INTC - Earnings call transcript Q1 2017

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John Pitzer

[Call Started Abruptly] segway into the first keynote, and I'm told now that we are webcast.

So Robert Swan, the Chief Financial Officer of Intel, comes onstage from a logistics perspective. I'm just going to read the risk factors sheet that Intel asks me to read every year. Statements in this presentation that refer to forecasts, future plans and expectations are forward-looking statements that involve a number of risks and uncertainties. Words such as anticipates, expects, intends, goals, plans, believes, seeks, estimates, continues, may, will, would, should, could and variations of such words and similar expressions are intended to identify such forward-looking statements. or identify on forward-looking to or uncertain refer also assumptions statements. that are projections, based events Statements Such statements actual are in involve materially many based those those on management's and from that current forward-looking uncertainties statements. could or cause expressed results differ risks to implied expectations and Important could so XXth, October so to from QX, cause differ Company’s from the on factors are release set date apologize. that I expectations in results materially Intel’s earnings that’s am in The the not earnings I be January though sure that. sometime date said early date even yet exact but can we

these may full, your affect copies report XX-K, regarding filing, obtained Bob, Appreciate Investor their time be now on included at information including and results morning. SEC stage. reports or XX-Q of Additional by And welcome other visiting Intel’s factors could Intel’s with site recent the this that Form Web Intel’s XX-K, that the XX-Q to www.intel.com. most Company’s X-K is and

I the sort a longer no the that think officially You’re the on tone his that to job. I of to ask one up conversation. worry kind first Bob, help like And the the Mark coming when With I kind of chat person set in has to that about questions fireside Company. of don’t oldest for think of

CFO You were September in of appointed last year.

I think you year. October Company in last joined the of early

seat the in over XX just been for you’ve so And months.

from in addressed from the I start kind think you challenges? looking how where And understand into the love of you’ve outside were of of would sort coming biggest job. the I sort to thought what those challenges you

Robert Swan

coming And everybody. didn’t real performance. very play biggest It's feel grow, phenomenal joined good months slot. and sorts CFO a roles a honored thinking Company what come a been morning join say engaging ago the series almost side. Thanks and think to of bit I and we the in making for Thanks, time operationally I predecessors actually It's capabilities, the of XX so and It's opportunities a flip are in. It’s all Intel. great active And got in to the company. about and the I all challenges. interesting. strategically the driving and early team. I'd who’ve good It's

can So team. to I join of kind in honored the

role year I think relatively of close XXXX. my forward been has straight last record how out

years. several compute that. did the what's modems; have whether and meant going bets explosion underway was And for we Brian on a by last transformation I Company. into great coming help some do that's been how accelerate company your It for transformation the in importantly, mean several and So next the kick-off, But on the the I year years mentioned a that, that from 'XX capitalizes in more PC-centric the trends it's the to of you the historically to the team been excited to for we're that more the big the And investments the returns; memory; team. it's it's the really, help making it's role what capacity. course attractive needs transformation. long-term it's we try during this big that year, in really My of been some whether all data is are to we've is recently, whether Mobileye, simply And that acquisition think about. very we're

portfolio. those in it And its variety assets life. last want short trade-offs different we and come practical potential. bring some that less medium the big -- long-term of to acquisition XX one bets important I the think by in challenges, by those the reality ways. term, a course excited it it's we're of about while we finance challenges the monetizing in that of with, the is acquisition; a Some strategically big of The Mobileye, using months, billion make of we $XX for the wrestled to by during But we we've the check; had the

in of McAfee, monetization been exit with XX% our of assets. XX% some able of the in with portfolio, with to So that positions of the fund ICAP acquisition we’ve stake we non-strategic the have equity

one of near that's So the term trade-offs.

a and it and new course a good what think with engage long-term a us. the the memory who is your customers are do memory the agreements money and benefit big that not the to memory differently. memory; think big, finance capital is of reallocates little to the we year but return, money Secondly, for do to going in customers strategic for relatively with engage economics for that during try them investment capital long-term use from we technology a the investment And for works We supply of us, but want bit trade-off. situation way the we their works our unique are very memories to just

short-term for earlier those long-term, what medium We year. in our our billion buyback. we've been We bets the increased we this to dividend $XX by the are term position during big against raised bets. long executing year Third, things we buyback. short And and our can buyback kind and raised of do that

to wonderful those short, we've towards So I been long spending that at we so we’ve growth last term have The growth dynamics drive our for time, able and think short-term some medium prospects. our can just we growth constrain real is stopped growth We've it's thing highlight spending. doing while to benefits, prospects focusing capital the down things on not grow the and we same would spending, investors. stopped accelerate reallocated by our And long-term but reducing that opportunities doing things. our to have

the team. part So I'm big just of

yet the and to record and of record we're and where XX in and positioned proud team. about of another well to to in help my role the and accelerate Brian me XXXX be deliver team the a XXXX. it’s Intel excited off we year we're I'm months transformation, are honored And part For a

