Intel Q4 2025 Intel Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Intel Corp Earnings Call
Speaker #1: All right. Welcome to Intel Corp's fourth quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session.
Operator: Welcome to Intel Corporation's Fourth Quarter 2025 Earnings Conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Mr. John Pitzer, Senior Vice President, Investor Relations. Please go ahead, sir.
Operator: Welcome to Intel Corporation's Fourth Quarter 2025 Earnings Conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Mr. John Pitzer, Senior Vice President, Investor Relations. Please go ahead, sir.
Speaker #1: To ask a question during this session,
John Pitzer: Thank you, Jonathan, and good afternoon to everyone joining us today. By now, you should have received a copy of the Q4 earnings release and earnings presentation, both of which are available on our investor website, INTC.com. For those joining us online today, the earnings presentation is also available in our webcast window. I am joined today by our CEO, Lip-Bu Tan, and our CFO, David Zinsner. Lip-Bu will open with comments on our Q4 results, as well as provide an update on the progress we are making on our strategic priorities. Dave will then discuss our overall financial results, including Q1 guidance, before we transition to answer your questions. Before we begin, please note that today's discussion does contain forward-looking statements based on the environment as we currently see it, and as such, are subject to various risks and uncertainties.
John Pitzer: Thank you, Jonathan, and good afternoon to everyone joining us today. By now, you should have received a copy of the Q4 earnings release and earnings presentation, both of which are available on our investor website, INTC.com. For those joining us online today, the earnings presentation is also available in our webcast window. I am joined today by our CEO, Lip-Bu Tan, and our CFO, David Zinsner. Lip-Bu will open with comments on our Q4 results, as well as provide an update on the progress we are making on our strategic priorities. Dave will then discuss our overall financial results, including Q1 guidance, before we transition to answer your questions. Before we begin, please note that today's discussion does contain forward-looking statements based on the environment as we currently see it, and as such, are subject to various risks and uncertainties.
Speaker #2: Good afternoon to everyone joining us today. By now, you should have received a copy of the Q4 earnings release and earnings presentation, both of which are available on our investor website, INTC.com.
Speaker #2: Before we begin, please note that today's discussion does contain forward-looking statements based on the environment as we currently see it, and as such, are subject to various risks and uncertainties.
Speaker #2: with comments on our fourth quarter results, as well as provide an update on the progress we were making on our strategic priorities. Dave will then discuss our overall financial results, including first quarter guidance, before we transition to answer your
Speaker #2: It also contains references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release, most recent annual report on Form 10-K, and other filings with the SEC provide more information on specific risk factors that could cause actual results to differ materially from our expectations.
John Pitzer: It also contains references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release, most recent annual report on Form 10-K, and other filings with the SEC provide more information on specific risk factors that could cause actual results to differ materially from our expectations. They also provide additional information on our non-GAAP financial measures, including reconciliations where appropriate to our corresponding GAAP financial measures. With that, let me turn things over to Lip-Bu.
It also contains references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release, most recent annual report on Form 10-K, and other filings with the SEC provide more information on specific risk factors that could cause actual results to differ materially from our expectations. They also provide additional information on our non-GAAP financial measures, including reconciliations where appropriate to our corresponding GAAP financial measures. With that, let me turn things over to Lip-Bu.
Speaker #2: They also provide additional information on our non-GAAP financial measures, including reconciliations, where appropriate, to our corresponding GAAP financial measures. With that, let me turn things over to
Speaker #2: Lip-Bu. Thank you,
Lip-Bu Tan: Thank you, John, and thank you all for joining us today. 2025 was a year of solid progress. Over the last 10 months, we established the foundation for new Intel, a more focused and execution-driven company. We simplified our organization and greatly reduced bureaucracy to improve efficiency and accelerate decision-making. We also recruited new leaders from the outside and empowered key leaders from within. We strengthened our balance sheet, forged strong new partnerships, and deepened relationships with existing as well as new customers. I'm encouraged by my conversation with our customers and partners around the world. I'm hearing a clear, consistent message. They see the progress we are making. They want Intel at the table as they navigate their own transformations. The opportunity in front of us is meaningful and significant.
Lip-Bu Tan: Thank you, John, and thank you all for joining us today. 2025 was a year of solid progress. Over the last 10 months, we established the foundation for new Intel, a more focused and execution-driven company. We simplified our organization and greatly reduced bureaucracy to improve efficiency and accelerate decision-making. We also recruited new leaders from the outside and empowered key leaders from within. We strengthened our balance sheet, forged strong new partnerships, and deepened relationships with existing as well as new customers. I'm encouraged by my conversation with our customers and partners around the world. I'm hearing a clear, consistent message. They see the progress we are making. They want Intel at the table as they navigate their own transformations. The opportunity in front of us is meaningful and significant.
Speaker #3: John: And thank you all for joining us today. 2025 was a year of solid progress. Over the last 10 months, we established the foundation for new Intel.
Speaker #3: A more focused and execution-driven company. We simplify our organization and greatly reduce bureaucracy to improve efficiency and accelerate decision-making. We also recruited new leaders from the outside and empowered key leaders from within.
Speaker #3: We strengthened our balance sheet for strong new partnerships and deepened relationships with existing as well as new customers. I'm encouraged by my conversations with our customers and partners around the world.
Speaker #3: I'm hearing a clear, consistent message: they see the progress we are making; they want Intel at the table as they navigate their own transformations.
Speaker #3: The opportunity in front of us is meaningful and significant. The era of artificial intelligence is driving unprecedented demand for semiconductors across the entire compute landscape, from AI-accelerated and traditional data centers.
Lip-Bu Tan: The era of artificial intelligence is driving unprecedented demand for semiconductors across the entire compute landscapes, from AI-accelerated and traditional data centers into the network and enterprise domains, all the way out to client and edge devices. Rapid deployment of AI workloads across this diverse environment will require heterogeneous silicon solutions leveraging CPU, embedded NPUs, discrete and integrated GPU, ASICs, and XPUs. In addition, we will need to see innovations in the software stack along with new emerging technologies like photonics, memory interfaces, interconnect, and quantum to name just a few. The breadth of our IP and know-how across silicon design, system-level integration, wafer manufacturing, and advanced packaging uniquely position us to capitalize on these AI-driven trends, capture sustainable, profitable growth. This will not happen overnight, and our executions need to continue to improve.
The era of artificial intelligence is driving unprecedented demand for semiconductors across the entire compute landscapes, from AI-accelerated and traditional data centers into the network and enterprise domains, all the way out to client and edge devices. Rapid deployment of AI workloads across this diverse environment will require heterogeneous silicon solutions leveraging CPU, embedded NPUs, discrete and integrated GPU, ASICs, and XPUs. In addition, we will need to see innovations in the software stack along with new emerging technologies like photonics, memory interfaces, interconnect, and quantum to name just a few. The breadth of our IP and know-how across silicon design, system-level integration, wafer manufacturing, and advanced packaging uniquely position us to capitalize on these AI-driven trends, capture sustainable, profitable growth. This will not happen overnight, and our executions need to continue to improve.
Speaker #3: Into the network and enterprise domains, all the way out to clients and edge devices. Rapid deployment of AI workloads across this diverse environment will require heterogeneous silicon solutions leveraging CPU, embedded NPUs, discrete and integrated GPU, ASICs, and XPUs.
Speaker #3: In addition, we will need to see innovations in the software stack along with new emerging technologies—like photonics, memory interfaces, interconnect, and quantum, to name just a few.
Speaker #3: The breadth of our IP and know-how across silicon design, system-level integration, wafer manufacturing, and advanced packaging uniquely position us to capitalize on these AI-driven trends.
Speaker #3: Capture sustainable, profitable growth. This will not happen overnight, and our execution needs to continue to improve. While we will stay humble as we address the work ahead, we will never be satisfied.
Lip-Bu Tan: But we will stay humble as we address the work ahead, and we will never be satisfied. Our Q4 was another positive step forward. Revenue, gross margin, and EPS were all above our guidance. We delivered these results despite supply constraints, which meaningfully limited our ability to capture all of the strengths in our underwriting markets. We are working aggressively to address this and better support our customers' needs going forward. Looking ahead for 2026, we will continue to position Intel to capture the significant growth opportunity AI presents across all our businesses. We will do this by strengthening our client franchise, advancing our data center, AI accelerator, and ASIC strategies, and continue to build trusted US foundry. Let me start with our Core x86 franchise, which remains the most widely deployed compute architecture in the world.
But we will stay humble as we address the work ahead, and we will never be satisfied. Our Q4 was another positive step forward. Revenue, gross margin, and EPS were all above our guidance. We delivered these results despite supply constraints, which meaningfully limited our ability to capture all of the strengths in our underwriting markets. We are working aggressively to address this and better support our customers' needs going forward. Looking ahead for 2026, we will continue to position Intel to capture the significant growth opportunity AI presents across all our businesses. We will do this by strengthening our client franchise, advancing our data center, AI accelerator, and ASIC strategies, and continue to build trusted US foundry. Let me start with our Core x86 franchise, which remains the most widely deployed compute architecture in the world.
Speaker #3: Our Q4 was another positive step forward. Revenue, gross margin, and EPS were all above our guidance. We delivered these results despite supply constraints, which meaningfully limited our ability to capture all of the strength in our underwriting markets.
Speaker #3: We are working aggressively to address this and better support our customers' needs going forward. Looking ahead, for 2026, we will continue to position Intel to capture the significant growth opportunity AI presents across all our businesses.
Speaker #3: We will do this by strengthening our client franchise, advancing our data center, AI accelerator, and ASICs strategies, and continuing to build a trusted U.S. foundry. Let me start with our core x86 franchise.
Speaker #3: x86 remains the most widely deployed compute architecture in the world. The deployments of AI are only amplifying the importance of x86—from orchestration and control planes to inference edge workloads and agentic AI.
Lip-Bu Tan: The deployment of AI is only amplifying the importance of x86, from orchestration and control planes to inference edge workloads, and agentic AI. In our client computing group, we strengthen our position in both consumer and enterprise notebooks with our Core Ultra Series 3 lineup, formerly known as Panther Lake, and build on our most advanced Intel 18A manufacturing process. We committed to deliver our first Series 3 SKU by the end of 2025, and we exceeded that commitment by delivering our first three SKUs. While we still have work to do, I'm encouraged by the steady progress on our Intel 18A use, and Naga and his team remain laser-focused on additional improvements as we ramp Series 3 into the high volume needed to meet strong customer demand.
The deployment of AI is only amplifying the importance of x86, from orchestration and control planes to inference edge workloads, and agentic AI. In our client computing group, we strengthen our position in both consumer and enterprise notebooks with our Core Ultra Series 3 lineup, formerly known as Panther Lake, and build on our most advanced Intel 18A manufacturing process. We committed to deliver our first Series 3 SKU by the end of 2025, and we exceeded that commitment by delivering our first three SKUs. While we still have work to do, I'm encouraged by the steady progress on our Intel 18A use, and Naga and his team remain laser-focused on additional improvements as we ramp Series 3 into the high volume needed to meet strong customer demand.
Speaker #3: In our Client Computing Group, we strengthened our position in both consumer and enterprise notebooks, with our Core Ultra Series 3 lineup—formerly known as Pantaliq—and built on our most advanced Intel 18A manufacturing process.
Speaker #3: We committed to deliver our first Series 3 SKU by the end of 2025, and we exceeded that commitment by delivering our first three SKUs.
Speaker #3: While we still have work to do, I'm encouraged by the steady progress on our Intel 18A use. And Naga and his team remain laser-focused on additional improvements as they RAMP Series 3 into the high volume needed to meet strong customer demand.
Speaker #3: Our client momentum was on full display at CES earlier this month, where we formally launched Series 3 with our OEM partners. Powering over 200 notebook designs, Series 3 will be the most broadly adopted and globally available AI PC platform we have ever delivered.
Lip-Bu Tan: Our client momentum was on full display at CES earlier this month, where we formally launched Series 3 with our OEM partners, powering over 200 notebook designs. Series 3 will be the most broadly adopted and globally available AI PC platform we have ever delivered. Along with our next generation Nova Lake coming at the end of 2026, we now have a client roadmap that combines best-in-class performance with cost-optimized solutions, giving me confidence that we are on the path of fortifying market share and profitability in both notebooks and desktops over the next several years. In addition, PCs become an important part of the AI infrastructure. The surge in AI workloads is driving massive demand for data centers, but cloud capacity alone cannot meet the scale of inference needed, especially in the power-constrained environment.
Our client momentum was on full display at CES earlier this month, where we formally launched Series 3 with our OEM partners, powering over 200 notebook designs. Series 3 will be the most broadly adopted and globally available AI PC platform we have ever delivered. Along with our next generation Nova Lake coming at the end of 2026, we now have a client roadmap that combines best-in-class performance with cost-optimized solutions, giving me confidence that we are on the path of fortifying market share and profitability in both notebooks and desktops over the next several years. In addition, PCs become an important part of the AI infrastructure. The surge in AI workloads is driving massive demand for data centers, but cloud capacity alone cannot meet the scale of inference needed, especially in the power-constrained environment.
Speaker #3: Along with our next-generation NovaLink coming at the end of 2026, we now have a client roadmap that combines best-in-class performance with cost-optimized solutions. This gives me confidence that we are on the path to fortified market share and profitability in both notebooks and desktops over the next several years.
Speaker #3: In addition, PC becomes an important part of the AI infrastructure. The surge in AI workloads is driving massive demand for data centers, but cloud capacity alone cannot meet the scale of inference needed.
Speaker #3: Especially in the power-constrained environment, this is accelerating the push toward hybrid AI—splitting workloads between cloud and client—which offers clear advantages in performance, cost, and control.
Lip-Bu Tan: This is accelerating the push toward hybrid AI, splitting workloads between cloud and client, which offers clear advantages in performance, cost, and control. We are working closely with ecosystem partners to seamlessly enable hybrid AI, and we are encouraged by the opportunity to grow the install base and accelerate the refresh rates over time. Let me now turn to DCAI. To support our AI objectives, I believe that our traditional server and accelerator roadmaps must advance together. To reinforce the alignment, I centralize our data center and AI businesses under Kovac, ensuring tight coordination across CPUs, GPUs, and platform strategy. Demand for traditional servers continues to be very strong, and we are focused on ramping available capacity to support the meaningful uptick we are seeing, including partnering with key customers to support their needs beyond 2026.
This is accelerating the push toward hybrid AI, splitting workloads between cloud and client, which offers clear advantages in performance, cost, and control. We are working closely with ecosystem partners to seamlessly enable hybrid AI, and we are encouraged by the opportunity to grow the install base and accelerate the refresh rates over time. Let me now turn to DCAI. To support our AI objectives, I believe that our traditional server and accelerator roadmaps must advance together. To reinforce the alignment, I centralize our data center and AI businesses under Kovac, ensuring tight coordination across CPUs, GPUs, and platform strategy. Demand for traditional servers continues to be very strong, and we are focused on ramping available capacity to support the meaningful uptick we are seeing, including partnering with key customers to support their needs beyond 2026.
Speaker #3: While working closely with ecosystem partners to seamlessly enable hybrid AI, we are encouraged by the opportunity to grow the install base and accelerate the refresh rates over time.
Speaker #3: Let me now turn to DCAI. To support our AI objectives, I believe that our traditional server and accelerated roadmaps must advance together. To reinforce the alignment, I centralize our Data Center and AI businesses under CORP Blocks.
Speaker #3: Ensuring tight coordination across CPUs, GPUs, and platform strategy. Demand for traditional servers continues to be very strong, and we are focused on ramping available capacity to support the meaningful uptake we are seeing.
Speaker #3: Including partnering with key customers to support their needs beyond 2026. The continuing proliferation and diversification of AI workloads is placing significant capacity constraints on traditional and new hardware infrastructure.
Lip-Bu Tan: The continuing proliferation and diversification of AI workloads is placing significant capacity constraints on traditional and new hardware infrastructure, reinforcing the growing and essential role CPUs play in the AI era. This is and will continue to benefit the ongoing RAMP of Granite Rapids as well as our mainstream products, Sapphire Rapids and Emerald Rapids. We have also made decisive changes to simplify our server roadmap, focusing resources on the 16-channel Diamond Rapids and areas to accelerate the introduction of Coral Rapids where we can. With Coral Rapids, we will also reintroduce multithreading back into our data center roadmap. We also continue to work closely with NVIDIA to build a custom Xeon fully integrated with their NVLink technology to bring best-in-class x86 performance to AI host nodes. Over the last several quarters, we have been developing a broad AI and accelerator strategy that we plan to refine in the coming months.
