INTC - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2019 Intel Corporation earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions].

As a reminder, today's program is being recorded.

like Head your of would program, for I Campbell, Trey Investor now to host introduce today's And Relations. Please go ahead sir.

Trey Campbell

everyone you a Operator. call. presentation. release welcome to quarter earnings fourth And earnings and By the now, of should copy received have our earnings Intel's conference

investor available us have you in window those joining our the both The earnings are available documents, webcast If intc.com. they presentation online. received on not website, is also for

George Bob am of a Davis. joined CFO, today and I brief them, both Q&A. In CEO, we from Swan hear our by will moment, our by remarks followed

begin, refer remind environment actual contains as we our more for to risks as the that the forward-looking see materially. currently today's include it and press risk cause release Before discussion could let on factors me that we such results information on Please statements specific differ uncertainties. based to does everyone and

we financial non-GAAP will both that presentation reminder, provided full GAAP available have and brief when earnings measures reconciliations. financial speaking non-GAAP and results. be include non-GAAP our release describing this The A GAAP the intc.com consolidated earnings we Today, to quarter on measures. and the

With it hand let to over that, Bob. me

Bob Swan

our fourth revenue QX, exceeded and respectively. QX We Trey. guidance $X earnings our year. by $X.XX off we a billion per $X.XX, for Thanks, in capping consecutive generated XXXX, and $XX.X expectations in In record billion share, exceeding

EPS. $X.XX records. businesses the PC, $XX each For and revenue time in center, in all annual The delivered IoT, full year, and set we data revenue memory Mobileye billion

have than businesses. centric our is beginning. quarter, of coming revenue transformation take reshaping XX% the that just journey of to revolution But data ago, reposition greater a our now is the advantage Several this of years computing. we Exiting collection our to we data began from company

priorities goals, our our multiyear over focus on our these continuously to progress I for we execution share deploying attractive capital key XX days. and priorities, would growth, like against accelerating will improving the reach last returns. three To

We larger AI workload as capabilities expanding growth Xeon workloads. foundation Demand of data playing and make customers a in infused are strong role customers' is Intel to by their continue success. our the accelerating Xeon very processors our for the center our scalable optimized platforms for

the Xeon One is its reasons Lake fastest is our of Cascade AI CPU performance. ramping unrivaled

performance AI over half processor the another scalable our up XXXX increase Cooper Xeon Lake family. AI take providing acceleration Xeon's XX% Lake features built-in Cooper the debuts. will DL previous step Intel first in to third-generation new extensions a performance training of for training in boost when

expanded products the persistent photonics. the Ethernet have in silicon In more than center ASICs, beyond XX% data we year-over-year. data grew with adjacent CPU Additionally, Optane center memory, such QX, products and as custom

are with designs we mobile shipping. first system seeing momentum XX excellent Ice XX computing, client nanometer for In Lake, CPU, our already

continue capabilities, platforms addition speeds In gig-plus connectivity leadership deliver delivering for to XXXX. were With X PC we our CPU and wired announced to Thunderbolt platform X, just connectivity. we in Wi-Fi for

laptops have and compatibility program, Athena the verified instant tuned, more. and deliver consistent life, Chromebooks. At our been CES, showed fantastic customer responsiveness, system-level Athena for wake, we including Project benefits momentum to first spanning innovation Project tested application verified Project verified and innovation battery Athena also

more verified to-date year. devices Athena have expect Chrome this verified design and to We Project XX Windows XX be across and

market the key for largest silicon our artificial growing strengthening the data-driven emergence inflections inflections. edge. to AI-based and The is intelligence of networks and addition intelligence, the are win businesses, evolving rise quickly. we of and transformation autonomous include In These investing of technology to

New workloads and are are computing converging performance AI. emerging high like existing workloads with

products. to AI investing market we AI-based be with of to strong in is by opportunity billion $X.X billion are a generated lead XXXX portfolio we XXXX, $XX The expected In revenue. and

introduced advance have In for a leading capabilities acquired unparalleled center the AI performance deep Labs, the addition to data and Habana new center. we portfolio of with of developer Habana, accelerators for and will leading products, programmable announced assets. that integrating workloads. software acquisition evolving our AI AI into expertise, We a AI an ASICs of all inference high programming already deepen learning data the to offerings AI Intel's with combined training standards-based existing processors and and address environment our

unified from AI open launched to for sufficient but That's today's the silicon model OneAPI we developer Delivering oneAPI not architectures. deliver the programming optimal approaches standards-based industry for why proprietary program heterogeneous to processing application model innovation. limiting architecture marks engagement and customers' an game to development changing architecture a problems. evolution critical and solve simplified initiative across is a cross

