Intel 2013 Annual Report Download - page 17

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Our R&D activities range from designing and developing new products and manufacturing processes to researching
future technologies and products. We continue to make significant R&D investments in the development of SoCs to
enable growth in ultra-mobile form factors. In addition, we continue to make significant investments in wireless
technologies including our work to develop a high-speed LTE solution for smartphones. Our second generation
VoLTE product with LTE-advanced features, such as carrier aggregation, is expected to be available in the first half
of 2014. We also continue to invest in graphics and HPC.
Our R&D model is based on a global organization that emphasizes a collaborative approach to identifying and
developing new technologies, leading standards initiatives, and influencing regulatory policies to accelerate the
adoption of new technologies, including joint pathfinding conducted between researchers at Intel Labs and our
business groups. We centrally manage key cross-business group product initiatives to align and prioritize our R&D
activities across these groups. In addition, we may augment our R&D activities by investing in companies or
entering into agreements with companies that have similar R&D focus areas, as well as directly purchasing or
licensing technology applicable to our R&D initiatives.
Employees
As of December 28, 2013, we had 107,600 employees worldwide (105,000 as of December 29, 2012), with
approximately 51% of those employees located in the U.S. (51% as of December 29, 2012).
Sales and Marketing
Customers
We sell our products primarily to OEMs and ODMs. ODMs provide design and manufacturing services to branded
and unbranded private-label resellers. In addition, we sell our products to other manufacturers, including makers of
a wide range of industrial and communications equipment. Our customers also include those who buy PC
components and our other products through distributor, reseller, retail, and OEM channels throughout the world.
Our worldwide reseller sales channel consists of thousands of indirect customers—systems builders that
purchase Intel microprocessors and other products from our distributors. We have a boxed processor program that
allows distributors to sell our microprocessors in small quantities to customers of systems builders; boxed
processors are also available in direct retail outlets.
In 2013, Hewlett-Packard Company accounted for 17% of our net revenue (18% in 2012 and 19% in 2011), Dell Inc.
accounted for 15% of our net revenue (14% in 2012 and 15% in 2011), and Lenovo Group Limited accounted for
12% of our net revenue (11% in 2012 and 9% in 2011). No other customer accounted for more than 10% of our net
revenue during such periods. For information about net revenue and operating income by operating segment, and
net revenue from unaffiliated customers by country, see “Note 27: Operating Segments and Geographic
Information” in Part II, Item 8 of this Form 10-K.
Sales Arrangements
Our products are sold through sales offices throughout the world. Sales of our products are typically made via
purchase order acknowledgments that contain standard terms and conditions covering matters such as pricing,
payment terms, and warranties, as well as indemnities for issues specific to our products, such as patent and
copyright indemnities. From time to time, we may enter into additional agreements with customers covering, for
example, changes from our standard terms and conditions, new product development and marketing, private-label
branding, and other matters. Most of our sales are made using electronic and web-based processes that allow the
customer to review inventory availability and track the progress of specific goods ordered. Pricing on particular
products may vary based on volumes ordered and other factors. We also offer discounts, rebates, and other
incentives to customers to increase acceptance of our products and technology.
Our products are typically shipped under terms that transfer title to the customer, even in arrangements for which
the recognition of revenue and related cost of sales is deferred. Our standard terms and conditions of sale typically
provide that payment is due at a later date, generally 30 days after shipment or delivery. Our credit department sets
accounts receivable and shipping limits for individual customers to control credit risk to Intel arising from
outstanding account balances. We assess credit risk through quantitative and qualitative analysis, and from this
analysis, we establish credit limits and determine whether we will use one or more credit support devices, such as a
parent guarantee or standby letter of credit, or credit insurance. Credit losses may still be incurred due to
bankruptcy, fraud, or other failure of the customer to pay. For information about our allowance for doubtful
receivables, see “Schedule II—Valuation and Qualifying Accounts” in Part IV of this Form 10-K.
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