The continuing proliferation and diversification of AI workloads is placing significant capacity constraints on traditional and new hardware infrastructure, reinforcing the growing and essential role CPUs play in the AI era. This is and will continue to benefit the ongoing RAMP of Granite Rapids as well as our mainstream products, Sapphire Rapids and Emerald Rapids. We have also made decisive changes to simplify our server roadmap, focusing resources on the 16-channel Diamond Rapids and areas to accelerate the introduction of Coral Rapids where we can. With Coral Rapids, we will also reintroduce multithreading back into our data center roadmap. We also continue to work closely with NVIDIA to build a custom Xeon fully integrated with their NVLink technology to bring best-in-class x86 performance to AI host nodes. Over the last several quarters, we have been developing a broad AI and accelerator strategy that we plan to refine in the coming months.
Speaker #3: Reinforcing the growing and essential role CPUs play in the AI era. This is, and will continue to, benefit the ongoing ramp of Granite Rapids as well as our mainstream products, Sapphire Rapids and Emerald Rapids.
Speaker #3: We have also made decisive changes to simplify our server roadmap, focusing resources on the 16-channel Diamond Rapids, and on areas to accelerate the introduction of CORP Rapids.
Speaker #3: Where we can. With CORP Rapids, we will also reintroduce multi-threading back into our data center roadmap. We also continue to work closely with NVIDIA to build a custom Xeon fully integrated with their NVLink technology to bring best-in-class x86 performance to AI host nodes.
Speaker #3: Over the last several quarters, we have been developing a broad AI and accelerated strategy that we plan to refine in the coming months. This will include innovative options to integrate our x86 CPU with fixed function and programmable accelerated IP.
Lip-Bu Tan: This will include innovative options to integrate our x86 CPU with fixed function and programmable accelerator IP. Our focus is on the emerging wave of AI workloads: reasoning models, agentic and physical AI, and inference at scale, where we believe Intel can truly disrupt and differentiate. Our long-term ambition is clear: to rebuild Intel as a compute platform of choice for the next era of AI-driven computing, grounded in world-class engineering, accelerated roadmap, and a renewed culture of execution. We are also building momentum in ASICs as customers seek purpose-built silicon for AI, networking, and cloud workloads. Our combination of design services, IP-building blocks, and manufacturing capabilities positions Intel well to resolve specialized problems at scale.
This will include innovative options to integrate our x86 CPU with fixed function and programmable accelerator IP. Our focus is on the emerging wave of AI workloads: reasoning models, agentic and physical AI, and inference at scale, where we believe Intel can truly disrupt and differentiate. Our long-term ambition is clear: to rebuild Intel as a compute platform of choice for the next era of AI-driven computing, grounded in world-class engineering, accelerated roadmap, and a renewed culture of execution. We are also building momentum in ASICs as customers seek purpose-built silicon for AI, networking, and cloud workloads. Our combination of design services, IP-building blocks, and manufacturing capabilities positions Intel well to resolve specialized problems at scale.
Speaker #3: Our focus is on the emerging wave of AI workloads—reasoning models, agentic, and physical AI. And inference at scale, where we believe Intel can truly disrupt and differentiate.
Speaker #3: Our long-term ambition is clear: to rebuild Intel as a compute platform of choice for the next era of AI-driven computing, grounded in world-class engineering, an accelerated roadmap, and a renewed culture of execution.
Speaker #3: We are also building momentum in ASICs, as customers seek purpose-built silicon for AI, networking, and cloud workloads. Our combination of design services, IP building blocks, and manufacturing capabilities positions Intel well to resolve specialized problems at scale.
Speaker #3: This is not a new area for us, although it is one that I'm committing significantly more focus, resources, and investment dollars to—including leveraging my own experience at Cadent Design, supporting and growing this market.
Lip-Bu Tan: This is not a new area for us, although this is one that I'm committing significantly more focus, resources, and investment dollars, including leveraging my own experience at Cadence Design, supporting and growing this market. Finally, we remain focused on the long-term objective of building a world-class wafer and advanced packaging foundry, anchored in trust, consistency, and execution. As I have said before, building a foundry business will take time and considerable effort and resources. While still early in our journey, we have hit some earlier important milestones worth highlighting. We are now shipping our first products built on Intel 18A, the most advanced semiconductor process developed and manufactured on U.S. soil. As stated earlier, use continues to improve steadily as we work to ramp the supply needed to meet strong customer demand.
This is not a new area for us, although this is one that I'm committing significantly more focus, resources, and investment dollars, including leveraging my own experience at Cadence Design, supporting and growing this market. Finally, we remain focused on the long-term objective of building a world-class wafer and advanced packaging foundry, anchored in trust, consistency, and execution. As I have said before, building a foundry business will take time and considerable effort and resources. While still early in our journey, we have hit some earlier important milestones worth highlighting. We are now shipping our first products built on Intel 18A, the most advanced semiconductor process developed and manufactured on U.S. soil. As stated earlier, use continues to improve steadily as we work to ramp the supply needed to meet strong customer demand.
Speaker #3: Finally, we remain focused on the long-term objective of building a world-class wafer and advanced packaging foundry, anchored in trust, consistency, and execution. As I have said before, building a foundry business will take time and considerable effort and resources.
Speaker #3: While still early in our journey, we have hit some early important milestones worth highlighting. We are now shipping our first products built on Intel 18A, the most advanced semiconductor process developed and manufactured on U.S. soil.
Speaker #3: As stated earlier, yields continue to improve steadily as we work to ramp the supply needed to meet strong customer demand. In addition, Intel 18A continues to progress well.
Lip-Bu Tan: In addition, Intel 18AP continues to progress well, and we are engaging with internal and external customers on this node, delivering our 1.0 PDK at the end of the last year. Intel 14A development remains on track. We have taken meaningful steps to simplify our process flow and improve our rate of performance and yield improvement. We are developing a comprehensive IP portfolio on Intel 14A, and we continue to improve our design enablement approach. Importantly, our PDKs are now viewed by customers as industry standard. Engagements with potential external customers on Intel 14A are active. We believe customers will begin to make firm supplier decisions starting in the second half of this year and extending into the first half of 2027. We also have the opportunity to provide strong differentiation in advanced packaging, particularly with EMIB and EMIB-T.
In addition, Intel 18AP continues to progress well, and we are engaging with internal and external customers on this node, delivering our 1.0 PDK at the end of the last year. Intel 14A development remains on track. We have taken meaningful steps to simplify our process flow and improve our rate of performance and yield improvement. We are developing a comprehensive IP portfolio on Intel 14A, and we continue to improve our design enablement approach. Importantly, our PDKs are now viewed by customers as industry standard. Engagements with potential external customers on Intel 14A are active. We believe customers will begin to make firm supplier decisions starting in the second half of this year and extending into the first half of 2027. We also have the opportunity to provide strong differentiation in advanced packaging, particularly with EMIB and EMIB-T.
Speaker #3: And we are engaging with internal and external customers on this note, delivering our 1.0 PDK at the end of last year. Intel 14A development remains on track.
Speaker #3: We have taken meaningful steps to simplify our process flow and improve our rate of performance and yield improvement. We are developing a comprehensive IP portfolio on Intel 14A.
Speaker #3: And we continue to improve our design enablement approach. Importantly, our PDKs are now viewed by customers as industry standard. Engagements with potential external customers on Intel 14A are active.
Speaker #3: We believe customers will begin to make firm supplier decisions starting in the second half of this year, and extending into the first half of 2027.
Speaker #3: We also have the opportunity to provide strong differentiation in advanced packaging, particularly with EMIP and EMIP-T. We are focusing on improving quality and yield to support customer desire for RAMs beginning in the second half of 2026.
Lip-Bu Tan: We are focusing on improving quality and yield to support customer desire for RAMPs beginning in the second half of 2026. In closing, I'm reflecting on 2025. I'm proud of the resilient commitment our team has demonstrated. We exit the year with a stronger foundation and clearer roadmap for 2026 and beyond. The opportunity ahead is meaningful and significant as AI-driven computing expands all the markets we serve. But I'm also mindful of the challenges ahead of us and transparent about the areas that we are doing well, and areas we need to improve. In the short term, I'm disappointed that we are not able to fully meet the demand in our markets. My team and I are working tirelessly to drive efficiency and more output from our fabs. While yields are in line with our internal plans, they are still below what I want them to be.
We are focusing on improving quality and yield to support customer desire for RAMPs beginning in the second half of 2026. In closing, I'm reflecting on 2025. I'm proud of the resilient commitment our team has demonstrated. We exit the year with a stronger foundation and clearer roadmap for 2026 and beyond. The opportunity ahead is meaningful and significant as AI-driven computing expands all the markets we serve. But I'm also mindful of the challenges ahead of us and transparent about the areas that we are doing well, and areas we need to improve. In the short term, I'm disappointed that we are not able to fully meet the demand in our markets. My team and I are working tirelessly to drive efficiency and more output from our fabs. While yields are in line with our internal plans, they are still below what I want them to be.
Speaker #3: In closing, I'm reflecting on 2025. I'm proud of the resilient commitment our team has demonstrated. We exit the year with a stronger foundation and a clearer roadmap for 2026 and beyond.
Speaker #3: The opportunity ahead is meaningful and significant. As AI-driven computing expands all the markets we serve, I'm also mindful of the challenges ahead of us and transparent about the areas where we are doing well and areas we need to improve.
Speaker #3: In the short term, I'm disappointed that we are not able to fully meet the demand in our markets. My team and I are working tirelessly to drive efficiency and more output from our fabs.
Speaker #3: While yields are in line with our internal plans, they are still below where I want them to be. Accelerating yield improvement will be important in 2026 as we look to better support our customers.
Lip-Bu Tan: Accelerating yield improvement will be an important lever in 2026 as we look to better support our customers. As I said earlier, we are on the multi-year journey. It will take time and resolve, but my team and I are committed to rebuilding this iconic American company and increasing the long-term value for our shareholders. I would like to thank my team for their hard work over the course of the last 10 months. I look forward to updating you on our progress as we continue this journey together, including hosting an Investor Day in the second half of this year at our headquarters in Santa Clara. Let me now turn it over to Dave to walk through our financials and business trends in more detail. Thank you, Lip-Bu. We remain encouraged by the fundamental drivers of demand across our core markets.
Accelerating yield improvement will be an important lever in 2026 as we look to better support our customers. As I said earlier, we are on the multi-year journey. It will take time and resolve, but my team and I are committed to rebuilding this iconic American company and increasing the long-term value for our shareholders. I would like to thank my team for their hard work over the course of the last 10 months. I look forward to updating you on our progress as we continue this journey together, including hosting an Investor Day in the second half of this year at our headquarters in Santa Clara. Let me now turn it over to Dave to walk through our financials and business trends in more detail.
Speaker #3: As I said earlier, we are on a multi-year journey. It will take time and resolve, but my team and I are committed to rebuilding this iconic American company and increasing the long-term value for our shareholders.
Speaker #3: I would like to thank my team for their hard work over the course of the last 10 months. I look forward to updating you on our progress as we continue this journey together.
Speaker #3: Including hosting an Investor Day in the second half of this year at our headquarters in Santa Clara. Let me now turn it over to Dave to walk through our financials and business trends in more detail.
Speaker #3: detail. Thank you,
David Zinsner: Thank you, Lip-Bu. We remain encouraged by the fundamental drivers of demand across our core markets.
Speaker #2: Lipu, we remain encouraged by the fundamental drivers of demand across our core markets. Fourth quarter revenue was $13.7 billion, at the high end of the range we provided in October.
Lip-Bu Tan: Fourth quarter revenue was $13.7 billion at the high end of the range we provided in October. We experienced strong growth across all our businesses, benefiting from the AI infrastructure build-out, with AI PC, traditional server, and networking revenue all up double-digits sequentially and year over year. Q4 marks the fifth consecutive quarter of revenue above our guidance, even as we navigate industry-wide supply constraints for our key products. Non-GAAP gross margin came in at 37.9%, approximately 140 basis points ahead of guidance on higher revenue and lower inventory reserves, partially offset by increased mix of outsourced client products and the early ramp of Intel 18A to support the launch of Core Ultra Series 3, codenamed Panther Lake. We delivered fourth quarter non-GAAP earnings per share of $0.15 versus our guidance of $0.08, driven by higher revenue, stronger gross margins, and continued spending discipline.
Fourth quarter revenue was $13.7 billion at the high end of the range we provided in October. We experienced strong growth across all our businesses, benefiting from the AI infrastructure build-out, with AI PC, traditional server, and networking revenue all up double-digits sequentially and year over year. Q4 marks the fifth consecutive quarter of revenue above our guidance, even as we navigate industry-wide supply constraints for our key products. Non-GAAP gross margin came in at 37.9%, approximately 140 basis points ahead of guidance on higher revenue and lower inventory reserves, partially offset by increased mix of outsourced client products and the early ramp of Intel 18A to support the launch of Core Ultra Series 3, codenamed Panther Lake. We delivered fourth quarter non-GAAP earnings per share of $0.15 versus our guidance of $0.08, driven by higher revenue, stronger gross margins, and continued spending discipline.
Speaker #2: We experienced strong growth across all our businesses, benefiting from the AI infrastructure build-out, with AIPC, traditional server, and networking revenue all up double digits sequentially and year over year.
Speaker #2: Q4 marks the fifth consecutive quarter of revenue above our guidance, even as we navigate industry-wide supply constraints for our key products. Non-GAAP gross margin came in at 37.9%, approximately 140 basis points ahead of guidance on higher revenue and lower inventory reserves, partially offset by increased mix of outsourced client products and the early ramp of Intel 18A to support the launch of Core Ultra Series 3, codenamed Panther Lake.
Speaker #2: We delivered fourth-quarter non-GAAP earnings per share of $0.15 versus our guidance of $0.08, driven by higher revenue, stronger gross margins, and continued spending discipline.
Speaker #2: Q4 operating cash flow was $4.3 billion, with gross CapEx of $4 billion in the quarter and positive adjusted free cash flow of $2.2 billion.
Lip-Bu Tan: Q4 operating cash flow was $4.3 billion, with gross CapEx of $4 billion in the quarter and positive adjusted free cash flow of $2.2 billion. NVIDIA's $5 billion investment closed in Q4 as expected. For the full year, revenue was $52.9 billion, down slightly year over year due to constraints across our own manufacturing network and with external suppliers, which limited growth, especially in the second half. Full-year non-GAAP gross margin was 36.7%, up 70 basis points on reduced period charges. Full-year non-GAAP EPS was $0.42, up $0.55 year over year on lower period charges and improved operating leverage. Specifically, non-GAAP OpEx of $16.5 billion was down 15% versus 2024, as we executed actions to reduce complexity and bureaucracy in the business and drive improved execution.
Q4 operating cash flow was $4.3 billion, with gross CapEx of $4 billion in the quarter and positive adjusted free cash flow of $2.2 billion. NVIDIA's $5 billion investment closed in Q4 as expected. For the full year, revenue was $52.9 billion, down slightly year over year due to constraints across our own manufacturing network and with external suppliers, which limited growth, especially in the second half. Full-year non-GAAP gross margin was 36.7%, up 70 basis points on reduced period charges. Full-year non-GAAP EPS was $0.42, up $0.55 year over year on lower period charges and improved operating leverage. Specifically, non-GAAP OpEx of $16.5 billion was down 15% versus 2024, as we executed actions to reduce complexity and bureaucracy in the business and drive improved execution.
Speaker #2: NVIDIA's $5 billion investment closed in Q4 as expected. For the full year, revenue was $52.9 billion, down slightly year over year due to constraints across our own manufacturing network and with external suppliers, which limited growth, especially in the second half.
Speaker #2: Full-year non-GAAP gross margin was 36.7%, up 70 basis points on reduced period charges. Full-year non-GAAP EPS was $0.42, up 55 cents year over year on lower period charges and improved operating leverage.
