Intel (INTC) 26 Jan 232022 Q4 Earnings call transcript

Thank you for standing by, and welcome to Intel Corporation's Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Mr. President Relations. Vice Corporate Pitzer, of Investor John Please sir. go ahead,

which By you you, and received our of a Thank website, earnings available have intc.com. investor both release copy now, earnings should Jonathan. on QX of presentation, are the

today, joining is also earnings those our For the window. in webcast presentation online us available

a our followed hear will brief from both I by Gelsinger; our we CEO, am joined CFO, moment, and a Q&A session. by Pat today David Zinsner. In comments

forward-looking that note on today's please statements begin, contain currently based environment does it. we we as Before the discussion see

such, involve As does risks it and uncertainties.

more Our press release risk on provides differ actual information cause that results materially. to factors could specific the

when and reconciliation. both provided full and be the also non-GAAP describing we earnings We've GAAP results. and will measures to our earnings The presentation and this consolidated non-GAAP include release financial measures speaking quarter, financial GAAP non-GAAP

over me let turn that, With Pat. things to

Thank impacted continue which you, the XXXX afternoon, near of at good underscored will and unprecedented end guide characterized QX term. persistent the in came a by by volatility, everyone. revenue John, in QX and which and in macro was low began headwinds,

our we made admit XXXX, notwithstanding but calendar progress our on year expect We the below challenges, results several in all what are meaningful fronts QX and we ourselves. guidance readily of

challenges working trajectory. and plans on We and to by in the are long-term our remain brought address diligently current confident demand trends

even in drive clear value. right transformation even the are we long-term most eye decision QX, described we more the Accordingly, as allocation to making we investments the aggressively capital of on a to long-term measures keep executing with intact our the critical cost

outlining the macro three, two, we progress participate; made to the in enter Year One, Today, the XXXX; our I'd areas. which commitments address we like making view markets stakeholders. all we are New in our on we the operational the as to and three

the on macro. First,

to of the of half improvements. weakness the least through persist possibility macro second expect with year half We at the first

are free and we revenue not Dave environment, his guidelines depreciation comments. in current beyond QX. flow the provide in uncertainty will adjusted guidance provide cash going spending, the given However, prepared to capital for

let impacted that, our view rates, tensions said uncertainty, impacts being To markets our are by additional COVID regarding in our Having Europe color interest various macro China. Asia, give degrees, in markets geopolitical in rising especially and of me all XXXX. you in

calendar PC In In saw QX, a to units. the for market, provided TAM million XXX million calendar deterioration year consumption an we ended further year XXXX we XXX as we the PC estimate of XXXX.

we and that expect uncertainty more range of likely continued a Given demand the we in QX, lower see is end outcome. signals

ecosystem PC the term, Near continues inventory. to deplete

of calendar all higher digestion grow again year consumption set. in data roughly For and meaningfully than to most was sell-in year, shipping significant with QX below expected full XXXX, our QX the under inventory to XX% represent our

predicting to While this we reverse, difficult. dynamic know need one is will

usage units refresh usage XXX rate minus, base, XX% and a in brought has term roughly are period see of supports by levels TAM is than webinar, a conservative PC PC which persistent we adjustment. reinforcing strong remains highlighted plus higher this recent longer even economy what of our we million pre-COVID PC COVID Importantly, data on as post or the And as and strong, that reopened. use installed as cases

near-term eyed We customers on second lives. of we see positive expect in PCs we the in on and the managing capitalize enduring remain strength growing We also but daily PCs to in that to intend on our Intel. a and weakness of have and increasing on XXXX, XXXX. to continue momentum value We betting of clear grew the are this based our in increasingly share through strong portfolio, pipeline TAM innovation product half

burn diminishing enterprise overall hyperscale World. server the rates declines XXXX server drove XXXX, in shipments at offset calendar CPU year Rest in up, in digits calendar progressed. albeit with grew Inventory year-on-year modestly the year and mid-single by of down year TAM consumption market, as In the

share was a year of and Our in with our function exposure especially TAM, our and given enterprise outsized volatility calendar revenue XXXX to line subdued our China. expectations, was in

TAM We expect with growth the at decline QX both half before rate server server returning sequentially second consumption TAM first to down year-on-year accelerated an year-over-year and XXXX consumption in half. to

weakened, China, especially of weaker have hyperscale. segments world, all While than to enterprise be rest continues and

have further the in than that enterprise hyperscale. correction along world, stronger highlight rest we we'd are the and of However, where positions

the not industrial, in mirrored QX broad-based in infrastructure, year these volatility. and Lastly, calendar PSG, record NEX, were immune was and Strong IFS demand to and macro demand our like in Mobileye. strong calendar throughout XXXX completely but auto markets markets XXXX strong revenue trends year by

We view semi decline We another though year the entered last likely growth of us in half year the persist, that parties to even see as the much in to today. digits. macro the XXXX of these to especially calendar ex-memory, a third year. to the in expect market to for rate is absolute This the difficult low uncertainty XXXX with year contrast is areas first mid-single which predict of is

call. are focused $X executing that on As to savings laser cost billion we committed our our XXXX on year QX we in such, calendar earnings

investments. making business we by to are our within and and further product tough BUs focus road maps rationalizing sharpened rightsize decisions We our organization the

savings. our to billion transformation, products while line, existing and of Since a still exited fully we core we strategic my switching part future do is continues NEX product and customers. in of have our providing in supporting investments seven will businesses, well return, $X.X network in but end excess

integrating the while accelerating are costs. reducing further to go-to-market well effective a of scale and more respectively, We CCG to capability, underway drive AHG DCI, these businesses also into

focus did on we macro progress results, also what calendar despite current year that While disappointing to doing our it important transformation. considerable highlight XXXX was to the to important it address are see is towards uncertainty, financial

open anchored fully Success and committed secure follows our culture. with products, platforms, execution our remain starts and to and our strategy people people. manufacturing on at-scale leadership We powered to to by supercharged by executing deliver

the from calendar strides XXXX, of appointment the This Tan already rebuild whom we the outside. of leadership have as In both took the made perspectives Barbara the adding with from year to includes of Board contributions Chair. and addition Yeary significant Frank within promoting of Lip-Bu and team, Directors, fresh important Novick, and

