Equity Method Investments

6 Months Ended

Mar. 02, 2017

Equity Method Investments and Joint Ventures [Abstract]



As of	March 2, 2017				September 1, 2016
	Investment Balance		Ownership Percentage		Investment Balance		Ownership Percentage
Inotera	$	—	—	%	$	1,314	33	%
Tera Probe	23		40	%	36		40	%
Other	15		Various		14		Various
	$	38			$	1,364

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



	Quarter ended				Six months ended
	March 2, 2017		March 3, 2016		March 2, 2017			March 3, 2016
Inotera	$	—	$	2	$	9		$	54
Tera Probe	7		3		(5		)	6
Other	—		—		1			4
	$	7	$	5	$	5		$	64

Inotera

Through December 6, 2016, we partnered with Nanya in Inotera, a Taiwan DRAM memory company, at which time we acquired the remaining 67% interest in Inotera. Historically, we accounted for our interest in Inotera on a two-month lag under the equity method. As a result of the Inotera Acquisition, we account for Inotera without a lag, consistent with our other wholly-owned subsidiaries.

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 and until our acquisition of the remaining interest in Inotera, 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 of DRAM products from Inotera in the first quarter of 2017 and $326 million and $705 million in the second quarter and first six months of 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). As of March 2, 2017, our proportionate share of Tera Probe's underlying equity exceeded our investment balance by $47 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 $32 million in the second quarter and first six months of 2017, respectively, and $18 million and $39 million in the second quarter and first six months of 2016, respectively.