ILLUMINA, INC.

Strategic Investments

Marketable Equity Securities

As of September 27, 2026 and December 28, 2025, the fair value of our marketable equity securities, included in short-term investments, totaled $2 million and $215 million, respectively. The decrease in our marketable equity securities relates to the sale of our investment in GRAIL that we retained subsequent to our divestiture in 2024.

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

Non-Marketable Equity Securities

As of September 27, 2026 and December 28, 2025, non-marketable equity securities, without readily determinable fair values, included in other assets, were $54 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 $243 million and $235 million as of September 27, 2026 and December 28, 2025, respectively, with associated gains and losses recognized in other (expense) income, net. We recognized net losses of $31 million and $17 million in Q3 2026 and YTD 2026, respectively, and net gains of $2 million and $10 million in Q3 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 consist of time deposits, which are included in short-term investments and classified as Level 2 measurements, and convertible instruments, which are included in either short-term investments or other assets and are 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 instruments. Fair value is derived using a probability-weighted scenario approach with changes in fair value recognized in other (expense) income, 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. In Q3 2026, we paid $30 million to buy out early both the 2026 Milestone and Royalty Contingent Consideration obligations. See note 2. Acquisitions, Intangible Assets and Goodwill for details of these arrangements. Prior to the buyout, we remeasured the contingent consideration to fair value using the contractual buyout amount. No obligations remained outstanding under the Milestone or Royalty Contingent Consideration arrangements as of September 27, 2026.

GRAIL Acquisition

The fair value of our GRAIL contingent consideration liability was $36 million and $54 million as of September 27, 2026 and December 28, 2025, respectively, of which $34 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 Q2 2026 and Q4 2024 through Q2 2025 were $129 million and $106 million, respectively, driven primarily by sales of GRAIL’s Galleri test. Covered Revenue Payments for the respective periods were $1,215 thousand and $994 thousand, 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 as published in analyst reports to estimate forecasted revenues through August 2033. To estimate the liability as of September 27, 2026, we selected a revenue risk premium of 2%. 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.