INTC - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Intel Corporation Earnings Conference. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your host Director of Investor Relations, Trey Campbell. ahead. go please Sir,

Trey Campbell

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

hear documents, both earnings CFO, CEO, for remarks Bob by by The also brief those received not us is moment, Davis. you've they're on In I'm website presentation webcast our the Q&A. in of our our online. both Swan; George them available a available joining and intc.com. investor window we'll from today If joined followed

we that to the forward-looking on the Before release differ begin, see does discussion results let factors both we include non-GAAP that, Bob. non-GAAP when presentation hand that we GAAP Please risk have as me specific and everyone and results. me The it intc.com release on financial this press could and today's refer based the reconciliations. non-GAAP and to to full risks more GAAP let as cause our it speaking earnings earnings Today, actual provided such remind materially. include available measures. financial for our over statements be consolidated on information currently we quarter the that brief and contains A environment describing reminder With uncertainties. measures to will

Bob Swan

$X.XX. topline expectation challenging portions our headwinds significant We million delivered performance of EPS. third quarter notebook billion solid and affecting exceeded delivered revenue $X.XX bottom-line I'm our generated consumer conditions. and our our and Trey call. proud by and continued $XX.X despite these for employees' you cloud we growth, thank increasing $XXX profitability incredibly our through Thanks in in demand expectation by revenue by We business. strong COVID-driven joining all and Led of

perseverance our deliver has has really Intel team tremendous shown customers. as together for one Our come and to

thoughtfully business, improving our execution the years, on to three last priorities; focused core we the extending to company, growth your accelerate of been the our continuing critical capital. our of Over deploy to couple reach strengthen have and

progress. me our quarter third Let discuss

First, core business. improving our execution to strengthen our

factors customers graphics, software for with fast and architectural Gen with technology, the Evo improvement internal form life, connectivity, our newest and also charging. and Evo real-world outstanding thin and in performance our through our XX-nanometer-based which SuperFin, innovation; our our can in AI, six Accompanying of deliver technology Lake launch, breakthrough CPU, updated the launched the April. Tiger improvements gaming we thin a we Xe productivity, Intel workloads competitive quarter notebooks. market up for plus expectation the Lake. graphics, world's processor expect and this Intel the office leadership to delivers than processors shining products, with streaming. is This Tiger that faster Core excited of in double real-world creation, end faster by This of announce light content X.X XXth and is codename best Xx Lake we versus Tiger to the In pillars delivers combined single history. Evo. premium times example a Lake brand notebook new I'm battery Iris our more is the Tiger XX% Gen year, Lake-based on Tiger designs brand the instant XXX product master Core, now and provided deliver platform Each we in faster designs we consistent verified Based audio, wake, video. support sleekest to XXth responsiveness, light debuted largest

end Evo by designs in the to We the of market expect have our XX customers year.

Xeon Scalable The shortly Gen combination performance launch Lake. plan other our CPUs data QX new higher within are computing Oracle performance are of and cloud product, other for business, also graphics our of now our our to of generation with business, but foundational XX adding strides processing the are Gen are engines scaling compared Oracle customers qualification to targeting graphics cloud-based the range to the of in end Ice leverage or about a made gains XX% volume instances. XPUs instances drive Scalable Recently, on Xrd levels to we Xeon of performance. they at existing Lake We've excited we QX. high-performance up center Intel can portfolio. instance to integrated of with from Turning in generation Ice We're after infrastructure. the our improvements architecture Oracle's to our generation computing we announced and upcoming great in the that of discrete next processors XX with certain Xrd workloads ramp

now shipping is for in DGX systems multiple in GPU OEMs discrete later first and will be Our QX.

our We on our architecture, for the DGX. the take segment. up this also discrete capability graphics product Xe GPU next-generation gaming will into client our Based on stack powered high-performance enthusiast

the data tell CPU center. power fit to every and of the edge GPU, Beyond our performance that diverse us want from needs a the intelligent the customers solutions AI to they range and level

looking Habana's and We've added deliver our the capability purpose-built programming in we're also with that our a we of that card. so are inference shipping most proof software to concepts major Habana to the cloud center game-changing almost Habana's workloads, resources, Labs performance can capabilities integrated that year several card is on in tier for providers data AI now we standard-based training volume in a customers. XPUs platform service the With ago. demanding Habana For of leverage mind, market. with environment. customers production acquired and And

its packaging advanced integration program in of and enables phase and tens and by annual technologies. improvements state-of-the-art our or advantage capabilities state-of-the-art In the ago to and addition dollars access Oregon of Defense advancements U.S. take program Intel's weeks manufacturing packaging semiconductor government our process of capabilities of Intel's Several to also we've created U.S. with the Arizona billions the investments. SHIPP prototype The R&D second of SuperFin, heterogeneous us Department architectural of awarded SHIPP.

