Intel (INTC) 27 Apr 232023 Q1 Earnings call transcript

Thank you for standing by, and welcome to Intel Corporation's First Quarter 2023 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 intc.com. Thank Relations earnings available have website Investor both release copy now earnings should Jonathan. on QX of presentation, are the

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

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

forward-looking that as non-GAAP note It on today's to please statements begin, provide contain currently and based references financial environment does it, various we believe we such, useful we as to Before that also contains uncertainties. the to discussion information investors. subject measures risks see and are our

most other expectations. Annual provide XX-K, that more measures, appropriate to recent on SEC, provide the could Form in differ reconciliations our filings where our non-GAAP They to on results the GAAP materially release, measures. the risk financial and information corresponding Report from cause also Our specific factors information including with earnings additional financial actual

turn over let me things that, to Pat. With

Thank you, everyone. afternoon, John, and good

investments cost and We and our disciplined to delivered results the revenue both and to expense reductions that Upside entire Intel our and critical the the solid thank drive thoughtfully was is better-than-expected on by efficiency management we on bottom-line. across not latter execute organization. driven want strategy. The top- easy first-quarter very I support as team improvements

cost for continue proof we quarter reestablish we more to IDM to as QX making remain product advance each shareholders. value still X.X all and results long-term to the transformation strategy. our the We leadership, points work to demonstrate in have delivering and are we our progress do committed provide but process, we

a our two, focus my and with on focus areas: an three, Consistent to move an and markets; update our on model. our the in internal to three prior quarters, I'd strategic highlights one, key from view foundry like of comments priorities macro with our QX;

challenges and industry as As the in continues on cautious remain we to macro the even modest second we the headwinds, some recovery expect multiple global through half. navigate outlook,

We we the in with proceeding expected. are had stability PC inventory corrections as largely seeing increasing market

networking Enterprise and as weak. reach server to their the bottoms have Cloud markets yet remain However, and

result, a embeds As off continued corrections seasonal to range revenue growth normal markets our our and inventory QX depressed core levels. guide QX of in revenue better-than-seasonal a

steadfast We our on and in remain advancing our focused is commitment what strategy. within to control our

and amount be healthy QX. our the earnings the in inventory on QX tracking anticipated of a we QX is at call, to significant end As market a of PC depleted by level

of Importantly, in pre-pandemic sell-through the levels, usage million installed a our with is view a that and on QX, market calendar track above is well to base year 'XX. remains better-than-expected strengthens along PC larger and the units PC XXX

supports we see As million which during higher refresh and TAM conservative webinar plus XX% rate highlighted a we strong what as minus. PC PC than base, installed units, is levels, our and in pre-COVID a XXX usage or of January, longer-term roughly

to both in declined half the of 'XX still an second modest with sequentially TAM consumption and QX rate at we recovery and see a Servers, In expect year-over-year year. decline year-on-year accelerated TAM first-half

quickly. along in Enterprise weakened, where stronger and all the further While segments reiterate we'd that have likely positions, will have correction is we and more Rest-of-World, recover

our trends are in like stronger. Infrastructure, and Industrial, demand Auto markets relatively Lastly, broad-based

NEX likely did will continue we of cause inventory anticipated, see a revenue quarters and the this will correction for NEX year. Although, decline to next as couple that QX expect

in market in collection calendar third-party a in decline growing In semiconductor we better expectations year-on-year total of these much contrast, Mobileye on 'XX, IFS, for and PSG, growth and the strong year continue than mid-single-digits the trajectory businesses a ex-memory. see

to to than and over continue While to our semis more position the the doubling next Combined XXXX, market to a of are on XXXX. the semiconductor capture ourselves $XXX with expected and by expected billion roughly nearly transformation resilient accelerate growth. industry for $X significant the trillion capitalize in be we decade, need by we supply well-positioned globally to is nature, balanced growth by multiple market foundry and vectors cyclical chains

that On QX. some highlight let front, from me key milestones

process efficiency We and focus are the and driving excellence including and cost company, on execution focused savings. a on relentlessly roadmaps throughout rigorous across product

process our to leadership Looking first performance transistor at regain track and XXXX. making progress on by we're power the performance roadmap, remain with we

Intel done. today Relative and for and five nodes, Intel nodes notably, X launch. Lake these production a essentially X, Meteor to in five in four now starts in is on product manufacturing, second-half two X's Intel out Intel of wafer are ramp X years, high-volume

We mastering our EUV Intel first EUV technology node. are quickly as X with

'XX, on the both nodes, we As first three recent our with shortly webinar, Rapids focus DCAI track will on X in begin is on highlighted Intel of and next shipping Intel thereafter, in Granite the Forest we X. half Sierra

details of track But planned have We also also building milestones foundry success nodes four supply diverse years. geographically important understand vitally not in to semiconductors. to and that execute. Intel five our look to overnight, We Intel be in deliver providing for Intel we take a foundry will forward Overall, a understand vibrant QX ecosystem as more and ambitions are time. we X, XXA, is XXA foundry significant squarely we secure will and realized establishing our on

XXA, step on with design when forward agreement a we leading-edge ecosystem fast and SoC customers. up new a product for alternative will our while new giving ecosystem designers community announced large building approaches foundry for major innovation and options enable this multi-generation in time-to-market, the build Holdings. opening month This also Arm chip of to a Arm designs took Intel We mobile

providing We power look with of foundry best-in-class forward technology. to the open CPU leading-edge process to and IP an system access

appropriately. provided our AI update In Center of hard our you we substantial part update to to and webinar China, we of health complete roadmap. to and last highlighting and as recent our trip acquisition Data month, Tower on the continue business, we'll progress Finally, the my work a