John Pitzer

player at data the as so a as XX-ish is talked night culture its Analyst you centric Day much PC a you And Intel billion. from share up the instrumental to which at dinner, as gone far being think internally this year, Analyst in in world. Day at trying Company thinking XX% in and at bigger TAM, percent to Bob, I has think the TAM, one server the fairly yourselves a about stop XXX I Last of defined about a moving defined well player more the you've change been to XXX things to world the transformation that’s share learned billion. the PC-centric at about

been PC server actually out the why where And that's into historically exploit so can these franchise very about bit right larger to Intel been of believe a little itself strong and what's talk is you that now time can a TAMs difficult. break

Robert Swan

started generates, And journey challenge a the we This Well, this is I and the the XX% the is company the that think that Brian at transformation XXXX Company. long time transformation joined PC-centric and Company of I tabs. a fundamental the in before Company, first, XXXX. a started the or profits. the the It's that of IP was revenues funded of have XX% filled for over the over back

the team at the of try big to be that was and level company. the had to not the the time I driver for growth the to really wherewithal going spending it And think Brian on PC-centric increase XX% a However, revenues they've or time. company, taken course as world. last the what five four they at of a saw capitalize an data-centric it was increasingly And to years, for the during the

we today, what of is XX% Company. business XX% our So call centric are approaching data the

PC where that So the at and the data-centric TAM transformation is XX%. time making over that a transition period, from time by to declined PC-centric

Company's the of the had to PC underneath have data-centric here later, businesses collection are from over growing So went billion, we coverage you this down that TAM five and been XX and billion year. revenues And years -- XX this in mid-teens. are roughly the

the the and we the a been for So serve. organically TAM think we both dramatically investments, while acquisitively, can of journey's that expanded have underway series and

the down. market as cultural there's but -- today go, transformation kind that longer XX% So in Company no having in plus where, relatively Company to smaller of share nowhere cultural of a is, content transformation. The The fundamental the the about we’ve that's $XXX world capabilities us positions billion talk of the continue TAM, the play accelerate the market of talks needs that to of with last in four believe years over series that well marketplace the transformation. our strengths, that to we we about built course tailwind in a

expanded will we So on matter base key content the opportunity drive There’s dynamics, the the ago. the XX% Brian with grow the is lens. and the proof points the and be the much where and use and different our We through big at there there most, areas of at world for way share worth our look several aspects to increasing a culturally growth that’s that transformation to to look forward, competitive world team going is company. capital years the the is player that opportunity, drivers key things a along focus really is and huge. The and started

John Pitzer

that the one go new as And re-tap it Is how this you the corporate you as if lot fruit? look is the I we next rate if sense over make one at Mobileye Bob, of think TAM, as and to like growth after to low years modem over look about things you But expanded hanging two that to should two to the know over look years, where five memory? next you the next you XX, me. a TAM?

Robert Swan

flow First, the shareholders. the It's the return data-center of in -- capital cash business to our we It the not a lot to to for we’ve world PC use XX% is data-centric. still that bulk for able of talk the or trivialize actually expand cash about It to And generates Company. PC-centric a been plays importance deemphasize, that flow Company. revenues. to and this

and of the this full business money. the year and going growth profitable always growth while will the memory, year. is the component PC memory what's have NAND during business we’ve business the for we’ve When the became you be continue be whole investments and be look What course technology invest in new a said, year, the And So will profitable the key we of we the made what said will in faster profitable, to than forward, big happened next lost space. at to continues we Company. be for core

a forward that So drag. been that contributor begins to of the instead going as investments have serve earnings to big growth a

dramatically. of mobile, our we client business of is as to of the business. last company, the the continue for the Secondly, But you several mobile a the big the improvement modem been in forward know. we’ve the improvement a money business, It's over performance and been loser underlying going years, growing in part expect

the a will real that near-term. be contributor in So

to it In no It's in and It's expect business. new growing, deploys billion It's often digits. technology continue that, reasons longer uses been, the grow it little addition our to tiny was to business. in a our It double other $X developed business, it's the and markets. has overlooked. IoT that over we for

driver bigger, the meaningful a a becoming for and a that’s So bigger more Company. growth

