Intel Corporation (NASDAQ:INTC) TD Cowen's 51st Annual Technology, Media & Telecom Conference March 31, 2023 10:15 AM ET Company Participants David Zinsner - CFO Conference Call Participants Matthew Ramsay - TD Cowen Matthew Ramsay All right. Thank you, everybody. And yeah, full room, no surprise. I don't know maybe we're deficient on chairs or something. But anyway, welcome to the next session in the semiconductor track of the TD Cowen TMT Conference. I think I know most of you in the audience, but my name ...

1st Quarter Earnings Presentation ...

Intel Corporation (NASDAQ:INTC) Q1 2023 Earnings Conference Call April 27, 2023 5:00 PM ET Company Participants John Pitzer - Corporate VP, IR Pat Gelsinger - CEO David Zinsner - CFO Conference Call Participants Timothy Arcuri - UBS C.J. Muse - Evercore ISI Ross Seymore - Deutsche Bank Matthew Ramsey - Cowen Pierre Ferragu - New Street Research Vivek Arya - Bank of America Joseph Moore - Morgan Stanley Operator Thank you for standing by, and welcome to Intel Corporation's First Quarter 2023 Earnings Confere ...

Financial Performance - Total revenue for Q1 2023 was $11.7 billion, down $6.6 billion or 36% from Q1 2022, with CCG revenue decreasing by 38%, DCAI by 39%, and NEX by 30%[9] - Gross margin decreased by 14.7 percentage points from Q1 2022, and diluted EPS fell by $2.64 or 133% from Q1 2022[11] - Operating cash flow decreased by $7.7 billion or 131% from Q1 2022, primarily driven by a net operating loss[13] - Total comprehensive loss for Q1 2023 was $2.625 billion, compared to a comprehensive income of $7.991 billion in Q1 2022[18] - Net income for the three months ended April 1, 2023, was a loss of $2,768 million, compared to a profit of $8,113 million for the same period in 2022[20] - Total operating loss for the three months ended April 1, 2023, was $1.468 billion, compared to an operating income of $4.341 billion for the same period in 2022[24] - Net loss attributable to Intel for the first three months of 2023 was $2.758 billion, a significant decline from a net income of $8.113 billion in the same period last year[28] - Operating income decreased by 81% from Q1 2022, resulting in an operating margin of 9%[75] Revenue Breakdown - Client Computing segment revenue decreased to $5.767 billion from $9.322 billion, representing a decline of 38.5% year-over-year[24] - Data Center and AI segment revenue fell to $3.718 billion, down 38.9% from $6.074 billion in the prior year[24] - Notebook revenue decreased to $3.4 billion, down $2.6 billion from Q1 2022, with a 37% drop in volume due to inventory reduction and lower demand[73] - Desktop revenue fell to $1.9 billion, down $762 million from Q1 2022, with a 32% decrease in volume driven by lower demand in small and medium business segments[73] - DCAI revenue decreased 39% from Q1 2022, with server volume down 50% due to reduced demand and inventory adjustments[79][94] - NEX revenue was $1.5 billion, down $650 million or 30% from Q1 2022, as customers reduced purchases in response to lower demand[83][94] Cash Flow and Assets - Cash and cash equivalents decreased to $8,232 million from $11,144 million, a decline of 26.0%[20] - Cash flows used for operating activities were $(1,785) million for the three months ended