INTC - Earnings call transcript Q1 2021

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

Operator

Good day. Thank you for standing by. Welcome to the Intel Corp.’s First Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there be a question-and-answer session. advised conference be being Please Instructions] that is today’s recorded. [Operator to I of conference Balow. would Instructions] hand Investor now Tony Head [Operator speaker, like the your over Relations, to ahead. go Please

Tony Balow

quarter Welcome to you Operator. have copy the release a our received call. earnings you, Thank presentation. should Intel’s first By earnings everyone now earnings and of conference

for online. If not remarks Q&A. received by available on am The website. Investor is by you Pat both also available our us In hear followed have Gelsinger; CFO, earnings the moment, in those joined today window and brief webcast our will both we I George documents, they joining a presentation CEO, from are Davis. our

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

to non-GAAP We speaking our the be financial describing measures consolidated will results. when

it year-over-year a exclude divestiture a subject non-GAAP With available release our the is to GAAP memory and include from full over to hand results. exclude Pat. also that, As and business, reconciliations. presentation reminder, our which NAND our and earnings NAND results non-GAAP let non-GAAP XXXX comparisons earnings pending The on me intc.com

Pat Gelsinger

Core we great bottomline Intel. for our response customers on be today. our With We best you strategy, team. call. IDM consider exceptional to industry volume strong the I support, setting January partners a you, Mobileye Xeon a of new for be honor our We by CPUs. Tony. from launched everyone. earnings course demand beat our company. of top unveiled for first competitive both has tremendous by its and The that joining quarter at Thank employees, for record a ever. leadership it products incredible. my pleasure notebook bold Thanks afternoon, and new and shipped Intel been guide processors. delivered a this execution exclusive with had X.X driven technology Good and Intel QX It’s an to CEO

Our executing. teams are reinvigorated, Intel amazing innovating and be at back. Intel It’s to and back is

you of models was This up is in the The digitization be result at spurred that’s COVID than This to new begin care. is foundation. capitalize Before that breadth and XXXX trends silicon aggressively in shaping and PC of shipments and ecosystem powers led is for with continuing. will financial connectivity, is manufacturing positioned we remote of Intel for George intelligent is a edge. central platforms, of and interacting more the PC There in ever. seeing more. point human why since I Technology to remarkably customers takes or decade company dynamic everything largest is particular simply, of Said increasingly to and powers sustained through PC to market resurgence. customers of so, digital at-scale artificial the super the software, depth are with on them. the Intel’s innovations. XXXX quarter, the learning industry the to and accelerated aspect COVID we innovation and creating a existence XXXX work growth well-positioned are cloud, on and four Intel is are any lives that experiencing and of working the can packaging of with only has intelligence every planet. details to on will and by and super driving explosive help do improve are harness next-generation semiconductors and to depend human these uniquely the learning, their mission growth transformation, the cycle and The and every process semiconductors in

CPUs in over volumes is shipped XX% in markets, first in quarter. PC unit in per longer more the any no of other well PC we is Total we fact, QX In The In call quarter than density notebook many history. up number PCs in every household, one what were increasing. our home enough. platform

global laptop. in where seeing in are of education, the still student remains and single growth PCs a per number We digits. strong teachers a on basis, students hundred Every the needs

go. We to have a long way

are innovation years refresh with this addition, PC opportunity. for PC marketing, over Lake enthusiastic. leading notebooks million that desktops, four XXX rejuvenation been and PCs Tiger are there is of and has reception running the and Windows Intel Lake shipped is today, over enormous In We old an level. XX experience platform for purpose-built and customer Rocket silicon user at software, the H which

over of execution, of volumes As expect year. XX-nanometers of the second ahead the H XX-nanometers Lake schedule we a qualified Tiger sign cross XX-nanometer unit our improving in we and half to in

across gen-over-gen workloads. At nearly edge. Xrd-gen million Intel performance launched demand no believe install our will base, which the runs most the Xeon of new see improvements the servers return workloads Our best is ecosystem Evo Intel mobile PC Xeon foundation, ways. to our we this slowing named Building code of the Microsoft, from and We to industry million and with than a the high-performance of range to industry’s our With more including to on we intelligent the Samsung the platform and range on broadest processor deepening offers recently day. network Scalable to Lake, buyers are PC world gives that very experience of over Google the cloud a in data units advance optimized heart a Intel. in shipping XX% experience power platform signs Ice XXX advanced partners innovative the center engagement new the

We communication XX including customers, service to than providers, cloud customers. Ice shipping Lake HPC and are already major enterprise more providers,

every optimized is more performance learning and computing more the application. infusion and into intelligence artificial demand for Another trend of driving nearly machine

