Benzinga on $INTC (Oct 29, 2026)

Thanks for waiting and Intel The corporation's third quarter 2026 earnings Welcome to the conference call.

By now you have received your third quarter earnings report. Receiving a copy of the report and presentation Gone. Both of our Investor Relations Available on the website, intc.com.

Our CEO Lipu Tan and CFO Dave Zinsner. Lipu third quarter results and our strategic priorities Will comment on progress. Then Dave Discuss the overall financial results. , including the fourth quarter The guidelines will be included, then we I will answer your questions.

Demand environment in the third quarter More balanced than the marginal ones Was. DCAI's strong momentum has brought upward results and this The strongest in the division in 15 years Has been able to achieve revenue growth .

This is due to the weakness of CCPG. Partially affected, which is high memory Industry-wide for pricing and limited IT budgets It happened due to the impact.

The incredible demand for super intelligence Because the industry is one of the largest suppliers in history Going through a crisis. In this context, in the third quarter we I am in the process of increasing server supply.

Satisfied. To keep up with server demands In the future frontiers we Facing the challenges, he I am aware of it.

Our equity offering in August was successful. As we complete, we will focus on future growth. Financial resources required to achieve Got it. I would like to thank our existing shareholders As well as new sovereign funds and Long-term growth investors Very happy to join.

We will use this capital quickly and carefully. I am using it. We expect that in the next few quarters Capital for key parts Expenditure and purchase commitment will increase significantly.

Increased supply and growing demand Strong partnership with us at Meta And for the cooperation I am our substrate Memory and foundry equipment suppliers I would like to thank you.

Looking at the business unit, we We at DCAI, which is part of the server business, Steadily moving forward according to our roadmap I'm going. Intel 3's Granite Rapids is fast One of the growing server products It has become.

Our first Intel 18A server product, Clearwater Forest, for revenue has started shipping and is scheduled for 2027. Demand, especially CPU intensive agents Rack scale is much higher in infrastructure.

Our first Intel 18 AP server product , Diamond Rapids, sampling stage and is on track for production in 2027. For inference and agentic workloads There is a lot of interest in this.

We recently launched Oracle Cloud Their AI with infrastructure Our latest generation for construction Announcement of a deal to deploy CPU Happy with.

To meet this huge demand, AI-driven The obstacles that stand in the way of our progress, I want to acknowledge them too. First, the yield and cycle time of Intel 3 It's improving, but I need more from the team.

Expecting significant effectiveness. Secondly, although our Intel 3 wafers Output is growing rapidly, yet e-IP Advanced Organic for Packaging The industry-wide crisis of substrates is upon us.

It is hindering the ability to increase production. Finally, earlier this month a Due to an unfortunate accident, we For a long time in the Israeli factory The activity had to be stopped.

Although the teams quickly handled the situation worked to give, but it is our 10 nanometers in the fourth quarter Server shipments will be affected.

Purpose-built silicon is our fastest It is a growing business sector, which has tripled in the last three years and will continue to do so in the next few There is a possibility of another three-fold increase in the year.

We are looking for existing and new potential customers, for example, with AI labs, further growth Seeing opportunities and the wide range of customer needs Expanding our IP portfolio at Meta I am doing it.

Finally, we recently completed our Creston Island Inference Optimized GPU I have unveiled. The initial response is quite encouraging. Its performance is progressing well. This is a new market for us and a big one.

It will take some time, but with customers Communications move towards firm commitment Going.

Looking at our client's business It seems that in recent weeks we Customers are concerned about memory pricing and availability. Signals that the PC is slowing down based on . System endpoint price since the beginning of the year has increased significantly, which Additional overhead on an already limited IT budget It created pressure.

The pace of PC repairs has accelerated in the last two months It's because our OEM partners sell Inventory in line with the decline Strictly controlling. We are expecting that memory availability and Current until prices normalize The situation will continue.

Although the next few peripheral PCs It will be challenging for the market, our The roadmap continues to strengthen and Our long-term outlook is positive.

We are using the Intel 18A with Penta I have successfully rammed the lake and Demand at Wildcat Lake exceeds supply More. Nova Lake, our first Intel 18 AP ( Intel 18AP) Client Product, Scheduled It is moving ahead of schedule and the inauguration time is Design Joy is twice as good as Penta Lake It is expected to be.

We are in January. More information to share at CES I am waiting. Market to normalize At the same time, we hope this portfolio Will help in gaining significant shares.

Intel Foundry this quarter The functionality has been continuously improved. Both Intel 3 and Intel 18A nodes Production has increased, where Intel 18A The improvement has been at a double-digit rate.

Wafer production expectations at both nodes Exceeded. Intel 18 AP is our internal product. On track for year-end openings across portfolio and involvement of external customers It is increasing.

We work with some very strategic customers. I am working and I am increasingly confident that Our Intel 18 AP external foundry Will be an interesting node for customers.

