Intel (INTC) 31 Oct 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome to Intel Corporation's Third 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, Investor Relations. Please go ahead, sir.

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

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

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

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

a expectations Intel trends the and shortly. Operationally, key in across Intel Products. QX go and taking QX actions will Dave guidance, and as our are charges on efficiency significant our referenced Foundry joining market competitiveness. we charges these we business milestones consensus. Overall, detail measured results a lower appreciate QX achieved everyone. our having we improve on profitability the Underlying in exceeded afternoon, today. We stepped-up into our focus reflects the That impact. cost by current QX and This the our impacted of improving for are above business said, pace, execution us and aggressive on negatively was our progress delivered John, I enhance is across and call. our to you, positive is efficiency revenue Thank outlook midpoint modestly good the made above you our QX our we plan. reduction cost, at

We to our priorities. more mindset we and need more every and are than have build and before, are embracing we our for to on inch this profitable with fight urgency a as ever We teams ahead execute a lot acting Intel. leaner, better deliver

provide on Now X let starting announced plan cost months we me an ago. detail more with update that our reduction

These necessary the reduction XX% track First, majority on than and of actions changes head QX more greater end to we a vast our before are count workforce during and reducing us company. that but agile we were our hard faster the year. complexity the completed of and are leaner, making

reduced relative the our entering expenditures to year. by plan we we capital Second, the had over have XX%

transition the beyond. We we market more have quickly our at development and are now of and of positioned our react demand. With no to EUV shell Intel complete a to normal on Intel XXA launch now strategy well ahead XXA with to the horizon, cadence

allowing addition, focused with fab more In teams time. us less productivity, to improving are our on maniacally over produce

to unlock portfolio and have and efficiencies our streamline begun parts value. simplify Third, create we of to

We are the across top xXX projects edge focus narrowing leadership being data reestablishing priority client, fewer our and maximize our franchise value product by center on portfolio of the with to markets. the

we portfolio on simplification, our portfolio into and NEX our CCG networking business of part and our As refocus will move edge telco.

foster our our business address solutions units business to integrated customers' software our integrate more We into most challenges. difficult that will also core

that XXXX. by in charges significant rightsize company over segment to actions, are the provide reflects we QX new we We reduced the to cost communicate spending in reporting and we sizable we to took shifts and portfolio have a of actions were QX XXXX will more go reflecting efficiency transitioned to appropriate, which financial concluded perspective, long in Intel nodes took QX we also we cannot migrate actions, a outlined excess our financial that evaluating in the now a delivering EUV these plan as portfolio way broader related spending to restructuring fully impairment other that was XXXX. Related towards billion last $XX when advanced we and necessary X COVID and There we've equipment era space, quarter. to mostly processing. From commitments

to nonproduct gross lower billion, reduce by billion and to between drive net $XX plan $X and we sales billion CapEx respectively. $XX to and to $XX $XX.X billion Specifically, cost $XX OpEx billion to billion, of

improving on free We focus adjusted to and leverage flow and liquidity. cash positive decreasing be we will expect next year,

go starting me products. detail business, into on the Intel with Let greater

franchise to as focus ] collective developed continue are over value of our forward. years We of for customers partners have source our going tangible we to They architecture uniquely and on investing. XX-plus differentiation xXX ecosystems our and xXX a demands the help and customer to Intel, cement core meet the and [ positioned

further supercharge unlocking meaningful we our intend value particularly of We of to And opportunities announcement demands AMD and to our drive with levels xXX xXX recent see all ecosystem franchise. are our of scalability new compatibility about to computing. this and current customization, steps the future We a excited create to advisory and unlock next-generation range am needed taking across group. meet of the businesses. I

Google, Oracle, interoperability as and HP to together focus help on simplifying of xXX Lenovo, with with shape Red bringing standardized guidelines. on have have Hat, consistency HPE, and across developers interface a equipment Meta, from Broadcom, industry ensuring signed luminaries, development, software ecosystem across are the and and leaders Inc., Torvalds Linus members We the future vendors Dell, as Sweeney. Microsoft, founding architectural tools Tim

us IFA, and AIPC Lake. battery to standard created, lead new of product Luna Series and CCG, Turning the AI positions XXXV to well superior for launched significantly to our comparable xXX ever competitor Core and life platforms. AIPC Intel Lunar define of family In Lake's most Ultra performance is mobile category. at category. at outperforming the we we setting formerly processors segments. continue a In processors named continue our the September combination performance efficient competitive lead to This

industry AIPC XXX to end We cumulative more continue than ship Ultra, the by ] we to XXX more AIPCs XXXX. applications Core the XXX also powered with than the track models and nurture most [ ISVs, million AI in on of by and remain XXX ecosystem robust

desktop up bringing Next platforms launched and is month the and brings entry Arrow for NPU Lake, which delivering to of desktop, per the to in earlier power first performance huge the workstation the leap this watt AIPC enthusiast time. and an a

is overall first in paving and the a this home allow to Panther us on half making [ Lake of launch Panther CCG. second of XXA that are ], CPU bring performant of competitive progress the All we process Intel Lake and XXXX. toward profitability. Overall, way cost good more be our in wafers improve client the will more will

share increasingly Our customers is setting market in is our especially ecosystem competition, to position solutions. strong continue from as apart that a vPro from the value our see with road map us product and enterprise increasing

to Turning DCAI.

