Intel (INTC) 1 Aug 242024 Q2 Earnings call transcript

Thank you for standing by, and welcome to Intel Corporation's Second Quarter 2024 Earnings Conference 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. By now, you should have received a copy of the Q2 earnings release and earnings presentation, both of which are available on our Investor Relations website, intc.com.

CFO, online webcast earnings by window. I Pat and us available is our joining Gelsinger; our in am our those today, presentation the also CEO, For Zinsner. David joined today a we moment, comments followed hear In Q&A a will session. from brief both by

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

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

Thank on in profitability you, new firmly John, and are billion despite in efficiency With improve and I by place, $XX and discuss accelerating operating will capital road product continued than more our model profitability we which QX maps. disappointing was to process actions XXXX, good shortly. afternoon, everyone. progress

would comments. We for profitability delivered QX in AI the was AI quarters, timing Core his AI quickly in to forecast to despite years more greater drive Ultra will the by well pressure address The ourselves grow near drive trade-offs ran than and below to less of For to we expectations, accelerate it. We sequential the in in leadership as significant revenue the extend May. will line fully today's We are which selective that and future define our our took our XX% today term. quarter, the PC our as XXXX. XX% market PC in unexpected decision investments announced restrictions previously new CPUs better investments benefits the of believe than position Dave in margins other to we from growth signaled know actions with worth will part the and in our export due come. category control

with Our 'XX. in is on meaningfully the improving Intel Lake bring which will second us first culminate a profitability. performance competitive to tiles our of half client more will our Panther and process, overall introduction Panther XXA, Lake much allow more additionally efforts of cost CPU our in-house,

This and across our financial represents we to the important and clarifies forward is view taking clean our plan of new the the of by cost reporting and foundry Intel sheet beginning eliminate to financial we swift and a Another operating enabled improved structural responsibilities roles model, impact products improvements also company. for separate and take to business announced is maximize trends. Having complexity to broad-based us the driver of performance reduction which current this Intel quarter. adjust business today. enables focuses plan us It pulling actions resources are allowing

our spending in head year. the As this half a second and of reduction drive a beginning to result, count expect meaningful we in

Intel year. this We XXXX have decisions. the the we the carefully will with and are reduction this of targeting a greater lightly of this the by but action hard These necessary of than family. completed head the end have majority end XX% are count on this considered take of impact do by not We

next see target $XX.X OpEx reduce in XXXX will billion, year bigger prior estimates. than and at OpEx actions with XXXX impact billion more a $XX Our XX% approximately to we below

yet to in decline benefits again. dollars expect in further OpEx We XXXX with absolute

will we deliver the needed strategy. our lower overall to investments we fund spending, as Even continue to

project every dollar the us benefits operating capital also rigorously is transparency new to our giving scrutinize requirements, of every model to and capital. driving Our more

execution in with including As carry of softer our million reduction we expectations billion expect our strong $XX strategy, is These with XX% of benefits $XX and expect between result, million. plan a smart from $XX now second in a half That between reflects and CapEx skip our of net capital well. XXXX over for additionally be gross second year next Apollo, billion. to entering XXXX and capital we demand. Combined the year to forward $XX will spending as

XXXX. sales our to impact flexibility plan. We again, strategy designed capital manage billion enable and to our trend capital these efficiency as growth the in targeted business execute $XX do spending to us quickly by capital accelerate nonvariable between smart generating not to ability billion. also it $X of while day-to-day when is cost our to comes. conservatively Increased over billion positive spending Once For time, billion net maintaining but a impact capture cost to billion XXXX, $XX operational $XX upside $XX and reductions will gross effectively we the line gross improvements roughly and margins and capital savings between to of

over taking to the are needed and and long-term strategy. We execution, measurable important the effective resources quarter, beginning the levels. Reductions and at line the especially dividend well support needed will CapEx business and provides step fourth We sales in recognizing and both cost the investments importance execute liquidity improvements achieve savings our shareholder view investments ongoing on The a commitment to of across remain manage the billion track operational our we the dividend a as continue the capital suspending will flows We totaled be clear that sustainable the direct of of reiterate to competitive to strategy. near of avid to and cash with OpEx, sight improved long-term $XX prioritize stay long-term to the in are prioritizing liquidity we model to and confident value higher as to driving teams to of XXXX sustainably helping cost results. as make term. drives have that through we the our we support financial discipline needed drive compass

expect expected, in reflected the While growth revenue through our the be year, QX the sequential outlook. the is to of we pace which rest of slower recovery will deliver than

QX will digesting and our Altera inventory Specifically, DCAI more trending CCG NEX, original in impacted cyclical by and below with forecast. a Mobileye businesses our modest of be

meaningful in reflects without industry-wide share our market outlook conditions change any expectations. Our

we end With look QX QX, at the flat see the levels growth As of exiting a QX, revenue client historically been that normal in quarter-on-quarter. seasonal inventory at range. we up revenue high of range X% has to improved

looking well the is also which very packaging our into Intel on with for and the officially Intel finish advanced Intel X production PDK being within of Direct next mass market. with for sight track and this leadership track we achieving is Forest released Intel returning the likewise, year provide use on half Intel are ramp to march, starting now first the is includes bring and advanced packaging, Lake And key me and end more with XXA many of booted to now capabilities strategy XXA aggressive running server, looking and is of month manufacturing five-nodes-in-four-years last volumes are RibbonFet, XXA, production microprocessor significant first details line 'XX the we and X.X X, very be and to client the to our of of Windows to process business products Let start ready in first is Intel key Intel the healthy. PowerVia other for These a by quarter. healthy. milestone. Clearwater part A are key the wafer panther units, Foundry. XXA by This Foveros is ready our

pace Importantly, the launch our XXA in innovation design to an returning process process will historic leadership. node fifth years of and of completing be Intel and X

