Intel Corp at UBS Global Technology and AI Conference Transcript

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

Question: Tim Arcuri - UBS Securities LLC - Analyst : <_ALACRA_META_ABSTRACT>Okay. With that out of the way, well, it's been an interesting few days. So Dave, let me start with you. Big announcement, yet there wasn't a financial update in the announcement. You're two-thirds of the way through the quarter. Wondering if there was anything you wanted to say about that and -- David Zinsner - Intel Corp - Chief Financial Officer, Executive Vice President, Interim Co-Chief Executive Officer Yeah. No, we typically don't provide updates, and we still have another month to go of wood to chop. So we stand by the guidance that we gave at earnings, and more to update, obviously, when we do our earnings at the end of January, which I'll be doing double duty on, it sounds like.

Question: Tim Arcuri - UBS Securities LLC - Analyst : Yeah, I wanted to ask about that, and there was a question last night at our dinner that I thought was a good one that it was notable that MJ also got promoted to Head of Intel Products and also Co-Interim CEO. So more of an emphasis on the Board's part on the product side, maybe in recognition that there's been -- I'm not saying too much, but there's been a lot of foundry, foundy, foundy, foundry. And so, that kind of in conjunction with where you are, does that -- there's a question of who -- if the product business is what's important to the Board now, Pat knew the products better than anybody. So there is some confusion, I think, among some investors if that's the emphasis for the Board, Pat would seem like the perfect guy.

Question: Tim Arcuri - UBS Securities LLC - Analyst : Great. Well, let me ask Naga the question. So you've been at Intel, I think, for maybe six months -- Naga Chandrasekaran - Intel Corp - Executive Vice President, Chief Global Operations Officer & General Manager, Intel Foundry Manufacturing and Supply Chain Three months.

Question: Tim Arcuri - UBS Securities LLC - Analyst : So can you just give us a little bit -- you were SVP of technology development at Micron prior to coming to Intel. Can you tell us what brought you to Intel, what opportunities you saw here, and what are your impressions in the first few months? Naga Chandrasekaran - Intel Corp - Executive Vice President, Chief Global Operations Officer & General Manager, Intel Foundry Manufacturing and Supply Chain So thanks for having me here first. And yeah, I was with Micron for 23 years, and I was doing technology development, manufacturing, and different roles within Micron. I was very happy and satisfied with where we were positioned as a company and as a technology development team, and I'm thankful to Micron for everything that they have done for me. But it was opportunistic that I started talking with Pat and Ann. And over a period of months that I was talking with them, I really believed in the consequential journey of trying to set up a foundry. I believe that Intel foundry is very important for Intel. It is very important for the semiconductor ecosystem, and it is very important to have some level of competitive space that's going to continue to drive innovation. So I truly believe in the mission that Pat and Ann and everyone in Intel is driving towards with this foundry. That's number one. Number two, I was very happy with where we have brought Micron as part of the journey. We have set Micron as technology leaders in memory, packaging, and financial stability where the company was. And also, my team was in a very good place. So I thought if I'm going to go do something else, then this was a pretty good time. I was with Micron for 23 years, and I was telling Tim this yesterday that I joined in 2001, June and then 2001, September 11 happened, and my first increment was a 10% pay cut. And probably for the next 10 years, I never sold a stock, because the only direction it went was downwards. But I still stayed with the company because I liked the challenge. I liked what I was doing with Micron and really liked the journey. And the last 10 years, it was transformational. So I felt I had done a good role, and the company was in a good place for me to go do something different. And that's the third piece was, personally, there's very few people who can do technology development role in the industry. There's very few that can do technology development and manufacturing. And then there's very few who can do both in memory and logic. This was a great opportunity also for me, personally, to say, how can I expand myself? So that's -- the combination of those three, that's why I'm here. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 8:35PM, INTC.OQ - Intel Corp at UBS Global Technology and AI Conference

