Related Parities - Equity Joint Ventures
|3 Months Ended|
Mar. 26, 2022
|Equity Method Investments and Joint Ventures [Abstract]|
|Related Parities - Equity Joint Ventures||Related Parties — Equity Joint Ventures
ATMP Joint Ventures
The Company holds a 15% equity interest in two joint ventures (collectively, the ATMP JV) with affiliates of Tongfu Microelectronics Co., Ltd, a Chinese joint stock company. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV.
The ATMP JV provides assembly, testing, marking and packaging (ATMP) services to the Company. The Company assists the ATMP JV in its management of certain raw material inventory. The purchases from and resales to the ATMP JV of inventory under the Company’s inventory management program are reported within purchases and resales with the ATMP JV and do not impact the Company’s condensed consolidated statements of operations.
The Company’s purchases from the ATMP JV during the three months ended March 26, 2022 and March 27, 2021 amounted to $348 million and $246 million, respectively. As of March 26, 2022 and December 25, 2021, the amounts payable to the ATMP JV were $205 million and $85 million, respectively, and are included in Payables to related parties on the Company’s condensed consolidated balance sheets. The Company’s resales to the ATMP JV during the three months ended March 26, 2022 and March 27, 2021 amounted to $4 million and $10 million, respectively. As of March 26, 2022 and December 25, 2021, the Company had receivables from the ATMP JV of $4 million and $2 million, respectively, included in Receivables from related parties on the Company’s condensed consolidated balance sheets.
During the three months ended March 26, 2022 and March 27, 2021, the Company recorded a gain of $3 million and $2 million in Equity income in investee on its condensed consolidated statements of operations, respectively. As of March 26, 2022 and December 25, 2021, the carrying value of the Company’s investment in the ATMP JV was $72 million and $69 million, respectively.
THATIC Joint Ventures
The Company holds equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. As of both March 26, 2022 and December 25, 2021, the carrying value of the investment was zero.
In February 2016, the Company licensed certain of its intellectual property (Licensed IP) to the THATIC JV, payable over several years upon achievement of certain milestones. The Company also receives a royalty based on the sales of the THATIC JV’s products developed on the basis of such Licensed IP. The Company classifies Licensed IP and royalty income associated with the February 2016 agreement as Licensing gain within operating income. During the three months ended March 26, 2022, the Company recognized $83 million of licensing gain from a milestone achievement and royalty income and during the three months ended March 27, 2021, the Company recognized $4 million of licensing gain from royalty income, both associated with Licensed IP. As of both March 26, 2022 and December 25, 2021, the Company had no receivables from the THATIC JV.
In June 2019, the Bureau of Industry and Security of the United States Department of Commerce added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. The Company is complying with U.S. law pertaining to the Entity List designation.
The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef