Intel Corp Q1 2025 Earnings Call Summary

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

Question: Ross Seymore - Deutsche Bank AG - Analyst : Welcome to Intel. Lite, the first question is for you. You talked a lot about increasing the flexibility and speed at Intel and unfortunately having to shrink the head count to do so, how we balance fixing the road map with also filling the foundry and making sure you have the unit volumes there. It seems like the flexibility and speed goals would be more quickly adopted and capitalized by going to foundry, but you have the need to fill your own Intel foundry. So balancing the internal product road map versus the foundry side of things is basically the question.

Question: Ross Seymore - Deutsche Bank AG - Analyst : I did have one for Dave. Dave, on the gross margin side of things, you talked a little bit about the slope for the rest of the year, but especially given the strategic changes that Lip-Bu putting into place, the cost cutting and the OpEx side of things and the lower CapEx that you talked about, can you just talk about some of the puts and takes on gross margin if you think about 2025 as a whole and maybe even 2026, what are some of the goals that you have?

Question: Timothy Arcuri - UBS - Analyst : Dave, can you help us -- just also on gross margin, can you help us with sort of what a claim number is for March? You guided 36%, but that was supposed to have some COGS headwinds from the way you accounted for the grants, but it came in -- so sort of what's the clean number for March? And then also, you said that the Q1 number would be the trough. So I know you're guiding Q2 to 36.5%. But like -- could it go lower than what you're guiding? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 9:00PM, INTC.OQ - Q1 2025 Intel Corp Earnings Call

Question: Timothy Arcuri - UBS - Analyst : I do. Yeah. So Lip-Bu, I know the prior policy had been to not announce new third-party foundry customers. How do you think about that? And how can you update us on sort of where you're tracking? Is there anything to help us believe that maybe you can add a Tier 1 customer and maybe this year, if not sooner, I know that they want some power improvements on 18A. But can you kind of talk about that?

Question: Joe Moore - Morgan Stanley - Analyst : Great. So a number of elements in your letter and in your comments about kind of improving product execution I guess, five weeks into it, can you give us your assessment of Panther Lake and Clearwater Forest and 18A product portfolio and give us a sense of are those leadership products? Do you still have work to do to get to the leadership position that you want to have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 9:00PM, INTC.OQ - Q1 2025 Intel Corp Earnings Call

Question: Joe Moore - Morgan Stanley - Analyst : I do -- the comments that you guys made about 7-nanometer being constrained further -- I'm sorry, Intel 7 being constrained for the foreseeable future. Can you elaborate on why that is and what impact that might have?

Question: CJ Muse - Cantor Fitzgerald - Analyst : I guess first question for Lip-Bu. You touched on your AI strategy, focusing on new and emerging workloads like reasoning models of Agentic AI and physical AI. Is the plan here to reinvent x86 to succeed in the AI world or perhaps a broader portfolio, including ARM? And then should we be interpreting your focus more on Edge AI?

Question: CJ Muse - Cantor Fitzgerald - Analyst : I do, Joe. Dave, to follow up on the OpEx guide for '25 and '26, do those numbers fully contemplate the head count reductions that you are planning? Or over time, could we see additional savings?

Question: Vijay Rakesh - Mizuho - Analyst : I was just wondering, as you look at the data center side, how do you see that playing out through the year? Sorry, you kind of cited June.

Question: Vijay Rakesh - Mizuho - Analyst : Just wondering how the data center side would play out the rest of the year as you look at the second half, especially?

Question: Vijay Rakesh - Mizuho - Analyst : Congratulations on the US segment, just looking at CapEx, this is for Dave. Any thoughts on how you would look at CapEx through that time frame, '25, '26? Are you looking at rationalizing that given the footprint that you have?

Question: Stacy Rasgon - Bernstein Research - Analyst : I wanted to go back to that 7-nanometer constraint or capacity constrained. So you say you see a lot of demand for Raptor, like I guess I'm just surprised given how good Meteor Lake and Lunar Lake are supposed to be. Like why are you seeing so much more demand for the older generation parts versus new ones? Or is it -- I mean, are you pushing the older gen stuff like because the margins are better. Like what's going on there?

