Commitments and Guarantees |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Guarantees |
Commitments and Guarantees
Operating Leases
The Company leases certain of its facilities and in some jurisdictions the Company leases the land on which these facilities are built under non-cancellable lease agreements that expire at various dates through 2028. The Company also leases certain manufacturing and office equipment for terms ranging from one to five years.
As of December 29, 2018, the Company’s future non-cancellable operating lease commitments were as follows:
Rent expense for 2018, 2017 and 2016 was $53 million, $44 million and $39 million, respectively.
During the second quarter of 2018, the Company entered into a 10-year operating lease to occupy approximately 270,000 square feet of office space in China. Base rent payments commenced in October 2018. As of December 29, 2018, the total estimated base rent payments over the life of the lease were approximately $68 million. In addition to the base rent payments, the Company is obligated to pay certain customary amounts for its share of operating expenses and tax obligations. The Company will also incur costs for capital projects for the new office space.
The Company leases 220,000 square feet of office space in Santa Clara for 10 years. The base rent obligation commenced in August 2017. As of December 29, 2018, the total estimate of future base rent payments over the life of the lease was approximately $94 million. In addition to the base rent payments, the Company will be obligated to pay certain customary amounts for its share of operating expenses and tax obligation. The Company has the option to extend the term of the lease for two additional five-year periods.
Certain other operating leases contain provisions for escalating lease payments subject to changes in the consumer price index.
Purchase and Other Contractual Obligations
The Company’s purchase obligations primarily include the Company’s obligations to purchase wafers and substrates from third parties. As of December 29, 2018, total non-cancellable purchase obligations excluding the Company’s wafer purchase commitments to GF under the WSA were $337 million.
The Company also had other contractual obligations, primarily included in Other long-term liabilities and Accrued liabilities on its consolidated balance sheet, which primarily consisted of $161 million of payments due under certain software and technology licenses and IP licenses that will be paid through 2022.
Future unconditional purchase obligations as of December 29, 2018 were as follows:
Obligations to GF
As of December 29, 2018, the Company's minimum purchase obligations for wafer purchases for the years 2019 through 2021 are approximately $2.4 billion.
Warranties and Indemnities
Changes in the Company’s estimated liability for product warranty during the years ended December 29, 2018 and December 30, 2017 are as follows:
In addition to product warranties, the Company from time to time in its normal course of business indemnifies other parties with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. In these limited matters, the Company has agreed to hold certain third parties harmless against specific types of claims or losses such as those arising from a breach of representations or covenants, third-party claims that the Company’s products when used for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third party, or other specified claims made against the indemnified party. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material.
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