Center the customers like those with Ice only on discrete with AI workloads CPU training. XX% extreme built-in and AI improvement Lake of Data solutions Habana in AI needs areas demands acceleration, our gen-over-gen As xXX the provides address

customers Sometimes both. want

For driving to record. San example, power accelerators eight Xeon super continues Mobileye new Voyager quarterly technology assisted with auto wins computer. and Mobileye’s Intel their new design use will Habana to Diego a in UC makers QX. set new over AI win

a year. with categories is Udelv XX have new XX LX Mobileye programs rapidly at transport OEMs. next robotaxis and evolving win continues fully open to We of as top automotive the such with beginning delivery power to autonomous

winning Cloud that to XG with deployment this locations. multiple across service help providers our Google develop collaboration extraordinary next-generation accelerate is network We success environments. communication example from have solutions continue in the to edge A quarter XG and great

oneAPI space power unified and tool across of and supply computing, high unprecedented open industry. oneAPI approach includes and data for providers We stressed scale. has programming are seeing already oneAPI’s embracing AI demand kits analytics. architectures Developers at vendors. and for semiconductors performance service embracing significant standard oneAPI the for cloud are leading customers chains adoption The This are who across

the capacity is We challenged the have doubled capacity, shortage our and now foundry a internal by components. last industry few years, substrates of wafer but

industry This make network strategy. to IDM to these IDM internal will across the take of and capacity shortages of underscores another demand unique our and the services. we utilizes factory leadership couple fundamental aggressively to importance our our are provide source shortages. deliver of significant X.X products our our industry ecosystem a it X.X reliably expect surging to foundry substrate investments challenge the Leveraging new gain and supply satisfy global foundry customer’s IDM for to years We the chain address through differentiated advantage, Intel working our share. market solve

operations example, IDM example model which with Foundry Services in network market. $XX XXXX. the our expanding why in will remove investment expand foundry are other Services, utilizing It’s dramatically with our to are industry us Foundry foundry QX, locations to substrate starting by capability major as establish Arizona. plan need our for demand, our to clear capability increase scale constraint in availability and units we future billion first with Intel suppliers, capacity our large gives For creatively address great meet It’s of Intel a supply. of provider to closely Intel Coming dynamic partnering response U.S. secure assembly while strong for a Intel Europe, and a a this have supply sustainable will is flexibility internal foundry the ensuring Services factory announcement, millions in committed of and semiconductor and the been the industry major its Foundry the capacity incredible. in more the the to we online a where We already world. Since

engaged We well are today. XX potential customers over with

from compute across automotive the excitement are technology and top service of providers. cloud from verticals seeing giants industry We high-performance to ranging in the world some

long-term. supply and both we with to help on can shortages and chains responding in alleviate proactively with them been We have near- suppliers component their automotive and how engaging the

semiconductors chip to our supply future. We need. increase alone. recognizing around global part advanced are prepare need the industry the require to are Governments partnership government nature it address address critical is cannot it close we needed the world immense required this the The and at doing and and scale the and investment of do crisis, this will but for manufacturing to capacity

the and as infrastructure, broadband of encouraged recognition infrastructure inclusion American along manufacturing and by national Biden’s component President its are critical Plan. in research our key Jobs semiconductor We in of a with investments

drive rate superior currently PC IDM external will will year. and technology supply, products technologies. performance and our a well second in the of this we With Looking accelerating leadership for to puts Lake ahead, a successful will and process our capacity capacity industry-leading resilience category. half leveraging clock of restore are will and cost our and strategy is by X-nanometers sampling every path and will launches By ship the leadership progressing innovation In have X.X Tiger structure. innovation, Lake of is Rocket on us and build internal in the deliver we with on confident we Lake, superior which we Intel. Alder follow packaging and X.X, business, IDM leadership our

and for the of XXXX around the end our our production the The unquestioned couple is leadership up. to and of in. center, data first ramp will Ice we is product strong execution, XXXX. ramp compute first reach innovation in Meteor and X-nanometer the Within every XXXX will of plans and Rapids, are underway the scheduled this are we machine XXXX. we roadmaps next our Lake, firm the In provide under with category weeks, Intel which for follow Sapphire to CPU tape Lake year XXXX in Overall, well participate half fired in of tile

pass back. me the excited am I the Before to in be it how details George quarter, reiterate let for I to

and Intel, great. inside the to of made that passion can the us energy feel You innovate the drive

brightest and best reigniting in are the engineers We culture and to attract, retain, the our industry. motivate

end we have total, to fact, engineers foundation so hire of to add X,XXX In future engineers more development. several thousand and as expect the including who year. accelerate Sanjay invest the of this X.X the trajectory execution. a XXXX the co-lead our our year by IDM key logic will our recent winning our of lay far In and pivotal onboarded is in over strategy we Natarajan, technology we year

X.X Given IDM and I certain demand in our front best days the incredible are am making, we technology for us. Intel’s of of the investments strength are computing, the strategy

George Davis

a with PC Mobileye quarters. Thanks, everyone. marked to and and than Pat, the stronger year, record afternoon, notebook start expected achieving QX businesses our both good

and strength of billion, in center our $X.X led in our by first Our signs and data the revenue $XX.X of government enterprise was business portion guidance exceeding our recovery business. PC by the billion

IoTG, adverse to an from environment as also began driven macroeconomic COVID. businesses posted sequential they growth Mobileye PSG and emerge Our strong by

in the results cash operations ICAP $XXX higher EPS exceeding QX largely strong for GAAP impact January completing revenue results. of We $X.X cash gains the approximately and our to litigation from guide, flow-through our an XXXX. plan with we exclude Gross flow In $X.XX the of was of operational up that on beat a was QX, are these on charge billion billion the QX performance to item. billion. guide margin guidance, shares, by XX $X.X in October non-GAAP quarter portfolio. due included repurchased generated basis Note corporate free announced VLSI of of $X.XX, versus noted to XX.X%, $XX repurchase $X.X million approximately includes majority revenue balance related in As that one-time the on points billion and the related of revenue.