Question: Stacy Rasgon - Bernstein Research - Analyst : I do a follow up on that. So what does that imply for the Panther Lake launch, which I guess is going to happen, you said by year-end. So I guess, we'll get at least one SKU by December, most of it comes next year, but if that's happening like in the midst of a macro event tariffs, like who knows like -- how do I think about like the launch of those new products, given like demand synergy pivoting back to the older products? And the environment hasn't even gotten bad yet. Yeah. I think it's a very fair question. The Panther Lake launch matches exactly what we did on both Meteor Lake and Lunar Lake in regards to timing. So it's very aligned with how customers like to take products to market. Panther Lake is a great product, both from a performance and price perspective for our customers. So I think you'll see a strong uptake of that product, right? We still see very strong commercial demand for AI PC as they're deploying their fleets as they're doing their upgrades, they want to future-proof their products and have that AI capability. So I don't think you're going to see that change in commercial. And if you look at our traditional ramps for these types of products, we tend to go faster in commercial first and then consumers come on board. And so we'll have to balance where is the economy at the end of the year, but I feel very bullish about the Panther Lake product and our customer feedback.

Question: Srinivas Pajjuri - Raymond James & Associates Inc - Analyst : Michelle, I want to go back to the comments you made about the server market. In particular, about the Q2 guidance, I'm just curious as to why Q2 is tracking a little bit weaker. And then as we look out to the next few quarters, I know you talked about granite ramping and also potentially TAM growing from a per core basis in double digits. But at the same time, we do have incremental competition from ARM, especially in head nodes, where I think you guys have done well. So I'm just wondering how to think about maybe talk about why the guidance is a little softer for Q2 and then how to think about your market share for the next few quarters?

Question: Srinivas Pajjuri - Raymond James & Associates Inc - Analyst : Yeah. And then on Panther Lake, I know Lip-Bu said it's a priority to ramp 18A with Panther Lake. I know in the past, your target was to, I guess, bring in 70% of the die in-house to 18A. I'm just wondering if that's still the target. And then as we look forward to Nova, has the decision about internal versus external being made yet if so, maybe you can give us some color on that as to what percent or how you think about internal versus external mix for Nova Lake.

Question: Thomas O'Malley - Barclays - Analyst : This one is for Dave a little more shorter term. Just if you look at the first 20-something days of the quarter here, I was surprised that you saw a little bit of weakness on the client side. Obviously, data center down a little bit more. But could you maybe just give us an update if you're seeing any pull-ins, any changes in dynamics from a geography perspective, any customer behaviors that are looking any different for the first couple of days this quarter just as it helps as a framework for the entire market and then also for you guys as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 9:00PM, INTC.OQ - Q1 2025 Intel Corp Earnings Call

Question: Thomas O'Malley - Barclays - Analyst : Yeah, I do. Michelle, in December, when we chatted when you first took over the job, you spoke about products being first and specifically, we talked about the data center side of things. And I think earlier to CJ's question, you addressed the edge. But if you look at the products that you've had with Gaudi, Falcon Shores inside the data center specifically. Could you talk about what the strategy will be going forward? Are you planning on launching a new product? I think at the time you said, we need to learn with what we've already had. So we're not starting from scratch, but any update to that strategy, particularly inside the data center.

Question: Vivek Arya - BofA Securities - Analyst : Lip-Bu for the first one, you said there are no quick fixes. So how much time realistically should investors be prepared for in terms of Intel's turnaround? Is it one year, two years, three years? And related to that, what are the right metrics to measure that progress? Is it share gains? Is it gross margin? Is it free cash flow? So basically, what metrics are you optimizing for? And what is the time line in order to achieve that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 9:00PM, INTC.OQ - Q1 2025 Intel Corp Earnings Call

Question: Vivek Arya - BofA Securities - Analyst : So on the IDM structure, Lip-Bu, given your experience in the industry, what we have seen from the outside is that the most successful businesses in semis are either fabless or a dedicated foundry. And a few years ago, when Intel started to give out financials for the manufacturing business, the hope was that, that would turn it around. But what we have seen is just consistently negative gross margin. So do you think that just 18A progress is sufficient, just kind of low single-digit top line growth is sufficient to make this business viable? So at what point do you need to rethink whether this IDM structure regardless of the way financials are broken out, does it make sense?

Question: Aaron Rakers - Wells Fargo Securities - Analyst : I guess maybe the first question would be is just as I think about the guidance that you gave and more importantly, the operating expense structure that you talked about in '25 and '26. Just to be very clear, -- that's exclusive of the pending divestiture of the 51% stake in Altera. I guess that's just a point of clarification.

Question: Aaron Rakers - Wells Fargo Securities - Analyst : I do, and it's maybe more strategic back to kind of the core data center AI strategy. And I know it's early days, but I'm curious of how you think about rack scale networking and the pieces that Intel has internally to really compete in the cloud infrastructure AI build-out? Is it UCIE? Is there other pieces of the building blocks that you think strategically is needed to really drive if it's with Jaguar Shores or how that strategy plays out around the networking scale-up side