CPUs Rapids, continues one Xeon excellent has Sapphire data delivered Gen to highest-quality Intel with ever center ramp the feedback. customer aggressively Xth and our is of

XXX are million configurations cloud by numerous OEMs, over system on X across are for We track all and to and and providers ODM, shipping midyear. designs units memory we

Notably, Domain comprehensive AI machine TDX industry, performance Intel Gen virtual and in our inference and Xth the competitors, confidential differentiate computing Gen Xeon Trust or computing from most Attestation substantially portfolio with Intel including offers isolation Trust extensions specifically the services. Xth Xeon confidential

leading Google including cloud complex service harden week their research with pre-launch instances, Microsoft for TDX Cloud, Intel to further joint in this Alibaba Just conducted preview announcing signaled providers environments. TDX Azure, and releasing readiness on

Emerald sampling Xeon launch and is with our on Scalable Gen Rapids, Xth to QX is 'XX. track in already customers

vehicle responses our Forest, in half from for begin 'XX, Intel customers. X Sierra are first earlier, receiving will Granite sampled Rapids with very which shipping of stated As Both positive shortly lead thereafter.

leadership, follow we on the in to node market first the with our of manufactured across Forest, server all our strategy. will Sierra is benefits ecosystem. xXX which Forest Intel of per achieve performance Forest, the Sierra E-core five-nodes-in-four-year to be culmination is is provide coming where on watt representing the and process leadership will XXXX across intend of competitive the which CPU Clearwater many, workloads to XXA, and and

ramp, and our turning the share Xeon of I we on webinar, Gen Center great combination as X was Data The an roadmap first point the QX became as strengthening highlighted our execution in improving position better-than-expected of CEO. a results, since quarter QX market

over taped advantage market we and in AXXX QX, and performance inferencing, and AI the in and GaudiX is in Further Habana offering in language vision substantial the the Accelerator Habana models. GaudiX training

points and Max, efficiency AI. AI to power for measured with roadmap the watt are delivered Xeon address enables inferencing us such the of For strong validation endorsements and XXX-billion as our in Gen higher accelerating model. example, Along BLOOM throughput growth language GaudiX Gaudi AI strategy. Stability in in models Face by and large XX% Hugging per Recent parameter Xth Xeon proof

Our across Enterprise, truly championing training drive in full ecosystem an of a strategy silicon to power both and from discrete inference is AI, with the and Cloud IP integrated Network, democratize open Edge, software and AI suite solutions. to and Client to incredible of

programming and driving now oneAPI royalty-free model, the which and critical Our C++ collaboration based to SYCL, includes innovation. open is

ability anywhere, accelerate the toolkit, democratize to we is migration SYCL work to as open-source want our helping As to the SYCLomatic, run developers once, write AI. to

the While in play deployment AI inference as on and development sparked strengths. adoption rapidly outwards by our to to migrate areas centered cloud, enthusiasm that around LLMs AI generative will expand is Client, to AI AI all dominant today workload, Edge and quickly will the

We are silicon all on focused segments and optimized software with solutions. capitalizing across

new of to calendar FPGA introductions to XX business with Solutions continues in business. portfolio year, new now Programmable revenue And FPGA scheduled Our record QX. an this all-time in ever PRQ well highest includes the more number than our products our perform product

a demand and the of customers piloting supply-chain. by products provides more Intel enhanced to build supply supply, resilient new visibility, transitioning of while predictability would an an PSG of Intel with is greater great design leveraging a also initiative chain PSG benefits with percentage provide customers to Intel which

to Our a on competitive share to and recent Client expect Lake Computing business market half. in we build in share overall We QX our roadmap and production continue wins. QX improve for on continues in execute position to this market Meteor second ramp launch as gained PC

Intel new in and we lineup by our of Gen introduced for companies XXth powered PC our Mobile increased Core the productivity. a vPro processors. of most hardware Gen XXth full and vPro security need delivers the comprehensive the followed Core QX, Intel by Intel In processor, the platform necessary refresh

expansive providers notebooks, Acer, HP, as our and Samsung technology more deliver workstations ASUS, Lenovo, XXXX, such and commercial XXX than Electronics. In Panasonic entry Fujitsu, portfolio from will desktops, Dell,

demonstrated Intel. vRAN Mobile and run Turning World core at all to Mobileye, and on that nearly virtualized deployments an network we Congress, NEX

We networks, to also Core programmable Edge open from Network from intelligent the the enable of to fixed-function world's the hardware and introduced and products software-defined Access platforms. Radio to range solutions to transition out a the that

Vodafone, Xth and boost, cloudification and power enable power network, from Ericsson of to Open with possible processors Telefonica extensive launch with In been XX% has support Verizon, gains Xeon Scalable and gen closely the us industry-scale include same vRAN delivering integrated others. RAN. the acceleration, within Gen the Intel gen, an working Intel times our to X making capacity over many particular, industry the among additional envelope up with the Ericsson, savings with of Highlights

of advanced family and growth remain the important we to in product be in gain to of Intel continues the the customers part and for and portfolio, Mobileye business. profile continue traction profitability with strong delivered QX. very significant Mobileye growth confident an They and value long-term Lastly, their

our process roadmap, we costs reduce on product make efficiencies. to and drive In and continue commitment addition progress to our to

products towards to savings investments as we XXXX, and in in respectively. our costs billion We way billion and X.X. exiting goal are includes our well annual further our XXXX. CCG, IDM $X We This of in billion reducing our integrating $X support prioritize on DCAI AXG rationalize in of $XX into

agreement QX business addition, to In we sell of an Edge server solutions for systems IT our longstanding our ODM the in a forward Cloud and exited and channel partner, an customers. on to manufacture server our with MiTAC, provider path to based business create designs and products signed