Our do, creation will product further across finish we businesses. our foundry and value what growth team And is to once determined resolute we unlock and we started. and

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Foundry the expect help continue profits us We running packaging hit Foundry leadership we're To Intel led He a to Kevin a future ramp through large meaningful with and we business, current Intel outside team. great addition AI capabilities our this for [indiscernible] and financial ground then as and driving time has is course chipset on process in our considerable and and for customers breakeven. driving businesses the with era. investments troughing traction [indiscernible] to accelerate year Foundry Foundry has operating XXXX for to the our services the put

reference Intel's later supply chain flows are Cadence, We technical excellent month all that in brings R&D welcome Siemens, lead is expertise bridge collaboration possible more sites, advance years will for declared the second be flexibility. These Foundry Synopsys team collaborating of launches. advanced organization. also in Foundry our silicon Intel and QX, we partners. for Chandrasekaran pleased and leadership XXA to area availability the a with design cost manufacturing priorities. Overall, our the effectively the single of announced embedded die and partners In He manufacturing than by Ansys, from process driving offers package, multi-die prepare in Naga our multiple our with XX interconnect deep design to to ecosystem for Micron help same and ecosystem to this to it technology. simplifies makes which packaging scale also will closely design a XXA EMIB and connecting readiness next larger half year's

XXA our XXA on development. well Intel Intel are we XXA, Intel Beyond way on and

process our normal map, Even for cadence extend are have to of more road implications a positive of transitioning and requirements. pace spending capital in will we development. R&D and innovation magnitude cadence ongoing as we and node to The normalized continue leadership both

profitable Ultra more ecosystem an road XXX our of AI experience category QX AI creating our XX every the to powering already XXX Intel of category models. Let's is transforming capabilities of largest this doubled forefront This Core testament The execute and consistent than to is Intel and PC AI we position now and across strong and and business, have to continue our against the sequentially years applications volume most well turn compute products. ongoing more moment. is the through in and investments. nurtured CCG, than Intel aspect we at map. is strengthen

achieved to this at ship shipped extend that to than now quickly to which will July power Windows position. XX% ahead multiples by since have track Lake, Lake with competitors the NPU our will million will desktop begin production CPU XX be Lunar performance half more delivers shelf and our the Lake all And our the Panther across XX the device for OEMs, we XX the holiday remain PC, next than of on and earlier, our delivered category launch, enhanced the AI PC Xx joined ship PCs efficiency will superior will of AI the Lake for of mentioned next-generation next power catalyst Lunar new million launch be more ultimate further qualified than Lake quarter. Lake AI be combined, in XXX to generation. schedule cycle. Microsoft by end has already next AI better our Lunar prior which by We than more gen-on-gen more AI up more quarter. more refresh. with XX more we cumulative over graphics December Lunar tops year-end gearing release are industry-wide PCs as million Copilot to Arrow than to power leadership Lake the year scale versus and XX% XXXX. Lunar which on performance

in very months. a and over progress XX super the strong next So road map good CCG

as most performance the focus Let position. improve This of now one to me important areas market work our of turn DCAI. and we is to

the shipping strong to road to fast And map Xeon is and performance including powering build, this today. Early forward customers. We enable seeing followed with processors, code-named high-density ownership have performance and data that million are X starting code-named XX% begin adopters and our consolidation. Xeon are for performance better scale-out first dramatic around flexible upon greater X the more designed with down This total for installed the particularly performance drives E-cores cost quarter, and Rapids, We Granite formerly this and scalable competitive some per Sierra of is greater Xeon will workloads, solutions than well efficiency, watt foundation to will this XXX by important be product already with suited quarter. demanding deliver world the AI of versus open, base took is which our most reduce power solutions. on Forest. that workloads Intel which a X for P-cores, delivers This centers rack steps build launch and

track achieved to the future, power bonding. our and we on on first Forest, Looking has launch Intel about are is launch of excited to server XXA product our the Forest industry-leading Clearwater Clearwater in hybrid feature XXXX.

As positioned the AI Xeon's strongly in choice position, competitive we head we servers. the of are reestablished as note

performance, on GenAI a and compelling improving also scalable, combination value enterprises are customers. delivering flexibility solutions. to map. road seeking We're focused that cloud of very and accelerator is our particularly We cost-effective

Technology into competitive offerings. To Enterprise, Lenovo, ecosystem X Xx open has Gigabyte Cloud AI, are the and focus cost to Wistron. accelerated and frameworks Gaudi developer and level, reference Launching Supermicro, X/X on with enterprise X roughly take strong perspective, of put performance gaining expect platform market to Hewlett Gaudi support, QX, designs, next combining accelerators per X the Our traction. just will for OPEA, performance in of training Faxcom, or Technologies, Dell through it we including in open at and both models, Packard deliver dollar Xeon Quanta our Gaudi open versus considerable HXXX. Ventec, inference

Turning to NEX.

