2022 Q3 Form 10-Q Financial Statement

#000005086322000030 Filed on July 29, 2022

View on sec.gov

Income Statement

Concept 2022 Q3 2022 Q2 2021 Q4
Revenue $15.32B $18.35B $20.53B
YoY Change -20.17% -6.51% 2.75%
Cost Of Revenue $9.734B $9.109B $9.519B
YoY Change 15.25% 8.12% 10.3%
Gross Profit $5.587B $9.244B $11.01B
YoY Change -48.01% -17.51% -2.99%
Gross Profit Margin 36.47% 50.37% 53.63%
Selling, General & Admin $1.800B $1.752B $1.942B
YoY Change 7.53% 9.57% 10.53%
% of Gross Profit 32.22% 18.95% 17.64%
Research & Development $4.400B $4.362B $4.049B
YoY Change 15.7% 17.42% 10.78%
% of Gross Profit 78.75% 47.19% 36.78%
Depreciation & Amortization $3.148B $3.348B $3.074B
YoY Change 6.39% 17.19% 2.36%
% of Gross Profit 56.35% 36.22% 27.92%
Operating Expenses $6.287B $6.114B $5.991B
YoY Change 13.92% 8.02% 10.7%
Operating Profit -$700.0M $3.130B $5.018B
YoY Change -113.39% -43.56% -15.46%
Interest Expense $109.0M $4.246B $258.0M
YoY Change -24.31% 3191.47% -83.74%
% of Operating Profit 135.65% 5.14%
Other Income/Expense, Net -$119.0M -$26.00M -$53.00M
YoY Change 56.58% -72.92% -411.76%
Pretax Income -$909.0M $9.661B $5.194B
YoY Change -113.25% 68.16% -30.64%
Income Tax -$455.0M $1.548B $571.0M
% Of Pretax Income 16.02% 10.99%
Net Earnings -$454.0M $8.113B $4.623B
YoY Change -106.65% 60.3% -21.07%
Net Earnings / Revenue -2.96% 44.21% 22.52%
Basic Earnings Per Share -$0.11
Diluted Earnings Per Share -$0.11 $1.975M $1.129M
COMMON SHARES
Basic Shares Outstanding 4.100B shares 4.089B shares
Diluted Shares Outstanding 4.100B shares

Balance Sheet

Concept 2022 Q3 2022 Q2 2021 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $27.04B $38.70B $29.25B
YoY Change 127.76% 398.66% 258.62%
Cash & Equivalents $4.390B $6.215B $4.827B
Short-Term Investments $22.65B $32.48B $24.43B
Other Short-Term Assets $5.275B $4.627B $2.130B
YoY Change 154.46% 91.12% -22.4%
Inventory $12.17B $11.94B $10.78B
Prepaid Expenses
Receivables $6.063B $7.074B $9.457B
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $50.59B $62.57B $58.56B
YoY Change -17.48% 26.73% 23.93%
LONG-TERM ASSETS
Property, Plant & Equipment $71.66B $66.72B $63.25B
YoY Change 19.97% 14.7% 11.77%
Goodwill $27.59B $27.01B $26.96B
YoY Change 2.99% 0.91% -0.03%
Intangibles $6.427B $6.813B $7.270B
YoY Change -16.36% -15.03% -19.45%
Long-Term Investments $13.00M $14.00M $16.00M
YoY Change -18.75% -17.65% -11.11%
Other Assets $8.227B $7.210B $6.072B
YoY Change 50.9% 34.62% 2.62%
Total Long-Term Assets $119.8B $113.8B $109.8B
YoY Change 12.35% 8.14% 3.78%
TOTAL ASSETS
Total Short-Term Assets $50.59B $62.57B $58.56B
Total Long-Term Assets $119.8B $113.8B $109.8B
Total Assets $170.4B $176.4B $168.4B
YoY Change 1.46% 14.07% 10.0%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $7.945B $7.210B $5.747B
YoY Change 16.98% 21.85% 2.97%
Accrued Expenses $16.39B $17.65B $17.12B
YoY Change -9.37% 15.96% 5.97%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $2.882B $4.459B $4.591B
YoY Change -38.6% 20.68% 83.35%
Total Short-Term Liabilities $27.22B $29.32B $27.46B
YoY Change -7.96% 18.06% 10.94%
LONG-TERM LIABILITIES
Long-Term Debt $32.55B $32.79B $33.51B
YoY Change -8.6% 3.39% -1.14%
Other Long-Term Liabilities $5.178B $5.191B $5.071B
YoY Change -3.92% -2.59% 40.32%
Total Long-Term Liabilities $37.73B $37.98B $38.58B
YoY Change -7.98% 2.53% 2.85%
TOTAL LIABILITIES
Total Short-Term Liabilities $27.22B $29.32B $27.46B
Total Long-Term Liabilities $37.73B $37.98B $38.58B
Total Liabilities $64.94B $67.30B $66.04B
YoY Change -7.97% 8.76% 6.07%
SHAREHOLDERS EQUITY
Retained Earnings $72.99B $74.89B $68.27B
YoY Change 14.68% 25.56% 21.4%
Common Stock
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $101.2B $103.1B $95.39B
YoY Change
Total Liabilities & Shareholders Equity $170.4B $176.4B $168.4B
YoY Change 1.46% 14.07% 10.0%