So these flows forward, for going have while things client we’re are Company. the not challenged now. for be tailwinds But continue volume. that new are These have Company, things will in they real built to of business earnings contributed some the profits momentum, the cash PC starting terms that and

John Pitzer

key of little the memory I it's TAM concerns scale strategy. cyclical the go into historically incremental I'm attack find to hear the has space. than mattered. investors, The It’s bit that the market, margin your hear and part is core. but lower same, a where you’re after, an to trying extremely to any key business from overinvesting you're the lower a aren’t that in not sure trying many coming your the margin been it And to market One core. hard of a is threat you to market, And being right businesses on the relative needle scale

strategic we mitigate cyclical more help semi-market. years? more of help be to understand last what's So the should can And may the was a do strategy? three better us you today than Why to what to inherently five us memory over it the understand believe part trying it's you're

Robert Swan

play incremental strategically or where at about I the it's the the see just access important data cloud compute isolation. the that to storage the not about compute memory we role more increasing to in way. get rapid needs, mean, in and Edge, whether needs it's and a and memory It's first,

the data a centric of a And is microprocessor with strategy storage of world in benefit CPU, us, memory and our about who the knowledge storage PC technology, together, the retrieval will the world. memory customers can where deliver important. that the from know value with view datacenter world means fairly in we the analytic combination So data in of incremental compute is the increasingly technology coupled the customers memory for the world enhanced customers IoT well, that customers part

of we just of slower win. memory the not think role way being memory. an competencies $XXX increasingly we're more that data we becomes have billion compete And more and So some said, core growth John, plays to important. the of going part That and centric after the

past performance. better five cost investment non-volatile to for the problems in can while because we in NAND and overall of Our probably the with space, years, HDD generate the been has with low DRAM performance several next space that grow the and the in NAND single to the will the that the where next And grow SSD solved we market world, SSD going be years. lower in particular, will over the and some digits memory growth it's density the the or in solve in begins believe, XX% CAGR has XD needs the

the growth they a So was performance think to in customer of It's market, their today the not needs, going technology that forward. but it's money, spend the of memory that it’s new with envelop address search search not billion market going is $XXX SSD the we it's money and characteristics. in faster

of leverages we’re So why to It It real faster intensive of enabled, in because capital -- the segment our to a long term. of solve, think we capital a the memory competencies that opportunity that customers' that's extremely more be that way commitments Capital participate memory. growing known a business. equation volume upfront think we about returns memory it of our more we its the balanced long to is manufacturing, over core growth our disciplined the economic of increasingly win, and capital for can generate less hard in Morris customers term known for more in have the we very trying of Law a high capital capital along our technology how And deployment committed needs of volume and businesses find It's given intensive. where business. is stage business core is way. our the to the

returns. it's data allocation the will disciplined strategy, the increasing memory the will again drive not So it's of centric just I strategy, that for play memory the importance memory capital data centric strategy believe, then and incremental and

John Pitzer

the announcements made Lot fact model modems the marketplace; the with sort modem being one potential competitive controversy do how that licensing there market sort the gave therein? maybe in share the your of perhaps as landscape potential argument if changes of an chipset that licensing on of a been some there’s that longer out the competitive has to make that term and was If antagonistic you customers market in could that have positioning perceived think that the side your of the resolved, you chipset in in. landscape about gets and on benefitted there was from modem

Robert Swan

most the models think, last about of shipping the our product to I modem been it's we've up products. improved deployed less and in are in building And performance XX% were about business about more couple level the build. real that we’re recently, able had the of inroads. years, -- best business Frankly, most And It's quarter. over being revenue recent almost our we've, volume,

gain traction. to continue We

now. current shipping product We’re our XXXX

we year. next us. product for adds getting characteristics That's fab, performance move volume We’re XXXX the think positioned when our into for which we'll additional

an that’s way the And is assess the really building in effective So that product one and changes, most far, we’re who play the this cadence higher about that product it's really of cadence is And is a to industry this performance. But we winning not. of ultimately focused. share having landscape determinant as customers. of the is where annual so always market. where them doing this a what's of deliver predictable particular good And in kind going to an be meets needs the annual can who great case,

John Pitzer

of it and that's And the money. memory space in had that investment comments you like you were moving looks one where both mentioned to the turn. areas starting your space been Bob, of modem

if this you've said of target seems you are a larger it as about XX% that TAM, a it think OpEx together margin like be narrow. to maybe honing going you XX% operating piece and I As after much gross percent of what about into margin that and range revenue, could

that right term you to longer the As Company? larger is TAM, XX% that markets go operating after that view about consistent that a profitability the with those way think margin are still for