We accelerate investment forward, process remain build stock committed as Going our have to repurchases an to growth we expect dividend. to leadership. lower return and volumes make the in phase support initial enter for to strong investments future demand to infrastructure foundry necessary client, we growing

consumer unit performance Increased by in all-time education the notebook volume was X% volumes, XX% Moving year-over-year. platform to driven down and in year-over-year, in record segment the being ASPs CCG revenue up quarter, XX% resulted year-over-year. up segments entry

year-over-year volume, of upside modem Combined Thunderbolt the challenging and government overall our this with SoC of inventory year-over-year our impact initial CCG Excluding in income our of year-over-year. income mix QX lower cloud exiting decline. division. through connectivity delivered Strong increased investment billion, and digestion DCG down persisted R&D DCG ASP’s ASP businesses, billion Operating and more Wi-Fi mix revenue was expectations, $X.X in while our billion, expectations, saw transition but sequential and home quarter Mac revenue, half recovery ramp-down Xeon network investment. XX-nanometer to and were than growth despite a roadmap. Enterprise $X.X somewhat $X.X performance and year-over-year on above and the expected. increased X% in was revenue year-over-year on of connected sales, compare. XX-nanometer growth operating products as higher grew down above the on drove with flat the down XX% seasonal in our XX% R&D

began quarter-over-quarter Our Intelligent Edge demand up year-over-year to were subside. as impacts businesses COVID-related and

revenue Specifically, industrial segment records in gain all-time was communications and with retail quarter-over-quarter up execute to IoTG million, strength $XXX and both and market auto recovers at $XXX embedded lows. strength quarter-over-quarter its XX% industry and continues million well with the XX% segments. margin as up operating pandemic Mobileye and from revenue revenue in share Mobileye respectively. were was DSG segments.

Moving to full year QX and outlook. our

of our NAND $XX.X For down QX, revenue business. are year-over-year billion, guiding we X% excluding

XX-nanometer shortages. continue believe we up increase fulfillment as momentum QX bottomed for data substrate X begin We factory digestion partially cloud costs. government to year-over-year, and Gross to PCs, challenges point component enterprise strong see approximately by very reserves QX improved and costs, center, is subside, XX%, lower offset demand and margin with revenue inventory by impacts In be driven and expected on to continues. in approximately in and start-up industry-wide will

of are We tax XX%. forecasting rate and $X.XX EPS of a per share

prior billion For and cash $XX.X provided expect full flow year, from XX.X% guidance increasing up XX March, our to $X.XX forecasting margin now up our guidance, versus prior revenue, $XXX at million EPS from in in up are we be $XXX billion, free gross call. our $XX.X March $X.XX, now of We million expectations.

PC volume very strong both increased constraints but supply the We will normal cloud, client revenue. return TAM and in be industry-wide second growth. expect industry-wide and growing we segments continue in demand X-nanometer and the as lower both Mac and due constraints be we percent predominantly half of to and center, half supply revenue impacting government second modem costs to internal double-digits continuing expect seasonality year-over-year, enterprise year, Gross margin see to the start-up data and increased supply due mix. demand with than ramp-down our to PC In of CCG to the more Apple first-half-weighted

and our We the X.X R&D throughout year in invest strategy. expect IDM roadmap we as increased

this list tempered businesses. As impacting guide entity uncertainty is industry-wide supply March, and our primarily stated client, constraints, DCG-related by PSG and IoTG in

your closely it questions. We guide. leveraging to our with and turn and capabilities let these constraints, Tony are supply gaining With unique get partners market to mitigate our chain working IDM back me this supply segment to outperform share over that, and

Tony Balow

All right. Thank you, George.

Moving the Q&A. on now to

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

Operator

from question JPMorgan. [Operator come Our from Sur of Instructions] will line Harlan the first

You may begin.

Harlan Sur

of it’s So in ultimately to a and but going the means back point strength continued But X-nanometer unveiling job nice to the ramped and your then that right? to on update the in cadence on getting maintain intranode to quarterly good the also with was strategy, to a order X.X It good require technology execution Good the March. just a X-nanometer. to leadership maintain It to execution. afternoon get was more node performance in on also sustain cadence importantly that’s to continued strategy X-nanometer XXXX. the of IDM and X.X and both IDM see milestone, optimization,

But to two can team a on your in half you two that two, articulated X-nanometers then the think ramp expect to years I X, I X-nanometer two and Intel every team move half to we two, X Pat, said, was years. yearly kind ramp X? the years after cadence March, ramp internode I but after and optimization. think node half of two, a back the that assume and and migrations had a a X-nanometer previously

Pat Gelsinger

Yeah. are for the And on we question, on They said the good you Harlan. very seeing now. I Thank X-nanometer progress are Hey. overall as call, the executing team.

