INTC Intel Corporation

 

 

 

 

 

 

 

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

 

   √               Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2014

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Introduction

This Specialized Disclosure Report on Form SD ("Form SD") of Intel Corporation ("Intel" or "we") for the year ended December 31, 2014 is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934, as amended ("Rule"). The Rule was adopted by the Securities and Exchange Commission ("SEC") to implement reporting and disclosure requirements related to "conflict minerals" as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank Act"). Conflict minerals are defined by the SEC as columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which are limited to tantalum, tin, and tungsten.  The Rule imposes certain reporting obligations on SEC registrants whose products contain conflict minerals that are necessary to the functionality or production of their products (such minerals are referred to as "necessary conflict minerals"), excepting conflict minerals that, prior to January 31, 2013, were located "outside of the supply chain" (as defined in the Rule). For products which contain necessary conflict minerals, the registrant must conduct in good faith a reasonable country of origin inquiry designed to determine whether any of the conflict minerals originated in the Democratic Republic of the Congo ("DRC") or an adjoining country, collectively defined as the "Covered Countries".  If, based on such inquiry, the registrant knows or has reason to believe that any of the necessary conflict minerals contained in its products originated or may have originated in a Covered Country and knows or has reason to believe that those necessary conflict minerals may not be solely from recycled or scrap sources, the registrant must conduct due diligence as a method to conclude if the necessary conflict minerals contained in those products did or did not directly or indirectly finance or benefit armed groups in the Covered Countries.  Products which do not contain necessary conflict minerals that directly or indirectly finance or benefit armed groups in the Covered Countries are considered "DRC conflict free". We use the term "conflict free" in this Form SD in a broader sense to refer to suppliers, supply chains, smelters and refiners whose sources of conflict minerals did not or do not directly or indirectly finance or benefit armed groups in the Covered Countries. Numerous terms in this Form SD are defined in the Rule and the reader is referred to that source and to SEC Release No. 34-67716 issued by the Securities and Exchange Commission on August 22, 2012 for such definitions.

 

Company Overview

 

We design and manufacture advanced integrated digital technology platforms. A platform consists of a microprocessor and chipset, and may be enhanced by additional hardware, software, and services. We sell these platforms primarily to original equipment manufacturers, original design manufacturers, and industrial and communications equipment manufacturers in the computing and communications industries. Our platforms are used to deliver a wide range of computing experiences in notebooks (including Ultrabook™ devices), 2 in 1 systems, desktops, servers, tablets, smartphones, and the Internet of Things (including wearables, transportation systems, and retail devices). We also develop and sell software and services primarily focused on security and technology integration.

 

Overview of Intel's Conflict Minerals Program

 

As a semiconductor manufacturer, we are knowledgeable of the design of our products including the materials needed to construct them.  We design the manufacturing processes to build those products and in some cases, design the detailed materials to manufacture those products. As a result, we know that many of our hardware products contain tantalum, tin, tungsten and/or gold that is necessary to the functionality or production of those products. Conflict minerals are obtained from sources worldwide, and our desire is not to eliminate those originating in the Covered Countries but rather to obtain conflict minerals from sources that do not directly or indirectly finance or benefit armed groups in the Covered Countries. We believe that it is important for us and other companies to support responsible in-region mineral sourcing from the Covered Countries in order to not negatively affect the economies of such countries. Intel is a founding member of the Public Private Alliance for Responsible Minerals Trade (PPA). We participate in the "Solutions for Hope" project that provides suppliers with tantalum from conflict free sources in the DRC, and we are an associate member of the ITRI Tin Supply Chain Initiative (iTSCi) that establishes traceability in the upstream mineral chain in the DRC, Rwanda and Burundi.

We are an industry leader in the conflict minerals subject area, where we have worked extensively for over seven years to put in place processes and systems to develop conflict free supply chains for Intel and our industry. We recognize that broad collaborative efforts among governments, non-governmental organizations and industry are needed to solve this complex problem. Intel is a member of the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI)'s Conflict-Free Sourcing Initiative ("CFSI", unique member code INTC) and as such, are working with companies in the electronics and other industries that use necessary conflict minerals (e.g., jewelry, automotive, medical instrumentation, and others) to help create conflict free supply chains. In 2013 and 2014, we manufactured microprocessors that are DRC conflict free for tantalum, tin, tungsten and gold. In 2015, we are continuing our work to establish conflict free supply chains for these conflict minerals.