Question: Tim Arcuri - UBS Securities LLC - Analyst : Good. Thank you. So I wanted to ask about progress on 18A. I know Pat put this, which is now famous, d0 number of 0.4 out. And I've written a couple of notes on this just trying to put it into context what that means, and it depends on the die size to translate the yield. But can you talk a little bit, A, about where 18A is versus where you think it needs to be to sort of intersect the second half of '25 ramp. And B, the thing that I hear from some of the customers is that -- some of the prospective foundry customers -- is that 18A is still a bit more geared toward HPC. And as a broad foundry node, the customers that I talk to are sort of like 18A is great if you have an HPC application; 14 A might be the node that's more broadly applicable to external foundry customers. Can you talk about that as well? Naga Chandrasekaran - Intel Corp - Executive Vice President, Chief Global Operations Officer & General Manager, Intel Foundry Manufacturing and Supply Chain Yeah. So when Pat announced the defect density, d0, less than 0.4, it was a point in time, and it was to give the indication that we are progressing as expected. If I look at it today, we are progressing. There are several milestones that we have met, and there are still many milestones ahead for the technology development. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 8:35PM, INTC.OQ - Intel Corp at UBS Global Technology and AI Conference And if I wear my technology development hat for a minute, there's always challenges when you're introducing new technologies, and there's ups and downs. But what I would say is there's nothing fundamentally challenging on this node. Now it is about going through the remaining [IL] challenges, defect density challenges, continuing to improve it, improving process margin and getting it ramped. Will there be challenges? There will be. But I think we are progressing, and next year as I look at it, primarily, the first half will be getting the node into engineering samples into our customer's hands and getting the feedback and starting a ramp in Oregon. And the second half of 2025, our milestone is certifying the node, getting it ramped in Arizona and getting the product on the shelves so that customers can buy it. So that's the milestones, and we are working towards meeting all those milestones over the next year. It's very critical for us. 18A, to your second part of the question, when we said we are going to be a foundry, 10, 7 was way past. And then Intel 3 also had several decisions already made, and even 18A, to some extent, decisions were made. So you're absolutely right. There are certain aspects of 18A that's extremely powerful for compute applications, especially the backside power. It's going to be very beneficial for compute applications. It can benefit mobile depending on how the designs are done, but because the customer engagement is more later, it doesn't address the full time. And 18A, our biggest customer for the next two, three years is still Intel products, which goes back to what they were saying. The Intel products, we know the demand; we know what needs to happen. And our focus is to ramp it and continue to get more customers on 18A. But all this learning is getting implemented into 14A. So as 14 A comes in, there will be a broader market that 14A will address, including compute and mobile and other applications and also how the PDKs are done so that it's not just for -- with Intel focus, but it's also focused on the broader ecosystem, taking 14A and applying it to their designs.

Question: Tim Arcuri - UBS Securities LLC - Analyst : And how do you think about just Naga's comment about the building or planning CapEx more to the high-confidence part of demand? I think we can all debate how successful we think is going to be, but as the CFO, when you're thinking about CapEx and now with sort of what the Board wants to do, how should we think about how you're planning CapEx? Because is this still too much? It seems like it could still come down quite a bit.

Question: Tim Arcuri - UBS Securities LLC - Analyst : So how did you think -- you've been here for many years. So how did -- how is this -- I think it's still hard for, some of us, and I've been getting this question a lot the last two days -- this tone from you, how is that different than what it's been the last two years, because it isn't like you've been throwing money up on a wall? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 8:35PM, INTC.OQ - Intel Corp at UBS Global Technology and AI Conference

Question: Tim Arcuri - UBS Securities LLC - Analyst : Dave, when you think about in this new world that we're going to see the next six months or so at Intel, what's the part of CapEx that is sort of sacred? I would think that you wouldn't want to cut into technology development to that part of CapEx. (multiple speakers) the way I think of it, it's a pretty significant piece of CapEx.

Question: Tim Arcuri - UBS Securities LLC - Analyst : And just the question around how much you can do with the manufacturing network given the [skips], both one and two. We kind of read those documents, and it reads as in some ways, there are certain milestones you have to meet in those fabs. And so does that limit your ability to do what you want with the fab -- with the fab network, the skips you've signed?

Question: Tim Arcuri - UBS Securities LLC - Analyst : And Dave, how much -- I get asked this question a lot with the new administration coming in. There's some questions, maybe the CHIPS Act money -- probably doesn't get pulled, the grants, but there's some potential renegotiation of the milestones you have to hit to get that money. And I know you have the skips but the CHIPS grants are a fairly big piece and, of course, the credits are going to be -- that's just as, however you spend the money, you get the credit. But the grant piece, is that a piece that you see is maybe at risk potentially?

Question: Tim Arcuri - UBS Securities LLC - Analyst : And Dave, how do you think about -- who knows what happens with tariffs -- but how are you war planning around the risk of tariffs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 8:35PM, INTC.OQ - Intel Corp at UBS Global Technology and AI Conference

Question: Tim Arcuri - UBS Securities LLC - Analyst : Great. And then the skips are basically, you're sharing the economics in Ireland and Arizona. So how do we think about what the long-term margin potential is for the business? Because in some ways, does that cap what the long-term margin potential is for the company? And how should we think about the potential progression of margins? I know you're not very optimistic about next year. It's more sort of out into '26 where we can see a bigger inflection in gross margin. (multiple speakers) talk through that.

Question: Tim Arcuri - UBS Securities LLC - Analyst : Total company. Yeah.

Question: Tim Arcuri - UBS Securities LLC - Analyst : Great. I have many more questions to ask you, but we're unfortunately out of time. So thank you. Thank you to both of you.