Intel(US:INTC)2024-01-26 01:57Financial Data and Key Metrics Changes - Q4 2023 revenue was $15.4 billion, up 9% sequentially and 10% year-over-year, exceeding guidance by $300 million [28] - Gross margin was 48.8%, 230 basis points better than guidance, driven by favorable product mix and improved unit costs [28] - EPS for Q4 was $0.54, beating guidance by $0.10 due to improved gross margins and disciplined operating expense management [28] Business Line Data and Key Metrics Changes - Client Computing Group (CCG) revenue was $8.8 billion, up 12% sequentially and 33% year-over-year, driven by strength in gaming and commercial segments [29] - Data Center and AI Group (DCAI) revenue was $4 billion, up 4% sequentially, with double-digit growth in the server business [30] - Network and Edge Group (NEX) revenue was $1.5 billion, up 1% sequentially, with an operating loss of $12 million [31] - Intel Foundry Services (IFS) revenue was $291 million, down modestly sequentially but up 63% year-over-year [31] - Mobileye revenue reached a record $637 million, up 20% sequentially and 13% year-over-year, with a record operating profit of $242 million [31] Market Data and Key Metrics Changes - The 2023 PC consumption total addressable market (TAM) was approximately 270 million units, consistent with expectations, with a low single-digit growth forecast for 2024 [22][34] - The server business saw solid sequential growth, with over 2.5 million units of the 4th Gen Xeon shipped, driven by AI demand [18] Company Strategy and Development Direction - The company is focused on its IDM 2.0 transformation, aiming to regain process leadership and expand foundry capabilities [5][10] - Plans to become the second largest external foundry by 2030, leveraging AI as a significant growth driver [10][16] - The launch of new products like Sierra Forest and Granite Rapids is expected to enhance market competitiveness [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sequential and year-over-year growth in revenue and EPS for each quarter of fiscal year 2024 [6][34] - The company anticipates temporary headwinds from Mobileye and PSG but expects overall core business performance to remain strong [6][34] - Management highlighted the importance of AI workloads as a key driver for future semiconductor market growth [16] Other Important Information - The company has made significant progress in reducing structural cost gaps and achieving $3 billion in cost savings for fiscal year 2023 [28][32] - A new internal foundry model has been implemented to enhance transparency and accountability, expected to drive further efficiencies [37][39] Q&A Session Summary Question: Near-term demand picture and seasonality - Management acknowledged the low end of seasonality for core businesses but expressed confidence in improving performance throughout the year [42][44] Question: Confidence in manufacturing nodes and leadership positioning - Management reassured that progress on 18A is strong, with external validation of process technology competitiveness [45][47] Question: Gross margin outlook and inventory impacts - Management indicated that Q4 gross margin performance was aided by better sell-through of previously reserved products, with expectations for a 60% fall-through in the long term [50][52] Question: Data center decline and FPGA weakness - Management noted that the data center decline is seasonal, with strength expected from server customers and a favorable outlook for the year [60][62] Question: Long-term mix between Sierra Forest and Granite Rapids - Management expects a healthy split between Sierra Forest and Granite Rapids, with a focus on total cost of ownership for cloud customers [64][66] Question: Client market performance and revenue confidence - Management anticipates a solid year for the client business, supported by a stable market share and improved product lines [70]