 

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Conflict Minerals Sourcing Policy

 

Intel's policy with respect to the sourcing of conflict minerals is as follows:

 

Conflict minerals originating from the DRC are sometimes mined and sold, "under the control of armed groups", to "finance conflict characterized by extreme levels of violence". Some of these minerals can make their way into the supply chains of the products used around the world, including those in the electronics industry. Intel's suppliers acquire and use conflict minerals from multiple sources worldwide. As part of Intel's commitment to corporate responsibility and respecting human rights in our own operations and in our global supply chain, it is Intel's goal to use tantalum, tin, tungsten and gold in our products that do not directly or indirectly finance or benefit armed groups in the Covered Countries while continuing to support responsible mineral sourcing in the region.

 

We expect our suppliers to have in place policies and due diligence measures that will enable us to reasonably assure that products and components supplied to us containing conflict minerals are DRC conflict free.  We further expect our suppliers to comply with the EICC Code of Conduct and conduct their business in alignment with Intel's supply chain responsibility expectations.

 

In support of this policy, we will:

 

The full text of our Conflict Minerals Sourcing Policy is available at www.intel.com/conflictfree.  The content of any website referred to in this Form SD is included for general information only and is not incorporated by reference in this Form SD.

Supply Chain Description

 

Most of our hardware products, primarily microprocessors, chipsets and their packages, are manufactured in our own network of fabrication facilities ("fabs").  Although many of our hardware products contain conflict minerals, we do not purchase ore or unrefined conflict minerals from mines, and we are many steps removed in the supply chain from the mining of the conflict minerals. We purchase materials used in our products from a large network of suppliers; some of those materials contribute necessary conflict minerals to our products. The origin of conflict minerals cannot be determined with any certainty once the ores are smelted, refined and converted to ingots, bullion or other conflict minerals containing derivatives. The smelters and refiners (sometimes referred to as "facilities") are consolidating points for ore and are in the best position in the total supply chain to know the origin of the ores.  We rely on our suppliers to assist with our reasonable country of origin inquiry and due diligence efforts, including the identification of smelters and refiners, for the conflict minerals contained in the materials which they supply to us.  We are more knowledgeable about the source and chain of custody of the necessary conflict minerals contained in products we fully manufacture in our fabs as compared to products which we manufacture but also include ready-made component parts we purchase from third parties or products that are manufactured for us by other companies.

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SECTION 1 - CONFLICT MINERALS DISCLOSURE

 

Item 1.01                      Conflict Minerals Disclosure and Report

 

Conclusion Based on Reasonable Country of Origin Inquiry

 

Intel has concluded in good faith that during 2014,

 

 

Description of Reasonable Country of Origin Inquiry Efforts

 

For 2014, we conducted a supply chain survey with our suppliers to obtain country of origin information for the necessary conflict minerals in our products using the Conflict Minerals Reporting Template (CMRT). That supply chain survey requests our suppliers to identify the smelters and refiners and countries of origin of the conflict minerals in products they supply to Intel. We compared the smelters and refiners identified in the surveys against the lists of facilities which have received a conflict free designation by the CFSP or other independent third party audit program such as the London Bullion Market Association's Responsible Gold Programme and the Responsible Jewellery Council's Chain-of-Custody Certification program. If a smelter or refiner in our supply chain was not listed as having received a "conflict free" designation, we proactively attempted to contact such facility to request country of origin information for the conflict minerals that it processed.  We documented country of origin information for the smelters and refiners identified by the supply-chain survey as provided from multiple sources including the supply-chain survey, independent third party audit programs and directly from smelters and refiners that Intel contacted.

 

There is significant overlap between our RCOI efforts and our due diligence measures performed. Our due diligence measures performed are discussed further in the Conflict Minerals Report filed as Exhibit 1.01 hereto.

 

Below is a summary of the country of origin information collected as a result of our RCOI efforts.

 

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Conflict Minerals Disclosure

 

This Form SD and the Conflict Minerals Report, filed as Exhibit 1.01 hereto, are publicly available at www.intc.com and www.intel.com/conflictfree as well as the SEC's EDGAR database at www.sec.gov.

 

 

The Conflict Minerals Report required by Item 1.01 is filed as Exhibit 1.01 to this Form SD.

