Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. We are joined by
Speaker 1: the Intel CEO, Pat Gelsinger, who's come straight from the
Speaker 1: company's call with analysts. Kindly you are joining us live
Speaker 1: on Bloomberg Television and Radio, and Pat, thank you for
Speaker 1: your time in the quarter gone. We were just talking
Speaker 1: about how you made painful decisions and those showed up
Speaker 1: as impairment charges and were reflected on the bottom line.
Speaker 1: To start, could I ask if that's it now that
Speaker 1: those actions are taken and you now have line of
Speaker 1: sight on what you want to do, or if there
Speaker 1: will be more sort of restructure to come.
Speaker 2: Yeah, we worked very hard this quarter to get this
Speaker 2: done and the people actions the restructuring chargers you'll largely
Speaker 2: finished this quarter, So it was a challenging quarter that way,
Speaker 2: but to also deliver better than expect the results if
Speaker 2: we eliminate those one time chargers and to take our
Speaker 2: guidance up for Q four. I'm very proud of our
Speaker 2: team being able to do both of those this quarter.
Speaker 2: Some of the most difficult restructuring charges maybe in the
Speaker 2: history of Intel since our memory microprocessor decision almost forty
Speaker 2: years ago. Getting that done and still beating results and
Speaker 2: taking the guide up. This was a very significant quarter
Speaker 2: for our team to execute, very proud of their discipline results, pat.
Speaker 1: The investor base of cheering you. I'm going on the
Speaker 1: reaction of your stock in after hours, but a lot
Speaker 1: of that does seem to be a focus on what
Speaker 1: you were guiding to in the final three months of
Speaker 1: this year, away from sort of the financials and numbers,
Speaker 1: Could you talk a little bit about the product business
Speaker 1: and the foundry business that gave you some confidence in
Speaker 1: that guide.
Speaker 2: Yeah, And if we take it apart a little bit,
Speaker 2: the client business, We've launched our lunar Lake product, the
Speaker 2: second generation of our AIPC and the AIPC category very solid.
Speaker 2: We'll be launching the commercial version of that into a
Speaker 2: good market, we believe next year for a Windows refresh,
Speaker 2: a corporate refresh cycle, and we start to see more
Speaker 2: strength in the AIPC category overall, with strong set of
Speaker 2: use cases and ISVs bringing new software into the marketplace.
Speaker 2: So we feel good about the client business. Data center
Speaker 2: quarter on quarter a little bit better than people forecast
Speaker 2: for that business, and a stronger product line with our
Speaker 2: Xeon six products now starting to ramp, you know, and
Speaker 2: finally on the Intel foundry. Quarter and quarter growth in
Speaker 2: that area and a strong pipeline of external customers. We
Speaker 2: announced Amazon and two other AT and A customers, some
Speaker 2: additional advanced packaging customers. So we're starting to see that
Speaker 2: business come to life. And that's a long term business
Speaker 2: because when people move designs, it takes several years for
Speaker 2: major designs to move into our foundry. So we've been
Speaker 2: at it now a couple of years, and we're starting
Speaker 2: to see the results of those hard work and getting
Speaker 2: back to competitive process technology with AT and A. So
Speaker 2: a very good quarter of operational results.
Speaker 1: Pat We have a question from our audience, and that
Speaker 1: question comes from Clem DeLong, who's the CEO and founder
Speaker 1: of Hugging Face, and he makes the point that on
Speaker 1: his platform there are many more smaller models now available
Speaker 1: and it's leading him to have a question for you
Speaker 1: about Intel's place in the on device trend we're seeing
Speaker 1: with AI and how you're going to enable more on
Speaker 1: device AI use.
Speaker 2: Well, thank you, Clem, A great question, and a Hugging
Speaker 2: Face a great company, and you know, as you think
Speaker 2: about these models, you know we do see it moving
Speaker 2: from the training phase of you know, trillions of parameters
Speaker 2: to the inferencing phase, and exactly like the questioner says,
Speaker 2: in that inferencing phase, more of that will happen on
Speaker 2: prem for data center customers, and many of those smaller
Speaker 2: models will be retrained with enterprise's own data.
Speaker 3: A lot of those will just run on Xeon. We
Speaker 3: don't need a.
Speaker 2: Special accelerator, or it'll be Zeon plus an accelerator.
