Intel (INTC) 25 Apr 242024 Q1 Earnings call transcript

Thank you for standing by, and welcome to the Intel Corporation's First Quarter 2024 Earnings Call. [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. John Pitzer, Corporate Vice President of Investor Relations.

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

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

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

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

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

that, to me With things Pat. turn over let

and John, welcome, everyone. Thanks,

We've delivering expense line our above management. EPS leverage continue revenue on as results, we reported and guidance to and in focus solid QX operating

our we well costs on approach the steady long-term as progress Our reducing reflect are results our disciplined against making as priorities.

trends consistent our half own supply modestly with first near-term and are originally reflect are we of some While what weaker said anticipated, they than also others have constraints.

our we offerings; in growth cycle see to expect refresh more data beginnings We strengthen revenue an the the center underpinned the and and and growing a sequential three, and into of with normal continue ramping to NEX, and AI XXXX, Altera. year Mobileye return patterns one, recoveries PCs; by: a QX bottom, as throughout to for two, and momentum enterprise cyclical CPU buying accelerator of recovery

building first-ever foundry drew hosted an importantly, to about and XXX competitiveness results. We Intel perhaps, our We Intel the milestones as extremely pleased journey most with and were productive potential customers achieved to fifth financial improved we reposition partners, our nearly Microsoft which and had customers offerings. for foundry our QX our hear Direct important customer. XXA announce along several Connect, are the company momentum execution, We to

value extended our road deal map than $XX first billion industry also High the We to NA node Intel EUV XXA, updated greater in lifetime our technology. to and with process use the

from Science Connect, Champion National announce Shortly were to the billion thrilled President Act join and loans. as the our following grants, we to along more with Semiconductor Biden Commerce than proposed of and Secretary the position CHIPS incentives largest award $XX with Direct single and Raimondo tax of

During accelerator. week together Supermicro joined April, how the more Bosch, of were and our brought from Intel Roche, Gaudi and at X than We top Vision of they we Dell, our many are customers introduced next-generation second XXXX, X,XXX shared among Naver, by who Intel we solutions. where partners others benefiting

will what with led initiative in enterprise Vision into the generation, the accelerate where This AI went industry Summit, for or market retrieval of Open applications, platform open largest for to AI be gen we the AI augmented REG. starting aims straight launch Source project. deployments

Our enterprise big here. Xeon established a role use our cases, to have with plus ecosystem, Gaudi play along

chain trusted underscoring Lastly, first the a and for our resilient, geographically we more Summit, industry's diverse, course, hosted semiconductors. of commitment building Sustainability deep supply to sustainable

water in energy are conservation, chemical leadership and reclamation. renewable position our We of proud

a technology company created I gap work rejoined underinvestment. execute have over the that laid by all accomplishments close year-to-date X out decade when the Job to Our on efforts build #X was was strategy to accelerate ago. years on I to we of our the done the

product accelerating our execution nodes cry and was improving The to our customer toured. cadence X The years. transitions X was of combined in regain heart Phase It rallying with trust. X node

rebuilt which in track capacity field on we stakeholders X-year of to have Intel with Lake. playing XXA, year the our completing in EUV begins with at market very position thought culture Arrow our and of X helps a half goal, our least, unique Intel and nodes which the doing, a are Western-based In XXA, production for second We technology, many the level are leader. so at-scale and engine with impossible way ramp execution Grovian at pave the this inception.

Intel production our in for ramp 'XX Forest middle of already Furthermore, lead expect Clearwater first year. release expect these product release XXA XXA next to and the Intel products this products, begin the of Lake, are in in in the to We X.X of and for PDK Panther fab, quarter. we half the

the is to was structure. a to critical matching our now step with cost a technology founder focus group relationship our and leadership progress, this between achieve group Given time a Establishing turn our products cost. better structural competitive manufacturing to

model the their financial Intel critical reporting cost the Intel introduced to accountability provide better for structures. to both Intel the products new Separating allow and transparency, Today, own This the and between which time, and needed reporting and make Foundry running the in incentives groups results proper to reflect are quarter, step internal operating new a we decisions to products we to was first transitioned Intel Foundry. to officially way we company. are our our optimize

provided we high going is day it I'm provide of baseline to based confidence also achieve. going that assumptions we of owners, the a revenue was target outside transparency will conservative we reiterate point a debate, and spark understood. to so more for establish added to important foundry a giving P&L our also and X This on was knew heard it model degree that reasonable to that but change knew Intel to cost and have we benefit the

high can already move working do operating target in faster catalyzing to ability you we assured these reasonable, degree Our And model better, beat across and targets. we If can our driving is we organization. a the of and hard change that in efficiencies is will and new confidence reflects model deliver. conservative rest our be to will,

by that new model. highlight the our business X me underscored our Let aspects important and of is strategy

have exposed with a Intel XXXX. is solidly a consumer XXXX established, hard our Intel profitable XXA base Intel with and in enterprise, to edge business we emerging benefits across is partners. competing ramp products, and displace First, and today customers recently rapidly a fabless semiconductor despite franchise downturn that installed to powerful with That and provide and just solid ecosystem as products we Intel X process and in still technology. from legacy changing meaningful

especially expanding. market second are new applications AI standards the the demand defining as leading capabilities, then category. the is a IDC earlier, as in and And corporate to stated take embedded helped AI we year, now We of advantage signals PC refresh. likely indicates begin emerge and see half by overall claim, PC we improving, of

expectation, double and Meteor XXXX. of accelerate the Our Core Lake our ship expected of us will Lunar continues limited in second allow half year, Lake, original AI in by with Ultra Improving this units XX CPU supply Lake Lake to and to later target Arrow beyond supply, only assembly. ramp, QX, by PC million our excess our sequentially addition to led Meteor of wafer-level original in

Lake, product XXA we Panther and extend enhancements. with will further Next year, our with lead Intel

on AI, and X the we Within achieved Xeon to is as product Forest. our we product, release first Sierra strengthen X, position first-generation server have our road continues share strong committed, on codename as execute Our Intel DC E-Core product map.

with The Xeon performance. on next-generation a natively QX. in product, Granite will running demonstrated Rapids, good P-Core model Vision, released X Xeon XX X parameter we be At billion

to continue stabilize We year expect in trends improving share before to this XXXX.

