Equity Method Investments



	December 4, 2014				August 28, 2014
	Investment Balance		Ownership Percentage		Investment Balance		Ownership Percentage
Inotera⁽¹⁾	$	1,028	33	%	$	914	33	%
Tera Probe	36		40	%	48		40	%
Other	16		Various		9		Various
	$	1,080			$	971

⁽¹⁾ Entity is a variable interest entity.

As of December 4, 2014, substantially all of our maximum exposure to loss from our VIEs that were not consolidated was the $1,028 million carrying value of our investment in Inotera. We may also incur losses in connection with our rights and obligations to purchase substantially all of Inotera's wafer production capacity under a supply agreement with Inotera.

We recognize our share of earnings or losses from our equity method investees generally on a two-month lag. Equity in net income of equity method investees, net of tax, included the following:



Quarter ended	December 4, 2014			November 28, 2013
Inotera	$	129		$	84
Tera Probe	(7		)	2
Other	2			—
	$	124		$	86

Inotera

We have partnered with Nanya in Inotera, a Taiwan DRAM memory company, since 2009. As of December 4, 2014, we held a 33% ownership interest in Inotera, Nanya and certain of its affiliates held a 33% ownership interest and the remaining ownership interest in Inotera was publicly held.

As of December 4, 2014, the market value of our equity interest in Inotera was $3.37 billion based on the closing trading price of 48.90 New Taiwan dollars per share in an active market. As of December 4, 2014 and August 28, 2014, there were gains of $25 million and $44 million, respectively, in accumulated other comprehensive income for cumulative translation adjustments from our equity investment in Inotera.

We purchase all of Inotera's DRAM output at a discount from market prices for our comparable components under a supply agreement (the "Inotera Supply Agreement"). The Inotera Supply Agreement has a three-year term (currently through December 2016) that contemplates annual negotiations with respect to potential successive one-year extensions. If the parties do not agree to an extension, the agreement will terminate following the end of the then-existing term plus a subsequent three-year wind-down period. In the event of a wind-down, our share of Inotera's capacity would decline over the wind-down period. In the first quarters of 2015 and 2014, our cost of products purchased from Inotera was significantly higher than our cost of similar products manufactured in our wholly-owned facilities. We currently are in negotiations regarding the extension of the Inotera Supply Agreement. There can be no assurance that we will be able to reach an agreement. Under the Inotera supply agreements, we purchased $729 million and $587 million of DRAM products in the first quarters of 2015 and 2014, respectively.

Tera Probe

In 2013, we acquired a 40% interest in Tera Probe, which provides semiconductor wafer testing and probe services to us and others. During the first quarter of 2015, we recorded an impairment charge of $10 million within equity in net income 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 4, 2014, the difference between our investment balance and our proportionate share of underlying equity in Tera Probe was $34 million and is expected to be accreted as income to our earnings through equity in net income of equity method investees over a weighted-average period of 7 years. We incurred manufacturing costs for the first quarters of 2015 and 2014 of $25 million and $33 million, respectively, for services performed by Tera Probe.