performance we compute-intensive to squarely quarter's market data is from solidifies X environments. as AI edge work embedded even servers. AI choice center latest workloads node We of host as gen are cloud competitiveness Our the product, exceptional handle the with with of performance of choice more our [indiscernible] leadership. core our acceleration. The using per servers than do. systems which and to provide the with delivering reestablishing the we this continue have Xeon new doubles memory strength focus to recognize cost This X opportunity codenamed enhance that position prior efficiency significant bandwidth a increased Xeon tailor-made counts, as AI Granite lower head Xeon this competitive Rapids, we already and Greater ownership. launched to as and significantly greater customers enterprise and in CPU. on Intel Xeon's we have And XX% watt our And total market of launches build powerful is on and flexibility, optimal

our Gaudi efficiency. This accelerator, quarter, delivers bandwidth language its twice model networking of also bandwidth the AI for the which and we X.Xx large predecessor memory X launched

a our Gaudi the impressive, pleased to rates service use. of have impacted to slower product the Gaudi we uptake X deploy X transition X benchmarks Cloud, software than as IBM as on from by collaboration the and and has with overall been Gaudi anticipated adoption ease are While Gaudi IBM we Gaudi been of by X were recent

announced market the value simplify efforts networking Gaudi part we NEX, be we our and month will our to our As proposition. In TCO business enhance million we on standards, focusing that of remain are to productivity achieve view, longer-term market a by in taking will open said, need XXXX. That a superior available clear not $XXX we There the target of our solutions the position. in is revenue as and result, we based last telco on drive with enhance us. portfolio, for encouraged Gaudi to and for continuing

leadership a more We core business edge will as of a which AI efficiently leverage into solutions, move accelerates. extend vertical business to CCG, our edge creates our wide especially opportunity to our range the edge on client meaningful and

focused [ Ethernet simpler, and our source to ] through in further solutions Link a Ethernet more NEX, to Ultra profitable attractive most connectivity we Consortium. we markets. In networking, positioned the gain are As share Ultra open better continue for Accelerator

turn in our in execution progress healthy disciplined map. continues to Intel stage at to our X Intel now returning our is this of fifth strategy to A development years key of part node process. Foundry. through process Let XXA, leadership me the road and is well

XXA, Panther Lake and milestones Forest early ahead year's have Intel Our XXA launches. Clearwater lead for of vehicles met next

PDK good of In the release of in traction the increase are X.X have and number quoting. and last the addition, actively our material we we with the RFQs seen engagements quarter

them expand AI by our chip dollar we include new Xeon recently, from existing partnership as we on a we are and customers. Most Intel AWS Intel all, win commitment will chip position a are XXA. in multibillion feedback custom X multiyear, finalizing to While potential new on a fabric based not to announced, our X on confident head-to-head

added this compute-centric design potential of nicely we AWS, over from quarter designs X pipeline companies, grown quarter. wafer our wafer has additional wins the and XXA Beyond

also billion leading packaging an Secure this edge Enclave advanced were also the added government. quarter. We semiconductors U.S. in for the in funding $X direct awarded design to we leadership our Given under back-end wins produce multiple program capabilities, additional

to ensure leadership government's proud supply manufacturing, in U.S. partner its chain the maintains the the to be domestic U.S. advanced systems are microelectronic and technology. choice process We of semiconductor and fortify

for Intel and of separation us as as business give optimize Foundry evaluate clear forward, is Intel external Products. future of foundry are independent independent last Foundry shared we the month, sources structure creating and an flexibility the establishing our and Intel important by to to subsidiary. funding Moving will This we customers capital

We foundry our category, other value. include #X fiduciary Board new with the process shareholder in are directors is subsidiary our forming priority the which independent unlock all experience. In will deep for of a semiconductor to

QX. revenue Altera, sequentially in operating and profit For increased XX% positive turned

new our ] line customers factor products, business of introduction [ well improvements. Consistent to With years. coming a To broad have end, previously, and with what investors remain the serve X IPO potential midrange and Agilex its bottom in announced discussions conclude a top we X to on map, competitive the focused segments. small stake the an also increasingly selling begun We and positioned early and show form path in continued Agilex market with is to road have to XXXX. Altera in on that we we expect said and

separation forward. recently hosted the growth advanced The execution to and greater solutions. Wrapping capitalize full comprehensive camera-centric event we leader systems for Mobileye its accelerate in driving out Mobileye, and to heightened enhanced strategy on have providing focus, systems. even with a a providing path up, discipline of company autonomy, company And opportunities its continues AI AI assistance QX deployment can by creating reflect and For autonomous results you range driver a the be to ability an compound laying development of moving value. expect and our

We our and profitability value. create our to rigorously long-term managing costs are shareholder improving

recognize game balance our reflected we our the managing decisions carefully the to and challenging we our some and connected improve want We entering put to past Dave. as are now board I our work strengthen far rightsize that, the employees. our few but We execute satisfied. mindset continue months, on every will needs. QX difficult meet to we innovate And closely liquidity. quarter are We I hard some as to up is are sheet very from also well, over new and cash over business, our view to a and staying of QX. With partners with turn customers it made most opportunity to their points the that and we to

afternoon, and Pat, you, good everyone. Thank

as both upper Intel Third growth billion, drawdown we Foundry, quarter in X% was navigated sequentially delivered in revenue range in and Products the we $XX.X up August. an and Intel clients. half revenue the even sequential provided of inventory

gross non-GAAP to Turning margins.