As expected, XXXX. our reached in revenue billion $X in networking business

helping by virtualizing by business our grown have based consolidating customers our networks transform architecture workloads servers. their on We Intel and

Now, are as we advance to we we era, XG design the accelerating as positioned momentum significant our in win into see share in stations. pipeline base win

Alibaba out will amazing and with simulations building the broadcasting. cloud support Olympics networks stadium software. announced persistent Tokyo infrastructure support to Optane we scalable and quarter, utilizing XG such This and XK as data immersive X-D memory both Beijing cloud strategic XG optimized agreement Xeon experiences Intel a These VR,

forward solutions. watt next-gen delivered or also XX almost up Keem Bay. to leaps inference edge is In comparable Movidius performance Bay in highly vision the we products. from We our for November, over delivering power per competitive billion portfolio disclosed $X IoT/edge revenue Keem processing annual in efficient groundbreaking the performance XX of with optimized our unit performance

Mobileye over more two of since and be team's acquisition been about we It's excited couldn't the the progress. years

Mobileye's Motor stack solution harvesting agreement for with This as quarter data established NIO with to AV. exciting the full announced several self-driving for NIO's strategic we We on new systems deploy partnership consumer engagements. SAIC a and embarked an REM

partnerships, Paris the to continue accelerate also Korea. We in of City South Daegu driverless two new with commercialization and Mobility-as-a-Service RATP in

and an opportunity role for AV we the expand excited and to to larger for QX, data to than $XXX Mobileye's were aspirations opportunity host analysts our billion and In more to Mobility-as-a-Service. strategy win at also billion in discuss headquarters investors to our the $XX ADAS, even

of stack to delivering the had a navigating guests technology we to unmatched on Our AV agility industry's the drive wide road our demanding safety. and complexities chance and driving solution leading Jerusalem variety as demonstrated test

have opportunities supply delivering added execution, strong demand, We realizing double invested digits half. levels first more allowed us but CapEx continued in increase capacity starting to requires second our with supply we to of for and In relative CPU That record the significant them our PC response customers. XXXX. by XXXX to half XXXX improved

supply continued tight our demand to has outpace business. However, supply in and PC remains PC

our XXXX customers' XX% nanometer increase high We to demand, will us continuing enable this so increase to Across are XX normalized growth. nodes, deliver capacity volume. and a to digit XX are to PC not plan unit year constraining deliver are our adding levels. financial in single inventory and add more market our wafer capacity This meet we

near product Our desired mix. term support is their challenge working our customers with to

continues our and improve. improve. we ramped QX, nanometer Our to to process In continue yields see technology XX execution production

including mobile base server, and We SOC, are a planning nine inference station an new and our XG this accelerator, first AI product our releases for Xeon nanometer networking. next-gen GPU on storage CPU, year, XX discrete

upgrade year, deliver XX on on We nanometer. our performance first this to track are XX nanometer-plus also

CPU Ponte remains track to in X after Vecchio, Our products with XXXX. on deliver of following product, X XXXX process at nanometer shortly lead the end nanometer our

also are the next innovation We generation in driving of computing.

which ships advancements at deliver the codenamed and XX Tiger over computes, this generation. look provided next-gen we built will prior Lake, designed first on mobile process, AI, Intel's year. it Intel when is processor our nanometer-plus interconnect gains Core in Lake, offer CES, At to groundbreaking Tiger later significant graphics a

part production on initial deliver the latter nanometer-based shipments also Ice will We product, first our Xeon XXXX. of scalable Lake in XX

We breakthroughs quantum the investing lead such are next wave of to also computing. technology as

pursuit commercially system. Our viable covers investment in full hardware of practical a the quantum quantum software stack computing and in

month first Horse unveiled of will quantum cryogenic control computing of stack last speed we systems. up example, a For kind full Ridge, that development its chip,

but us larger quarter improving success. We focused allow supply, made that play be means in leadership to a execution. and continue technology role to laser our our product good on we innovations the will progress delivering That process customers' this

means, Our R&D have investing your is business our returns. third and to deploy drive necessary the revenue in CapEx That first we long-term XXXX, Since plan. deliver capital to to grown thoughtfully priority attractive a $XXX same spending was by we as reducing the $X.X while period R&D down nine billion. points $XX by over of by Spending spending more increased billion revenue have than while million. percentage

our exit We accelerate acquired Labs, will We AI also Habana IMFT while making the quarter. the and closed company modem thoughtful disinvestments. plans of smartphone in that fantastic a the XG sale both