April 1, 2023, compared to $5,891 million in the same period of 2022[20] - Total current assets decreased to $48,314 million from $50,407 million, a decline of 4.1%[19] - Total assets increased to $185,303 million as of April 1, 2023, compared to $182,103 million at December 31, 2022, reflecting a growth of 1.2%[19] - Total liabilities decreased to $84,900 million from $89,850 million, a reduction of 5.5%[19] - Total stockholders' equity decreased to $100,403 million from $103,286 million, a decline of 2.8%[21] Research and Development - Research and development expenses for Q1 2023 were $4.1 billion, compared to $4.4 billion in Q1 2022[16] - Total R&D and MG&A expenses for Q1 2023 were $5.4 billion, down 11% from Q1 2022, representing 46.2% of revenue[100] Strategic Initiatives - The company is committed to its IDM 2.0 strategy and plans to enhance its manufacturing capabilities and product offerings[4] - The restructuring program initiated in 2022 is expected to be substantially completed by the end of 2023, with total restructuring and other charges of $64 million recorded in the first quarter of 2023[33] - The organizational change to integrate AXG into CCG and DCAI aims to enhance go-to-market capabilities and reduce costs[72] Market Conditions - The company faced an uncertain macroeconomic environment, impacting consumer and enterprise demand due to inflation and higher interest rates[9] - The company expects macroeconomic uncertainty and a challenging market environment to persist throughout 2023[93] Legal and Regulatory Matters - A charge of $2.2 billion has been accrued related to ongoing litigation involving VLSI[63] - The European Commission has reopened its administrative procedure to determine a fine against the company based on alleged conduct related to preventing sales of specific rival products[65] - Multiple securities class action lawsuits were filed against the company following the July 2020 announcement of 7nm product delays, with the court granting a motion to dismiss in March 2023[67] Equity and Debt - The company issued $11.0 billion in senior notes in Q1 2023 for general corporate purposes, including refinancing and capital expenditures[109] - The fair value of issued debt increased to $45.9 billion as of April 1, 2023, compared to $34.3 billion as of December 31, 2022[51] - The company has an ongoing authorization to repurchase up to $110.0 billion in common stock, with $7.2 billion remaining available as of April 1, 2023[125] Product Developments - The 13th Gen Intel® Core™ mobile processor family was introduced, including the first 24-core processor for laptops[14] - DCAI launched the 4th Gen Intel® Xeon® Scalable processors, aimed at accelerating workloads including AI[14] - NEX introduced the 4th Gen Intel Xeon Scalable processors with Intel vRAN Boost, integrating Layer 1 acceleration into the Xeon SoC[14] Investment and Acquisitions - The acquisition of Tower Semiconductor is expected to have a total enterprise value of approximately $5.4 billion, with each share converting to $53 in cash[44] - The divestiture of the NAND memory business to SK hynix Inc. was completed for $9.0 billion, with $7.0 billion received in the first phase and a pre-tax gain of $1.0 billion recognized[45]