AI starting generative and head where being While the we node, conversations into late to QX show in budgets signs are refresh CPU second strong improving still traditional position half. have for in continue a build-out, prioritized to customer the

product, share will Our us XXA Clearwater is first slated next to year Intel gains. launch accelerate allow to Forest, and

accelerated strong launch data offering Our for the improve to cloud. computing in Gaudi X our position a and center gave us

now expanding over of as XXXX increasing million into in We Gaudi own XXXX, half X's as accelerated momentum on our $XXX superior supply. in vastly well based with TCO expect revenue second

with the are In Developer largest Intel customers Dell to our Cloud onboarding Zeekr, addition, with good with and IDC win platform, this date. we finding including traction

far our by progress encouraged are We but from satisfied.

the stabilized year and a business our the expected as channel NEX, approaching with business through and normal beat acceleration has levels within result. inventories targets QX Lastly,

We for also and AI scale NIC chiplets and and customers announced Ethernet-based market Ultra discrete a scale as plans up numerous our for delivered recently key standardization the out Ethernet with the AI foundry industry networking Consortium. through in providers

us and So Intel to build good products, that for on. lot a is momentum

Intel Let Foundry. to me turn

are on profitability to improvement We in executing strategy over drive time. meaningful our

with track yet, and be we a was not large obviously there to right But we going we are needed out business. be We we build upfront plan, investment it expect multiyear the right now. always are said on this this to to given where

the from wafers at the we of As pre-EUV webinar discussed powerful us. for is a beginning tailwind the our month, wafers post-EUV during to transition

We our margin average blended over faster driving grow wafer pricing Xx significant than expansion. to decade, cost the expect

addition, business our and Both elements consolidated that at bring are Intel current drive are the tiles and today earnings external are to allow level. many at doubling the the competitive more In dynamics being more revenue control than will on us of our growth key wafers to home breakeven, to foundries. manufactured power not in dependent

It of drawing for advanced with leadership and our die useful leading-edge tools more strong from fill creates company in more assembly, and combined packaging life our is competitive and wafers external manufacturing customers. note wafer-level base our opportunities extend wafer interest as is our important returns. the in to further that with our technologies Of position potential factories course, of financial increased the value outside only wafers Asia,

meaningful Intel the quarter, defense secure total but I desire to their Intel a and this our on customer supply am A to we have XXA, that of XXA, X. also chose to because this leader Foundry announce U.S.-only on based customer only not of in bringing the technology another benefits Intel process industry, base. signed aerospace pleased

were program, we awarded very this Foundry to that Intel which RAMP-C announce the federal confident and customers. of will pleased lead III week, are defense Just we the Phase aerospace additional to DoD

interest More broadly, design we to engagements with XX strong in in The interest awards. we continues and to nearly a packaging, X customer XXA near-term continue industry, with chips. Intel now every Intel which are the advanced pipeline seeing foundry includes of nearly test in be have including growing strongest Foundry

profitability Intel important also near-term the improving on we long-term the of focused highly Foundry, are of here. that is it keep opportunity we sight While

the billion to nodes $XXX The by with from is expected foundry grow market of today advanced XXXX, almost to packaging. $XXX XX% EUV growth from coming billion and

demand. to this clear expertise a market. in sustainable less the Put and leadership it would technology the advanced XX% building we proving leading system AI and Foundry day, Given not for but billion revenue of a edge on of our decade. systems resilient, Foundry Foundry the of is by trillion embedded model line our overall to manufacturing Intel High-NA by that represent alternative our serve It the way, foundry second in packaging, AI question largest are achieves process market escape target the external backdrop, when on market era $XX if another a XXXX, semi $X top velocity. of becoming And than largest to sight EUV have foundry a we surge the our the and of the in trusted Intel to capacity, every Intel is path end

up All to unlock value. category, where wrap by me Let priority is our our #X shareholder Other to speaking

to Intel partner similar an forward coming we to IPO Mobileye. private path Programmable Altera, quarter, for help puts on Group, rebranded This the an company. company We year in prepare equity Altera as years. look formally the in our This this bringing a Solutions a

opportunity to companies. growth unlock ability today. commitments, products providing rapidly our billion value. We more assets with assets, are equipment IMS, it accelerate their and excited approaching we the financial and net Intel the enhance Foundry our overall franchise market writing stand on represent autonomy, AI. X/X business and significant we opportunities their to both in in an respective our separation mask capitalize market drive create up $XXX meet we believe with path value of Along their in By than with for business, Foundry Intel further we their and solid them believe as profitability our we of X about to opportunity shareholders future see these a and Intel Combined leverage to value tangible our

of out So that for say I'll there's QX. coming to lot a us overall, on build

We strategy, steady we are and our progress. systematically executing to making are

solve relentless bring our are maniacally hardest drive customers' regain we executional to focused fiscal excellence discipline problems. We on and and process in are solutions our next-generation leadership to and

in confidence we in need will we us, will for payoff me but what are drive are to front the know a the do to be global where this in the of of hard have headed. come. Semiconductors lot and we All gives the that Yes, of we end. work decades economy currency significant