I'm fully I Coast, going Last change. understands foundry explained establishing had not impact on everyone of importance to the East opportunity this we an that of a the you and sure month, leadership. internal spend I'm we've are to model, few some minutes cost and while the with on meet

design and and manufacturing a drive cost wafer foundry more price between create foundry a level. the win drive P&L external BU cost It also customers. standard needed BUs' parity better the to to manufacturing structure own group a will efficient network serve internal and on efficient and compete external more their will decision and the factory to Giving customers at

With provide peers. a manufacturing BUs we for of separate P&L will comparison their group, to external a also with cleaner the the you fabless

believe us As IDM, to the have. none profit multiple earnings to access on an execute allow that stated on our and we we of are unique which call, pools should of QX peers structure our

the and taking drive one this fundamentally most are to Foundry more way forward IDM mechanisms steps company day-to-day the detail of webinar an the consequential foundry discussing Establishing X.X, we Internal to model internal and incentive the deliver look that behaviors. during in QX. We our in shifts operates is

achieving leadership We quarter. roadmap I executing with Intel this nodes performance four our in on years, five first, process on in committed unquestioned delivering strategic and XXXX XXXX, am proud parity progress to of XXA. by our team's by, remain

Sapphire and the the on executing in Second, XXXX. roadmap, the second of Emerald and Center in of launch Data our including AI Rapids Sierra and 'XX, Forest half Granite Rapids ramp; Rapids

Lunar Lake 'XX, Lake and Meteor Third, ramping and in in Lake launching XXXX. second Arrow half

include large and to And this customer wins XX, IFS XXA fourth, design Intel X, on our Intel expanding base year. advanced packaging, Intel

our will efficiency, cost drive and improve we structure return first operational profitability. we to As

XXXX; expand Internal Smart aspirations Capital capital the P&L on use balance with long-term realities. and our by our execute strategy our foundry Second, of third, to near-term

We to allocate effectively capital are steadfast our stakeholders. pursuit of commitment to of your our continue for value creating in in the all

to over on enabled of Gordon it his a moment to industry pay the away turn vision. decades. and the I life technology March in I'd Dave, tribute inspired the to Before defined technologists entrepreneurs Gordon across through like instrumental revealing honor to passed Moore, the who He was XX. of and insight and and and power transistors take

periodic as his mentor be am exhausted, grateful use every "What done, to person the to we I forever unwavering which on the is technology be guiding table earth. stewards Gordon This Law, power of Moore's the principle enable willingness can me, to can of hand, is until outdone." improve and and we drive friendship. said, as guiding lives famously for of his our intend

hold to details will shortly. the on life and this share service Intel will of and memorial we more honor a Gordon accomplishments

you, Thank good and afternoon, Pat, everyone.

the beating cost long-term. persistent and expenses investments fundamental of on line. IDM X.X continue quarter, top macroeconomic volatility, guidance we manage the first both near structure solid and prudently will term, transformation, business execution backdrop drove prioritize drive our our bottom and We the to to improvements to critical aggressively Against in

softer expectations, in was the the of CCG, NEX quarter. First offset and by $XXX and quarter million our in $XX.X exceeded above guide. IFS midpoint revenue Results impacting Edge demand partially Network markets, from the Mobileye our revenue DCAI, billion,

than points Gross XX.X%, the macro for in $X.XX charges reserves continued factory higher-than-expected inventory on margin focus by below discipline. EPS $X.XX taken QX margins spending was cross-company our modestly negative basis underload better period. demonstrating quarter, guidance the impacted our tied to cents uncertainty. XXX were on guide, was

in cash of $X.X QX net adjusted of billion, an in cash paid flow we negative resulting Operating free was CapEx billion. flow was $X.X dividends billion, and $X.X $X billion, negative

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

Before a Unit are effect and margins a The on our reporting. highlight business from respectively, those results, Data the Business CCG few former our products Center businesses. made moving reported will within and now Client focused segment to operating dilutive of changes and the DCAI I segments, within have AXG will

and part available businesses moved of both Our have Silicon Photonics and and our and Foundry respectively, are significant Automotive on revenue, as all now sharpening to NEX out other reported of IFS. the IFS, focus opportunities market NEX

unit billion, business first-quarter CCG achieved the the of our to revenue quarter. Shifting than results. better $X.X for expectations

While segments, and continue in Intel, driven product performance. prefer continue demand environment, our especially challenging a to leadership Education our to see customers Consumer we by

customers As period. discussed inventory our saw we the last significant quarter, burn a at in

remain as levels While market equilibrium will inventory we elevated, the be closer exit anticipate to QX. we

ahead year-over-year and QX expectations contraction reduced mix. revenue a due remain and DCAI and million, expect by XX% of down second PSG AXG unit our all OpEx. market of excess ASPs lower capacity offset business. declining soft on operating CPU quarter. the $XXX billion, revenue sequentially QX, year-over-year profit significant despite saw was sequential demand from in We were higher and sequentially partially costs Xeon, across charges, segments flat to in TAM lines to down and was revenue, $X.X