Cashflow Statement

Concept 2022 Q3 2022 Q2 2021 Q4
OPERATING ACTIVITIES
Net Income -$454.0M $8.113B $4.623B
YoY Change -106.65% 60.3% -21.07%
Depreciation, Depletion And Amortization $3.148B $3.348B $3.074B
YoY Change 6.39% 17.19% 2.36%
Cash From Operating Activities $809.0M $5.891B $5.797B
YoY Change -91.95% -31.51% -41.39%
INVESTING ACTIVITIES
Capital Expenditures -$7.255B -$4.797B -$7.632B
YoY Change 63.36% 11.97% 97.36%
Acquisitions
YoY Change
Other Investing Activities $7.423B $2.157B $2.598B
YoY Change -209.52% -203.55% -242.98%
Cash From Investing Activities $168.0M -$2.640B -$5.034B
YoY Change -101.5% -58.54% -11.44%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -2.802B -1.863B -3.806B
YoY Change -165.19% -30.49% 124.28%
NET CHANGE
Cash From Operating Activities 809.0M 5.891B 5.797B
Cash From Investing Activities 168.0M -2.640B -5.034B
Cash From Financing Activities -2.802B -1.863B -3.806B
Net Change In Cash -1.825B 1.388B -3.043B
YoY Change -158.42% -411.21% -221.28%
FREE CASH FLOW
Cash From Operating Activities $809.0M $5.891B $5.797B
Capital Expenditures -$7.255B -$4.797B -$7.632B
Free Cash Flow $8.064B $10.69B $13.43B
YoY Change -44.33% -17.05% -2.38%

Facts In Submission

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<div style="margin-bottom:9pt;margin-top:15pt"><table style="border-collapse:collapse;display:inline-table;margin-bottom:5pt;vertical-align:text-bottom;width:100.000%"><tr><td style="width:1.0%"/><td style="width:10.238%"/><td style="width:0.1%"/><td style="width:1.0%"/><td style="width:87.562%"/><td style="width:0.1%"/></tr><tr><td colspan="3" style="background-color:#0068b5;border-bottom:1pt solid #0068b5;padding:2px 1pt;text-align:left;vertical-align:bottom"><span style="color:#ffffff;font-family:'Arial',sans-serif;font-size:14pt;font-weight:400;line-height:120%">Note 12 : </span></td><td colspan="3" style="border-bottom:1pt solid #0068b5;padding:2px 1pt;text-align:left;vertical-align:bottom"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:14pt;font-weight:400;line-height:120%">Contingencies</span></td></tr></table></div><div style="margin-bottom:9pt"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:12pt;font-weight:400;line-height:120%">Legal Proceedings</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:6pt"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">European Commission Competition Matter</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:112%">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.</span></div><div style="margin-bottom:6pt"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Litigation Related to Security Vulnerabilities</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:6pt"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Institute of Microelectronics, Chinese Academy of Sciences v. Intel China, Ltd., et al.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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 &amp; 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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:112%">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.</span></div><div><span><br/></span></div><div style="margin-bottom:6pt"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">VLSI Technology LLC v. Intel</span><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-style:italic;font-weight:700;line-height:120%"> </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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. </span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div><div style="margin-bottom:6pt"><span style="color:#0068b5;font-family:'Arial',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Litigation Related to 7nm Product Delay Announcement</span></div><div style="margin-bottom:9pt"><span style="color:#262626;font-family:'Arial',sans-serif;font-size:9pt;font-weight:400;line-height:120%">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.</span></div>

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