optimization. across engineers BIOS stack Software software application is another which more pillar is from leadership working essential the for to have than product we XX,XXX why

AVXXXX workloads Through these capabilities. as against using X.X hardware fight As an have using the optimizations. via efforts used optimize example, increased by our software such experts we and center code simulation data top performance times by we via of who processing of have times COVID-XX X.X the dedicated a the model BERT range the language key dynamic software workloads in natural NAMD molecular

in we of oneAPI been tremendous customers that unified year. quarter and have the of of this architecture working an fourth release spec that We've to have our closely demand. Additionally, part in open and track the effort with software of on are on gold oneAPI with ecosystem standard the released oneAPI With open progress creating quarter support X.X the software XPU the can variety third XPUs as transformation. developers the the we made oneAPI

focused on accelerate we're our growth. to reach Second, extending our

a autonomous these strategy and businesses by market everything positioning company edge. our diversified a several data against built in are We the transformation fueled the actively in and now computer. history, the We grow rise and the network a multibillion-dollar where world opportunity XG growth have businesses intelligence like intelligent largest of executing increasingly to artificial in by share looks

our larger much must in greater. play And a role ambitions Our realize them success. to customers' we are

deep scale half We and peak now that in learning developers edge design seen to cloud. last our first times this third by examples. time recent five than double the so more same we're year wins our OpenVINO-related quarter of the opportunities versus year. only than we've created last And beginning year the realize created with XG. quickly XXXX OpenVINO in applications In to accelerate could rate some edge deployed OpenVINO was our the from download inference are and solutions more Here

increasingly communication adopting As to their the service future providers software-defined they a virtualized infrastructure. of evolve rollout networks, networks are support XG

Verizon and architecture Intel's fully experience our portfolio Flex-ran quarter, software FPGAs, reference virtualized the and successfully years session, of data of cards This vast including virtualization. XG products world's ethernet Xeon, completed in first end-to-end leveraging

for have We our continue design customer to million more Year-to-date new units. now lifetime we excellent momentum than business. XX see XX Mobileye wins in

quarter's partnerships. win its solution landmark featuring and Ford in unveiled electric with network held we auto Mobility-as-a-Service design announced our Geelys WILLER. last important surround with manufacturer in Group starting largest China We AHG SuperVision view new two XXXX. collaborations Automotive ADAS for Mobileye's hands-free with collaborations privately late the Geely vehicle expanded Following

WILLER first and Mobileye third return of to the improved Mobility-as-a-Service. propel in second pre-COVID Al to The businesses the vehicle levels as to the IOTG with quarter. from with first our is of vehicles Habtoor autonomous UAE; also production is deployment Group Japan global

this the Finally we're energy agreement your an always thoughtfully allocating win-win is in and we sell to to NAND believe on differentiated of customers, where our a and employees. technologies, center shareholders. memory role partners our in success our mindful our deliver we week the technology $X attractive role focus fantastic memory and NAND transaction the hynix allows us success a bigger We our same capital. billion. of the of signed benefit can can hynix a our greater business in time, ecosystem the investment data build for our SK SK that This At to play to of scale grow and at customers returns

customer producing improved demands. We fabs to We've intend meet also and repurchase repurchase to our to our and stock. quarter, the developing continue scaling expanded Optane share entered three technology our are into investing, $XX accelerated have XXXX currently Earlier products than also for We've more retaining Optane XX% supply our and capacity business. significantly customers. by billion XX-nanometer this in in high-volume agreements we

made $XX.X billion October of will $XX Following XXXX. in repurchase have this we of we approximately the repurchase commitment completed billion

have as value even our We confident we a strategy strong our sheet. business. and And are in long-term as macroeconomic we grow the we persists, balance very uncertainty create

the most customers. our Finally, for the few let guiding to value me use thoughts a about principles share deliver we

differentiated provide. enabled is decided die architectural leadership potent for Our cadence a tool packaging few products. we that the priority technologies our advanced disaggregation best that overarching would years predictable and employing to A by shift most we the an can ecosystem a important deliver and of be to ago

foundries on meant can treating solve equipment in also delivering providers EDA not a different help strategic partners ecosystem us that we that learn customer that We as the third-party engaging suppliers from way: realized that and and and but the can as problems. promise

the we flexibility our of inside have because core as both walls the advantage, process These attractive or deployed small and benefits make said, We our it or supply will large Now being call or we have Many Intel. do economics, products architectural IP advantage future outside a we and buy technology we whether no co-optimization and approaches take product. and provides be a in of of others. core manufacturing. and assurance. from inside hybrid products us more manufactured can internal get design That IDM described great universe it as for development of of whether outside make longer or or

partners. preserve broadly, supply, to strategic as as IDM of So the performance work schedule, we ecosystem advantages and some we engage of want with we the more like our

intention process our to reiterate to differentiation to continue want our is and packaging leading advanced I to nodes bring for business. investing option development creating and future future force This a Finally, powerful process products provides value in tremendous technology capabilities for in our market.