our quarter, expected margin. depreciation that approximately of reduction spending As gross costs accelerated margins indicated you noncash would and those plan with impairment likely for of we billion XX% of gross and but which above points and We non-GAAP margin Intel $X.XX and our driving costs incremental some beyond impact $X.XX. margin loss EPS to associated recognized charge billion gross know, non-GAAP are charges a and approximately XX% adjustments primarily X,XXX last approximately we $X gross non-GAAP share. guided basis $X X, per quarter-to-quarter down asset to by reduced EPS of by our This

billion, which triggered charges, impacted our results. $XX.X non-GAAP have we was of tax had These charges balance will resulting from out our cash by billion, cumulative charge impairment charges main billion impaired on the be deferred impairment growth also nearly is was charge capital. up quarter, that in expenses billion. were those other only GAAP-based operating forward, flow billion are adjusted first, Beyond $X.X years; by will charge billion we Mobileye, $X.X the asset components: X $XX cost X of We the with by of billion available $X.X in and lastly, operating consolidated the $X.X with associated The to sequentially to in are $X our which $X.X and $XX.X billion details up billion second, of tax $X.X XX% plan XX-Q, cash a cash CapEx our better aligned shows year. This flow approximately of not of billion impact. going affect next our last the related full over cash which a asset goodwill is reduce free sales negative and of severance taxes tomorrow. QX approximately last to working employees with impairment in take earnings; excluded losses

with land the We associated QX charges 'XX. to in cash cost expect the principal restructuring

year billion and operations investments, cash improve. from delevering paid We focused to continues have of down as $XX.X remain debt on short-term the next billion and in $X.X of quarter cash

was revenue segment their to billion $XXX revenue XX% was start $X.X digits billion, income Moving as as CCG of results. revenue was revenue inventory and was double sequentially Revenue traditional Products of Operating increased recover to down sequentially, demand revenue expected. X up operating loss expectations. Intel up by Products Foundry a on $X.X up charges million was revenue Intel impacted Foundry sequentially and a profit earlier. NEX $X.X [ expenses. improved. X% DCAI the for $XX.X of driven cyclical by servers million reduced up higher down off quarter-over-quarter $XXX as negatively materially operating $X elements work quarter-over-quarter down revenue ]. XX% of driven mix was slightly accelerator per discussed write-down sequentially up billion of of billion, Intel reduced impairment by I operating inventory due wafer X X% to sequentially. customers for business Intel as bottom. QX delivered and was this billion,

this to charge. losses continue same at approximately minus rate in QX the impairment expect We

as cost with significantly. we and restructuring nodes to better structure to operating improve savings actions, we realize the the associated move Next with a expect year, losses

up by QX focused year revenue Additionally, of roughly revenue driving on adjusted full Foundry. Mobileye tangible and most as XX% lead which and X% consistent we're was improved was sequentially shipments times delivered is to basis by and $XXX easier billion China XXX driven operating income. Altera flow Cash XX% Operating on associated $XXX income. spending become margins revenue value, $X returns million, a support where with above reduction intensely exposure primarily well of of partners. than generation distribution discipline. guidance guidance gross now maintained revenue sequentially, down of is with by cash increased book the reported on as improved significantly year-over-year, Intel to in for million our our quite was points strong will operating comparisons smaller. operating more better margins

we end work previous independent supply to constraints. to revenue growth for inventory as remain sequential single-digit Altera down work year. inventory continue half to to our high customers first billings of through next partners expect the continue below warehouse normalization cutover operations. Overall, We distribution tied the we will QX, as For prepare with anticipate consumption

fourth We QX, across Now and our customer aggregate. Based of charges of we QX, reductions we ] with as should additional of successfully revenue client GAAP DCAI NEX with on expected of of midpoint portfolio worked towards basis, and XX.X% grow Revenue line rate continued gross all these we basis. expect a turning inventory to margin we non-GAAP inventory expectations our billion despite of our CCG the $XX.X billion, QX and higher on $X.XX, off actions At factors, to $XX.X businesses end cost approximately client be $XX.X On execute customer the EPS sequentially levels in a down in in [ expect on expect million flat guidance. quarter. and decisions, continue XX% QX. in to a restructuring in abnormal QX. tax to the seasonal in is

investments to the and ability respectively. We annually our growth to with up to scale continue anticipate business gross size billion $XX XXXX of that X% trend billion, dictates. X% $XX demand We to be as capital X% and line will to approximately net the X% support revenue to

restructuring $XX cash expect billion net timing of cash negative is positive $XX XXXX, with $XX.X $XX approach year-end. In to we CapEx free and around as for billion in achieve approximately OpEx gross $XX XXXX to adjusted today of flow of offsets to uncertainty expectation we adjusted charges billion, and billion free flow. capital to the billion the Our be and to disclosed due and the respectively,

achieve of are to and restructuring model to moment financial a model. impairment XXXX you and this remind in you items take me a let today's as charges close, couple I that service Before of

market strong of AIPC positive growing adoption on we the and the product First, are positioning. our

we of could products our As Panther particularly XXXX, half. Intel year muted, margin to the in mix and be second CCG expansion grows outsourced support Lake, gross ramp calendar and XXA in