 

 

 

 

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Intel, the Intel logo, and Ultrabook are trademarks of Intel Corporation in the U.S. and/or other countries.

 

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

 

 

 

 

 

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Conflict Minerals Report

   

 

Intel Corporation

in accord with Rule 13p-1 under the Securities Exchange Act of 1934

This Conflict Minerals Report ("Report") of Intel Corporation ("Intel" or "we") for the year ended December 31, 2014 is presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934, as amended ("Rule").  Numerous terms in this Report are defined in the Rule and our Specialized Disclosure Report on Form SD and the reader is referred to those sources and to SEC Release No. 34-67716 issued by the Securities and Exchange Commission on August 22, 2012 for such definitions.

 

Pursuant to the Rule, we undertook due diligence measures on the source and chain of custody of the necessary conflict minerals in our products which we had reason to believe may have originated from the Democratic Republic of the Congo ("DRC") or an adjoining country (collectively defined as the "Covered Countries") and which may not have come from recycled or scrap sources, to determine whether such products were "DRC conflict free". The term "conflict free" is used in this Report in a broader sense to refer to suppliers, supply chains, smelters and refiners whose sources of conflict minerals did not or do not directly or indirectly finance or benefit armed groups in the Covered Countries.

 

Design of Conflict Minerals Program

 

The design of our conflict minerals program is in conformity with the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition, and related Supplements on Tin, Tantalum and Tungsten and on Gold (collectively, "OECD Guidance"), specifically as it relates to our position in the minerals supply chain as a "downstream" purchaser. Summarized below are the design components of our conflict minerals program as they relate to the five-step framework from the OECD Guidance:

1.	Maintain strong company management systems:

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2.	Identify and assess risks in our supply chain:

3.	Execute a strategy to respond to identified risks:

 

4.	Support the development and implementation of independent third party audits of smelters' and refiners' sourcing:

 

5.	Report on supply chain due diligence:

 

The content of any website referred to in this Report is included for general information only and is not incorporated by reference in this Report.

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Description of Due Diligence Measures Performed

 

Below is a description of the measures we performed for this reporting period to exercise due diligence on the source and chain of custody of the necessary conflict minerals contained in our products which we had reason to believe may have originated from the Covered Countries and may not have come from recycled or scrap sources:

  

Products

 

During this reporting period, we identified the following products which we manufactured or contracted with others to manufacture that may contain necessary conflict minerals (defined as any tantalum, tin, tungsten or gold that is necessary to the functionality or production of our products):

 

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"Client Microprocessors and Chipsets":  Desktop and mobile microprocessors and chipsets that are solely manufactured by Intel, which are comprised of the following: Celeron®, Pentium®, Intel® Core™ M, Intel® Core i3™, Intel® Core™ i5, Intel® Core™ i7, Intel® Quark™, and Intel® Atom™ processors (except Intel® Atom™ processors for servers, storage and communications).

 

●	"All Other": All other Intel® products that may contain necessary conflict minerals that we manufactured or contracted with others to manufacture, which products are comprised of the following:

o	Server: Enterprise branded microprocessors, chipsets, motherboards, server and micro-server systems which contain components manufactured by Intel and other components purchased by Intel including Intel® Xeon Phi™, Intel® Xeon®, Itanium® and Intel® Atom™ processors for servers and storage.

o	Mobile: Wireless platforms including Intel® mobile phone platforms and mobile communications platforms such as Intel® XMM™ slim modems.

o	Networking: Ethernet network adapters, controllers and wireless products which enable the computers and networks to exchange data including Thunderbolt™ technology, Intel® Centrino® technology, Intel® WiMAX and Intel® WiFi products.

o	Boards and Other Components: Desktop printed circuit boards and other components including Intel® Desktop Boards, Intel® Galileo boards, Intel® Edison boards, and Intel® NUC (next unit of computing).

o	Storage and Other: Memory products including Intel® Solid-State Drives (Intel® SSDs) and Intel® Atom™ processors for storage and communications.