have we X% that next Board repurchased we months our future are a $X.XX approved in to billion XX commitment shares. months in has that billion into Last over and quarter, in XX confident per share consistent three our $XX $X.X share. execute repurchases to announced dividend increase in We window a and the to with our already

we world being beyond the delivering role great culture of practices. us that our real This a corporate on work. recognitions to our citizen Finally, our the we reflects we and ourselves around strategy, are is Also, to improvement. the our that efforts of culture continued the workforce we others that and diverse bar growth world. executing raises why a for released on outside and has the communities have around continue proud our where essential I am goes employees which XXX,XXX-plus the believe data for received many for responsible representation and in business detailed results strong workforce inclusive impact

to a goal leader continue sustainability are on and increase in making XXX% the of to operations progress energy significant are important by be use water And also our to products. our of XXXX. it's restoring and of we investing global us efficiency environmental And we our to our

well Day, fueling are we the environments, four to an billion and intelligent generate where earnings positioned networks believe inflection $XX Back expansion to the told expect three edge. the revenue transforming in in multi-cloud this next lead of We industry was $X at we that revolution and growth per is share to you data Analyst in May the and our in point we years. data catalyzing exponential massive at

that into our commitment. we tracking well year plan, One ahead are of

additional our earnings May we have have $X more versus revenue We expectations. billion $X.XX in earned an and

XX multiyear make to Our continue expectation days. is to goal towards deposits our every

growth, priorities accelerate your thoughtfully our capital and to of excited execution am you. opportunities improve of front in us our support. In I appreciate and continued like are about on summary, behalf owners deploy our the

call now outlook. I for to our details the over George and QX results business on George? hand will

George Davis

leverage. finish over record outstanding billion everyone. $XX.X $XX.X good our of to total an data revenue, in $XX was on XX%, approximately Mobileye all-time and $X record two of billion, marked another QX spending Bob quarter. up and guide. centric We revenue Thanks guide afternoon centric billion, our consecutive an achieved year-on-year with year-on-year operating ahead representing fourth higher revenue than points in capping X% PC high. margin gross the year both of and year CCG's up billion revenue QX DCG was XX% margin growth. record X% higher revenue QX and of saw revenue,

guide, margin for EPS the DCG and expectations was higher leadership QX boosted flow-through the $X.XX beating our These to due record-breaking further solid from to quarter demand was portfolio. our strong strong execution demonstrate to $X.XX, performance XX.X%, due operational year. gains ICAP by above Gross primarily achieve and for strong results products of revenue. our a

$XX.X the of As year cash EPS dividend was X% and generated billion XX% X%. XXXX free billion of up a in record flow, are full up year We raising anticipate $X.XX returned $XX.X to shareholders. another result, by year-on-year. and We

and XX lower offset QX performance. data volume over ASP process by a driven and a spending half gains our the XX% nanometer share pricing lower or was by were offset and higher rate. point XX% more year-over-year was of portfolio EPS portfolio degradation. versus up margin, details partially up partly margin quarter on by operating our centric NAND in of and in strength our last on as to a tax year Moving higher ramp higher ICAP count, equity the $X.XX Operating

line in up in rate expectations year-over-year with benefits and discrete QX non-GAAP XXXX. QX items in points tax five tax due Our reform was to and from tax XX.X%,

Let's move to segment performance.

up providers strong from products. up results XX% our era. Our cloud revenue X% expectations beat IA-based prior XX% adopt second year-over-year service communication segments of ASPs continue serve year. continued and data Xeon and with revenue service highest record to center platform These adoption XX% to Enterprise our demand. continue government had QX, up on for providers' expectations networks at the three while revenue was XX% customers cloud year-over-year revenue the In transform their was quarter. cloud exceeded $X.X volumes and to X% to customer Gen capacity XG billion, group demand performance and down transition the up platform grew solutions and scalable building as our as All

were and X% to year-over-year up revenue businesses driven and AI Intel income XX% centric And up and intelligent to year-over-year adopt another up power fast-growing Our computer respectively, ADAS customers as infused market. digit growth in Mobileye operating achieved XX% and EyeQ were EyeQ other unmatched growing a XX%, offer industry-leading double XX% up with increasingly XX% data edge. revenue QX. IOTG up and the which operating quarter continue income by mapping products, win vision the capabilities revenue year-over-year. was in products

pricing grew declines. partially NSG by XX% bit more of as growth, cost pricing on continued revenue operating $XX declines. than NSG reported offset an improvements million year-over-year offset by loss NAND were

product revenue versus income XX% time QX by wireless. mix. down partially year-over-year on XXXX, driven on segment embedded by Operating was in softness last revenue buys primarily the in PSG segment XX% declined and offset lower strength lower

strong by fourth PC by smartphone and grew the solutions, mix XG increased continued include and and modems connectivity a in billion on driven year-over-year exit. higher capacity. which revenue solutions. wireless $XX XX%, was and modem points up margin higher for driven year-on-year Adjacencies, spending volumes XX% was strength revenue of unit PC X% were better year-over-year connectivity and quarter, driven on up by modems four volumes. up X% modem market DCG lower and Operating wired the demand