QX see networking future. products into continue stability in introducing in expand that edge We and the will new leadership while to our

member scale-out next As of the interface AI solutions, Ethernet we including a card year. which Ultra array Consortium, network chiplets, Intel founding the an of announced we'll and launch ethernet foundry AI-optimized

IPO Google broadens Hat, codeveloped to Red access recent solution Dell Cloud. with adapter Technologies for enterprise, Our supported and the by the

part to data the accretive an AI becomes and IPU important as the it expect be growth acceleration profitability to in increasingly center. We of

standard of be communication communication new the and dedicated positioned beyond. growth of the We to is on the creation an industry XXXX well use AI also growing with accretive AI centers. advancing edge, number Combined driver and Ultra low-latency a high-speed, Link, of for NEX data in Accelerator cases announced scale-up systems, to

IPO by Lastly, business year-end, working capitalizing the years. coming separation are an as operational in for reaches the we Altera toward generate Intel on proceeds full path actively to a to

We Altera opportunities are growth with that focus provide their excited the strategy. execute realize and mandate, to their to resources

decisions autonomy made will for Mobileye their drive with shareholders, we years IMS year. similar expect our the ago increased an to X We value help to last

me has hard year. let Dave, the to sum up half it thought turn by saying of I Before first been a

improve We have performance. taking clear our sustainable achieved and several are important to actions we milestones and financial decisive

strategy That that, We have we over execute to by entered driving are game focus seeing the Dave. forward intensity motivated pass we as we and build mindset QX our stronger on and as I'll continue are with a us our very it realize to the vision. clear is renewed Intel. With progress to up a our

Pat, and Thank you, everyone. good afternoon,

headwinds year-over-year sequentially. business and with of restriction drivers. the challenged $XX.X with AI and more X% X% growth, EPS line gross to our by Foundry, Revenue which our provided expectations, negatively of $X.XX. Weaker-than-expected main was our significantly was X was margin delivered an caused due of more cyclical PC impact XX.X% we was offset QX businesses. billion, previous China. revenue Intel quarter Second May client in by gross The in was ramp product. our down versus largest X accelerated margin receiving of in Profitability range point Intel Products up after year-over-year in and license notice an impacted both export

Ultra we development wafers of to where to term. facility in transition Oregon the exceeding made costs X and fab from Intel X in on accelerate high-volume In Core our the higher wafer decision in addition are to QX Ireland, shipments, near expectations our

by noncore this However, typical Intel resulted the Ireland long we were businesses and as related and charges also capacity. $X of scale impacted in approximately capital higher will associated with fab. Margins billion margin X charges change period X term up savings gross improve unused to than and

grants partner unfavorable Ireland was business communicated cash sequentially was investment $X.X skip Gross approximately flat by and X and operations capital. was resulting license billion as offset more down flow in competitive ramp billion, adjusted $XX.X Finally, higher than by and billion. sequentially X% $XX.X revenue partially CapEx highlighted PC free better ASPs, revenue export to quarter. DCAI than was up year-over-year. on flow points of we $X.X $X.X client contributed roughly operating billion, factory up offset X% pricing Apollo's of saw and Products contributions, Intel by in in year-over-year billion the $X.X the mix an The our product restrictions year-over-year. AI billion expected. QX more during cash working volume grew

in expect modestly. market, inventory delivered revenue through million digestion Intel on on reduced by first was our Foundry approximately improves billion, year-over-year telco of point reserves. both second driven volume previously $X.X sequentially. for impacting EUV the and nodes billion, of sequentially traditional half Foundry $X.X sequential down growth data X% small profit and XX% Intel up than for and the up was Revenue Though X NEX first of Intel approximately year-over-year. the $X.X the discussed growth services flat, X packaging of billion revenue center loss servers increased year-over-year the year-over-year, business for sequentially the higher base, $XXX We demand in excluding delivered off NEX as and a more and half. QX advanced Products operating including and operating was XX% revenue revenue X revenue. Foundry inventory X. Intel doubled start sequentially wafer worse the

revenue in will significant in margin improved cost digestion predictable occurred of occurred support million We is to and and than ramp X approximately Intel believe drawdown fashion, and our cost uncompetitive and of rapid XX% leading-edge X QX $XXX of also Ireland that indicates recovery in reflected nonrecurrence we rapid at weigh continued sequentially progression organized, the performance the technology XX% start-up wafer now of with The The profitability. Mobileye an to QX. on nodes of development due in complete. inventory and revenue it market-based coming facility expect our losses operating the pricing. and power continue rate area same an deficits volumes from and structure pre-EUV more elevated with R&D still to

automotive guidance income many below remains operating quarter. and Revenue to $XXX of the delivered positions suppliers, China, down. margins sequentially, consumption are lower Mobileye X revenue with difficult points half. Alterra conditions their for tied up revenue to in which inventory supply are led However, the constraints second Western worked previous X% million, impacting in improving as

normal to second sequential growth through the double-digit return expect more buying revenue as We customers half patterns.

Now turning investments Weaker reduced and XXXX. China TAM spending AI in for continued expectations our to cloud and the especially focus QX markets, enterprise our consumer on have server guidance. across in

customer result, a elevated. As levels inventory are

impact the modest growth to down and We client modest growth expectation from market should These customers an of in the exiting and the quarter. with center markets. With the below controls. revenue the result in data second high year the inventory seasonal quarter reduce fourth over in continuation flat negative of export in inventory enterprise QX with half edge at expect business revenue see and along of dynamics healthier should refresh cycle, the continued seasonal positions end of an growth the we to

ramp gross of to expect with a by efficiencies We manufacturing be growth moderately nodes. new margins and revenue continued sequentially, weaker modest offset