Speaker #2: Specifically, non-GAAP OpEx of $16.5 billion was down 15% versus 2024 as we executed actions to reduce complexity and bureaucracy in the business and drive improved execution.
Lip-Bu Tan: For the full year, we generated $9.7 billion in cash from operations and made $17.7 billion of gross capital investments, with capital offsets of approximately $6.5 billion. Although adjusted free cash flow was minus $1.6 billion in 2025, we produced $3.1 billion in the second half, as cash from operations more than doubled half on half. We exit 2025 with $37.4 billion of cash and short-term investments, bolstered by further monetization of Mobileye, the completion of our stake sale of Altera to Silver Lake, accelerated funding from the US government, and investments by the SoftBank Group and NVIDIA. In addition, we repaid $3.7 billion of debt. Looking back, 2025 marked an important year of progress against our key priorities, even as we know we have more work ahead.
For the full year, we generated $9.7 billion in cash from operations and made $17.7 billion of gross capital investments, with capital offsets of approximately $6.5 billion. Although adjusted free cash flow was minus $1.6 billion in 2025, we produced $3.1 billion in the second half, as cash from operations more than doubled half on half. We exit 2025 with $37.4 billion of cash and short-term investments, bolstered by further monetization of Mobileye, the completion of our stake sale of Altera to Silver Lake, accelerated funding from the US government, and investments by the SoftBank Group and NVIDIA. In addition, we repaid $3.7 billion of debt. Looking back, 2025 marked an important year of progress against our key priorities, even as we know we have more work ahead.
Speaker #2: We generated $9.7 billion in cash from operations for the full year, and made $17.7 billion of gross capital investments, with capital offsets of approximately $6.5 billion.
Speaker #2: Although adjusted free cash flow was minus $1.6 billion in 2025, we produced $3.1 billion in the second half as cash from operations more than doubled half on half.
Speaker #2: We exit 2025 with $37.4 billion of cash and short-term investments, bolstered by further monetization of Mobileye, the completion of our stake sale of Altera to Silver Lake, accelerated funding from the US government, and investments by the SoftBank Group and NVIDIA.
Speaker #2: In addition, we repaid $3.7 billion of debt. Looking back, 2025 marked an important year of progress against our key priorities, even as we know we have more work ahead.
Speaker #2: Internally, we reorganized and right-sized the team to become customer-centric and engineering-focused, while shoring up our balance sheet to give us more flexibility to pursue our goals.
Lip-Bu Tan: Internally, we reorganized and right-sized the team to become customer-centric and engineering-focused, while shoring up our balance sheet to give us more flexibility to pursue our goals. We've navigated a market that has shifted from tariff-driven uncertainty in the first half to an intense AI-driven demand environment constrained by supply in the second half. 2024 demonstrated the staying power of the x86 ecosystem across client and data center, and the importance of our manufacturing assets as we launched Core Ultra Series 3 on Intel 18A, the most advanced process fully developed and manufactured in the United States. Both create a firm foundation on which to build the new Intel. Moving to segment results. Intel Products' Q4 revenue was $12.9 billion, up 2% sequentially. CCG revenue was down 4% quarter over quarter, even as AI PC units grew 16%, and DCAI was up 15%, reflecting strong demand for traditional server compute.
Internally, we reorganized and right-sized the team to become customer-centric and engineering-focused, while shoring up our balance sheet to give us more flexibility to pursue our goals. We've navigated a market that has shifted from tariff-driven uncertainty in the first half to an intense AI-driven demand environment constrained by supply in the second half. 2024 demonstrated the staying power of the x86 ecosystem across client and data center, and the importance of our manufacturing assets as we launched Core Ultra Series 3 on Intel 18A, the most advanced process fully developed and manufactured in the United States. Both create a firm foundation on which to build the new Intel. Moving to segment results. Intel Products' Q4 revenue was $12.9 billion, up 2% sequentially. CCG revenue was down 4% quarter over quarter, even as AI PC units grew 16%, and DCAI was up 15%, reflecting strong demand for traditional server compute.
Speaker #2: We've navigated a market that has shifted from tariff-driven uncertainty in the first half to an intense AI-driven demand environment, constrained by supply in the second half.
Speaker #2: 2025 demonstrated the staying power of the x86 ecosystem across client and data center, and the importance of our manufacturing assets as we launched Core Ultra Series 3 on Intel 18A.
Speaker #2: Though most advanced process fully developed and manufactured in the United States. Both create a firm foundation on which to build the new Intel. Moving to segment results.
Speaker #2: INTEL Products Q4 revenue was $12.9 billion, up 2% sequentially. CCG revenue was down 4% quarter over quarter, even as AIPC units grew 16%, and DCAI was up 15%, reflecting strong demand for traditional server compute.
Speaker #2: These results reflect our efforts to balance our constrained supply with strong data center demand while maintaining support for our client OEM partners. Where possible, we're prioritizing our internal wafer supply to data center and leveraging an increased mix of externally sourced wafers in client.
Lip-Bu Tan: These results reflect our efforts to balance our constrained supply with strong data center demand while maintaining support for our client OEM partners. Where possible, we're prioritizing our internal wafer supply to data center, and leveraging an increased mix of externally sourced wafers in client. CCG revenue was $8.2 billion, and in line with our expectations. We estimate the client consumption TAM was greater than 290 million units in 2025, marking two straight years of growth off the post-COVID bottom in 2023, and the fastest TAM growth since 2021. Within the quarter, CCG launched three SKUs of Series 3 ahead of our expectations of one. Performance reviews have been extremely favorable, with up to 27 hours of battery life, a 70% gen-on-gen improvement in graphics, and performance on industry-standard benchmarks that is 50% to 100% better than peers.
These results reflect our efforts to balance our constrained supply with strong data center demand while maintaining support for our client OEM partners. Where possible, we're prioritizing our internal wafer supply to data center, and leveraging an increased mix of externally sourced wafers in client. CCG revenue was $8.2 billion, and in line with our expectations. We estimate the client consumption TAM was greater than 290 million units in 2025, marking two straight years of growth off the post-COVID bottom in 2023, and the fastest TAM growth since 2021. Within the quarter, CCG launched three SKUs of Series 3 ahead of our expectations of one. Performance reviews have been extremely favorable, with up to 27 hours of battery life, a 70% gen-on-gen improvement in graphics, and performance on industry-standard benchmarks that is 50% to 100% better than peers.
Speaker #2: CCG revenue was $8.2 billion, and in line with our expectations. We estimate the client consumption TAM was greater than 290 million units in 2025, marking two straight years of growth off the post-COVID bottom in 2023, and the fastest TAM growth since 2021.
Speaker #2: Within the quarter, CCG launched three SKUs of Series 3 ahead of our expectations of one. Performance reviews have been extremely favorable, with up to 27 hours of battery life and a 70% gen-on-gen improvement in graphics, and performance on industry-standard benchmarks that is 50% to 100% better than peers.
Speaker #2: DCAI revenue was $4.7 billion, up 15% sequentially, above expectations, and the fastest sequential growth this decade. Revenue would have been meaningfully higher if we had more supply.
Lip-Bu Tan: DCAI revenue was $4.7 billion, up 15% sequentially, above expectations and the fastest sequential growth this decade. Revenue would have been meaningfully higher if we had more supply. While the market continues to benefit from more power-efficient CPUs, stimulating a refresh cycle, all indicators point to the growing and essential role CPUs will play within hyperscale and enterprise AI data centers as inference-driven AI usage expands. The world is shifting from human-prompted requests to persistent and recursive commands driven by computer-to-computer interactions. The CPU's central function coordinating this traffic will drive not only traditional server refresh, but new demand that grows the installed base. In addition, due to the networking demand for the AI infrastructure build-out, our custom ASIC business grew more than 50% in 2025, 26% sequentially, and reached an annualized revenue run rate greater than $1 billion in Q4.
DCAI revenue was $4.7 billion, up 15% sequentially, above expectations and the fastest sequential growth this decade. Revenue would have been meaningfully higher if we had more supply. While the market continues to benefit from more power-efficient CPUs, stimulating a refresh cycle, all indicators point to the growing and essential role CPUs will play within hyperscale and enterprise AI data centers as inference-driven AI usage expands. The world is shifting from human-prompted requests to persistent and recursive commands driven by computer-to-computer interactions. The CPU's central function coordinating this traffic will drive not only traditional server refresh, but new demand that grows the installed base. In addition, due to the networking demand for the AI infrastructure build-out, our custom ASIC business grew more than 50% in 2025, 26% sequentially, and reached an annualized revenue run rate greater than $1 billion in Q4.
Speaker #2: While the market continues to benefit from more power-efficient CPUs, stimulating a refresh cycle, all indicators point to the growing and essential role CPUs will play within hyperscale and enterprise AI data centers, as inference-driven AI usage expands.
Speaker #2: The world is shifting from human-prompted requests to persistent and recursive commands, driven by computer-to-computer interactions. This traffic will drive not only the traditional CPU central function, coordinating this server refresh, but also new demand that grows the installed base.
Speaker #2: In addition, due to the networking demand for the AI infrastructure buildout, our custom ASIC business grew more than 50% in 2025, 26% sequentially, and reached an annualized revenue run rate greater than $1 billion in Q4.
Speaker #2: This strength provides our ASIC team a solid base to pursue a $100 billion TAM opportunity. Operating profit for Intel products was $3.5 billion, 27% of revenue, and down approximately $200 million quarter over quarter, on an increased mix of outsourced products and seasonally higher operating expenses.
Lip-Bu Tan: This strength provides our ASIC team a solid base to pursue a $100 billion TAM opportunity. Operating profit for Intel products was $3.5 billion, 27% of revenue, and down approximately $200 million quarter over quarter on an increased mix of outsourced products and seasonally higher operating expenses. Intel Foundry delivered revenue of $4.5 billion, up 6.4% sequentially on increased EUV wafer mix. EUV wafer revenue grew from less than 1% of wafers out in 2023 to greater than 10% in 2025. External Foundry revenue was $222 million in the quarter, driven by projects with the US government and the deconsolidation of Altera. Intel Foundry operating loss in Q4 was $2.5 billion and $188 million worse quarter over quarter, driven by the early ramp of Intel 18A. Within the quarter, Intel Foundry met key 18A and 14A milestones.
This strength provides our ASIC team a solid base to pursue a $100 billion TAM opportunity. Operating profit for Intel products was $3.5 billion, 27% of revenue, and down approximately $200 million quarter over quarter on an increased mix of outsourced products and seasonally higher operating expenses. Intel Foundry delivered revenue of $4.5 billion, up 6.4% sequentially on increased EUV wafer mix. EUV wafer revenue grew from less than 1% of wafers out in 2023 to greater than 10% in 2025. External Foundry revenue was $222 million in the quarter, driven by projects with the US government and the deconsolidation of Altera. Intel Foundry operating loss in Q4 was $2.5 billion and $188 million worse quarter over quarter, driven by the early ramp of Intel 18A. Within the quarter, Intel Foundry met key 18A and 14A milestones.
Speaker #2: Intel Foundry delivered revenue of $4.5 billion, up 6.4% sequentially, on increased EUV wafer mix. EUV wafer revenue grew from less than 1% of wafers out in 2023 to greater than 10% in 2025.
Speaker #2: External Foundry revenue was $222 million in the quarter, driven by projects with the US government and the deconsolidation of Altera. Intel Foundry operating loss in Q4 was $2.5 billion, and $188 million worse quarter over quarter, driven by the early ramp of Intel 18A.
Speaker #2: Within the quarter, Intel Foundry met key 18A and 14A milestones. With the official launch of Core Ultra Series 3, Intel Foundry is the only semiconductor manufacturer in the world shipping gate-all-around transistors with backside power for revenue.
Lip-Bu Tan: With the official launch of Core Ultra Series 3, Intel Foundry is the only semiconductor manufacturer in the world shipping gate-all-around transistors with backside power for revenue. These advanced wafers are rolling off our production lines in Oregon and Arizona, here in the United States. Finally, our continued progress on Intel 14A demonstrates our commitment to research and develop the world's most important technology on US soil. Turning to all other, revenue came in at $574 million and was down 42% sequentially due to the Q3 2025 deconsolidation of Altera. The primary components of all other in Q4 were Mobileye and IMS. Collectively, the category delivered an operating loss of $8 million. I'm pleased with the early momentum at Altera as an independent company with a new leadership team. Their industry-leading programmable fabric, developer productivity-driven software tools, and a large installed base positions them well to drive long-term value creation.
With the official launch of Core Ultra Series 3, Intel Foundry is the only semiconductor manufacturer in the world shipping gate-all-around transistors with backside power for revenue. These advanced wafers are rolling off our production lines in Oregon and Arizona, here in the United States. Finally, our continued progress on Intel 14A demonstrates our commitment to research and develop the world's most important technology on US soil. Turning to all other, revenue came in at $574 million and was down 42% sequentially due to the Q3 2025 deconsolidation of Altera. The primary components of all other in Q4 were Mobileye and IMS. Collectively, the category delivered an operating loss of $8 million. I'm pleased with the early momentum at Altera as an independent company with a new leadership team. Their industry-leading programmable fabric, developer productivity-driven software tools, and a large installed base positions them well to drive long-term value creation.
Speaker #2: These advanced wafers are rolling off our production lines in Oregon and Arizona, here in the United States. Finally, our continued progress on Intel 14A demonstrates our commitment to research and develop the world's most important technology on U.S. soil.
Speaker #2: Turning to all other, revenue came in at $574 million and was down 42% sequentially, due to the Q3 '25 deconsolidation of Altera. The primary components of all other in Q4 were Mobileye and IMS.
Speaker #2: Collectively, the category delivered an operating loss of $8 million. I'm pleased with the early momentum at Altera, as an independent company with a new leadership team.
Speaker #2: Their industry-leading programmable fabric, developer productivity-driven software tools, and a large installed base position them well to drive long-term value creation. Now, turning to guidance.
Lip-Bu Tan: Now, turning to guidance. During the second half of 2025, we supported strong demand for our products with interquarter wafer production and inventory on hand. As we enter 2026, our buffer inventory is depleted, and the mix shift in wafers towards servers, which began in Q3, will not come out of fab until late Q1 2026. As a result, and as we stated last quarter, our internal supply constraints are most acute in Q1. In light of these dynamics, we are forecasting a Q1 revenue range of $11.7 to 12.7 billion. The midpoint of $12.2 billion reflects a lower end of seasonal Q1. Within Intel products, we forecast a more pronounced revenue decline in CCG than in DCAI as we continue to prioritize internal supply to our server and markets.
Now, turning to guidance. During the second half of 2025, we supported strong demand for our products with interquarter wafer production and inventory on hand. As we enter 2026, our buffer inventory is depleted, and the mix shift in wafers towards servers, which began in Q3, will not come out of fab until late Q1 2026. As a result, and as we stated last quarter, our internal supply constraints are most acute in Q1. In light of these dynamics, we are forecasting a Q1 revenue range of $11.7 to 12.7 billion. The midpoint of $12.2 billion reflects a lower end of seasonal Q1. Within Intel products, we forecast a more pronounced revenue decline in CCG than in DCAI as we continue to prioritize internal supply to our server and markets.
Speaker #2: During the second half of 2025, we supported strong demand for our products with interquarter wafer production and inventory on hand. As we enter 2026, our buffer inventory is depleted, and the mix shift in wafers towards servers, which began in Q3, will not come out of FAB until late Q1 ‘26.
Speaker #2: As a result, and as we stated last quarter, our internal supply constraints are most acute in Q1. In light of these dynamics, we are forecasting a Q1 revenue range of $11.7 to $12.7 billion.
Speaker #2: The midpoint of $12.2 billion reflects a lower end of seasonal Q1. Within the Intel products, we forecast a more pronounced revenue decline in CCG than in DCAI, as we continue to prioritize internal supply to our server end markets.
Speaker #2: We expect Intel Foundry revenue up double digits quarter over quarter, helped by continued mix shift to EUV wafers and Intel 18A pricing. At the midpoint of $12.2 billion, we forecast a gross margin of approximately 34.5%, with a tax rate of 11% and break-even EPS.
