Equity Method Investments

3 Months Ended

Dec. 01, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments

As of	December 1, 2016				September 1, 2016
	Investment Balance		Ownership Percentage		Investment Balance		Ownership Percentage
Inotera	$	1,360	33	%	$	1,314	33	%
Tera Probe	25		40	%	36		40	%
Other	16		Various		14		Various
	$	1,401			$	1,364

Equity in net income (loss) of equity method investees, net of tax, included the following:

Quarter ended	December 1, 2016			December 3, 2015
Inotera	$	9		$	52
Tera Probe	(12		)	3
Other	1			4
	$	(2	)	$	59

Inotera

We partnered with Nanya in Inotera, a Taiwan DRAM memory company, through December 6, 2016, at which time we acquired the remaining 67% interest in Inotera. As a result, we will consolidate Inotera's operating results beginning December 6, 2016. (See "Acquisition of Inotera" note.)

As of December 1, 2016, the market value of our equity interest in Inotera was $2.00 billion based on the closing trading price of 29.80 New Taiwan dollars per share in an active market. As of December 1, 2016 and September 1, 2016, there were losses of $9 million and $44 million, respectively, in accumulated other comprehensive (loss) for cumulative translation adjustments from our equity investment in Inotera.

From January 2013 through December 2015, we purchased all of Inotera's DRAM output under supply agreements at prices reflecting discounts from market prices for our comparable components. After December 2015, the price for DRAM products purchased by us was based on a formula that equally shared margin between Inotera and us. We purchased $504 million and $379 million of DRAM products from Inotera in the first quarters of 2017 and 2016, respectively.

Tera Probe

We have a 40% interest in Tera Probe, which provides semiconductor wafer testing and probe services to us and others. In the first quarter of 2017, we recorded an impairment charge of $16 million within equity in net income (loss) of equity method investees to write down the carrying value of our investment in Tera Probe to its fair value based on its trading price (Level 1 fair value measurement). As of December 1, 2016, our proportionate share of Tera Probe's underlying equity exceeded our investment balance by $52 million, which is expected to be accreted to earnings over a weighted-average period of seven years. We incurred manufacturing costs for services performed by Tera Probe for us of $16 million and $21 million in the first quarters of 2017 and 2016, respectively.