Intel 14A is also on the right track There is. In October, as promised, We are our industry standard. 0.9 PDK selected customers I have disclosed it to you. This is our highest quality 0.9 PDK which Industry standard at the time of publication Meeting yield and performance criteria Did.

As in the foundry business Conventional. I have consistently said that we I will not disclose customer details. However, in the case of 14A, there are multiple The progress we make with the potential customer I am very optimistic about it.

In terms of advanced packaging, EMIP (for our domestic products) EMIB) and EMIB T We are happy with the progress. Both technologies require external customers Significant response is being received from.

Our Advanced Packaging customers We work with the supply chain to meet demand. Emphasis on increasing our capacity through work I give. We are also preparing for HPI. We are seeing strong progress, which is our future.

3D chip stacking for server products Will enable.

Across our entire production network. Additional capacity is constantly being put into operation. Installation of Intel 3 in Ireland Progressing well, as is Oregon and In both places in Arizona, 18A happening, including our second highest Volume 18 includes Fab (Fab 62) .

In New Mexico and Malaysia, we are coming Years for Advanced Packaging To support the wide range of customer needs Increasing capacity. In New Albany, Ohio. The team recently completed the first large structural truss The importance of construction through installation milestone has been achieved and we are To accelerate Ohio construction Valuing unique and highly privileged opportunities and I will be writing more about this in the near future. I hope to tell you something.

Looking to the future, I always emphasize I have said that the Intel restructuring is a Long-term journey and making it a success I am firmly committed. We are only a year and a half into this journey. .

We have made tremendous progress in the past 18 months. including our workforce Significant size change, middle row Elimination of management and bureaucracy, Bringing mobility to executive positions and almost Forming a completely new leadership team.

We are once again an engineering-focused We have established a culture, our products We have simplified the range and expanded the range of Intel products and More for Intel Foundry We have created a competitive roadmap.

We still have a lot of work to do. This resurgence in CPU demand has given us A very important step in the journey of transformation Important supporting force.

Fuel in building AI infrastructure Skills are increasingly important Becoming a measurer. Although GPUs are for thinking tasks Great, deterministic CPU Much more efficient in search work; Where Running a GPU Reasoning query takes a few Watt-hours of electricity may be consumed.

A single CPU is slightly slower to run the query. Amount of energy required. Total number of digital agents and per Conservative estimates of CPU utilization rates However, in the next five years, the CPU A huge market (TAM) is easily anticipated.

It can be done. According to our estimates, mainly agentic Server CPU usage due to workload The market will be 40% of the current market in the next five years. From a billion dollars to 200 billion It could be more than a dollar. This creates a huge opportunity for Intel. Did.

We are certainly talking about fierce competition. Be aware, because almost every fable is The company itself offers this through its own offers. They are racing to meet unprecedented demand.

However, Intel is responding to this demand in three ways: are in a unique position to benefit. First, the world's most widely used As the guardian of x86 as ISA, We are doubling down on our investment in x86 innovation.

And one of the CPU innovations in our pipeline There is an excellent roadmap. In addition, for the first time, we are offering customers Our custom workloads are tailored for Fully modular and verified x86 CPU Creating a version.

Secondly, there are only three in the world Advanced Node Semiconductor Foundry One and only one located in the United States As a foundry, we only Not their own needs, but the greater good Able to meet the needs of the industry.

We can provide any CPU for our customers. Ready to make on a large scale, which can be used by any ISA compliant. Third, modern computing platforms As increasingly complex systems-in- Becoming a package, so advanced Our leadership in packaging is very Provides unique solutions, which are especially The current massive AI infrastructure needs Essential for fulfillment.

That's why I'm excited about Intel's future opportunities. Optimistic, although we still have a lot of work to do.

Finally, we set our short-term goals While focusing on fulfillment, what is the next step? We must not forget that it will happen. A vast array of Intel technology and IP There is a resource, which is our computing Helping to drive the next wave forward Will do.

We are silicon photonics, neuromorphic Computing, advanced materials and quantum In groundbreaking technologies like computing We have continued to invest, which will It can open the door to new opportunities.

This week we are Israel-based Quantum Software Provider' We have announced the acquisition of Classic, which Our quantum operations are fundamental. From research to commercialization Going.

Classic hardware-agnostic software The platform level is more customers Quantum computing opens up opportunities for exploration Gives. This is our already strong internal Quantum hardware and software Complementary and this is our compute Platform offers include CPU, GPU And ASIC as well as QPU added It will help.

After the acquisition, Intel has a full-fledged Revenue-generating quantum computing Will become a company.

In short, in the third quarter Although we are doing well, we clearly have more work to do. There is left. I am disappointed that this quarter we are not able to provide Couldn't meet the strong demand.

We are close to a production supply shortage. Facing the challenges of the times. Unprecedented memory crisis and the resulting PC There has been a slowdown in demand. But I am not sure about the path ahead of us.