In plugs to transparency engine. development. design addition, key a product reintroduced methodology organization, year ago, of X OKRs a we reestablished our the drive and TikTok rigorous are and execution across Both spark to accountability to and we establish

begun the design. and show manufacturing benefits culture Rebuilding has in to

XXXX throughout progress Our against TV year calendar and quarter, our confidence our continue to improve every map road grows.

look X health nodes to for manufacturing years. server. manufacturing, show are our in Intel X, continues is goal client high-volume half the in forward and we great four the on ready is X in Lake now to ramp We are at/or and of year. of X ahead both and Meteor for second Intel of track. Intel today we On

silicon Intel have of X RibbonFETs of EUV, and first taped running Intel the per transistor and XXA, X forward performance chips test a foundry XXA in customer and the fab. in density. modes and major are to watt represent out those and Intel On terms a PowerVia, potential deploying will and the with our benefit from internal nodes major step first

XXXX. power regain leadership to be track to performance and performance on by transistor continue We

IFS. provider leading cloud happy Progress we that customer Such I a edge add including greater in validated by $X billion lifetime have than for center X leading for solutions value data we be were deal TD as our a able and as Intel continues prior to MediaTek, IFS am customers. edge to of pipeline. now

pipeline an active have pipeline with potential consistent We also seven customers foundry engagements largest of XX out the to partner and chips. ecosystem growth XX include customers test coupled with

Additionally, engineering and of final with expect on we production to have lead in next customers weeks. continue our Intel already XXA, and shared to make the release the PDKX.X progress few release I've the

amplify complete In which are to Tower becomes momentum our we the business compelling foundry further to even working more our as addition, customers. acquisition, hard will

January was On among Rapids HPE, from Google HBM, many a milestone. the host and Rapids particularly MAX including others. fourth introduction Microsoft the Xeon our respectively, on the scalable Dell, Azure satisfying to NVIDIA, was Rapids Sapphire and CPU testimonials great better to Lenovo, front, QX XX of a of events, known Xeon many of customer-centered PRQ and It Cloud, formal you and series gen CPU as Sapphire product Sapphire in

to track to production on we are to X We ship be demand, of ramping meet units midyear. are thrilled and a by strong million backlog

and that visual shifting In large-scale part quality noteworthy CSPs addition, clear density deployments. now as of in series and into delivery media AHG showing it our enabling leadership Intel is DCAI, with for gaming stream MNCs, media cloud and and large deployments initial optimized is moves Flex

remains power sampling second XXXX. on on only from here Our in will improves launch customers, has and to CSP it DCAI OEM map half and top and completed with rapid road track of the to and

addition running core Granite the Rapids, product, Further, performance on XXXX, track systems our on many different multiple to operating configurations. track also is CFR across Xeon for to core first our efficient is XXXX. portfolio launch next in

performance Lastly, it revenue up its record to standout to delivering PSG highlight year-on-year. for appropriate QX is XX% continue

fulsome a the Stay are webinar tuned later QX. at We in more look for in at planning have progress BCEI our invitation. to investor our next

client the our drove our continue ecosystem. we stack market the particularly clear on ASPs leadership pleased at with that quarter. across delivering I'm by build leadership the our focusing CCG, on share open to In in momentum end broad PC products record performance high

overclocking, Intel Core desktop processor time with barrier the starting codename, new became chipset. Intel with Intel K partnership officially Core set Raptor ever. In Gen In available, record a past for ZXXX processors family, QX, XXth XXth the the we the and the Gen X Lake, desktop for gigahertz world first the pushing ASUS,

PC desktop we the in gamers processors down, overclocking the for best and provide industry. with Hands enthusiasts features and

mobile Raptor We notebook we the notebook the XXXX. and more including forward introduced in Lake XX the first already also look half world's at fastest wins CPU than first design cores. We family XXX secured of CES, to have our the ramping

XXXX, optimized remains track light appropriate on Meteor which its progressing on ultra-low for to Lake look our for power built disaggregated CPU first Lake, enable mobile track of Lake systems for to on production ultra-thin and X, create is Lake, taped now forward Meteor more out having first with it's Lunar of PC the performance, silicon. users. the Intel to will half second And readiness well, for which year. our is in partners Lunar

strength ramp on introduction investment we vPro an design our outlined XXX% XX drive by the the the deploying almost leadership webinar, market, multi-device helping The their platforms customers Evo return end on uniqueness users. our experience as as In more of in Unison the are the for to we wins excited vPro and of by addition, than of brand. enterprise we

Alchemist-based enthusiasm ramp latest consumer throughout build graphics as products expect year. we for Lastly, continue volume discrete graphics into to our the reintegrate CCG, and

well Sapphire performed P&S, market server. in and have Alder Turning Mount calendar Evans, forces businesses PCs milestones XXXX, and impacting QX to year key NEX some product Rapids of and by insulated the Lake growth Lake and hit Raptor year the drive year of calendar second Mobileye. a consecutive to in year-on-year Both partially with XXXX. and double-digit NEX

and XXXX. to share outperformance continue market gains expect in We

Mobileye to generate approximately future and design increased year-on-year XXXX growth revenue path XX year by year solid across supervision, almost for wins, revenue QX Calendar of a billion on projected is XX% including units. $X.X XXXX. million in calendar are

factory have environment signals, manufacturing under-loading changing in In only respond now XXXX. year worst rapidly to demand QX year, our supply-constrained to years, near-term pivot throughout addition, which over driving organization calendar XX in in are navigating Starting performed our well to the network. the to

importantly, internal leadership we already foundry, new culture creating with approach IBM evolving practices is push gaining next X.X More the and structure. systems of an to a business our cost This internally. to phase continue momentum establish forward

model uncover cost manufacturing and agile, foundry place external similar a decisions in BUs savings. allow and will better internal group customers, the and to reminder, a make be as IFS our economic BUs our will footing As and more efficiency