Lip-Bu Tan: We expect Intel Foundry revenue of double digits quarter over quarter, helped by continued mix shift to EUV wafers, and Intel 18A pricing. At the midpoint of $12.2 billion, we forecast a gross margin of approximately 34.5% with a tax rate of 11%, and break-even EPS, all on a non-GAAP basis. Gross margin is down sequentially due to lower revenue, increased 18A volumes, and product mix. Let me take a few moments to provide some color for your full year 2026 model. First, from a revenue perspective, we expect our factory network to improve available supply beginning in Q2 and for each of the remaining quarters in 2026. Within the server market, customer feedback and our own market intelligence points to the likelihood of a strong year of growth for DCAI. Finally, client CPU inventory is lean, and there is excitement for Series 3.
We expect Intel Foundry revenue of double digits quarter over quarter, helped by continued mix shift to EUV wafers, and Intel 18A pricing. At the midpoint of $12.2 billion, we forecast a gross margin of approximately 34.5% with a tax rate of 11%, and break-even EPS, all on a non-GAAP basis. Gross margin is down sequentially due to lower revenue, increased 18A volumes, and product mix. Let me take a few moments to provide some color for your full year 2026 model. First, from a revenue perspective, we expect our factory network to improve available supply beginning in Q2 and for each of the remaining quarters in 2026. Within the server market, customer feedback and our own market intelligence points to the likelihood of a strong year of growth for DCAI. Finally, client CPU inventory is lean, and there is excitement for Series 3.
Speaker #2: All on a non-GAAP basis. Gross margin is down sequentially due to lower revenue, increased 18A volumes, and product mix. Let me take a few moments to provide some color for your full-year 2026 model.
Speaker #2: First, from a revenue perspective, we expect our factory network to improve available supply beginning in Q2, and for each of the remaining quarters in 2026.
Speaker #2: Within the server market, customer feedback and our own market intelligence point to the likelihood of a strong year of growth for DCAI. Finally, client CPU inventory is lean, and there is excitement for Series 3.
Speaker #2: In contrast, over the last several months, industry-wide supply for key components like DRAM, NAND, and substrates has come under increasing pressure due to intense demand to support the rapid expansion of AI infrastructure.
Lip-Bu Tan: In contrast, over the last several months, industry-wide supply for key components like DRAM, NAND, and substrates has come under increasing pressure due to intense demand to support the rapid expansion of AI infrastructure. Rising component pricing is a dynamic we continue to watch closely, especially relative to the client market, and could limit our revenue opportunity this year. For OpEx, we target 2026 operating expenses of $16 billion. We expect non-controlling interest, or NCI, to net to approximately $325 million in Q1 and be approximately $1.2 billion for the year on a GAAP basis. NCI is expected to grow meaningfully again in fiscal 2027. Our share count is forecast to be 5.1 billion shares in Q1 and grow in line with our stock-based compensation going forward.
In contrast, over the last several months, industry-wide supply for key components like DRAM, NAND, and substrates has come under increasing pressure due to intense demand to support the rapid expansion of AI infrastructure. Rising component pricing is a dynamic we continue to watch closely, especially relative to the client market, and could limit our revenue opportunity this year. For OpEx, we target 2026 operating expenses of $16 billion. We expect non-controlling interest, or NCI, to net to approximately $325 million in Q1 and be approximately $1.2 billion for the year on a GAAP basis. NCI is expected to grow meaningfully again in fiscal 2027. Our share count is forecast to be 5.1 billion shares in Q1 and grow in line with our stock-based compensation going forward.
Speaker #2: Rising component pricing is a dynamic we continue to watch closely, especially relative to the client market, and could limit our revenue opportunity this year.
Speaker #2: For OpEx, we target 2026 operating expenses of $16 billion. We expect non-controlling interest, or NCI, to net to approximately $325 million in Q1 and be approximately $1.2 billion for the year, on a GAAP basis.
Speaker #2: NCI is expected to grow meaningfully again in fiscal 2027. Our share count is forecast to be 5.1 billion shares in Q1, and grow in line with our stock-based compensation going forward.
Speaker #2: As we think about our capital expenditures for 2026, we're working to balance our ability to drive capital efficiencies with our need to respond to the demand signals we're receiving.
Lip-Bu Tan: As we think about our capital expenditures for 2026, we're working to balance our ability to drive capital efficiencies with our need to respond to the demand signals we're receiving. Previously, we said CapEx would be down, but we are now planning for a range of flat to down slightly, and for expenditures to be more weighted to the first half. As a reminder, CapEx in 2026 would be to support demand in 2027 and beyond. We expect to generate positive adjusted free cash flow for the full year, and we're planning to retire all $2.5 billion of maturities as they come due this year. I'll wrap up by saying that Q4 was another solid quarter to mark our fifth consecutive quarter of over-delivering to our guide. We exit 2025 increasingly confident in the long-term sustainability of the end markets we serve.
As we think about our capital expenditures for 2026, we're working to balance our ability to drive capital efficiencies with our need to respond to the demand signals we're receiving. Previously, we said CapEx would be down, but we are now planning for a range of flat to down slightly, and for expenditures to be more weighted to the first half. As a reminder, CapEx in 2026 would be to support demand in 2027 and beyond. We expect to generate positive adjusted free cash flow for the full year, and we're planning to retire all $2.5 billion of maturities as they come due this year. I'll wrap up by saying that Q4 was another solid quarter to mark our fifth consecutive quarter of over-delivering to our guide. We exit 2025 increasingly confident in the long-term sustainability of the end markets we serve.
Speaker #2: Previously, we said CapEx would be down, but are now planning for a range of flat to down slightly, and for expenditures to be more weighted to the first half.
Speaker #2: As a reminder, CapEx in 2026 would be to support demand in 2027 and beyond. We expect to generate positive adjusted free cash flow for the full year, and we're planning to retire all $2.5 billion of maturities as they come due this year.
Speaker #2: I'll wrap up by saying that Q4 was another solid quarter to mark our fifth consecutive quarter of over-delivering to our guide. We exit 2025 increasingly confident in the long-term sustainability of the end markets we serve.
Speaker #2: We believe our improved balance sheet, thanks in part to the trust of our strategic partners, combined with the strong talent we have, will enable us to meaningfully participate in the next wave of computing, as the industry pushes for returns on their AI investments.
Lip-Bu Tan: We believe our improved balance sheet, thanks in part to the trust of our strategic partners, combined with the strong talent we have, will enable us to meaningfully participate in the next wave of computing as the industry pushes for returns on their AI investments. I look forward to providing you, our shareholders, an update on what this future means to you at our analyst day later this year. With that, I'll turn it over to John to start the Q&A. Thank you, Dave. We will now transition to the Q&A portion of our call. As a reminder, we would ask each of you to ask one question and a brief follow-up to allow us to accommodate as many of you as possible. With that, Jonathan, can we please take the first question? Certainly, and our first question for today comes from the line of Ross Seymour from Deutsche Bank.
We believe our improved balance sheet, thanks in part to the trust of our strategic partners, combined with the strong talent we have, will enable us to meaningfully participate in the next wave of computing as the industry pushes for returns on their AI investments. I look forward to providing you, our shareholders, an update on what this future means to you at our analyst day later this year. With that, I'll turn it over to John to start the Q&A.
Speaker #2: I look forward to providing you, our shareholders, an update on what this future means to you at our Analyst Day later this year. With that, I'll turn it over to John to start the Q&A.
John Pitzer: Thank you, Dave. We will now transition to the Q&A portion of our call. As a reminder, we would ask each of you to ask one question and a brief follow-up to allow us to accommodate as many of you as possible. With that, Jonathan, can we please take the first question?
Speaker #2: Thank you, Dave. We will now transition to the Q&A portion of our call. As a reminder, we would ask each of you to ask one question and a brief follow-up to allow us to accommodate as many of you as possible.
Speaker #2: With that, Jonathan, can we please take the first question?
Speaker #3: Certainly. And our first question for today comes from the line of Ross Seymour from Deutsche Bank. Your question, please.
Operator: Certainly, and our first question for today comes from the line of Ross Seymour from Deutsche Bank.
Lip-Bu Tan: Your question, please. Hi, guys. Thanks for taking my question. I guess the first one is two quick parts, and it's both on supply. In the short term, are the yield improvements and the other actions you're taking sufficient to address just typical seasonality throughout the year, given that usually Q1 would be the low point on revenues, and then perhaps more importantly, longer term on the supply side? You guys seem more confident in your 14A, your 18A, the customer engagements, your internal roadmap. When would you decide to loosen up the reins on the CapEx side of things so that you could address structurally higher demand going forward with more internal supply? Thanks, Ross, for the question. So on the short-term supply, certainly improving yields and throughput are a great driver of supply increases.
Your question, please.
Ross Seymore: Hi, guys. Thanks for taking my question. I guess the first one is two quick parts, and it's both on supply. In the short term, are the yield improvements and the other actions you're taking sufficient to address just typical seasonality throughout the year, given that usually Q1 would be the low point on revenues, and then perhaps more importantly, longer term on the supply side? You guys seem more confident in your 14A, your 18A, the customer engagements, your internal roadmap. When would you decide to loosen up the reins on the CapEx side of things so that you could address structurally higher demand going forward with more internal supply?
Speaker #4: Hi, guys. Thanks for letting me ask a question. I guess the first one is two quick parts, both on supply. In the short term, are the yield improvements and the other actions you're taking sufficient to address just typical seasonality throughout the year, given that usually the first quarter would be the low point on revenues?
Speaker #4: And then, perhaps more importantly, longer term on the supply side, you guys seem more confident in your 14A, your 18A, the customer engagements, and your internal roadmap.
Speaker #4: When would you decide to loosen up the reins on the CapEx side of things so that you could address structurally higher demand going forward with more internal supply?
Lip-Bu Tan: Thanks, Ross, for the question. So on the short-term supply, certainly improving yields and throughput are a great driver of supply increases.
Speaker #2: Okay, thanks, Ross, for the question. So on the short-term supply, certainly improving yields and throughput are a great driver of supply increases. In fact, it's got a great ROI to it because it doesn't require any incremental capital.
Lip-Bu Tan: In fact, it's got a great ROI to it because it doesn't require any incremental capital. So that's what Lip-Bu and I are actively working on to improve, and we're reasonably confident that there's a good trajectory there. That said, when you look at CapEx, it's a little bit more nuanced than just it's going to be flat to slightly down. It's actually down significantly in space. So we're spending a lot less in space. We think we have a good footprint in terms of clean room. And what we're devoting more of our dollars to is tools. So we are ramping up tool spending quite a bit in 2026 relative to 2025 to address this supply shortfall as well. And in fact, every quarter, we're seeing kind of wafer start increases pretty much across the board across Intel 7, Intel 3, and 18A.
In fact, it's got a great ROI to it because it doesn't require any incremental capital. So that's what Lip-Bu and I are actively working on to improve, and we're reasonably confident that there's a good trajectory there. That said, when you look at CapEx, it's a little bit more nuanced than just it's going to be flat to slightly down. It's actually down significantly in space. So we're spending a lot less in space. We think we have a good footprint in terms of clean room. And what we're devoting more of our dollars to is tools. So we are ramping up tool spending quite a bit in 2026 relative to 2025 to address this supply shortfall as well. And in fact, every quarter, we're seeing kind of wafer start increases pretty much across the board across Intel 7, Intel 3, and 18A.
Speaker #2: So that's what Lip-Bu and I are actively working on to improve. And we're reasonably confident that there's a good trajectory there. That said, when you look at CapEx, it's a little bit more nuanced than just, 'It's going to be flat to slightly down.'
Speaker #2: It's actually down significantly in space, so we're spending a lot less in space. We think we have a good footprint in terms of clean room.
Speaker #2: And what we're devoting more of our dollars to is tools. So we are ramping up tool spending quite a bit in '26 relative to '25 to address this supply shortfall as well.
Speaker #2: And in fact, every quarter, we're seeing kind of wafer start increases pretty much across the board—Intel 3 and 18A. So across Intel 7, all three of them every quarter improve and get better to address the supply.
Lip-Bu Tan: So all three of them every quarter improve and get better to address the supply. And like I said, we think things will certainly improve in Q2, but we won't be completely out of the woods here. But as we progress through the year, we think things will get better and better. Did we take a 14A thing or? Yeah. On 14A, Lip-Bu has been very direct with us on all of this. He does not want to spend on capacity on 14A, only spend on the kind of TD spend or R&D spend associated with 14A, even in the fab until we have customers secured. We've talked about the likelihood is our customers on 14A, their window to secure, or for us to secure them will be in the back half of this year and in the first half of next year.
So all three of them every quarter improve and get better to address the supply. And like I said, we think things will certainly improve in Q2, but we won't be completely out of the woods here. But as we progress through the year, we think things will get better and better. Did we take a 14A thing or? Yeah. On 14A, Lip-Bu has been very direct with us on all of this. He does not want to spend on capacity on 14A, only spend on the kind of TD spend or R&D spend associated with 14A, even in the fab until we have customers secured. We've talked about the likelihood is our customers on 14A, their window to secure, or for us to secure them will be in the back half of this year and in the first half of next year.
Speaker #2: And like I said, we think things will certainly improve in Q2, but we won't be completely out of the woods here. But as we progress through the year, we think things will get better and better.
Speaker #2: Do you want me to take the 14A thing? Yeah. On 14A, Lip-Bu has been very direct with us on all of this. He does not want to spend on capacity on 14A, only spend on the kind of TD spend or R&D spend as associated with 14A, even in the fab.
Speaker #2: Until we have customers secured. We've talked about the likelihood that our customers on 14A—their window to secure, or for us to secure them, will be in the back half of this year.
Speaker #2: And in the first half of next year. And so once visibility improves there, we'll start to unlock the spend on 14A.
Lip-Bu Tan: And so once visibility improves there, we'll start to unlock the spend on 14A. I can just add a little bit more. I think on the yield improvement, we see the 7%, 8% yield improvement per month. I think it's more in focus in the variation, make sure that we can be more consistent delivery and also the defect density at the end so that we can ship quality wafer to the customer. So I think all those are very important for our PC client, Panther Lake, and then also for the 18A and 14A development. So I think all in all, I see improvement, but still not quite to the industry-leading standard yet. Ross, do you have a quick follow-up? Yeah, I do.
And so once visibility improves there, we'll start to unlock the spend on 14A.
Speaker #5: I can just add a little bit more. I think on the yield improvement, what we see is the 7% to 8% yield improvement per month. I think it's more in focus on the variation, making sure that we can be really consistent in delivery.
David Zinsner: I can just add a little bit more. I think on the yield improvement, we see the 7%, 8% yield improvement per month. I think it's more in focus in the variation, make sure that we can be more consistent delivery and also the defect density at the end so that we can ship quality wafer to the customer. So I think all those are very important for our PC client, Panther Lake, and then also for the 18A and 14A development. So I think all in all, I see improvement, but still not quite to the industry-leading standard yet.
Speaker #5: And also the defect density at the end, so that we can ship quality wafers to the customer. So I think all those are very important for our PC client, Pentalak, and then also for the 18A and 14A development.
Speaker #5: So, I think all in all, I see improvement, but still not quite to the industry-leading standard.
Speaker #5: So I think all in all, I see improvement, but still not quite to the industry-leading standard yet. Ross, do you have a quick—
John Pitzer: Ross, do you have a quick follow-up? Yeah, I do.
Speaker #2: follow-up? Yeah, I do.
Speaker #4: On the gross margin side, Dave, you gave some puts and takes for the full year on a bunch of different metrics, but you didn't mention gross margin.
Lip-Bu Tan: The gross margin side, Dave, you gave some puts and takes for the full year on a bunch of different metrics, but you didn't mention gross margin. How should we think about that? And forgive me, it's a 40% to 60% incremental. I know you guys give kind of you can drive a truck through, so anything with perhaps just a little more precision directionally would be helpful. Thank you. Yeah, and I'm not even sure the math is that good on this time around. When you look at Q1, the gross margin decline in Q1, there's two main components. Obviously, revenue coming down with a largely fixed cost business is going to affect gross margins. But the other piece of this is Panther Lake, while the cost structure improves from Q4 to Q1, it's still diluted to the corporate average, and it's a bigger percentage of the mix.
