismissed plaintiffs' complaint with leave to 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. Apple withdrew from the case and dismissed its claims in June 2021. The court heard defendants’ motion to dismiss the Second Amended Complaint in September 2021, and dismissed Intel’s claims with prejudice that same month, entering judgment in favor of defendants. Intel filed a notice of appeal in December 2021 Appellate briefing concluded in June 2022.
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, and dismissed all of Intel’s claims—except the breach of contract claim—with prejudice in September 2021 for lack of jurisdiction because, the court reasoned, Intel’s license defense has been raised in the other U.S. suits between Intel and VLSI and could be adjudicated in one of those actions. The court stayed Intel’s breach of contract claim pending a determination on whether Intel is licensed to VLSI’s patents. 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 Delaware Court granted Intel's motion in July 2021, but in March 2022, the Texas Court denied Intel's motion, holding, among other things, that it would be futile for Intel to add the license defense as it would not be meritorious.
In October and November 2019, and in February 2020, Intel filed IPR petitions on certain asserted claims across six of the patents-in-suit in WDTX. Between May and October 2020, the PTAB denied all of these petitions on a discretionary basis and without reviewing the merits. Intel requested a rehearing, and review from the POP as to all petitions. All requests for POP review and rehearing were denied. Intel filed notices of appeal regarding the discretionary denials for all petitions in February and March of 2021. The Federal Circuit dismissed the appeals in May 2021 for lack of jurisdiction. The Federal Circuit denied Intel’s petition for hearing en banc in August 2021. In March 2022, the Supreme Court denied Intel’s petition for writ of certiorari.
In June 2021, OpenSky Industries LLC (OpenSky) requested IPR of certain claims of the '373 and '759 patents at-issue in the first Texas case, including those claims found to be infringed in that judgment. Both petitions copied Intel's earlier petitions, and used the expert declarations previously submitted by Intel. Another entity named Patent Quality Assurance LLC (PQA) also petitioned for IPR of certain claims of the '373 patent, those claims found to be infringed in the first Texas case judgment. PQA also largely copied Intel's petition, but (1) added a challenge to an additional claim and (2) included newly signed declarations from Intel's experts. In December 2021, the PTAB instituted OpenSky's petition on the '759 patent, but declined to institute on the '373 patent. In December 2021, Intel filed a motion to join OpenSky's '759 IPR. In January 2022, the PTAB instituted PQA's petition on the '373 patent. In February, Intel filed a motion to join PQA's petition. Both of Intel's joinder motions were granted in June 2022, allowing Intel to participate in the IPRs as an understudy. That same month, the PTO Director decided to review "the Board's decision[s] instituting inter partes review" as they raise "novel issues of law and policy." Intel has been ordered to submit briefing on the matter in August 2022.
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 and anticipates losses, if any, in excess of this amount would be immaterial to the financial statements. 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 United States 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, 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 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. In July 2021, Intel introduced a new process node naming structure, and the 7nm process is now Intel 4.








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Financial Statements Notes to Financial Statements
22
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.
TermDefinition
5GThe fifth-gen 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
ADASAdvanced driver-assistance systems
AIArtificial intelligence
ASPAverage selling price
AXGAdvanced Computing and Graphics operating segment
CCGClient Computing Group operating segment
CODMChief operating decision maker
COVID-19The infectious disease caused by the most recently discovered coronavirus (aka SARS-CoV-2), which was declared a global pandemic by the World Health Organization
CPUProcessor or central processing unit
CXL standardCompute Express Link standard
DCAIData Center and AI operating segment
ECEuropean Commission
Form 10-KAnnual Report on Form 10-K
Form 10-QQuarterly Report on Form 10-Q
FPGAField-programmable gate array
GPUGraphics processing unit
IDM
Integrated device manufacturer, a semiconductor company that both designs and builds chips
HPC-AIHigh performance computing for AI
IFSIntel Foundry Services operating segment
IPIntellectual property
LIBORLondon Inter-Bank Offered Rate, an interest rate average calculated from estimates by the leading banks in London
MBMWMulti-Beam Mask Writer
MD&AManagement's Discussion & Analysis
MG&AMarketing, general and administrative
NANDNAND flash memory
NEXNetworking and Edge operating segment
nmNanometer
ODMOriginal design manufacturer
OEMOriginal equipment manufacturer
R&DResearch and development
RSU Restricted stock unit
SECU.S. Securities and Exchange Commission
SoCA 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 products in CCG, DCAI, and NEX. In our DCAI and NEX businesses, we offer SoCs across many market segments for a variety of applications, including products targeted for 5G base stations and network infrastructure
SOFRSecured Overnight Financing Rate, a benchmark interest rate for dollar-denominated derivatives and loans, replacing LIBOR
SSDSolid-state drive
TAMTotal addressable market
Tax ReformU.S. Tax Cuts and Jobs Act
U.S. GAAPU.S. Generally Accepted Accounting Principles
VLSIVLSI Technology LLC