Robert Swan

laid the it earlier if where of margin of about and this from gross for kind And world, be one, perspectives years several the long a of at kind our this several including XX% to you and to expect inherent range; view we roughly in for year And last margin the a last characteristics; the for XX% gross Company. of in will. XX% XX% We of the term we the that between roughly out couple outlook had XX% next three-year we've range, our high year, year. so XX% we'll that end had generate this view margin we’ll

mix, end with gross increasing even been continue. that in So we’ll upper of the level. our And margin changing characteristics, expect we an performance have

from of than improve in said a that. half where down However, year we time roughly in time, the that updated XX% second being same what the to revenue is we would with At decline we’re of lower years. XXXX XX% this spending gross in would to to going gross guidance be terms of modest couple our performance performance. And we've revenue XX% spending that record from XXXX our in is said come of the do last at with we where levels margin, we deceleration margins been the expect modest the in at

the So come operating And of such in about margins, income nine we to gross revenue, than that where decline down we grows over spending the expect a and the in as in course year a be will great we offset bit. are. faster more feel that percentage dynamics with mix, months than revenue that change the of growth. outlook Those gave three are we by

John Pitzer

the kind outlook, the gone that in through and core relative always of to the when that what's of of business about PC four comparison, get CCG We've to year a the markets, quarter core the And clearly, business. the then inside When just questions enthusiast that of think and you at that, enterprise the in owning look about consumer three easy I is market; embedded one its of you PC that’s market. stability market three absolute market, business of think some six period PC stability. some I

As you plan, three thinking of year think unit how how three that about that look year should we at growth plan? PC you’re over

Robert Swan

despite years, I over business, PC volume decline in its several the The over $X by profitability mentioned XX% unit a earlier billion. that's last improved

has this higher through investments managing So team our TAM, dynamics in of generating a been strategies profitability and a market. declining the extremely in good declining

this So in and they variety a done of execute in it market how they've to know ways. different

annual to happening in that our future. the First, now; the increased will for happen continue been past; that's that's with in product performance cadence customers; happening

of performance, to spending ways when with it in cost segmenting been drive core that's a worked you we goods contributor we Second, and improvements node that highlighted well. the performance a selling, we're down relates extremely to level stack and talked next mobile. Continuing unit from to that's the the that the market to volume go line market, higher the real ASPs contributor the has in overall to get moving declining as up some a about been then has

in declining nor the driving course this are we PC a TAM that see, the TAM. counting environment. to the including performance five in is years, of PC really we've have about characteristics year, been increased accelerating we those growth tried So our philosophically on last way TAM over multi-year The in view think don't are

to our the profitability stability a And to profitability contrary relative data-centric we overall been continue TAM to the PC and nice, begin see Company. that, carry increased On the the multi-year to outlook has weight overall size our businesses of with been has from decline. but and bigger and of performance in great, them continue the

try will We'll TAM. continue So to to cautiously we execute. PC for plan

And view lot have our we line we just view investment being if cautious Just more up cautious higher cautious line, result. growth, view. our a get envelope a cash With flows generate ends our in a that as costs profit in and accordingly.

and year our as So TAM well, stable in that Company. likely be a well philosophy out a we're businesses and we become declining part extremely the our of profitability execute other that's been the going what of will our philosophy but plan, data will very the team the to laid centric multi-year perform environment, this is bigger PC was

John Pitzer

helps like cautiousness pricing sounds conservative a already as and up the just but one pricing. tam is it that’s, the think, unit PC It taking outlook your Company view unit even decline on things of I from is embedded cautiousness the Bob here. mix seems the not like you're really in TAM

us help philosophy on behind that. understand the Just

Robert Swan

first hard Well, higher whether it’s and been we enthusiast segment. hard where count whether performance count that. world, bit. the enterprise on, environment, I an get on In as in market And mix, to consumer to call performance, it’s benefited is it's have or the whether continuing they the therefore on have result, to for. performance in performance get The quite growing wants the continuing a pay one increasingly that stronger. higher prepared from a and It's bigger it’s it core environment that in to the ASPs to competitive

line in speaking data as our execute in let's think just get grow the our well for let's broadly So be and outlook centric businesses. it relates, client to business, continue and our let’s cautious cost I