We have will improvement for that subcategories different our operational aggressively nine teams pursue. identified

full provide benchmark better In drive approach this calendar ourselves how on judge share against us our transparency better we value. addition and year to to transparency to other We'll best-in-class establishing foundries allowing provide better performance. our P&L new to XXXX. capital and we creating owners to incentives, allocating Ultimately, you as will your foundry also to internal allowing in execution, financial are expect improved

our we expect to call. cost foundry exiting key savings efficiencies a $XX accomplish additional on of to internal We we outlined billion our as as element XXXX, our is which billion model, last $X implement

are navigate things on strategy. We we the I want that to everyone remind that, our within multi-year remain journey. a are short-term while control our executing as on headwinds, to focused long-term we

am long financial with that a pleased expectations, to that, we have way I making. While we I achieve remain are our the sober transformation progress

the we to I initiatives on running can to value-creating tell you, XXXX the always for numerous in we of additional do. focusing examine as continue company day-to-day addition obviously

as We assured, owners to at we for deem to Rest confident long-term you value the in along are road will beginning and our update we move so. appropriate. journey, laid ability our this on out delivering we of committed any strategic we and do the remain to creating we map

XX, and IFS year. and X deliver XXXX, Lake XXXX by parity ramp process PRQ customer introduced XXXX in Lunar XXXX Three, four, design Granite half Rapids on XXA one, to second five and large Intel years, second Rapids an and unquestioned execute half on XXXX. Meteor achieving performance will, on Sapphire base include We XXA. leadership this CRXs in in in nodes our expand Lake XXXX with in Intel ramp and in and Intel wins Two, aggressive Emerald Rapids four

need front, and improve structure chips the of and three, XXXX. drive with our use and this return foundry by reduce one, efforts execute long-term balance calendar to leverage efficiencies. and drive and to realities. smart we the of our On to our of Europe internal and XXXX, benefits operational costs to in our also on XXXX XXXX capital, deliver including Two, And multiple to pools will cost efficiency. expand We strategy near-term profitability capital US aspirations capacity P&L the our on year skips

seriously all ultimately, we we it turn stakeholders close extremely to to value saying, to I commitments Dave, each to our Before and create them. our I'm strive for over going by of take

is a predictable to it products to our For of cadence their ambitions. customers, execution our rebuilding engine provide best-in-class support

and to market It For world-changing our to employees the what inspires of each opportunity develop the us technologies. is to provide company. inside them with of bring is

deliberate which investment For to with thoughtful, on the decisions make highest capital. we allocation, drives our make external your capital is around return owners

across are Our equal manufacturing, way and design, which ambitions to and passion, by products are our transformation our X.X. their driving foundry our on flywheel, the IBM and efforts creating well is

afternoon, saw semiconductor headwinds good despite and the macroeconomic industry. quarter solid Pat, fourth impacting you, everyone. execution the Thank We in business persistent

challenging half least conditions of As first through to year. Pat indicated, we expect continue the the at macro

executing $X to structure As outlined our XXXX. to well prioritize and in our longer aggressively $XX term. last and continue billion investments transformation, towards expenses to critical managed quarter, exiting fundamental we'll near-term target $X cost our in drive prudently improvements billion We're billion and XXXX

quarter with at from was $XX landing impacted in end range down Fourth CCG by PCs. the was NEX while low revenue line and our DCAI and softening billion, Revenue for of expectations, X% were sequentially. demand

Gross low XXX for slightly than range. QX factory offsetting impacted insurance XXX revenue sequential of better the underload a had settlement. an margin charges, was we benefit quarter were the points basis margins our XX%, end basis from expected point for from gross

$X.X Net was on EPS lower inventory our for dividends of billion, adjusted $X.X of for of guide We EPS quarter $X.XX flow revenue cash billion. flow $XX.X the billion, $X.X XX.X% paid gross resulting we was XXXX finished free in billion. of the margin below revenue cash was with and of FY CapEx Operating reserves. and increased billion an quarter $X.XX. and $X.X $X.XX.

for billion the Day approximately cash of $XX.X generated incentives last $X QX of billion of adjusted billion of into billion When operations to $X flow billion of at We at adjusted despite we February, XXXX. that negative capital end revenue and billion last and XXXX. low $X from $XX cash spoke FY shifted from provided flow the quarter, forecasted Investor we $X free of we negative approximately range free an cash

to come spending capital conditions position strategy, by expected half making to of within rapid we and IDM our adjusted investments to optimizing initial while X.X second within billion at in reduction still areas flow to long-term $XX business billion a we $X in market needed free to $X the working guide, our XXXX, our growth of XXXX. the reductions committed for reach the a cash significant expectations pace of support trillion ourselves in Through control. macroeconomic capital and of in a As deteriorated offset revenue improvements,

balance remains billion, strong a than and Our strong with and of investment balances sheet modest leverage $XX cash profile. more investment-grade

fourth business revenue remains inventory PC TAM elevated year-over-year deteriorated as unit continue quarter into Customer of billion, headwinds. expectations of to burn half expected CCG than was XX% XXXX. a results. Moving $X.X macroeconomic to due previous decline first beyond our faster will and to the

in Evo XX% up see record features of platforms. vPro premium to continue realized our relative as segments by year-over-year driven CPU our CCG strength leadership and ASPs, and performance we attractive

product $X.X and driven operating year-over-year, was operating X% revenue competitive was QX XX% million. increased mix. QX, down lower year-over-year $X.X contraction profit higher TAM Intel softness was DCAI ASPs sequentially, up X demand DCAI fourth pressure. and with the down offsetting on profit quarter for in and revenue billion by billion, $XXX