While quarters work PC heavier wafers we to margins. will will pressure external continue dependence several improve as profitability a gross products we the on our over next near-term AI ramp

expect all of $XX.X margin basis. As with in EPS At tax $X.XX billion third midpoint the XX% gross approximately XX%, expect the on of we a a of a $XX.X non-GAAP negative of result billion to quarter. these of rate factors, billion, of and revenue $XX we

in half earnings. of As the lower-than-anticipated gross Pat discussed and is the year earlier, pressure putting on back margins revenue

global note more spending quickly. Please be to are with difficult, may organization productivity these manufacturing the not model results. to make which help response. of likely our operating we to guide they yet of streamline in included non-GAAP not more we better our to new estimated will Capital our in build that has charges included have in and utilize decisions these while some are reduce taking are aggressive the improve We expansion opportunities capacity efficiently. and Since capacity actions, pace These breadth have uncovered and our actions guidance. Smart to significantly actions, associated continues and charges,

to flow, cash billion range to a we to make with $XX leverage. targets. In responded to flow. $XX to back we've by $XX necessary adjusted including to OpEx achieve breakeven net of spending CapEx achieve be billion, The adjustments approximately billion $XX of restructuring a $XX.X the of and our XXXX Altera XXXX, capital should in billion, to modestly positive investments gross of dividend, XXXX to with our and charges expect million improve reducing cash adjusted billion, we spending cash revenue would to as $XX our cash net free flow begin lower adjusted process of Additionally, ordinarily billion of free programs. These adjusted capital we $XX now initial approximately skip free negative payments and positive but the bring expect our flow us the to significantly liquidity position suspension free capitalization us related to meaningfully decreasing

of me let Before highlight I items model couple take a to a XXXX. you moment close, as

operating street As of $XX.X be expectations billion. previously billion to expect mentioned, $XX from we approximately expenses to reduced

within We will billion. of approximately reduce spending cost also $X by sales nonvariable

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it not product While was cost. external great, largely wafers the part and optimize originally a for using narrowly is targeted

has much be only is internally improved our up news will likely sourced and cost the gross result, is good modestly on Panther year. The follow-on structure. next XXA a margins Lake, As product, a

savings the demand, great lower see from the drives Lake momentum will margin years. in with meaningful PC of operating As be our our in position together cost and Panther AI a expansion we capital model gross improvements the new subsequent spending, from to

our below line IMS income with interest. has not in we're results. by in income expected at and and We're noncontrolled Altera up the adjustment wafer profitability the market on recovered The and the and and our Lastly, adjusted skips share NCI as production $XXX partners from Mobileye, 'XX portion achieve noncontrolling of continuing called net and so our income basis by show earned increases with a closing, while our aggressively not execute the and but spending satisfied commensurate to a Arizona the adjusting we cash obviously our XXXX Ireland million approximately of negligible conditions, flow that years. In is by a fabs more controlled strategy. expect market in on reducing driver, responding invest been be it as in far, has subsequent meaningful increasing positive free current GAAP to skip to

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caller. Jonathan, that, first can With the please Instructions] we [Operator take

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

big environment. strategic better picture, the doing issue, to wondering have the accurately much issue. CPU issue, be product appear issues, been they look challenges, same I'm market diagnosed? competitor, core in your That Because the the are execution issues we just when at

don't So I'm do is just Plan job? the what curious cuts B if cost

for the plan the now in you, starting the to Vivek. well getting this the us to products for to start GEO our segment marketplace. now with sustainable have rebuilding financially the the To take yet world-class is describe journey. that need we place, This significant building ago. We We're strategy. say believe clean building foundation it's time sheet to microprocessors X.X memory the forensics Forest the operation I'd Many business world-class opportunity to Panther for Thank competitive model said, rebuilding building underway. of us since IDM Yes. products believe we restoration Lake, world-class that we've for done XXA, footprint build Intel in that more The with would competitiveness. But that These a to opportunities we for creation Intel decades today. phase X of wherewithal Intel in into for we've ramp Clearwater financial have long-term future. that are of exercise, significant the we're have rebuilding company group. to the first our powered on, Foundry efforts, We've we this stakeholders. a new to recovery, Products financial launched done just aggressive those PDK we is financial as value firmly building we us on every shape, model for better of all underway more X.X, And and this identified of a for And with see products say That transition sustainable for more and many just from out, industry. a that us steps new with have a position the more could we're now X, efficient is the believe, companies. for long-term a and allows focus the that I year, that Phase it, savings. most

Vivek, do you have a follow-up?

either do the your funding. long-term restructuring map, road any sorry, the actions your R&D For my opportunity external restrictions on have impact and I'm curious what Foundry -- chipset follow-up,

the on the from actions? these suggested there in with those think what growth any past, long-term value actions? had of Just you changes I external restructuring impact Foundry. in $XX Is because billion about targets restructuring

efficient we fundamentally, we one even more strategy by -- taking our believe get these as in maintained you, The Thank And questions be your steps one. grants chips Vivek. will Yes. sort of place.

On the against announced. those we've to believe chip these side, we milestone-based comfortably that able that are we're projects across the still milestones investments execute

opportunities. actually the expansion very of we that lot like very we're office plans. Also, We're lot government. and we're seeing momentum a the those that on seeing place. program of the the areas quite We've those believe where in the model in in comfortably put areas a So of U.S. CHIPS worked with closely Foundry, comfortable we've packaging chips advanced uptake

efficiency we're about those guidelines by we're capacity. capacity had to So catch the completed, to. Obviously, catch-up the end be as we very up. $XX as very billion class that We and ahead, our building aligning to the to the focus scrutinizing the us $XX of for that to of LDV shell still that are are our the the confident revenue talked and billion had of the to we've decade, for no signals on to those capital able had more we Foundry we've as we spare In our with much solid we've carefully. to that investments. our capital, now we're have capital in ahead. them well the driving place. a with Foundry more future be and road be side commitments And going no see the catch capital efficient made, capital now products capital largely this like up more just spend to that changes future no view as paid does We investments market much