We unleashed I the superb since cadence embrace process EUV that changes technology, are our execution. we move said yearly to to move the clearly. just we path and in expect as for And event, have seen have to we that done and out with and the going to confident that we a are very laying made be we very or on that really better

We that. are ultimately getting some the the and back team us parity fired we excited leadership again. yet making. to hiring with that Natarajan am about The our up sustained about, and to talked investments get is of team’s team process we very of And Sanjay to happy to the execute are on I ability

really bringing X.X some manufacturing with and foundry IDM strategy. and full from of together will the It’s also say IP the is in of as technology and some I technology seen are full about it’s piece our the process. about see, the customer packaging is that that enthusiasm bringing We seen strategy, have this X.X we have IDM early packaging. one of to set of the we just the table It’s strategy our we leadership about the pipeline at-scale

question, heart your to of So, overall, back getting exactly. the

cadence We innovations. our going to technology are increase the process of

we leadership future. We in and seeing very sustained change the on are to since signs positive out this made we parity are and again track

Our fire team rigorously and we on about am very what forward. we we on those are firing is This excited going is all seeing are and monitor executing. cylinders milestones as I team

Harlan Sur

Great. Thank you.

Tony Balow

Operator, next question.

Operator

you. Thank

Our Muse question line next C.J. will the from from Evercore. of come

You begin. may

C.J. Muse

for what’s in follow-on up strategy. foundry them fully scale question. you IDM for foundry customers then edge over the to strategy there. to the XX-nanometer But at be get the a edge benefit hear guess the nodes I to to of gaining from going vision backfilling question cajole I Thank redesign how of opening at will to subsidize investing by folks the leading or Pat depreciated that yourselves taking will I and a and time benefit you that thoughts capacity you. X.X or guys. Yeah. Thank you and the the your the XX-nanometer business U.S. love to you to have Government? the subsidy are leading design, to and your would and comes your

Pat Gelsinger

thanks picture paint little question. let’s Overall, Yeah. just the broadly, a more bit the for C.J. and

all the edge leading around leading On available capacity for the edge few supply it world. about we customers. there’s can strategy, our more needs capacity very IDM foundry and And making world the are X.X that companies

foundry that planning investment. capacity of we are going you we lot And a on getting as to to cycle and we have monetization of expand better our cause to also enthusiasm business us life it longer It’s foundry margins seeing a kind means the more of suggest, and the So with on build are that. aggressively. for

engaging they coming our that more choices process begun we be already have and seen right? where on leading for they that enthusiasm, have seen have might enthusiasm technology to have customers, design from. we with We get as Now,

as manufacturing and the that be excited in and also and all of be tool some can and with have think requirements. with IP like other that very have a right and all optimized some with powerful to combine do that compelling and we idea is the that to supply we our we for something we government the EDA customers need are response that of And that time a seen such supply now, industry. right their chains, that for more We aspect great of to particular for to at-scale the will This software are a saying, more hey, the other get it. humanity take ideas from they about aspects things the that’s this are their market are can seeing boy, the that the we including IP strategy We optimized from enthusiasm packaging, ability the like really we IP have customers, for xXX of for time my say, is technology. as bring This this about right the the cloud then as in been bringing bring international strengths hit them. some seeing enthusiasm in disbursed This to of I Cores have the yeah, strategy resilient from well and assets table, seeing future critical solution And early we and suppliers. Also, the very industry in is we talked chain geographically response environment better that’s a our technology. customers. constrained the have is for right cool we semiconductor

C.J. Muse

you. Thank

Tony Balow

Operator, next question.

Operator

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

begin. may You

Joe Moore

can you decline in numbers. XX% selling about guess I competitive cloud both Great. price. cloud resuming group you talk there? any what’s in platform decline Thank if average How lingering and kind much is and wonder weakness data think center the that is XX% to I this aspect year-on-year the digestion you. and just that there to of the of visibility the your

Pat Gelsinger

better than Yeah. we the year. little his go revenue I to ask a in in improving little we see of DCG it expected jump on start George bit. we for terms one QX said and a George will and Overall, as was comments, through bit in that as

had also asked are of starting the to are pick the were the the that driven we for some So starting start now as some digestion we that of signs up, cloud. phase wins to an business cloud But business and great strong extraordinary exactly last in they question the we next lot digestion. A their year. We want just But to almost networking build you the customers this see at very bottom. saw our saw area. enterprise successes through XG was that in with by of

path that also So, Lake to plus I’d we of the absolute into as getting launch generation-to-generation emphasize growth. a And we gains AI-infused overall, great we like Ice superb, customers said, believe AI This back we is the and This bringing are as product right? of major our response improvement them. this areas are differentiation the overall. performance. on Xeon sockets XXX and now is million new AI one capability into every powerful from a in

George, year are feel very our we the expect good see add? business. outlook build that for momentum exciting to the is to the going you business on. an to for response, anything getting our So that see through competitive center that we the go and we would about data overall customers as continue And year we are the Board. position, It’s time the on path