As products I coming. I look years am of next products, to the we excited have about the several

We and of Lake, sampling CPU, sampling XXXX we'll Sapphire technology. later pillars Alder data capabilities are in XXXX enhanced by the will CPU our center significant quarter. client be deliver Rapids six now innovation Both including SuperFin our enabled our our fourth

either another further products to the great and forward deliver the or XXXX processes in on providing leadership I'm X-nanometer increasingly look lineup call. combination foundry or update Intel January of I both. have in external a products We confident XXXX in of will our

George Davis

IOTG was higher to billion, in for accelerated was XX%, year-over-year government margin segments. free demand quarter QX strong spending CapEx million aggregate good government billion, QX, common billion expectations. in our due cash guidance, lower comm PC offset Gross DCG, up was and to X% than NSG. impacts, $X.XX segments slightly increased initiated supply. data PCs. flow. revenue Operating XX% was in billion approximately data and at data in exceeded ASPs. guide. expectations shareholders than demand $X.X on by And share COVID-related ASPs, sales cash COVID-related in afternoon, our and more achieved our margin repurchase in X% PC-centric than intensifying down down PC and our EPS resulting an billion versus points impact enterprise lower XX%, guide, one weakness lower center Bob. year-over-year increased and cloud program notebook notebook education client on invested $X.X center, repurchase and lower billion enterprise revenue and enterprise the down client in two for of segment, Data-centric and $X.X $X.X in Revenue saw below was the record provider, growth everyone. as service consumer $XX ASPs accelerated year-over-year education and revenue continued the Thanks, flow $X.X we on particularly point government center segment for Despite center $XXX came mix and and billion, $XX.X driven data billion our and and we demand an $X.X our EPS In better share shift consumer cloud dividends We in on of and stock. from to operating generated and in paid of of and

approximately and is settlement end as in the cash billion free these share return billion up XX% year-over-year; repurchase program billion, historical of $X.X to practices the and flow in year-over-year. of have billion, total XX% XXXX. cash balance Following $XX.X is repurchased flow shares to operating billion announced $XX.X markets part return We agreements capital of year-to-date by up complete when we'll Year-to-date intend planned XXXX, October of stabilize. $XX.X the a $XX

QX. Let's Data segment was segment, year-over-year significantly consecutive our X% was of performance which compare more than COVID-driven XX% challenging from year. move impacted Group of the to growth. $X.X and down quarters XX% headwinds down two following prior government Center revenue in Against enterprise the billion

of weakness network ramp year-over-year, segments ASPs Our were to was XX cloud networking up were revenue on and revenue CCG higher million COVID-related segment ASPs to the demand, due XX% respectively partially ASPs. year-over-year quarter, businesses. XX% driven year-over-year desktop production of in grew as $XX year-over-year revenue unit lower offset and PC segment segment. XG adoption were was notebook to sequentially XX% service volume income lower Lake by down increased and supply. and on on businesses income and unit was by on our year-over-year DCG strong reserves $X.X down profitability in due improved. million Ice notebook volume, government provider on the year-over-year weaker and by solutions the by billion X% and divestiture. PSG and returned Operating XX% year-over-year improved consumer down offset down enterprise adjacencies up XX% offset were up continued and was X% comm Operating embedded revenue. up was operating declines up margin and volumes and consumer XG declines the SoCs Revenue X% record XX% government home due weaker X% volumes IOTG, and other for and were volume year-over-year increased to down entry revenue volume. declined enabled respectively. due and modem higher year-over-year units NSG businesses demand, of enterprise significantly $XXX as ASPs to revenue, global weakness. was and on XX%. was costs. X% pre-PRQ on station and by volume strong revenue XX-nanometer our SoC Platform Mobileye base education product. in continued. IOTG lower down on XX% on demand XX% up in gateway NSG PSG our cloud down XX% XX% XX% partially data-centric in communications server growth XX% Operating our income with points lower vehicle reduced year-on-year

XX with by Tiger expected exceeding Bob forecasted end of expectation year from ramp Lake mentioned As XXX QX. up design wins is in

leadership products. cost the As year-on-year continue products to higher to we including demand ramp XX% eight share Tiger through year-end. supply on and was see of down margin associated regain for expect we increases with strong Operating unit XX-nanometer our Lake, points

we QX. from see of We supported in PCs supply. the strength were that notebook Moving fourth in in outlook, and and consumer our in dynamics dynamics many same by continued place learn-from-home QX now see work to quarter increased

industry We also as stabilizes. Mobileye momentum automotive expect growth continues win continued design strong and the