one X Western the and capacity can chip ourselves to maybe on in market. are immense will We positioning only and that to the capitalize companies X, AI well world technologies Quarter-by-quarter, that of the in next-generation R&D, has and enable continue are entire we the opportunities ahead. we one participate

that, let With Dave. to turn things over me

Thank you, afternoon, Pat, everyone. and good

We with gross revenue margin again results guidance. quarter EPS, in delivered and beating solid in the and line finishing

revenue Forward-looking revenue half. the accelerating expect and markets first and quarter, through demand deliver with pace the growth measured XXXX, of core in pace signals improved EPS in second our in a year full at growth we to the

up business of Intel within and and billion, product line with Foundry. well performing year-over-year the XX% delivered customers our Intel business with Products year-over-year $XX.X inventory noncore of XG segments several Altera guidance, by lines headwinds impacting the X% was the revenue sunsetting our including packaging quarter just traditional expectations. as offset growth, of midpoint Mobileye, above in First as

XX.X%, These previously of on and and line in sequential spending reserved was of noncore by billion, just $X $X.XX XX a operating beat with inventory. our $X.XX Gross strong guidance. guidance, headwinds over guidance of drove above QX sell-through EPS basis decline discipline points revenue margin

dividends flow billion QX and was of billion. in free was Net in paid negative $X.X an of $X.X resulting adjusted negative the billion $X operating cash $X.X we quarter. flow cash CapEx billion,

to in half. annual expect point expected timing driven cash by of low seasonal the with free factors, the along flow, We QX adjusted upsides from be payments, including capital for bonus second offsets larger

and this first services Foundry creates our Intel quarter and structure mentioned, manufacturing a the with groups Products Pat market wafers our relationship As between from foundry new products The reporting in revised at segments. fair purchasing is prices. Intel operating

step efficiencies and transparency across which discipline. another organization, important positive This our of in all increased transformation, with a decision-making quarter having the already represents layers on and accountability is financial impact

As I including and Intel All between with All talk results them the Mobileye Other, about Altera. our of the categorize Products, and results, Other Intel I'll category, Foundry

Intel and inventory customer in data a significantly X% our Products $XX.X found demand. was grew release year-over-year. XX% AI position be can more by year-over-year year-over-year growth, and detail with Additional and strong client filings. driven revenue product contributed XX% The billion, earnings business and Xeon SEC center portfolio share by The ASPs up business enterprise improved than levels. higher and improved

declined revenue X% NEX year-over-year.

year-over-year, Intel inventory approximately billion expanded discipline, As approximately the Products' continue discussed which expect last markets, in saw spending declines reserved the than in to offset recover profit and network revenue, of quarter, sell-through year. we margin growth driven XG operating quarter. better through an of by we market, resulting $X.X the by operating and operating year-over-year partially in higher more XX% our edge significant by to in XX%

$X.X was and XX% with along back-end lower sales. revenue, sample IMS billion, revenue services down lower tool Intel foundry year-over-year on

was in ASPs with declined down, the Operating million with higher revenue modestly volume factory by improved being year-over-year, profit pricing modestly nodes. by offset driven for wafer partially addition, lower mature utilization. approximately by quarter, In $XXX

margins remain expect to with X as margin significantly foundry of X will depreciation. years business costs by driven declined XXXX and The billion impacting increase P&L start-up we trough P&L packaging in $X an roughly year, higher operating Op absorbs traditional costs expected the quarter-over-quarter, and of conclusion through in peak and start-up challenged associated the in the the nodes revenue.

the our a actions to efficiency improves, XXXX, process expect structure with shift through cost begin to flow rapid including see to we leadership improvement. competitive compute P&L, the and internal manufacturing of profitability return Beyond nodes tiles to scale begins toward volume as nodes

to Mobileye $XX of revenue of Mobileye full were an morning. this reiterated million their well-publicized of call inventory. $XXX both million on and year due down loss operating year-over-year iQ drawdown earnings meaningfully customer a guidance

financial $XX 'XX. revenue results loss with process stand-alone XXXX digestion spending a million, constraints supply industry-wide $XXX impacted inventory of quickly. up and company. expected the revenue operating results recover inventory as Altera's million significantly standing by year-over-year, associated to with a and lower in result down digestion track, is With following on was are Altera Altera the

increased We already hard results normalize. run the catalyzing seeing billion as of and our positions to $X the the our the a expect processes continue efficiencies to transparency driving structure. execution work at revenue and rate to XXXX transition company. across I Altera We're change reporting inventory acknowledge to exit want systems and across focused new the company to

our to guidance. turning Now QX

QX to the quarter, a $X.XX, billion a the expect our the approximately of $XX.X and $XX.X we of end revenue tax impacting aligned NEX XX.X%, seasonal. and business typical $XX gross non-GAAP AI second from client XX% billion data do constrained with in on by of At services. center Core to billion, of to Ultra-based which of EPS see for all demand seasonal is We We and to ability expect rate our low midpoint meet revenue assembly growth results basis. of QX roughly We PCs. supply, growth. margin is foundry wafer-level Mobileye, midpoint sequential flat client the at with expect the

edge to meaningful TAM, PC. Altera We the from in growing enterprise also second support a refresh network for a AI servers growth capacity look increased core expect in all from demand cloud we the the beyond across enterprise half led both second QX of year, As and our half. for and driven accelerating ultra growth by customers the ramp businesses, segments to we return improved and growth Gaudi by should general guidance, PC assembly see purpose and and a

to X costs, FY expect gross X-year Despite points we factory 'XX compared XXX the 'XX. roughly basis representing of start-up margin XXXX improvement and FY node driven peak for