As operating CCG achieved in income a result, XXXX. record

$XX.X billion and generated billion XXXX, $XX.X invested we CapEx. in flow cash operating In in

free We and of also flow buybacks. returned shareholders XXX% through dividends cash to

in XXX quarter of we During XXX% $XX $XX.XX increased shareholders billion and we per Total XXXX, average free excess shares announced purchased the XXXX repurchases price share expect the in last return the cash buyback to million were quarter, of flow share. of an at announced program under XX dividend million and today.

for to be Let's expected move record the another is year to outlook. XXXX company.

revenue forecasting EPS are and of We $XX.X of billion approximately $X.

PC due Windows strong to on down XXXX to the XX our a a down first lower lower the expect moderating we be modem second slightly and revenue refresh half and expect single see in of business digits PC TAM TAM. low Within dynamic commercial XXXX, We centric half to matures. PC expected year-over-year a second as half

our Bob single that We high outlined. capitalize we year the businesses to on from trends digits the expect secular revenue centric full up as data for be

cloud more of remainder We as buildout for phase. customers are products. build an expecting exceptionally as to capacity performing three and expansion strong cloud will and move strong continue This digestion we of to highest our QX mark CSPs expect modest adopt year capacity the a quarters the

are competitive planning for increasingly we the We environment as also through year. an move

revenue, flat total first have billion the a be the As the result to point for more in revenue on to year, of of these of point XX%. mix margin approximately loaded than be XX we cost. in and or versus the dynamics, XX% for year a of products expected margin is Spending XX% of impact both Gross approximately $XX nanometer down to a one resulting operating seen down we expected be XXXX half expect historically. front-end is

more equipment. flow-through CapEx to operating growth We space $XX.X of X comprised back of investments be flow expect higher by to rebuilding Free is offset in expected and is inventory of than nanometer from and X approximately XXXX CapEx product is approximately and which critical fab depreciation higher levels. of $XX normal and more as billion half the cash revenue billion,

revenue year and continued up patterns. year-over-year QX. of particular seasonal year-over-year in bit to being anticipate Let's expected be well is to XX% above and normal turn growth, by $XX to revenue XX% start cloud NAND QX another strong data record a growth. buildout driven with particularly above on centric We billion, This

additional XX% expected supply up revenue. is than continued more business on higher market contributing and and centric modem PC be PC year-over-year is to also strength, Our

we top year. gross $X.XX, is a way Tax points With ever rate year and and year-over-year. be operating expected we EPS strong line leverage seven and best XXXX mix, approximately to and approximately up of revenue. margin to up In XX%, be expected XX% expect is year-over-year. three growth another higher Intel's points QX margin the summary, versus year strong QX XX% record XXXX to higher start on gross expected be on margin to to on last spending up was expect is XX%,

Trey. me let it turn to that, With back over

Trey Campbell

All you Thank George. right.

to Q&A. now on Moving the

As ahead one ask Operator, go we to caller. participant normal is our each just question. our ask and practice, please first would introduce

Operator

Certainly.

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

please. question, Your

Ross Seymore

and end answer on or Hi guys. on it you Thanks for to and year-over-year. Bob, you centric of want those congrats the you there segments want trajectory this, to But last bit even letting the in gave me centric. negative I PC color great segments, into ask the this could year. a George, of question George strong of appears, two data to both and revenues. this go little year end going year different be the start some of of by whichever

So the it in drop. end-of-life the some market the seems shortages actually on the away side gains? of fact factor that that and I mentioned in like competition significant increased you do could how Windows it's go you should But share a have you things. pretty appreciate so conservatism

Bob Swan

Thanks Yes. Ross.

start, George. you me chime Let And can in.

these. First, half we half things XXXX to When our impact first for quarter compliment the have on a we second George thank outlook. at touched going you results. on demand fourth on three And cycles, that kind the few look of