I'll again, our effectiveness we've flex We're and have that capital against market that and model and to up down conditions. with investments say appropriately, down going to smart can to market this we scale a Finally, established the up just building now we're our outlook.

we for now we're So of like that of we all the that moving of strategy. feel and into Phase strategy the X things track, execution set our on

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

way. impact up to But would cetera. macro as do like first ask I different kind to the want adjusting your of Pat, sounds And it across what you're on a saying, you're the Part X. seems maybe board just realities, of follow it cetera, dynamics of like if that it didn't slower any be the et growth, it structural well. to the difficult reflect et spending

weren't is, long-term just cuts target to your company, you that So and I these are billion competitiveness, either of happening, any were the changes the the question $XXX saw necessary. therefore, -- structure the felt real guess there

what of So describe can any structural the targets be? the structural you of outcome any changes? the Or financial might to your changes and do

Yes.

our out started be said concurrent Let the model. with world-class new We this forensics, at point of operational to to We the rolling have we sheet you me I said a back Foundry. what clean this start. analysis,

against maintenance, what We going become. And procure lots like footprint wafers is run foundries, world-class ourselves everything analyzed. shuttle and ways we how more every price are to of inefficiencies, drive benchmark Foundry and do aspect and effectively. of our that. that how -- capital we being business And of how can chemicals, a lot to that's of a going lot to is lot that a things, that's and going we Intel uncovered And we

a like? our product same too we What world-class IPs. build areas So does industry a using on done validate a vendors We've analysis. Similarly done don't many analysis. steppings. sheet fabless We're leverage uncovered quality. versus in We've clean look design as where company of side, we've We EDA exactly the that not lot effectively. quite

many these fabless steps are of be things And to steps. we're company. taking that So these are a structural significant world-class

the more undertaking. accelerating and at areas look now networking Foundry similarly, of that business an for work see us portfolio impacts. We're I'm we going we've opportunities. based been lot that focus are aggressively those also And can that portfolios, over to we Intel this X.X, add were in as we done the year. own right want IDM the move were results, now quickly year. And product we're realize accelerating forward next we these that's as lines center, for less-than-expected quarterly data built this the so even leadership. on second client, half product now business. a that efficiency. drive the on their We areas: each having with built the future. for And efficiency, we're those though We the of the We of never restructurings get X to for And

long-term long-term we've given the the based near the terms our or of can to requirements we those track achieving guide how model many in tempering that conditions of we're conditions. we've We our business getting our believe that in on things for down market portions appropriate regard, and Foundry we of we the we've set actions will model growth XX-XX are the But grow capital see. and long those. that we're In and achievable fast we're forecast, larger is those are scale you, built We view that business. accelerate term out clearly models on those the of scale the still up areas that us help term the the the market will described, believe to today's laying

Ross, do quick you a follow-up? have

know a the going analysis tailwind, But for headwind description Any details how of DCAI CCG, the to takes competition? relative puts and sort competitive in you're feeling 'XX positioning helpful? of what cost you're good takes with and change revenue. next guide to the through went not I to structure for would and you -- puts Dave, or year? primarily the be do. I XXXX wondered I would point from view, maybe Yes,

Yes, sure.

very the And and PC position. talked in we Lake leading On remarks that. performance our client that side, product our a about coming the obviously, We're of AI feel prepared category. good, product new I after given the bit next we think little Lunar Lunar Lake, in

soft of been position. We're kind only obviously when of And and we to is data go It the market and CPU is course, the and looks obviously, the into recover other China year. AI so grow making we'll that these and to The to That's the spending other by a going early also have world regions next of is plays telco that space, to out. And affected a traditional year on has of product we been as have businesses, the how question outside like So this does then center, that's see Altera starting like big of recover? NEX side recover. so and inroads starting tempered then space good phenomenally forth. now.

that we're plays year see Mobileye will optimistic how them. a next year be have we And ultimately. good to So out for

view part of of margins package the on the kind is Lake, followed we're all of into the that in front, material ramp getting comes sourced seeing it. gross that back our the outside Panther But and think is year, which and That talked fab. margin That given seeing I and with Lunar about memory they're next I almost of inflation Lake. impacting -- by tempered space.

lot provide once capacity beyond to external we is, a stories some resurgence get facilities the of sources taking bigger think internal start the next of have I should on of of year improvement move that the had we of that terms into kind And we'll to in our one meaningful profitability.

we've show year, year, following about even business, of a the terms then, we'll the lot, including start in as be more of will restructuring done impactful and Pat up next but talked the to And those course, new operating model.

good So do get in us a of growth And terms term an our don't I we the and news term margins gross play see actually model ton position. the in is of for kind both the we growth, long even and of medium margins. think it out, better in need puts us operating to

question next Cantor Muse from C.J. line from Fitzgerald. the our And of comes

outsourcing I obviously and gross guess, investing at I hoping Dave, you're TSM. titles It's both that how was follow-up question. leverage hard prior think to offer the about in very same beyond you when a to the to margins could Foundry to perhaps capacity to meaningful time, speak 'XX.

been on we that Lake how any or margins pricing? incremental of parts encouraging phenomenon competitive thinking mix be you've just kind bringing including a near-term call, you're should product into unfavorable Panther kind Is this So think other And 'XX, back more and in-house, moving the of 'XX? that about should speaking about the about we there? something the of that else

Yes. Yes.