John Pitzer

Switching DCG. gears to

two DCG, enterprise been least; declining that why credit a the market, haven't growth which the look, the cloud is that until centric and data then of at the I of late the you networking at gotten look market, for relative sort to one at you we as it’s you least of XX% If think that is on tail that, specifically cities, would reasons of earlier, argue when as you enterprise, mind again, embedded year about to been center? pointed which out And you vector. Give that us data cycle? three outlook, update in and for think growth where enterprise XX% an you market are what's your in

Robert Swan

about We XX% rather a the underway little PC talked from opportunities grow transformation that's with massive earlier And data for Company. from to XX% culturally share than share opportunities. with centric, centric to

environment and cloud fairly the large space. customers, over for a transformation is the The business that’s in migrated comms and to in today a last that's the been of And DCG benefiting from underway business networking DCG network enterprise OEMs business. third bit infrastructure several the And that business. with is one from primarily change years the from a from XX% is the cloud the our we’ve within growth and quite

offset space So in business significant a cloud overall single-digits that underneath the more enterprise have grow we covers, that we to the to stock the and in growing business very than declining. fairly enterprise continue. strong, in the expect those that despite trends Similarly, have continues multiyear is decline got a the our high been business outlook, where the comms

continue. are ASPs and prepared been enterprise But attractive and part to get characteristics tendency cloud to customers it's In business that the our We to time. comms high benefit and and comms than It's offsetting expect we growth a performance the of function pay it business. cloud do real world, client continue value to for and got to a product. performance. really revenue the the and that's from space, they we migration and a have today the attractive to growth to similar has that We expect more cloud higher of migrate that value where over us. And workloads expect cloud we to a more clouds to that stabilize business the more client expect from for

John Pitzer

Purley a server how In and the Purley XX probably the core unfolding product about of in what's or week our kind get there. and questions how outlook is important I the XX business, cycles, Xeon

next cycle out little bit importance, quarters? the and see So over could six you rolling Purley talk product you general, how a about to specifically in four

Robert Swan

a well. more that to crazy. their to little access all analyze effectively are their to data, for get that CIOs, mind dealing think they growing and are are memory demands And this growing. compute, don't growing storage, I more you going more and of focus you don’t to XX% world, for that want in but for is more more -- -- have pay you have applies don’t performance. This demand security data, they if have X%. XX% and the growing on I'm And -- think, and for bit If more enterprise more they like internal I threats. know want just to with pay they cloud, as also increasing it the a -- be The cyber customers with demands to everyone, efficient to deal to where if demand

they’re in the or what whether they’re with to deal So perform performance that CIOs increasing on-premise, for with. looking to they looking more in facing for, general, cloud offload they're the challenges

deliver higher performance. a more comes that products predictable new from that of So cadence performance just

we’re through can launch, data performance. important. that in Purley And collective their of the new course is just let's third go of grow everything that into over the can you deliver over replacement product course cycles. growing on launched much they the We of the timeframe. the our as most continue now. into replace a performance spending know, quarter It envelope. It's and will that like we higher of it's growth lot you dramatically grow July with refresh, higher means the recent We what it's performance got with the for and very deal been of we products sell, -- don’t client annual product an launch to continue rollout will quarter growing So this fourth their for and be XXXX. for side, has us the so product the source expect, as the and are they they increasing trying of will demands go of to improved demand

John Pitzer

lot success GPUs, acquisitions a some success lot is there made. to as exploit concern much Clearly, We've core AI. seen of the a around workload. questions initial of of about you’ve as not Couple AI a Xeon or with helpful. positioning your That’s with

of couple a questions AI. So around

First, a that your GPUs is not where in successful AI that in is the sum AI, what’s world have going there you’re perception wining investment specifically, I'm in business? Xeon If the zero to a think it's is impact on community game. server curious core losing. you a

Robert Swan

nascent. a nascent. I worlds, is relatively It’s the think, important relatively in AI workload is still first data center increasingly but

forward, that’s of going workload, the characteristics if this inference the down this first, training. are really And attractive into place you versus we're been So growing AI where to win. approach we’ve break we are going our growth world is, with the using expectations think, AI and

have the very our and strong space. inference acquisition. optimize in is there strong is training, it position strong to And there to which attempt the really In market fast, is but the CPU Xeon is AI a for the that very a our our an of product nascent AI been position workloads use through inference, continue that’s, growing And We position. and strategy world is continue more core to protect CPU Xeon for take optimize recently, inference. also approach and Scalable, extend this world to

protect to fast important So Xeon inference. position very workload our in and meant FPGAs are and extend in a growing

