Acquisitions & Divestitures

12 Months Ended

Dec. 25, 2021

Acquisitions and Divestitures [Text Block]


Note 10 :			Acquisitions and Divestitures

Acquisitions

We completed four acquisitions in 2021 and six acquisitions in 2020, all of which qualified as business combinations. The consideration for the acquisitions in 2021 and 2020 primarily consisted of cash and was allocated to goodwill and identified intangible assets. For information on the assignment of goodwill to our operating segments, see "Note 11: Goodwill," and for information on the classification of intangible assets, see "Note 12: Identified Intangible Assets."

Moovit

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

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, subsequent to our fiscal 2021 year-end. At first closing, SK hynix paid $7.0 billion of consideration, with the remaining $2.0 billion to be received at the second closing of the transaction, expected to be no earlier than March 2025. In connection with the first closing, we expect to recognize a pre-tax gain of approximately $1.0 billion within interest and other, net, and tax expense of approximately $450 million. Based on our ongoing obligation under the NAND wafer manufacturing and sale agreement, approximately $600 million of the initial closing consideration will be deferred and recognized between 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 will be 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 will fully deconsolidate our ongoing interests in the NAND OpCo Business in the first quarter of 2022, and will record a receivable for the second closing proceeds of $1.9 billion.

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


(In Millions)	Dec 25, 2021		Dec 26, 2020
Inventories	$	953	$	962
Property, plant and equipment, net	5,989		4,363
Total assets	$	6,942	$	5,325

We ceased recording depreciation on property, plant and equipment as of the date the assets triggered held for sale accounting. The agreement provided for continued capital purchases through first closing and we invested $1.6 billion in 2021, which is classified as assets held for sale at period end and sold at first closing.

Home Gateway Platform Division

On July 31, 2020, we completed the divestiture of the majority of Home Gateway Platform, a division of CCG, for proceeds of $150 million. The divestiture included the transfer of certain employees, equipment, and an ongoing supply agreement for future units.

Smartphone Modem Business

On December 2, 2019, we completed the divestiture of the majority of our smartphone modem business, including certain employees, IP, equipment, and leases. Net assets sold were $267 million. We recognized a pre-tax gain of $690 million on the divestiture.