Ross Seymore: The gross margin side, Dave, you gave some puts and takes for the full year on a bunch of different metrics, but you didn't mention gross margin. How should we think about that? And forgive me, it's a 40% to 60% incremental. I know you guys give kind of you can drive a truck through, so anything with perhaps just a little more precision directionally would be helpful.
Speaker #4: How should we think about that? And forgive me if the 40% to 60% incremental—I know you guys give kind of, you can drive a truck through.
Speaker #4: So, anything with, perhaps, just a little more precision?
Speaker #4: Directionally would be helpful. Thank you. Yeah.
David Zinsner: Thank you. Yeah, and I'm not even sure the math is that good on this time around. When you look at Q1, the gross margin decline in Q1, there's two main components. Obviously, revenue coming down with a largely fixed cost business is going to affect gross margins. But the other piece of this is Panther Lake, while the cost structure improves from Q4 to Q1, it's still diluted to the corporate average, and it's a bigger percentage of the mix.
Speaker #2: And I'm not even sure the math is that good on this. This time around, when you look at Q1, the gross margin declined in Q1. There's two main components.
Speaker #2: Obviously, revenue coming down with a largely fixed-cost business is going to affect gross margins. But the other piece of this is Panther Lake—while the cost structure improves from Q4 to Q1, it's still dilutive to the corporate average.
Speaker #2: And it's a bigger percentage of the mix, so it actually has a relatively negative impact on gross margins. That's partly why we're guiding down.
Lip-Bu Tan: So it actually has a relatively negative impact on gross margins. So that's partly why we're guiding down. There's some mixed things going on as well. I think as we progress through the year, the two things should benefit us. One, we improve our supply chain; that should improve our revenue picture. On top of that, Panther Lake's cost structure gets better and better. Lip-Bu talked about the incremental improvement every month we're going to see in yields. We're working on the throughput as well. So those two things combined, that should help in terms of cost structure and make this more of an accretive product to us as opposed to a diluted product. And I think that will be a lot of what is the story around gross margins for the year. They're still mixed, and mix can go any different direction depending on how things play out.
So it actually has a relatively negative impact on gross margins. So that's partly why we're guiding down. There's some mixed things going on as well. I think as we progress through the year, the two things should benefit us. One, we improve our supply chain; that should improve our revenue picture. On top of that, Panther Lake's cost structure gets better and better. Lip-Bu talked about the incremental improvement every month we're going to see in yields. We're working on the throughput as well. So those two things combined, that should help in terms of cost structure and make this more of an accretive product to us as opposed to a diluted product. And I think that will be a lot of what is the story around gross margins for the year. They're still mixed, and mix can go any different direction depending on how things play out.
Speaker #2: There's some mixed things going on as well. I think as we progress through the year, the two things should benefit us. One, we improve our supply, ergo.
Speaker #2: That should improve our revenue picture. On top of that, Panther Lake's cost structure gets better and better. Lip-Bu talked about the incremental improvement every month we're going to see in yields.
Speaker #2: We're working on the throughput as well. So those two things combined should help in terms of cost structure and make this more of an accretive product to us, as opposed to a dilutive product.
Speaker #2: And I think that will be a lot of what is the story around gross margins for the year. They're still mixed. And 'mixed' can go in any direction, depending on how things play out.
Speaker #2: But what we're largely focused on for the next 12 months is driving the cost structure of these products that we're building.
Lip-Bu Tan: But what we're largely focused on for kind of the next 12 months is driving the cost structure of these products that we're building to improve the margins. We know that 34.5% is by no means an acceptable level of gross margins. We're actively working at first to get it to 40, and then once we get it there, we'll move to a new target. Jonathan, can we have the next question, please? Certainly. And our next question comes from the line of Timothy Arcuri from UBS. Your question, please. Thanks a lot. Dave, I'm wondering in the guidance, you're guiding to $12.2, but I'm wondering if you can kind of pro forma that for us. If you could meet all the demand, what would the kind of unconstrained guidance be for March? Yeah.
But what we're largely focused on for kind of the next 12 months is driving the cost structure of these products that we're building to improve the margins. We know that 34.5% is by no means an acceptable level of gross margins. We're actively working at first to get it to 40, and then once we get it there, we'll move to a new target.
Speaker #2: To improve the margins. We know that 34.5% is by no means an acceptable level of gross margins. We're actively working at first to get it to 40%, and then once we get it there, we'll move to a new target.
Speaker #1: Jonathan, can we have the next question, please?
John Pitzer: Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Timothy Arcuri from UBS. Your question, please.
Speaker #4: Certainly. And our next question comes from the line of Tim McCurry from UBS. Your question, please.
Speaker #2: Thanks a lot. Dave, I'm wondering—in the guidance, you're guiding to $12.2, but I'm wondering if you can kind of pro forma that for us.
Timothy Arcuri: Thanks a lot. Dave, I'm wondering in the guidance, you're guiding to $12.2, but I'm wondering if you can kind of pro forma that for us. If you could meet all the demand, what would the kind of unconstrained guidance be for March? Yeah.
Speaker #2: If you could meet all the demand, what would the kind of unconstrained guidance be for March? Yeah. It's a squishy figure to figure out, Tim, but I would tell you that if you look at kind of that $12.2 billion relative to the $13.7 billion we posted in the fourth quarter, and look at normal seasonality, it's in the range of seasonal, but it's at the low end of that range of seasonal.
Lip-Bu Tan: It's a squishy figure to figure out, Tim, but I would tell you that if you look at kind of that 12.2 relative to the 13.7 we posted in the fourth quarter and look at normal seasonality, it's in the range of seasonal, but it's at the low end of that range of seasonal. We'd be well above seasonal if we had all the revenue or supply, I should say, to hit the revenue. Tim, do you have a follow-up? I do. Thanks. Lip-Bu, there's obviously a lot of excitement about your foundry business. Sounds like we might get a few customer announcements maybe in the second half. But I just wanted to ask you, what do you define as success in that business? I think prior to you arriving, the mantra was sort of to be number two, the number two foundry player by 2030.
David Zinsner: It's a squishy figure to figure out, Tim, but I would tell you that if you look at kind of that 12.2 relative to the 13.7 we posted in the fourth quarter and look at normal seasonality, it's in the range of seasonal, but it's at the low end of that range of seasonal. We'd be well above seasonal if we had all the revenue or supply, I should say, to hit the revenue.
Speaker #2: We’d be well above seasonal. If we had all the revenue—or supply, I should say—to hit the revenue.
John Pitzer: Tim, do you have a follow-up?
Speaker #1: Tim, do you have a follow-up?
Timothy Arcuri: I do. Thanks. Lip-Bu, there's obviously a lot of excitement about your foundry business. Sounds like we might get a few customer announcements maybe in the second half. But I just wanted to ask you, what do you define as success in that business?I think prior to you arriving, the mantra was sort of to be number two, the number two foundry player by 2030.
Speaker #2: I do. Thanks. Lip-Bu, there's obviously a lot of excitement about your foundry business. Sounds like we might get a few customer announcements, maybe in the second half.
Speaker #2: But I just wanted to ask you, what do you define as success in that business? I think, prior to you arriving, the mantra was sort of to be the number two foundry player by 2030.
Speaker #2: If you look at most of the forecasts for that, the number two player is somewhere in the range of $30 billion in revenue by that time.
Lip-Bu Tan: If you look at most of the forecasts for that number two player, it's somewhere in the range of like $30 billion in revenue up by that time. Is this still kind of a reasonable bogey that you're shooting for? And what do you consider as a successful outcome for that? Thanks. Thanks. Good question. So I think we are determined to commit to drive the world-class foundry business. So I think, first of all, on the 14A, I think we clearly development's on track. We like what we see, and we simplify the whole process flow. Most important is kind of building up the IP portfolio so that we can serve the customer. Some of the IP is very critical in order to serve the customer. The other part is on the yield and improvement. We see trend of improvement, and we also see the variations getting better.
If you look at most of the forecasts for that number two player, it's somewhere in the range of like $30 billion in revenue up by that time. Is this still kind of a reasonable bogey that you're shooting for? And what do you consider as a successful outcome for that?
Speaker #2: Is this still kind of a reasonable bogey that you're shooting for? And what do you consider as a successful—
Speaker #2: outcome for that? Thanks. Yeah.
Lip-Bu Tan: Thanks. Thanks. Good question. So I think we are determined to commit to drive the world-class foundry business. So I think, first of all, on the 14A, I think we clearly development's on track. We like what we see, and we simplify the whole process flow. Most important is kind of building up the IP portfolio so that we can serve the customer. Some of the IP is very critical in order to serve the customer. The other part is on the yield and improvement. We see trend of improvement, and we also see the variations getting better.
Speaker #5: Thanks. Good question. So I think we are determined to commit to drive the world-class foundry business. So, I think, first of all, on the 14A, I think we clearly have developments on track.
Speaker #5: We like what we see, and we simplify the whole process flow. Most important is kind of building up the IP portfolio so that we can serve the customer. Some of the IP is very critical in order to serve the customer.
Speaker #5: The other part is on the yield. An improvement—we see a trend of improvement. And we also see the variations getting better. I think in the long run, I think clearly we are kind of anticipating that; we have heavy engagement with some of the key customers. We think that in the second half of this year, they're going to indicate to us what kind of capacity firm commitment so that we can deploy the capacity CapEx to really build that.
Lip-Bu Tan: I think in the long run, I think clearly we are kind of anticipating that we have heavy engagement in some of the key customers. We think that the second half of this year, they're going to indicate to us what kind of capacity firm commitment, so that we can deploy the capacity CapEx to really build that. So I think all in all, I think it's a service business. We really build the trust and the consistency. We're able to deliver. And then we have the PDK on the 14A first quarter 0.5. And then we're starting to engage with customers with the key products that they want to run with us. So I think all in process, I think the second half of this year, we were able to have the commitment that we can really drive the scale of the operation.
I think in the long run, I think clearly we are kind of anticipating that we have heavy engagement in some of the key customers. We think that the second half of this year, they're going to indicate to us what kind of capacity firm commitment, so that we can deploy the capacity CapEx to really build that. So I think all in all, I think it's a service business. We really build the trust and the consistency. We're able to deliver. And then we have the PDK on the 14A first quarter 0.5. And then we're starting to engage with customers with the key products that they want to run with us. So I think all in process, I think the second half of this year, we were able to have the commitment that we can really drive the scale of the operation.
Speaker #5: So, I think all in all, it's a service business. We really build the trust and the consistency we're able to deliver. And then we have the PDK on the 14A first quarter, 0.5.
Speaker #5: And then we're starting to engage with customers with the key products that they want to run with us. So, I think all in process, I think the second half of this year, we were able to have the commitment that we can really drive the scale of the operation.
Speaker #2: Another early indicator, I think, of success in the foundry is going to be advanced packaging. And we'll start to see that revenue come in even before we start to see meaningful wafer revenue.
Lip-Bu Tan: Another early indicator, I think, of success in the foundry is going to be advanced packaging. We'll start to see that revenue come in even before we start to see meaningful wafer revenue. I think as I was talking to investors over the past kind of 12 to 18 months, I was thinking that those opportunities would be measured in hundreds of millions of dollars, and wafer opportunities would be measured in billions of dollars. I'd say some of the early customer engagements suggest that we'll be well north of $1 billion on many of these opportunities for advanced packaging. So they're way more exciting than even I had expected. It's because we have really good technology there that's very differentiated and supports AI in a way that is particularly special. Yeah, I think the EMIB key, I think it's a very big differentiator for us.
David Zinsner: Another early indicator, I think, of success in the foundry is going to be advanced packaging. We'll start to see that revenue come in even before we start to see meaningful wafer revenue. I think as I was talking to investors over the past kind of 12 to 18 months, I was thinking that those opportunities would be measured in hundreds of millions of dollars, and wafer opportunities would be measured in billions of dollars. I'd say some of the early customer engagements suggest that we'll be well north of $1 billion on many of these opportunities for advanced packaging. So they're way more exciting than even I had expected. It's because we have really good technology there that's very differentiated and supports AI in a way that is particularly special.
Speaker #2: And I think as I was talking to investors over the past kind of 12 to 18 months, I was thinking that those opportunities would be measured in hundreds of millions of dollars.
Speaker #2: And wafer opportunities would be measured in billions. I'd say some of the early customer engagements suggest that we'll be well north of $1 billion on many of these opportunities for advanced packaging.
Speaker #2: So they're way more exciting than even I had expected. And it's because we have really good technology there that's very differentiated, and supports AI in a way that—
Speaker #2: is particularly special. Yeah.
Lip-Bu Tan: Yeah, I think the EMIB key, I think it's a very big differentiator for us.
Speaker #5: I think the EMIT-T—I think it's a very big differentiator for us. And then, clearly, we have a couple of customers willing to even prepay the subscription because subscription is very big; supply shortage.
Lip-Bu Tan: And then clearly, we have a couple of customers willing to even prepay the substrate because substrate is a very big supply shortage, and then they're willing to share with us. That means that shows the commitment they are going to be working with us. Jonathan, can we have the next question, please? Certainly. And our next question comes from the line of Joe Moore from Morgan Stanley. Your question, please. Yes, thank you. I wonder if you could talk about server prospects. You've sort of talked about some of the challenges of Diamond Rapids not having symmetric multi-threading, and Copper Rapids is going to be important. Can you give us a timeframe on Copper Rapids and sort of what's your expectation for the potential for market share, puts, and takes as you wait for that to come? Yeah, good question.
And then clearly, we have a couple of customers willing to even prepay the substrate because substrate is a very big supply shortage, and then they're willing to share with us. That means that shows the commitment they are going to be working with us.
Speaker #5: And then they're willing to share with us. That means that shows the commitment they are going to working with us.
Speaker #5: Yes, Jonathan, can we have the next question, please?
John Pitzer: Jonathan, can we have the next question, please?
Speaker #1: question, please?
Operator: Certainly. And our next question comes from the line of Joe Moore from Morgan Stanley. Your question, please.
Speaker #4: Certainly. And our next question comes from the line of Joe Moore from Morgan Stanley. Your question,
Speaker #4: please. Yes.
Joseph Moore: Yes, thank you. I wonder if you could talk about server prospects. You've sort of talked about some of the challenges of Diamond Rapids not having symmetric multi-threading, and Copper Rapids is going to be important. Can you give us a timeframe on Copper Rapids and sort of what's your expectation for the potential for market share, puts, and takes as you wait for that to come?
Speaker #2: Thank you. I wonder if you could talk about server prospects. You've sort of talked about some of the challenges of Diamond Rapids not having symmetric multi-threading.
Speaker #2: And Copper Rapids is going to be important. Can you give us a timeframe on Copper Rapids and sort of what's your expectation for the potential for market share puts and takes as you wait for that to come?
Lip-Bu Tan: Yeah, good question.
Speaker #5: Yeah, good question. So I think, first of all, I would centralize the data center and AI under a Covert that I hire in to help us build that.
Lip-Bu Tan: So I think, first of all, I would centralize the data center and AI under Kovac that I hired in to help us to build that. He already built the team and then recruit some of the talents on board. I think the more important right now, we are laser-focused in a 16-channel Diamond Rapids, and we simplify the product roadmap. And then the other part is accelerate the introduction of Coral Rapids. And Coral Rapids will have the we introduce the multithreading into our data center workflow. So I think overall, we are very positive. The team is in place now. The roadmap is very clear, and we are very decisive of doing that. And then laser-focus on the Diamond Rapids 16-channel and also accelerate the Coral Rapids introduction. Jody, you have a quick follow-up? Yeah, sure. Thank you for that.
So I think, first of all, I would centralize the data center and AI under Kovac that I hired in to help us to build that. He already built the team and then recruit some of the talents on board. I think the more important right now, we are laser-focused in a 16-channel Diamond Rapids, and we simplify the product roadmap. And then the other part is accelerate the introduction of Coral Rapids. And Coral Rapids will have the we introduce the multithreading into our data center workflow. So I think overall, we are very positive. The team is in place now. The roadmap is very clear, and we are very decisive of doing that. And then laser-focus on the Diamond Rapids 16-channel and also accelerate the Coral Rapids introduction.
Speaker #5: We already built the team, and then included some of the—recruited some of the talents on board. I think, more importantly, right now we are laser focused on our 16-channel Diamond Rapids.