We margin structure [ XXXX XXA, cost underutilized of to improve of expect and improved tiles by gross Foundry fall-through vastly ] a driven Intel significantly operational the return the in efficiencies. meaningfully Intel to

Second, by John future from be noncontrolled standards IMS product SCIPs encouraged we've of We're million the and there's the closing, the spending, the process and of external much turn us recognize in set profitability back on over Mobileye, confidence to expected Ireland. In and be earned of ramping improve strong with [ to of to to by GAAP second well strategy and to the to $XXX ] customer is Altera, we the our work basis give made shareholder weighted efficiency portion income a more in execution, SCIP of our done outs heavily the progress to and with quarter below business. compelling partners the XXXX traction in and our returns. I'll half start ] the [ quarter, at the this fabs the Arizona a grow continue will years rightsize remains the will our now wafer our combined deliver estimated Q&A. it to

With [Operator can question, first Instructions] please? the take that, we Jonathan,

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

about on want healthy. people this you see externally ramp talk solid ability results. on about You've said XXA Congrats talk going transition. confidence it's are metrics to to in the Pat, give to able we're to just be to Can the what I it? the

But or externally grows? an external your design some about of Foundry the metrics base importantly, as customer revenue internally true from come wins. either Intel even to are more talked when going perhaps new You've

was we new quarter And Forest. we obviously, X that. Lake that Panther on customers, to customers progress ago, new a Clearwater Internally, a the weeks which had, Yes. X few added were and external public Thanks, good Ross. this Amazon, on

updates and the ramping qualitative So updating Panther continue as for a go go the giving year. solid to the lifetime as on 'XX much move we metrics through wafers progress LDV that progress. as not financials lot it. we'll foundry get ramp update, progress Clearly, line. only year. Clearly, there's as be financial we'll impacts margin Thus, more larger bring have we from updates, on well we be more with and on we'll structure Lake on year of into next that benefit because deal we'll has value across year, the It as XXA in product give we're better we was through the customers, it home on as late

it is So to we'll be the business this way, it year, industry. but for us. foundry specific for will that be giving next financials important in tie clarity for super hard but our to

as of we'll proceed. we So giving plenty be color

Ross, have follow-up do please? you a question,

do. charges, excuse One a the I side on me, chronologically, be gross better you're about it for just second quarter, somewhat guided. than that's to gross I not Yes, you -- Dave the margin overall, know like ex want you third margin the things, that's where but looks or the of XX% in much

So the the what especially it quarter? is second we puts into are about was to thereof, the year? next the what leverage of cause of margin going the upside takes half And fourth the that get as lack alluding there? you're in or and gross big down Why picture

Yes. Good question.

Okay.

[ with So associated say third better the really was previously I price inventory. reserved of would sell-through ] quarter

most that quarter. that us the thing upsided I think was in the third the

fourth into the sell-through that itself. we'll repeat have won't better look As we quarter,

we So margins in charge. the down additionally, And start-up the the of gross did we're to that will quarter the kind associated third of be with have a why XXA absent slipped going in than costs quarter. fundamental more fourth impairment driver

of is previous that's of XX.X% around put margins. But fourth the a quarter pretty I the guide on guide. It quarters. less kind do to clean So the at it than for going a midpoint the pressure gross noise some little has think the

kind of Lunar in provide on Pat We're particular, gross indicated, say sure, would the think our which It's look Lake, product. good we're kind next-generation inform early. to I to will to and AIPC 'XX all going for all metric on not yet on and still takes as we're puts is in of terms it's are, of in guidance how a it 'XX. margins. I start of So in

As gross margins, you I on to in Lake weigh of the the know, affects down business that gross and Lunar us for memory the the going it's package, the the 'XX. has in product think side margins

the mix wafers Panther know, you more which better also as helps wafer include one, foundry get but of the business. Now next Lake's internally, product at just also the margins the level,

So that's get in as Panther helpful gross we be more margins. 'XX volume and Lake, going to ramping for

On the foundry we will next side, improvement see year.

it see it won't we at level, that reductions but 'XX, foundry don't report the because on will we partly because You we side of see step talked gross improvement into margin we as about. the

going about, their billion, billion of it As spending of talked spend. of Intel in efficient we associated cost sales with is we're terms more more Foundry getting our business to directly in $XX reduce the by than $X

just we're better EUV wafers Additionally, on have a wafers. to be basis. EUV mixing pricing to relative dynamic, going a cost to better more have a structure

be also help product our portfolio, just something we think, not as think Foundry in and and continually 'XX. commands tailwind. yet, that seen kinds in just Products, the profile model managing usually with business optimize well. Longer I been better both better term, improvement way, in and I've there. of all and better But longer new that the we term cost I shows up structure a side with pleased that P&L. see margin foundry at improve should their at on, a foundry meaningfully of both I've product to the as a And just a So going decision-making

of as sustainable as we're indicated that earnings focused return, on restructuring on just the And that, financial model add transformation. this last we're results, phase phase, we go I through more we our much shareholder next disciplines. would business in the call, our quarter's With

very Getting process getting game. is competitive. place, place, much The first our in back getting in phase ahead the in shell getting about products

the base going the go be. base, I cost more taken overall, CapEx it. from as focused overall, getting of think cost quarter. on us investment, gross a much are actions tough overall they're So where we be this margin, And Those to more getting operating margins we've to the we need the Ross, company, we're attention lot just forward. our