We as segment line multiple enterprise demand assumes and of IOTG in cloud expect DCG. the well moderates enter demand continued digestion following government NSG quarters above as in guide a weakness growth. and customers of period as our Further, trend key segment

guide and to in expect we down Gross prior As QX. gains be our QX, approximately XX% portfolio QX five to quarter expected expecting saw the Intel be billion to is EPS OpEx Relative up from approximately $XX.X of down same low modestly are share. order be total on XX%, single the operating and $X.XX down points revenue we in for with result, PC-centric down capital digits year-over-year expected the data-centric per our be on share. a we is per environment to margin year-over-year. of $X.XX to

announced strictly SK be our consideration we billion the structure in first regulatory factor is of to of commitments Our assets will of deal approvals, $X Micron. to a stages. the sale two quarter, At expected overall. and is fourth agreements facility and The is rate the non-GAAP of existing NAND the Dalian In within the The tax with sales close in the our subject billion we XX.X%. quarter long-term to factory Hynix. the unique this business $X receive transfer

continue the We of until the to in operate XXXX. will we entirety business for can SK factory transfer the Hynix

and this Under announcement suspended for is will through. for is sold effective sale, non-GAAP begin Non-GAAP sales reporting forward. be unchanged for effective We reporting of benefit quarter then date held and seen not held from cost sale QX GAAP inventory-carrying from NAND depreciation will be XXXX. in this excluded accounting the NAND change be for as depreciation of until QX the will business will The purposes. existing

is Hynix will a and by spend approximately ahead. a This business by cash XXXX spending will core $XXX the assets cash sale opportunities amount. QX free scale be investment our as reduce sale our flow capital million Capital We and for held non-strategic NAND excluded be in later dispose believe or So to for earliest to commit of for shown the benefit XXXX focus from bring will flow. XXXX. win-win to Intel forecasted in free true similar will SK this business our necessary this and will a raise on asset QX

full to year. versus we $XXX EPS move revenue Let's of respectively $X.XX, on expect and July guidance, expectations. our higher million the billion QX our $X.XX and $XX.X Based of

be our mid PC year-over-year. digits also year-over-year digits business to expect that the against up is We mid-single to single high TAM up

build-outs to operating NSG Gross cloud lower from XG approximately point approximately growth Spending divestitures be XX.X% to guidance approximately our approximately is the volumes business. year-over-year margins. gains, and from versus $XXX XX% down of two are most down year revenue year QX down billion in dynamics spending by revenue Full expect higher on for be that exit up X.X ASPs EPS modem share our July on volumes NAND Spending higher revenue is year-on-year equity COVID and XX-nanometer million expectations margin expected business. We as reduced mix-related reduced points weakness a year-over-year. points the due businesses gross offset mix offset percentage of improved be $X.XX on be are IOTG of the single-digits operating higher in one to $XX.X is QX year-over-year. for to as increased both by margin The of partially is expected expected to mid down XX% and leverage. demand, lower Year-over-year is approximately July resulting count and COVID-related above data-centric $X.XX strong of heavily year higher impacted and we gross margin partially seeing and XX-nanometer products volumes. by margins by is offset

some flow Bob billion. join and billion CapEx $XX.X approximately And worldwide thanking it to a that to for I'd We billion $XX.X approximately to environment. continue employees conclude, thoughts questions. go deliver of in to we before customers our our I'll cash they with in hand back to challenging $XX.X most expect billion for additional as your of Bob To XXXX free $XX Bob? to like

Bob Swan

George. Thanks,

and most to the year. more our geopolitical tensions even social impacted little XXXX down NAND on products best the this, primarily even expectation we than XX-year grow products year be just invest year Full to spending pandemic change supply year principles storied as gross of We've our in expect to a two business margin to we mix maintained as deliver of your COVID our our January has billion revenue history. get all margin discipline XX-nanometer-based non-GAAP points a in work-from-home, of acceleration chain one global been unrest. gross $X.X We accretion points study-from-home driven approximately Before a and globalization challenging in challenging the to will in next year. decision versus questions by significantly mix. expectations COVID our a communities my we January in with made the environment. has by will workforce career and we business drive plan context Despite and our business to sell two combat of

billion. our we months capital increase decisions mindful In free cash Intel to $X.X to our made of dividend difficult and and employees $X through flow ASR now are these your January portfolio. commitments into want increase and to XXXX, beat shareholder thank by financial to to our Finally, are all capital our circumstances we working and of through management our value Nine customers. deliver prudent support expect I billion closing, who guide

Trey Campbell

Bob. you Thank right. All

to Q&A. on the Moving now

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

Operator

Yes.

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

Your line is open.