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Financial Statements Notes to Financial Statements
23
Management's Discussion and Analysis
This report should be read in conjunction with the Consolidated Financial Statements in our 2021 Form 10-K where we include additional information on our critical accounting estimates, policies, and the methods and assumptions used in our estimates.
We previously announced several organizational changes that we believe will accelerate the execution and innovation of our Company by allowing us to capture growth in both large traditional markets and high-growth emerging markets. These changes include the reorganization of our business units to be positioned to capture this growth and to provide increased transparency, focus and accountability. As a result, we modified our segment reporting in Q1 2022 to align to this previously announced business reorganization. All prior-period segment data has been retrospectively adjusted to reflect the way we internally manage and monitor segment performance starting in fiscal year 2022.
For additional key highlights of our results of operations, see "A Quarter in Review."
Client Computing
We are committed to advancing PC experiences by delivering an annual cadence of leadership products and deepening our relationships with industry partners to co-engineer and deliver leading platform innovation. We focus on long-term operating systems, system architecture, hardware, and application integration that enables industry-leading PC experiences. We intend to embrace these opportunities by investing more heavily in the PC, ramping its capabilities even more aggressively, and designing the PC experience even more deliberately. By doing this, we believe we will continue to fuel innovation across Intel, providing a growing source of IP, scale, and cash flow.
CCG Revenue $B
CCG Operating Income $B
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■ Notebook
■ Desktop
■ Other
Revenue Summary
Q2 2022 vs. Q2 2021
■Notebook revenue was $4.8 billion, down $2.0 billion from Q2 2021. Notebook unit sales decreased 38% driven by lower demand in the consumer and education market segments. Notebook ASPs increased 13% due to an increased mix of commercial products and lower mix of education and consumer products.
■Desktop revenue was $2.3 billion, down $503 million from Q2 2021. Desktop unit sales decreased 19% primarily driven by lower demand for education products, with a slight increase in ASPs of 1%.
■Lower demand for notebook and desktop was driven by customers tempering purchases to reduce existing inventories.
■Other revenue was $625 million, down $102 million primarily driven by the continued ramp down from the exit of our 5G smartphone modem business and lower demand for our wireless and connectivity products.

YTD 2022 vs. YTD 2021
■Notebook revenue was $10.7 billion, down $3.0 billion from YTD 2021. Notebook unit sales decreased 36% driven by lower demand in the consumer and education market segments compared to COVID-driven highs in Q1 2021, and Notebook ASPs increased 23% due to an increased mix of commercial and consumer products and lower mix of education.
■Desktop revenue was $4.9 billion, down $632 million from YTD 2021. Desktop unit sales decreased 15% driven by lower demand for consumer and education products, partially offset by an increase in ASPs of 4%, primarily driven by an increased mix of commercial products compared to Q2 2021.
■Lower demand for notebook and desktop YTD was driven by customers tempering purchases to reduce existing inventories.
■Other revenue was $1.3 billion, down $405 million from YTD 2021 primarily driven by the continued ramp down from the exit of our 5G smartphone modem business.
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MD&A
24
Operating Income Summary
Operating income decreased 73% from Q2 2021, with an operating margin of 14%.
Operating income decreased 53% from YTD 2021, with an operating margin of 23%.
(In Millions)
$1,085 Q2 2022 CCG Operating Income
(1,375)Lower gross margin from revenue, primarily driven by notebook and desktop
(540)Higher desktop and notebook unit cost primarily from increased mix of Intel 7 products
(435)Higher operating expenses driven by increased investments in leadership products
(420)Higher period charges primarily driven by inventory reserves taken in Q2 2022
(180)Higher period charges primarily associated with the ramp up of Intel 4
6 Other
$4,029 Q2 2021 CCG Operating Income
$3,912 YTD 2022 CCG Operating Income
(1,565)Lower gross margin from revenue, primarily driven by notebook and desktop
(1,225)Higher desktop and notebook unit cost primarily from increased mix of Intel 7 products
(790)Higher operating expenses driven by increased investments in leadership products
(555)Higher period charges primarily driven by inventory reserves taken in 2022
(355)Higher period charges primarily associated with the ramp up of Intel 4
85 Other
$8,317 YTD 2021 CCG Operating Income
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MD&A
25
Datacenter and AI
DCAI delivers workload-optimized platforms to empower datacenter and hyperscale solutions for diverse computing needs. We are focused on delivering the hardware and software portfolio our customers need to support the increased demand for high performance computing and processing of increasingly complex workloads. DCAI offers a portfolio of leadership products, including CPUs, FPGAs, and AI accelerators, and Intel® persistent memory together with a broad portfolio of software and solutions that enable our hardware’s differentiated features to deliver performance to customers. Our customers and partners include hyperscale customers, OEM/ODMs, enterprises, independent software vendors, system integrators, communications service providers, and governments.
DCAI Revenue $BDCAI Operating Income $B
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Revenue Summary
Q2 2022 vs. Q2 2021
Revenue was $4.6 billion, down $898 million from Q2 2021, driven by a decrease in Server revenue. Server volume decreased 12% as certain customers tempered purchases to reduce existing inventories, and adjust to a lower demand environment. Server ASPs decreased 10% due to a higher mix of hyperscale customer-related revenue within a competitive environment. The decrease in Server revenue was partially offset by an increase in other DCAI revenue in Q2 2022 due to growth in our FPGA business.
YTD 2022 vs. YTD 2021
Revenue was $10.7 billion, up $196 million from YTD 2021, due to higher Server revenue in Q1 2022. Server volume increased 7% from YTD 2021 primarily due to demand from our hyperscale customer-related products and recovery from COVID-driven lows, partially offset by certain customers tempering purchases to reduce existing inventories, and a lower demand environment. Server ASPs decreased 6% from YTD 2021 primarily due to customer and product mix. Other DCAI revenue also increased in YTD 2022 due to growth in our FPGA business.
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MD&A
26
Operating Income Summary
Operating income decreased 90% from Q2 2021, with an operating margin of 5%.
Operating income decreased 50% from YTD 2021, with an operating margin of 18%.
(In Millions)
$214 Q2 2022 DCAI Operating Income
(890)Lower gross margin from Server revenue
(400)Higher period charges primarily associated with the ramp up of Intel 4
(320)Higher operating expenses driven by increased investments in leadership products
(275)Higher period charges primarily driven by inventory reserves taken on non-qualified products
(175)Higher Server unit cost from increased mix of 10nm SuperFin and Intel 7 products
100 Higher gross margin from DCAI other product revenue
84 Other
$2,090 Q2 2021 DCAI Operating Income
$1,900 YTD 2022 DCAI Operating Income
(750)Higher period charges primarily associated with the ramp up of Intel 4
(595)Higher operating expenses driven by increased investments in leadership products
(405)Higher period charges driven by inventory reserves taken in 2022, including reserves on non-qualified products in Q2 2022
(270)Higher Server unit cost from increased mix of 10nm SuperFin and Intel 7 products
(115)Lower gross margin from Server revenue
215 Higher gross margin from DCAI other product revenue
24 Other
$3,796 YTD 2021 DCAI Operating Income
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MD&A
27
Network & Edge
NEX lifts the world's networks and edge systems from fixed function hardware into open software running on programmable hardware. We work with partners and customers to deliver and deploy intelligent edge platforms that allow software developers to continuously evolve, improve, and tailor systems to gain more control, security, and flexibility. We have a broad portfolio of hardware and software platforms, tools and ecosystem partnerships for the rapid digital transformation happening from edge to cloud. We are leveraging our core strengths in process, manufacturing at scale, and software, to grow traditional markets and to accelerate entry into emerging ones.
NEX Revenue $BNEX Operating Income $B
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Revenue Summary
Q2 2022 vs. Q2 2021
Revenue was $2.3 billion, up $228 million from Q2 2021, driven by increased demand for Ethernet and 5G products and higher ASPs, partially offset by lower demand for Network Xeon.