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

an maybe yields? mentioned XXA a sort that to you looking translates of of translate high sub-X.X, you And just sort Can a density customer you number in your conference Is number for, they're defect defect is at when foundry? does think want at how into talk say, said that to enough I that on Pat, I to volume? what September about density think. see

Yes. And Tim, big density, have sizes defect yields it's because the conversation, percent a lower at complex density. even die defect right, same that

variable So size particular the very of die product. depending on it's the

was yield but said X.X, DX that's yield we of for not when a this than the development, of phase So that yet of less at we're the that production the process process a healthy at number phase not high-volume level. yet development XXA.

in the at where be to point cycle. life process at So it's we development we'd a number this are want says that

that as very well doing volume it work to that on bring But signals, year. to in get qualification and as track be never this we with important then And is production out of all to densities that the year, second as next year. Similarly, forward. I'd with, we that managing Arizona wafers move-ins, accomplishing the you as we're the markedly of next half high-volume second that. first the density. terms yield that emphasize volume tool the the we milestones maturity you in go we for look high-volume in we levels to next we'll defect you're Arizona lower the X, half XXA. fab right? of continue now, ramp quality and comes and to in signs, QX on which is as than at process done and something that and today's you move Clearly, of going in online that's we'd also expect all production, of believe EUV yield to into hit on key on see that as technology You be we accomplish the in have year. we Intel tools carefully coming next in defect the But we're again, have us

progressing giving we're and as overall, we we'll proceed. updates So be you well,

follow-up Tim, do have a you question?

I on Pat. do. Yes. I Panther have a question Lake,

track, that that but guess most still we are that? that Or coming do Is know you a speak I change? So that And always when hear plan? still I to back it's tiles outsourced. in-house, Can the in-house? you desktop was is is side, being Lake being that to dual there at be still brought it the still an it outsourced? could that back [ look be Nova guaranteed on option Or it is ] meaning

tiles but Panther the you. external, the majority square percent in back more of the Thank area the internal. package some be is in-house. back millimeter would of XX-plus Lake, Yes. silicon It's are

So the definitely a Lake coming the at we majority Intel. Nova good continuing that leverage large come SKUs majority back capacity margin more wafer is some tiles additional but to we're back externally, have Panther looking Lake, for have the of Lake as in-house well. inside Nova of of by and

in Product some the have committed the Nova we Foundry. So the but still flexibility Lake majority that Intel product, Intel of to or is large

factories a product But margin our future. structure large of Lake and our one wafers the strategy are meaningfully that said, executing absolutely we Clearly, fills Products. Intel lines on bringing that for the a That of partner. use we've in Intel wafer's home we'll been demonstrated the has TSMC also has the home meaningfully and strength overall, out. partnership Lunar coming that selectively of So percentage the laid that great improves

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

to last on question. follow on, Wanted that

be negotiated that in optionality capacity, terms to in all you're of do have securing leading-edge obviously, on in terms get XXA. the of what if capabilities you delayed, But in of terms of how were terms In the are Arizona? in being terms to securing more successful, about time in 'XX, in thinking XXA on And hand, adding if of proves capacity capacity frame more 'XX. aggressive you other

Yes. Thank the optionality I'll you, product we say way. C.J. have in portfolio that

We have result. more in competition does supply chain as resilience our than a

we good quite that. feel So about

G&A really portfolio to with and very with We the continue value nicely up to is set capacity. our right, product TSMC respect relationship,

as to -- Intel conditions bring our flexibility investments products require our shell a margin scale customers of the over if we wafer our ] of benefit several Given that last adds we've ahead also but market [ in we the years, a nature have given and are for margin And lot made foundry market way. the that every home conditions uniquely require able to strategy to meaningful from the up we if well. structure stacking for

So with progress we And line, ourselves products really starting we also an more XXA, on foundry packaging, with very are is technologies future. map, we've Intel we momentum see but product road in uniquely nicely the based setting in place up make as advanced the for are finding our long-term Intel which and of XXA,XXAP, customers, on benefits Foundry. the in to put strategy Intel that our really aggressive

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

I do.

an read QX, better give us how on the into you're consensus you for QX? Following the early about could guide thinking seasonality

Yes.

for C.J., to not QX. going we're So guidance provide,

whether into we on to update work next quarter's But we'll be and seasonal see you Let's the you color earnings, going than and X% range, things for as can QX, we seasonality in in are that. or the get differently QX XX% we average January. to is more give

And hard say, it's Yes. say. to I'd overall,

or to us so control our don't of we're committed we if that is the overall opportunity flexibility quite up well control, at, to question, I as those a of things we with. think, this bit strategy the the very clearly the marketplace, to to have can we manage world directly lot but we there's we're to C.J., very do. do that we deal have uncertainty, that geopolitical think scale comfortable and uncertainties by that don't I business we necessary factors and any positions have But well. beyond the what a as looking trying with a in at And cost We We're structure to indicated that wisdom point. have other last overall,

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

to one, look XXXX want the kind I back of For how should at we it. and actually first to go

think [ trend point, think about of that the margin we should then because And [ I I you headwinds line. you the that XX.X%, sort in at I at asked some don't of that point, XXXX? imply second at also QX ] half your look of 'XX. mentioned for I X% Is growth on one the muted top Dave, gross in sales? ] line side, said that expansion, you other I how if And think X% of is what to

dip So that levels. got below it whether me confused these as to could

trend the kind outlook, not giving us you're 'XX metric. know did I number did -- just but you XX.X% a give you and So line give of

color would So any be very useful.