Timothy Arcuri

is a XXX below Thanks QX be. thought basis margin. wanted George, to in, QX double to gross quick I about it for I lot. what points and on guess obviously, It below came was

for pre-quals much not mix, Lake. the QX. the understand And government you certainly Tiger but the on already you the on already cautious and pretty enterprise were paid those there's So and in segments weaker recovery and price of I a

on bit if would or be like it so a revenue you not And is least QX sounds at it as ago months that's three about track. better. So thought

margin. understand slope. is beginning a I the to that So how guess to slippery guess, competition much investors could and say trying lower this going it's the that I'm of account just I is mix gross are for point this

wonder I both that. can you talk Thanks. if about So

George Davis

Tim. Thanks

you third with really is talk ways quarter I many summarized of falloff for I'll And think what changes fourth place took the the in out in in two-point few But quarter. the PC a a kind quarter the about. quite heavier much turned third factor a going than was thought very of to mix both quarter, it it entry-level markets consumer and of a the different education. really be we -- in, similar

ASPs growing saw that an the as two that's In healthy and saw unit XX% government of server, us. XX% market -- standpoint consecutive year-over-year. you that's So very strong we a dropped quarters from in even after demand. enterprise And as know you for ASP

take ASPs the so growth chips. the data account server and we very also actually And have than if they the center you that down into that different that obviously SoCs our within ASPs fact in as pulls saw

mix year. in we on was about we're feel the Yes second where So a good than We really story. levels thought. increased -- the year, we competition are competition overall but the half competition it of different seeing not of

very So we I different it's story really than mix say thought would a a mix and in. going

Bob Swan

Maybe just…

George Davis

Go ahead, ahead. go

Bob Swan

of thought we XX-nanometer quarter, Lake of the we to beginning from was that of now it's what saying Tiger second -- And the we year. our the And we We I that even design more in exacerbated supply. be product of demand up this from and in course we a the what than said more us it's be function it XX% XX volume up add XX% during anticipated the products. strong we ramping to the enable the half going it fabs been in demand, for three half is going and the that's manufacturing back just was real to thought. the product …to -- get We're say we're quarter to dynamic fourth more impacted shelf of now on going the and even other launched double ago. more one the high the as that that'll XX-nanometer second but thought was about third wins days north the

that one on the feature -- added George's that's So top of just commentary.

George Davis

Yes. Lake QX, volume And further. in the benefit more Tiger there you'll would say of ramps Tim see I the of as

they we And notebook in said think stronger cloud in contributor starts. be So will were digestion as QX QX. a we than then

So E&G fall on we expect put off because coming that back. margins pressure don't see and we gross to

better flow rent-and-repeat I and through as healthy gross So a -- But gross we margin gets stronger think of one notebook gets and story mix mix in where quarter normalizes it's it's outlook. it's of think healthier. terms that the margin kind a

Trey Campbell

Thanks Tim. Operator?

Operator

Yes, sir.

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

question please. Your

Harlan Sur

Good taking you for afternoon. Thank question.

Another question on gross margin.

positive this gross your but see the XX-nanometer the having acceleration margins. So year, obviously, impact muting is it of good demand to

the of that on expect you're year You're aggressive this is more the year. gross learning up volume still this XX-nanometer But as the coming recapture a the because off to Is learning of that yield curve. year early next XXX you this how be the of we points should margin the the should getting going more and be in basis higher tailwind gross team sees it? so, And team XXXX pull-forward? to margins through to if XX, profile gave cost

George Davis

XX-nanometer, look accelerated that. a there's said, The it's from impact way margin it, as as displacing -- at we XX-nanometer because we

XXXX, even of are So teams The are of working initiatives of the will XXXX. we should we in guided on of still that the improving as see as felt XX-nanometer as think, XX-nanometer, cost show positive. back May cost up be impact the we all in yield XX-nanometer structure performance that

on. XXXX has a got from that pressure call now, put So And ramping wouldn't it has other gross we a XXXX. earlier the tailwind. some in But We've changed XXXX what margin right I thought. in bit little for mix tailwinds,

in the of half. of half. see and has second a first margin normally think back. first really a IOTG weak we accelerating in it and we year. see get year-over-year growth back third hurt this think our -- business that had enterprise to strong was We half saw what We half government come very and instance as and returned E&G strong For which is further. quarter already there. kind to We weak reverse starts comes the accretion Mobileye you second And we

digestion So acquiring we think be good. take in time expect We some cloud normalization but back think cloud XXXX. to is we will

top So modem -- then on the and of we exit. have that,

we tailwind that's of accretive. actually we gives then to So margin us and which a we as one- fewer about next on And margins announced year. think fewer sell course, NAND modems, exit gross two-point the

Harlan Sur

you. Thank Great.

George Davis

question, operator? Next

Operator

you. Thank

next Curtis Our from comes question of Barclays. Blayne

please? question Your

Blayne Curtis

Hey margin. question. really Maybe just Thanks gross for the guys. down

Just looking I margin lowest the DCG XX%, in think at the that's op ever.

haven't XX-nanometer. center, really ramped if I gross redo just data on that answer, maybe you focusing just So because in can margins yet you that's guess that area an

I'm just to kind layers in business fold And So that, later. at how also you look that of Optane curious as in.