DCAI on product Server margins to merge reserves and AXG Generation new the and System business were QX loss sequentially the business. by market exit are Scalable impacted tied leadership CPU broad lower process Rapids. diluted our inventory Sapphire excited stable products of market costs share was and our in saw the in Xeon also nodes. revenue, the ramp of $XXX of We Operating investment higher Xth by million, by processor:

business, quarter, Programmable our for in and expectations consistent operating customer to DCAI quarter and which Network our continued levels $X.X ASPs to our supply, Solutions driven revenue was softness industry. Edge billion, us XX% overall in QX, demand the profit below and revenue helping with by record elevated the external Within the markets, drive growth. inventory year-over-year, up satisfy Group NEX the delivered for second backlog, improved increased consecutive with enables

loss $XXX year-over-year, inventory continued by quarter by record of Operating with content first-quarter million, impacted Mobileye offset end-markets, in continues and depressed million, vehicle. discipline. delivering revenue was reserves, X% partially and along outperform underlying $XXX a to up revenue sequentially management the Automotive expense in year-over-year increase XX% per

to was a in revenue. IFS continues sequential be sequentially growth we Operating million, QX startup of was increased invest costs Profitability by strong income XX% Packaging operating as with strategic $XXX million, impacted loss million. $XXX including growth $XXX in business. factory revenue

of towards our to benefits our our on billion billion XXXX, billion reductions change the exiting $X spending on well exclude $XX way to of which XXXX, Useful $X reductions, in Life. committed path from We're Equipment in will

demonstrated prioritization our our investment focused discipline spending As trending expectation. results, reductions QX OpEx have and by of ahead

While revenue-adjusted and cost-of-sales due charges reductions uncertainty. demand factory continued underload from faced inventory headwinds reserves to

focus necessary As much quarter. test Pat our a forward with in already shift profit We've model operational our of the Foundry our increased sort detail in times. Internal Investor webinar the financial demonstrating path structural and and in on Foundry goals. later unpacking to to disruptive to We highlighted, benefits early an expedites, reduction look achieve cost the our in improvements an a more is long-term factory model Internal wins to seen

to turning Now guidance. QX

billion, billion. inventories. Center, as to We on markets our revenue billings expect and of billion continue expect of midpoint Client in At to second-quarter $XX the operating Data $XX.X focus consumption customers to we $XX.X trail Network rightsizing

cautious, revenue shoots expect the sequential and green While we're seeing growth year. we throughout remain

long-term short-term our the the headwinds Cloud, AI Network mentioned Edge giving portfolios elevated we're from opportunity. to confidence are market and grow, benefit and the of an PC continued confident the signals CPU at strong across Accelerator and that usage continue devices, well-positioned in our for to and that Demand anomaly are the revenue us Pat capabilities active tailwind. to

rate margin of points. We're $X.XX XX%, are of forecasting guidance. tax projected of to an a XXX revenue approximately EPS negative impact midpoint margins gross the basis QX gross by QX Factory underload of XX.X%, at charges

margins to are points Increased margins map should margins in reserves XXX gross by impact costs, of this QX support I'd year product XX well products below While products basis basis acceptable new later inventory impact launch. levels, by begin costs approximately which points, highlight sample road pre-PRQ as on Xeon sequentially. will our unwind

factories Our million change XX% the operating in from we split accounting and $XXX will cost is underloaded QX. the this products we're to quarters be and business. QX a up life of fixed that first period charges guidance benefit in the XX% of sell announced impact sales an the several January, in margin includes from useful $XXX approximately unit for approximately of year higher to to goes as million It's we cost with through to important The remember OpEx, beyond felt half costs. seeing average

as to factory framework. operate continue our prudently capacity deploy We'll within capital we smart

commitments. communicated intensity gross of XXXX, the scale approximately we with XX% in last gross XX% in XXXX of CapEx number As range Consistent customer XX% of XX% net in smart a low of CapEx. expect to capital offsets approximately will with which capacity CapEx, capital, IFS manage line revenue quarter, represents foundry to with

positive year XXXX. second weighted With throughout gross we capital and CapEx offsets first to expect half adjusted and of free second the improve in cash be half, sequentially to flow weighted to to half

sequentially XXXX, While our satisfied focused not through we're what quarter expect to we're we first by financial control. encouraged with and growth remain improve results on and can revenue

goals. capital of our execution the prioritization our and long-term owner's Our toward

revenue and and our cash generation. products expectations our for will deliver commitments, we meet flow We're we on confident that owners' road as growth and customers' our expectations free strong exceed our for map

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

Thank you, Dave.

our [Operator into move now Instructions] will portion the We of Q&A call.

take With that, question? Jonathan, we please the can first

Certainly.

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

question Your please.

XXX year. pre-PRQ a XXX of have a the through Dave, basis rest it go parts. highlighted kind moving sounds There's you another costs. have points I Thanks lot. of like I of you through of you walk underutilization lot And wonder if the the also margin basis you know these the can points. from gross

XX things, couple of So you're those two too. normalized ex there's sort a offsets, of at but

around You like new got takes Meteor higher puts Sapphire. and costs and products die from these

us terms past sort the in you of takes a and walk can of June? when puts give move Thanks. are So you what

Yes. Sure, Tim.

little Let me you color. give a

that And of half on is lot we you that are So pre-PRQ that's benefit those of reverses. of to Emerald. basis the a as the XXX the ship, points reserves, back that go the Lake Meteor into highlight related that as the correctly year, and