Yes.

So X% the on that a better, then in fall going rate over to minds. that it. and you start to business us in revenue our perspective. I -- the XX.X% is in to X% unique through quarter the in year, out things investing that's growth, time, proxy we're to calculation profitability Only we are year we're quarter. aspects the And of business wasn't a a of terms growth be the every not to suggesting was good again, 'XX. to which good next it for to going turn it move have that quarter I'd XXXX, for to just managing but clean, Clearly, from how a full take it you every some say was was XX.X%,

You're right, second for of following Panther like that over half to do in improve in becoming for we're volume meaningful meaningful XXXX. the Lake [ yes, business the we and the the headwind the time a first given of part the versus year volume Again, XXXX. half becomes as part starts more in more see more ] more client

you follow-up do have a please? Vivek, question,

ARM-based right for Intel's strategy just or center is What Intel's replaced Is what does with what like no Pat, data point AI CPU-centric AI like competitive look product. commoditized At enough? Pat. is products. now? future for custom the being one does there maybe chips CPU the if get So good

plays the Yes. just in highlight. Thank perspectives AI X you, CPU Vivek. one data to an Number compute. center role increasing is different

So and Intel's strength head comments. environments area nodes Xeon I of for an in my are even reflected cloud-based in as today, already,

we And or there As Gaudi. a you embedding, prominent CPU role, accelerator CPU or CPU to more plus enterprise to much expect more plus databases, place our strategy is go workloads. refinement into attuned AI,

associated enterprise use the them see forward. we ] life So with [ cases going having a very long

customers. Second, good product seeing of X, a but good We win, good I IBM interest and Gaudi as there. mentioned early the activities pipeline said, from

in regard. And launched ecosystem xXX we that we also as this the plus advisory. So quarter, accelerator have Xeon

we into from build industry, life from breathing the architecture, that the how xXX and we're are seeing We luminaries interest on momentum. extraordinary and

number to well most all be interested forward. industry participating cases very and in front applications ISVs quite footed range for of world's use greatest definitely full architecture and So us influence, of we a the as the the time. xXX and AI and with The want continuing momentum expanding cases, joining use of broadest but also industry's that

And Rakers from Wells our comes from the next question Fargo. Aaron line of

appreciate it. I as Yes. The if well. can questions, -- X I

given you higher success in billion 'XX? out this how of was external the on XXA 'XX, first think how I that on pace how we [ forward, as focus as about it, would of that in think ramp we curious, of the foundry you last curious about. quarter. start So of most inflecting is look million wins revenue it you talked pipeline that the design And just your that recent the of call quarter, ] about large I'm external that, business. business define looking And into to we I'm ramp $X.X kind guys $XX of the piece have do kind

Yes.

foundry been years. foundry be external for business internal for the Our a building will couple dominated [ business of products by the many next right, as foundry the years. overall, the be ] of we've So portion, portfolio will that modest revenues

will did the quarter ramp as online. lifetime indicators And couple the forward. go our the go this profitable by numbers of said, wins, reported LDV, on foundry design the of Intel the coming we'll on saw the external we financial end Intel $XX we decade, plus the deal break that business, Foundry advanced of dominated said customers right, of be in value our of we revenue, external of for of objectives decade, foundry we'll external did portion be the nice as by for the QX. a updates we years. That customers in billion growth, for through new foundry and rest substantially business periodic giving So products we new like next But we quarter-on-quarter packaging

be to add nice characteristics, business that? nice seeing growth as on updates are characteristics, we'll giving and we go more forward. Dave, So anything we

No, than I it but Intel a dominated business. internal within still quarter, mean, bit business the by Foundry was other this up

Aaron, question? do follow-up a you have

do positioning Granite your we think your as about I Yes, share side of you on of curious as business CPU share do. the kind recapturing guess question. about the continual or think in views of far recapturing and service. ability Intel's stabilizing the prior Diamond server as discussion Clearwater server how I'm there's kind of Forest Real or Rapids, debate quickly I a Rapids, of position off market? xXX characterize in that we to like

because goal expanding And role and Forest quarter are Yes. nice of milestones. Thank our X, our fully and position. customization. the it a available our I'd Sierra important Xeon and was you, shipping for a our was AWS very And stabilize Aaron. deal now from say position is grow deal Obviously, this reinforces solid that but Granite Rapids also Clearly, execution. Xeon,

hold seen then the these head is nodes, that business and strength share. is use the cases. share of we've AI say Xeon regain for I'll So first order the AI

we for more showing Granite initiatives as performance per cases. Rapids We right, into getting to look clearly will there basic we the and of have competitive have ] share XXA, Forest on, power good Rapids AI very just shortly [ And that Clearwater Diamond fighting on is underway. future, performance core health the powered on for go use fab.