So as news I begins C.J., us that really footprint to of is shift internal talked good the for lot about for that, manufacturing the for back a 'XX titles. [indiscernible], the our to

cost will more wafers internal structure. the network back bringing the meaningfully to improve so And

of in structure clearly think I a depreciation become really becomes cash cost for helpful less us. term, the beneficial the the which of to in of as in headwind CapEx, flow near kind are adjustments terms

I get all a And just decisions will our also coming made operating our taken optimize about way, model like we've actions will will got helpful. And said, forward. So are that business go-forward today on then structural we've that the that new going model. be basis from improvements both these the

how good We'll margins. think playing when of more a the for are number actual year things in should a I save for have we terms into gross us later visibility be out. 'XX date

other mix wafers us, than or probably for in margins move as just we perspective, are significantly towards on big margins than going a not nodes. leading-edge better from a more the think to tailwind wafers, it's those a the I be headwind strict pre-V mix

will a get that on help on on pricing, come that regard, helps to -- perspective, EUV pricing a because, be will EUV per then think obviously, one So It also us. factor us that in wafers. And wafer it opposed will certainly competitive also side ultimately, as really we from competitive down wafers the I that to pricing better a competitive pricing on to in about, and to we dynamic. customers we're on talked the helps we're us have running all products where of we're those getting That Pat when fronts. terms place the delivering process, have process, deliver as starting the And what we and want.

as the in progress And feel good through our realize we few so years. to pricing about opportunity I next of that the form

good clarify. start on with be to benefits. benefits that, of almost aggressive year, top to is outsourced. But health, where And we So obviously, of of next more of just we'll volume the that in Panther a one that a entirely add are ramping Lake process at both which Lunar bringing more huge with thing Lake, volumes a those With right? is on already second on, right, Panther the some powered showing really see that is of competitive just to we'll the start 'XX, product in Lake, product offsetting home the very wafers competitive half

and is, will start a more competitive that unfold home story as process. that more say, to to bring with And tiles a I'll really So product year. you competitive we next more talk the we

follow-up? a CJ, do have you quick

Yes.

one quick OpEx. on a Just

of $X.XX to 'XX, us You all calendar gave share million exit what billion. us that for could rate with think around Is $XX.X the look you the you in like? coming the would but I'm ballpark?

through the of give number given budget I'll to to we kind time will clarity going say, as go we're to of than part the going exit. fine-tune we're 'XX, enter that least we're me I'll at some that. start down to the I'll and next 'XX early in taking year, more we for Give some And a actions around the of give that. to you at relative should 'XX. you progress year through be higher

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

the the Forest are about you kind and internal? Sierra with talk And you about Can have we you product. -- competitively? this that or Forest is where you're the Granite map where But You quarter. in Do server think is shipping talked road that shipping how a gap focus. of closed the longer-term leadership puts obviously, Rapids Clearwater

for very product, but E-cores a right, efficient Forest, new Sierra obviously, And Yes. us. category

to with Early it. have feedback positive. very win sockets we go So customer

winning for it, it's we'll right Rapids now of the back the Granite anything As really a encouraging value on greater is from ramp the the that is back that. But But is early but Rapids they're quarter. traditional us, lot in say energy you that AI sockets share, longer-term market, XX% build-out, know. ramp. its winning as take lot of even for data a Granite though P-cores, for will and server center than I'll we said, more a cycle start the Xeon it TCO seeing this in signs

investment facing much the of environment, is in energy footprint. the So largely AI going we're a where into period this

showing on then the also XXA is good good very next have TCO progress. substantial product fab server very next spectacular. version win those So really early The stunning to benefits health, positive. The to health P-cores design Forest XXA, spectacular. Foveros achievement this new level but Granite year. the really looks And technical is showing Rapids socket this with of fight we're a very of and not Direct Clearwater that major is a but yet back, new should is early in having a of a really This design, for in

-- to So map overall, gets our the and is we second marketplace. position position half with And we're so stabilizing the believe is share then our competitive. in it, fight our we road market to I'll share say, as the the more back. We do static, that we more share, fairly, feel believe, go like market right? Year-on-year, we the in XXX overall year, win this modest see

nodes good is ours. node a head anybody's where being seen of for of accelerator, including lot and quite seeing the interest we've the AI our that head in Xeon of server things the we're One choice we're advantaged, market

our to our with like position there, from products things is here. feel and map strengthening only and of do we unpack lot a road the stabilizing So but improves

follow-up? have a you Joe, do

Yes.

kind be right we And of mean indications years. you of do That maybe some on like server traditional sort need server, significant you power in the are any a at now? of does when slow I on invest than come? you in ecosystems it Like positioned and see in take of a is are AI perceive Do that would guys in couple to given budgets that that? enterprise of we to advantage focus stronger of would from notion refresh. how ceiling it cloud overall looking that seems the Just a --

some signals indications, there Xx, Yes. do Thanks, Similarly, for you are market, there. to substantial. ratios that traditional, buying have too but right, cycle, from strategies see, is AI favorable that Joe. right, enterprise market. early give say, we talking for cycle behavior, people firm the market delivery will can more on we any are market, quite we cloud of environments. Xx a And do as And believe positive the their to indications I'll it's have cloud we do now right, they think a better be early enterprise start in refresh These starting us. consolidation server a the get better But our there, as refresh environments, real say the OEMs container benefits to we I'll their place, about TCO of in

and a CPU plus we're there is bigger for that enterprise the CPU the starts CPU cycle help the will X is natural will we described and that Gaudi CPU that, towards. products get as strategy on be believe GPU. be sides us both market market. of GPU both with and to that obviously, we've favorable as markets on So that's that more That's that do use And competitive, plus building story right, the But OPA delivering. GPU, cases traditional for the refresh course, positioning cloud like of And our more message be also the we'll shipping, the for the right?