While still million node under and reduced $XXX satisfactory, costs profit down substantially increased higher lower advanced Operating more costs. than start-up product up profit revenue, impacted sequentially was by on year-over-year, was factory costs.

revenue, record significant through PSG up XXXX with DCAI, XX% improved increased ASPs, Within PSG QX still achieved with record enters revenue, XX% infrastructure strength the segment. year in backlog. full year-over-year, external unfulfilled year-over-year, supply up along and

infrastructure down billion, in growth $X.X and the the was Xeon business, network X% our revenue impacted Edge quarterly CPUs global processing as of ramp offsetting unit. GDP Mounts year-over-year, Evans declining NEX

growth. in down Despite second XX% half and consecutive of revenue higher shift the costs. Operating segments revenue up was lower-margin start-up million factory profit headwinds, on at marking $X.X billion, full NEX record fourth quarter, years set year-over-year and $XX another to macro mix year double-digit

Operating the by sequentially, launch with down negatively record demand, X AXG was for year-over-year, of million, crypto processors. valuations sequentially Sapphire up $XXX softer quarterly by revenue inventory XX% especially of million million, HBM. impacted supported $XXX Rapids achieved loss point up $XX and

quarter record sequentially more than Mobileye, XX% Full of $XXX another of year-over-year. growing million year-over-year. billion and also year growth record was a $XXX up million, income operating delivered of year-over-year. revenue Mobileye XX% million and for XX% represents revenue XX% $XXX quarter of growth $X.X Fourth

increased year-over-year revenue improvement on $XXX up revenue. record million IFS sequentially XX% loss $XX million, on automotive achieved sequentially was and higher of $XX a quarterly Operating XX% million, shipments.

product our drive to operational needed savings the remain the well our billion efficiency. growth. earnings we to mindfully $X long-term the are XXXX cost of investments to costs world-class on while outlined reshape to QX for continue ensure positioned accelerate market We committed to We protecting company call, transformation and and

five QX to to me accounting machinery impact turning equipment the equipment business take and and change with January over changes and more quarter. to life Before our years. from is economic better let increased the our estimated the IDM that model guidance, first of demonstrated useful will an a XXXX, in the moment to years discuss aligned strategy. inherent of results machinery This production change eight value reflects time Effective beginning X.X certain we our

will of we IFS older quarters beyond improve the better what X.X. allows CPU architecture are to growth Disaggregated of chiplet more pipeline around performance deal optimization leveraging the ROIC. and The life nodes. equipment and was optimizing maximize IDM each And for core nodes practical extend cost capacity within utilization business manufacturing sustainable our

useful R&D When decrease An expense increase change in of life decrease QX applied inventory to end The approximate XXXX ending $X.X a roughly $XXX values. XXXX, and prospectively billion. to reduce be profit, the depreciation by will a place in compared in expense $X.X XXXX. of million in total the gross $X.X billion as billion expect beginning we estimated to

billion company quarter, billion is billion towards we or to committed This not the accurate counted results our financial the last provide improvements $XX long-term reflection to owners. be cost change $X structural $X most of and intended will to short-term

guidance. to turning Now

first $XX.X billion we expect QX, revenue For of billion. $XX.X to quarter

we customers few In prior will a DCAI addition business. response macro meaningfully inventory quarters macro headwinds, CCG, to in x the pace at to softness continued expect lines impacting faster burn and of the than TAM

as the improve of second shows data macro half than to for third-party typical seasonality potential conditions in headwinds see faster easing year. We market the

operating fixed sequential we're cost across While revenue negative operating reduction gross with the the business, billion decline significant will spending We're XX% revenue XX%, life million negative of rate and of EPS we guidance, quarter. company, in XX% sales margin forecasting $XXX of nature the cost $X tax of given useful of approximately a a to accounting OpEx. at in inclusive to of expect our million $X.XX result and margin the the margin midpoint progressing of first benefit change, to $XXX the XX% toward from split of austerity

underload Factory by QX impact gross basis XXX to projected points. charges margin are

continue all expenses ROI, and investments will across capital remain to operating for conditions optimizing and for market We on assets. adjusting laser-focused evaluate

beyond outlook. While guidance I'll touch a we're not elements providing few our QX, on of

capital noted XXXX, phase we that Day, at XXXX intensity. through was from IDM of Investor investment XX% X.X to during model the At operate our approximately net

around despite lower XXXX, below revenue XX% Brookfield. with SCIP or model. Embedded including be FY are our offsets CapEx of to expect to the our assumptions in capital innovative level, XX% XX% For partnership the at of we growth

measures second operating consistent guardrails change. FY free and roughly billion, half committed expenses in depreciation year-over-year back adjusting our $X return with Day XXXX. totaling guide the under in expect half We flow Investor first be XX% cash will approximately cost-cutting of XXXX Adjusted the XXXX neutral below of of for towards $XX a billion, decline,

laid model the year. at committed for of unit Day The to revenue remain closing, XX% at across our growth we strategy business flow we cash and remains. and free last opportunity strong financial long-term portfolio out In Investor revenue

an with transformation results, this opportunity achieve represents goals. While to the our forward accelerate transformation providing we're year satisfied on not journey our look progresses. market updates to I as downturn long-term necessary to near-term the

turn the let back that, With over call John. to me

Thank you, Dave.

the now will We our into of portion call. move Q&A

and one ask first that, please the reminder, take question Jonathan, a follow-up a each where question we With to we ask can applicable. brief As caller caller?

from question from the line Bank. Seymore of our And first Instructions] Deutsche [Operator Certainly. Ross comes

please. Your question

now revenue I questions be It expect year? quarter guys. the any absolute problem a seems me question. that? the some color or guess, said, let the segments? CCG Hi than to or bottom items you in the just between of Thanks ask And right it's exceedingly quarter, in it like Dave, to the first for is the through do hit a you on broader dollars

Yeah.