Speaker #5: And we simplify the product roadmap. And then the other part is accelerate the introduction of Cora Rapids. And Cora Rapids will have introduced the multi-thread into our data center workflow.
Speaker #5: So, I think overall we are very positive. The team is in place now. The roadmap is very clear. And we are very decisive on doing that.
Speaker #5: And then laser focus on the Diamond Rapids 16-channel, and also accelerate the Cora Rapids introduction.
John Pitzer: Jody, you have a quick follow-up?
Speaker #1: Joe, do you have a quick follow-up?
Joseph Moore: Yeah, sure. Thank you for that.
Speaker #2: Yeah, sure. Just thank you for that. And just in terms of the mix for the rest of the year, are you able to move wafers towards data center, away from PC?
Lip-Bu Tan: Just in terms of the mix for the rest of the year, are you able to move wafers towards data center away from PC? Is that something that you're thinking about? And, just, it seems like the constraints are at their worst point in Q1 and get better, but I assume you're still constrained beyond that. Are you able to move the mix towards data center? Yeah, we're absolutely constrained, Joe. So what we're doing within client, we're focusing on the mid and high end and not as focused on the low end. And then to the extent we have excess, we're pushing all of that into the data center space to meet that customer demand. And I think you'll see some share adjustments based on that because our primary focus is to our main customers. And obviously, we have important customers on the data center side.
Just in terms of the mix for the rest of the year, are you able to move wafers towards data center away from PC? Is that something that you're thinking about? And, just, it seems like the constraints are at their worst point in Q1 and get better, but I assume you're still constrained beyond that. Are you able to move the mix towards data center?
Speaker #2: Is that something that you're thinking about? It just seems like the constraints are at their worst point in Q1 and get better. But I assume you're still constrained beyond that.
Speaker #2: Are you able to move the mix?
Speaker #2: towards data center?
Speaker #5: Yeah. We're absolutely
David Zinsner: Yeah, we're absolutely constrained, Joe. So what we're doing within client, we're focusing on the mid and high end and not as focused on the low end. And then to the extent we have excess, we're pushing all of that into the data center space to meet that customer demand. And I think you'll see some share adjustments based on that because our primary focus is to our main customers. And obviously, we have important customers on the data center side.
Speaker #5: Constrained, Joe. So what we're doing within client, we're focusing on the mid and high end, and not as focused on the low end. And then, to the extent we have excess, we're pushing all of that into the data center space to meet that customer demand.
Speaker #5: And I think you'll see some share adjustments based on that, because our primary focus is to our main customers. And obviously, we have important customers on the data center side.
Speaker #5: We have important OEM customers, both in data center and client, and that needs to be our priority—to get the limited supply we have to those customers.
Lip-Bu Tan: We have important OEM customers on both data center and client, and that needs to be our priority to get the limited supply we have to those customers. Jonathan, can we have the next question, please? Certainly. And our next question comes from the line of Ben Reitzes from Melius. Your question, please. Hey, guys. Thanks a lot. My first question is about seasonality throughout the year. So Dave and Lip-Bu, I mean, you're subseasonal in Q1. You said you'd be well above seasonal if you had the supply. So what does that imply for Q2 to Q4? Should we model that above seasonal, or are the constraints in PC so much that we shouldn't? Thanks. Yeah, thanks.
We have important OEM customers on both data center and client, and that needs to be our priority to get the limited supply we have to those customers.
John Pitzer: Jonathan, can we have the next question, please?
Speaker #1: Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Ben Reitzes from Melius.Your question, please.
Speaker #4: Certainly. And our next question comes from the line of Ben Reitz. It's from Mobileye. Your...
Speaker #6: Hey, guys. Thanks a lot. My first question is about seasonality throughout the year. So, Dave and Lip-Bu, I mean, your subseasonal in the first quarter—you said you'd be well above seasonal.
Ben Reitzes: Hey, guys. Thanks a lot. My first question is about seasonality throughout the year. So Dave and Lip-Bu, I mean, you're subseasonal in Q1. You said you'd be well above seasonal if you had the supply. So what does that imply for Q2 to Q4? Should we model that above seasonal, or are the constraints in PC so much that we shouldn't? Thanks. Yeah, thanks.
Speaker #6: If you had the supply, so what does that imply for Q2 to Q4? Should we model that above seasonal? Or are the constraints in PC so much that we shouldn't?
Speaker #5: Yeah. Thanks. Yeah.
Speaker #5: Yeah, thanks. Yeah, thanks. I mean, we would expect to be better than seasonal through the year if we can get the supply to where we think we can as we get into Q2,
Lip-Bu Tan: Yeah, I mean, we would expect to be better than seasonal through the year if we can get the supply to where we think we can as we get into Q2. So that's correct. Ben, do you have a follow-up question? Sure. I wanted to ask about with regard to the hyperscaler situation in servers. In terms of your momentum there, is this mostly driven by hyperscaler, or do you feel like the shortage is mostly impacting them, making you subseasonal, or is the enterprise demand also are you seeing it there? Thanks. Yeah, I think that may answer that question. I think the hyperscaler is very important for us to scale the business, and I spend a lot of time with the hyperscalers. I think a couple of things.
Lip-Bu Tan: Yeah, I mean, we would expect to be better than seasonal through the year if we can get the supply to where we think we can as we get into Q2. So that's correct.
Speaker #5: So, that's correct. Ben, do you—
John Pitzer: Ben, do you have a follow-up question?
Speaker #1: have a follow-up question?
Speaker #4: Sure. I wanted to ask about, with regard to the hyperscaler situation in servers—in terms of your momentum there, is this mostly driven by hyperscalers?
Ben Reitzes: Sure. I wanted to ask about with regard to the hyperscaler situation in servers. In terms of your momentum there, is this mostly driven by hyperscaler, or do you feel like the shortage is mostly impacting them, making you subseasonal, or is the enterprise demand also are you seeing it there? Thanks.
Speaker #4: Or do you feel like the shortage is mostly impacting them, making you subseasonal? Or is the enterprise demand—are you seeing it there as well?
Speaker #4: Thanks.
David Zinsner: Yeah, I think that may answer that question. I think the hyperscaler is very important for us to scale the business, and I spend a lot of time with the hyperscalers. I think a couple of things.
Speaker #5: Yeah, I think that may answer that question. I think the hyperscaler is very important for us to scale the business, and I spend a lot of time with the hyperscalers.
Speaker #5: I think a couple of things. One, clearly the message from them is the CPU actually is driving a lot of their business in terms of the different workloads that they're driving.
Lip-Bu Tan: One clear message from them is the CPU actually is driving a lot of their business in terms of the different workloads that they're driving. So I think it's very encouraging to see that they are willing to commit long-term agreement to really prioritize their CPU deployment. So that's something that's very positive. And then secondly, I think they are very excited about working with us in terms of besides working on the silicon, the software, and the system-level engagement. And that's something that's also very exciting. So all in all, I think they are very strong. Their workload, they've shared with us what they're looking at and what we can help them. And also the ASIC design also is an opportunity for us. They also want to build some of the purpose-built silicon with the Xeon CPU included.
One clear message from them is the CPU actually is driving a lot of their business in terms of the different workloads that they're driving. So I think it's very encouraging to see that they are willing to commit long-term agreement to really prioritize their CPU deployment. So that's something that's very positive. And then secondly, I think they are very excited about working with us in terms of besides working on the silicon, the software, and the system-level engagement. And that's something that's also very exciting. So all in all, I think they are very strong. Their workload, they've shared with us what they're looking at and what we can help them. And also the ASIC design also is an opportunity for us. They also want to build some of the purpose-built silicon with the Xeon CPU included.
Speaker #5: So I think it's very encouraging to see that they are willing to commit to a long-term agreement to really prioritize their CPU deployment. So that's something that's very positive.
Speaker #5: And then secondly, I think they are very excited about working with us in silicon, the software, and in terms of, besides working on the system level engagement.
Speaker #5: And that's something that's also very exciting. So, all in all, I think they are very strong. Their workload, their share with us, what they're looking at, and what we can help them with, and also the ASIC design, also is an opportunity for us.
Speaker #5: They also want to build some of the purpose-built silicon with the Xeon CPU included. And also, they are very interested in, overall, how you use advanced packaging to make it more complete.
Lip-Bu Tan: And also they are very interested about overall, how do you use the advanced packaging and then to make it more complete? I think overall, I think it's a great opportunity for us to work with them. Jonathan, can we have the next question, please? Certainly. And our next question comes from the line of Stacy Rasgon from Bernstein Research. Your question, please. Hi guys. Thanks for taking my questions. For my first question, I wanted to dig a little bit into the segments. So I mean, if I sort of run the math, Mobileye is going to be up, and the Altera foundry revenue is maybe close to a couple hundred million dollars. I mean, I need both DCAI and client to be down pretty meaningfully. And if client's down more, I mean, maybe DCAI is down high single digits and client's down like mid-teens.
And also they are very interested about overall, how do you use the advanced packaging and then to make it more complete? I think overall, I think it's a great opportunity for us to work with them.
Speaker #5: I think overall, it's a great opportunity for us to work with.
Speaker #5: Jonathan, can we have the next question?
John Pitzer: Jonathan, can we have the next question, please?
Speaker #1: please? Certainly.
Operator: Certainly. And our next question comes from the line of Stacy Rasgon from Bernstein Research. Your question, please.
Speaker #4: And our next question comes from the line of Stacy Raskin from Bernstein Research. Your question.
Speaker #4: please. Hi, guys.
Stacy Rasgon: Hi guys. Thanks for taking my questions. For my first question, I wanted to dig a little bit into the segments. So I mean, if I sort of run the math, Mobileye is going to be up, and the Altera foundry revenue is maybe close to a couple hundred million dollars. I mean, I need both DCAI and client to be down pretty meaningfully. And if client's down more, I mean, maybe DCAI is down high single digits and client's down like mid-teens.
Speaker #2: Thanks for taking my questions. For my first question, I wanted to dig a little bit into the segments. So, I mean, if I sort of run the math, Mobileye is going to be up in the Altera foundry revenues maybe close to a couple hundred million dollars.
Speaker #2: I mean, I need both DCIA and Client to be down pretty meaningfully. And if Client's down more—I mean, maybe DCIA is down high single digits, and Client's down like mid-teens.
Speaker #2: But I guess, number one, is that true? And number two, why should Data Center be down so much, given where the demand is and given where you're prioritizing?
Lip-Bu Tan: But I guess number one, is that true? And number two, why should data center be down so much given where the demand is and given where you're prioritizing? Why would I expect data center units to be down? Seems like they have to be down pretty meaningfully in Q1. Yeah, I mean, both will be down as a function of supply. Obviously, we're shifting as much as we can over to data center to meet the high demand, but we can't completely vacate the client market. So we're trying to support both as best we can and obviously work our way out of this supply issue. I do believe that the first quarter is the trough. We will improve supply in the second quarter.
But I guess number one, is that true? And number two, why should data center be down so much given where the demand is and given where you're prioritizing? Why would I expect data center units to be down? Seems like they have to be down pretty meaningfully in Q1.
Speaker #2: Why would I expect that data center units to be down? It seems like they have to be down pretty meaningfully in Q1.
Lip-Bu Tan: Yeah, I mean, both will be down as a function of supply. Obviously, we're shifting as much as we can over to data center to meet the high demand, but we can't completely vacate the client market. So we're trying to support both as best we can and obviously work our way out of this supply issue. I do believe that the first quarter is the trough. We will improve supply in the second quarter.
Speaker #5: Yeah, I mean, both will be down. As a function of supply, obviously, we're shifting as much as we can over to data center to meet the high demand.
Speaker #5: But we can't completely vacate the client market, so we're trying to support both as best we can—and obviously work our way out of this supply issue.
Speaker #5: I do believe that the first quarter is the trough. We will improve supply in the second quarter. And part of the challenge is that in the third and fourth quarter of '25, we lived off of supply.
Lip-Bu Tan: Part of the challenge is that in Q3 and Q4 2025, we lived off of supply, but we also had a reasonable chunk of finished goods inventory to also work through. Unfortunately, that is now down to kind of 40% of what it was at peak levels. So we don't have that to rely on. It's just literally hand-to-mouth what we can get out of the fab and what we can get to customers is how we're managing it. Stacy, do you have a follow-up question? I do, thanks. I mean, just to push on that a little bit. I mean, you guys have your own factories. Why are you in the inventory situation that you're in? And then I mean, even if you look at it, I get the whole idea about finished goods versus other stuff.
Part of the challenge is that in Q3 and Q4 2025, we lived off of supply, but we also had a reasonable chunk of finished goods inventory to also work through. Unfortunately, that is now down to kind of 40% of what it was at peak levels. So we don't have that to rely on. It's just literally hand-to-mouth what we can get out of the fab and what we can get to customers is how we're managing it.
Speaker #5: But we also had a reasonable chunk of fixed goods and finished goods inventory to also work through. And unfortunately, that is now down to kind of 40% of what it was at peak levels.
Speaker #5: So we don't have that to rely on. So it's just literally hand-to-mouth—what we can get out of the fab and what we can get to customers is how we're managing.
Speaker #5: It... Stacy, do you have a—
John Pitzer: Stacy, do you have a follow-up question?
Speaker #1: follow-up question? I do.
Stacy Rasgon: I do, thanks. I mean, just to push on that a little bit. I mean, you guys have your own factories. Why are you in the inventory situation that you're in? And then I mean, even if you look at it, I get the whole idea about finished goods versus other stuff.
Speaker #2: Thanks. I mean, just to push on that a little bit—I mean, you guys have your own factories. Why are you in the inventory situation that you're in?
Speaker #2: And then, I mean, even if you look at it, I get the whole idea about finished goods versus other stuff. But, I mean, you have $11.6 billion of inventory.
Lip-Bu Tan: But I mean, you have $11.6 billion of inventory, and yet it's not in the right place at the right time to ship. How does that happen? That's largely a win. I'll tell you, Stacy, I think the biggest thing is that if you go back six months or so ago and looked at what the outlook was, core count was absolutely looking like it would increase. But the units were not expected to increase. And every hyperscaler customer we talked to was signaling that. And obviously, it has rapidly increased over the Q3 and Q4. And in talking to a few of them right before this call, I got the feeling like it was going to be a story we'd feel for several years.
But I mean, you have $11.6 billion of inventory, and yet it's not in the right place at the right time to ship. How does that happen?
Speaker #2: And yet, it's not in the right place at the right time to ship. How does that happen?
Lip-Bu Tan: That's largely a win. I'll tell you, Stacy, I think the biggest thing is that if you go back six months or so ago and looked at what the outlook was, core count was absolutely looking like it would increase. But the units were not expected to increase. And every hyperscaler customer we talked to was signaling that. And obviously, it has rapidly increased over the Q3 and Q4. And in talking to a few of them right before this call, I got the feeling like it was going to be a story we'd feel for several years.
Speaker #5: As largely as what? I'll tell you, Stacy. I think the biggest thing is that if you go back six months or so ago and looked at what the outlook was, core count was absolutely looking like it would increase.
Speaker #5: But the units were not expected to increase, and every hyperscaler customer we talked to was signaling that. And obviously, it has rapidly increased over the third and fourth quarters.
Speaker #5: And in talking to a few of them right before this call, I got the feeling like it was going to be a story we'd feel for several years.
Speaker #5: And yes, the advantage we have is we do have our own fab. So we can squeeze out supply as much as possible, which is what we're working on.
Lip-Bu Tan: And yes, the advantage we have is we do have our own fab, so we can squeeze out supply as much as possible, which is what we're working on. But we directionally weren't managing the supply to an expectation that there would be unit increase that significantly in data center. Jonathan, can we have the next question, please? Certainly. Our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please. Thanks for taking my question. For the first one, Lip-Bu, I'm curious, when do you think Intel should start getting any credit for external foundry efforts? Because you mentioned that you might hear of awards in the second half of this year. I assume that you'll start building the capacity for that, right, sometime late this year or next year.
And yes, the advantage we have is we do have our own fab, so we can squeeze out supply as much as possible, which is what we're working on. But we directionally weren't managing the supply to an expectation that there would be unit increase that significantly in data center.
Speaker #5: But we directionally weren't managing the supply to an expectation that there would be a unit increase that significant in data.