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Results of our Due Diligence Measures

 

Inherent Limitations on Due Diligence Measures:

 

As a downstream purchaser of products which contain conflict minerals, our due diligence measures can provide only reasonable, not absolute, assurance regarding the source and chain of custody of the necessary conflict minerals.  Our due diligence processes are based on the necessity of seeking data from our direct suppliers and those suppliers seeking similar information within their supply chains to identify the original sources of the necessary conflict minerals.  We also rely, to a large extent, on information collected and provided by independent third party audit programs.  Such sources of information, as well as our smelters and refiner facility visits, may yield inaccurate or incomplete information and may be subject to fraud.

 

Another complicating factor is the unavailability of country of origin and chain of custody information from our suppliers on a continuous, real-time basis. Under the Dodd-Frank Act and the Rule, a product is "DRC conflict free" if it meets the required standard every day of the reporting year; conversely, a product would "not be found to be DRC conflict free" if it does not meet the required standard even one day of the reporting year. The supply chain of commodities such as conflict minerals is a multi-step process operating more or less on a daily basis, with ore being delivered to smelters and refiners, with smelters and refiners smelting or refining ores into metal containing derivatives such as ingots, with the derivatives being shipped, sold and stored in numerous market locations around the world and with distributors and purchasers holding varying amounts of the derivatives in inventory for use.  Since we do not have direct contractual relationships with smelters and refiners, we rely on our direct suppliers and the entire supply-chain to gather and provide specific information about the date when the ore is smelted into a derivative and later shipped, stored, sold and first entered the stream of commerce. We directly seek sourcing data on a periodic basis from our direct suppliers as well as certain smelters and refiners.  We ask that the data cover the entire reporting year, and we seek to use contract provisions requiring the suppliers to promptly update us in the event that the sourcing data changes.

Supply Chain Survey Responses

We conducted a supply-chain survey of the 324 direct suppliers that we identified may contribute necessary conflict minerals to our products. The overall response rate to this survey was approximately 99% compared to the 83% response rate attained in 2013; and 100% of our direct suppliers that contribute necessary conflict minerals to our Client Microprocessor and Chipset products responded to our 2014 supply chain survey. Our supplier requirements related to providing DRC conflict free products to Intel include:

1.	publish a conflict mineral sourcing policy on the supplier's public website;

2.	participate annually in our conflict minerals supply-chain survey using the CMRT;

3.	accurately identify all smelters and refiners facilities which process the conflict minerals contained in the products provided to Intel; and

4.	verify the smelters or refiners which process the conflict minerals contained in the products provided to Intel have received a "conflict free" designation from the CFSP or other independent third party audit program.

Smelter and Refiner Due Diligence Summary

In response to our supply-chain survey, our suppliers identified 229 operational smelter and refiner facilities which may process the necessary conflict minerals contained in the materials provided to Intel. Of those facilities, as of May 15, 2015:

To our knowledge, none of these 229 facilities directly or indirectly finance or benefit armed groups in the Covered Countries.

Additional information regarding such smelter and refiner facilities is available in Table 1 below. 

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Product Determination

 

On the basis of our due diligence measures as described in this Report, we have concluded in good faith that during this reporting period, the necessary conflict minerals contained in our products that originated or may have originated from the Covered Countries are either DRC conflict free or DRC conflict undeterminable as described below.

 

 

Our Client Microprocessor and Chipset products are DRC conflict free.  Our suppliers have identified the smelters and refiners in the supply chain that are sources of the necessary conflict minerals for our Client Microprocessor and Chipset products.  All of these smelters and refiners have received a "conflict free" designation from the CFSP or other independent third party audit program which resulted in our reasonable determination that our Client Microprocessor and Chipset products are DRC conflict free.

 

 

All Other products are DRC conflict undeterminable.  We are making this determination because we have insufficient information from suppliers or other sources regarding all of the smelters and refiners that processed the necessary conflict minerals in All Other products to conclude whether those conflict minerals originated in the Covered Countries and, if so, whether those conflict minerals were from recycled or scrap sources or other conflict free sources.