of of as to percent across in capital we free neutral to of Our continue XXXX approximately flow. expected XXXX year, a intensity land aggregate cash expect unchanged. remains capital With significant the half forecast net in and revenue the offsets second adjusted XXXX mid-XXs

the second While several we're at largely growing into important milestones fabless signals capturing our the we foundry XXXX. margin a first out signals half the with and towards IDM unique weaker, the in demand in both line and the X.X level large bit industry. TAM have year of achieved QX level, played participating a advantage product market have expectations. encouraging We and By margin half our been with in for stacking and vision,

years climb, and represents node of XXXX majority start-up part on X our economics. transformation, the our X with are steepest into uncompetitive X-year volume the We process nodes and of peaking the with cost and pre-EUV

the achieving However, as toward and back the month. look this financial to few a laid crest long-term out we and wins earlier years, we clear strong the targets we path at have our next hill and mid-

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

Thank Dave. you,

call. our now can that, will the first We of take Q&A question? to Instructions] With the [Operator transition Jonathan, portion we

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

I the second high for And level expected? the so of term but dive of you're side have you that than the the half to ramp? near some I demand into you little dive above in that's what gives more both level, went largely had my a seasonal. confidence I in was a of bit guess growth it know sequential equation. you quarters, going significantly much can to reasons you in into the half deeper weaker the seems double-digit at through like What first wanted back question, importantly,

question. Yes. say so weaker. was for market out, just thanks the the Starting Ross, I'll

as that in well. of a You've seen others that have commented number

customers, that, somewhat say across I'll We've across geos. board bit. a seen So the cloud enterprise,

we low today, strength to weaker board, end demand, the OEM go see as So at engaging that with bit we seasonality I'll partners, year, of just our into half right? And right, the say say saw. and just a deeply QX we'll customers second of the QX we're the just across our we

of product by second half and characteristics market by position, a some even cycle, in of of we it that PC driven our hot. that the Core and we the is believe, we're Part Windows commitments, of we're not unique and racing customers. as seeing upside QX, driven And -- is but said, AI client, we're upgrade our underway meeting Ultra all from all requests

a see strong outlook we data PC AI So center. very the in

that in very improved on As products and to like this our we we seeing well Intel seeing X, for with we're new week went center increase just healthy with we're production competitiveness. ASPs data product on position products, bring our as products CRX

from most of half $X.X All half of Altera the and NEX, in billion second we're seeing businesses And revenue say, all out of I'll improved positions improvements second of Intel by seeing loaded. quarter improvements on and decade we're margin then time. that And all Intel as and just have And those And here Mobileye We until Foundry, half Other of the coming in Gaudi, and incremental, the both Foundry. the to over those is every business inventory one, improvement first right? well. one

the think So bit half that we business, lot very outlook a we half very into comfortable and but Intel go of be that outlook momentum across and strong explainable, weaker, quite feel is for understandable, second half very every a as business very growing first we it's a comfortable 'XX. for second will the a

a have you quick do Ross, follow-up?

nice up. in little drop but with the upside is on for Maybe first I quarter going revenues the margin a in quarter, do. the side, bit gross Dave, puzzling second the

just you could the driven quarter Or that confidence there, talk and just the metrics half? then a half? in little about the that revenue the second second in Is rebound drop second bit So key please? the what's in

reserved material. Maybe sell-through QX sell-through Ross. QX. because That product. of it hadn't better I somewhat previously start with explains Meteor was even mentioned better had Lake Thanks, on We strength. Good. Yes.

just QX terms because and flattish in that. how flow we that We bit margins little a through. of in QX And between had saw of more upside a would gross so some of plan

in the pulled kind some of kind have seen QX it benefit and it QX. would margin pulled so And of of gross into of we improvement

part was that of So it.

this for about, in heavy as was to meaningfully for shows it And up talked a more second cost versus be us. we the year quarter start-up first year really the second The is, quarter. part going

that pressure added And little a margins. puts so on gross

the like, As see will they where some revenue, high you today. areas top have then have QX, are of margins, Mobileye, like the will that gross the that we help us back example, drive gross the the helping from there products strength and in Mobileye out, margins in on help year fall-through And for which see good gross margin we'll lift good get we upside for year. will in gross through that margins QX that, also better the point we'll and and half of the

look we'll think than As better than I have we margins into 'XX, in had 'XX. gross we 'XX

front. by story gross So now for XXXX ultimately to an margins XX%. the be the driving get to we're And of and as should this midpoint mid-XXs margin gross getting to us on kind know, between you ongoing and

pricing gross will over margins. Xx growing Of drive our XXA a within XXA course, mentioned, wafer be control. revenue of help tiles, going cost part things that of lot at for better of It's is drive Pat us to internally The margins But the that that. time. like pull-in will as is of

we're All as margins margins we from for EU that terms to expect the better us, course, for mentioned, announcement into also new with get improvements doing of investment the also gross the as coupled decision-making, be will be time cost translate will over better we're significant businesses gross decision-making driver of on CHIPS tailwinds over and meaningful tax should a a well. which of out. And of what in credit drive major to Pat course, what long-term basis. happy And that, resegmenting

our question Ben And the next Reitzes of Melius. comes from line from

servers talk can little kind ask a of your There discussions. data And year Pat, in throughout for of going there you that the to do the the the talk light question here. more guidance? previous was catalyst chance about XQ the bottom pickup Appreciate what's in of center? there? a you bit see a How in

And you, just improving data Ben. stabilizing. And competitiveness. center, I'll at Thank our we're the position look we obviously, we're in with that, say Yes. our as

as going see, I also the We in up are the well. comments, as mentioned comfortably that ASPs