segment. now. our Very we into to Nervana opportunities tremendous the year Our we real that acquisition to And a made ago done our over in training think team, meant strong traction. competitors, of that has strengthen have architecture position with GPU, extend our acquisition where that’s is segment position

really which segment. cadence And and launch a with segment. foray to focus with our and just Nervana, training product first XXXX. in is acquisition, a So product training good in have a expect high Facebook, the foray our announced with then real the we product another the performance is annualized We of into Nervana in product,

but company the AI stuff, is for the third power XX lower Edge, a power nascent but through at fast acquisition aspect heavy the ago, The in big months us lower Movidius. not of And Edge. about at performance, called also this growing space that's performance

strong very releases that and AI, the of the fast Edge, we're presence to of and the but space. acquisition and be in a using inference embarking Nervana called kind improve on is So some we growing Xeon In a workload, of capabilities training, that we acquisition in to announced this use have to extent. Movidius, nascent products the And in leader of collection our continue position. just we're to AI we've protect at

John Pitzer

think the I from And that Bob, definitely back of around the take you've like my time about a you you you historically the the your around maybe might you've and conservatism changed around joined misperception go have predecessors that understand is hit philosophy the Company, around has or guidance. your if looking one Or things joining. since communicate think in outside philosophy guidance philosophy mind? half I prior guidance of look investors. at you from to seems a that some as It help your you slightly the than can that? your of Is different with perspective me

Robert Swan

build a to how from to it you where great And a we we important it's we we're we and company we think in doesn't I going And can what to say. internally it's us. that's drive employees to we're that going and just you a what way guidance do between it's greatness know -- for distinguish to it -- say no to expect pragmatic our low that is do between our take trust what accountability that what in great, distinguish be be perform and balanced about that you effect, how do say cannot demanding credibility, that but philosophically, isn't you do. convey set can not, and -- It's XXX,XXX

So you us. count can on

John Pitzer

try overtime? close philosophy between depreciation Is how should depreciation new than you growth How a we've free and flow things driver in There's revenue this is capital listen cash growth. the the here of -- with about offset gap more And and closing in should think the difference to dynamic of with business that needs TAM per match share. know, of trying to to prepayments. existing free flow we that One to you've is model some that, still gap? quarter pretty do Or per earnings as in the and between NAND the share EPS, CapEx. all done cash gap biggest about got that big the quarter you think

Robert Swan

losing reasons. memory I the gap. What does it's that reasons a And that and for it. money, really good reasons good increased free it's one it's cash gap, been close and for mean? earnings The driven good is fine. and fundamentals; It's three has is gap good for for the ways There widened. reasons, whamming. some us just how business that not-so in think And double between capital not flow sometimes so has by for And there's about the

to customers to But use fund we capital. we money. extent our we the what agreements with So there point supply can some money is of make two do to to their long-term your where also

But That biggest our in EPS the at gap. quarter the gap intention to prepays the two ways. we of memory agreements we free close driver do money. at make those might different received combination to cash make is supply continue Customers money we two flow and working and money. helped close will one most But this foremost to that to -- We’re gap. the how of last first close look that use in And to strategic that make to importantly. is we’re

modest been the gap It depreciating to been Second, for capital our yet. a it's it for node. the build it's not a will XX-nanometer. will to be the in margin is capital, we’ve growing investments expenditures gross base contributor next and has invested, by to depreciate infrastructure And overtime. capital capital driven good erosion begin That

out our that So an that's faster in into imbalance than multiyear right -- margins play will good now but capital growth revenue and profile. our imbalance there is

during and good the our And cash levels driver third also The of driver, user year. of this for a the been now its is us a capital. working inventory have of gap course

growth think innovation. working fine. at And in whether a transitions, because it's it's the with transitions whether highest capital. continue is the improve product growth inventory if We’re third we’re function to that. more in okay multiple the we're company the quarter. of That's just multiple in We’ll I that's in or grown that's and accelerating and volume okay modem level But inventory product in memory, the business, or whether it's

a cash is we are three There’s flow. goodness that between and free gap. opportunities narrow narrow for EPS have continue there to we and we gap And primary and drivers, So will okay us the there’s with that.

We have been and going we will gap, narrow forward. that

John Pitzer

out that, us. But some to joining this Appreciate run for thank time especially time you. morning's, Bob it, this want with thank spending of I Great. in With everyone we've for for session.

Robert Swan

you. thank Appreciate it,

Intel (INTC) 28 Nov 172017 Q1 Earnings call transcript