And our Arcuri Timothy from from line comes question UBS. next of the

of decisions the X in than was was X. seems more line. you ago? of know it, and you was, margin pretty talked gross how mix really but can mix explain you small worse is and Dave, a I I probably part about again X it it June so it revenue much basically mean months was like just thought around Intel

was I'm can So such again, explain a just sure that why not understand big? I you

Yes.

biggest businesses just there do impacted to we Okay. a was couple one. to had that things of other that some related say write-offs the were legacy that That I'll us.

that Our X is Intel biggest bit planning But utilization kind We run TD impact to our in was Oregon, a process the Intel of quickly mature to it's X it starts Intel fab. We now. X even our capital fab, of over are quickly. The on sorry, in expensive Intel then Lake was that all one production to We move the is twice don't to good more of did a right essentially. downside on that shift processes run the fab, saves X development technology originally ramp our Intel Meteor X X or the and more lower, And and and capital. have spend And were made the Ireland production to Ireland. us. which wafers -- shift. because it decision

of but average while average the it's because more in not and still do above next we're product puts the ramp And volume that pressure not because quarter, on much a the we're carry it's we to margins so point do going below wafer corporate obviously, that kind the wafer at will we get better and the this quarter. mean of corporate cost early margins. will to the I next improving higher of into cost, be pushing where yet. we're -- through That's system the going to

that, we will Lake And better as on third situation and it's the started cost so and -- margins mature, improve Meteor structure we'll quarter weigh the meaningfully. well. down more on gets the more for After

quick Tim, follow-up? do you have a

in-house foundry my I plan we execute how with real one I in But keep these the talking time. also this Pat, to guess the just of bringing wafers the CapEx? sort given I all in about to of on can question is XXXX. even TSMC help outsourcing hand, hear more talk about strategy margin you gross CapEx cut? you back kind mean, lower lot on a

cut committed. that execute is to on strategy? the you understand the how of I'm your structurally customers Foundry more deciding can CapEx still that maybe cut trying just family and they're not So -- as some are

capacity And at level, the built Foundry we've customers. strategy unchanged. Thank highest Yes. Foundry you. And corridor the for

However, available, shelves how we the of until that with careful a have against that corridor we going sites scrutiny in orders, admitted the equipment keep will we're much go be suppliers be that much equipment that modest subject how for need we And put forward. to working have we and we as on how of much our flexibility place. we

to the that also We investment in some capital need support our we view adjustments of made current forecast. market

aggressive of right? build-out, say, all shell We think the finishing about we're we those And phase catch come in place, to 'XX. into So substantial ahead pull no and over side 'XX on couple we're been last had of capacity. those how tiles capital we capacity home focused we've investments now 'XX, as no making to investments years. And The harvest do you thing up, what had no now had I had We EUV adjustments. capacity. this we those, are that is big ahead, as of

we're a to, aggressive in more to world-class having as is efficient capital significant much that, utilization, for we'll capacity. much of required putting to of Intel right, again, for be does. we're capital going company, point require So foundry ahead world-class I'd on foundry this here requirements And Intel customers is, a of as to dollars, back a capital Products. like success the the you more We're Foundry. The be suppliers We're view how going our packaging. make with lot not there, And right? working point a capital fabless just advanced that be with Foundry with early wafer are the last

us seeing are interest customers capacity, packaging So of that most a advanced packaging advanced very interested we're we much believe our surge but increasingly in for clearly there and technology. for

when the point a believe that capacity Foundry Intel we've have to final be requirements. the we'll Dave benefits starts tiles lot of aligned to 'XX. model of with, as really, 'XX, we clearly, look put right, in order, place leadership those the as, before, we start described That's very and in that area leadership continuing we said, to beyond. home, will the the is 'XX, we've process the that's in Intel externally for home an and that's And Product in first see on-ramp technology, products, So time you'll coming Intel Foundry, deliver as good. The is in and 'XX bring big tiles

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

about it's margin of of can to of you follow-ups. now? that Ireland from on a clarify the much Dave, to how basis? a couple And how about that like-for-like when much -- fab, you do Oregon A a being talked talk on move much gross Can think headwind. be how going is fully loaded an headwind also right a headwind ongoing basis, that's you on you

I'm will base, much is, the saying? second sorry, how be headwind you're ongoing the question on what

Ongoing yes. basis,

Okay. All right.

in points, be case was call that mix wasn't think increase that that increase, account an and we're basis quarter, I underutilization amount, So best the of quarter-over-quarter a was the it Meteor related rate so I probably write-off the the about about affected that. was and talking also is to businesses to quarter. it. the it, and basis legacy basis margin given It way points. take revenue the XX% portion on chunk gross we XXX a off was the in but it or the of a think meaningful third know, that of third insignificant part And let's in don't will Lake points XXX good into think were, XXX it There I to

start Beyond that, not less the actually and point to it's become to where to headwind. a less going to going be it's

factory Oregon. Yes, cost factory will per TD ramps, the lower start have Ireland wafer as the like production a because a the -- factory tailwinds than

a becomes headwind into next we So go it year. as

[indiscernible]. Tailwind

memory -- in be we be next the next Lunar ramping for now challenge -- will has the as now package. year Lunar Lake year. the Lake Now we'll

So that to price margin. price we're include that at at and essentially to X% around in and a our have turn going buy

margins. So pressure the that externally. some And the it's sourced additionally, more puts got content negative on

know, some as seeing inflation. And you we're

starts to Lunar in outlook then Lake but a next that to starts become Intel of the Intel becomes which to on margins, terms to helpful, going one of and the we're margins the product be hint. is our improvements Lunar So to Meteor Products lot a why more tempered Foundry going really on side, Lake of we're be side. the year tempered of going have drag Lake. be because because It's on it's for

to And was I going just thing. add one

as XXA As into on High-NA we move their XXA. our the then team Ireland. focused into We're second our tool for instance, Oregon taking, TD is and Intel as more XXA XX It well on facility. also gives capital the capacity coming