So you to first? want go

No.

So let add some and me going I'll Pat’s color. start, -- to

down provide rest expecting guidance be the But units the to So the say on is these we're of not sequentially, first most digits. the likely of for double business billion, inventory We're I seeing year. to $XX that going the half to be corrections. did

that The would is be to history. other decline I thing expecting year is the add to we're just position our color recent at customers QX seen maybe the in most significant inventory we've that

last -- it's you of quarters. higher So the or this look of if quarters over those be reduction, back four will all five than meaningfully

impacting that the outlook. QX obviously, So, is

year QX, clearly, quarter-on-quarter clearly center as uniquely And data enterprise, And China. expectation we we of look across also adjustments, of statement And our we've our down the all affecting second is and them level data of center to as we more positive China from expected inventory the cloud, for as and from significant recovery by a clearly heard be but see what government do that's from Part well. at clients Yeah. with also well. as think half across some segments that's and customers macro year-on-year, affected that macro but well.

is they inventory rates. refresh their and sell-out steps inventory So aggressive well But adjust. overall, and after customers clearly, how back-to-school adjustment wanting more to coming below a that correction take do our as clearly major cycle they

recovery stronger adjustments, made So will we the go and for inventory they believe as that those year. we we'll see have that, as the through business do be we see

Ross, do you a have follow-up?

the within want Is now. you What on But the the to right I of to bands. billion, you know any depreciable investors to see three the Investor can there there gross does had the side you gross the take to give do. margin revenue last a framework range pivot margin. be thought $XX a it to to offsets, billion? that and Are Dave, XX% $XX I get operate give Day change you side in a margin Quickly, about things, to want equation, I have that? excluding headwind confidence those XX% is life handle at level? above revenue gross year we biggest talked never to we'd Do your back of

we going back want last framework so get from to if you significantly that's to changed to provided really know And what a that take it's to five And handle. us? the

question. good Yeah,

did the down expect is impact levels. obviously So, burn. it's these We significant a be most margins. obviously, That significant function to not to gross some at revenue said, of inventory

So necessarily in reflection of the a demand it's not market. the

So, to margins. will which we would lift significant that obviously, ever at to gross a be the some expect point,

to experiencing. demand And is, we're thing loading, point a under the in other from gross currently quarter, The the improve to first loadings going just have expect we about because the once we're margins we on XXX our basis impact would of softness. past get correction inventory

improve and a gross we underway. we're addition have number of to In well underway margins, initiatives to that,

you that a to $XX of further foundry click billion billion look XXXX, underway by to to billion. way of sales we $X end the that talked our billion XXXX, of two-third that, model at the our that $X Pat when of lot sales, about you internal and getting And improvement. XX% about cost $X of that we start cost mentioned. from is on hit into reduction the for of that billion want we're of that When getting we're in $X it that then And well is

a of XXXX, cost that will and translate structure XXXX I seeing about business And much to have the was that to already we more it's smart better think meaningful factories. to over course that be efficient and see areas efficient of of more we'll this significant lot in going year for modest between our have us gross help units improvement. things say our margin. capital Also, in – We're opportunities to we be that significant does capital smart a

Pat of to to back I XX%. that, will it said confident get XX% long in term, we aim very think back range. that to get And And feel XX% So in we confident feel to beat will XX% net we very I the past, I to medium the in term. the

Jonathan, next can Ross. you, have please? we the question, Thank

And comes of of Bank the next our from America. line Certainly. question from Vivek Arya

please. question, Your

for should Thanks of the is is is think PC year question. which in microprocessor that, the inventory in than say below think inventory what weeks end. many rate you demand sure? you my this know lower there? to are be consumption could you the QX, you understand, we how the consumption quarter, not that? I'm assumptions And do is be, assumptions? the So supply do low microprocessor right, if or $XXX shipping or that the QX that when it much whether of levels? for million, even taking still is I'm PC consumption curious, many will trying So right, they how be weeks How is clearing What just channel?

overall, as or will rate $XXX end in $XXX the said, we the was rate saw range we we consumption below be and The that QX So sell-in Xx consumption sell-through to below rate. consumption even the We in more significant significantly is that, of lower million, more the that. rate saw million. the QX believe almost well the

customers range. monitoring the that's bit the we working low that taken what's are sellout channel they've the effects been clearly, end a us the macro our But more as partners, been these and predict, seen. we've with of Obviously, to carefully can't that we've very and

comfortable pretty range. that with So we're

of known. there we to And is level to unique this with our that And closely year. do there, recovery the topic expect customers. forecasted be the point some of we particularly that, very economic continue there'll well a half we second in as is would we a China and Also, work circumstance

that overall, do and the on updated in That our we webinar, market the million XXX expect unit long-term range. we PC is said, as

near-term gone adjustment think So you PC number Microsoft, to this of as heard and from economic. be the The per usage installed cycle, inventory up. this up. overcome we continues some has PC base hours up, I And as , of is

that will of very period million all a inventory selling give plus this minus So that of that market factors unit post confidence us reasonable those have or $XXX into. we're healthy correction

Vivek, a question? do you have follow-up

Pat. you, Yes. Thank John. you, And thank

your seem incumbency, be it up. in likes lot when market incumbent Doesn't harder center. them? Historically, to the cloud And is displace it and competitor a share messes make deployments, semiconductor the data only there seems question of now, doesn't incumbent messing is right a shift Second be to on larger becoming if a the to up. and

you. just of edge change shift curious what status cloud in specifically? better? to change manufacturing? your you will it share to Thank you Is this Do get servers, think noticeably momentum I'm specifically do quo the you think has current Intel that of Is What design helps it cloud architecture? shift in share server?

