Intel Corp Q2 2025 Earnings Call Summary

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

Question: Ross Seymore - Deutsche Bank Securities Inc - Analyst : Hi guys, thanks for asking a question. Lip-Bu, the first one for you, and thank you for walking through the strategic details that you're putting into place. It seems like fixing the foundry side is based on trust, as you said before, and that trust seems in its origin in fixing the x86 side of the business. So I guess my question is, how fast can you fix that? I know you are having to sign off on every tape out, but is the trust that 18A can ramp dependent upon Nova Lake and Diamond Rapids, are we talking 2022 what are the sort of steps we need to see to build that trust in your x86 business so that the foundry business can ramp?

Question: Ross Seymore - Deutsche Bank Securities Inc - Analyst : I do, one, potentially a little nearer term for Dave, on the gross margin side. You mentioned that the gross margin was guided down a bit sequentially for a couple of different reasons. Can you dive a little more deeply into those? And perhaps more importantly, just what do you see as the tailwinds and headwinds to gross margin as we look, say, into next year? I know you're not going to guide it specifically, but just some of the puts and takes would be great. Thank you.

Question: Timothy Curry - UBS - Analyst : Thanks a lot. Lip-Bu, I wanted to ask about the foundry strategy. You did add a bunch of risk factors and language on 14A that kind of seems to leave the door open to kind of walking away from its development. And I know you did talk about some of that. But if I'm an outside customer, and I'm looking at your road map, and I see this hedging on 14A, why would I engage? I guess how do you sort of marry the hedging of 14A development with turning to build an external foundry business? I guess I kind of read it as maybe a hard pivot away from foundry and doing what's right for the product business. But can you sort of talk about that?

Question: Timothy Curry - UBS - Analyst : I do, yeah. Yeah, I guess I just kind of wonder like how an external customer would continue to be engaged. But the question really is for Dave. So Dave, you talked about CapEx coming down next year. what is maintenance CapEx? Like how much can you cut CapEx next year? Could you take like $5 billion out of gross CapEx next year? If you can give some sense on that?

Question: Joseph Moore - Morgan Stanley - Analyst : Great, thank you. You mentioned again the Intel 7 being in short supply through the end of the calendar year. Can you talk about what's driving that? Is there -- are you going to be able to drive more volume to the Intel four products. And what you have to add wafer structure in Intel 7. So I'm just kind of curious what's going on with that.

Question: Joseph Moore - Morgan Stanley - Analyst : Yeah, I do. Coming back to the CapEx. I mean you still have the large amount of construction in progress that hasn't yet been productively employed. Are you going to be able to get full value out of that? I know there was a shell first strategy? Is it going to continue to persist that there's a large amount of that? Or will you start appreciating that at some point?

Question: William Stein - Truist Securities - Analyst : Great. Thank you for taking my question. Lip-Bu, I'd also like to lean into this AI topic a little bit because I think you might not have used the words full stack, but that's certainly what it sounds like. And so when I think about the opportunity that Intel has, I guess, I thought of it as do you want to be sort of like NVIDIA, but NVIDIA already has a very established position. You have cloud service providers doing ASICs and you have AMD trying to do the same thing. So it sounds almost like your aiming to be the third or arguably the fourth supplier in a market where there's really only two successful and so far NVIDIA and some of its customers. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 9:00PM, INTC.OQ - Q2 2025 Intel Corp Earnings Call And I wonder to what degree you have considered or still considering another approach like doing ASICs to establish a better position in this market. I hope that question makes sense, but any clarification and education you could provide us will help a lot, I think. Thank you.

Question: William Stein - Truist Securities - Analyst : Yeah. I'd like to maybe just ask about the write-downs in the quarter. It sounds like that was equipment, but I wonder if there was any inventory in that as well. And maybe any clarification on what you're writing down to the degree, I think it would help us. Thank you.

Question: Stacy Rasgon - Bernstein - Analyst : Hi guys, thanks for taking my questions. For the first one, I wanted to touch on 18A and 14A. So you said 18A would be supplying the next three generations of Intel Products. So I guess that's 2026, '27 and '28. So I guess that would suggest 14A if it comes out, would be 2029 at the earliest. I guess, number one, is that timing correct? And then just within that, given the plans or at least the contingency plans to maybe not do 14A I mean, I guess that suggests that if 14A dies, does the foundry strategy die with it? And can you run a sustainable business just on internal volume with 18A and increasing outsource at 14A doesn't do what it needs to do.

Question: Stacy Rasgon - Bernstein - Analyst : I do. Thanks. I want to ask about the CapEx. You talked about sustaining CapEx like 50% of the current level, which would be like $9 billion, I guess. Should I be thinking about that as a plausible scenario for next year? I mean if I take the current like run rate for this year, like the gross CapEx in the first half and $18 billion for the year, it suggests like a quarterly run rate of, I don't know, $3.6 billion to be something like $14 billion, $14.5 billion for the year. I guess, I'm trying to figure out like what's a plausible number for where you might land next year given what you see, is $9 billion actually on the table? Or is it closer to $14 billion? Or what do you guys actually have a line?

Question: Vivek Arya - BofA Global Research - Analyst : Thanks. For my first question, I wanted to discuss competition in the server CPU market. I see in your 10-Q, you mentioned server ASPs were down 8% from last year because of a competitive environment. I thought that rising cores would mean greater ASP. So just if you could address that. But then kind of more medium to longer term Lip-Bu, how impactful is competition from ARM who is claiming to take over half the server market?

Question: Vivek Arya - BofA Global Research - Analyst : Yeah. Thank you. Maybe one for Dave on gross margins. So Dave, let's say if your sales grew mid-single digit next year, hypothetically, what will gross margins do when you look at all the puts and takes around the mix of 18A and what you need to outsource? I know you're not giving specific outlook, but let's say, your top line growth, is there a simple formula to look at the gross margins versus the 36% level that you're at right now?

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah, thanks for taking the question. I want to go back to the server discussion as well. I know in the past, you guys have talked about the progression of 18A and Clearwater Forest, which I can appreciate a lower-volume SKU. But I'm curious as you think about stabilizing your market share and maybe being able to recapture share, do you think that, that's a function of Diamond Rapids? And if so, can we at all think about the timing of Diamond Rapids 2026, second half of '26? Any clarity on that would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2025 / 9:00PM, INTC.OQ - Q2 2025 Intel Corp Earnings Call

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah, I do. Thanks, John. So real quickly, just Dave, I want to go back like the skip or the Arizona and the Ireland fabs. Just remind us again how we should be modeling that. I think in the past, you talked about a $500 million headwind this year, and then that going to like $1.3 billion to $1.5 billion next year, and significantly higher in 2027. So any kind of update should we still think about that? Is that increasing just any color?