George Davis

XX% that margin. added we saw also too, on the drop-off, that year-over-year of the of you drop-off ASP the And such which margin was business gross with as than revenue falloff -- what spending operating obviously, of we operating dynamics E&G. flows we've at a lower to has an steep Habana expected Yes, right there through impact certainly a profile. On into the margin look

DCG. back then margin in AI area. spending some seen seeing recovers. overall cloud And as performance out We investing be we think of you've as growth and again comes the strong So we're in E&G should

Bob Swan

be decline, within but have to at business the look mentioned of cloud George segments the the as XX% earlier, -- strong. continued year-on-year when ASP But growth a you you really

on year-to-date is a up mid-XX%. So basis cloud

performance cloud So relatively strong.

much of tendency and enterprise the that big with decline. kind and ASP volume be the where drove lion's decline becomes third, mix strong of that And growth, the have lower the comms a business. being enterprise higher real Our XX% the than is the Yet combination so play prices, mix as the to growth strong volume ASPs the effect alone edge share at cloud then of of business larger. ASPs we role business normal unit network our

think cloud we that with the strong remember dynamics mix the growth George flagged, through So, E&G but reality of year. -- is of six months up I the -- XX%, first were

environment. So E&G macro third year-to-date in on fairly account when into a flat volume business you is basis take the a challenging quarter

off in the at year, of levels flat a half So when the started being all weaker in first going channel think I They year-to-date it's high. a with told, a half. third the second the relatively in the saw line we what in quarter into third where quarter probably inventory bit, bled therefore, with And stronger we we the were quarter. quite probably course second were

George Davis

Yes. very to second year was a we strong big we're normally what like looks half. more in another a And the to year-over-year. seeing see normal which a would kind our lot -- margin operating half second Harlan as of our DCG we half what of had is, for compared we and prints seasonality, forecasted at weaker very, half and way the look first had that first year we And is, on it the

Blayne Curtis

color. the for Thanks

George Davis

Thanks, Blayne.

operator? Next,

Operator

Thank you.

Our John next from comes question ahead. the line of Please go Suisse. Pitzer of Crédit

John Pitzer

forces capacity lead Bob, X-nanometer for your I me flexibility maximum of Yes. Good X-nanometer you time where time guys. afternoon, to appreciate ask for maintain lead want to for guys. your kind time But a your around around comes a your for question. decision comments foundry's Thanks own there capacity need the letting and upon point ability decisions. or in

and I'm that? help window So we this thinking understand Or about to could percentages how all an scenarios should could make X have you understand are nothing? or through. the should close think much help if just Is a as you if talking you as we when be decision us on to here? kind us of And wondering the we

Bob Swan

Yes. strong IoT. mean, client, very for we XXXX, a lineup for for Thanks, have first and server and XXXX product XXXX for I John.

three not And the AI CPU, our for for So over FPGA. we for about but good looks years. feel the very lineup next just for GPU like what the and

years three the good feel next product the lineup. about So we very

and level fairly are control we process at other with And best criteria, evaluating macro products imagine, we're as third-party to could schedule ability time. the processes. fundamental think economics And our XXXX our can. product supply you that beyond, predictability, the simple: we versus as about looking at required the we're So possibly chain chain -- supply the and and schedule performance at

of be the kind exit whether we're more that's or as are early really to foundry So XXXX determination and of the we we're the simple evaluating and to relatively a adding that third-party would capacity. those one whether we'll that as have time because make XXXX, X-nanometer criteria buying equipment each

spoke, we those we we we mean, fundamental looking spoke our this criteria. fix. it. going knew capabilities would the root our process I time around we're others' really last excursion. process at caused the thought capabilities time is had So say three identified well. We since last very I through an We X-nanometer had doing

early be Now, we've foundry big the small question our deployed at is or within we We next the No, say, the we're criteria. an I'd nonetheless, John still all last product year line. towards about, versus But fix and or three the those at segments look client. this And server made wonderful at look foundry We core, of your core. On look progress. end nothing. the of some year. evaluate call it going to across will third-party stack

we're of in all business. it's a a looking of best not path in terms the my variety predictable of ensure a the it's or prepared had of nothing; at think, products remarks, And XXXX and have in the in I cadence probably we different more days probably learn leadership pretty as XXXX, makeup an said terms during for the last and time believe our that we of So in XXXX of next parameters I we the mix in lay as frame. like the the And XX days in we'll position a XX be January a XXXX have and good decision lot XXXX. we out to course will to

John Pitzer

color. Helpful Thank you.

Operator

Thank you.