YTD 2022 vs. YTD 2021
Revenue was $4.5 billion, up $642 million from YTD 2021, driven by increased demand for Ethernet and 5G products and by post-COVID transformation of the edge, and higher ASPs. We also saw increased demand for Network Xeon.

Operating Income Summary
Operating income decreased 60% from Q2 2021, with an operating margin of 10%.
Operating income decreased 28% from YTD 2021, with an operating margin of 13%.

(In Millions)
$241 Q2 2022 NEX Operating Income
(185)Lower gross margin from Network Xeon revenue primarily driven by decreased demand
(150)Higher operating expenses driven by increased investments in leadership products
(125)Higher period charges primarily associated with ramp up of Intel 4
(120)Higher period charges driven by reserves taken in Q2'22 and lack of sell-through of reserves compared to Q2 2021
160 Lower unit cost primarily from increased mix of 10nm SuperFin products
56 Other
$605 Q2 2021 NEX Operating Income
$607 YTD 2022 NEX Operating Income
(255)Higher operating expenses driven by increased investments in leadership products
(215)Higher period charges primarily associated with the ramp up of Intel 4
(175)Higher period charges driven by reserves taken in 2022 and lack of sell-through of reserves compared to 2021
290 Lower unit cost primarily from increased mix of 10nm SuperFin products
175 Higher gross margin from NEX revenue, primarily driven by demand for the edge and Network Xeon products
(61)Other
$848 YTD 2021 NEX Operating Income
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MD&A
28
Accelerated Computing Systems and Graphics
AXG delivers products and technologies designed to help our customers solve the toughest computational problems. Our vision is to enable persistent and immersive computing, at scale, and accessible by billions of people within milliseconds, which drives an incredible demand for compute - from endpoints to data centers.
Our portfolio includes CPUs for high performance computing and GPUs targeted for a range of workloads and platforms from gaming and content creation on client devices to delivering media and gaming in the cloud, and the most demanding HPC and AI workload on supercomputers. To address new market opportunities and emerging workloads, we also develop custom accelerators with blockchain acceleration, as an example.
AXG Revenue $BAXG Operating Income (Loss) $B
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Revenue and Operating Income (Loss) Summary
Q2 2022 vs. Q2 2021
Revenue was $186 million, up $9 million from Q2 2021. We had an operating loss of $507 million, compared to an operating loss of $168 million in Q2 2021, due to increased inventory reserves taken and investments in our product roadmap.
YTD 2022 vs. YTD 2021
Revenue was $405 million, up $47 million from YTD 2021. We had an operating loss of $897 million, compared to an operating loss of $344 million from YTD 2021, due to increased inventory reserves taken and investments in our product roadmap.
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29
Mobileye
Mobileye is a global leader in driving assistance and self-driving solutions. Our product portfolio covers the stack required for assisted and autonomous driving, including compute platforms, computer vision and machine learning-based sensing, mapping and localization, driving policy, and active sensors in development. Mobileye's unique assets in ADAS allow for building a scalable self-driving stack that meets the requirements for both Robotaxi and consumer-level autonomy. Our customers and strategic partners include major global OEMs, Tier 1 automotive system integrators, and public transportation operators.
Mobileye Revenue $BMobileye Operating Income $B
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Revenue and Operating Income Summary
Q2 2022 vs. Q2 2021
Revenue was $460 million, up $133 million from Q2 2021 primarily driven by higher demand for EyeQ products. Operating income was $190 million, up $57 million from Q2 2021, primarily due to higher revenue.
YTD 2022 vs. YTD 2021
Revenue was $854 million, up $150 million from YTD 2021 primarily driven by higher demand for EyeQ products. YTD operating income was $338 million, up $34 million from YTD 2021, primarily due to higher revenue, partially offset by increased investments in leadership products.
