Intel Corporation (NASDAQ:INTC) Data Center and AI Investor Conference Call March 29, 2023 11:30 AM ET Company Participants John Pitzer - Corporate Vice President and Head of Investor Relations Sandra Rivera - Executive Vice President and General Manager of Data Center & AI Group Lisa Spelman - Corporate Vice President and General Manager of our Xeon products Greg Lavender - Senior Vice President, Chief Technology Officer and General Manager of our Software & Advanced Technology Group Conference Call Partic ...

Intel Corporation (NASDAQ:INTC) Morgan Stanley Technology, Media & Telecom Conference March 8, 2023 6:20 PM ET Company Participants Dave Zinsner - Chief Financial Officer Conference Call Participants Joe Moore - Morgan Stanley Joe Moore All right. Welcome back everybody. I'm Joe Moore, Morgan Stanley semiconductor analyst. Very happy to have with us today the CFO of Intel, Dave Zinsner, under somewhat better circumstances than last year. I upgraded the stock this time right before the conference so that was ...

Financial Data and Key Metrics Changes - Q4 revenue was $14 billion, down 8% sequentially and at the low end of guidance, with FY 2022 revenue totaling $63.1 billion [29][30] - Gross margin for Q4 was 44%, impacted by factory underload charges, with EPS at $0.10, below guidance due to lower revenue and increased inventory reserves [30][31] - Operating cash flow for Q4 was $7.7 billion, with adjusted free cash flow at $3.1 billion [30] Business Line Data and Key Metrics Changes - Client Computing Group (CCG) revenue was $6.6 billion, down 36% year-over-year, with elevated customer inventory expected to continue into H1 2023 [33] - Data Center and AI (DCAI) revenue was $4.3 billion, down 33% year-over-year, with operating profit of $371 million [33][34] - Programmable Solutions Group (PSG) achieved record Q4 revenue, up 42% year-over-year, while Network and Edge (NEX) revenue was $2.1 billion, down 1% year-over-year [34][35] - Mobileye revenue increased by almost 60% year-over-year in Q4, reaching $565 million [23][35] Market Data and Key Metrics Changes - The PC market is expected to see a total addressable market (TAM) of 270 million to 295 million units for 2023, with a likely outcome at the lower end due to demand uncertainty [9][10] - Server consumption TAM is expected to decline year-on-year in the first half of 2023 before returning to growth in the second half [11][12] - Broad-based markets like industrial and automotive showed strong demand, with expectations for continued growth in 2023 despite macro volatility [12] Company Strategy and Development Direction - The company is focused on executing $3 billion in cost savings for 2023 while maintaining critical long-term investments [13][36] - A shift towards an internal foundry model is expected to enhance operational efficiency and transparency, with a goal of achieving $8 billion to $10 billion in cost savings by 2025 [24][25] - The company aims to regain leadership in process technology by 2025, with significant product launches planned for 2023 and 2024 [26][27] Management's Comments on Operating Environment and Future Outlook - Management expects macroeconomic challenges to persist through at least the first half of 2023, with potential improvements in the second half [8][29] - The company is optimistic about long-term demand for PCs, citing strong usage data and an installed base that is 10% higher than pre-COVID levels [10][54] - Management emphasized the importance of rebuilding customer confidence and the strategic roadmap to regain market share in the data center segment [57][58] Other Important Information - An accounting change effective January 2023 will increase the estimated useful life of certain production machinery, expected to reduce total depreciation expense by approximately $4.2 billion in 2023 [37][38] - The company is committed to maintaining a competitive dividend, with a $0.365 dividend announced for Q1 [80] Q&A Session Summary Question: Will Q1 be the bottom for revenue? - Management expects most business units to decline sequentially, with Q1 seeing significant inventory corrections impacting outlook [45][46] Question: What will it take to return to a gross margin of 51% to 53%? - Revenue recovery and improved loading rates are essential, with ongoing initiatives to enhance gross margins [47][50] Question: How many weeks of PC microprocessor inventory are in the channel? - Management indicated that the consumption rate in Q4 was below expectations, with a significant inventory adjustment expected in Q1 [52][53] Question: What is the edge Intel has to change the share shift in cloud servers? - The introduction of high-quality products like Sapphire Rapids is expected to rebuild customer confidence and regain market share [56][57] Question: How is the demand environment in DCAI? - Demand has softened across all segments, with expectations for recovery in the second half of the year [86][88] Question: What is the strategy for capital expenditures in a slower demand environment? - The company is focused on strategic investments for long-term leadership while adjusting capacity capital to current demand [71][72]

4th Quarter Earnings Presentation Pat Gelsinger Chief Executive Officer David Zinsner Executive Vice President and Chief Financial Officer • This presentation contains non-GAAP financial measures. Intel revenue, gross margin, and earnings per share, including year-over-year comparisons, are presented on a non-GAAP basis except with respect to our Q4 2022 and FY 2022 revenue, Q1 2023 revenue outlook, or as otherwise indicated. This presentation also includes a non-GAAP adjusted free cash flow (FCF) measure. ...