Confident. Look away from the vast opportunities ahead of us. These challenges are quickly overcome without removing Have to deal with it. This quarter, our employees, partners and For the tireless work of suppliers I want to thank you.

Thank you, Lipu. We are revenue, gross margin And in terms of earnings per share, we A goal exceeded I gave a powerful marginal gift. This The eighth consecutive quarter where we We have exceeded financial expectations.

Our The third quarter results prove that Superintelligence or AI infrastructure How much CPU does our server use to create? Essential. The results are our best. Also highlights the activities, because we are AI To meet the strong demand for compute Increasing supply.

DCAI Led by record year-over-year growth Third quarter revenue was 16.5 Billion dollars. Our factory network and strong across the external supply chain More servers than expected CPU production confirmed.

This The strong position is in the client segment. Decreased slightly due to weakness, where Memory shortages and limited IT budgets The use of PCs has been affected due to this.

Non-GAAP gross margin in the third quarter was 44.1%, which is the second quarter and About 200 more than our forecast Basis points higher. This gradual improvement The reason was Intel 3 and Intel 18A.

Improved production costs and more favorable Product mix. In the third quarter, non- GAAP EPS was 52 cents, while Our forecast was 38 cents. This The reason for the increase is higher revenue, Strong gross margins and disciplined Expenses, which are operating better than expected Created leverage.

Operating Cash Flow It was $5.1 billion. We are about 54. Billions of dollars in cash and short-term I have completed the quarter with the investment, As well as our new extended revolver Under the $15 billion loan There is capacity, which was previously $10 billion.

More than. Early August, 23 Billion dollar equity offering Through this we further improve our balance sheet. I have strengthened. Associated with the offer Growing interest income in the third quarter contributed about 1 cent to EPS, which It was not in our original instructions.

The reason was Intel 3 and Intel 18A.

Now let's come to the segment results. DCAI - had revenue of $7.3 billion, up from the previous 17% quarter-on-quarter and year-on-year The gap has increased by about 80%. Our factory network and outside Suppliers help increase production The income from the work exceeded our expectations. was significantly higher.

Supply The work our teams have done to increase It is having a real impact. Our present According to the outlook, DCAI's revenue in 2026 The end of the year was better than the expectations at the beginning of the year.

On track to exceed nearly $10 billion There is. Third quarter growth hyperscale , Enterprise and NeoCloud customers The case was extensive. We are purpose-built. Strong momentum continues in silicon as well I have kept, whose income compared to the previous quarter It has grown by 50% and in the space of a year It has more than doubled.

To increase power Despite our progress in the field, DCAI The demand for the product exceeds the existing supply. Significantly more. DCAI operating profit was $3 billion, Which is 42% of revenue and compared to the previous quarter An increase of about $600 million.

This improvement was driven by higher incomes and lower Operating expenses. Granite Rapids is now our server. The largest product family in the portfolio, because We ship from our Ireland factory.

We also launched the Intel GPU D series , formerly known as Crescent Island, Which is long-term memory-intensive AI To improve the economy of inference Designed.

CCPG's revenue was $8.1 billion, which 9% less than the previous quarter and our Below expectations. We mentioned earlier. I did that memory deficit for years. Second half PC on TAM Can create stress.

That pressure is third. During the quarter, especially towards the end of the quarter The trend intensified and as a result, customers Significant changes in purchasing methods It has arrived.

Despite short-term weakness, we I have seen some positive progress. Total Despite a 5% drop in CCPG revenue, we AIPC revenue up 35% year-on-year Increased.

Above Intel 18A Based on our client products It's progressing well. Wildcat Lake, our cost-effective Intel 18A Client CPU units are about 70% has increased and is completely sold out It's done.

Finally, our edge business is edge and Physical AI design continues to win It was more resilient due to the speed. CCPG operating profit was $2.3 billion. , which is 28% of revenue and the previous quarter Almost unchanged compared to, basically Due to lower inventory charges.

Looking at the Intel Foundry, you'll see Yes, Intel Foundry's revenue was 6.7 billion dollars, which is the previous quarter's 16% more than the Intel 3, which was behind And better than expected on Intel 18A Growth.

Income from external foundry It has become $411 million, which is $118 million more than the quarter , basically a non-recurring customer Because of the program. Intel Foundry is worth $1.9 billion. reported an operating loss, which was $236 million compared to the quarter Improvement.

Intel 14A risks next year We are constantly preparing for production. First Intel 3 costs about 10% more than the previous quarter. 15% increase, while volume is the same as before It has increased by 15 points compared to the quarter.

Intel The yield of 18A is our internal At industry-standard levels earlier than expected The trend of reaching has been maintained. First From the edge, Intel 18A client CPU revenue has increased from less than 5% to now total Client CPU revenue is about one- Reached a third.