So products our socket core fairly like power us product, new definitely per performance Sierra but socket improves or the the ASP count X Forest And capabilities. with through increased Gen stable gives Xeon then year, position.

head seeing mid-XXs we're winning also a we're rate, AI node as positions, performance We're capabilities Xeon. go the in growth And overall, Vision. we seeing increasing seeing healthy extraordinary of pretty year. So very at and interest the through we're

us. We run for a talked XX lot billion of enterprise these platform capabilities, now out directly And plus use Xeon. to this a Xeon ability models Vision, ability AI position about strong at as say, to for for for positioning parameter a strong type product. on open the the cases, laid we And very of very is enterprise is Xeon Gaudi start

OEMs and are growth So the that overall, as have trajectory Xeon ASPs our on and product by ODMs in use like been it's better servers. where dominated gen we better communicating, there's AI for now overall AI theme CPU feel and GPU we're a much solid improving And cases we of lot a a in these position, plus enterprises, positioning here into a accelerator. market a even though it's

Ben, quick a have follow-up? do you

an your confidence accelerator say into annualized an to is there front? on Can year? Gaudi, the heading I XXXX also just with back you there update basis Thanks. think on about million $XXX Yes. AI? we double-click half does the billion in revenue that a on the of and previously pipeline. pipeline the yield And in What couple on the talked about your of

in and quarter-on-quarter those we was ISVs customers At XX Gaudi super more into the enterprise IBM X right, but for It than which obviously, pleased that's customers. maybe their board, 'XX revenue embrace as had was I customers. CSPs And business to revenue, greater we and event, said, on Ola much the year, Vision was see and Naver breadth It most X. And describing of importantly, like Zeekr, indication over Gaudi rapidly, of also accelerating and our Cloud. pipeline Thanks, gives and $XXX publicly like is Ben. coming Yes. a converting the meaningful obviously million as great well. for

models, us Falcon and And the AI in okay, like road of Ultra increasing on models, AI to use data initiative, platform are good Gaudi. the out. and our And is we but so 'XX. true we networking for of to Gaudi the that to PyTorch in The powerful AI enterprise for Bosch enterprise forward where for development demonstrate their Shores of map the Ethernet also TCO ability up seeing creating abstract that's standardizing be wants Xeon levels plus gen work customers' benefits. Roche rolled embrace We're is going to to industry benefits customers Gaudi out enterprises Consortium and X open announced ultimately, our open action environment The scale Ethernet, training, shape. with that The in were alternatives. coming able and and to and AI scale

industry AI to taken starting for regenerative uptake alternatives together, All those of we're the our deployment are and enterprise looking pipeline really is and positioned, Xeon now. Intel that and Accelerator quite for well open in see

line question Stanley. from next of our Joe Morgan from Moore And comes the

then products you that Forest is product expect for sounds how Forest to talk where the Sierra the Granite those I wonder confirming you're will you to you demand for talk bifurcated like Do and see And as volume? both? road It you both could demand there the Rapids. for be quickly Sierra see well? come if server -- Can you to about map. time frame

Yes.

a X, of pipeline see because performance the do a we're product power, count, core Xeon node. back a technology area for soil socket of, Now good first of been on product, power and deficit, So process has customers in being focused efficiency, area really for share is see been that and Forest, This super I'll we've on I'm Sierra say, and we have X proud, Intel exciting. XXX pipeline good performance, that. win the older now a core Forest, gains backs Sierra carrying on high on And American we leadership decade. very we nodes, on an our right? first definitely XXX, a And time leadership an that

of the Xeon is Rapids, bread come much QX, family. the Granite course, Of P-Core more which in X Xeon butter part the and will

see haven't power tool. aggressively So element do stronger sockets the that been and participating this the a as gives being we Forest portfolio performance lately, year we Sierra in as that us to

we described. it on good X a with in coming a we QX feel ramp as one-two With is that, a So have line. Granite we've Intel product really very volume punch, and

year power Clearwater gain of in strong leadership is Forest, that's a a very I the the to leadership on data great and again market, center. XXA generation for the believe performance, part, unquestioned so us, opportunity second us product the in Next the for server E-core share position

for is and map and customer is execution at road excited saying, confidence AI building as And as that. And I the cases us volume, back." then on The building strong, They're momentum as the now trust. looking quite beyond rebuilding cases, by use "Oh, the healthy. we're the is and just the referred that, traditional So question well. well as use we're Intel Ben's

Joe, have follow-up? do you a quick

you. Yes, I do. Thank

next you point crossover getting get kind of being just talked Intel was is half? of of the year? kind of leadership inflection volume X about webinar, products sort we Intel What's that server could it volume X year. next about Or see you those had in that you obviously, On from products ramping Does mean in foundry the of important. some these of are kind the keeping second more to -- an sort talked

scale. they at And thank they're in, a you. generally just while Joe, take to because them ramp. always them bring Yes, test things putting they qualify Customers servers them, these

And for some an on accountable ever most products. the team we've aggressive holding that adoption of numbers for achieved I'm ramps server just there's are the server products. volume So my cycle that

total X it's I by So right, X them the dominated the And very much Intel of terms that's in webinar. volume Intel hard. was on year, wafer we're prominent X. and wafer the and this next said, driving what year, That communicating become volumes more

production half will Intel The underway are X We more that ASP began already going prominent already we But foundry underway. up points, X next as these a those, much wafer they are in of better associated margins go on second X, through see year. to of the But ramps become Intel last year. with ramping you're much start P&L and the better to ASPs the X. as at pick year, ramp that Intel result

coming course, that X.X for And the volume products the bringing we volume for the half we'll as year of the the and QX, XXA and we're So Clearwater these products very then, volume first wafer productions, in with of our Forest ramps marketplace, underway that are PDK out. next begin deliver to ability. in confident PDK ramps on Lake Panther those in

we've laid So overall comfortable picture that feel with out. very that we

you, So thank Joe.