George Davis

Yeah. you phase to be if digestion the very, with it we just strong of are that than I first the say, the -- bottom the in more half what of now was quarter, bottom QX. comparing think we about impact the the would fact year-over-year very believe a really

better of to line X-nanometer for gets server see the this weren’t talking see up generation clearly, year-over-year. going OpEx then That drive of finally, have reflected as Xeon starting in made so and to that our costs things roadmap a even start-up is harder are piece impacts is starting have much good about. with thing. progress on is investment over we time. -- And to you scale, we some increased cost Pat also space. the This in that. are XX-nanometer That’s initial was is X-nanometer, -- same we on are other this on the a the almost Also, there you you that the The

We the seeing very business. in already the of client improvements cost strong side are XX-nanometer

ramp going from today, but got is it’s start still to obviously through have XX-nanometer. they that XX-nanometer DCG of work to Some mix as to to helping they some go -- their

Joe Moore

the that was Great. make ASP, decline any sure, platform related there decline in well comms something, And as like-for-like? towards or just was to mix XX% more as

George Davis

It whatnot strongest there. got down tougher margin and higher was comparisons relative you mix SoCs area. those the When down mix lot of -- in revenue, all you are a mix on you have on and are get

Joe Moore

Great. much. very Thank you

Operator

from Bernstein. Stacy Rasgon

may You begin.

Stacy Rasgon

I that Thanks for question taking ask guys. explicitly. my to little bit Hi, questions. more want a

gross And versus like half? So XXX down or on if is of second much XX% product as that ASP front tie bps is that first decline half in second coming what year-over-year, go half? more the what we guidance the due mix, half about center something was into expect we than and was implied half, ASP mix and the does the is from? half which of should second into margin how data other company the the half, whatever How SoC to which in that for direct the decline

George Davis

Yeah.

think I let So just Stacy. me clarify,

seeing and compared quarter revenue volume effect to lower the were the includes last year. of in ASP So the we first what

year. the was costs remaining the the of we operating see the when about split I what are the relative volume impacting and overall going from the on half -- are to the going margin, impacts we X-nanometer ramp mix supply throughout XX-nanometer unit that start-up what it. higher say that think are second would about, seeing of was half talked think between factory they year-over-year. of situation the the and the year you the some OpEx, So client. to Again, of out cost actually see we And I margin margin, that’s costs talking then over saw impact to about we just since ramping start-up

factor the that’s see and a fact then offset little So server to are start next recover. that bit we probably going to biggest the by

Pat Gelsinger

is add it’s great building a it. Lake product strong seeing a and Ice I’d Stacy, leadership just about And Yeah. overall, for are we products. ramp

As area. be the very in better and of aggressive are products get better, market then terms going ASPs will share in this we get to

a foot front see some and we with dynamic So our the we particular are Lake on area with have in now way. are Sapphire we market our are customers. Ice like are things following response that competitive to seeing much the again leaning up, and feel business we of good we that we in respond Rapids of and And on our great from are about into program and this the this starting we business talked very

Stacy Rasgon

Can you share? you market mean what on define aggressive

Pat Gelsinger

Aggressive area market for market. are an the going that. that Exactly we in socket on to is fight This our is to business. share, every core

aggressive. be to going are We

product great We for a new have it. delivered just

is about bringing is using a can design, to base We partners, customers. one are strategy everything our Stacy X.X assets, million our are an that install that now. system we software for be business, also to best servers our value in we customers. XXX cloud us, that going IDM And bring aggressive to chain, to customer have validation, on our this that powerful. I’d business that, say, think and very as is our with going great looking This our of the you things area this are supply to relationships, our be we that They building our our

center going going bringing optimize you we aggressive area. we and are be as business But them be for markets to well. are the their only building for better co-designing, products we and going to and also to saying are co-innovating capabilities in cloud data be to going forward. in Yes, we better Now are to for this them new solutions not

Operator

And from Credit Suisse. John Pitzer

open. is line Your

John Pitzer

Data center…

Operator

is John. open, line Your

John Pitzer

guys me? you hear Can

Pat Gelsinger

John. you, Yeah. Thank

George Davis

John. We you can now, hear

John Pitzer

in as in that cloud QX. It’s in but not and you going all of more Do theme prepared cloud Sorry, in down are you QX, is center the George’s hard for from internal another cloud cloud and said like us sort question be something of this digestion about I he you on Pat, I not portion sequentially away I expect center business, just would understand you QX. something more comfortable that guys gives And up more what year-over-year about you the that. data on compare June. this know year-over-year digestion data can know solutions down is Intel? XX% well? help and solutions ask comments, have confidence the of or to that was about XX% and sticking the why because

Pat Gelsinger

the at what forecasts with these people level, are. right? customers, we are we chains, work we levels intimately intimate very their environments, So, relationships. their are will are inventory I them, These working we in say, just Our know highest are building with supply