Speaker #5: Center. Jonathan, can we have the next question?
John Pitzer: Jonathan, can we have the next question, please?
Operator: Certainly. Our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please.
Speaker #4: Certainly. Our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please.
Thanks for taking my question. For the first one, Lip-Bu, I'm curious, when do you think Intel should start getting any credit for external foundry efforts? Because you mentioned that you might hear of awards in the second half of this year. I assume that you'll start building the capacity for that, right, sometime late this year or next year.
Speaker #6: Thanks for taking my question. For the first one, I'm curious—when do you think Intel should start getting any credit for external foundry efforts?
Speaker #6: Because you mentioned that you might hear of awards in the second half of this year, I assume that you'll start building the capacity for that, right? Sometime late this year or next year.
Speaker #6: So, when do you actually start to get a decent amount of revenue from those customers? And I think you mentioned that building this business will take an incremental amount of resources.
Lip-Bu Tan: So when do you actually start to get a decent amount of revenue from those customers? And I think you mentioned that building this business will take incremental amount of resources. So what level of external foundry revenue does Intel need to call this business a success? And when do you get that? Is it 2027? Is it 2028? Is it later? Yeah, good question. I think, first of all, I think the engagement with our potential external customer on the 14A are very active right now. A couple of key customers are working with us. We expect them to really go through the milestone basis on 0.5 PDK and then starting to look at the test chip and look at how our yield is performing. And it's going to be a process to work with them.
So when do you actually start to get a decent amount of revenue from those customers? And I think you mentioned that building this business will take incremental amount of resources. So what level of external foundry revenue does Intel need to call this business a success? And when do you get that? Is it 2027? Is it 2028? Is it later?
Speaker #6: So, what level of external foundry revenue does Intel need to call this business a success? And when do you get that? Is it '27?
Speaker #6: Is it 28? Is it
Speaker #6: later? Yeah.
Lip-Bu Tan: Yeah, good question. I think, first of all, I think the engagement with our potential external customer on the 14A are very active right now. A couple of key customers are working with us. We expect them to really go through the milestone basis on 0.5 PDK and then starting to look at the test chip and look at how our yield is performing. And it's going to be a process to work with them.
Speaker #5: Good question. First of all, I think the engagement with our potential external customer on the 14-day is very active right now. A couple of key customers are working with us.
Speaker #5: We expect them to really go through the milestones based on 0.5 PDK, and then start to look at the test chip and look at how our yield performance is.
Speaker #5: And it's going to be a process to work with them. And then I think the second half of the year, then they're starting to satisfy, then they're going to ask us, 'Okay, now this is the particular product we're going to run with your foundry.' And the productions.
Lip-Bu Tan: I think the second half of the year, then they're starting to satisfy. Then they're going to be asking us, "Okay, now this is the particular product we're going to run with your foundry and the productions." The indication to us, and that's the time, my discipline is until they have a commitment to the volume, then they're starting to really build and the foundry expansion so that we can meet their requirement. The other part, parallelly, they also give us a list of IP. And if it's a mobile-related, it has to be a low-power IP that we need to have. If it's data center-related, it clearly will be the performance, the connectivity, all these things that we need to really get it ready so that we can serve that as a service as a customer to meet their requirements.
I think the second half of the year, then they're starting to satisfy. Then they're going to be asking us, "Okay, now this is the particular product we're going to run with your foundry and the productions." The indication to us, and that's the time, my discipline is until they have a commitment to the volume, then they're starting to really build and the foundry expansion so that we can meet their requirement. The other part, parallelly, they also give us a list of IP. And if it's a mobile-related, it has to be a low-power IP that we need to have. If it's data center-related, it clearly will be the performance, the connectivity, all these things that we need to really get it ready so that we can serve that as a service as a customer to meet their requirements.
Speaker #5: And then the indication to us, and that's the time my discipline is—until they have a commitment to the volume, then I'm starting to really build.
Speaker #5: And then the foundry expansion so that we can meet their requirement. And then the other part, parallelly, they're also giving us a list of IP, and if it's mobile-related, we have to be low-power IP that we need to have.
Speaker #5: If it's data center-related, clearly it would be the performance, the connectivity, all these things that we need to really get it ready so that we can serve there as a customer service, as a customer, to meet their requirements.
Speaker #5: So it's parallelly on the IP readiness and also our yield readiness. Then, I think it's satisfied. Okay, now this product—this is a volume we're going to run with you.
Lip-Bu Tan: So it's parallelly on the IP readiness and also our yield readiness. Then they starting to satisfy. Okay, now this product, this is a volume we're going to run with you, and that's how you're starting to build. So in terms of 14A, realistically, in terms of I call it the risk production in the later part of 2027, and the real production, volume production is 2028. That is similar to the same timeframe as a leading foundry. And I'd just say we probably will be able to give you a lot more color around all of these things at the Analyst Day that Lip-Bu mentioned we'll have in the back half of the year. Vivek, do you have a follow-up question? Yes. Thank you, John. For my follow-up, I'm curious, what do you think is the server CPU TAM in 2026? How much of that is x86?
So it's parallelly on the IP readiness and also our yield readiness. Then they starting to satisfy. Okay, now this product, this is a volume we're going to run with you, and that's how you're starting to build. So in terms of 14A, realistically, in terms of I call it the risk production in the later part of 2027, and the real production, volume production is 2028. That is similar to the same timeframe as a leading foundry.
Speaker #5: And that's how you're starting to build. So, 20 in terms of 14-day—realistically, in terms of, I call it the risk production—in the later part of 2027, and the real production, volume production, is 2028.
Speaker #5: That is similar to the same time frame as the leading foundry.
Speaker #3: And I’ll just say, we probably won’t be able to give you a lot more color around all of these things at the analyst day that Boo mentioned.
David Zinsner: And I'd just say we probably will be able to give you a lot more color around all of these things at the Analyst Day that Lip-Bu mentioned we'll have in the back half of the year.
Speaker #3: We'll have in the back half of the year.
Speaker #3: Year. Vivek, do you have a follow-up question?
John Pitzer: Vivek, do you have a follow-up question?
Vivek Arya: Yes. Thank you, John. For my follow-up, I'm curious, what do you think is the server CPU TAM in 2026? How much of that is x86?
Speaker #6: Yes. Thank you, John. For my follow-up, I'm curious—what do you think is the server CPU time in 2026? How much of that is x86?
Speaker #6: How much of that is ARM? I mean, if you are supply constrained, is the entire industry supply constrained? Do you think that whatever you can't supply, all that market share is going to go to your x86 competitor and to everyone in the AI community that is building ARM-based servers?
Lip-Bu Tan: How much of that is ARM? I mean, if you are supply constrained, is the entire industry supply constrained? Do you think that whatever you can supply, all that market share is going to go to your x86 competitor and to everyone in the AI community that is building ARM-based servers? So when do you think your supply, how much does the market grow? And when do you think your server CPU supply constraints come off? Thank you. Okay. Maybe I'll start you. So I think this demand, what we're seeing is largely an x86 phenomenon because it's an upgrade cycle in a lot of ways around older networks that have to talk in some way to the AI systems, and the performance is not where it needs to be. So I really view this as x86.
How much of that is ARM? I mean, if you are supply constrained, is the entire industry supply constrained? Do you think that whatever you can supply, all that market share is going to go to your x86 competitor and to everyone in the AI community that is building ARM-based servers? So when do you think your supply, how much does the market grow? And when do you think your server CPU supply constraints come off? Thank you.
Speaker #6: So, when do you think your supply—how much does the market grow? And when do you think your server CPU supply constraints come?
Speaker #6: off? Thank you. Okay.
David Zinsner: Okay. Maybe I'll start you. So I think this demand, what we're seeing is largely an x86 phenomenon because it's an upgrade cycle in a lot of ways around older networks that have to talk in some way to the AI systems, and the performance is not where it needs to be. So I really view this as x86.
Speaker #3: Maybe I'll start, and you—so, I think this demand we're seeing is largely an x86 phenomenon because it's an upgrade cycle in a lot of ways around older networks that have to talk in some way to the AI systems.
Speaker #3: And the performance is not where it needs to be. So I really view this as x86. Of course, we do have another competitor in the space.
Lip-Bu Tan: Of course, we do have another competitor in the space, and we'll be jockeying for position from a market share perspective. I think we will make great strides on the supply as we progress through the year. So I wouldn't envision that to be the fundamental driver, ultimately, of market share. It's really about products. Lip-Bu Tan talked about getting 16-channel Diamond Rapids out, accelerating the introduction of Coral Rapids. Those will be the things that are most important for us as we look at market share dynamics in the coming years. Yeah, I think from my side, clearly hyperscale and the high-end ODM is critical for us on the server side. Then we're basically working with them. Their first choice is the CPU from Intel. That is a very clear message from them.
Of course, we do have another competitor in the space, and we'll be jockeying for position from a market share perspective. I think we will make great strides on the supply as we progress through the year. So I wouldn't envision that to be the fundamental driver, ultimately, of market share. It's really about products. Lip-Bu Tan talked about getting 16-channel Diamond Rapids out, accelerating the introduction of Coral Rapids. Those will be the things that are most important for us as we look at market share dynamics in the coming years. Yeah, I think from my side, clearly hyperscale and the high-end ODM is critical for us on the server side. Then we're basically working with them. Their first choice is the CPU from Intel. That is a very clear message from them.
Speaker #3: And we'll be jockeying for position from a market share perspective. I think we will make great strides on the supply as we progress through the year.
Speaker #3: So I wouldn't envision that to be the fundamental driver, ultimately, of market share. And it's really about products and what we talked about—getting 16-channel Diamond Rapids out, accelerating the introduction of Coral Rapids.
Speaker #3: Those will be the things that are most important for us as we look at market share dynamics in the coming quarters.
Speaker #3: years. Yeah.
Speaker #5: I think from my side, I think clearly hyperscale and the high-end OEM, ODM is critical for us from the server side. And then we’re basically working with them.
Speaker #5: Their first choice is the CPU from Intel, and that is a very clear message from them. They were trying to get as much as we can give them.
Lip-Bu Tan: They will try to get as much as we can give them. I think that's a key driver. Jonathan, can we have the next question, please? Certainly. Our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Your question, please. Yeah, good afternoon. Thanks for taking the question. I guess a follow-up on Stacy's question around supply. Considering your bullish commentary on AI-led demand and how you're supply constrained, and your peers, TSMC and Samsung, are aggressively slotting for equipment delivery, do you worry that if you wait for late 2026 to place orders, that the lead times then might be longer than you thought? And as part of that, why wouldn't you look to be more aggressive today? Yeah, I don't know if this is the answer to your question, but I mean, we are aggressively getting tools on Intel 7, Intel 18A.
Lip-Bu Tan: They will try to get as much as we can give them. I think that's a key driver. Jonathan, can we have the next question, please? Certainly. Our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Your question, please. Yeah, good afternoon. Thanks for taking the question. I guess a follow-up on Stacy's question around supply. Considering your bullish commentary on AI-led demand and how you're supply constrained, and your peers, TSMC and Samsung, are aggressively slotting for equipment delivery, do you worry that if you wait for late 2026 to place orders, that the lead times then might be longer than you thought? And as part of that, why wouldn't you look to be more aggressive today? Yeah, I don't know if this is the answer to your question, but I mean, we are aggressively getting tools on Intel 7, Intel 18A.
Speaker #5: And then I think that's a key home driver.
Speaker #1: Jonathan, can we have the next question?
Speaker #1: Jonathan, can we have the next question, please? Certainly.
Speaker #4: Our next question comes from the line of C.J. Muse from Canterbridge, Gerald.
Speaker #4: Your question, please. Yeah.
Speaker #7: Good afternoon. Thanks for taking the question. I guess a follow-up on Stacy's question around supply—considering your bullish commentary on AI-led demand and how you're supply constrained, and your peers, TSMC and Samsung Taylor, are aggressively slotting for equipment delivery—do you worry that if you wait for late 2026 to place orders, that the lead times then might be longer than you thought?
Speaker #7: And as part of that, why wouldn't you look to be more aggressive today?
Speaker #5: Yeah. I don't know if this is the answer to your question, but I mean, we are aggressively getting tools on Intel 710, Intel 318A.
Speaker #5: That is happening. And we will be increasing our wafer starts as aggressively as possible on those nodes. What we're holding back on is 14A, because 14A is really linked to foundry customers.
Lip-Bu Tan: That is happening. We will be increasing our wafer starts as aggressively as possible on those nodes. What we're holding back on is 14A because 14A is really linked to foundry customers. It does not make sense to build out significant capacity there until we know that we have the customers that will accept that demand. So that's just the discipline we're going to have. I'd say the other thing with regard to a lot of this around supply is Lip-Bu's first focus and our short-term focus is we think we can get a lot of supply just by doing things better with our existing tools and footprint, getting yields improved, getting cycle times improved. We're aggressively working on that. We think there's lots of opportunity to improve our supply just on those two things that don't require CapEx, quite honestly.
That is happening. We will be increasing our wafer starts as aggressively as possible on those nodes. What we're holding back on is 14A because 14A is really linked to foundry customers. It does not make sense to build out significant capacity there until we know that we have the customers that will accept that demand. So that's just the discipline we're going to have. I'd say the other thing with regard to a lot of this around supply is Lip-Bu's first focus and our short-term focus is we think we can get a lot of supply just by doing things better with our existing tools and footprint, getting yields improved, getting cycle times improved. We're aggressively working on that. We think there's lots of opportunity to improve our supply just on those two things that don't require CapEx, quite honestly.
Speaker #5: And it does not make sense to build out significant capacity there until we know that we have the customers that will accept that demand.
Speaker #5: And so that's just the discipline we're going to have. I'd say the other thing with regard to a lot of this around supply is, Lip-Bu's first focus—and our short-term focus—is we think we can get a lot of supply just by doing things better.
Speaker #5: With our existing tools and footprint, getting yields improved, getting cycle times improved, and we're aggressively working on that. And we think there's lots of opportunity to improve our supply just on those two things that don't require CapEx, quite honestly.
Speaker #5: And that's something that's probably more unique to us right now than to other foundries.
Lip-Bu Tan: And that's something that's probably more unique to us right now than to other foundries. C.J., do you have a follow-up question? Yes, John. And thanks, Dave, for the answer. Just to hit on the press release, you talked about demonstrating technical feasibility on high-end 18A for future HBM. And so just curious, is that something you're still contemplating for 14A, or is that more of a 10A adoption? Thank you. It will be part of our 14A process. Of course, there'll be different variants of 14A, but high-end 18A is targeted at 14A. Jonathan, can we have the next question, please? Certainly. And our next question comes from the line of Harlan Sur from JPMorgan. Your question, please. Yeah, good afternoon. Thanks for taking my question. Lip-Bu, as you look forward to 14A, you talked about engineering engagements with customers.
And that's something that's probably more unique to us right now than to other foundries.
John Pitzer: C.J., do you have a follow-up question?
Speaker #1: CJ, do you have a follow-up question?
Vivek Arya: Yes, John. And thanks, Dave, for the answer. Just to hit on the press release, you talked about demonstrating technical feasibility on high-end 18A for future HBM. And so just curious, is that something you're still contemplating for 14A, or is that more of a 10A adoption? Thank you.
Speaker #7: Yes, John. And thanks, Dave, for the answer. Just to hit on the press release you talked about—demonstrating technical feasibility on high-end A for future HBM.
Speaker #7: And so, just curious, is that something you're still contemplating for 14A, or is that more of a 10A adoption? Thank you.
Speaker #3: It will be part of our 14A process. Of course, there will be different variants of 14A, but high-end A is targeted at 14A.
Lip-Bu Tan: It will be part of our 14A process. Of course, there'll be different variants of 14A, but high-end 18A is targeted at 14A.
John Pitzer: Jonathan, can we have the next question, please?
Speaker #1: Jonathan, can we have the next question, please?
Operator: Certainly. And our next question comes from the line of Harlan Sur from JPMorgan. Your question, please.
Speaker #4: Certainly. And our next question comes from the line of Harland Server from JPMorgan. Your question, please.
Harlan Sur: Yeah, good afternoon. Thanks for taking my question. Lip-Bu, as you look forward to 14A, you talked about engineering engagements with customers.
