Intel Corporation (INTC) UBS Global Technology and AI Conference (Transcript)

Company and Industry Overview * Company: Intel Corporation (NASDAQ: INTC) * Industry: Semiconductor and Technology * Event: UBS Global Technology and AI Conference, December 4, 2024 Key Points Foundry Strategy and Execution 1. Foundry Focus: Intel remains committed to being a world-class foundry and the western provider of leading-edge silicon to customers [7]. 2. Customer Engagement: Intel is actively engaged with customers and working through RFPs, aiming to add more customers to their foundry business [9]. 3. Investment and ROIC: The board emphasizes the need for incremental Return on Invested Capital (ROIC) on foundry investments [10]. 4. CEO Role: The incoming CEO is expected to have capabilities in both foundry and product sides [11]. Product Strategy and Leadership 1. Product Focus: The board wants to build out the products business while standing up the foundry business [14]. 2. MJ's Promotion: MJ's promotion to Head of Intel Products and Co-Interim CEO highlights the board's emphasis on the product side [15]. 3. MJ's Role: MJ's experience and understanding of customers make her the perfect person for the product CEO role [16]. Manufacturing and Operations 1. Cultural Change: A significant cultural change is needed within Intel to transition from IDM 1.0 to a foundry [27]. 2. Demand Uncertainty: Intel is moving from a build-to-inventory mindset to a build-to-order mindset [28]. 3. Customer Focus: A mindset of customer focus is crucial for success in the semiconductor industry [29]. Technology Development and Nodes 1. 18A Node: The 18A node is progressing as expected, with several milestones met and many ahead [31]. 2. 14A Node: The 14A node will address a broader market, including compute, mobile, and other applications [35]. Capital Expenditure (CapEx) 1. CapEx Planning: Intel is planning CapEx more conservatively, focusing on high-confidence demand [42]. 2. Investment Focus: The focus is on technology development, shell ahead, and capacity level CapEx [53]. 3. CHIPS Act Grants: The CHIPS Act grants are not at risk, and Intel is already a third of the way through the milestones [57]. Margins and Financials 1. Margins: The biggest challenge for margins next year is Lunar Lake, which is largely fabbed outside [66]. 2. Foundry Margins: Foundry margins are expected to improve in 2025 due to cost-reduction improvements and higher mix of EUV wafers [68]. 3. Product Margins: Product margins are expected to remain in the low 50s for a couple of years before improving with new product generations [70].