good map well. shape road the is So in as solid

do of more putting attention analyst more has every How inferencing we do those How data? complement CPU increasingly, beddings to for overall, And our database that RAG all those the the [ that weather question us for with are I are well ] pathway. much do is centric. model, not ], how in and been if do localized last models? more that and and training. say, training. creating we I'd good think of AI, use as all And training them? that the retrain I we of a [ against areas associated And that How and is with is it. all we So all also to energy I'd But add we of feel emphasize using cloud-based

more and CPU see toward us we something cases well our that unique of of its we've and coming these AI had. strength in use the some the market So power traditionally strength as the as

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

guys question I Pat, particular, in pretty have technology, on know, I you a it's believe, lot about foundry proven, I the have. EMIB et look business skepticism packaging XXA have Foveros, the think side, I cetera. but though if a at there's you good of packaging I and and even

question given see thought your more in right interest the have the would I is, tightness So services. packaging would industry we packaging in my now,

curious I'm be -- So seeing why we I are it it's I'm nuances to not packaging are that. as Is interest. seeing some curious not just because TSM we with more wafers. as using guess just of to there why must your

on many they're of at I'd say like these though, EMIB now complicated. cowos, is this technologies in we qualification that interest your chain, unique and well. significant designs And first do see area we and as time Foveros, have looking designed the at Well, then and and moving supply takes looking they're were

very see area. in actually good momentum that So we

healthy advanced as so packaging. nearly, go of the which will we as see, right, aren't up pipeline size. will activities by advanced packaging, But And those the also we'll driven Most margins into wafer for the and external that very design, as technology of large as strong. be quarter-on-quarter 'XX see we external were year-on-year the as revenue-producing improvements nicely be revenue saw they're in is that foundry Now well. not we largely in

see then comment, advanced but engaging of already of packaging us ] earlier additional give as are optimism chain term. business. this So great did always piece wins now pipeline in our business as stand profitable that for noted our moving in, include long LDV the [ to well. by our and becomes a foundry that that a an we designs slow, the we that as foundational it the seen the I And we itself in design is hard of progress and supply we've all already

have question? Srini, follow-up you do a

much you there I Dave. PC guess Yes, margin One, it gross a of your that margins. side, helps the said impacting percent. the that is I your suppose I packaging the your question just gross on hurts your I'm ASPs, I an having do. packaging guess outsourcing margin I gross are memory. margin? gross the guess how of but impact and wafer on other, memory X issues curious

that's Lunar maybe So package? I going with, architecturally, to and one And And know impact much just Pat, that's I it curious in Or how do is why something memory for one-off we a to this of combine then having. is an guess, need be Meteor to, Lake? guess, just ongoing?

we part And ] Lake's how Yes. gross next having but would competitively. significant terms hard this originally, impact good a and Lake And AIPC just the up. X/X volume the to recognized pushed [ Lake. Lunar Meteor year margins, meaningful a on Lake, of be clear, our it's how pretty be not market it's exclusive impact, was significantly to on Lunar volume of expectations like when the We Lunar in we and were

total so And pressure has reasonable some for put on the that company. margins gross the

we second that architecturally, from life great wanted capability maybe product. And half that niche And designed performance product niche being Yes. with then a a product to high-volume achieve highest be Lake to initially to question, and battery AIPC, occurred. Lunar went it pretty was of the AIPC and a

meaningful million XXX it million, well. piece from speaking, relatively as XX about a of mix small a relatively Now I'm our total portion of talking units, but

we occurred, around and good It's product that industry a industry, became volume and obviously, margin of the category. were going the overall. business. volume for the energy the AIPC because the Lunar run volume want to But implication, the for way So have a have option channel. momentum scale pleased very and a for don't at to Lake both this higher to Lunar shift volume bigger company like That's memory you that Lake PC as to a not

of Lake. the Lunar with road AIPC this GPU, it's But the more for the it the Panther in structure, build Lake. a margin ] forward. its [ around package. have with off kind impact 'XX And map be memory one-off capabilities with way a category. scaled successors ] with we we're again, and we've Lunar I/O off product. of volume happy coming Lake, the case Nova But dealing package NPU we as CPU, going is, well. really have in be won't through the we're [ with traditional that and package not great and We'll and in it in portfolio, will memory the in for it specifically that So the it Lake enthusiasm That us, in a will

comes Research. next from Our of the Caso from line Chris Wolfe question

have are you question think were and I ] that numbers, for you go there the about changes much in And I guess guess do you you growth next in well invest as through fact resulting the you how nodes, through is is plan as Dave, I market first what those the 'XX I maybe plans go as question [ pretty cash well. on revenue is. the Yes. and for as clear technology what bit new in the is CapEx in flow conditions. that much year. how and have don't much the 'XX free both that given OpEx a Also guess, flex to flex recognize

Yes.