Financial Performance - 2022 revenue was $63.1 billion, down $16.0 billion, or 20% from 2021, with CCG revenue decreasing by 23% and DCAI revenue decreasing by 15%[13]. - Gross margin decreased by 12.8 percentage points from 2021, attributed to lower revenue, higher unit costs, and increased inventory reserves[17]. - Diluted EPS fell by $2.92 or 60% from 2021, driven by lower gross margin and higher operating expenses[17]. - Operating cash flow decreased by $14 billion or 48%, resulting in adjusted free cash flow down $15 billion or 137%[17][18]. - Revenue for 2022 was $31.7 billion, down 23% year-over-year, primarily due to macroeconomic weakness affecting PC total addressable market (TAM) in consumer, education, and small/medium business sectors[70]. - Operating margin decreased to $6.3 billion, down 60% year-over-year, attributed to lower notebook and desktop revenue, higher unit costs, and increased investments in leadership products[70]. - The company reported an operating income of $2.3 billion in 2022, down from $19.5 billion in 2021[126]. - Net income attributable to Intel was $8.0 billion in 2022, a significant decline from $19.9 billion in 2021[126]. - The company reported a net increase in cash and cash equivalents of $6.3 billion in 2022, reversing a decrease of $1.0 billion in 2021[153]. - The company had total debt of $42.1 billion as of December 31, 2022, an increase from $38.1 billion in 2021[150]. Investment and Capital Expenditures - The company invested $17.5 billion in R&D and made capital investments of $24.8 billion in 2022[13]. - Future capital expenditures are expected to remain higher than historical levels as the company targets delivering five technology nodes in four years[19]. - The company plans to invest over $20 billion in a new semiconductor campus in Ohio and up to €80 billion in the European Union over the next decade[22]. - The company is focused on expanding its manufacturing capacity and plans to invest up to $30 billion in the Arizona Fab LLC for enhanced manufacturing infrastructure[22]. - The company had commitments for capital expenditures of $22.7 billion for 2023, indicating a focus on significant manufacturing expansion plans[149]. - Capital expenditures for 2022 were $24.8 billion, an increase from $18.7 billion in 2021, reflecting ongoing investments in manufacturing and technology[155]. Strategic Initiatives - The IDM 2.0 strategy includes transitioning to an internal foundry model to enhance operational efficiency and accountability[19]. - The company is pursuing the acquisition of Tower Semiconductor Ltd. to accelerate its global foundry business and strengthen its IDM 2.0 strategy[22]. - The company aims to achieve process technology leadership by 2025, planning to deliver five technology nodes in four years[44]. - The company is focused on product leadership across various computing architectures, including x86 and xPU products, to meet diverse customer needs[26]. - The company aims to build a world-class foundry business to meet the growing global demand for semiconductors, differentiating its offerings through advanced packaging and process technology[28]. Market Conditions and Challenges - The uncertain macroeconomic environment, including inflation and geopolitical tensions, is expected to impact business conditions into 2023[19]. - The company expects macroeconomic uncertainty and a challenging market environment to persist into 2023[128]. - The competitive environment has intensified, with significant competition from companies like AMD, Qualcomm, and NVIDIA, impacting demand and pricing for the company's products[182]. - The company faced delays in the release of its Sapphire Rapids product, which was postponed from the first half to the second half of 2022, highlighting challenges in timely product development[182]. - The company experienced demand volatility and supply chain disruptions in 2022, impacting revenue and operational performance[168]. Sustainability and Corporate Responsibility - The company aims to achieve net-zero greenhouse gas emissions across its global operations by 2040, enhancing energy efficiency and reducing the carbon footprint of its products[23]. - Intel has achieved gender pay equity globally since 2019 and maintains race/ethnicity pay equity in the US, with a commitment to transparency in pay and representation data[57]. - The company has conserved approximately 973 million kWh of energy cumulatively since 2020, aiming to conserve 4 billion kWh of energy this decade[62]. - Intel has committed to achieving net positive water globally and has conserved approximately 26.2 billion gallons of water since 2020, with a target to conserve 60 billion gallons by 2030[63]. - The company launched new products in 2022, including the 12th Gen Intel Core HX processors and the 13th Gen Intel 7 client product, enhancing its CPU and related solutions portfolio[66]. Workforce and Diversity - The workforce consists of 131,900 employees, with a focus on attracting and retaining top talent in the semiconductor industry[52]. - The undesired turnover rate was 5.6% in both 2022 and 2021, indicating a stable workforce amidst competitive talent conditions[53]. - The company is committed to creating an inclusive workplace and fostering a culture of empowerment, inclusion, and accountability[52]. - Intel aims to double the number of women in senior leadership and underrepresented minorities in US senior leadership by 2030, with a goal of 10% of employees self-identifying as having a disability[54]. - The Global Inclusion Index Survey saw nearly double the number of participating companies in 2022 compared to 2021, indicating progress in diversity and inclusion practices across industries[55]. Risks and Legal Matters - The company is subject to increasing cybersecurity threats, with a notable rise in ransomware attacks observed in its supply chain[196]. - The company is engaged in multiple litigation and regulatory matters that could result in costly and time-consuming outcomes, impacting its operations and reputation[200]. - The company faces ongoing litigation related to IP rights, including a notable case where juries returned unfavorable verdicts of $945 million and approximately $2.2 billion in damages[199]. - The company is vulnerable to reputational damage from catastrophic events and cybersecurity incidents, which could reduce demand for its products and affect investor confidence[195]. - The company has experienced significant disruptions in manufacturing processes due to power outages and supply chain issues, which could adversely affect revenue[195].