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Intel Foundry Services
IFS seeks to empower our customers by delivering industry-leading silicon and packaging with a differentiated IP portfolio via a secure and sustainable supply of semiconductors. We intend to leverage our decades-long investment in advancing Moore’s Law to spark innovation and customization for our customers on leading edge nodes and mature specialty processes, through support of an open multi-Intel System Architecture ecosystem. Our early customers include traditional fabless customers, cloud service providers, automotive customers and aerospace firms. We offer a combination of leading-edge packaging and process technology, world-class differentiated internal IPs (e.g., x86, graphics, AI), broad third party ecosystem and silicon design support. Additionally, our offerings include mask-making equipment for advanced lithography used by most of the world’s leading-edge foundries.
IFS Revenue $BIFS Operating Income (Loss) $B
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Revenue and Operating Income (Loss) Summary
Q2 2022 vs. Q2 2021
Revenue was $122 million, down $142 million from Q2 2021, primarily driven by lower sales of MBMW tools. We had an operating loss of $155 million, a $207 million unfavorable margin change from Q2 2021, primarily due to lower gross margin from lower tool sales and increased spending to drive strategic growth.
YTD 2022 vs. YTD 2021
Revenue was $405 million, up $38 million from YTD 2021, primarily driven by higher sales of MBMW tools. We had an operating loss of $186 million, a $204 million unfavorable margin change from YTD 2021, primarily due to lower gross margin from lower tool sales and increased spending to drive strategic growth.
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31
Consolidated Results of Operations
Three Months EndedSix Months Ended
Q2 2022Q2 2021YTD 2022YTD 2021
(In Millions, Except Per Share Amounts)Amount% of Net
Revenue		Amount% of Net
Revenue		Amount% of Net
Revenue		Amount% of Net
Revenue
Net revenue$15,321 100.0 %$19,631 100.0 %$33,674 100.0 %$39,304 100.0 %
Cost of sales9,734 63.5 %8,425 42.9 %18,843 56.0 %17,244 43.9 %
Gross margin5,587 36.5 %11,206 57.1 %14,831 44.0 %22,060 56.1 %
Research and development4,400 28.7 %3,715 18.9 %8,762 26.0 %7,338 18.7 %
Marketing, general and administrative1,800 11.7 %1,599 8.1 %3,552 10.5 %2,927 7.4 %
Restructuring and other charges87 0.6 %346 1.8 %(1,124)(3.3)%2,555 6.5 %
Operating income (loss)(700)(4.6)%5,546 28.3 %3,641 10.8 %9,240 23.5 %
Gains (losses) on equity investments, net(90)(0.6)%295 1.5 %4,233 12.6 %663 1.7 %
Interest and other, net(119)(0.8)%(96)(0.5)%878 2.6 %(252)(0.6)%
Income (loss) before taxes(909)(5.9)%5,745 29.3 %8,752 26.0 %9,651 24.6 %
Provision for (benefit from) taxes(455)(3.0)%684 3.5 %1,093 3.2 %1,229 3.1 %
Net income (loss)$(454)(3.0)%$5,061 25.8 %$7,659 22.7 %$8,422 21.4 %
Earnings (loss) per share—diluted$(0.11)$1.24 $1.86 $2.06 
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Revenue
Segment Revenue Walk $B
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Q2 2022 results were impacted by a weakening and uncertain macroeconomic environment impacted by inflation, higher interest rates and the war in Ukraine, and our customers' adjustment to this new environment. We were also impacted by worse than expected reductions in demand following COVID-driven highs as well as supply dislocations in China and other parts of the supply chain, including following the extended shutdown of ports in China.
Q2 2022 vs. Q2 2021
Our Q2 2022 revenue was $15.3 billion, down $4.3 billion or 22% from Q2 2021. CCG revenue decreased 25% in Q2 2022 due to lower notebook and desktop volume, and lower revenue due to the continued ramp down from the exit of our 5G smartphone modem business. Notebook volume declined driven by lower demand in the consumer and education market segments, though ASPs increased due to the resulting product mix, while desktop volume declined primarily driven by lower demand for education products. DCAI revenue decreased 16% in Q2 2022 on lower Server volume, while Server ASPs decreased due to a higher mix of hyperscale customer-related products. CCG and DCAI customers tempered purchases to reduce existing inventories and adjust to a lower demand environment. NEX revenue increased 11% in Q2 2022 primarily due to increased demand for Ethernet and 5G products and higher ASPs, partially offset by decreased demand for Network Xeon. The decrease in our "all other" revenue reflects revenue of $1.1 billion in Q2 2021 related to the divested NAND memory business for which historical results are recorded in “all other."
Incentives offered to certain customers to accelerate purchases, particularly in DCAI and CCG, contributed approximately $1.0 billion to our revenue during the second quarter of 2022. These incentives were made to increase sales for the quarter and to strategically position our products with customers for market segment share purposes, the impacts of which were contemplated in our financial guidance for the third quarter and full year of 2022 as included in our Form 8-K dated July 28, 2022.
YTD 2022 vs. YTD 2021