question our Vijay from line comes the Mizuho Rakesh Securities. of from And next

those you Grand And computing quick there question Rapids, on do any to Just the a share, with thoughts expect share server the on regain some timing? ramps?

to comfortable, much the some Rapids Yes. I'm Forest, come it these on competitive Granite release products will to just QX bit of Granite this that Same Vijay. But when little and performance more a have time in takes those year -- for Thanks, marketplace. Rapids, Intel product. production last as power customers of are X. products qualify, question. get on Sierra we'll building bring the

stabilizing us to we're be very see as we're as year, we and And next that next this are we products aggressively share. we them then customers. year. So great and into into going go and regaining to go ramping giving opportunity share with year them expect we our These end regain

Vijay, do follow-up? a you have

Thanks. Yes.

the that? Just building on Falcon the that 'XX? you out side, do AI Any How on Shores? GPU into any parts on on preliminary takes side, see

next build. the Falcon with combine all X, bringing that Falcon when X that have of of received. Shores extremely -- architecture, quarter, late already, together this a comes customers great Obviously, cadence we XX-plus We'll a Shores we're aggressive well that And momentum. and X, announcement X Falcon I Gaudi performance Gaudi with year Falcon Shores. Gaudi as following for systolic build And will fully on Yes. be a very when so And of then we Shores rich mentioned that that. seeing programmable products

X very accelerator getting Gaudi We an is plus Gaudi accelerator card or case PCIe as it. well. use also Xeon to of This added the good response customers from

momentum we'll real the later So Gaudi TCO with establishing just But is the delivering and the on value, X out story this X. that Shores enterprise cases. bringing be the Falcon we're that year. build will use delivering

date, of data are at seeing enterprise the benefits. But Zeekr, AI on unleash the Intel and Open customers, like their the platform bigger Cloud where that Cloud, that's assets enterprise and very Developer customers. early Summit. we're launched Developer getting story enterprise we described in developers the customers now like these our things is win coming And how for for we Intel customers also open biggest our to the We life do products available

a We're happening overall, So a Intel. or this, AI good And everywhere. enterprise whether is delivering opportunities all across well, as lot of segments, our gen as our participating AI of right, unleash edge, things that's the doing of AI to hot market. course, cycle for client, we're foundry

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

wanted ask also gross I to margin. Dave, about

You the you'll did XXX already next above that say because whipping is you're to but sort it you XX be this better to little it points. around XX.X it's up And is a lot. going basis well a or be guiding at have to year year this year, maybe like looks which really at it of higher, exit

And qualitatively then sustain guide next exited the want but you and So sort crashed help those even you at things half I can because to can at of year, during year. you of I asked you level? if first year, here us, margins XX% don't that know last the

takes to if what help year some of just will you this us you're be off can going of base year at? about exit that puts So think next the high and

question. Yes. Good

will start-up lower. percent think basis, costs revenue We So year. additional there a next of be it be it will do on

the So help lift margins. that should

be decision-making Of of under decision-making course, this this around that show changing we help. that, P&L. lot now business of structure new how top at we already the That A different that we we good growth would in doesn't and revenue. up see the should expectation have On operate stuff also actually are point. seeing in

lot these benefits to have sorry, year get year a decisions made next this those show We decisions all up of after. until lot and the a the but -- made decisions the don't year, of

some benefit So as we that from should well. see

up has notion has other whipped few the PRQ Forest Sierra thing our last the margins this just the where this years of just until over The we that Pat material PRQ-ed. mentioned that been -- around reserve bit a kind all way

be started So ordinarily, as and bunch would We reserves of Sierra won't the beyond we whole take shipping we Forest forward. on that going release then them doing we date. a PRQ

margin. the that So should adjust help volatility the of gross

a spending of and the costs in we more growth have revenue fabs, that be will function profile the start-up it mix. So

you do follow-up Tim, a question? have

I do. I yes. do,

CPU want was share. that -- for flat. going I to the about March was think share server pretty I So ask service be assumption March to

the impact of given the case? optimistic, little So -- sounds that to And these into a sort the how was share. lines, the back question things if you on share long is, your reading of I'm maybe takes sound just bit half sort less the it year, of between it

that? half like just outlook more it's second year, in clarify the So it your driven. you Can of share versus market-driven the sounds bullish

will products. the like year. hitting better to good, is does our products year share surge improving now we've I our and these these position rebuilding would AI the, that of we in with We overall, us new seen. delivering of a the take it's gen of products, the out new what time That the customer. on with Well, end trust But call cycles are early of right, ramp these customers the these giving the market the we're play to lot quarter came that on say right? first interest and products in how hard predict, the said, light exactly overall It to market into

at running more make of these execution. natively also billion and model demonstrated our Rapids business confident our all event, cases parameter a XX Vision on New just more use us in Granite

the counts new increase. don't core need The products to also on as leadership going ASPs that our SoC account seeing with we We're up are well.

building all getting of we're optimistic our customers and industry. view upgrade that for channel OEMs those fairly a partners view from their across the momentum of from in cycles, our So

We feel comfortable our that very position. stabilizing we're

expect been into the have gains road our improving We as year and share 'XX. go and to map, we see do end we

Srini of line Pajjuri Raymond from James. comes the question next from Our

client is question My the on side.