And first, how to level, that resources to and go the we we those very appetite positioned are about feel at relevant, this to But that data insatiable continue. make macro for increased demand. need good on this processing data the trends capitalize

to time, purchasing year, that you of and benefit initially. perspective, mentioned know ability them to Second, the then will bigger of from from is hard. remember cloud we DCG kind last our the CSPs same overall patterns digestion part protect the bigger At which relatively continue a our now I you that is trajectories and from to as expect revenue,

third So strong in of we QX to consumption be real second the folks. look a patterns half, at will essence half row first cloud the in quarter from

from impact know it the patterns that have tried our some buying begin past history account And medium long we we year. on can. during the down. trends it to And as point impact of the that to, course doesn't into trends digestion based go into and So at does cyclical term but much take mode they learnings, slow or as we

are of half we the first purchases conservative. are stage half. of we So how wrong. kind to at hopefully Hopefully, But game, cloud looked this at that's we second the

we second George down a flat The expect going that thing, the the the And expectation first bit PC to TAM, be to that is second flagged. we And year. slowdown think half. Windows refresh XX is to this be continue half to will little in

third is And item then the modem.

XG As we of second smartphone be moves to lower half expect world. we the the volume that the modem of go business year, we into phase as as to out modem

to So as more know expand the and us while position of and the growth those full our compute things to moves environment. competitive that network our edge. the continue X% year is much three inherent have to course cloud at And further the we of compete protect kind got year from to vigorously have to intentions in a looking is further away of out during the we and

George Davis

expect certainly guess little certainly of different our than strength add flatter units. we share outside to we growth just from a it that which had the Yes. some across pattern be year really pattern. difficulties than the coming can we start provide some But PC, would businesses going year I areas on in to the just seasonal in is past It's really to more headwinds it's terms back work normal we saw and still in gaining feel good last about TAM. as and in all And good But where of the overall. I the

Bob Swan

the very And I the record of XXXX comment, looking we half comps second after apologize. of of net to think it But a then get last year-over-year one But, XXXX. XXXX, just year. another a year half be George on shaped tougher strong half in the comps in are I And easier. as for the in going are will net, second basis, up, first

Ross. Thanks

Ross Seymore

Thank you.

Operator

Thank you.

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

Your question, please.

Vivek Arya

Thanks What especially of releases rather expectations on data the and mentioned way, retired is congratulations XX year on Or maybe nanometer. XX ahead XX% and of than of a buybacks, right you nine years. node it you terms that nearly for the help put in yields in a sale imply do results does I to you Bob, what year? of in be XX question nanometer be might and you taking in I two was the context? mentioned that off the you. nanometer on node? on strong product maybe the and XX. Question. nanometer and last Can desktop I my small slide, shares XX regular server some there different think percent your speculation even SKUs? next this guess, Thank asked expect a range in

Bob Swan

we we on make consistent that's have quarter on of kind been challenges And real XX. Yes. six theme all just four to that's good continue XX the over Well, yields a to last the progress had, been, for yields after first, on nanometer.

into we we year good exiting So very where coming this yields. are on year on and feel the

fourth XG really out through on fourth course Ice product quarter. We for quarter. this of network, server product Agilex to products products least, certainly client the then we GPUs of AI in launched we in we then accelerator, but bringing Second, in roadmap, year, XG Ice year. inference XX the launched the successive the end And the the about terms last SOC excited of for launched are back have in are going FPGAs, and of the Lake that of not nanometer Lake

good. The launched. we So yields have are

products fastest. half XX primarily still client the of in be level XX+ ramp the of is will But will new good. whole call will the will the we And Designs are year, Gen during of we we one or the them volume, ramp the It the of will second that of nanometer during introduces the up year. second be, of of portfolio business ramp a for terms the to course across in our It are year. our product. performance course which what on the going

But It the part half and year in will as the second overall the have huge grow our a won't become our we a of we bigger of overall volume in the much aggregate, in of company percentage volume year. exit XXXX.

last, tow-and-a-half then the want And our in about shortly we follow. just intention would to May nanometer And first is I CPUs year and again to reiterated launch our is we get XXXX we our in say cadence. that a expectations have today latter that X two to to product back back after part launching closely XX, with will

So ramping. XX is

two clients go and XX+ to X year cadence will We a on we will XXXX. in for

Vivek Arya

you. Thank

Bob Swan

Thanks a lot.

Operator

you. Thank

Our next of from line Curtis comes question Blayne in Barclays.