Our YTD 2022 revenue was $33.7 billion, down $5.6 billion or 14% from YTD 2021. CCG was down 19% in YTD 2022 due to lower notebook and desktop volume, and lower revenue due to the continued ramp down from the exit of our 5G smartphone modem business. Notebook volume decreased driven by lower demand in the consumer and education market segments compared to COVID-driven highs in Q1 2021, though ASPs increased due to the resulting product mix. Desktop volume decreased driven by lower demand for consumer and education products. NEX revenue increased 16% primarily driven by increased demand for Ethernet and 5G products, and higher ASPs. DCAI revenue increased 2% in YTD 2022 on higher Server volume due to demand from our hyperscale customer-related products and recovery from COVID-driven lows, while Server ASPs decreased in YTD 2022 primarily due to customer and product mix. CCG and DCAI customers tempered purchases to reduce existing inventories and adjust to a lower demand environment. Mobileye revenue increased 21% in YTD 2022 primarily driven by higher demand for EyeQ products. The decrease in our "all other" revenue reflects revenue of $2.9 billion in 2021 related to the divested NAND memory business for which historical results are recorded in “all other”, and $584 million of revenue recognized in YTD 2021 from a prepaid customer supply customer.
Historically, our net revenue has typically been higher in the second half of the year than in the first half of the year, accelerating in the third quarter and peaking in the fourth quarter. In 2021, continued strong COVID-driven notebook demand in the first half of the year contributed to a flatter trend than we historically observe. For the remainder of 2022, we again expect a flatter trend than we historically observed as we experience the uncertainty and impacts, including on demand and the supply chain, of current macroeconomic conditions, the potential for a recession, and the risk for continued COVID-related disruptions or shutdowns.
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Gross Margin
We derived substantially all of our overall gross margin in Q2 2022, and most of our gross margin in YTD 2022, from the sale of products in the CCG and DCAI operating segments. Our overall gross margin dollars in Q2 2022 decreased by $5.6 billion, or 50% compared to Q2 2021, and YTD 2022, decreased by $7.2 billion, or 33% compared to YTD 2021.
Gross Margin $B
(Percentages in chart indicate gross margin as a percentage of total revenue)
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(In Millions)
$5,587 Q2 2022 Gross Margin
(1,375)Lower gross margin from CCG revenue, driven by notebook and desktop revenue
(1,075)Lower gross margin from Server and Network Xeon revenue
(1,030)Higher period charges primarily driven by inventory reserves taken in Q2 2022, including reserves on non-qualified products
(705)Higher period charges primarily associated with the ramp up of Intel 4
(559)Optane inventory impairment related to winding down our Intel Optane memory business
(555)Higher unit cost primarily from increased mix of 10nm SuperFin and Intel 7 products
(546)Lower gross margin related to the divested NAND memory business
(205)Corporate charges from patent settlement
105 Higher gross margin from DCAI other product revenue
95 Lower incentive-based cash compensation charges
231 Other
$11,206 Q2 2021 Gross Margin
$14,831 YTD 2022 Gross Margin
(1,565)Lower gross margin from CCG revenue, primarily driven by notebook and desktop revenue
(1,475)Higher period charges primarily driven by inventory reserves taken in 2022, including reserves on non-qualified products in Q2 2022
(1,320)Higher period charges primarily associated with the ramp up of Intel 4
(1,205)Higher unit cost primarily from increased mix of 10nm SuperFin and Intel 7 products
(855)Lower gross margin related to the divested NAND memory business
(584)Lack of revenue recognized in Q1 2021 from a prepaid customer supply contract
(559)Optane inventory impairment related to the wind down of our Intel Optane memory business
(205)Corporate charges from patent settlement
285 Higher gross margin primarily from DCAI other product revenue
60 Higher gross margin from Server and Network Xeon revenue
194 Other
$22,060 YTD 2021 Gross Margin
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Operating Expenses
Total R&D and MG&A expenses for Q2 2022 were $6.2 billion, up 17% from Q2 2021, and $12.3 billion for YTD 2022, up 20% from YTD 2021. These expenses represent 40.5% of revenue for Q2 2022 and 27.1% of revenue for Q2 2021, and 36.6% of revenue for YTD 2022 and 26.1% of revenue for YTD 2021. In support of our IDM 2.0 strategy, described in our 2021 Form 10-K, we continue to make significant investments to accelerate our process technology roadmap. This requires increased investments in R&D, and an intensified effort to attract and retain talent. We expect total R&D and MG&A expenses to remain roughly flat in the second half of 2022 as we implement cost-cutting measures, including slowing the pace of hiring, while at the same time improving our product execution in response to the sudden and rapid decline in economic activity.

