Intel 2004 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2004 Intel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 111

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Intel Communications Group
Within ICG, our strategy is to be the leading supplier of silicon and other component-level communications building blocks for OEMs
and other systems builders. We are focused on developing products for the wireless handheld computing and communications market segments
as well as products that we believe will help continue to build out the Internet.
Component-level products for the wireless handheld computing and communications market segments include flash memory products,
application processors and cellular baseband chipsets. Our strategy for our flash memory products is to offer a broad range of memory
densities, leading-edge packaging technology and high-performance functionality. In addition to having offerings that meet the needs of
cellular customers, we offer flash memory products that meet the needs of other market segments, such as the broad market segment. The broad
market segment includes flash memory products found in various applications, including set-
top boxes, networking products, and other devices
such as DVD players and DSL cable modems. In our flash memory product portfolio, we currently offer NOR flash memory products such as
Intel StrataFlash
®
Wireless Memory, which uses two-bits-per-cell technology to provide a single-chip solution for fast code execution, with
higher storage densities and 1.8-volt operation optimized for advanced mobile phone designs. In application processing, Intel XScale
®
technology provides the processing capability in data-enabled mobile phones and PDAs. Addressing the trend toward convergence in
computing and communications, we offer stacked packaging solutions (stacking an application processor on top of memory) as well as
packaging that stacks several memory chips together.
In support of the build-out of the Internet, we offer products designed for wired and wireless connectivity; for the communications
infrastructure, including network and embedded processors; and for networked storage. Our strategy for connectivity products is to expand our
product portfolio in the local area network (LAN) market segment and to address the metropolitan area network (MAN) and networked storage
market segments. Within the LAN and MAN market segments, we are investing in Gigabit Ethernet and 10-Gigabit Ethernet, as well as
wireless technologies based on industry standards for wireless 802.11 (WLAN, or WiFi) mobile applications and the emerging standard
supporting 802.16 (or WiMAX) for broadband connectivity. We currently offer a variety of wireless connectivity products based on the 802.11
standard for notebook PCs as part of Intel Centrino mobile technology. For the communications infrastructure, we deliver network processing-
related products that are basic building blocks for modular communications platforms. These products include advanced, programmable
processors used to manage and direct data moving across the Internet and corporate networks. We also offer embedded processors that can be
used for modular communications platform applications as well as for industrial equipment and point-of-
sale systems. In the networked storage
market segment, we offer products that allow storage resources to be added in either of the two most prevalent types of storage networks:
Ethernet or Fibre Channel.
Critical Accounting Estimates
The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in
our financial statements, which we discuss under the heading “Results of Operations” following this section of our MD&A. Some of our
accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. Our most critical accounting estimates include the assessment of recoverability of goodwill, which impacts goodwill
impairments; valuation of non-marketable equity securities, which impacts net gains (losses) on equity securities when we record impairments;
valuation of inventory, which impacts gross margin; assessment of recoverability of long-lived assets, which primarily impacts gross margin
when we impair manufacturing assets or accelerate their depreciation; and recognition and measurement of current and deferred income tax
assets and liabilities, which impact our tax provision. Below, we discuss these policies further, as well as the estimates and judgments involved.
We also have other policies that we consider key accounting policies, such as for revenue recognition, including the deferral of revenue on
sales to distributors; however, these policies do not require us to make estimates or judgments that are difficult or subjective.
27