These results are meaningful. Represents progress, although a Building a sustainable profitable foundry business We still have a lot of work ahead of us. From our data center customers Demand signals are continuing to strengthen.

We expect that throughout 2027 and 2028, Supply constraints in the industry until 2018 Will continue.

As Lipu discussed, The adoption of agentic AI is a challenge for CPU compute. Expanding the role further. To keep the workloads running, we CPUs are playing a central role.

As a result, we are expanding our DCI products We are seeing strong demand for... Now we hope that in both 2026 and 2027, Industrial server CPU units are over 30% Will increase.

If there is excess supply in the industry However, this growth rate was lower in both years. The rate would have been higher.

At the same time, in 2026 After remaining stable in the first half, PC The market is weakening. We are hoping. That is, the PC unit TAM for 2026 You will get a reduction of about 12%.

Of which the year Units down more than 20% in the second half You will get it.

Memory availability is not improved and We will not do anything until prices normalize. I don't expect a sustainable recovery. 2027 For 2019, we are offering PC units TAM I am planning to get about 10% off.

We hope that in the first half of the year This year-on-year decline will be more pronounced and Due to the relatively easy conditions in the second half There is potential for improvement.

PC market Our long-term view on the matter Remains unchanged. Traditional PCs To enable AI applications and Strong returns on AI infrastructure spending will play an important role in achieving.

Besides, we are just new to the market. I've started looking at agentic systems. We are interested in edge and physical AI. I see a long-term opportunity, because Agentic applications are widespread across the economy. It is spreading.

Considering these matters, We are reporting fourth quarter earnings Target is $15 to $16 billion I have determined in. $15.5 billion At the midpoint, we have a 38% gross margin, 11% Expecting tax rate and 25 cents EPS , all of which are on a non-gap basis.

At Fab 28 Based on the initial assessment of the incident Under our guidance, about 300% of the revenue Million dollars and 200 basis points in gross margin The impact of the points is included.

By segment, we expect that DCAI revenue is gradually moderate will increase by ten percent, while the purpose -Built silicon overall than DCAI Will grow quickly.

Please note. Make that Fab 28 to 300 million dollars Almost all of the effect is within 10 nanometers. Related to server products. We Expecting that CCBG revenue will decrease by more than 20%, because customers Quickly reduce their inventory and the demand expectations for 2027 Coordinating shopping with.

Fourth Consistent gross margin growth in the quarter The reduction is mainly due to our fixed cost structure. On the contrary, the overall revenue decline Reflects, because we are in the current demand Client wafer in line with I am coordinating production.

Moreover, revenue Mixtures, especially in purpose-built silicone Strong growth expected, Challenges in quarterly comparisons Doing. These odds are Intel 3 and 18. This technology offers continued yield and cost reduction. It will be partially reimbursed through.

We are about 4.4 billion in the fourth quarter. dollars and about 16.3 for the whole year Billions of dollars in non-gap operating expenses I hope so. We are in the fourth quarter.

Non-controlling interest or NCI is approximately Expecting $250 million and Currently for both 2027 and 2028 We are expecting about $1.1 billion in NCI.

Finally, we are 5.44 in the fourth quarter. Number of fully diluted shares in billions I hope that our August The entire amount issued for the equity offering Indicates the marginal share.

Regarding capex, our total for 2026 Capital expenditure to remain at $20 billion The target is maintained and we hope Total capital expenditure in 2027 will increase significantly.

Our To support growth plans In terms of collecting the necessary equipment for We have made good progress, where equipment Our assurance to suppliers Purchase orders gradually increased by about 40%. Got it.

We are with Arizona's Fab 62 We are also accelerating the construction of clean rooms. And the opportunities to accelerate work in Ohio I'm checking.

Capital expenditure and operating Despite this capital increase, we are We remain steadfast in our commitment to reduce debt in 2019. We maintain discipline in investing. and our products and processes Technology capabilities and customer needs Not even a dollar until there is clear evidence I won't spend it.

In these three matters, we Confidence is constantly growing. In conclusion, I am not sure about the opportunities ahead of us. I want to talk. Our main server CPU market is ahead is growing faster than ever and the current market Edge and physical AI in the midst of the situation For client class CPUs Creating significant increased opportunities.

Importantly, we are committed to our product With improving functionality and roadmap With market share recovery and our Faster than the underlying market We are creating opportunities for growth.

Our core Outside of the x86 franchise, we have three big Investing in opportunities where we have good Despite the momentum, the income is currently relatively low.

Purpose-built silicone, advanced packaging and External wafer foundry. Each one A new market worth billions of dollars, Where our technology, production resources And customer relations are one of our participation A special opportunity has been created.

Overall, long-term double-digit revenue Growth and meaningful leverage and improved We have margin potential. Our There is a lot of work ahead. However, strong The cultural launch of the market and Lipu Changes that improve performance, transparency and Intel is improving discipline Long-term earning potential and free cash Our confidence in the growth of flow Increasing.

