Revenue and Segment Information

12 Months Ended

Dec. 31, 2019

Segment Reporting, Measurement Disclosures [Abstract]

Note 3: Revenue and Segment Information

Revenue recognized for sales agreements amounted to $5,492.0 million and $5,849.0 million for the years ended December 31, 2019 and 2018, respectively. Revenue recognized for product development agreements amounted to $25.9 million and $29.3 million for the years ended December 31, 2019 and 2018, respectively.

The Company is organized into three operating and reportable segments consisting of PSG, ASG and ISG. The Company's wafer manufacturing facilities fabricate ICs for all business units, as necessary, and their operating costs are reflected in the segments' cost of revenue on the basis of product costs. Because operating segments are generally defined by the products they design and sell, they do not make sales to each other. The Company does not allocate income taxes or interest expense to its operating segments as the operating segments are principally evaluated on gross profit. Additionally, restructuring, asset impairments and other charges, net and certain other manufacturing and operating expenses, which include corporate research and development costs, unallocated inventory reserves and miscellaneous nonrecurring expenses, are not allocated to any segment. In addition to the operating and reportable segments, the Company also operates global operations, sales and marketing, information systems and finance and administration groups. A portion of the expenses of these groups are allocated to the segments based on specific and general criteria and are included in the segment results.

Revenue and gross profit for the Company’s operating and reportable segments are as follows (in millions):


	PSG		ASG		ISG		Total
For year ended December 31, 2019:
Revenue from external customers	$	2,788.3	$	1,972.3	$	757.3	$	5,517.9
Segment gross profit	976.0		794.8		275.4		2,046.2

For year ended December 31, 2018:
Revenue from external customers	$	3,038.2	$	2,071.2	$	768.9	$	5,878.3
Segment gross profit	1,110.1		878.3		317.1		2,305.5

For year ended December 31, 2017:
Revenue from external customers	$	2,819.3	$	1,950.9	$	772.9	$	5,543.1
Segment gross profit	959.8		817.8		302.6		2,080.2

Gross profit is exclusive of the amortization of acquisition-related intangible assets. Depreciation expense is included in segment gross profit. Reconciliations of segment gross profit to consolidated gross profit are as follows (in millions):


	Year Ended December 31,
	2019		2018		2017
Gross profit for reportable segments	$	2,046.2	$	2,305.5	$	2,080.2

Less: unallocated manufacturing costs	(72.6)		(66.8)		(44.6)
Consolidated gross profit	$	1,973.6	$	2,238.7	$	2,035.6

Revenue for the Company's operating and reportable segments disaggregated into geographic locations based on sales billed from the respective country and sales channels are as follows (in millions):


	Year Ended December 31, 2019
	PSG		ASG		ISG		Total
Geographic Location
Singapore	$	864.7	$	679.7	$	168.7	$	1,713.1
Hong Kong	843.5		436.8		137.0		1,417.3
United Kingdom	467.1		303.5		151.0		921.6
United States	356.3		332.6		121.4		810.3
Other	256.7		219.7		179.2		655.6
Total	$	2,788.3	$	1,972.3	$	757.3	$	5,517.9

Sales Channel
Distributors	$	1,740.6	$	971.5	$	461.0	$	3,173.1
OEM/ODM	857.5		860.3		258.8		1,976.6
Electronic Manufacturing Service Providers	190.2		140.5		37.5		368.2
Total	$	2,788.3	$	1,972.3	$	757.3	$	5,517.9


	Year Ended December 31, 2018
	PSG		ASG		ISG		Total
Geographic Location
Singapore	$	1,086.6	$	704.2	$	164.2	$	1,955.0
Hong Kong	847.9		496.5		144.7		1,489.1
United Kingdom	488.5		319.8		138.2		946.5
United States	398.5		339.2		125.0		862.7
Other	216.7		211.5		196.8		625.0
Total	$	3,038.2	$	2,071.2	$	768.9	$	5,878.3

Sales Channel
Distributors	$	2,011.1	$	1,066.4	$	464.2	$	3,541.7
OEM	846.8		860.7		263.4		1,970.9
Electronic Manufacturing Service Providers	180.3		144.1		41.3		365.7
Total	$	3,038.2	$	2,071.2	$	768.9	$	5,878.3

The Company operates in various geographic locations. Sales to unaffiliated customers have little correlation with the location of manufacturers. It is, therefore, not meaningful to present operating profit by geographical location.

The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. The Company’s consolidated assets are not specifically ascribed to its individual reportable segments. Rather, assets used in operations are generally shared across the Company’s operating and reportable segments.

Property, plant and equipment, net by geographic location, are summarized as follows (in millions):


	As of December 31,
	2019		2018
United States	$	616.7	$	616.9
South Korea	485.4		383.1
Philippines	433.5		474.5
China	243.6		248.4
Japan	218.1		205.0
Czech Republic	213.4		194.5
Malaysia	204.4		229.1

Other	176.5		198.1
	$	2,591.6	$	2,549.6

The following table illustrates the product technologies under each of the Company's reportable segments based on the Company's operating strategy. Because many products are sold into different end-markets, the total revenue reported for a segment is not indicative of actual sales in the end-market associated with that segment, but rather is the sum of the revenue from the product lines assigned to that segment. These segments represent the Company's view of the business and as such are used to evaluate progress of major initiatives and allocation of resources.

PSG

ASG

ISG

Analog products

LSI products

Discrete products

ASIC products

Sensors

HD products

Connectivity products

IPM products

ECL products

Isolation products

Foundry products / services

MOSFET products

Gate Driver products

Memory products

LSI products

PIM products

Sensors

Standard logic products