In XXX% end essence, it in margin. we gross up fact, at shipping

becomes a tailwind. that So

we start have comment will the things a from only, demand back kind are we I into perspective, inventory. The in load then product And that are improve built that loaded cost to cautionary that costs still as guess, expect, the do is fab of we our up. held that of under

take time so see period -- are still the we'll And there does we that. these where that start to a few start to quarters some it costs cost even from underutilization of headwinds beyond stop seeing

the be appropriate tailwind. up fabs to nice But ultimately, loading and we'll that be will a levels, the

the describe obviously, comfortably perspective back those year, maybe factors. the I is, think, based the XXs like And gross feel all we're from in be it to on of for a margin we'll way $XX of XXXX, and half So to time we that the margins. base, billion get we a to on gross the working in the is to billion cost benefit lot a our will reductions be by spending end best $X which of of actively the

do have follow-up? Tim, a you

their in have five investments coming time. for E-core of lot that a Basically, you time X.X longer data some are platforms and a are amount guess these of in I than Pat, customers center P-core, platforms I that. Yes. do. pretty some but in understand I a want to got out short years. usually, products leverage you've

Can platforms you to these that some impediment kind could about could So that? talk of be how quickly ramp?

the Sapphire Tim. Yes, and X it's are is I'd highlight Gen And platform. question, that great same what Gen Emerald and a X

Similarly, platform. next platform substantial Granite again the the in way. So as and to that's with into Forest, they webinar from go Sierra get same 'XX, year disclosed those the leverage into we once And for also platform. in following goes that Rapids, center perspective, same year Clearwater that the Forest a we investments customer's data

So though across obviously, five received warmly we've market a to that it's two that's to get to broader And our our leadership, that by we're essentially, we're leverage space And discussed, working as increasing through even customers. very ability solid this platforms. momentum getting that platform products is period from customers. back

as to prepared quarter this I market delivering. ramp. AI value new feature to my And unique share the in we're highlighted, platform, both data being very that underlying are that all did we use add was for being a our helps see for on We good capabilities capabilities security our map. these Sapphire And business, the center remarks, that in of customers QX as for differentiating value that able these better in inferencing the forecast a the for disclosed, platforms the very cases in road see as healthy we Rapids deploy well able increasing track than to are overall, them

a good Thanks question, the for very So Tim. quarter.

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

Certainly.

comes C.J. Evercore question next line Our from of from Muse ISI. the

please. question Your

Yes, question. good you the taking Thank for afternoon.

of do you the PC your least sense utilization, for How talk about you inventory give today? shipping planned at normalizing Can snapback? raising the end June much by demand can talked quarter. how you CPU were about business? you us the timing CCG think about And exiting under of You've a

Yes.

that the undersold and that, QX, jump might a some XXX into of the units QX. unit think we million from market XX% we was the on it in start by for sell-through essentially TAM year. we to that or in. that can Generally, seen sell-in you industry the million equates and XXX Dave TAM said I'll million equivalent continues in That overall, about XXX And So analysts. have --

half in the OEMs selling, we we stronger positions a in a very a rate same inventory improvement the now year. our position with by the stronger natural back well we're channel. second the That I'll of half, end first half the out normally think say, overall, selling and in us So healthy first in very for as by of at marketplace half

go as just going the Overall, launch we're every our this year, strong momentum inventory another for from strong later year. quarter our in the And to is positive Dave road build for indicated, is the indication. we through as a which We're Meteor already customers to seeing map. be starting Lake

Dave, the comment? if comment inventory want on to you

Yes.

we the have aggregate about customers and aggregate we of depletion days of start Obviously, So at normalize the get the in end the balance inventory up inventory level sheet. XXX on we'll to consumption, through to back as we to but certainly through expect inventory, by the burn and the to of don't can that ramped through ramp start the end we'll you improving will be us year, the fully year. start ramping I factories. think be the we

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

customers of if the for you share talked from feedback your Curious Granite. confidence you tests Sierra any Yes, that ramp? you're hearing a to prepared feedback and about quick one. that Pat, on us at remarks, positive your in give can

the call, platforms. their is, high-quality You volume product, your a I'd of wow, right? guys their, they're the And into at generally, you us very say, now the we phase what windows that scheduled front feedback Yes. end delivering with of and gave validation are

we're they're to the where for receiving software of that to critical So ready validation of samples do when stepping they the production cycle with enough very forward of platform. us it firmware the validation move those both start the us is in the and because can broad informs platform. parts of That

E-core the part both response good as seeing P-core the part next-generation well as Forest very with on Sierra with We're first Granite Rapids.

in back they're X, that the we're performance future. we're before, Gen warm for has a response Emerald their rebuild you've for customers' such going seeing, as from and uptick with into So very well the customers. their Clearwater the not getting is super that rebuilding good overall, Rapids, strong talk a -- products just Intel's positions Forest but very next heard I'd feel me that C.J., And belief this and strong Rapids we And year's execution us to have been in we of products just Intel. that say center products confidence their on this our Sapphire XXXX machine position data the confidence E-core

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

Certainly. comes question from of Bank. Seymore And our next from the Ross line Deutsche

please. question Your

things. little you Hi Pat, a your by it bit how The dig a in hoping seeing little the you a customers seem some in is numbers, geographically, to very you're bit with what seems ask being trends in bit strong data And me, little specifically deeper could customer Intel, but side was the markets, that inventory guys. about of market a competitively? center doing you. for Thanks little you for bit enterprise. still an end cloud, cloud that into end I then type a digesting preamble, reporting talked be alluded question. themselves to

Yes. the That cloud. to And the heard for for refer first you you. some there least we're quarter the do do is and overall clearly, a you've the that that enterprise down said, first for market. We was our position half see year. -- affecting of by We that comments at Thank and the see that of encouraged improving.