Summary of Intel Corporation's Conference Call Company Overview - **Company**: Intel Corporation (NASDAQ: INTC) - **Event**: UBS 50th Global TMT Conference - **Date**: December 5, 2022 Key Points Industry and Market Position - Intel is focusing on reestablishing its position in the semiconductor industry, particularly in the data center segment, with upcoming product launches like Sapphire Rapids, Emerald Rapids, and Sierra Forest expected to improve market share [2][4][50] - The company is gaining traction in its NEX (network) business and has made progress in its nascent graphics business [2] Product Development and Foundry Business - Intel is optimistic about its foundry business, with good customer engagement and expectations for more customer announcements in 2023 [3][18] - The separation of the foundry business into a distinct P&L is aimed at increasing accountability and transparency, which is expected to drive efficiency and performance [16][18] Financial Performance and Cost Management - Intel aims for a gross margin of 60% and an operating margin of 40%, with a focus on reducing costs by $3 billion in 2023 and a total of $8 billion to $10 billion by 2025 [4][5][50] - The company plans to reduce operating expenses from approximately $22 billion to $20 billion in 2023, with a clear path to achieving these targets [5][34] Challenges and Market Conditions - The company is currently facing headwinds, including a 300 basis point impact on gross margin due to underutilization in Q4 [6][41] - There is uncertainty regarding macroeconomic conditions and inventory digestion, which may affect performance in early 2023 [37][38] Capital Expenditure and Investments - Intel's net CapEx is expected to remain in the mid-30% range as a percentage of revenue during its investment phase (2022-2024) [39][40] - The company is leveraging third-party financing, including partnerships like Brookfield, to manage the significant cash outlay required for new fabs [27][28] Dividend Policy - The dividend is considered important for providing yield to investors during the investment phase, but growth in dividends is not anticipated until the company achieves a free cash flow of 20% of revenue [34][35] Future Outlook - Intel is engaged with seven of the ten largest foundry customers and expects to announce new customer sign-ups in early 2023, which would serve as validation of its progress [21][22] - The company is focused on improving manufacturing efficiencies and aims to enhance its competitive position against rivals like TSMC [10][50] Additional Insights - The company acknowledges the importance of government support through initiatives like the CHIPS Act and investment tax credits, which are crucial for maintaining competitiveness in the semiconductor space [30][32] - Intel is committed to improving its manufacturing processes and has identified significant inefficiencies that it plans to address [9][10][13] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Intel's focus on product development, financial management, and market positioning within the semiconductor industry.