Research and Development $B
Marketing, General, and Administrative $B
(Percentages indicate expenses as a percentage of total revenue)
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Research and Development
Q2 2022 vs. Q2 2021
R&D increased by $685 million, or 18.4%, driven by the following:
+Investments in our process technology
+Investments in our businesses to drive strategic growth
+Increase in corporate spending
-Incentive-based cash compensation
YTD 2022 vs. YTD 2021
R&D spending increased by $1.4 billion, or 19.4%, driven by the following:
+Investments in our process technology
+Investments in our businesses to drive strategic growth
+Increase in corporate spending
-Incentive-based cash compensation
Marketing, General, and Administrative
Q2 2022 vs. Q2 2021
MG&A increased by $201 million, or 12.6%, driven by the following:
+Increase in corporate spending
-Incentive-based cash compensation
YTD 2022 vs. YTD 2021

MG&A spending increased by $625 million, or 21.4%, driven by the following:
+Increase in corporate spending
-Incentive-based cash compensation
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Gains (Losses) on Equity Investments and Interest and Other, Net
(In Millions)
Q2 2022Q2 2021YTD 2022YTD 2021
Ongoing mark-to-market adjustments on marketable equity securities$(209)$138 $(639)$(153)
Observable price adjustments on non-marketable equity securities 135 72 206 623 
Impairment charges(44)(35)(67)(73)
Sale of equity investments and other
28 120 4,733 266 
Gains (losses) on equity investments, net$(90)$295 $4,233 $663 
Interest and other, net
$(119)$(96)$878 $(252)
Gains (losses) on equity investments, net
Ongoing mark-to-market adjustments in YTD 2022 and YTD 2021 were primarily related to our interest in Montage Technology, Co. Ltd and others.
In YTD 2021, we recognized $471 million in observable price adjustments in our investment in Beijing Unisoc Technology Ltd.
In YTD 2022, the sale of McAfee to an investor group was completed and we received $4.6 billion in cash for the sale of the remaining share of McAfee, recognizing $4.6 billion of gains in Sale of equity investments and other.
Interest and other, net
In YTD 2022, we recognized a gain of $1.0 billion from the first closing of the divestiture of our NAND memory business.
Restructuring and Other Charges
(In Millions)Q2 2022Q2 2021YTD 2022YTD 2021
Employee severance and benefit arrangements$38 $15 $43 $22 
Litigation charges and other13 49 (1,203)2,251 
Asset impairment charges36 282 36 282 
Total restructuring and other charges$87 $346 $(1,124)$2,555 
Litigation charges and other includes $1.2 billion in YTD 2022 from the annulled penalty related to an EC fine that was recorded and paid in 2009, and a charge of $2.2 billion in YTD 2021 related to the VLSI litigation.
Provision for Taxes
(In Millions)
Q2 2022Q2 2021YTD 2022YTD 2021
Income (loss) before taxes$(909)$5,745 $8,752 $9,651 
Provision for (benefit from) taxes$(455)$684 $1,093 $1,229 
Effective tax rate
50.1 %11.9 %12.5 %12.7 %
In Q2 2022, we recorded a tax benefit as we incurred a loss before taxes. In YTD 2022, our provision for income taxes decreased due to lower income before taxes and our effective tax rate slightly decreased primarily due to a change in tax law from 2017 Tax Reform related to capitalization of R&D that went into effect in January 2022, and a higher proportion of our income being taxed in non-U.S. jurisdictions. These effects were partially offset by the unfavorable tax rate effects associated with the gains related to the equity sale of McAfee and the divestiture of our NAND memory business.


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Liquidity and Capital Resources
We consider the following when assessing our liquidity and capital resources:
(In Millions)
Jul 2, 2022Dec 25, 2021
Cash and cash equivalents
$4,390 $4,827 
Short-term investments22,654 24,426 
Loans receivable and other498 240 
Total cash and investments1
$27,542 $29,493 
Total debt$35,430 $38,101 
We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in the longer term. Cash generated by operations, supplemented by our total cash and investments1, as shown in the preceding table, is our primary source of liquidity for funding our strategic business requirements. Our short-term funding requirements include capital expenditures for worldwide manufacturing and assembly and test, including investments in our process technology roadmap; working capital requirements; and potential and pending acquisitions, strategic investments, and dividends. This includes a commitment of $5.4 billion associated with our pending acquisition of Tower. Our long-term funding requirements incrementally contemplate additional investments in the significant manufacturing expansion plans we announced as part of our IDM 2.0 strategy and additional investments to accelerate our process technology.
We expect to benefit from government incentives, and any incentives above our current expectations would enable us to increase the pace and size of our IDM 2.0 investments. Conversely, incentives below our expectations would increase our anticipated cash requirements.
In the first quarter of 2022, we amended our $5.0 billion variable-rate revolving credit facility, extending the maturity date by one year to March 2027 and transitioning the interest terms from LIBOR to term SOFR. 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 July 2, 2022, we had no outstanding commercial paper or borrowings on the revolving credit facility.
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.
Cash from Operations $B
Capital Expenditures $BCash to Stockholders $B
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        ■ Dividends ■ Dividends
        ■ Buybacks
Six Months Ended
(In Millions)
Jul 2, 2022Jun 26, 2021
Net cash provided by operating activities$6,700 $14,149 
Net cash used for investing activities
(2,472)(8,914)
Net cash provided by (used for) financing activities
(4,665)(6,354)
Net increase (decrease) in cash and cash equivalents$(437)$(1,119)