Your please. question,

Blayne Curtis

for you Thanks question give actually results. second is talked the of out When XX servers on there Lake you ago I servers that, great And half. say would ramp? Or Bob, when that and different first because lot congrats like taking just gets be a do you Hi nanometer is a taping that to in expect you maybe Ice volume the the to out? is my remember half, it for following about two milestones, confusing. actually, guys. on I quarters

Bob Swan

good few And Yes. things. just question. It's a a

our deploy received of samples. ecosystem technology. I think in Today, we partners server Ice terms Lake already how have the first,

year translate of that shipments will we the of will the production in kind of indicated start step that's XXXX. into production this half that the we first And in So then wafers latter first and us. part is, for what

that's of sequence So a events.

first the wafers, we deliver production, deliver half. output we samples, So check. year. We We part load production load of wafers latter

quarters. with this pretty have So been to last been ramp the over several trying consistent we that's how

Blayne Curtis

clarity client guess that side. growth the Thanks am year-over-year the but a you the or the are strong surprised I guess? Win for I in you that. seasonality with market, by And are I with shorting XX, then understand QX, still seeing on just I

Bob Swan

Yes.

end and year growth came we flat stronger even is TAM and XXXX kind all we quarter. done, of and in with said the looking First, X% PC at about fourth the when a overall into

as still has a of that XXXX. real I were we PC we constraining year, strong fill our we quickly left first would market real the the And table we the to quarter. year backlog in At So it's had as had are strong, the some the come indicated, end a say, trying on to in we customers.

the terms volume So but of first of the half. the our end to disappointment at customers quarter, that year adds in serving obviously in a first

As we just go George macro spent we through course in remarks. the in from as capital year, capital of record laid record prepared his XXXX, the again out level, XXXX, in the

really single PC ensure in never it capital record is be geared have XXXX And slightly. XXXX. We our market a And against to our it's and unit we will high that down that we constrain in expectations growth. customers' volume have digit to expect to flat

that we manage the XXXX. to quarter. dynamics to so sell our begin in able be been outlook fourth to have and more and the much we demand on can natural in full the mix We and product that look build inventory the in the meet of position we when, what levels position than better to to volatility deliver market going in are we good So to year

so constraints, never about we supply So eliminating customer that we it. maniacal have demand are can meet and to about those worry

George Davis

we And dynamic. half the the see small core part will may be second in more to expect of which

serve that market in of the we in haven't would way like really end to. that been the We the

that So are part at. you what maybe looking of

Blayne Curtis

Thanks.

Bob Swan

you. Thank

Operator

[Operator Instructions]. you. Thank

from Suisse. John comes of Our next Pitzer line from question the Credit

please. question, Your

John Pitzer

and Bob Yes. Good George. afternoon,

be have the first margin. I going results. similar to congratulations Ross' question is to I mine gross on a my add question guess me solid Let but got to on revenue

full am is it brings I some curious calendar XX% and year you am in the competition? the slightly the could the just of kind explicit kind at about puts this margins are If throughout takes you to is a take what how of at is talked sort you and X gross of this whether as getting year of and versus of of just pull-forward think X baking or QX of in puts just down understand much to the a margin close is much how gross kind year here XX%, gross of XXXX. Because and lower nanometer? you trying what we increased is guys down were Analyst going look the you guide Day, exclusively XX% are to the but of year? I of that Or year-on-year throughout the about pull-forward pretty margin about flattish pretty

George Davis

think really level, start you system the as into are are the into So coming nanometer the that I for impact year go this during seeing reasons that full second XX because what to year me the increasing with Bob that all out. half be cost related the is laid highest we largely At and just let an will helpful.

We that half gross and of getting help margin going in improving lower some the from that NAND that's moderating year is pricing on of the modem year-over-year, impact are second mix actually in but overall. particularly to us the actually help the year,

moving And reason the up lower modems being a about So reduction. of those and QX, lower nets the we that is that a what you are X% big really modem and say, in comp from QX. out to are drivers point, seeing variable

businesses. of obviously to quarter than other expected the see bigger unusual for it's of of products seasonally have our nothing so much would in because normally many down margin drop QX And gross a mix as you the

Bob Swan

we for we more guide to our will is the volume ASPs One function begin we get lower small that in year. has I inherent of things. the to which supply you mentioned, expectations course George, is of that constraints and know, George lower is, eliminate core secondly and a thing competitive which, are as the add ASPs it's as two would only more on the anticipating go a environment and our

it bring XX are they back bit ramping and May just of [indiscernible]. ramping slightly kind really little this as our in in to since investing Day. then, are are to half the is And with XXXX and the And those X to in the contributor So things gross great and are on parallel be that second in XXXX. And that's say expect contributor thing that, margin one a of back, of that I flagged to and is we XX we are the we would in the yields we changed in Analyst continue year. half the better at a that XX XXXX better are second year in we

John Pitzer

guys. Thanks Perfect.

Operator

Thank you.

Our JPMorgan. comes from Harlan of the next line Sur from question

Your question, please.