right? that confidential are to I but significant computing Yes. shipping as what it areas computing most and now Thank a did Xx just important anything liked Intel. customers very were in marketplace. be we high-quality would we product function, competition the features had great security differentiated think for with are high-performance that thing estimated, power in areas with Sapphire like Our performance, of feature quite the from in earlier, like performance, workflows initially is areas are AI Obviously, leadership from security you. and the have Rapids, a product we And we anxious

shift, a share ago. right, in years were particularly or right, the ago, data one Obviously, two designs these space, center year

in amount million year, very And so Sapphire units of so ramp as the very it that, a demand through time. takes strong the middle of strong we're I the our seeing some said, for outlook from Rapids year, customers. against And X

we And rebuilding thing, map. our year. other we've for are next later healthy rewon customers' Sierra And is that the Rapids, bet they very Forest looking for looking our year. confidence. road those, I And this as believe, of all customers' very our and Emerald Rapids could confidence on indicated, have Granite healthy

as massive that that, the is believe and has, And with base though Intel incumbency installed that have base enormous the seen emphasize many right? XX-plus just share of some confidence. I would to of we -- There's customers, the even sell-in, that their shift percent Intel, given us rebuild renew in recent I that we the an Intel our incumbency customers' on very strong cloud we installed gives is get a

this put all map allows building this in yes, together, we're that critical think of that going those we stabilizes be momentum. We us that lost stumble, term a right? to you So realize long road the leadership lost things to year, market. share. as We and regain We for we

can Thanks, Vivek. please. Jonathan, question, we have next the

Certainly.

Arcuri from UBS. from Our of the Timothy line next question comes

please. question, Your

of question but you for to is on Dave, know year, lot. don't you're year, a get. to say to did of is a the have sets. know that I money I you be a guide want you going Thanks the I full chips lot number the CapEx. had on don't XX% the visibility to going XX% CapEx, this gross whatever

divide XX% billion, because And And But it's be mid-XXs of little range that revenue take. the to of in that the it seems still roughly. case, gross I you sort a the it be I going is like, $XX less sort CapEx help something give said just be implies in that, to if XX% than going or less, numbers, best take number, of handicap a the Can you will us number? CapEx intensity. of net or that

Yes.

guiding free me much I are avoid first would we're of of IDM let trying focused strategy around the for we the very level to see say -- obviously, on while thoughtful spend to long-term being just I investment X.X, if the necessary very flow. murkiness. So cash appropriate how manage CapEx quarter beyond we our the can given

with our offsets I with Capital partnership that's better be along with be will pretty healthy year, year. think we'll much X SCIPs last Partly, this Smart because than fully Brookfield.

Smart grant be Capital are part offsets. incentives this We year's of a expecting to

to do lastly, And investment in have place, tax which we -- so year. us could this some have those already and credit, benefit then the

prudent progress we our but are the spend -- as -- it very year, you Capital will Smart of we'll manage how being to us we'll we'll develop, healthy, year. things kind gross and be through certainly, the accordingly. through see around we And So expect capital can

importantly, of that the we still to XX% -- yet discipline we should about I XX%. the this this, did away not what that obviously, we stay intensity that's CapEx for think message. maintain revenue net take year. talked from I And to think be when level, And XXXX at below for investors we expect most at or

of the implied just making part also expect and this it, there's do as I'd well, is Yes. of well. motivation point year another start do but we the Dave credit commerce year. which to to rules and in as we add, future on get place Also, the I'd that to X and to source in near the Europe sort SCIP Also, center underway and clearly dispense this funds do

as chips well as chip. US So EU it's

of part us. Capital for of those are all So efforts Smart

well IDM do on near-term the we'll our importantly, that capital more with what with And We that's to factory in track believe capital, investments. necessary have on customers. for builds to have to both we the foundry that as meet the us as well track both X.X. We're process products for but we're the long-term our our that deliver the strategic our say leadership restore allow technology as capacity as

do Tim, have you follow-up?

some But for John. I you But Dave, that mean, puts you through puts that, can might would of there and that sort any grow, again, takes. margin. what the Thanks. the know obviously, call will to I full puts the gross for takes can guide year. us? gross as help of are do, walk volumes just sort us of think don't you just of about maybe help other out margin -- some and takes you I be? and want

Yes.

margins. significant to fixed I most think be driver the high We're cost of gross clearly, revenue is a model. going

of benefit So is we declining, also when when obviously, but is we the that, suffer revenue revenue the expanding. get consequence

so does to tailwind is as headwind currently will what what turn a the And a business -- recovers.

is significant The most the impact we have underload second charges.

a the sense management the points But terms quarter. we're this we'll be this quarter of And doing we to or quarter. that's determination as to So in of second what second as cash flow. loading basis to XXX appropriate make our so makes for get closer

as improve will business loading will that start we again, fab at But the rate, a conditions margins. and higher adjust, gross

beyond that, for the I and the that really gross we billion $X it over drive cost it's have margins lot next improvement years revenue billion billion $X and around costs few help to underway. the really is think and $XX course the the It's drive the initiatives beyond just of a loadings. of the will XXXX,

Thanks Tim. question have Jonathan, can we please? the next

from question Evercore of from Certainly. comes Muse And the line our next C.J. ISI.

Your question please.