1 See "Non-GAAP Financial Measures" within MD&A.
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Operating Activities
Cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities.
The decrease in cash provided by operations in YTD 2022 was primarily driven by lower net income after adjusting for non-cash items, including the gain on the sale of McAfee and the pre-tax gain from the divestiture of our NAND business; and was also affected by cash unfavorable working capital changes.
Investing Activities
Investing cash flows consist primarily of capital expenditures; investment purchases, sales, maturities, and disposals; cash used for acquisitions; and proceeds from divestitures.
Cash used for investing activities was lower in YTD 2022 compared to YTD 2021, primarily due to increased maturities and sales of short-term investments, proceeds from the divestiture of our NAND business, and proceeds from the sale of our remaining share of McAfee.
Financing Activities
Financing cash flows consist primarily of payment of dividends to stockholders, issuance and repayment of short-term and long-term debt, proceeds from the sale of shares of common stock through employee equity incentive plans, and repurchases of common stock.
Cash used for financing activities was lower in YTD 2022 compared to YTD 2021, primarily due to our curtailment of common stock repurchases.























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Non-GAAP Financial Measures
In addition to disclosing financial results in accordance with US 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, as applicable. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated.
Non-GAAP adjustment or measureDefinition Usefulness to management and investors
NAND memory business
We completed the first closing of the divestiture of our NAND memory business to SK hynix on December 29, 2021 and fully deconsolidated our ongoing interests in the NAND OpCo Business in the first quarter of 2022.
We exclude the impact of our NAND memory business in certain non-GAAP measures. While the second closing of the sale is still pending and subject to closing conditions, we deconsolidated this business in Q1 2022 and management does not view the historical results of the business as a part of our core operations. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model and how management currently evaluates core operational performance. 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 adjustmentsAmortization 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 US 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 chargesRestructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include periodic 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 core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.
Share-based compensationShare-based compensation consists of charges related to our employee equity incentive plans.We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these adjustments provide better comparability to peer company results and because these charges are not viewed by management as part of our core operating performance. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends, including in comparison to other peer companies.
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Non-GAAP adjustment or measureDefinition Usefulness to management and investors
Patent settlement
A portion of the charge from our IP settlements represents a catch-up of cumulative amortization that would have been incurred for the right to use the related patents in prior periods. This charge related to prior periods is excluded from our non-GAAP results; amortization related to the right to use the patents in the current (and ongoing periods) is included.
We exclude the catch-up charge related to prior periods for purposes of calculating certain non-GAAP measures because this adjustment facilitates comparison to past operating results and provides a useful evaluation of our current operating performance.
Optane inventory impairment
In Q2 2022, we initiated the winding down of our Intel Optane memory business.
We exclude these impairments for purposes of calculating certain non-GAAP measures because these charges do not reflect our current operating performance. This adjustment facilitates a useful evaluation of our current operating performance and comparisons to past operating results.
(Gains) losses on equity investments, net(Gains) losses on equity investments, net consists of ongoing mark-to-market adjustments on marketable equity securities, observable price adjustments on non-marketable equity securities, related impairment charges, and the sale of equity investments and other.We exclude these non-operating earnings for better comparability between periods. The exclusion reflects how management evaluates the core operations of the business.
Tax Reform
Adjustments for Tax Reform reflect the impact of a change in tax law from 2017 Tax Reform related to the capitalization of R&D costs.
We exclude the impacts of this 2022 change in U.S. tax treatment of R&D costs for purposes of calculating certain non-GAAP measures as we believe these adjustments facilitate a better evaluation of our current operating performance and comparison to past operating results.
Adjusted free cash flowWe reference a non-GAAP financial measure of adjusted free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Adjusted free cash flow is operating cash flow adjusted for 1) additions to property, plant and equipment, net of proceeds from capital grants received, 2) payments on finance leases, and 3) proceeds from the McAfee equity sale.
This non-GAAP financial measure is helpful in understanding our capital requirements and sources of liquidity by providing an additional means to evaluate the cash flow trends of our business. Since the 2017 divestiture, McAfee equity distributions and sales have contributed to operating and free cash flow, and while the McAfee equity sale in Q1 2022 would typically be excluded from adjusted free cash flow as an equity sale, we believe including the sale proceeds in adjusted free cash flow facilitate a better, more consistent comparison to past presentations of liquidity.
Total cash and investmentsTotal cash and investments is used by management when assessing our sources of liquidity, which includes cash and cash equivalents, short-term investments, and loans receivable and other.This non-GAAP measure is helpful in understanding our capital resources and liquidity position.
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Following are the reconciliations of our most comparable U.S. GAAP measures to our non-GAAP measures presented:
Three Months Ended
(In Millions, Except Per Share Amounts)
Jul 2, 2022Jun 26, 2021
Net revenue$15,321 $19,631 
NAND memory business— (1,098)
Non-GAAP net revenue$15,321 $18,533 
Gross margin percentage36.5 %57.1 %
Acquisition-related adjustments2.2 %1.6 %
Share-based compensation1.2 %0.5 %
Patent settlement1.3 %— %
Optane inventory impairment3.6 %— %
NAND memory business— %0.5 %
Non-GAAP gross margin percentage1
44.8 %59.8 %
Earnings (loss) per share—diluted$(0.11)$1.24 
Acquisition-related adjustments0.09 0.09 
Restructuring and other charges0.02 0.08 
Share-based compensation0.22 0.15 
Patent settlement0.05 — 
Optane inventory impairment0.14 — 
(Gains) losses on equity investments, net0.02 (0.07)
NAND memory business— (0.09)
Tax Reform0.01 — 
Income tax effects(0.15)(0.04)
Non-GAAP earnings per share—diluted$0.29 $1.36 
1 Our reconciliation of GAAP to non-GAAP prior year operating and gross margin percentages reflects the exclusion of our NAND memory business from net revenue.
Six Months Ended
(In Millions)Jul 2, 2022Jun 26, 2021
Net cash provided by operating activities$6,700 $14,149 
Net additions to property, plant and equipment1
(11,793)(7,481)
Payments on finance leases(299)— 
Sale of equity investment4,561 — 
Adjusted free cash flow$(831)$6,668 
Net cash used for investing activities$(2,472)$(8,914)
Net cash used for financing activities$(4,665)$(6,354)