Speaker 3: But also then the edge use.
Speaker 2: Cases and AIPC use cases.
Speaker 3: Ed.
Speaker 2: I call it the three laws of the edge, right,
Speaker 2: the laws of physics, right, the speed of light if
Speaker 2: I have to go to the cloud, I had time.
Speaker 2: Your second law is the law of economics, right, it's
Speaker 2: cheaper to run on my device. And finally, the laws
Speaker 2: of the land my data on my device in my
Speaker 2: data center. So we see it moving from a cloud
Speaker 2: training world to an edge and on prem world for
Speaker 2: inferencing for the future.
Speaker 1: Pat I therefore have to ask you about GOUDI. Your
Speaker 1: AI accelerator did not get the traction that you'd hoped,
Speaker 1: and you won't be making the outline target of five
Speaker 1: hundred million dollars in sales for this fiscal year or
Speaker 1: calendar year. Why is it a use case? Issue that
Speaker 1: the data center operators aren't looking at it or something else.
Speaker 2: Yeah, two factors that we pointed out. One is is
Speaker 2: now we have Gouty three coming out, so there's more
Speaker 2: enthusiasm for the next generation product that we're just starting
Speaker 2: to ramp now. The second one is the software and
Speaker 2: the software use cases.
Speaker 3: The AI world has moved very.
Speaker 2: Rapidly and innovating very quickly, and the robustness and the
Speaker 2: completeness of the Gouty software a stack hasn't been as great.
Speaker 2: And it's an accelerator, not a full reprogrammable GPU, so
Speaker 2: that makes some of the software porting and optimizations a
Speaker 2: bit more difficult. Obviously, as we get more of that
Speaker 2: running on Goudy, we solve the software problems. But secondly
Speaker 2: then it's also to move to a complete GPU capability,
Speaker 2: which we'll be doing out in time, and that development
Speaker 2: effort is also well underway, so we feel we have
Speaker 2: a solid position. The world is coming to more on
Speaker 2: prem and enterprise use cases. Like the last question ask
Speaker 2: and Gouty three good early indications from the marketplace and
Speaker 2: its success as we ramp it in twenty five.
Speaker 1: If you're just joining us on Bloomberg television and radio.
Speaker 1: We're live with the Intel CEO Pat Gelsinger. Pat Bloomberg's
Speaker 1: reported that arm and Qualcom, two of your peers, are
Speaker 1: interested in buying some or part of Intel. Can you
Speaker 1: confirm whether or not you received a formal offer from
Speaker 1: them or anyone else, and what Intel's consideration of them
Speaker 1: would be.
Speaker 2: Yeah, And obviously there's been rumors and churn in the industry,
Speaker 2: and I think all of that just indicates how important
Speaker 2: Intel is to the Intel into the industry structure and semiconductors,
Speaker 2: and how important those supply chains are.
Speaker 3: For the world.
Speaker 2: We don't view any of these rumors as particularly emeritus.
Speaker 2: We laid out a strategy, we reaffirmed that with our
Speaker 2: board of directors, and obviously, as we've taken these steps
Speaker 2: this quarter and restructuring and getting our costs where they
Speaker 2: need to be, we have the capacity to go on
Speaker 2: the journey that we've laid out to produce sustainable profitability
Speaker 2: and result in shareholder return. So with that, I'm committed,
Speaker 2: the team's committed, We have the board support for the
Speaker 2: strategy that we've laid out, and Q three shows that's
Speaker 2: exactly what we're going to do.
Speaker 1: I've been trying to help our audience understand Intel's historic
Speaker 1: and current business right the products, but also foundry. And
Speaker 1: what you said was that twenty twenty six is when
Speaker 1: those third party customers start to show up. But could
Speaker 1: you just outline the path to that what you want
Speaker 1: to hold yourself to for next year in developing that
Speaker 1: business as a sort of standalone unit.
Speaker 2: Yeah, and it's a great question ed, and clearly we've
Speaker 2: started to see that already emerge. And even this quarter
Speaker 2: we saw quarter and quarter growth of the external foundry business,
Speaker 2: largely driven by some of those early.
Speaker 3: Packaging design wins.
Speaker 2: So these advanced packages are sort of a faster on ramp,
Speaker 2: but ultimately it's becoming a wayfer foundry for the industry.
