Segment Information

3 Months Ended

Feb. 02, 2020

Reportable Segments

During the first quarter of fiscal year 2020, we updated our organizational structure resulting in two reportable segments: semiconductor solutions and infrastructure software. Each segment represents components for which separate financial information is available that is utilized on a regular basis by the CODM in determining how to allocate resources and evaluate performance. The reportable segments are determined based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics.

Semiconductor solutions. We provide semiconductor solutions for managing the movement of data in data center, telecom, enterprise and embedded networking applications. We provide a broad variety of radio frequency semiconductor devices, wireless connectivity solutions and custom touch controllers for mobile applications. We also provide semiconductor solutions for enabling the set-top box and broadband access markets and for enabling secure movement of digital data to and from host machines, such as servers, personal computers and storage systems, to the underlying storage devices, such as hard disk drives and solid state drives. We also provide a broad variety of products for the general industrial and automotive markets. Our semiconductor solutions segment also includes our IP licensing.

Infrastructure software. We provide a portfolio of mainframe, enterprise and storage area networking solutions, which enables customers to leverage the benefits of agility, automation, insights, resiliency and security in managing business processes and technology investments, and to reduce the cost and complexity of managing business information within a shared storage environment. We also offer a cybersecurity solutions portfolio, including data loss prevention, endpoint protection, and web, email and cloud security solutions.

Our CODM assesses the performance of each segment and allocates resources to each segment based on net revenue and operating results and does not evaluate each segment using discrete asset information. Operating results by segment include items that are directly attributable to each segment and also include shared expenses such as global operations, including manufacturing support, logistics and quality control, in addition to expenses associated with selling, general and administrative activities for the business, which are allocated primarily based on revenue, while facilities expenses are allocated primarily based on site-specific headcount.

Unallocated Expenses

Unallocated expenses include amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, charges related to inventory step-up to fair value, and other costs, which are not used in evaluating the results of, or in allocating resources to, our segments. Acquisition-related costs include transaction costs and any costs directly related to the acquisition and integration of acquired businesses.

Depreciation expense directly attributable to each reportable segment is included in the operating results of each segment. However, the CODM does not evaluate depreciation expense by operating segment and, therefore, it is not separately presented. There was no inter-segment revenue for the fiscal quarters ended February 2, 2020 and February 3, 2019. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.



	Fiscal Quarter Ended
	February 2, 2020			February 3, 2019

	(In millions)
Net revenue:
Semiconductor solutions	$	4,191		$	4,386
Infrastructure software	1,667			1,403
Total net revenue	$	5,858		$	5,789

Operating income (loss):
Semiconductor solutions	$	1,979		$	2,032
Infrastructure software	1,105			1,020
Unallocated expenses	(2,370		)	(2,497		)
Total operating income	$	714		$	555

Significant Customer Information

We sell our products through our direct sales force and a select network of distributors and channel partners globally. No customers accounted for 10% or more of our net accounts receivable balance at February 2, 2020, compared with one customer who accounted for 24% of our net accounts receivable balance at November 3, 2019.

One customer accounted for 14% of our net revenue during the fiscal quarter ended February 2, 2020, compared to 15% of our net revenue during the fiscal quarter ended February 3, 2019. Net revenue from this customer was included in our semiconductor solutions segment.