Pat, supply impacting constraints you XQ outlook. something about I mentioned think, your

want context benefit put then constraints that and of understand ease think the as to as to how maybe you AI this think or Is products it also to we, million Intel? that some these causing color ASPs? PCs, to those as the you've costs. I as come to these higher when with think Could helps half. ramp? in Intel shipping I so higher If PCs would into just Is into AI just some $XX what's you do margin? supply it about guess, should talking terms it you go higher how actually we about could expect second your potentially year. I And been provide those I

the occasions we've part submarkets. is capabilities And up Meteor finished Wafer-level are meeting Yes. our declared Core and We're we and of end. as our new as we've multiple Thank you. we or just been that been hot subsequent PC overall, throughout. category, to products. we've seen, a had, and but incrementing they've the come for AI year, catch last this our this commitments The up we the racing back are Ultra And on on customer one assembly, and client that those asked Lake back product. has upside AI PC product different and request, the constraint upside to across of volumes

to with catch up meet more those. to working So that, capacity wafer-level assembly build and we're

It applications, it's security of and or it's at of we Hey, essentially does it's seeing. new How security and And new translation whether larger cases, category. capabilities It a use we're other an gamers your creators time others new cases it's it ASPs new communications creates Zoom new app, with think products CrowdStrike cycle a we're seeing advantage for will over ISV that question and of be that to finding category way their us? whether capabilities new and new team create it's on also every TAM. the ways taking generally But higher help this. use as the client upgrade suggests. AI-ing contextualization, do creates and and

we kind as AI time. And say, in of So in a that's see and We improve Centrino factories. at we're from own like underway, the leader, right, AI even our differentially the the scale, going an ushered scale. demonstrated now PC market become performance we're described inside how have "Oh, the that and And Srini, do going cases factories in PC at as we the And over yields PC category going Intel I've cycle Centrino platform?" emergence it's for see you in moment, of to the right, to upgrade every AI to is I leader great using starts that how of when my where it, to the PC industry. be unquestioned benefit ushering creation, these to WiFi new use the we But AI think everybody PC.

do Srini, you have follow-up? a

my Yes, on bucket. the other question is you. And other guess John. I Thank

levels. exiting at the current rate growth over think accelerate That's pretty from kind of you couple said run also, will $X steep I you I potentially a a ramp. Altera next quarters. think, of year billion about next And talked Dave, the

products? is weakness visibility giving just and Any Or market -- that to telecom out driven as helpful. this just it recovering? I some would by color confidence. new that you I'm is mean we're the what's the So given seeing, there or be curious

to shipping that then Yes. that On inventory, Altera, normalizes, when you start of significantly and this down as massive course, is impacts of see the unprecedented consumption. a not work revenue. But you end

to through pretty a billion inventory period. once easy actually the mark it's get So to we're the digestion lift $X

high confidence So that. have on I we think

And have their inventory FPGA cycles on as commented category. well the others in

of the ramp to year, second We starting have as half well. with Agilex the in good products

NEX, that gone course, inventory business its own then adjustment. has of also through And on

for around reversing, products And see So then drive year. like, the we'll of AI through see example, of tailored confidence more at course, good space, strength. have some we the that will that to which strength NEX, the help are we'll

growth through And well. year so as that good revenue should the drive

our AI area. in in seeing And the also strong, networking that are strength IPU products Yes. we're products, NEX,

through though, weaker seeing year as into we aspect of your second providers, Even pretty is Dave communication much suggests, So sector the is it's as and their AI, the into go of as every well that business 'XX. and question as service inventory the the edge strength in said, as products. but the half year,

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

TAM of easily just CPU? cloud server AMD's CPUs, the And it the if I gen shrink is use? the number announced accelerator, accelerators, how Pat, ARM's? important matter can specific gen a really xXX it is or role essentially customers AI is ARM-based being In move because alternatives. Or or a CPU of yours done server question. server guess that conceptual that between your AI the on towards with interchangeable workload a question have is does of the which a servers, most for I

that how going So think I'm CPU to about TAM xXX means for conversion AI curious, what you over and do just server that gen forward?

on And retrievable the but Vivek. at Thanks, like all all augmented is our generation, where cases all about we run Yes. the Vision on databases, might RAG, embedding of the an real-time spoke event CPU. use accelerator, running data, of LLMs the the of

the AI LLM these many business environment it, are all which already augmented an LLM. one the think time, seeing capabilities AI. this real cases with about if of right? might enterprise primary processes use And be X-, you're And trained you area of data, on becomes an data whole But believe old RAG environments, X-year are and for right? Xeon with running I of xXX being to of So feed and

prominent. the database to And this constantly. retraining area that's going becomes not You're front-end be where very of

databases of run today. on xXX those All

them of on-prem, database occurring we data we've environments in the customers. that the a have against all security, they sits And use xXX cases run unlock the extraordinary as in like natively furthermore, All the because this being need sits for for networking, parameter And why XX cases. being enterprises billion TCO enhanced accelerators management the shown, IT see the use We are all And that's they RAG. model in Xeon on run today, with don't we enhanced are some data place. technologies that of have cases. the have can value environments they these

those of to those use They cases. upgrade or from any change need don't

of see also we here lot So is on used for GPU we're be a accelerators the Gaudi, as Xeon augmenting but we asset head it's the are franchise, have is to very to And enterprises. or with opportunity aggressively And that. commonly enterprise being even a being we've Xeon going node, other when that be build we're we going the think other opportunity powerful plus used. described, to

cases, new many as enterprise we new in market So those this coming lift, new energy the cases, use a see AI. to of applications,

on-prem Here under workload XX% the of back many lot emerging. a we data seeing what see are is you to the powerful a happen would of point And Vision. and I through This that was xXX just described unlock. going great that event cycle CPU at And today. and to customers we a value are what in and today. is cloud, of to cloud, in control gen underutilized AI year XX of the businesses of that going moved That's enterprise, of while XX% has the much to the the over the remains we

have a you follow-up? Vivek, do quick

you. for model Maybe one operating on Thank that loss, kind foundry Yes. the Dave do we the of for potential business. how