saw market we QX, in segment indicated share. better-than-forecast I a As

some pipeline rapidly strength by that seeing to the show for for seeing say a We'd Gaudi time that encouraged we're line. driven we're of center X We positive our that market growing also also first green to positive shoots data and that very by characteristics. very in some And some China. And saw response is in product AI. starting

saw X of early strong the as a for Rapids. Sapphire ramp also driver Gen We that

use believe that's taken we need important we we a what is in and we that's we to remarks, able have we where the AI use also, inferencing, are of those my see critical for that together, you refer Those are democratizing we most to an as said, trend. do AI, case super to that make -- being and uneconomical But AI. high-end environments, broadly machines And enable deployment broad available. as prepared to

where, prior and strengths for strength above to long-term. particularly line, And generations that's and expect our Xeon an be us has of core area area alternatives an that one well particular competitive product we

a Ross, you do have follow-up?

that for Dave. The because, basis row headwind, margin and is I trigger gross I quarters underutilization a XXX go which, should revisit just side in do. guess, there one revenue-wise, charges, we that? two of expect wanted obviously, the some back to I that's point to the away point at so go

new then quarter in it was things, or two, introductions go to prior seem would the necessarily back. product a a if the of that like frequency fast, would come And that question, those alluded given doesn't pre-PRQ do side of away for they they or

those walk can puts pre-PRQ us of charges just underutilization and please? through takes So the you on and some

okay. Yes,

midway effect is So right, Sapphire year you're on through it this saw pre-PRQ, We the Rapids. last and with always lumpy.

pretty the for we so, a of on in this we quarter. second second is sure, quarter And of pre-PRQ won't have magnitude for occasion. But for significant half see these reserves year, will the think the we us

-- charges, it's think under-loading our partially partially, the but where it's I about and On revenue, inventory levels they it's about are.

inventory need down So XXX going be the the important. from we to days. bring obviously levels That's to

would situation I quarter, to of just that the period load the in improving charges. us And just by expect would and that, terms fourth I end we're third behind be through think time say the of will under cost the I likely, year, see under the loads. would - in an on see I hey,

with living we under-load into might unit factory be after have couple products. because per higher cost the loaded quarters a this of that, up. we'll We of some But factory, ultimately, for cost built back network the that of the

please? Jonathan, Ross. we next Thanks can have question

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

please. question Your

to afternoon much. the of I Good guys. ask node question the to very Pat, I wanted wanted - you sort on roadmap. thank Yes, is first

good working through but being in made You nodes four via I five some years. that on focusing all the market have and dynamics, near-term product internal are around? around end developed there, know and progress power gate there's, well we're nodes some and guys some also backside as

in question, maybe give of second for node XXA? roadmaps potential update So customers individually? are cost going node you the to bit to those getting described, the and little internal parity I of succeed guess Thanks. those on can path you do part a leadership external as on pieces an to the talk and you parity of you could about if how technology two a as And

of the -- PRQ right? ramp, Intel four done, essentially, volume that are the product, but later as as in ramping indicated, Lake Matt. nodes We X question, great And Meteor with the in we will And five process I the done, is X now the Yes, Intel Yes. view PRQ-ed. which years, we're all year.

So we up of are feel we're five like is Intel two the now completed. Obviously, one X. next

for I've confidence Sierra us referred volume now are nodes. X updates Intel very X that the Forest Intel And along Both gives to sampling given that that nicely. with year, a that, is the next already positive Intel lot of Granite EUV we've on coming and and X,

the we transistor As go around and the RibbonFET, architecture say, backside as gate all innovations power. major the you XXA to are the two and XXA,

improvements the of backside had didn't indicated, the had uniqueness to we or power, externally as that an power, as results very node was announcement went that -- good the the well. node, I internal from were and point backside products of that do. We of you to we the we power able extremely that derisk one benefits Arm routability to backside that Given And one expose that delivery, gave. the was power proof as demonstrated -- that significant

client node be we So be 'XX. everything. ones next primarily products the as Lake XXA and XXA 'XX our XXA XXA will will Arrow up. and ramp are in a

will products products, products. server client We have networking products, many and foundry

out. noted chips first coming that quarter the we this our that foundry We also have test was

out the external of them. a so are fab XXA for on by tested some popping and And now test customers chips being

structural that from with lot to is the the with at one put point. cost a good of you question, very cost industry them, insightful the mentioned, that affirmation things XXA And So of structure. I the we've parity Matt, believe we actually also best what is emphasis in it's on getting think a

So, we view also parity, get this cost power to structural as as area parity parity we XXA. getting performance and and not just to but

we really the to And that's the against do we as XXA measuring able best, that's competitive against we being and that. in understood, as it the in the is ourselves of we've on And timeframe. internal wafer with ourselves model wafers that to benchmark for believe, to have really viewing track part foundry the benchmarked believe we're I'm the that structure industry why we level talk industry deliver margin about as start right? P&L at and price

quick have follow-up? you do a Matt,

asked Yes day to had detail question another you do you my roadmap platforms kind My John there. I Pat I month and for the so question guys is server a that helpful second guess a compatibility. ago. or roadmap, of thank question and related on is was on DCAI

Pat, - mentioned products including think on including into sort the same a I on you few Granite? of Clearwater roadmap, the up as being Forest platform

- just And on Diamond the product folks before, was the same P-core it. I Rapids, roadmap There Any next a that product. to wasn't Day, had the update Thanks. DCAI in few mentioned really sort the of public was on for want it another me there? platform? and asking is about it I've

we technology. Yes. will next CXL And a that memory delivery would our that architecture, about which that platform change architecture, steps next-generation the move channel, be with while to in the not scalability lot when the we're at memory point key introduction power product, speaking of platform, next-generation package be would

of So the say, by in a step big for our And and of just at our also point. as is be but customers platform well. for well enterprise, architecture roadmap aspect received I'll customers that critically terms every that both will getting cloud

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

Certainly.

the line of Street Research. Our Pierre next New question from Ferragu comes from

question Your please.

the that Is line for is clear? me Sorry.

