Description of Business, Including Segment Information

6 Months Ended

Jun. 30, 2017

Description of business, including segment information

1. Description of business, including segment information

We design, make and sell semiconductors to electronics designers and manufacturers all over the world. Beginning January 2017, we reorganized the product lines within our two reportable segments – Analog and Embedded Processing – to realign our business structure with the way our customers select and buy products. These changes had no effect on either our previously reported consolidated financial statements or on our reportable segment amounts. Our two reportable segments are established along major categories of products as follows:

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Analog – consisting of the following product lines: Power, Signal Chain and High Volume.

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Embedded Processing – consisting of the following product lines: Connected Microcontrollers and Processors.

We report the results of our remaining business activities in Other. Other includes operating segments that do not meet the quantitative thresholds for individually reportable segments and cannot be aggregated with other operating segments. Other includes DLP^® products, calculators and custom ASIC products. As of January 1, 2017, we no longer recognize royalties as revenue; instead, they are now recorded as OI&E. We continue to receive royalties from arrangements involving license rights to our patent portfolio. Although we expect royalties to continue for many years, they are of decreasing significance to our core operations. Prior period amounts were not material.

Our centralized manufacturing and support organizations, such as facilities, procurement and logistics, provide support to our operating segments, including those in Other. Costs incurred by these organizations, including depreciation, are charged to the segments on a per-unit basis. Consequently, depreciation expense is not an independently identifiable component within the segments’ results and, therefore, is not provided.

Segment information

	For Three Months Ended				For Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Revenue:
Analog	$	2,411	$	2,044	$	4,667	$	3,923
Embedded Processing		868		755		1,671		1,484
Other		414		474		757		874
Total revenue	$	3,693	$	3,273	$	7,095	$	6,281

Operating profit:
Analog	$	1,077	$	781	$	2,012	$	1,469
Embedded Processing		271		192		511		379
Other		132		158		209		267
Total operating profit	$	1,480	$	1,131	$	2,732	$	2,115

Operating profit amounts in the prior period have been recast as a result of our early adoption of a new accounting standard related to pension and other retiree benefit costs. See Note 2 for more information.