Sustainable Shareholder Value This is a strong foundation to build on. Thank you very much. Dave, PC Market Considering the fluctuations and the current situation I want to know, are you going to be there next year?

To give us some ideas or guidelines for Can you?

I think PC AI might be 10 to 15 years old. 15 billion may increase, but PC The market may probably decline a bit. So, Can you give us a quote for next year? Ideas and what the year could be like Can you tell me something about it?

Yes, thanks Tim. I will be there next year. I'm not making specific predictions, but I I can give you some qualitative information. High Speaking of levels, we are looking forward to next year. I see it as a year of growth.

The speed we achieved in the data center this quarter I saw and excluding the influence of Israel, That momentum continued into the fourth quarter. We see that continuing into next year. There will be.

One small thing is, the year We were somewhat limited in the first half. I will stay. We are increasing the capacity of the substrate by 40%. I have spoken, but a large part of it is from the year It won't be useful to us before the second half.

We also have limitations with Intel 3. We are in the middle and as Lipu said, we Some of our supplies are being moved to Oregon. I'm working on it, but it's out of the fab. It took quite some time to come to market as a product. Will take.

So, we will be building a data center next year. Very optimistic about business growth and Excited. In addition, we are within the DCI We also talk about our specially formulated silicone I said.

You know, that business has been going on for the last three It has increased 3 times per year. We hope. We are increasing it at the same rate in the next three years. You will get it.

And so we are going to do this until 2027. I am quite optimistic about this matter.

You know, Future projections of client segments It is the most difficult thing to do. As I said, We see that in 26 TAM It is getting a reduction of about 12% on a unit basis. We think that next year, on a unit basis This will be about 10%. So, this is a big Subject.

Then something like inventory correction There will be a process. We are in that situation now. I'm going through. In the third quarter we I felt some impact. Fourth We will feel its big impact in the quarter.

We think this is at least the first quarter. It will last until.

After that, I think You can reduce the issue of inventory corrections. You'll see and we're back to TAM. I will focus, as I said before, on 10% We think it will decrease.

With this Another additional thing is that next year we will Nova Lake is coming as a product And we think it's in the long run. One of our best products. We think This is for participating in client segments.

Meets all necessary needs. We Very happy about this. We think Do it, next year and in the years to come Our market share in client segments Conditions will be created for growth.

This is for participating in client segments. Meets all necessary needs. We Very happy about this. We think Do it, next year and in the years to come Our market share in client segments Conditions will be created for growth.

So, this challenge in terms of memory and its impact on the client Unfortunately, but in terms of products we Very enthusiastic.

And I know you are this. You didn't ask the question, but I'm keeping the issue current. Expanding beyond the year. Look, we I think that despite everything, the PC is back again.

It will regain its importance. And we think that AI workloads As it begins to shift, PC or agent in client space Heavy workloads on devices like Box will be needed, so we are quite interested in this market I see potential.

This is our temporary Challenges must be overcome, But in the long term, we are quite optimistic about this market. Optimistic.

Yes, there is. Okay. Dave, you said it. That next year's capital expenditure ( Capex will increase a lot. Many of us might I think it might be 30 billion, but I The real question is, will you be free next year?

Committed to creating cash flow, Or is it difficult because of this pressure from capital? Do you think it will happen? Thank you.

Yes, that's a good question. We still I haven't finalized the number completely. We are this Let's wait until the end of the year, before I don't do this. But about what could happen We have an initial idea and Keeping in mind the lead time of the equipment, we Finalize purchase orders (POs) with vendors I am doing it.

So we know what's going to happen. I think next year is for us. Year of investment.

How we view the year , so next year we will have positive It may not be possible to have cash flow, Because we consider it an investment in development. I see it as a great opportunity.

We have seen that by investing in the right sectors, Profits come from properly improving nodes and getting a return on invested capital Goes. During the equity offering in early August, we I said that we are investing in these nodes. Expecting at least 20% ROI through .

But next year will be a time when Several things are happening at the same time. We Increasing to 18A, slightly Intel 3 ( Intel 3) is increasing and production in 28 To prepare 14A for I am making the necessary investments.

It is very big. Investment, which came to us in one year It has fallen. So I don't think it's like that. There will be a year where we are cash positive. I will see the flow, and besides, it's August.

The funds we raised at the beginning, His purpose was to put us in this situation.

Yes, thank you very much. I am fourth. Something you mentioned for the margin. I wanted to know about the problem, which might It can last up to the first quarter and How much larger are they than previously expected and I want to know when the situation will improve.

You mentioned editing the work. ; There is the situation in Israel, which I wonder what the impact will be in the next quarters. What will happen and when will it be resolved—anyway, I'm sorry this happened—and then Clients matter.

And since guidance 1.8 less than market expectations, so Can you discuss these three issues? You can see that these are the reasons behind this 1.8% decrease. How much and when the situation will improve is It would have been better if you had told me. Thank you very much.

