Intel Corporation

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 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, John Pitzer, Corporate Vice President, Investor Relations. Please go ahead, sir.

Thank you, Jonathan, and good afternoon to everyone joining us today. By now, you should have received a copy of the Q1 earnings release and earnings presentation, both of which are available on our investor relations website, intc.com. For those joining us online today, the earnings presentation is also available in our webcast window. I'm joined today by our CEO, Lipu Tan, and our CFO, David Zinsner. Lipu will open with comments on our first quarter results as well as some initial observations, priorities, and actions that he is driving. Dave will then discuss our overall financial results, including second quarter guidance. We will then transition to answer your questions. Before we begin, please note that today's discussion contains forward-looking statements based on the environment as we currently see it, and as such, are subject to various risks and uncertainties. It also contains references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release and 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 Lipu.

Thank you, John, and let me add my welcome. I joined Intel five weeks ago. The reason I'm here is simple. I love our company. I saw the challenges we were facing, and I could not sit on the sidelines knowing I had the opportunity to turn things around and put us back on the path to gain market share and drive sustainable growth. Q1 was a step in the right direction, driven by Dave and Michelle's leadership. We delivered revenue, gross margins, EPS above our guidance. I want to thank them both, as well as our teams, for the good execution, especially with the ongoing macroeconomic uncertainty. Our goal now is to build on this progress, but it won't be easy. There are many areas we need to improve and there's no quick fixes. We must remain laser focused on execution. One of my biggest learning so far is that we need to fundamentally transform our culture and the way in which we operate. Organizational complexity and bureaucracies have been suffocating the innovation and agility we need to win. It takes too long for decisions to get made. New ideas and people who generate them have not been given the room or resources to incubate and grow. The unnecessary silos have led to bad execution. I'm here to fix this. I'm taking shift actions to simplify the way we do business and drive transparency and accountability across the company. We will empower smaller teams to move faster and make better decisions. And we will significantly reduce the number of layers that get in their way. As a first step, I have flattened the structure of my leadership team. All critical product, manufacturing, and G&A functions, which were spread over two to three layers, are now directly reporting to me. This will allow me to get closer to our product and engineering groups and work directly with them to close the gaps with competition more quickly. I will apply the same streamlining approach across the company with a focus on empowering our engineering talents to create great products and make it easier for our customers to do business with us. To accelerate this simplification, we are taking more costs out of the business. The lower our cut calendar 2025 and calendar 2026, OPEX targets. We now expect OPEX of $17 billion this year and $16 billion next year. In addition, as we continue to identify ways to operate our manufacturing network more efficiently, I have directed our teams to find additional $2 billion of savings in our growth CapEx. taking our target for this year to $18 billion. We will continue to take closer look at our existing factory footprint to ensure that we are making the most efficient use of our in-store capacity before committing to any additional spending. I will continue to make the needed investment to reunite innovation even as we reduce our overall expenses by minimizing projects and programs that have been taking attention away from our core client and server business. They will include revitalizing our engineering core and rebuilding our engineering talent pool with urgency by promoting strong leaders internally bringing back critical loss talent and recruiting new people in addition we are mandating a four day per week return to office policy effective q3 2025 i know firsthand the power of teamwork and this action is necessary to re-instill a more collaborative working environment, improving efficiency, and boost innovation. By eliminating inefficiencies and transforming how we do business, I strongly believe we can reduce our costs while securing our future. Many of you have asked about my longer-term strategy plan. It is appropriate question It's a little bit too soon for me to provide all the details, but let me share with you my priorities. First, the best products always win. And this is very important that we refocus our core franchise to start building best-in-class products again. We have a good foundation. Our ecosystem in client and data center computing is valuable and durable, and we still maintain a large market share in both. My focus will be ensuring that our team build products that are highly competitive and meet the needs of our customer as we enter a new era of computing. defined by AI agents and reasoning models. To achieve this, we are taking a holistic approach to redefine our portfolio to optimize our products for new and emerging AI workloads. We are making necessary adjustments to our product roadmap so that we are positioned to make the best in class products. while staying laser focused on execution and ensuring on-time delivery. However, I want to emphasize that this is not a quick fix here. These changes will take time. Our goal is to become the platform of choice for our customers. This requires us to radically evolve our design and engineering mindset. and anticipate the needs of our customer well in advance. I have received direct feedback from many of our largest customers who are also close personal friends. I'm taking this feedback to heart and using it to inform and change our approach to product and platform design. Second, we need to refine our AI strategy. with a focus of emerging areas of interest. My experience helping successfully fund and incubate many startups in this space provides unique insights that we will leverage in this fund. Our goal will be to take an integrated system and platform view to develop full-stack AI solutions that enable more accuracy, power efficiency, and security for our enterprise customers. Our goal will be to enable the next wave of computing defined by reasoning models, agentic AI and physical AI. Third, we need to build trust with foundry customers. We have a lot of important building blocks in place, including the RAM of Intel 18A in second half of 2025 to support the launch of our first Pantheon Lake SKU by year end, with additional SKUs coming in the first half of 2026. However, I know from my years at Cadent Design that success in foundry business requires more than process technology manufacturing capabilities alone. It is first and foremost a customer service business built on foundational principle of trust. and we need to instill customer service mindset across our foundry business. Success in foundry relies on recognizing that each customer use different design tools, methodologies, and styles. As a foundry, we need to ensure that our process technologies can be easily used by a variety of customers. each with a unique way of building their products. To do this, we are more rapidly embracing industry standard EDA tools and best design practices. Here again, there's no quick fix, but we will make the necessary changes to our route map to deliver on the commitments we make to our foundry customers. We must learn to delight our customers by building wafers that meet their required power, performance area, cost, quality, yield, reliability, and on-time schedule. While we are currently focused on delivering Intel 18A, we are also working closely with customers to define the critical KPIs to ensure online delivery of Intel 14A. Lastly, we need to strengthen our balance sheet. Our business is capital intensive and we have important investment to make at the time when our financial performance is not where it needs to be. This means we need to be prudent with capital. In addition to new targets of OPEX, CapEx. We will also look to further monetize non-core assets. I'm very pleased to have Silver Lake as an investor in Altera and welcome on board Rakib to help drive the business to its potential. In addition, we have made the decision not to spin off Intel Capital. but to work with the team to monetize our existing portfolio while being more selective on new investments that support the strategy. We need to get our balance sheet healthy and start the process of deliberation this year. As we are building the new Intel, you can expect us to stay humble drive the necessary changes to delight our customers my motto has always been to under promise and over deliver and i will be not satisfied until we regain the trust of our customers putting the company on sustainable path of gaining shares and growing revenue and deliver consistent returns for our shareholders. With that, I will turn it over to Dave.