So they relationship I’d the when they are as just are say they and last at and are are selling that in confident and products digesting how now what speak level, because we see that delivered that doing are services we going the selling to future well. we them will we becoming that of and in ramping year and are instances deploying I to that intimate say we are they have. what

see quite that. about modest in that X.X sequential some Intel well. the Foundry have talked we of of creating will the saying, to Services as we work, mentioned confident them We own fairly an is and a area so we IDM exploring strategy, we from see see now their those are are some think work seen we at are enterprise the close off business. I growth, all co-innovate us can comments. volume expect is respect in we with in and and overall do to see we those as the us to networking, an that the this Those environment, powerful them with just we for for say that we terms that see to and I to as and customers a answer help doing wow, navigate we something response of uniquely architectural some said, the well great is We as at and point as this design favorable of them the their that the that at across cloud that, to in the very going Like cloud start. much government We And more are we last elements far. is without that that powerful that is new of question,

George Davis

going in be the areas three data going Hey, all is standout cloud. to in but would QX to we see add, thing of Hey. John, one the are I grower major center, growth in

John Pitzer

Thank Perfect. guys. you,

Operator

from the comes line question Srivastava BMO. Ambrish of next from Your

You may begin.

Ambrish Srivastava

that kind of related for? mentioned go I really should you But level capital just excuse buyback, you as somewhat to what P&L to to on and wanted and me. investors impact X.X? IDM the X.X milestones that clamping IDM And that Pat you. be looking George, Thank an be through impact as strategy. Yeah. capital spend of sense, you how to come implementing cash allocation, are flow should so thinking is free back go the makes down George, investors the about which elevated through

George Davis

Yeah and the for thanks question.

idea certainly cover a where, us capacity is, our good give Analyst been is years. and long. to for Not a chasing also have to are those clearly foundry in additions our only of fulfill build-out of be and period demand number doing off, We -- and will which a forward-looking. qualify nimble to customers, a for respond the as time. more today. you have we lot the of will got market investing more much certain know, are we we And take cycles for of to What for been very which cannot first shelf, Day, the going have also for are the which are that Arizona both investment market we And since optionality example details to does here take time be I it have aggressively of core foundry being at to

so, building from you us optionality. see really is in that will And what

we helps up have of which to So forecast have that. That somewhat some on good growth a you would free cash and we also obviously -- flow. be cash reflecting expect impact from with But growth operations. capital will

we investment be starting years customer the be for then of think, will cycle years. can I overall, three it returns But this to the so, get The balance two to for the start lay next you phase logical will out And types investment. demand sure see to you out. as an for investment

Pat Gelsinger

huge of to billion suited just laid the I’d $XXX to aren’t give. take that out, clearly, right? we factories in some a I’d market, a optionality that for And uniquely in and Yeah, leading-edge we time up say on things existing has building foundry this from And as the to are add is Yeah. market, long competitors And the that catch March, capacity a well unleashed emphasis area our are with good business. which as helps this in business, demand as something this is to able build. George foundry our announcement

large, has somebody to the The supply more go the is it and back. And margin be to we for long-term. balanced wants more think business good of good characteristics able the semiconductor produce but we we over Not characteristics good business. needs a Finally, capacity. us, It chain. it’s a world that as only again, returns going it like this, about we are foundry expect

We are we that that. are governments seeing uniquely to positioned industry say say seeing and that, fulfill we are

Ambrish Srivastava

Thank you.

Operator

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

You may begin.

Vivek Arya

margin my Thanks roadmap for on question. near I a question the taking both longer term. had of for gross and kind

your is point we than XX% depreciation. sales, Is XX%, and this the plus then it’s keep near-term, for start when in look longer higher the this margin And kind the term, trough the at XX% gross XXXX we implied minus. that about On about as to are should X-nanometer? I of half of mind now, in invest much starting your calendar CapEx in back more

talking And the in that at XX% the the you is makes foundry gross about, business margin. look what pressure So when I as additional the those best world are foundry things converge?

think near-term should how the Thank you. both longer we margin term? about and gross So

George Davis

Yeah.

are going on to we to this call. able and probably off, not forecast be First XXXX beyond

margins way environment -- second certainly look Analyst are about, dynamics client to it’s higher give at are and constrained over we talked Day. small supply for and more like We the ASP of will But the what an in I a half us than you than year, as that margin half, of constrained idea will we time higher our a remainder products. the in exposes core really, would and first

which The X-nanometer. the the which the products really to This about, forward showing of other is is and is start-up, X-nanometer readiness piece move I process both a good the on factor. talked

server. get will from we because We help see some strong will recovery

is the about of XX, margins bit, little mature because where over would was muted that Some are which But they won’t is I there this really very -- it a as be feel the we long quite where XX-nanometer can good expect. and so as rich run. a of we off node ramping drive

critical we activities. that year next we -- just two meet But You for this that meet the is the making of Obviously, are investments be to on see critical are not see some just the to IFS will going impacts client. material year from most are to demand really investments. investment those or increasing

Vivek Arya

And CapEx and when converge, depreciation George? do

George Davis

really multiyear We will will -- it like. capital what picture depend the on looks

that So we are to picture. wait will discuss to we have a and ready when give multiyear

Pat Gelsinger

this say, just I’d year. a Yeah. is pivotal

George Davis

Yeah.

