Identified Intangible Assets

6 Months Ended

Jul. 02, 2011

Identified Intangible Assets [Abstract]

Note 18: Identified Intangible Assets

Identified intangible assets consisted of the following as of July 2, 2011 and December 25, 2010:

	July 2, 2011
			Accumulated
(In Millions)	Gross Assets		Amortization		Net
Acquisition-related developed technology	$	2,534	$	(307)	$	2,227
Acquisition-related customer relationships		1,710		(117)		1,593
Acquisition-related trade names		65		(15)		50
Licensed technology		2,331		(620)		1,711
Identified intangible assets subject to amortization	$	6,640	$	(1,059)	$	5,581
Acquisition-related trade names		828		—		828
Other intangible assets		291		—		291
Identified intangible assets not subject to amortization	$	1,119	$	—	$	1,119
Total identified intangible assets	$	7,759	$	(1,059)	$	6,700


	December 25, 2010
			Accumulated
(In Millions)	Gross Assets		Amortization		Net
Acquisition-related developed technology	$	235	$	(97)	$	138
Acquisition-related customer relationships		152		(10)		142
Acquisition-related trade names		46		(10)		36
Licensed technology		1,204		(765)		439
Identified intangible assets subject to amortization	$	1,637	$	(882)	$	755
Other intangible assets		105		—		105
Total identified intangible assets	$	1,742	$	(882)	$	860

As a result of our acquisition of McAfee during the first quarter of 2011, we recorded $3.6 billion of identified intangible assets. In addition, as a result of our seven other acquisitions during the first half of 2011, we recorded $1.3 billion of identified intangible assets, of which substantially all was from the acquisition of the WLS business of Infineon. For further information about identified intangible assets recorded as a result of acquisitions during the first half of 2011, see “Note 15: Acquisitions.”

In January 2011, we entered into a long-term patent cross-license agreement with NVIDIA. Under the agreement, we received a license to all of NVIDIA's patents while NVIDIA products are licensed to our patents, subject to exclusions for x86 products, certain chipsets, and certain flash memory technology products. The agreement also included settlement of the existing litigation between the companies as well as broad mutual general releases. We agreed to make payments totaling $1.5 billion to NVIDIA over six years ($300 million in each of January 2011, 2012, and 2013; and $200 million in each of January 2014, 2015, and 2016), which resulted in a liability totaling approximately $1.4 billion, on a discounted basis. In the fourth quarter of 2010, we recognized an expense of $100 million related to the litigation settlement. In the first quarter of 2011, we recognized the remaining amount of $1.3 billion as licensed technology which will be amortized into cost of sales over its estimated useful life of 17 years. As of July 2, 2011, the remaining liability of $1.1 billion is classified within other accrued liabilities and other long-term liabilities, based on the expected timing of the underlying payments.

For identified intangible assets that are subject to amortization, we recorded amortization expense on the consolidated condensed statements of income as follows:

	Three Months Ended				Six Months Ended
	July 2,		June 26,		July 2,		June 26,
(In Millions)	2011		2010		2011		2010
Acquisition-related developed technology	$	137	$	16	$	210	$	32
Licensed technology		43		43		89		85
Cost of sales	$	180	$	59	$	299	$	117

Acquisition-related customer relationships	$	73	$	2	$	107	$	3
Acquisition-related trade names		3		2		5		4
Amortization of acquisition-related intangibles	$	76	$	4	$	112	$	7

Based on the identified intangible assets that are subject to amortization as of July 2, 2011, we expect future amortization expense to be as follows:

	Remainder
(In Millions)	of 2011		2012		2013		2014		2015
Acquisition-related developed technology	$	271	$	522	$	506	$	487	$	208
Licensed technology		90		171		154		143		125
Cost of sales	$	361	$	693	$	660	$	630	$	333

Acquisition-related customer relationships	$	146	$	284	$	264	$	260	$	250
Acquisition-related trade names		5		10		10		10		9
Amortization of acquisition-related intangibles	$	151	$	294	$	274	$	270	$	259