Thank question. taking you for the

demand is love CapEx. flow Another and of need in saying, XXXX spend Thanks. just at the we Would I it or picture CapEx you demand potentially you number picture, can your or minus we strategy delaying question overall speak are can it Y investments your And free environment? to Is wafer that's guess spending? right a starts, model, to potentially philosophy to a simply why X cash finding a sense slower bigger on looking fit it's how the get if XXXX? of here and changing slowdown is less. and into not not, your

going those? for strategic is strategic from can start diminish I'll and get to of millions am to Yeah. jump degree, think But look going in. leadership about those? I right? dollars We lenses the and To Dave Am two in back at Yes, capital lens. or on hard hundreds do required XXA? save of to Thanks, the we required that? I long-term. One with some C.J. ask at XXA Absolutely. Could we to to the Where mind, make to scrub budget capital not capital will. investments we do going the we're we for Yes, tens leadership those? the

So strategic capital, largely unchanged.

in to the have areas and aggressive existing large just of finding that's trade-offs The been. with downward right, suppliers terms our capital, to And, minimize everywhere the more a and that's bucket, as adjusting work requirement. can I'll capacity for business else. doing course, that's and effectively we squeeze been flows driven ebb as meaningfully can how and adjusted be in And in of near-term it, required second this course, labs we to of obviously, we're buildings our the capacity and have more capacity to where business well. macro call and ours, the of everything larger everything as we in those equipment And, requirements we capital environment,

us scrubbing are crazy like those We you to. as want would

you add? Dave, would what else

efficiency. and on really yeah, focused OpEx which of Pat the an area that Obviously, You one is area, area -- lab we have mentioned is of took we've one areas an the that piece, found mine. the

the of initiative we'll one-third be smart for we -- We Analyst expectation. original capital than our what in I Day. seen thing offsets last get that And guess capital have announced think we when probably is we the higher our at were XXXX planning in our

coming So stronger. that's obviously in

already year tool, powerful to this alluded course, and out turned Pat Of has a a Skip that the that helps. X this as will -- obviously to of Skip enable be a pretty lot do to us is which fact well,

follow-up? C.J., do a have you

a free at full as you XXXX, for And event? a second don't you cash do the in see but scenario the come analysis something you do could to out? quick know different half, Is how to that's guide flow look again, return year, positive I or I XXXX one. want playing that really that

right this that year, thinking were we're Obviously, was look into back be we year in flow first the cash away back that is spend a Analyst the a below as us XXXX, But thing bit but is lot of half going at this where of the February. XXXX a we for on. And free model now, half in time of to year, last Well, the we would Day XXXX. are breakeven of course, the we from the approach we model. expect to

around you if cash came thing, flow tell $X we our one look minus I roughly for you would XXXX, in at free billion.

still was and level the range. in but through And would pushed into a yet it were quarter initiatives. end coming, that we is the way actually $X that capital higher minus the billion capital hit between minus be $X which we somewhere forecasted of before, We we of And offsets, we remember did XXXX. working still you If billion. high assuming

here. how are is a but focus our here, attention manage strategy more our of how -- we we a So It's that have is to very this been flow, our cash terms inventory. past linearity, big focus big a may big capital. I managing around how think how is of something manage working the we part It's in managed free not in shipments payments,

The because spending does but the our underload we're taking margins, flow, affect improves we're cash less costs. it gross fact that also variable on

flow for areas terms free that in pretty us can be we through are be these beneficial us think to as year. a we of So tailwind the cash progress and

can question, the Jonathan, next C.J. please. we have Thanks,

from our And of next from Ramsay line question comes Cowen. Certainly. Matt the

please. question, Your

of guess, Thank you. it the get as working that I mentioned flow. lot question I cash as you Dave, first to guys. a extracting capital afternoon, with just is, just question, you out challenges well at C.J.'s on did and team you much And the in done Good cash free your the of quarter.

at question it’s that ton. time. a Is sort Is get the dividend? Intel a a about it thing Don’t I decision, operating of of Board-level in that sacrosanct your shoot bit. the could of it the I either maybe But all but get the questions current the a that's Are way? And levels Thanks. plan? dividend a Pat maybe messenger, address security around discussions you there current and

dividend are Yes. management, And and consistent maintaining a last we committed owners. to the a the for the how being take we're Well, just a $X.XXX we say That with committed obviously, dividend. we capital very capital prudent approach Board, announced to quarter's quarter. first around I'd was the going strategy, we allocate to very competitive remain for dividend. the allocation to disciplined

question? Matt, do follow-up you have a

down just of cloud know, plus something being bit. little rough business guys as like guess, DCAI you And percent enterprise Thanks, is I that Thanks, PSG into which, kind up, about, question, a the you that. don't or XX%, year-over-year, it guys, Altera guys. my math, follow-up John. I I Yes. dig if the I server to wanted means the talked think, XX-odd business core that

you in Pat, space? the is in what roughly that versus where happening you And us, Just break enterprise? ASP loss right how and in the see so, walk versus share and you server could of you. maybe, share that for through is operationally Thank just in -- math terms your down China how weakness -- do us what markets

Yes.

continues quarter, But good the strong suggest very you very a math the a those businesses. that relative incorrect, have has grow. of I'd did PSG say So given to backlog, size is quite

bit little So we'll through talk more a offline happily that.

XX OEMs, and of users. great Rapids line. was market all strong stabilizing a The this some we better the ramp response this share Sapphire had and the did event than getting announcement see grew last year. less right? on and year We said, the we've released is key ISVs, all from customer-centric product We factor baby That products, we that just of with end -- that And participation all saw our January CSPs, loss. the

building about confidence we year, very So and in that strong much event. it we'll and was well product map. seen it map. you have share position confidence say improvements very your through installed market that as ASPs as will do determinant, road reestablished on be ramping This see okay, that the now, the an as base. ramp we've product better in we I'd be great. have road And both But Customers the in the long-term? the are a very So as a a credible year, we'll

see samples, capabilities. on we Sapphire from as cetera, this us the products of news differentiated et You'll of coming next-generation well features continued of the and year delivering lots as highly ramp with start Rapids as

this we've foot area. they our use business us, feel customer-centric, in And way behind cases put say business. right? that in we their very delivers now customers the to in that like we're coming front the So I'll a back the need And ISV-centric worst

next question, the we Thanks, have please. Matt. can Jonathan,

our moment Hari from Goldman Sachs. comes One And next from next question. question Certainly. of for line our Toshiya the

Your question, please.