But plan. and investments OpEx, we invest think necessary. there, that's to some the can we pretty the areas obviously, pursue. mean, want here most $XX.X adjustments important I team I the if rightsized on in for or to that the billion a Pat think firm make we've

investments process, be relatively we of the with components that always case. of there's for make there And That have bit always investment to maybe we're we going CapEx. X so we there and will, associated associated are process. ahead. There's variability this invest to little largely as progress There investments to is shell can say, through kind Shell going up, with advancing capacity. is will CapEx, would We're I the what make caught a the ahead, those the we just I that, process. [indiscernible], to there's advance the think. adjustments but year. The

more be shell relative to terms And to then it flow. capacity tooling based then I flash, becomes we going shells, of capacity. what out of cash managing increasing demand the the see as our look and itself we think, to on measured, kind of and, we're we're modulating so And of in now course, that

there is flow year generate to and flexibility So into flow progress cash there next year year. as adjusted free and the our obviously is through And the following cash generate to onwards. we free and there goal

the of accordingly. one be managing the other I show guess which CapEx offsets, up any net variable course, already will of we're net CapEx we'll component SCIP next impact So next offsets. year. our also some a to we be see to [ aggressively the ] into pursuing the And some which will to next baked we know of start of already credit We're the meaningful investment would offsets forecast. year. year, going from more be have tax

right, gotten an that EUV XXA that fleet, just we to for that, to leveraged bit across highly X, I a Largely, be a Chris, little our we've thing CapEx Chris, would the XXA would -- used lot that it. the now more into across fleet. Intel have flexibility CapEx add and base,

this overall fleet through years, a X have this X normal rapid the we're to ] opposed X to nodes, add as to cadence capacity point now finished X much that to we more this and capability. Obviously, is years, to more capital. racing [ we're building new very a back nodes, that progressing not So get technologies other modern of requirements to of

] And NA, I'll the at largely us TD also singular XXA bases include optionality high the central include the So that across that development say will it. give with are we node the high have the entirely into not of NA And additional same to that [ flexibility. exception flexibility well. even or a EUV, built part we've as of almost as

So capacity. we've lot of built a

capacity much both ways Now forward. leverage overall manufacturing a we're going going and more in that a high-volume for to TD leverage efficient

do Chris, follow-on? you quick a have

a case, question I you on the could looked of obviously, And it's why be and of I And a willing next has right strategic that's And kind various what Better would guess in or plan Pat, the on explain that. rationale now. opinions about comments do. the at the is if if tell your current it's think question, -- mean, segue Together. beyond good I you there's anything

as flows And manage that the it. synergies of through foundry. That very the see I'll and the that requirements Yes. outlined aiming And it the The X we and comfortable vast overall volumes customers I'll say, subsidiary gives right, for co-development from we [ external are balance the forward rate that ] we to earnings able just to capital highly and as as create well. definitively opportunity in say, Products. we then the as model call, moving we're said, go last substantial benefits the of company us, that very of we're clearly customers clear more of greater that fund be cash that to aspect potential managing to the to the come Intel communicate we and sheet beneficial as majority from integrity, get decade operational is the separation, and the our

for ]. those distinct but [ Better So there view all ] some Together reasons, are [ of

question, Jonathan, for we've please. got last time one

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

on mean In shift? that? shift talk your there that more in focus other are you're that mindset opening what product the Can prioritizing there? happens speaking, to xXX? about, Is areas remarks, focus you mean, less a you by Just practically you Does talked and organizational about xXX. investing do narrowing what

how the when but of SKUs Joe, that maybe much the line, its there's business the too for instance, complexity a in as customers many Yes. of developing. it socket complexity lot behind our current product examples server and And complexity substantially I'll across puts types we, growing. maybe development was couple OEM, create a size, it, just larger they're At [indiscernible] give as details well our and on appropriate quick was different

have that So capabilities. client with road we've marketplace, the handling fewer to associated becoming a the SKUs simplify how to the it. in fewer is SKUs and simplifying are map, efficiencies integrated we're product large to focused on graphics how line, the the taken area, cover we graphics and steps increasingly product that. Similarly, cover

need for market the graphics less discrete So forward. going in

to simplifying those together our the map we in around CCG the And core business for areas. better be market, edge leveraging bring that So the then road our to and reach took to investments. able steps

spoke billion very a we way others to that fighting leverage OpEx our but those, Dave of variety hit a I'll $XX.X that have our behind profitable and many growth So as allows still say, about, get future. for investments, ourselves, in the that solid a shape us in more

Joe, do you have a follow-on? quick

Yes, relationship? leadership does referenced xXX on still business are Is model? is do do. to focus, is there that that is that you in Like the versus well? . excess have that prioritizing benefit -- if to internal a the Just foundry marrying really that the more a more anything focus going arm's I is still kind those length how tightly? think extent you about the X.X with relationship IDM of To they it IFS the you shift --

you different the run and wafers, from a internal external that business, come foundry, view cash business. clearly, but of And the how right, Yes. requires the manage flows

that subsidiary edge, for at-scale an we're going leading this foundry piece is model. the of bring success extraordinary western-centered industry drive still for to how is for and world. transformation So but cultural model the asset a key an us, of That the

So able what been position in teams us behind a to in bring to but X years we're we're has to stunning to accomplish very X have done. an been and it's making see focused And technology. wow, years on journey our nodes that extraordinary This not there, successful. from accomplish just TD leadership

be restructuring steps will very critical us financial to us was a the of the what be yet. in our to of well of most and that seminal the history, a able to front in We lot we our have in that shareholder on completing to work quarter driving way we to long-term restructuring have We're took one bring point to capacity we return. can this the say

thank QX was the step. actions our the we've taken. a opportunity up, you, as good wrap call. always, just maybe We the for discuss as joining So appreciate progress, we to

look prepare to right to along strong and I Thank forward to we to forward to [ you, XXXX. We're speaking way. the ], and Now finish for it you year need determined updates the look soon. get and the again all

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

Good disconnect. now may You day.