Regarding Israel, we have been in the country for about two weeks. I was stuck. We hope to have it by the end of this week. We can start production. While we are doing that , then we will process all the wafers in the line Trying to evaluate that Which of the materials is usable?

None of them are usable. Okay, so you. You know, it's both the fourth and the first. Some initial assessment of the quarter itself, But my current idea is that the fourth We have about 300 million in the quarter.

The dollar will be affected. In the first quarter it It is likely to be the same. We think most of the wafer write-offs Or the cases of wafer cancellation are fourth It will happen across the border.

This is essentially what is having the impact of 200 billion. I I don't expect that to increase in the first quarter. There will be cancellations, but keep in mind This is still in the early stages.

We are talking now. I am working on all of this as I speak. and Of course, over time we will I will keep you updated.

In terms of client side, I think It will reset at this stage and usually Inventory correction every quarter The rate remains almost the same. So I expect it will generally be the same. , but in the first quarter the client There may be some seasonal effect in the case Can.

For the fourth quarter we Speaking of the next stage, there is a possibility that We experienced a slight seasonal decline in the quarter. I will see. Beyond that, I have some things to implement.

Even if you think about negative things, most The implementation has actually been quite positive. For example, Lippi and his team Intel 3 Yield, 18 Yield increase and substrate vendors Great success in working with Showed.

Lipi was in Japan and many substrates Spoke with the vendor so we could get the right I can get supplies. So supply is assured. I think we are better than others in doing so. I am in a relatively good position.

Situation Quite difficult. It's quite the next quarter. It's going to be difficult. Until the first half it It will be difficult, but I think we can do it ourselves. We put it in a good position and then we put the data Center business sees good growth Pub.

Yes. Regarding server speed, there are some shortcomings or There are other problems; However, 200 billion When will it be able to keep pace with the growing market? You can start growing, that's it. Do you have any ideas?

According to your comment, is this the future? Will more happen towards the second half of the year? Thank you.

Yes, good question. I think, Ben, first of all, we The biggest source of income from servers is Granite Rapids. It is based on Intel 3, We are clearly looking to increase its production capacity.

Working. And secondly, we are producing it. We are also trying to increase capacity. And, I think Dave mentioned Oregon. Did. We will be launching Intel 3 in the second half of next year.

We are planning production so that customers The demand can be met. Overall, Intel 3 handled the issue. It will be possible to give. Next comes our Clearwater Forest. , which we are shipping in 18A; Ours There should be sufficient capacity for.

Then Diamond Rapids will come in 2027; We are ready for this with 18 APs. I will stay. Of course, in 2028, Korra Rabbit Coming, which will be made in 14A. So in my mind Either these things are in a pretty good position.

Yes, I'm talking about the same thing, PC. What is the weakness of this wafer redistribution? Handling and Transferring Giving you the opportunity to accelerate? The answer is yes.

We are 18 years old and have been working hard to install Intel 3 in Oregon. I'm removing these wafers, they Typically for creating Panther Lake products It was used. So, by using that ability, we More data center wafer production I see an opportunity.

But remember, we are only talking about wafers. Not limited to the substrate aspect We also have limitations. So Production of substrates to meet demand It is very important for us to grow .

Yes, there is. The server market next year How do you see the shares? You are 30 percent. He talked about unit growth. AMD 70 Percentage revenue growth forecast . The ARM camp is also growing quite rapidly.

It seems so. I understand you. You are within limits. Nevertheless, the market You can see how the shares may change. Do you think so?

Of course. I think this is a good question. . Obviously we have a roadmap; What we are doing in the case of Kora Rabbit Will be competitive with AMD And in the case of the next generation chip We will stay ahead of AMD.

So I will say Keep an eye out, we will maintain our lead. . CPO is really our Franchises, we are there to achieve success Determined and I think this is our A great opportunity to move forward.

Yes, I would like to add one more thing that , I think the market will be better next year The partnership will depend on supply, So we supply on a relative basis. We can improve market share. We will do better in that regard.

Hi everyone, for taking my questions. Thank you. I am talking about gross margin. I would like to know some details. I understand. I understand that 38% of the guidance is from Israel.

Except for unfortunate circumstances, it would have been 40%. , but when I look towards next year Looking at the overall drivers How should I think? For example, mine There is clearly a client flush and Maybe there is a utilization problem, which is a Negative aspects.

I think capex ( Depreciation is increasing due to Capex, which is a Negative things. And maybe 18A and 3- Yields are improving with its ramp, but Can you tell us that? Is the gross margin of the segments still 107?

Down? I wonder what this mix change is. A barrier, with AS6 and There are also packaging issues. On the other hand, Maybe the server-side bias is a positive. Direction and maybe pricing are also helping. .

