Intel Corp at Deutsche Bank Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ross Seymore - Deutsche Bank AG - Analyst : Perfect. Thank you very much for that. So what I really want to try to do is talk a little bit about the near term and connect that to the IDM 2.0 transformation. So I think what investors are truly concerned about is the market will go up and down in the near term and that's fine. But in Intel's case in the middle of the transformation, the concern is that it's a reflection on something more existential at the company. So I want to be able to kind of bridge the gap between those two. So why don't we just start off. In the near term, for the first half of this year, roughly, you expected super seasonality in the back half of the year and now it's sub seasonality. What changed and how much of that is a

Question: Ross Seymore - Deutsche Bank AG - Analyst : Yes. So on the revenue side, it sounds like it was more of a market dynamic and nothing specific to Intel and share loss or anything like that.

Question: Ross Seymore - Deutsche Bank AG - Analyst : And the second part of the near term to then longer term, connecting the dots I want to do is on the gross margin side. That seem to be -- admittedly with lower revenues, of course, you're going to have lower gross margin, but it was a bit worse than that. So this seems like it's a bit more Intel-specific. Talk a little bit about why the gross margin, whether it's second quarter or second half, unfortunately, has a three handle again.

Question: Ross Seymore - Deutsche Bank AG - Analyst : So the last near-term question I have is kind of bringing those two things together. So part of the gross margin pain is too much goodness on the AI PC side. Meteor Lake and then Lunar Lake is going to ramp. How is it big enough to be bad for gross margin, but not big enough to be good for revenues? How do people reconcile those two?

Question: Ross Seymore - Deutsche Bank AG - Analyst : So let's switch gears over to the restructuring side. What is the overall goal from an efficiency level, profit margin, return metrics? What led to that being 15,000 and [$10 billion] as opposed to 5 billion more or 5 billion less? How is Intel thinking about it and even potentially splitting between the CapEx side and the OpEx side?

Question: Ross Seymore - Deutsche Bank AG - Analyst : So it's a good segue to the manufacturing side. You talked a little bit, and last night we talked about some of the defect density bunch of kind of nerdy stats. And (multiple speakers) folks. When can investors expect to have positive proof that 18A is, in fact, on time, delivering what you expected at leadership or ahead of your competition, if you include backside power and all those sorts of things? When is the show-me story going to be shown?

Question: Ross Seymore - Deutsche Bank AG - Analyst : So that's a perfect segue to the foundry side of the equation. If you're proving with these products internally that 18A is working the foundry side, that should be a great carrot for your potential customers there. Talk about the pace of progress on the foundry side. And going from where you are today to somewhere in the low to mid single digit, billions of dollars and then eventually $15 billion, I think you have a lifetime value. Talk about how long it's taking to get to where you want to go. And when will you be hitting those bigger numbers?

Question: Ross Seymore - Deutsche Bank AG - Analyst : So that was going to be my final question on that. So between the positives and negatives that you just mentioned, does that change anything about that breakeven? And I think '27, midpoint of the '25 to '30 range, I think is what you said earlier this year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 29, 2024 / 3:00PM, INTC.OQ - Intel Corp at Deutsche Bank Technology Conference

Question: Ross Seymore - Deutsche Bank AG - Analyst : So let's switch gears to the AI side of things. And this might be the longest I've ever gone without talking about AI up on stage here. The PC side we'll get to. But I think the bigger question is what is Intel's plan on the infrastructure side, whether it be on the CPU side where I think the plan is a little clear or on the accelerator side. So just talk a little bit about how you play in that, especially given some of the GPU-centric folks that are doing billions and billions and billions of revenue.

Question: Ross Seymore - Deutsche Bank AG - Analyst : So in the last five minutes, given that this audience tends to care about financials, let's talk about some of the financial implications and targets that you have. A year ago, we set up on stage. And you roughly talked about $100 billion in revenue and a 60, 40 gross margin. Operating margin, [$85 billion out of the $100 billion] would be from products and [$15 billion] would be from foundry. Given what you're seeing on the revenue front, given what you've done on the restructuring front, how does that change?

Question: Ross Seymore - Deutsche Bank AG - Analyst : Why don't we wrap up with talking about gross margin. It's always been a very key metric for Intel and for semiconductor investors in general. Walk us through what the key milestones are to go from roughly 40% to your 60% target.