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

open. is Your line

Joe Moore

kind Ice play year seems to like talk launch. little It to of you about of close Thank next important road year. next going I quick about the what bit also how part pretty Sapphire map. in out Great. transition you particular, just Lake like pretty Rapids talked being seems a a and you've wonder those more that's so together? Can talk volume being early if you. a two And with Sapphire about Rapids could server

Bob Swan

I later of, about so very the XX of or very last excited our course for the of kind year, is map of I road enhanced consistent are the of months the think road getting last which of the for laid mean, Sapphire And course the months. kind of year beginning set quarters the that feature year. at out end Rapids pretty in I of enhanced equally four our a end the year, set next and Rapids Ice early the a we've about ramp a to mind map Lake -- excited customers and think, out XX people attractive at Sapphire over feature been Well, end the it's over Ice fairly Joe, Lake with Cascade now Lake

to products not in it as so And than in So long of as it timeframe. sequence plan in continue kind that X dramatically quarter kind our able do X effectively, we to predictable, laid past. want different fairly maybe leadership of got a we out be customers to we've the of this how approached cadence can is

Joe Moore

Okay.

there? So just is to I cut early XXXX? Rapids understand to I am sort trying will it make be in volume more too -- so sure finely of of Sapphire kind Or it

Bob Swan

it. fine little doing You're too cutting a

Joe Moore

you so Thank Okay. much.

Bob Swan

lot. a Thanks

Operator

you. Thank

Baird. comes from the Tristan line question Our Gerra next of of

is open. line Your

Tristan Gerra

haven't it the building afternoon. days, to you How more manufacturing? TSMC that of still of where existing transition all have - good easy processes you next of be like comfortable you internal Hi, over chiplet a architectures? is? type reevaluate this is Under would type for explain you for from to XX can that how TSMC and And leading back I understand to node or starts your architecture scenario

Bob Swan

that's back are in port will good event kind -- we the question. And also going one, under performance to those what I the economics big questions. circumstances general observations can that we for back go on versus the just should we would the in ability we out whether event would of that can. on gave fact, I which you the port criteria chiplets. criteria out it's to alternative a we synthesizable more we more I of bookend say feel three if in around I in as well. want around and able to if being really It's we our in can yes either of And makes schedule confident that conclude bookend we we of port bit TSMC. on complexity the go based that's in, very to product mean technologies there's core the if Yes. nature predictability And of portability the that of the a more bookend ease us we sense what's ease feel of out -- is that go out. of say, And the then those cores. the other the that increasingly core products around And confident conclude or best

go that can in back come out the we evaluating process and should we're we what So in we and can of under circumstances.

Tristan Gerra

much. very you Thank Great.

Bob Swan

Thanks.

Operator

you. Thank

next line from Pierre Research. Ferragu the Our of question of comes New Street

please. question Your

George Davis

make please line Using phone, the lift speaker the Pierre, your sure unmuted. handset.

Pierre Ferragu

Can you hear me well?

George Davis

can now. We

Pierre Ferragu

great. That's Okay.

comments on yes, and I'd market to market go So to share. the the PC you've like made back

How So do -- end notebook did gaming things in over of the see play the how are in market How gaining the out share it the And like market in the out you're market higher them the like for you market. year? regaining looks lower things end next of in community? QX? the playing

Bob Swan

Yes.

unit I the pile stage. X% you that's we're on. So volume year-to-date volume at single with this up third I'll high a George mean start. in up in quarter digits unit TAM probably XX% can the first,

So notebook to the a offering. be, done. a primarily got when we've George flagged one. third shift in into market don't think year, And feel product much a we massive continue products; expect I think that some exacerbated as came in roadmap want one, I stronger improved the but capacity which launch then think mix I our we going have by where the back core. happened market anticipated, to number number this we say and and good we like share is by bit exactly in share. increase mobile quarter a then little we've incremental basis the the some more year-to-date three, QX that two, very recapture to know -- all on we how wonderful fourth that capacity that really small products and number to begin Number we we we we feel would with to gained quarter TAM recapturing And have higher and is to end product fact And those protecting than been

high mid So high in -- the the single-digit a in the TAM at to aggregate growth we're year. for looking

into Our volume kind chain good really We up holiday we've and think product is season. our the we as nice down of and nine the we supply stack got in go months holiday X%. a XX-nanometer through got the ramp of

George Davis

the expected Yes. serve seen share And have had we both level. said some the and higher saw we We're of we in QX the the the We markets that clearly and entry in the entry not PC -- end mix to QX. didn't in markets. the seeing we half capacity first just year, shift at level

QX super produce And we're and seeing recover share we getting on we top could quite space. have to ramping frankly, we So have more if sold produced could the -- in we this QX coming capacity. have strong -- demand of could what we're sold opportunity we we're as in everything into

half and we feel that that we in half to in in market. about starting recover were grow down share where -- entry the very the we first good second the So

