Intel Corporation

Thank you for standing by and welcome to Intel Corporation's third 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 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. We ask that you please limit yourself to one question and one follow-up. You may get back in the queue as time allows. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, John Pitzer, 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 Q3 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 am joined today by our CEO, Lip Bu Tan, and our CFO, David Zinsner. Lip Bu will open up with comments on our third quarter results, as well as provide an update on our progress implementing strategic priorities. Dave will then discuss our overall financial results, including fourth quarter guidance, before we 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, 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 this afternoon. We deliver a solid Q3 with revenue, gross margin, earning per share above guidance. This marks the fourth consecutive quarter of improved execution delivered by the underlying growth in our core markets and the steady progress we are making to rebuild the company. While we are still a long way to go, we are taking the right steps to create sustainable shareholder value. We significantly improved our cash position and liquidity in Q3, a key focus for me since becoming CEO in March. This includes accelerated funding from the United States government important investments from NVIDIA and SoftBank Group and monetizing portion of Altera and Mobilize. The action we took to strengthen the balance sheet gave us greater operational flexibility and positioned us well to continue to execute our strategy with confidence. In particular, I'm honored by the trust and confidence President Trump and Secretary Lufnig have placed in May. Their support highlights Intel's strategic role as the only U.S.-based semiconductor company with leading-edge logic R&D and manufacturing. We are fully committed to advancing the Trump administration's vision to restoring semiconductor production and proudly welcome the US government as an essential partner in our efforts. We also make tangible progress to improve our execution this quarter. We remain on track not only to right-size the company by year-end, but also to evolve the talent mix, re-establish the engineering-first mindset, and optimize the executive and management levels across the organization. We are seeing a significant increase in day-to-day energy and collaborations as our employees return to office after a substandard period of remote and hybrid work. Let me dive deeper into our underlining business trend Over the course of my career, I have had the privilege of contributing multiple ways of disruptive innovation. But I can't recall a time when I have been more excited about the future of computing and opportunities in front of us. We are still in the early stage of AI revolution. And I believe Intel can and will play a much more significant role as we transform the company. This starts with our core x86 franchise, which continues to play a critical role in the age of AI. AI is clearly accelerating demand for new compute architectures, hardware, models, and algorithms. At the same time, it is fueling renewed growth of traditional compute as the underwriting data and the resulting insights continue to rely heavily on our existing products from cloud to edge. AI is driving near-term upside to our business, and it is a strong foundation for sustainable long-term growth as we execute. In addition, with unmatched compatibility, security, and flexibility, by virtue of being the largest install base of general purpose compute, x86 is well positioned to power the hybrid compute environment that AI workloads demand, particularly for inference edge workloads and agentic system. It is a great starting point from which to rebuild our market position to revitalizing and rejuvenating the x86 ISA and positioning it for the new era of computing with great products and partnerships. Our collaboration with NVIDIA is a prime example. We are joining forces to create a new class of products and experience spanning multiple generations that accelerate the adoption of AI for the hyperscale enterprise and consumer markets. By connecting our architectures to NVIDIA NVLink, We combine Intel CPU and x86 leadership with NVIDIA unmatched AI and accelerated computing strengths, unlocking innovative solutions that will deliver better customer experience and provide a beachhead for Intel in the leading AI platform of tomorrow. We need to continue to build on this momentum and capitalize on our position by improving our engineering and design execution. This includes hiring, promoting top architectural talents, as well as reimagining our core roadmap to ensure it is the best in class features. To accelerate this effort, We recently created the central engineering group, which will unify our horizontal engineering functions to drive leverage across foundational IP development, test chip design, EDA tools, and design platforms. This new structure will eliminate duplications improved time to decision-making, and enhanced coherence across all product development. In addition, and just as important, the group will spearhead the build-out of a new ASIC and design service business to deliver purpose-built silicon to a broad range of external customers. This will not only extend the reach of our core x86 