taking comms I DCI for about hoping question. in talk much environment the customers. the could cloud, enterprise bit so Thanks Pat, a was you and across little demand perhaps afternoon. good Hi, your

remarks, of talked I prepared the ahead your about enterprise think in in you correction being inventory cloud.

forward, expand of we that through cloud be that, helpful. year, as that you. on -- could if the could the you do or comments can going kind would progress those there So demand decline moderate or Thank imply

in providers weakened well. what Great. but same now softening which a more little in said, That's those Toshi. we're we as the have seeing through The data overall. to see bit characteristics the position with clearly our exposure the center in that we cloud demand did you, Obviously, Great. statement. Thank year, China, more we -- a year we believe enterprise market

So weaker we the them first see in the half all of of year.

are, that we is will competition. back in those news that come year segments, say, more and And our cloud. us believe relative We will back as to we exposure I'll a rapidly stronger the through China enterprise come good touch than the optimistic a for potential with go

have that The are networking areas platform the leadership of strong one is is market ones area, that strength we have. very networking much in other sustained the O-RAN space as we our share of would and like dramatically segments vRAN in with and also through competitors. as year, than where better some some that those expect but softening we the level not in there And

to half half of in the down First the returning year-on-year the to second be year year, growth. we to of expect

is we stabilizing and markets adjustments, inventory half market that relative the second go year. in we're the have So optimistic weaker half, stronger we little they'll as back Overall, we of a believe expect. stronger what the we recovery obviously, bit that and year that in, in the a through first the is position, we're come

Toshiya, follow-up? do you have a

value investments John. future I also are do. creation, commitment your you mentioned the business. you how and talked you Pat, focus pulling guys toward Thanks, switching from about

across look your of As today. you portfolio as

about I improving you think is creating coming lot going to portfolio and the Thank back. Like incremental value? since your done forward think quite a opportunity the as where point, you. you've

returns, it. are just things evaluation, discussion hesitant say inside thorough of customers where say to And And portfolio. would the at. I without at haven't here have And decision the make looking portfolio, where I'll and getting these those making aspect we're we some under more And optimize looking to are we're every the been you a portfolio. with few the carefully as of say, we're best back. way Yeah. we We're decisions too the across specific a doing we're after handle and not. good decision we being to that And analysis

job model our can hey, to we We've the every do But and area better better that comments, looking our efficiency part run steps foundry more. we assets? do a at the the of job a suggested of major discussed internal with Dave Could his line? we're building our improve as business. to also with making company automation ERP we're in also

of the people of every run and been business. Some ourselves scrutinizing we how very in our actions. benchmarking aspect best-in-class We've against

in one-by-one, world-class going the and we're yielding good benchmarks So with believe areas be saying we in, strategically investments. as that our we're measured and these all they're areas to we're by results shareholders' business important

Jonathan, we last Toshiya. have Thanks time question one please. for

Stanley. for Then comes today Certainly. of Moore line final Morgan our the from Joseph question from

you. Thank Great.

platform We’re it to ramp is Rapids. like the in about under you're does the chip. CPUs I particular, DDRX a expensive, level more Sapphire the now expensive. more you going like budgets migrating at a the other right that pressure, relative or price with it and environment What's are And that really But more is seeing change it's think getting reception talk seems have? expensive good to to platform

that a Yeah. right, memory important the currently. making very on And for DDRX very gap Thanks, DDRX pricing And pricing has memory. are you the collapsed, obviously, touching Joe. and issue, versus visible

the cost TCO, platforms they of total buy right? that don't customers into them they said, The buy They get operations the put operations. prices. for them on memory these That on performance as

one the DDRX piece memory widely that the forecast diminish go gap expected to But of through will DDR and through decline, we are prices gap is is decline to as we to year. So price DDRX go that. say I'd and as price also

in to contrast absolute not AI, of TCO. calculation, performance into And significant measured when that measured seeing areas on to Security put that confidential And TCO performance and a statements some you benefits. is computing. overwhelmingly right, It's five you However, capability. it's we're like security the Xx on positive.

we overall, this year. are driving aggressively ramp very the So through

our And we factories quickly. the believe the Sapphire have strong that platform have we ramp customers. through ramping of demand We go of Rapids strong year. do We're as a we'll

follow-up? Joe, have do quick you a

there a the also business mean, wanted in of is restructuring where any into Is ASG those priorities, just to mentioned migration change -- on, I just CCG. or that I reside? and is businesses Yeah. of there the a of touch you it DCI the

And the business. where of And rate for this, enormous of with the driving as lines. scale now And restructuring into phase of past motions and those products. channel a those move graphics, launch reside. our product It's we're I'll businesses discrete we phase say, the instance, attach client Yeah.

bringing AI that data uniquely we're center. HPC, center, the through broader across a In portfolio line, Flex we our delivering data product that capabilities have the

scale is having they is been this those changes, we've efficiency discussions of areas. with And and the all our have of So been about customers numerous received. these business very about well and

we discrete And that I'd lines. out launched products line, Flex the of product AXG, graphics the the the product say MAX all line, product

believe have go as those products of revenues continuing All those are the strong will market we year. we through impact of forward, volumes, ramps and all their in and

So let me with our just together. that, wrap up time

for pleased grateful business. for And that made. result, would in for. execution the business. we confident joining also we that you the on update we're outlook today, we We're us a you. we're hope us what progress But you've strategic to thank First, aren't with opportunity given our as our the you And have clearly, financials the

Though It difficult is in difficult. was QX. the macro

half We things the controlling our expect we through management we go and it we're hands in our focused paths. first but executing the transformation that difficult as can and and aspect against the cost year, is to of laser underway are those we in remain on every execution, of well

of next forward quarter, very seeing quarter. you our Thank much. we you throughout look updating with many on So you that, to the progress

program. you, participation This in Thank your conclude for conference. today's ladies does gentlemen, and the

day. You disconnect. may now Good