Yes, Pierre, how you? are

of line it's lot the right a for taking your all all read apologies, your back, the details now you nodes? name. to costs gross Thanks in end very plate, sorry because kind and say on XXXX, going the the difficult margin gets step between and coming my a with I'm very lot gross margin. and when of thinking be is Yes, unlucky the of very various out a to volatile on you And have

historic would at below good Intel much we XX from my things say, competitive position. higher a so a question being And level, about be, the are in maybe around as points looking let's margins

recently. the is high? per cost Some a some then And a has issue. of is really clearly unit scale this The that difficult that significantly of business shrunk where too very node is XX-nanometer lot

nodes or 'XX you And so gap that sort with making my that like very the on looking tangible that you how what really of against guide you of much do get XXXX or at coming any regain it 'XX? very, question what this of is, going you to wafer already node, have from Intel up wafer, without X, in really from know across are is now this the

do order forgetting have of now wafer competitive in But you a just or power what cost roadmap, of the looking because get at against about improvement wafer, you pricing base manufacturing? in you magnitude power think it, your earnings like

Yes.

So some I'll then of take it, and you...

Yes, yes.

Pierre, element And technology really appropriate level, we XXA to margins be at about one that's structure the process at our like cost competitive. Maybe to getting the intersect a think way to is, high maybe it that. of where the look, is deliver getting to

make we perspective. the but there So improvements the meaningful process really we that's improvement a along where make way, from to get

this basis to Pat we're that nodes stacked. of that years of along we five virtue in is headwind on we start-up the have, all does is on but strategy, costs hundreds with, create the for stacked The is challenge the that right the have of deal points kind the is there's way, by Now of it which headwinds fact four that cost driving side. us

on our we've cost - of four once perspective. a from but that in other five we to way So process nodes have years, got technology that, work side a through we're the competitive

we're scale have higher as we we then benefits of lastly, And as on a the out, Pat then attention of which We've lot about, was billion would notion get $XX drives significantly us to of billion expect. just think where revenue internal startup as you well. that the say, going of a XXXX. incurring cost gotten this are ourselves that to let's of behind exiting $X talking costs the you whole savings And you foundry have, we of model, lot point and that this,

there's And forth target. at I margins. would that's the which depreciation, least look it The suggest nothing great going a is the we those a the gross we're way we the company that to incrementally of timing that raises feel going think for to we We So path market. from But at than think, that obviously we're that, margins. is I changed a model at somewhat that on off like have function on that. pace other We are that. achieve put

Yes. we're just XXs product different into we've the by gets of the would the model we'd Dave consider right, say, come online, be the Pierre, said, nodes up We the lumpiness XXs cycles, about. as useful et work process will through year. cetera. there us And along I and the you going downs when as as from say set way, ups around into XX talked of the end period, five-year if life, long-term XXs that, you comfortably the this But a

upon. I'll be say, time to the on right over we're and path down margins to ourselves track should that as work that's up So and we're due up laying considerations, with we to, lumpiness but these the various

you quick do follow-up a have Pierre, question?

traction Gaudi the Gaudi, for getting that despite large today work processing of fact run positive and mentioned models. is models? like, starting on you and tangible I quick very to I Yes, very, Pat, good like really me, really one. power big, more capacity more language the very signs see, benchmark a like don't look around these When gaining

and opportunity? that will that missing not soon? So my Or something and this fast-growing Gaudi are building question very, is taking was, parts before very really still very there become seeing am blocks I apparent just things

Yes.

I points positive a only starting think proof to we're it's good the fair in commentary that see industry.

is that's AI, fair instability pipeline. stable point of of GitHub the around Very the comments my which this diffusion, right, popular another important I think rapidly like I'd growing a of the point the the So AI also proof a world. Hugging to most Pierre. quarter, positive Face, sort back But forces critique, announcement

in now have engaging can't measure you I'll tell Obviously, we're you, opportunities that, but globally. we that many

as aggressive dev taking our environment market. more with the You'll developer steps us presenting also cloud see this for a

the I So a we Gaudi X to a But has gain interest we in have now market. think way. work here a up to meaningful started quite in lot do to of the show lot think of strategy

shows be XXXX customers my the taped out, That in we're said will step-up. I now describing has the product, prepared our As remarks, Gaudi also step-up. our the another platform, is which next Also, which Falcon very full HPC I'll together platform the, and roadmap HPC offering well coming to are simplification our alignment say, into single Customers and and responding of offering. AI brings AI the in our the together. a of X

this the starting that in clear area. to meaningful we we you we're near put be show to space, And to but marketplace up some future. lot customers able revenue in proof So now in land like overall, in points to a that this feel do of work I'm the can start we'll have see hopeful to

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

Certainly.

line Our Vivek of of next the question Arya comes from from Bank America.