Pierre Ferragu

you. Thank

George Davis

Thank Pierre. you,

Operator

you. Thank

Our next from comes Citi. of Chris Danely question

line open. Your is

Chris Danely

Hi. margin. Thanks, Actually guys. first a question a just longer-term clarification gross and then on

like no pricing reasons or from sure the my margin pressure about of pricing pressure as as comm and going the want far I pricing these guess that goes talked it for just part longer-term you mix away. no And as more on on not to gross when headwinds aggressive there's then revenue seems are your I is, So competition? the some mix question such on make

just what that there. going should So maybe a think indicated do a the your clarification than by look little previously? offset situation? margins being you've to range gross as Or being at the Maybe little we longer-term, is lower bit you NAND be

George Davis

in and I'll start may Bob want to Maybe things. Sure. throw some

So, largely we're It's competitive in but on really to isn't a terms effect from there think circumstance. I in mix change. say that we're headwinds by unusual is we And not pricing expected the change mix. Again, pricing to the dominated the that seeing it's of environment very implications, some competition, the see. long-term

radically our of year, a were that dynamics. demand year different of just kind of and related really So to responding we the COVID those both And XX-XX saw. to the mix dynamics

many there's a most I probably think the mean focus this. profile long-term we'll over implications than the that is see normalization think too XXXX segments. these wouldn't more -- in long I draw we mix of competitive run. each to having 'XX of I So our on And is like

Bob Swan

Obviously add just decisions portfolio. expect home in to headwinds. we the one as of the was tailwinds Joe and this real well as to little Yes. just go and of connected year bit they're modem volume earlier. our lower-margin this XXXX, in May the a the we We decline back longer-term But announcement I would XXXX in net-net, businesses the week's reasonably you on we And highlight year. exited business into we into to middle some made we And that I some I see go them, exit of mentioned on you asked device tailwinds the XXXX. NAND, we and with it that think just outlook balanced relative some think gave that

So as of the tailwind net XXXX. business is enter mix a the we

that still equipment XXXX and third, then of will on volume fully increasing we And expect we we that our in improve. Secondly, XX-nanometer have we've the made portion will fact yields during -- have expectation mature a really XX-nanometer good will year. on depreciated. in of as an significant progress going be And the into XX-nanometer in course on will of this next year fact portion will the

some these knew X, XX XX, things So anticipated that of have real -- we we in are months tailwinds ago.

numbers we more are as migrate line. had then not dramatically at we in we versus on where to only when laid will some The that environment volume us XX of anticipated our we today we all what work longer-term And XX positive is of those we kind headwinds. decision net real So and NAND. have from against planned. When the the And we assumed are more from competitive different. as our

as little second a the say business the of should of the now dynamics I half the the are mix. negative chance us is biggest mix headwinds a as that just positive that bit, that COVID-related implications surprised on say more and to tailwinds that characterize think opposed I beyond. are I'd obviously what of in much And So and there's But wildcard because the on front. probably I'd of XXXX

we May than So we of a better I'd positioned some little it maybe were out XXXX. when headwinds. laid real as Net-net, where in we've characterize maybe got tailwinds today some

Chris Danely

a Thanks very helpful. lot. That's

Trey Campbell

couple out. a of Bob, if thoughts, want call you close to maybe the just

Bob Swan

just we back billion the this free to the Well, us. joining very flow $X.X what grow Yes. at to thanks and first a $X.X out challenging revenue environment, by through cash for say expect year $X.X I'd beginning market of laid we year. by above billion billion

next all a we'll the despite better we'll inherent portfolio product deliver challenges, into a and as go have year. So year stronger we

stage be Second, fact said on The that lineup we're we are in focused at a leadership remarks, of as And product great delivering XXXX. position relentlessly working a I is to in. a have we good relatively really XXXX think predictable the this cadence I products. hard through prepared on

as to XG, and cloud, intelligent computing inflections Third, these our such extend edge technology by accelerate our autonomous key AI. and continue meeting and reach growth we

and the to and the customers. we're characteristics. into that for strong I'd of a just continue resources more So is our grateful health retain last delivering for we thing dedication and think environment while to our work our And of safe I we're positioning resiliency Intel partners collective and employees, more real efforts say growth incredibly with

inspired this create Earth. time be during that the where our been of of on purpose I course technologies enrich year. are the lives can't it than that So is important world-changing which purpose, could And a by person has collectively imagine more to we simply every

So we'll soon. talk to you thanks us and for joining

Trey Campbell

the and for go and Bob, operator, thanks Thanks, close call. everyone let's that the joining call. With ahead

Operator

this Ladies Thank you call. conference gentlemen, concludes for and today's participating.

You may now disconnect.

Intel (INTC) 22 Oct 202020 Q3 Earnings call transcript