Pat Gelsinger

roadmap supply, get us have revenues, improvements over in to is year, I we roadmap and produce as are products we opportunities we overachieve are Right. and X.X our go strategy, will through product leadership IDM in building this margins we drive shape. getting we we will if remarks, and on where our we time, Leadership we his will committing margins. for see see we overachieving, mean, right? said the products are on as out as as back the are revenue, As we we George we gross margin leadership if to prepared see back leadership supply,

overall, will have to kind this you in underway, from the want So, to well see are us. making of is growth that would of that and is pivotal we products, with to kind expect right, turn Intel back, right, right, say I the

Vivek Arya

Thank you.

Operator

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

You may begin.

Timothy Arcuri

thing know in I talked second I is it the guess two-part question. where the reported sort from was George, about Thanks had a a I had first And the on some before prepayments year from sprinkled related, the lot. a into just last CapEx, segments? guess year. million throughout I or was you corporate all that this pushed was segment $XXX had is, perspective of like part CapEx that

I or think it that. was something like billion $X.X

number right bit billion So the $XX Is trajectory like little is $XX is you sort the right what next year. it -- less wondering is as or I Thanks. am it of than of into a normal billion? sort new

George Davis

Yeah.

First off, It was revenue. not in was the $XXX million spread. other

On basically the of to capital affected that factor of more the the continues place. just weeks biggest you in It CapEx, last one saw probably really And in But be -- because it we yes, as know, of all had we the pandemic. So activities. terms challenging. year. was eight out construction push or that

that this add up requirements where both for with $X.X year and from we down the you billion could billion year bring the so our you really catching you and just year. were is $X.X for CapEx could also maybe flow to cash to behind estimates So argue could free last

number So this we the year will is next talk later. good and about I year billion $XX a more for think

Timothy Arcuri

Thanks, George.

George Davis

Thanks.

Operator

Ferragu Our next question Street. comes New from from Pierre

You may begin.

Pierre Ferragu

Intel in very two were if own two how terms first is second most the wondering of the what Hey. nature. mainstream conversations IP? business about mind, you And being your I are your is one? far, think so Thanks compete back ways where taking the said one foundry these think can you more integrate the and different TSMC? in like two And what I mix? is more And in design I’d being see what one there want you long Intel’s existing what are what with and for And to run, had they directly say foundry to do the to service versus -- that with ways the my balance so conversations you your -- really like Samsung like was I question. foundry general you clients it. and in players One in your between to then look have in at bringing come these like Pat, a on would about a initiative the foundry to

Pat Gelsinger

the for question, Thanks Hey. Pierre. Yeah.

engage where customers. I are degree, we think I’d some a to good right? are to with phase We beginning say, in know, it’s don’t And this question. we

good fit across customers some in a comingle buckets, pipeline of using of the some the And I then value hybrid create design that aiming providers, of foundry of can very I that communications pipeline their a interested our with into IP auto particularly ecosystem will segment decide that where our They the customers world-class as we and it’s have we say rich I Definitely more all their are IP at versus IP. a spectrum. in ours bucket right? they of a ecosystem, We to of need or those industry, et the customers full ARM much fit set of pretty of really to where broad cetera, them as don’t will some both about for get cloud designs. makers, set X, have proposition second Risk would will we much we the spectrum every the for theirs. right, customers get broad to where across customers us xXX with say, say, IP. a is design this very, view as that of they of that And with

is, and here on Pierre, packaging tile be from say, tile advantage are would newer our test or combined seeing it a And right? process from also assembly And technologies, older world-class Samsung I technologies. and with technologies, thing Intel, our other a being taking TSMC technologies. might extreme might be packaging of in process we The those interest

and that roadmap, so So and see we bear enthusiasm to is full spectrum we think really really world-class package gives that very IP, test the in proposition coming I one differentiated that for of a if industry, capabilities. you and of it foundry, would unique Intel world-class is seeing world-class combination are assembly high you alternatives, a that the and us far, our of used highly about set very to look the internal remember IP And add different to two people G things specific as the talked Pierre, is at to offering. that

exist And ecosystem over of said of capabilities have more time, out and We makes of makes it advantage IPs in it’s there. because very terms terms taking going it do in we more are already it. sense be adopting that to that, industry clear time libraries, cycle that of to sense the and

some people many terms we going might to of we our lot of to be these are we IP going being on when blocks of the are able far as demonstrate as customers knowledge not intercept in away, So on -- -- closing a think, I that are to not think, around nodes, of we today. depend

Pat Gelsinger

Yeah.

Let add to me just that.

it’s cycle, powerful We process being my internally industry to going well. right? move the strong the siren piece the benchmarked Also IP reinforcing our right? point, I every standard available because, to right, IP available are are as embrace to Every increases think industry a be we the EDA for as to of IP for teams. from great This design industry suppliers. industry, George, PBKs, I their against from internal seeing develop generate use we the becomes that technology is I made a

product all takes So increases rate a innovation better, this our efficiency we powerful of our with up our makes see clock industry. our process It’s strategy. of and it it the as better, makes it

Pierre Ferragu

Makes sense. Thanks, George and Pat.

Pat Gelsinger

Thanks.

Operator

from Danely the next come line Our will from Chris question of Citigroup.