Your question please.

for Thanks longer-term a taking my a one. I then had and near-term questions.

for you're think contemplated how the XXs to that set are at low now, about half? consensus reflected is growth. not giving appreciate on should I to Right guidance. I gross They term, But the XX% growth the XX% in expectations. we So the look that kind of is when return the margin? half-on-half or about second near

Yes.

providing revenue the half I and what the think XXs, pre-PRQ us of with any that not the second modestly year. on said is, thought reserves half? some guidance better that, themselves, things utilization see the combined what would the confidence And gives fact the in of be Pat second we That's levels. in probably better we're reverse specific we'll comfortably

three is half think there's in One that for our the a things to half. second I'd normally just you about Well, stronger industry. have say second

case. the to that expect We be

hey, we'll worked second it's right? marketplace. We we're green are it first shoots the issues inventory beat it's some by in market there. market tough well, through lot of you a QX. is for line a go think as and through as bottom And top Second our all, half. to seen seeing out And navigating a But we half tough in the have

So over as being we fairly cautious look we're time. out still

strengthening our And execution. obviously, third, then

most. gaining as market Our that I navigating stronger. we're road our point proof share. than a better that we tough of is We're in a map way And solid QX environment getting think have through the

also as through are second macro continue we half, fiscal So we careful careful go believe incrementally have we discipline uncertain a on very we outlook. but positive the to more execution,

do Vivek, you have follow-up? a

Yes. you, Thank John.

CPU to mid-single So interesting see Arm Arm implies instances. ecosystem do or more the digit it's role already of part question I Arm It's so as starting you're on server is, that servers. believe market? for Ampere Pat, that cloud my credible of with you the partner servers. longer-term a in how I around developing presume

see the xXX just over bigger see CPU -- next you Arm the few impact TAM, servers you the do how if years? of what it as And So is on server Arm market? do in the role becomes and

platform, IFS, couple announcement here, that for Arm ecosystem is with statement it was was Yes. things one did the foundry a focused and And over One where this Vivek. around around a strong offerings the do quarter our of play we that has we'll but expect it's time the on the we mobile that Arm announcement strength across proven considerable broader a focused as have indicated market. mobile, that first

continued the Arm of matter. the across say Arm, that laid also four now And GPU, that data deliver coming whether our with and that and TCO right? benefit road and Sierra we critical all if RISC-V, will role role participating out playing right? that's we a in in be that xXX. xXX, strong those, offerings. map thereafter, great power doing think the center we the at accelerators we've role with with Forest, we through right, I'd laid you're I've architectures are limited, the through Clearwater of foundry And market product we'll a future of to of now believe or particularly our product job view E-core performance line of products Forest be that the

in lot if very customers Migrating give center is and an do E-core will TCO superior work, of alternatives, stacks I that solutions a well. the easy path right? And data software with xXX with

the So come our with play that, all. that's become our foundry time, primary same play. At will one,

this capabilities time. and of right, offerings We for RISC-V significance wafers any leadership industry as view in arm, for competing and manufacture, every across industry the play that alternatives committed to every our we're great architecture, We over the foundry one xXX through our will of segment superior an the industry. of GPU

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

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

please. question Your

million. you mentioned -- $XX And You CapEx shelves I Can more money capacity? still Does number years? a north it's Or about of the you. seem like could kind ballpark? allocated you talk five gross on to in and XX% that you spending the if I in foundry. talk that's going Thank CapEx? to about how nodes that that of wonder of Great. get are gets four much the money

model $XX what Yes. in I of of as We little be modeled of CapEx XXs of keep Gross our which million. better that a the capital-intensive within is the intensity we of percent net transformation. can think, as than north actually low revenue, mentioned, our kind would we during kind phase a bit

very to lot of little CapEx going investment a certainly, us. lot towards are to We the past a there's to There's biased been shell more of And equipment. kind caught long relates are type obviously it split, we As in that and probably shells. the of going investments. We're a now. bit behind, the these -- lead probably right CapEx had time

you make have so shell need be a it. And want you when to you -- sure

investments to we have in that biased are appropriate that to ourselves And the regard. and do make so that

largely you as as our I own point said, around out, And it's needs.

the we that we front. appropriate. get to gain as we'll are some as now foundry investments get traction on And side right ramp customer as We modest making -- investment start on customers, the more

Joe, do you have a quick follow-up?

yes. do, I

within Brookfield? benefit with get there dispersed? of XX% yield does capital potential CHIPS Act, start to that opportunity with see For -- of Or be the number the you've number you another better? we better deals that future are if from improvement? guess grant things? Or In got those money that like terms additional about XX%, in Like contemplating talked get I the of to terms sort to for that is number as to offsets you've starts the example,

somewhere XX%. offsets. end will year It the better. mean, assumes CEO our there is another the managing incentives. to XX% current out obviously the got by and I've can have government the I is It this in of skip the obviously, that But we some outlook get

investment helpful. And next in so certainly year, not also there's coming opportunity obviously the have in this benefit credit see mind, keep next that to be I if the And point, of think we'll at tax year, will upside, year. which

with our Yes. Commerce we're grant top the is And engaging We're on in would add area. I just this working right applications Department and through now that, something working. that of of

level the CHIPS certain in going about to than the possible. Dave We making U.S. we're And better Congress and hope as a manufacturing that quickly done Obviously, guidelines laid have fundamentally, the be And this said. competitive is regard. focus do world. working that all modeled as was we the to we in the Act of get to those intent that as have that's and out, in

returns credit. with obviously, And continue that to our a be tax us make and working front. in the to an we bring great Parliament major intensity to shareholder opportunity We're a meaningful to and skip on had way. also We for EU a investment last week, CHIPS milestone Act passing work efficiency capital

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

say you. us. me making. we're on that progress We're We're our we the let joined grateful to you an update have the thank and business that grateful give opportunity you First, that

top there, on of plenty our great out process execution that and and challenging also on headwinds is believe financials line, execution product our maps. macro the bottom our be of While on we road will

and points strategy, are to increase had the next bumps we you tenure, the some the have clear the And and team, And has also in together. our date we on see years transformation. to right to that here we we and confidence forward unexpected my quarter updating journey that two call throughout look are executing road. the We're right my this beginning into

all So much. thank so you

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

Good You day. may now disconnect.