1 The calculation of adjusted free cash flow includes additions to property, plant and equipment net of proceeds from capital grants.
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Other Key Information
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 2021 Form 10-K.
Risk Factors
The risks described in "Risk Factors" within Other Key Information in our 2021 Form 10-K and our Form 10-Q for the quarter ended April 2, 2022 (Q1 2022 Form 10-Q) 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 2021 Form 10-K, as updated by our Q1 2022 Form 10-Q, 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
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
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 July 2, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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. No shares were repurchased during the quarter ending July 2, 2022. As of July 2, 2022, we were authorized to repurchase up to $110.0 billion, of which $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 in a similar manner 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.
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Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
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 subsidiaries are 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 licenses issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), and there are no gross revenues or net profits directly associated with any such dealings by us with the FSB. As announced on April 5, 2022, Intel suspended all business operations in Russia until further notice, and we plan to continue limited activities as required to conduct business in the Russian Federation to the extent permitted by applicable law.
On April 15, 2021, the U.S. Department of the Treasury designated Pozitiv Teknolodzhiz, AO (Positive Technologies), a Russian IT security firm, as a party subject to one of the sanctions specified in Section 13(r). Prior to the designation, we communicated with Positive Technologies regarding its IT security research and coordinated disclosure of security vulnerabilities identified by the firm. Based on a license issued by OFAC, we resumed such communications. There are no gross revenues or net profits directly associated with any such activities. We plan to continue these communications in accordance with the terms and conditions of the OFAC license.
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Exhibits
  Incorporated by Reference 
Exhibit
Number		Exhibit DescriptionFormFile NumberExhibitFiling
Date		Filed or
Furnished
Herewith
3.18-K000-062173.15/22/2006
3.28-K000-062173.23/16/2021
10.1†
X
10.2†
X
31.1X
31.2X
32.1X
101Inline XBRL Document Set for the consolidated condensed financial statements and accompanying notes in Consolidated Condensed Financial Statements and Supplemental DetailsX
104Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101X
† Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate.
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Form 10-Q Cross-Reference Index
Item NumberItem 
Part I - Financial Information
Item 1.Financial Statements
Pages 3 - 23
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations:
Liquidity and capital resources
Pages 37 - 38
Results of operations
Pages 2, 24 - 36
Critical accounting estimates
Pages 24
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Page 42
Item 4.Controls and Procedures
Page 42
 
Part II - Other Information
Item 1.Legal Proceedings
Pages 18 - 22
Item 1A.Risk Factors
Page 42
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Page 42
Item 3.Defaults Upon Senior SecuritiesNot applicable
Item 4. Mine Safety DisclosuresNot applicable
Item 5. Other Information
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
Page 43
Item 6.Exhibits
Page 44
Signatures
Page 46
(a)    As of July 2, 2022, we did not have any significant off-balance sheet arrangements, as previously defined in Item 303(a)(4)(ii) of SEC Regulation S-K.


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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 28, 2022 By: /s/ DAVID ZINSNER
  David Zinsner
  Executive Vice President and
Chief Financial Officer (Principal Financial Officer)
Date:July 28, 2022By:/s/ SCOTT GAWEL
Scott Gawel
Corporate Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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