 

Our efforts to determine the mine or location of origin of the necessary conflict minerals in our products that are DRC conflict undeterminable with the greatest possible specificity consisted of the due diligence measures described in this Report. In particular, because independent third party audit programs validate whether sufficient evidence exists regarding country, mine and/or location of origin of the conflict minerals that the audited smelter or refiner facilities have processed, we relied on the information made available by such programs for the smelters and refiners in our supply chain. For smelters or refiners in our supply chain that had not received a "conflict free" designation by any independent third party audit programs, we attempted to contact such facilities to request country, mine and/or location of origin of the conflict minerals processed by them, and in certain cases, visited the facilities to perform an on-site review of this information.  We were unable to ascertain the country of origin and/or chain of custody of all necessary conflict minerals processed by facilities that contribute to All Other products because, for this reporting period, certain smelter and refiner facilities (1) had not yet received a "conflict free" designation from an independent third party audit program, (2) did not respond to our requests for country of origin or chain of custody information, (3) were unwilling to allow us to visit the facility to conduct an on-site review of such information, or (4) did not have contact details available to establish communication to request country of origin or chain of custody information.

 

Table 1 below lists the facilities which, to the extent known, processed the necessary conflict minerals in All Other products.

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Future Due Diligence Measures

 

During the reporting period for the calendar year ending December 31, 2015, we are continuing to engage in the activities described above in "Design of Conflict Minerals Program" and "Description of Due Diligence Measures Performed." In our efforts to attain a conflict free supply chain for our products, we intend to continue to contact smelters and refiners identified in our supply chain survey process that have not yet received a "conflict free" designation and request their participation in the CFSP or other independent third party audit program in order for them to obtain such a "conflict free" designation.

 

Independent Private Sector Audit of this Report

 

We obtained an independent private sector audit of this Report by Ernst & Young LLP, which is set forth as Exhibit A to this Report.

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Intel and the Intel logo, Intel Atom, Intel Core, Intel Xeon, Intel Xeon Phi, Centrino, Celeron, Itanium, Pentium, Quark, Thunderbolt, and XMM are trademarks of Intel Corporation in the U.S. and/or other countries.

 

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Report of Independent Accountants

 

Board of Directors and Stockholders of Intel Corporation

 

We have examined whether the design of Intel Corporation's (the "Company") due diligence framework as set forth in the Design of Conflict Minerals Program section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2014, is in conformity, in all material respects, with the criteria set forth in the Organisation of Economic Co-Operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition 2013 ("OECD Due Diligence Guidance"), and whether the Company's description of the due diligence measures it performed, as set forth in Description of Due Diligence Measures Performed section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2014, is consistent, in all material respects, with the due diligence process that the Company undertook.

 

Management is responsible for the design of the Company's due diligence framework and the description of the Company's due diligence measures set forth in the Conflict Minerals Report, and performance of the due diligence measures. Our responsibility is to express an opinion on the design of the Company's due diligence framework and on the description of the due diligence measures the Company performed, based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States, and, accordingly, included examining, on a test basis, evidence about the design of the Company's due diligence framework and the description of the due diligence measures the Company performed, and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion.

 

Our examination was not conducted for the purpose of evaluating:

►	The consistency of the due diligence measures that the Company performed with either the design of the Company's due diligence framework or the OECD Due Diligence Guidance

►	The completeness of the Company's description of the due diligence measures performed

►	The suitability of the design or operating effectiveness of the Company's due diligence process

►	Whether a third party can determine from the Conflict Minerals Report if the due diligence measures the Company performed are consistent with the OECD Due Diligence Guidance

►	The Company's reasonable country of origin inquiry (RCOI), including the suitability of the design of the RCOI, its operating effectiveness, or the results thereof

►	The Company's conclusions about the source or chain of custody of its conflict minerals, those products subject to due diligence, or the DRC Conflict Free status of its products

 

Accordingly, we do not express an opinion or any other form of assurance on the aforementioned matters or any other matters included in any section of the Conflict Minerals Report other than the design of the Company's due diligence framework as set forth in the Design of Conflict Minerals Program section and the Company's description of the due diligence measures it performed, as set forth in the Description of Due Diligence Measures Performed section referenced in the first paragraph above.

 

In our opinion, the design of the Company's due diligence framework for the reporting period from January 1 to December 31, 2014, as set forth in the Design of Conflict Minerals Program section of the Conflict Minerals Report is in conformity, in all material respects, with the OECD Due Diligence Guidance, and the Company's description of the due diligence measures it performed as set forth in the Description of Due Diligence Measures Performed section of the Conflict Minerals Report for the reporting period from January 1 to December 31, 2014, is consistent, in all material respects, with the due diligence process that the Company undertook.

 

/s/ Ernst & Young LLP

 

San Jose, California

May 21, 2015

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