Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v3.19.3.a.u2
Segment Reporting
 12 Months Ended
Dec. 28, 2019
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
Management, including the Chief Operating Decision Maker, who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue and operating income (loss). These performance measures include the allocation of expenses to the operating segments based on management’s judgment. The Company has the following two reportable segments:
•
the Computing and Graphics segment, which primarily includes desktop and notebook processors and chipsets, discrete and integrated graphics processing units (GPUs), data center and professional GPUs and development services. The Company also licenses portions of its IP portfolio.
•
the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services and technology for game consoles. The Company also licenses portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because management does not consider these expenses and credits in evaluating the performance of the reportable segments. This category primarily includes employee stock-based compensation expense.
The following table provides a summary of net revenue and operating income (loss) by segment for 2019, 2018 and 2017.
 
2019
 
2018
 
2017
 
(In millions)
Net revenue:
 
 
 
 
 
Computing and Graphics
$
4,709

 
$
4,125

 
$
2,977

Enterprise, Embedded and Semi-Custom
2,022

 
2,350

 
2,276

Total net revenue
$
6,731

 
$
6,475

 
$
5,253

Operating income (loss):
 
 
 
 
 
Computing and Graphics
$
577

 
$
470

 
$
92

Enterprise, Embedded and Semi-Custom
263

 
163

 
132

All Other
(209
)
 
(182
)
 
(97
)
Total operating income
$
631

 
$
451

 
$
127


The following table provides major items included in All Other category:
 
2019
 
2018
 
2017
 
(In millions)
Operating loss:
 
 
 
 
 
Stock-based compensation expense
$
(197
)
 
$
(137
)
 
$
(97
)
Impairment of technology licenses
—

 
(45
)
 
—

Loss contingency on legal matter
(12
)
 
—

 
—

Total operating loss
$
(209
)
 
$
(182
)
 
$
(97
)

The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information.
The Company’s operations outside the United States include research and development activities and sales, marketing and administrative activities. The Company conducts product and system research and development activities for its products in the United States with additional design and development engineering teams located in Canada, China, India, Taiwan and Singapore. The Company’s material sales and marketing offices are located in the United States, Latin America, Europe and Asia.
The following table summarizes sales to external customers by geographic regions based on billing location of the customer:
 
2019
 
2018
 
2017
 
(In millions)
United States
$
1,764

 
$
1,327

 
$
1,360

China (including Hong Kong)
1,736

 
1,319

 
974

Japan
840

 
1,225

 
1,215

Europe
762

 
470

 
263

Taiwan
719

 
1,197

 
738

Singapore
597

 
728

 
550

Other countries
313

 
209

 
153

Total sales to external customers
$
6,731

 
$
6,475

 
$
5,253


The following table summarizes Property and equipment, net by geographic areas:
 
2019
 
2018
 
(In millions)
United States
$
300

 
$
232

Canada
99

 
51

China
36

 
17

Singapore
33

 
29

Other countries
32

 
19

Total property and equipment, net
$
500

 
$
348


The following table summarizes sales to major customers that accounted for at least 10% of the Company’s consolidated net revenue for the respective years:
 
2019
 
2018
 
2017
Customer A
12
%
 
19
%
 
23
%
Customer B
*

 
11
%
 
15
%

* 
 
Less than 10%

Sales to customers A and B consisted of products from the Company’s Enterprise, Embedded and Semi-Custom segment.