You may begin.

Chris Danely

Thanks, Italian guys. guess now. I was always I thought I am Jewish. I

Pat Gelsinger

Now be you can Catholic.

Chris Danely

So ARM products ending the of both like middle it out we are merchant a there from in this of and seems captive perspective. never fuselage a

you thoughts hyperscale versus in your and space. I’d their an of guys center products having ever design PC appreciate see the out guess, xXX licensing the the with xXX And you on, some on ARM would maybe Pat, them shaking So, your just customers technology both foundry? where consider and the own things data I to

Pat Gelsinger

services what part on last cores announced, we the right? with the yes. them. available question be to for just our answer people and simple That’s design available of The is, foundry to XXX will

service include of cloud take will that that. So providers advantage to the

for flexibility we xXX people xXX. have weren’t yes. giving it. think take we as the of advantage comingle ARM meaningful believe them So IP to our And is, shift it to I the of about customers part be will to answer versus how a that do was simple in Because design the way ability this described

is in could don’t to So the good say, particular really features. guy unique products network them they few together of that They their now we but capabilities associated set and come with This integrated xXX great were are them process standard the have this I ecosystem enhancing choice. other with of the a to like those Lake. powerful saw hierarchy continues have we let saying powerful design it. use in for new optimize There these our to the our shift absolutely gave into foundry be It’s the strategy are very the work. say to that leading of be do optimized this are exact as meaningful that will capabilities a think packaging didn’t do -- a for the way code making on of they lots of powerful. or really are a think technologies, own being and in is with designs the and and well. have things question capabilities AI memory that trillion as new instruction particularly And xXX core our able in are do trying xXX. the IP, the which you innovation These powerful been products We boy, asked. you very I and opening we I available doors with and of that the lines differentiators. that Ice cloud we let’s do our have doors Overall,

our is to X.X. are we and the about are making as we standard available through what excited doing ecosystem We innovate IDM what continuing as products, are in well

Chris Danely

Great. Thanks.

Operator

Matt of from And line Cowen. from our the come Ramsay last will question

begin. may You

Matt Ramsay

second Thank here. platform guys Good just die a been feedback might and dig is in more platform from transition couple the compatibility Lake think on afternoon, it on facing? Sapphire is, Lake as that question to wanted terms bit and the I that wonder, and lot issues the been little launched tile and the a questions of event, know the in from be from and to you guess, it transition change have I maybe ask architecture of I to can now customers similar guys. from you. you a Thank out, the I just the feedback a guys one but another much. the lay And Pat, a around you data Sapphire. customers that what new you very asked it to then you memory Rapids I does and center strategy Ice I it on of terms what’s And particularly sampled sampled single Lake a and first, what into Cascade have of as platform capabilities architecture features of launched a system? part has we Ice to

Pat Gelsinger

Yeah.

an think spend question. I could we that hour on

PCI capabilities, PCI, maybe co-processor up, but we things But have been Ice is that from let are be very about, And as new here with that. work Early so very a it. has new The capabilities, new So of a well. working years response number as with more many clearly, obviously, new Rapids would the be in CXL DVR, excited a that ago. probably, has to interface does capabilities, on them, been as gotten the I seminally the the as mean, support part has exciting when the you better strong. there change, pooling try from on good platform really platform Sapphire since right, is to strong, suggests, that bringing gen customers for bit if quite ramp Lake capability And question through memory platform platform your opening right, of put me response been the platform part tell I launch, new with introduced that we industry, most most weren’t tremendous that the new additional we will that it well. customers, quick transition of the are good and the that

I have platform. quite So TCO customers a their rise of the who a for cloud lot of memory cost excitement portion particularly that enthusiasm lot of about area There’s of their -- in that have seen and rapidly.

our there out overall, transitions of with we generation, say say, with the far as that. in transitions as customers are Sapphire we Rapids transitions. we liked that we direction XXXX, the in are as value And time, start industry, the But platform particularly in for. is will of that us, less value I think XXXX as probably we lay major part some to But in to architecture, seeing something more you stability the roadmap lot process theme they I would enhancements core having yeah, is out play. that much further of have think, I’d are a I So have look XXXX, all there’s striving the to out to seminally, leadership, from we the through of going those see Obviously look all response in so of into major, think start to they are those as those leadership, more AI get leadership, this. right, roadmap. vector aspects Also I the our come platform centered

nice I very will of see lays out architecture time. over platform think we how view a that

Matt Ramsay

Great. you. Thank

Tony Balow

closing have for you any the thoughts do call? Pat,

Pat Gelsinger

joining for VMware. Well, just to one the want call first I One opportunity opportunity again say hey, back. my back first, CEO is you last thank to -- everybody as of say to Intel

firing cylinders. all are on We

Our us. ahead best days are of

quarterly are call to are we our forward investing getting just next for future, executing you. and Look are with we the started. We

Tony Balow

for all you could Thank Pat. please close the Thanks, Operator, joining you today. call.

Operator

conference call. participating. This concludes for today’s you Thank

You may disconnect. now

Intel (INTC) 23 Apr 212021 Q1 Earnings call transcript