I'm actually gross in this kind of environment. An idea about the evolution of margins I'm trying to get it, because there are many things Working here. I hope you like us. Can you help me a little?

This is a Good question, Stacey. Of course here There are many variables. From a margin perspective, Israel's The issue is probably mainly based on margins. An event in the fourth quarter (Q4).

I Scrapping in the first quarter (Q1) I don't expect any major impact on the case. Usually if we can identify it, But we scrapped it at that point. I'll do it. The demand for Xeon is really high.

Very powerful and I think I mentioned We have made it so that Granite Rapids is now ours. Helping to increase margins. So Growth Gross in Granite Rapids Helpful for margins and we are Intel 3 And at 18, attention is maintained in both cases.

I will keep it. Their structural costs are our main Focus; Such as production rate and efficiency Things like that. We are very excited about the third quarter. Did well, even better in the fourth quarter We hope to do so and our goal is to Maintain this pace for years.

You are about 18A. You're right, loading is our expectation. It will not be according to. We are Intel 3 in Oregon. I am trying to solve some problem by installing, However, there is still some loading in the case of 18A.

There is a possibility of being low. This is a bit Will create an unfavorable situation. Our The other challenge for If you look at it correctly, it is positive, that is our Purpose-built silicon business, which is still It is in the initial stage.

Its margin Lower than the company's average margin. But we We are seeing massive growth there and Lipu and I focus on increasing gross profit. We have decided to give, and this is our Will increase income.

This will be the operating margin for the next year. May put some pressure on percentage , but I think it's finally It will be profitable. I think when you do everything If you compare, then there are many calculations This makes it difficult to measure.

I Still 40 to 60 percent follow-through or I am leaning towards the growth rate. Our That's probably the goal. So, next year If we have a year of growth, we We will see an expansion in gross margins.

This As a general rule, every quarter Maybe that won't happen, but on a year-by-year basis. If you look at it, it will be within that range.

? Yes, there is. Yes. I am PC or personal. I wanted to know about computers. The third quarter is probably the worst quarter of the last 20 years. was the worst for PCs, Probably more than that.

It seems Customers will probably be in the third quarter He created an inventory. What are you? Can you confirm that? And it seems They did it a lot in the fourth quarter. They are reducing it.

I think, even the first This can happen even on the margins. Your words It sounds like you're hoping. The situation will improve in the second half, Regarding the improvement of memory supply, you What is the reason for confidence?

If you are in memory Listen to the people involved, but remember Either they say it won't happen. Yes, let me be clear.

Yes, that's a good question, Stacey. Um , Let me be clear. We think Okay, you are absolutely right that the fourth and first Most of the inventory corrections in the quarter Part will happen, and it is on us TAM (TAM ) is having more of an impact than the reduction.

So, we will look at this fourth and first In the quarter, probably the second quarter Partly. Then, it will return to that state again. Where theoretically our billings Will be consistent with enjoyment.

So, We hope to recover from there. I am doing it. But make no mistake, we Optimistic about next year in terms of memory No. We think it's about TAM. Will have an impact. We think next year TAM per unit reduced by 10% You will get it.

And then we'll have to see in '28. Whether the situation improves, but we The hope is that the situation will improve in 2027. It won't happen.

Thank you. For the first one, if I were your fourth Get the latest data center guidelines , but that's about $8.5 billion. and if you make it annual, it will be next year A budget of about $35 billion for the year Reaches conceptual goals.

So I'm curious to know, is this a Achievable foundation? Are you better than this? Can you do something good? Demand supply What is ASP because it is higher than Is there any scope for expansion, or 27?

How big is your data center business in 2019? When we think about what will happen, we have other things to think about. Anything to keep in mind?

Yes. I think this is a good start. Dot. I think it's right to think about it. Way. Um, what we can say is, 27. In the first half of 2019, wafer and substrate In case the situation becomes more narrow There is a possibility.

However, we have done a lot of work, as I I said, our Intel 3 wafer Ways to increase production, get more products To improve yields and Our investment in substrates, which That capability will be unlocked in the second half of the year.

Will do. We are expecting this to be a year of big growth. Will be. Remember that we are using our silicone And the ASIC business is part of that business unit. I brought it under me.

So this is the fourth quarter growth One of the reasons and we hope it will be 27 It will continue in 2021.

Yes. Thank you. I am an outsider in your foundry. To know work updates with customers I wanted, especially the packaging and more. Importantly, wafer processing In case. Are you an external customer for 18 AP?

Are you hoping, or should we assume that all work will be done at 14? and when do you think Intel will Tape out or actual from their assessment Will you have the confidence to take on the income stage?

So, for Intel in the next few years When to start modeling external income We should all be pretty good about that.

Sure. Thank you. Good. Vic, thank you very much for the question. Thank you. Your first question is about packaging. And our EMP is making great progress. We are very focused on capacity and substrate.