Speaker 2: And as we said, three major design wins this quarter,
Speaker 2: you'll one with Amazon and two other compute use cases.
Speaker 2: So we'll be updating, you know, the market as we
Speaker 2: win more of those customers and describing the lifetime deal
Speaker 2: value of those to the marketplace as well. So we'll
Speaker 2: give some of those breadcrumbs along the way. But it
Speaker 2: takes a couple of years for people to move these designs.
Speaker 2: A year to design it, a year to bring it
Speaker 2: into production until it starts to ramp in the marketplace.
Speaker 2: So key milestones for eighteen A that customers are now
Speaker 2: beginning those design cycles, the design tools, the design libraries
Speaker 2: are being moved over to eighteen A, but it really
Speaker 2: isn't until twenty six that those results start to really
Speaker 2: help Intel's products, and then twenty six twenty seven until
Speaker 2: we start to see meaningful volumes externally.
Speaker 1: That way just days away from an election in this country,
Speaker 1: and I'm particularly interested in your assessment planning for what
Speaker 1: might happen to the Chips Act programs. Of course, I
Speaker 1: don't expect you to know what will happen in the election.
Speaker 1: You do not have a crystal ball. But former President
Speaker 1: Trump has kind of made disparaging remarks about President Biden's
Speaker 1: economic agenda. How are you planning for that? Please?
Speaker 3: Yeah, And I'd say maybe three different perspectives.
Speaker 2: Number One, the Chips Act was a bipartisan act and
Speaker 2: with that strong support from both sides of the aisle.
Speaker 2: And with that, we believe the importance of that in
Speaker 2: terms of industrial policy. The semiconductor industry is well supported
Speaker 2: by Congress and both parties. Second, we are disappointed by
Speaker 2: how long and how slow. The dispensing of funds has
Speaker 2: been and well over two years at this point. I've
Speaker 2: invested thirty billion in capital and we've seen zero dollars
Speaker 2: of the Chips grants at this point. So we do
Speaker 2: believe that that has been too slow, and we're somewhat
Speaker 2: frustrated by that, and we've taken that of our financials
Speaker 2: for this year. That said, Gil, there's also the Investment
Speaker 2: tax credit that we are seeing in it is much
Speaker 2: larger than the grant portion of the CHIPSAC and that
Speaker 2: is now law and that will be beneficial. But clearly,
Speaker 2: I think whoever wins the election, the importance of this industry,
Speaker 2: the importance of rebuilding this supply chain of manufacturing is
Speaker 2: well supported. And Intel as a designer, R and D
Speaker 2: and manufacturer is unique in the United States and in
Speaker 2: the overall structure of the industry, and we expect the
Speaker 2: broad support rate of the administration regardless which party wins
Speaker 2: as a result.
Speaker 1: Thank you, Pat. Two quarters ago your CFO told me
Speaker 1: you were two over indexed to CPU, and we know
Speaker 1: what happened with Goudi. You made painful decisions in the
Speaker 1: court to gone reduce headcount by sixteen five hundred. Do
Speaker 1: you now have the plan in place and are you
Speaker 1: confident from here?
Speaker 2: You know, we laid out a clean sheet pro that
Speaker 2: we went through to really benchmark the business. We took
Speaker 2: a conservative view of the funding plan, as we call
Speaker 2: it internally, saying, you know, we're taking a modest growth
Speaker 2: outlook and we're building our cost structure to that very
Speaker 2: modest outlook. But we've also built now a lot of
Speaker 2: optionality to scale up into the business. We have a
Speaker 2: shell ahead where we have capacity that we can scale
Speaker 2: into if necessary, and we've made a smaller, more efficient
Speaker 2: Nimbre company that is able to execute with more agility
Speaker 2: and speed as well. So we feel like we're now
Speaker 2: well set up for the future. This was a challenging
Speaker 2: quarter for me for the company, but we feel like
Speaker 2: we're well set up for the future, and the good
Speaker 2: operational results that exceeded the markets expectations and the increased
Speaker 2: guidance for Q four, we feel like we're now in
Speaker 2: a very solid position.
Speaker 1: Intel CEO Pat Gelsinger, thank you for joining us here
Speaker 1: on this special blobot technology straight from the the school.
Speaker 1: Appreciate your time.
Speaker 3: Thank you. Ed Like always