Harlan Sur

Good afternoon execution. the and good quarterly job on

appreciate of you. single data how the framework On for high first in the the it Thank and the full high that half, digits, about framework, how guys year thinking on But then, up guide And the you growth are digits I segments, within see data trends service of for for do provider? centric? DCG. half enterprise i.e., sort other Is growth centric DCG that with growth you second line full year? profile within comms DCG in single

George Davis

Yes.

would we look rate growth way the the So than be overall would at say lower rate. growth I the DCG, modestly will

some got very little that bit. to You high contributing up a growers pulling

year. the in still average the but growth a So attractive below little

Operator

Thank you.

Rasgon Our next from from question of the Stacy comes Bernstein Research. line

please. question Your

Stacy Rasgon

for I Hi question. taking ask capacity about a I guys. additions. bit wanted the to Thanks my

that wafer are you forward going market where the market and do to is Does volumes we that of Like capacity PC own like be you that rebuilt overshipping those may think are going digits to into your will the capacity sort ideally have that a how you that decline point? as adding shrink die market So channel imply of XXXX, itself XX% in support this higher that in and be that? I inventories? if imply year still down. What up actually at high about think going does you you kind get single

George Davis

I hear point. your Yes.

is, order to in producing to are up One back inventory mentioned year. going build the in we of be levels we things that the

the in expect and to of normalized second so would back to able products server And most half the bring products both inventory level. our a our more we year, PC importantly, be to

also being rebuild to So digits inventory. up not high customers we single meant only are in but is the satisfy allow to us our

correct. is math your So

Stacy Rasgon

own keeping inventory to the So that's in your it inventory? are to Or books? customers channel? your You be or selling the on that going

George Davis

our we if It inventory levels. well. inventory of then some when are own trying it's will inventory, look you about But as our you to might the to at information, be the customers channel build And will talking have some building inventory. see,

Bob Swan

And also inventories are PC, us. low. on that's would channel the would exiting say, I say, I the relatively year for

I at the we demand. XXXX. as to with levels XXXX our year, But expect healthy expect then So will during spikes the and inventory of do exit deal the through time, more at we we course in build more the same to levels channel be

think really with to one we mention, the and in comms we and business several our play growth would the other network and the bigger continue on as overall digit to for of edge, with that sector, the about years. growth the demand we delivered the we progress I double and as and bigger last good business. characterize just kind particularly And signals, role And are thing of network the transition then make IoT the the the intelligent we IoT parts XG. And

think we are we So well very positioned.

demand or this about over think our up So business that growing when manufacturing PC aspect places footprint. down bigger you got volume, on time, our of we

So that's would I add, Thanks. thing Stacy. other the only

Operator

you. Thank

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

please. question Your

Joe Moore

Yes. Thank seeing. guess to you constraints that the are I you. PC back going

year. like out said, them you in, from early to up But back to inventory be customers So telling you you weeks think few I it would going short. just are like your and in we seems would you a that build

unit And that when constraints to would you in forecasting start like what point share be happen then eased, at side? able you second to So client on the take they half? the back will those in do inventory? you feel first Are half, the add are that can

Bob Swan

Yes.

to to supply provide a of combination as want important we very PC we be if it. November, get strong is with able our was customer those say, advance was in to possible it as grow with And things felt and to data to first, to center middle out demand to soon think ability I possible. grow it November, time deal to I customers as much notice excursion, factory of base as their went them and growth, continuing we give that to constrain out should to our going

one beginning year, in things really of into from I meet XXXX, our in to the got we more capacity of the and going because the was think factories favorable XXXX place back output to build capacity the we XXXX, are and we we close as put the demand.

the So our or sufficient year. say supply sufficient supply are, we in expectations will first should I throughout quarter the have

think we the on is customers really things, not right in quarter, supply going and the that QX I on to PCs particular mix. that or week-on-week our particularly hoping just then linearity, challenge the second, have our but supply for. SKUs making with are be two sure is product as mix, And

we have capacity. will So enough

little deal I plan in challenging and to will overall think be mix out environment as product supply XXXX. but to we a try constrained with QX really of be linearity we the

Joe Moore

Okay. Is And there or than then the products? anything entirely any are client? other shortages Or client? other are anywhere in server it

Bob Swan

in we server. quarter are in No, XX% depleted levels. fourth growth with that on And pretty good inventory think shape I going our

pretty a prioritize in SKUs. perfect demand, try have spike we that across great or shape. here not all server in you is good. where and good constrained challenges and there. and kind shape are of ourselves But Pretty Micro, But we in really supply that are we put pretty CPUs, to are products good not macro. So all when pretty position few server a CPU we

Operator

Thank you.

the Rolland from comes from question line Christopher next of Our Susquehanna.