IP, but also leverage our design strength to deliver an array of solutions from general purpose to fixed function computing. In client, we are on track to launch our first Pentalic SKU by year end. followed by additional SKUs in the first half of next year. This will help us to solidify our strong position in the notebook segment across both consumer and enterprise with cost-optimized products across our full PC stack from our entry-level offering to our mainstream core family up to our highest performing Core Ultra family. In high-end desktop, competition remains intense, but we are making steady progress. Arrow Lake shipments have increased throughout the year, and our next-generation Nova Lake product will bring new architectural and software upgrades to further strengthen our offerings. particularly in the PC gaming hello space. With this lineup, we believe we will have the strongest PC portfolio in years. In traditional servers, AI workloads are driving both refresh of the install base and capacity expansion. Fueled by rapid growth in tokenization, the increased demands around data storage and processing and the need to elevate power and space constraints. We remain the AI head nodes of choice with strong demand for granite rapids, including instances across every major hyperscalers. We are listening to what customers need and strong performance per ward and TCO are top of mind. As I shared with you last quarter, the key part including improving our multi-threading capabilities as we close existing gap and work to regain shares. Finally, on our AI accelerator strategy, I continue to believe that we can play a meaningful role in developing compute platforms for emerging inference workloads driven by agentic AI and physical AI. This will be a far larger market than that for AI training workloads. We will work to position Intel as a compute platform of choice for AI inference and we look to partner with a race of incumbent as well as emerging companies that are defining this new compute paradigm. This is a multi-year initiative and we will strike partnership when we can deliver true differentiation and market leading products. In the near term, we will continue delivering AI capabilities through Xeon, AI PCs, Arc, GPUs, and our open software stack. Looking ahead, we plan to launch successive generation of inference-optimized GPUs on the annual cadence that features enhanced memory and bandwidth to meet enterprise needs. Turning to Intel Foundry, our momentum continues. We are making steady progress on Intel 18A. We are on track to bring Penta Lake to market this year. Intel 18A yields are progressing at a predictable rate, and Fab 52 in Arizona, which is dedicated to high-volume manufacturing, is now fully operational. In addition, we are advancing our work on Intel 18AP, and we continue to hit our PDK milestones. Our Intel 18A family is the foundation for at least the next three generations of client and server products. Our work with US government within the secure Engrave, and other committed customers. It is a critical node that will drive wafer volumes well into next decade and generate a healthy return on our investment. On Intel 14A, the team continued to focus on technology definition, transistor architecture, process flow, design enablement, and foundation IPs. We remain active, engaged with potential external customers, and are encouraged by the earlier feedback, which help us to drive and inform our decisions. Lastly, our advanced packaging activities continue to progress well, especially in the area like EMIB and EMIB-T. which we have true differentiations. Like our Intel products, my conviction in the market potential for Intel Foundry continue to grow. The rapid expansion of critical AI infrastructure is fueling unprecedented demand for wafer capacity and advanced packaging services that present a substantial opportunity demanding multiple suppliers. Intel Foundry is uniquely positioned to capitalize on this unprecedented demand as we execute. As I mentioned last quarter, our investment in Foundry will be disciplined, and we will focus on capability and scalability, giving us flexibility to ramp quickly, and we will only add capacity when we have committed external demand. Building a world-class foundry is a long-term effort founded on trust. As a foundry, we need to ensure that our process can be easily used by a variety of customers, each with their unique way of building their own products. we must learn to delight our customers as they count on us to build wafers to meet all their needs for power, performance, yield, cost, and schedule. It is only by doing this that they can rely on us as a true long-term partner to ensure their success. This requires a change of mindset that I'm driving across Intel Foundry as we position this business for long-term success. As we look ahead, my focus remains firmly on the long-term opportunity across every market we serve today and those we will enter tomorrow. Our strategy is crystallized around our unique strengths and value proposition supported by the accelerating and unprecedented demand for compute in the AI-driven economy. Our leadership continues to strengthen. Our culture is becoming more accountable, collaborative, and execution-oriented. And my confidence in the future grows stronger every day. I look forward to keep you updated as we advance our journey. I will now turn it over to Dave for detail on our current business trends and financials.