Mobility Group

Mobility Group

The revenue and operating income for the Mobility Group (MG) for the three years ended December 27, 2008 were as follows:

(In Millions)   2008   2007   2006
                   
Microprocessor revenue   $ 11,439   $ 10,660   $ 9,212
Chipset and other revenue     4,209     4,021     3,097
Net revenue   $ 15,648   $ 14,681   $ 12,309
Operating income   $ 5,199   $ 5,611   $ 4,602

Net revenue for the MG operating segment increased by $967 million, or 7%, in 2008 compared to 2007. The increase in microprocessor revenue was due to significantly higher microprocessor unit sales, which were partially offset by significantly lower microprocessor average selling prices. A portion of the increase in microprocessor unit sales, as well as a portion of the decrease in average selling prices, was due to the ramp of Intel Atom processors. The increase in chipset and other revenue was primarily due to significantly higher chipset unit sales, which were partially offset by lower revenue from the sale of cellular baseband products. We are winding down the sales from the manufacturing agreement entered into as part of the divestiture of the cellular baseband business.

Operating income decreased by $412 million, or 7%, in 2008 compared to 2007. The decrease in operating income was primarily due to higher operating expenses, which were partially offset by lower microprocessor unit costs.

For 2007, net revenue for the MG operating segment increased by $2.4 billion, or 19%, compared to 2006. The increase in microprocessor revenue was due to a significant increase in unit sales, partially offset by significantly lower average selling prices. The increase in chipset and other revenue was due to higher unit sales of chipsets and, to a lesser extent, higher revenue from sales of cellular baseband products. In the fourth quarter of 2006, we sold certain assets of the business line that included application and cellular baseband processors used in handheld devices; however, in 2007 we continued to manufacture and sell those products as part of a manufacturing and transition services agreement.

Operating income increased by $1.0 billion, or 22%, in 2007 compared to 2006. The increase in operating income was primarily due to higher revenue. Lower microprocessor unit costs were more than offset by approximately $330 million of higher start-up costs, primarily related to our 45nm process technology. Lower unit costs on wireless connectivity and cellular baseband products were offset by higher chipset unit costs. Operating expenses were higher in 2007 compared to 2006; however, operating expenses as a percentage of revenue decreased in 2007 compared to 2006.

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