please. question Your

Christopher Rolland

billion, about do versus the mentioned the XX? you are On for you I how and of between And X you we doing are question. specifically X know that Thanks parts for guys. we XX How Could what even. you there. are PSG? some Hi guys that as if divide outsource about $XX up foundries? CapEx you you CapEx, some But know forward don't and with moving you thinking going how here, like feel outsourcing think Thanks example, adding CapEx still do guys. about And to capacity forward? non-CPU products

George Davis

not. Bob take the you can why I will cover Maybe outsourcing Sure, CapEx and piece.

is part this more space. expecting reason on CapEx, we $XX of building we billion year are So are the

fill on items, of space things available to with Some which our if impacted to in support demand in terms longer customer closing frame in gap us shorter the time lead enough the has and space can that's you you really place. much one already of a a of not do equipment it time been have ability

space as is nanometer be said, So to over going X and and X for then half we equipment. for

other. have got three each we of all know, you nodes As top right on

with we also fact are our customers' on less meeting we the gap perhaps the that think of so we But sure meet add billion. be we are to in trying when of going building to XXX the And I make efficient, can to little for kind the demand And a are that those combine where the space to requirements. all add capital things to have necessary. capacity shelf you quickly future place close if we capacity

Bob Swan

one other the And of node high. relatively the to is one still with next litho, the exception is Yes. thing maybe reuse the from

a put generation. the XX most a or tools X, reuse for we place can for next continue we what So in part, those to for

look your evaluate, it's in a And foundries. we XX% from overall third-party non-CPU of the And we time. part get to XX% foundries And always our question, of non-IA, to where continue particularly capital-intense have long the business, place have second things process. an That's been best a we we probably historically the leveraged to manufactured. products, for third-party in at, ongoing continue the these in is to supply

And in I larger do is all our equal, products. a of say, breadth portfolio inside else play a full-time success, with we would and effort of our that, the we outside And more at larger end. as what we the customers' build we do what our evaluation and role

So do we will to continue it.

make the most prioritize where best, get and decisions to the We can we efficient will those continue over time. output

Christopher Rolland

guys. Thanks Great.

Trey Campbell

for question over things up. and we wrap then Jonathan, to Bob time think to back I we the will more have one turn call

Operator

Certainly.

Timothy for from then question final Our comes Arcuri of from the line UBS. the day,

please. question Your

Timothy Arcuri

lot. to Thanks go George, margin. a wanted I gross to back

are concerned about better we for a obviously last environment. XX% And the and year but quarter, we XXX little competitive about bit were for think the on basis talking now this XX% year points only revenue. yes, less it's people I are

it year, to exit XX%, to the would maybe year looks that you changed? in And which you talk what next number XX.X% like can about as the be So where just range, XXXX. you is be, has said specifically

number still Thanks. So a year next that for is too?

George Davis

What to kind that that than which that the expecting let we is the correct said, XX% said QX, mean the we quarters And look we those where just should little with And be will table Tim, over number for question either couple also at be we XXXX, we numbers. to the we bit. that a for of closer the XX% A, XX%, XXXX? are? does for is last we when on of was, be when I will me quoted just history what is was,

is And we in with were so what believe very we guiding. line XX% much

feel in second the where things that will half. the But we less going really shape rich also half of things I be So the a about mix from mix in are are were seen would XX year. particularly little that be the and talked mix. the like we product about don't than clearly and may as some to is have of much everything is BOB see the effect, an richer down we plays point. mix a Those nanometer all the normally out we fact in, having talked first year we

what we So I with see were line would year. nothing those this of are very think more really thinking type in which than movements we much

Timothy Arcuri

George. Thanks very Awesome much.

George Davis

Tim. Thanks Yes.

Bob Swan

to just Trey, wrap. maybe

great for year. up wrapped joining the about us. thanks First, how We we feel

year the will is, in our Our history, best it in we XXXX company's best outlook XXXX our and the do quarter company's history again. for

it be ambitions been know, And have greater. expect year. to our We another you just never record

going are TAM. As after we you larger a know,

success. that customer's We our play are role expanding in the we

the competitive leveraging to increasingly like we of And GPUs good and evolve. as We we visual feel our also about dynamics where continue very industry, given well-positioned and workloads overall to We to world. but with processing we units feel CPU evolving are stand architecture it. it's beyond are deal the an realize we CPU the

for joining again thanks So us.

on and better focus we really of company. do will best be our that better growth is expect that drives the we serve Our to the customers obsessing about and how what and

days from So thanks to XX and another we now. deposit look forward

Trey Campbell

please and today. Operator, George up and you Bob us the joining call. thank Thanks you all and go ahead wrap can for

Operator

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

You may Good disconnect. day. now

Intel (INTC) 23 Jan 202019 Q4 Earnings call transcript