Equity Method Investments



As of	June 2, 2016				September 3, 2015
	Investment Balance		Ownership Percentage		Investment Balance		Ownership Percentage
Inotera⁽¹⁾	$	1,321	33	%	$	1,332	33	%
Tera Probe	26		40	%	38		40	%
Other	14		Various		9		Various
	$	1,361			$	1,379

⁽¹⁾Entity is a variable interest entity.

As of June 2, 2016, substantially all of our maximum exposure to loss from our VIEs that were not consolidated was the $1.32 billion carrying value of our investment in Inotera. We may also incur losses in connection with our rights and obligations to purchase all of Inotera's wafer production capacity under our supply agreement with Inotera.

We recognize our share of earnings or losses from our equity method investees generally on a two-month lag. Included in our share of earnings for the first nine months of 2015 was $55 million related to Inotera's full release of its valuation allowance against net deferred tax assets related to its net operating loss carryforward and the resulting tax provision in subsequent periods. Equity in net income (loss) of equity method investees, net of tax, included the following:



	Quarter ended						Nine months ended
	June 2, 2016			June 4, 2015			June 2, 2016			June 4, 2015
Inotera	$	(19	)	$	67		$	35		$	402
Tera Probe	(22		)	3			(16		)	(3		)
Other	1			(2		)	5			1
	$	(40	)	$	68		$	24		$	400

Inotera

We have partnered with Nanya in Inotera, a Taiwan DRAM memory company, since 2009. In the second quarter of 2016, we entered into agreements to acquire the remaining interest in Inotera. (See "Proposed Acquisition of Inotera" note.)

As of June 2, 2016, the market value of our equity interest in Inotera was $1.93 billion based on the closing trading price of 29.35 New Taiwan dollars per share in an active market. As of June 2, 2016 and September 3, 2015, there were losses of $41 million and gains of $13 million, respectively, in accumulated other comprehensive income (loss) for cumulative translation adjustments from our equity investment in Inotera.

From January 2013 through December 2015, we purchased all of Inotera's DRAM output under a supply agreement at prices reflecting discounts from market prices for our comparable components. Effective beginning on January 1, 2016, the price for DRAM products sold to us is based on a formula that equally shares margin between Inotera and us. We purchased $348 million and $1.05 billion of DRAM products from Inotera in the third quarter and first nine months of 2016, respectively, and $533 million and $1.89 billion in the third quarter and first nine months of 2015, respectively. The supply agreement with Inotera (as extended in December 2015) has an initial three-year term, followed by a three-year wind-down period. Upon termination of the initial three-year term, the share of Inotera's capacity we would purchase would decline over the wind-down period.

Tera Probe

In 2013, we acquired a 40% interest in Tera Probe, which provides semiconductor wafer testing and probe services to us and others. During the third quarter of 2016, we recorded an impairment charge of $25 million within equity in net income (loss) of equity method investees to write down the carrying value of our investment in Tera Probe to its fair value based on its trading price (Level 1 fair value measurement). As of June 2, 2016, the difference between our investment balance and our proportionate share of underlying equity in Tera Probe was $43 million and is expected to be amortized over a weighted-average period of seven years. We incurred manufacturing costs for services performed by Tera Probe of $19 million and $58 million for the third quarter and first nine months of 2016, respectively, and $19 million and $66 million for the third quarter and first nine months of 2015, respectively.