So we're well underway on XXA.

the PC part already technologies, are capacity and our for which So of the TD was well showing this TD of good cadence it and indicators. for decision resources next-generation was a was cost also optimizing acceleration, use the AI it term. decision of long underway Part a but an in early

a quick follow-on? have Srini, do you

Yes.

confident Foundry -- opportunity the Pat, you think in least past, XXXX. and sometime talked cuts is business I seem changing. the about to potentially sound not you Foundry So in all even at the breaking that And given the

Foundry a given that all see the break So even just cuts? business sooner curious, you I'm do possibility could the actually

and Clearly, that's say, I. The of to putting significant taken right? our that that One that complete chop we said, objective, are today we that lot I'll journey. efficiency for for until wood steps our we're have we've Dave is a in operational place.

of operating come that's the home, But process that the investments many online, these said, that really this new objective new year we many our technologies. have. of we wafers come factory clearly, So is as 'XX

to I'll will significant cost expect that can So today aspect year we free doing scrutiny that and a turning right, of our and one. we're financial good profitability I'd the will is that $XX acceleration 'XX is many announcement focus, adjusted what cash the big frame time of positive. and But billion give said our us, focus the And of these an 'XX. the number. the trust every Foundry, operational Intel to accelerate of is lens next you improvements forward a say Dave carry by say, still which in flow

with everything thought that we're tree. is doing So that aligned .

question final from Ramsey TD line of our the Then from Cowen. comes Matt today for

my question I is on client space. first the guess

might you have to client down September. mentioned Dave, think, I flat in

seasonal impact primary think could There's noise system however give quantify the the think OEMs client inventory of into to now. you above double us puts they in XXX I would up market, digits, could the if what coming is for competitor your seasonal, and Maybe how you're affecting of I relative think there. might that takes But what there you you color going ARM lots be be in kind be about to modest with and mentioned or maybe more give guiding I little us September? you a described.

feel And our good the PC. we Matt. that, momentum client very I'll we in Yes. with take AI position, have

very very have the as healthy channel. sell-in large position I'll And sell-through we're market on have, share say well. and that as a the in we focused We ecosystem

third believe I portion is expansion we're TAM single we're 'XX view strong low inventory into seeing We'd is, AI sell-through given the PC vPro a say this above the of with is the and expected lot even quarter is quite cycle that as commercial into QX. Overall, actually seasonal coming refresh enthusiasm the of inventory believe go the market corporate. assets, also now some position of our we our expansion digit, very the levels in our So and we though around market broadly. further on TAM our we're comfortable overall we've in a share in where in indications that

great customers from We our success to day as able also they for have, that. and in not -- a recover vPro dealing recover were where who took with or so, CrowdStrike saw, were weeks vPro to blue things the on like screen period customers vPro, customers customers

Dave only that said, Panther of of have Lake market the And leadership and lot AI a So position Lunar PC. our make ecosystem, Lake reinforcement on stronger. we as the

So outcomes. solid indication far very I this so think is we're every very comfortable and quarter for those

Matt, have do you quick follow-on? a

forward? quarters? seen taking and early of maybe progress the Q&A, your of people that programs to bring $XX script planning to in I'm those how in wanted moving Are packaging. you, charts I they is Thanks, Pat, term, I they're the Have Are that or ramping I the XXA, last and doing the have acceleration. still XXA I to John. engaged is you've and things medium on with from on Yes, seen about do. the maybe to committed just hesitation business. some of prepared that out few things? ask gant Foundry the trying in And a kind the you for progressing the into how customers on Have maybe know that early of ask that PDKs think Are I wait see reiterated you billion those Foundry tape-ins? figure wanted funnel the to in But you you any customers? maybe seen stuff lot XXA?

Yes.

$XX clarify, just lifetime is me committed value a pipeline, deals, So we have now committed billion is that right? in this Let business the place. of this is deal

So committed in because I of $XX Matt, billion pipeline. want is that, question clarify think the I to lot a that more There's deals. just your the suggests This pipeline.

advanced in As of technology. the a of a been of that you capability opportunity say, expansion packaging, volume and and lot has near-term significant we're seeing terms

of On lot X.X have released the the now seen of activity the a And right? XXA last been PDK, vendors EDA, IP end customers we've flurry PDK the that with the specifically, a and the waiting customers. month, for PK we

optimistic go indicators looking test that the But released. to was many coming this the just point that coming So in to from production for them at good that the have I'd start area be starting future. we chips of based chips really in we've on PDK

coming we as finish industry. are want name time hope on building updates. I our we'll the given I'd this, reiterate put key to foundry Deutsche phase, these track earlier comments you of Thanks, believe to more you where the Conference we've agile last base to audacious traditional turnaround, in afternoon, in process couple and to our as joining of the meaningful are quarter that in the say and of to product we've have further long-term of over rightsize, there, achieved but this some see appreciate leaner, we'll have Overall, more John, as many always. So a business. And we now the this for come. Maybe quarter, said things to the a packaging will Technology that of And sustainability updates of that, also remain looking and we one like Thank call. there. But wrap We the the financial customers their up. I'll success. on future operation supply have we decisions very with for our a what resolved that a indicated, difficult with updates confident our our are that area. to do for out say Intel further in we've up, putting I making comfortable reluctant topics, that more at everybody. the and I'd shift with Bank good We're we the emphasis rebuild enable we're we efficient, milestones acceleration

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

now may Good You disconnect. day.