I was focused, so that the necessary capacity and yield from substrate materials It can be confirmed. Secondly, we are looking at yields and We are improving it significantly. Third is cycle time and so far Led by Shili, who is a member of SK Hynix Was CEO and in process integration Specialist, the work is going quite well.

He is doing a great job and is very Dedicated. I think in the next two years we will In terms of substrate materials, many We will gain capacity and day by day we will Yields are also improving.

Overall, stay with us; Tomorrow We have named a few customers in the two quarters. I can announce. So obviously, if customers performance, but we always I want to wait for you, and now we Interest from external customers and we work closely with them and they are very satisfied with EO .

And now we focus on D-size. so that we can ensure that We can deliver it to them and Confirming that the IP is for him Ready. So I think 18 AP Stay tuned, we're good at that. I have made progress.

In the case of 14A, We have made unprecedented progress; In my mind Either we have announced 0.9 PDK, which we Already to our selected customers We have published and they are with us.

Actively working. Another issue is performance yield. In the case, all metrics, error density And with the variability we face every day I am improving. So far we are very satisfied; Our 1.0 by the first quarter of next year The PDK should be completed and we will then From now on, we will work with customers to find their favorite products.

Start using our fab with the products I can do it. So I think stay tuned, When customers are ready, we will call them. I will announce.

The second half of this year has begun. Happening. Many new GPUs and XTUs The platform is being launched. This is new. Most of the launches are scheduled for next year. Will continue to grow until the first half, Because these platforms have strong The CPU is connected and within Many are based on Intel x86 CPUs. Platform.

And additionally, the overall supply Mobility which is still limited, but we The team is bringing more capabilities and you, as mentioned, yield or productivity improved Happening.

In light of all this, what do we In the first quarter, DCAI Can we expect consistent growth?

Yes, I am very concerned about this threshold. I want to refrain from making predictions. I I think your overall idea is correct. In terms of CPU demand, a There will be a strong driving force.

We think it will last for the whole next year. Will continue. We take the supply side. Working to ensure that we We can meet the needs of customers. We may not be able to meet all their needs.

I can't fulfill it. But I think the year Compared to the second half, we had a better first half. The situation is going to become more challenging. So perhaps this is an additional data point that I definitely use it when modeling.

I would like to add that you clearly Our announcement with Oracle Cloud seen and we also have multiple customers . They are all under LTA agreement with us. Interested in signing, so that we can We can confirm the roll-out of the CPU for.

So I think these are encouraging signs. The demand for CPOs is very high.

Yes, things that are within the party's control. and yield, reliability and productivity As a reflection of continuous improvement. My I remember Panther Lake in the second quarter. and Granite Rapids both gross Margins were below Intel's corporate average, But Intel is third at 3 and 18.

The quarter saw further yield improvements. You mentioned that in the third quarter Intel 3A Xeon 6 Granite Rapids Positive role in gross margin He has kept it. Is the team in the third quarter of Core Series 3?

Panther Lake also has a gross margin of 40 percent. Managed to take it above the lower-middle level ?

We are on Panther Lake's gross margin. I have definitely made meaningful progress. This Still not at or above the corporate average, but We have taken a lot of big steps and it's just Yield and efficiency improvements and the right scale A matter of achievement, which over time is gross Will contribute positively to margins. It is still It hasn't quite reached that stage.

The first question is about capital expenditure. In this regard, you have spent significantly Increased, WFE vs. Building How do you view the cost issue in this case? In the past you said that the increasing Most of the cost goes towards the building. .

I want to make sure that we are still Am I on my way?

Behind our equipment in this quarter The cost has increased significantly and the next It is likely to increase further in the quarter. So most of what we're spending now is Mainly for equipment.

We have invested and in many cases We are now finalizing the installations. I am doing it. And, most of the cost is for equipment. The only exception is we are spending Still in the heavy construction phase in Ohio I am, but other than that, everything else is basically For equipment.

Yes there is, about the PC side, I know. You said about the industry that The number of units will decrease by 10% next year. To know Want a mix shift or mix change? How do you see the matter and what do you What is the impact on pricing? Will read. Thank you very much.

I mean, I would say that we are in Panther Lake. Relatively quite strong in the field I have noticed the demand. The entire market is moving a little slowly, but Panther Lake holds its position.

Also, we have a lake called Wildcat Lake. I worked hard on the product, which is a Cost-effective part. We are at Wildcat Lake. We have seen significant growth in the field. This has come at the perfect time because it is cost- Affordable and we are very much in that direction. I'm paying attention.

Next year we will bring Nova Lake. I think the important aspect of Nova Lake is Here is our high-end desktop There was some shortage in the portfolio and Nova Lake filled that void.

So I'm hoping that in terms of the mix We will do quite well, because high-end We expect a good response on desktop as well. I am doing it. So, let's see what happens. We think that with the Nova Lake portfolio We can increase market share, and Of course we will monitor the market and see. How is the situation progressing?