Speaker #6: Yeah. Good afternoon. Thanks for taking my question. Lip-Bu, as you look forward to 14A, you talked about engineering engagements with customers. And typically, the largest fabless semiconductor companies in the world want to run their own test chips to assess a new foundry node, and they typically wait for PDK 0.4, 0.5 before they start their test chip designs.
Lip-Bu Tan: Typically, the largest fabless semiconductor companies in the world want to run their own test chips to assess a new foundry node. They typically wait for PDK 0.4, 0.5 before they start their test chip designs. It looks like they can get started now on test chip design with the release of your PDK 0.5. So I guess the question is, have customers commenced test chip designs, or are they maybe even further along than that, and customers are already running their own 14A test chips now? I mean, in order for them to make decisions on 14A in the second half, they need to be running their test chips fairly soon. So if you give us an update there. Yeah, good question. So I think you're absolutely correct. A couple of customers were already engaging about the PDK 0.5, and they are looking at the test chip.
Typically, the largest fabless semiconductor companies in the world want to run their own test chips to assess a new foundry node. They typically wait for PDK 0.4, 0.5 before they start their test chip designs. It looks like they can get started now on test chip design with the release of your PDK 0.5. So I guess the question is, have customers commenced test chip designs, or are they maybe even further along than that, and customers are already running their own 14A test chips now? I mean, in order for them to make decisions on 14A in the second half, they need to be running their test chips fairly soon. So if you give us an update there.
Speaker #6: It looks like they can get started now on test chip design with the release of your PDK 0.5. So I guess the question is, have customers commenced test chip designs, or are they maybe even further along than that, and customers are already running their own 14A test chips now?
Speaker #6: I mean, in order for them to make decisions on 14A in the second half, they need to be running their test chips fairly soon.
Speaker #6: So, if you could give us an update there.
Lip-Bu Tan: Yeah, good question. So I think you're absolutely correct. A couple of customers were already engaging about the PDK 0.5, and they are looking at the test chip.
Speaker #5: Yeah. Quick question. So I think you're absolutely correct. A couple of customers we're already engaging about the PDK 0.5, and they are looking at the test chip.
Speaker #5: And also, more important is the specific product they're going to run to our foundry. And that one, we are working with them. And then, of course, they want to know the capacity, the pricing—those are all in the discussion right now.
Lip-Bu Tan: And also, more important, it's a specific product they're going to run to our fab foundry. And that one, we are working with them. And then, of course, they want to know the capacity, the pricing. Those are all in the discussion right now. So that's why I mentioned the second half of this year, they're starting to satisfy, and they're starting to say, "Okay, now we need this volume, and we need particular fab from yours to do it." And then also the other part is, do we have all the right IP to serve them? And so those are the things that we're parallelly processing with their supply chain and also their design team to work with them. So this is a very complex step, and that we are very familiar with working in the right way. Harlan, do you have a follow-up question, please? Yeah, thank you.
And also, more important, it's a specific product they're going to run to our fab foundry. And that one, we are working with them. And then, of course, they want to know the capacity, the pricing. Those are all in the discussion right now. So that's why I mentioned the second half of this year, they're starting to satisfy, and they're starting to say, "Okay, now we need this volume, and we need particular fab from yours to do it." And then also the other part is, do we have all the right IP to serve them? And so those are the things that we're parallelly processing with their supply chain and also their design team to work with them. So this is a very complex step, and that we are very familiar with working in the right way.
Speaker #5: So that's why I mentioned the second half of this year. They're starting to satisfy, then they can start to say, 'Okay, now we need this volume and we need a particular fab from yours,' to do it.
Speaker #5: And then also the other part is, do we have all the right IP to serve them? And so those are the things that we are processing in parallel with their supply chain and also their design team, to work with them. So, this is a very complex set of steps.
Speaker #5: And that we are very familiar, we are working in the right way.
John Pitzer: Harlan, do you have a follow-up question, please?
Speaker #1: Harland, do you have a follow-up question, please?
Harlan Sur: Yeah, thank you.
Speaker #6: Yeah. Thank you. On your server portfolio, I apologize if I missed this earlier, but Clearwater Forest, right—your E-core, sort of cloud workload-optimized server platform—it was targeted to be the first server platform to use your 18A manufacturing.
Lip-Bu Tan: On your server portfolio, I apologize if I missed this earlier, but Clearwater Forest, right, your E-core sort of cloud workload optimized server platform, it was targeted to be the first server platform to use your 18A manufacturing and RAMP for half of this year. But Lip-Bu, you talked about server roadmap changes to focus on more performance-focused products. So is the team still supporting Clearwater Forest, or just focusing now on Diamond Rapids? And has the team taped out or taped in your next-gen Xeon 7 Diamond Rapids products and any preliminary views on RAMP timing of Diamond Rapids? Yeah. So answering your question is yes, we continue to do this and support that.
On your server portfolio, I apologize if I missed this earlier, but Clearwater Forest, right, your E-core sort of cloud workload optimized server platform, it was targeted to be the first server platform to use your 18A manufacturing and RAMP for half of this year. But Lip-Bu, you talked about server roadmap changes to focus on more performance-focused products. So is the team still supporting Clearwater Forest, or just focusing now on Diamond Rapids? And has the team taped out or taped in your next-gen Xeon 7 Diamond Rapids products and any preliminary views on RAMP timing of Diamond Rapids?
Speaker #6: And RAMP, first half of this year. But Lip-Bu, you talked about server roadmap changes, the focus on more performance-focused products. So is the team still supporting Clearwater Forest, or just focusing now on Diamond Rapids? And has the team taped out or taped in your next-gen Xeon 7 Diamond Rapids products? And any preliminary views on RAMP timing of Diamond Rapids?
Speaker #5: Yeah, so I think your question is yes, we continue to do this and support that. And what I mentioned about the focus on the 16-channel of Diamond Rapids is kind of a focus on the high end of Diamond Rapids.
Lip-Bu Tan: Yeah. So answering your question is yes, we continue to do this and support that.
Lip-Bu Tan: What I mentioned about focus on the 16-channel of Diamond Rapids is kind of a focus on the high-end of the Diamond Rapids so that we can really laser focus to really providing a differentiating competitive product. And then the other part is, as I mentioned in the past, this multi-threading is very important in terms of driving the performance. And the one that we can really come out with, it takes time to have that. And we're going to have that in the Coral Rapids. Now the question mark is, how much can we accelerate that? The pull-in earlier because customers are really excited about that. And Lip-Bu, can you pull it up earlier? That's why I work with Kovac and this team, see how far the way we can really drive that acceleration to bring the market, to bring the customer earlier.
What I mentioned about focus on the 16-channel of Diamond Rapids is kind of a focus on the high-end of the Diamond Rapids so that we can really laser focus to really providing a differentiating competitive product. And then the other part is, as I mentioned in the past, this multi-threading is very important in terms of driving the performance. And the one that we can really come out with, it takes time to have that. And we're going to have that in the Coral Rapids. Now the question mark is, how much can we accelerate that? The pull-in earlier because customers are really excited about that. And Lip-Bu, can you pull it up earlier? That's why I work with Kovac and this team, see how far the way we can really drive that acceleration to bring the market, to bring the customer earlier.
Speaker #5: So that we can really laser focus, really providing a differentiating, competitive products. And then the other part is, as I mentioned in the past, this multi-threading is very important in terms of driving the performance.
Speaker #5: And the one that we can really come out with, it takes time to have that. And we're going to have that in the Core Rapids.
Speaker #5: Now the question mark is, how much can we accelerate that and pull it in earlier? Because the customer is really excited about that. So, Lip-Bu, can you pull it up earlier?
Speaker #5: That's why I work with Cobalt and this team—to see what are the ways we can really drive that acceleration to bring to market, to bring the...
Speaker #5: Customer earlier. Jonathan, we have time for—
Lip-Bu Tan: Jonathan, we have time for one more question, please. Certainly. And our final question for today then comes from the line of Aaron Rakers from Wells Fargo. Your question, please. Yeah, thanks for taking the question. And I have two if I can fit them in. But on the memory side and what we're seeing in the market, I'm curious of how you guys are seeing customers react to memory. If there's a potential demand destruction in the PC market, just any kind of curiosity on what you're seeing in that. And how impactful is memory pricing to the gross margin given, obviously, I think, stronger-for-longer Lunar Lake demand? Yeah, good question. So I think in the industry facing a very big challenge is the memory constraint and also the pricing. So I think we also listen to our customers.
John Pitzer: Jonathan, we have time for one more question, please.
Speaker #1: one more question,
Speaker #1: please. Certainly.
Operator: Certainly. And our final question for today then comes from the line of Aaron Rakers from Wells Fargo. Your question, please.
Speaker #4: And our final question for today then comes from the line of Aaron Rickers from Wells Fargo. Your question,
Speaker #4: please. Yeah.
Aaron Rakers: Yeah, thanks for taking the question. And I have two if I can fit them in. But on the memory side and what we're seeing in the market, I'm curious of how you guys are seeing customers react to memory. If there's a potential demand destruction in the PC market, just any kind of curiosity on what you're seeing in that. And how impactful is memory pricing to the gross margin given, obviously, I think, stronger-for-longer Lunar Lake demand?
Speaker #7: Thanks for taking the question. And I have two, if I can fit them in. But on the memory side, and what we're seeing in the market, I'm curious how you guys are seeing customers react to memory.
Speaker #7: Is there the potential for demand destruction in the PC market? Just any kind of curiosity on what you're seeing in that. And how impactful is memory pricing to the gross margin, given obviously, I think 'stronger for longer,' Lunar Lake.
Speaker #7: demand? Yeah.
Lip-Bu Tan: Yeah, good question. So I think in the industry facing a very big challenge is the memory constraint and also the pricing. So I think we also listen to our customers.
Speaker #5: Good question. So, I think in the industry, we are facing a very big challenge with memory constraints, and also with pricing. So I think we also listen to our customers—some of the bigger players.
Lip-Bu Tan: Some of the bigger players in the OEM and the bigger player in the hyperscale, they have more access into the memory allocations. So we kind of hear from them. And then secondly, I think some of the smaller ones, they are really challenging to scramble to get the memory. So I think that will be very important for us, Dave and I, how to allocate and also our sales grid and how to allocate to the right customer. We don't want to have a CPU we send to them, but they are missing the memory. They cannot complete the products. So we try to do it correctly. And then that is very important to have that intelligence and then also feedback from the customer to work with us so that we can fulfill their requirement, Dave.
Some of the bigger players in the OEM and the bigger player in the hyperscale, they have more access into the memory allocations. So we kind of hear from them. And then secondly, I think some of the smaller ones, they are really challenging to scramble to get the memory. So I think that will be very important for us, Dave and I, how to allocate and also our sales grid and how to allocate to the right customer. We don't want to have a CPU we send to them, but they are missing the memory. They cannot complete the products. So we try to do it correctly. And then that is very important to have that intelligence and then also feedback from the customer to work with us so that we can fulfill their requirement, Dave.
Speaker #5: And OEM and the bigger player in the hyperscale—they have more access into the memory allocations. So we kind of hear from them. And then secondly, I think some of the smaller ones, they are really challenging to scramble to get the memory.
Speaker #5: So I think that will be very important for us, Dave and I, how to allocate and also our sales—great in how to allocate to the right customer. Although, we don't want to have a CPU we send to them, but they are missing the memory; they cannot complete the products.
Speaker #5: So we try to do it correctly. And then, that is very important—to have that intelligence, and then also feedback from the customer to work with us.
Speaker #5: And so that we can fulfill their requirement,
Speaker #5: Dave. Yeah.
Speaker #4: I think on the Lunar Lake side, I think we've got what we need based on the current forecast. Of course, that could always tick up.
Lip-Bu Tan: Yeah, I think on the Lunar Lake side, I think we've got what we need based on the current forecast. Of course, that could always tick up, and then we would need more memory, which would kind of impact gross margins. But we were relatively aggressive in terms of getting the memory early. So I feel like we're in a relatively good place there. Now, that said, those margins are low because the memory is in package. So that is an impact to our gross margins as well. But I think we're largely in the place we thought we would be a quarter or two ago. Aaron, do you have a quick follow-up? I do. And I'll be really quick. I'm curious on the custom ASIC side. You talked about hitting $1 billion of run rate business. How do we think about the progression of that?
David Zinsner: Yeah, I think on the Lunar Lake side, I think we've got what we need based on the current forecast. Of course, that could always tick up, and then we would need more memory, which would kind of impact gross margins. But we were relatively aggressive in terms of getting the memory early. So I feel like we're in a relatively good place there. Now, that said, those margins are low because the memory is in package. So that is an impact to our gross margins as well. But I think we're largely in the place we thought we would be a quarter or two ago.
Speaker #4: And then we would need more memory, which would kind of impact gross margins. But we were relatively aggressive in terms of getting the memory early.
Speaker #4: So I feel like we're in a relatively good place there. Now, that said, those margins are low because the memory is in package. So that is an impact to our gross margins as well.
Speaker #4: But I think we're largely in the place we thought we would be a quarter or two ago.
David Zinsner: Aaron, do you have a quick follow-up?
Speaker #1: Aaron, do you have a quick—
Speaker #1: follow-up? I do.
Aaron Rakers: I do. And I'll be really quick. I'm curious on the custom ASIC side. You talked about hitting $1 billion of run rate business. How do we think about the progression of that?
Speaker #7: And I'll be really quick. I'm curious on the custom ASIC side. You talked about hitting a $1 billion run rate business. How do we think about the progression of that?
Speaker #7: And how broad is the customer base within that?
Lip-Bu Tan: And how broad is the customer base within that opportunity set? Thank you. Yeah, good question. I think Dave mentioned earlier is a 100 billion TAM market opportunity. And we are delighted. We are already in the run rate of 1 billion. It's a robust demand. And customers are really excited about what we have in terms of the CPU, Xeon, and also the AI-related momentum. So they're more building a purpose-built silicon for AI and network and cloud. And that part, I think we continue to work on that. And also more important for them is also the advanced packaging, make that more compelling. And that's the advantage of Intel that we can do both to provide the customer delight. And so that's, I think, is a good opportunity for us. With that, thank you again for joining us today.
And how broad is the customer base within that opportunity set? Thank you.
Speaker #7: opportunity set? Thank you. Yeah.
Lip-Bu Tan: Yeah, good question. I think Dave mentioned earlier is a 100 billion TAM market opportunity. And we are delighted. We are already in the run rate of 1 billion. It's a robust demand. And customers are really excited about what we have in terms of the CPU, Xeon, and also the AI-related momentum. So they're more building a purpose-built silicon for AI and network and cloud. And that part, I think we continue to work on that. And also more important for them is also the advanced packaging, make that more compelling. And that's the advantage of Intel that we can do both to provide the customer delight. And so that's, I think, is a good opportunity for us. With that, thank you again for joining us today.
Speaker #5: Good question. I think Dave mentioned earlier it's a $100 billion, $10 billion market opportunity. And we are delighted. We are already in the run rate of $1 billion.
Speaker #5: It's a robust demand, and customers are really excited about what we have. In terms of the CPU, Xeon, and also the AI-related momentum, we're building more purpose-built silicon for AI, network, and cloud.
Speaker #5: And that part, I think we continue to work on that. Also, more important for them is the advanced packaging—making that more compelling.
Speaker #5: And that's an advantage of Intel, that we can do both to provide customer delight. And so, I think that's a good opportunity for us.
Speaker #5: With that, thank you again for joining us today. As we move forward, I remain focused on disciplined execution and deep collaboration with our customers to seize the meaningful opportunity created by the AI era.
Lip-Bu Tan: As we move forward, I remain focused on disciplined execution and deep collaboration with our customers to seize the meaningful opportunity created by AI era. While we have a lot more to do, we are confident in the foundation that we built and the progress underway. We're looking forward to provide you another update in April. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
As we move forward, I remain focused on disciplined execution and deep collaboration with our customers to seize the meaningful opportunity created by AI era. While we have a lot more to do, we are confident in the foundation that we built and the progress underway. We're looking forward to provide you another update in April. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Speaker #5: While we have a lot more to do, we are confident in the foundation that we built and the progress underway. We're looking forward to providing you another update in Q2.