So about are year? this foundry depreciation What way, almost exclude let's all I foundry is external is Dave, you if say, income in business. revenue to I'm $X assuming much billion your the of foundry which or the going right think loss operating And to this year? how expecting headwind,

ultimately losses given remainder before first improving for the in quarter get the to I and quarter, going second given operating operating quarter. increasing X-ish some the the pick improvement were every achievable. that midway between We is into at up through The we think say, I the costs roughly wants like he in to question. XXXX. X-, Pat's to I start-up what year. 'XX. the the and It me said roughly is Good up. order, pick And will breakeven be in see then And see Yes. of point then that in are the loss now would will And that range very

the was second question? what Vivek, Sorry,

you still are on? Vivek,

on. we've No, moved

Jonathan? next Why don't the we go caller, to

the from Cowen. comes question line Matt from Ramsay next of Our

some some understand highlighted external to you the but to starting I've of in Yes. years, from any increased and as it volume the totally volume external some times. guys Is earlier? to I might ramp one to X customers yield think are some to lead a indication that of you X volume it's at guys economics the times you to foundry back And able flex on matters product folks at being that put made which nodes because own Pat, been external demonstration some and question folks, some business. foundry, I XXA, looking tile to at give on these to of progress your bring your multiple programs and there have getting of all

all at flex any just some to pull tiles? that So of sort reshoring of in external timeline the of

product Yes. And those Thanks, when Matt. largely, are decisions the decisions made. are made

generally, process So the for around. it's if And them that node on. tile, you move a there's pick limited flexibility node to process a certain that's

those before, we've there's decisions, flexibility as were And those made. So there. of choices And Matt right? ago, limited made many highlighted years literally were

year. road quite next begins tiles the our peak even see And this of we the late back of starting next said, coming year That movement being and accelerate, then external those map to the year. and

is laid out. the plan So clearly

we as fabs' coming a said, the factory we and of beyond. into we back As move capacity couple network see into Intel worth 'XX of

becomes So driver. this significant a

that product we as are Every road Lake And cycle in from powerful we that for clients, a year that best foundry network. we built with question ability in the the improving XXA. our in say Clearwater the Unquestioned, right, seeing against being as server products. essentially and in the decisions in And products that. driven begins Intel customer see are very customer We've customers benefit the process foundry also speak profile Panther and to our to, significant X where and best them way suggests, now next of understanding products map Intel on Forest. I'll

decade We're a track that are on business we've wafer go this both wafer through as that the the as factories. accomplish healthy presented wafer technology that's we've foundry such will to have We're to the and over business overall, ASP, why the those laid go deliver and is laid next have fill process the out Dave years we we it have the in model and and good. go capabilities, model the I And volume, and the improvements to that out foundry and together. and So several that very I decisions shows right? made, in very feeling on these improvement products Dave confidence track

you do Matt, a have quick follow-up?

ask the wanted I to you. Thank question John. road AI about Yes, a accelerator map.

forward will have how map? software X to that to So on you talked in looks map and you Falcon about the feel space or year. you come the quite uniqueness for software really have the AI rather, much road that compatibility, I and And on is the question do wanted what And guys the going Falcon on How Shores forward? that well, you Gaudi both goes there training. runs about road that for software top X Gaudi versus hardware -- ask but inference of coming guys that about Shores also good. a next for the

X Yes. points different Maybe there.

acceptance the a on for The get is right seeing the have have have. more less challenging we use seeing customers Matt, led we're of compatibility, in in databases the so first lot that's now, strength offerings the some cases, compatibility going the context But more the can that a environments issues the now forward, as of that TCO, and finding lot that us. much inferencing enterprise market use And training that to the models, in a focused on the many been quite right, for a number need and of cases the if why software inferencing Gaudi software and matured of is other, one those we've getting And now, we customers inferencing, as GPU worked clearly, have we're focused software you stack as a whole And that of we're run use portends we've you these with and lot strength cases. X of of through of right? X.

seamless much capabilities complete the use full and deficits will But Shores full at greater of is come we for powerful the from of Falcon upgrade into point, will a that Shores. programmability with Falcon instruction Gaudi Falcon will smooth the that thing compatibility set very cases for capabilities. And that the you'll any with We see have no AI range Shores. the have and X of

other is programmable a these powerful The RAG emphasize AI, I thing cases for I capabilities cases Xeon with us. there that is use clearly incredible use for the is like capability beneficial with and platform open we're finding enterprise described

is software the So moving abstraction overall, we're like story as Python is nicely. feeling very and software coming together the to entire higher such And level Triton. industry

these any open to platform. of from away software dependencies they're So an moving or

industry So trends the direction. are right in the

direction, Shores. smooth gotten is and maturity much we'll our have Falcon very to mature, upgrade right software the more Our in stack and has a

got So time thank say future. that a foundation let us QX. just joining we the you gives QX We and close solid give in very the together lot update a done for the me call. a appreciate for great Thanks questions. And our our to for on you

months, process I to there. innovations drive technology map. AI delivering and were at forward our look seeing If on to few you and process road and any in continue a of products leadership We COMPUTEX you and our

have our next as you much. we we continue forward AI look there talking to and always, quarter. Thank number products be and announcing offerings that as of to momentum We competitiveness. you a we'll very And

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

now disconnect. day. Good may You