INVENTORY AND INVENTORY VALUATION

3 Months Ended

Mar. 31, 2023

The following table summarizes the components of “Inventory” on the Condensed Consolidated Balance Sheets (in millions):


	December 31, 2022		March 31, 2023
Raw materials and work in progress	$	949	$	1,267
Finished goods	399		556
Total inventory	$	1,348	$	1,823

Inventory is stated at the lower of cost or net realizable value (“LCNRV”) and consists of raw materials, work in progress, finished goods, and service parts. The Company’s ending inventory was written down by $582 million and $561 million for LCNRV as of December 31, 2022 and March 31, 2023, respectively. Additionally, the Company has LCNRV losses related to firm purchase commitments which were $338 million and $261 million as of December 31, 2022 and March 31, 2023, respectively, and are reflected in the inventory component of “Accrued liabilities” on the Condensed Consolidated Balance Sheets. Refer to Note 6 "Accrued Liabilities" for more information about Accrued liabilities.

The Company recorded a $188 million and $229 million charge to reflect the LCNRV of inventory and losses on firm purchase commitments as of March 31, 2022 and March 31, 2023, respectively, in “Cost of revenues” in the Company’s Condensed Consolidated Statements of Operations.