ILLUMINA, INC.

Strategic Investments

Marketable Equity Securities

Our marketable equity securities consist primarily of our retained investment in GRAIL subsequent to our divestiture in 2024. As of June 28, 2026 and December 28, 2025, the fair value of our marketable equity securities, included in short-term investments, totaled $88 million and $215 million, respectively.

Gains (losses) recognized in other income (expense), net on marketable equity securities were as follows:

Non-Marketable Equity Securities

As of June 28, 2026 and December 28, 2025, non-marketable equity securities, without readily determinable fair values, included in other assets, were $59 million and $58 million, respectively.

Venture Funds

We invest inthree venture capital investment funds (the Funds), which are accounted for as equity-method investments. The aggregate carrying amount of the Funds, included in other assets, was $273 million and $235 million as of June 28, 2026 and December 28, 2025, respectively, with associated gains and losses recognized in other income (expense), net. We recognized net gains of $7 million and $14 million in Q2 2026 and YTD 2026, respectively, and net gains of $6 million and $8 million in Q2 2025 and YTD 2025, respectively.

Our commitments to the Funds are as follows:

Fair Value Measurements

The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:

Marketable equity securities are measured at fair value based on quoted trade prices in active markets. Other investments primarily consist of time deposits, which are included in short-term investments and classified as Level 2 measurements, and convertible notes, included in other assets and classified as Level 3 measurements. Due to their short-term contractual maturity, the carrying value of our time deposits, measured at amortized cost, approximates fair value. We elected the fair value option for our convertible notes. Fair value is derived using a probability-weighted scenario approach with changes in fair value recognized in other income (expense), net. Deferred compensation plan assets consist primarily of investments in life insurance contracts carried at cash surrender value, which reflects the net asset value of the underlying publicly traded mutual funds. We corroborate the fair value of our holdings, comparing valuations obtained from our investment service provider to valuations reported by our asset custodians, validating pricing sources and models, and reviewing key model inputs.

Contingent Consideration Liabilities

We reassess the fair value of acquisition-related contingent consideration on a quarterly basis, with changes in the fair value subsequent to the acquisition date, recognized in selling, general and administrative expense.

Changes in the estimated fair value of our contingent consideration liabilities during YTD 2026 were as follows:

SomaLogic Acquisition

In Q2 2026, we paid $25 million for the milestone payment earned for the 2025 performance period. As of June 28, 2026, our remaining SomaLogic contingent consideration liabilities, included in accrued liabilities, had an aggregate fair value of $37 million. See note 2. Acquisitions, Intangible Assets and Goodwill for details of the arrangements. During Q2 2026, we engaged in discussions to early buyout the 2026 Milestone and Royalty Contingent Consideration obligations. Accordingly, we used a probability-weighted scenario approach to estimate the fair value of the liabilities as of June 28, 2026. Under this approach, we assigned separate probabilities to the estimated buyout outcome and to the value derived under the original contractual terms. To estimate the fair value under the original contractual terms, a Monte Carlo simulation was used for the 2026 Milestone Contingent Consideration and a discounted cash flow analysis was used for the Royalty Contingent Consideration. Estimates and assumptions used in the Monte Carlo simulation and the discounted cash flow analysis included forecasted revenues, a revenue risk premium, an operational leverage ratio and a counterparty credit spread. An estimate for revenue volatility was also used in the Monte Carlo simulation. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. On July 27, 2026, we paid $30 million to buyout the remaining obligations that were outstanding as of June 28, 2026.

GRAIL Acquisition

The fair value of our GRAIL contingent consideration liability was $40 million and $54 million as of June 28, 2026 and December 28, 2025, respectively, of which $39 million and $52 million, respectively, was included in other long-term liabilities, with the remaining balance included in accrued liabilities. The CVRs entitle the holders to receive future quarterly cash payments (Covered Revenue Payments) representing a pro rata portion of certain GRAIL-related revenues (Covered Revenues) each year for a 12-year period through August 2033. As defined in the Contingent Value Rights Agreement, this reflects a 2.5% payment right to the first $1 billion of revenue each year for 12 years. Revenue above $1 billion each year will be subject to a 9% contingent payment right during this same period. Covered Revenues for the periods Q4 2025 through Q1 2026 and Q4 2024 through Q1 2025 were $84 million and $70 million, respectively, driven primarily by sales of GRAIL’s Galleri test. Covered Revenue Payments for the respective periods were $794,000 and $660,000, paid in YTD 2026 and YTD 2025, respectively.

We use a Monte Carlo simulation to estimate the fair value of our GRAIL contingent consideration. Estimates and assumptions used in the Monte Carlo simulation include forecasted revenues for GRAIL, a revenue risk premium, a revenue volatility estimate, an operational leverage ratio and a counterparty credit spread. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. We rely on information made public by GRAIL and information published in analyst reports to estimate forecasted revenues through August 2033. To estimate the liability as of June 28, 2026, we selected a revenue risk premium of 3%. Given the volatility in GRAIL’s market capitalization, the revenue risk premium is derived from reconciling forecasted revenues for GRAIL to GRAIL’s market capitalization, primarily using a 60-day trailing average and consideration of a Capital Asset Pricing Model and comparable company betas.