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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Joining us is the Intel CEO Pat Gelsinger. A Pat,

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Speaker 2: good morning to you and thank you for your time.

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Speaker 2: You know, the stock is down more than ten percent

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Speaker 2: and we're kind of here again right where there's the

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Speaker 2: short term and the long term where you're trying to

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Speaker 2: convince investors of a return to technology leadership and also

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Speaker 2: grow a foundry business. Have you an updated timeline and

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Speaker 2: when you think you will achieve that target? Yeah?

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Speaker 3: Thanks Ed, And obviously, hey, we delivered a solid Q one, right,

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Speaker 3: We met on revenue, We beat on earnings, a bit

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Speaker 3: tepid in the first half, as we said, but we

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Speaker 3: see a lot of improvement as we go through the year.

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Speaker 3: And with that, obviously the foundry business, as I would say,

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Speaker 3: we're going to see progress on the foundry business every

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Speaker 3: quarter from now to the end of the decade. It

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Speaker 3: it just gets better and better as we move into

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Speaker 3: our new technologies, you know, as we've getting back to

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Speaker 3: process leadership, which have better asps and we can build

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Speaker 3: better products with them. We win more external foundry customers

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Speaker 3: as our scale growth, and we also get past this

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Speaker 3: period where we had to invest to catch up, right

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Speaker 3: and create the capacity for a decade plus of under investment.

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Speaker 3: So everything there becomes a tailwind going forward. And we

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Speaker 3: hit key milestones and one of those I was very

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Speaker 3: proud of just this week we went to production with

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Speaker 3: our first server part on Intel three. The US is

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Speaker 3: back to leadership process technology being manufactured on our shores

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Speaker 3: for the first time in a decade. So some key milestones,

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Speaker 3: and I'll just say everything is coming together as we

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Speaker 3: would say, and we're very optimistic that yes, in fact,

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Speaker 3: we will deliver the foundry business and the manufacturing capabilities

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Speaker 3: as we've laid out for the company, the industry, and

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Speaker 3: the world Stiphil.

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Speaker 4: Interestingly, anais over there. Twenty twenty four should mark the

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Speaker 4: bottom in many.

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Speaker 1: Aspects, pat but they really want to down the pace

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Speaker 1: of the climb that is necessary. How can you tell

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Speaker 1: us about how quickly you'll be able to scale that

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Speaker 1: market share that.

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Speaker 4: You're so far lost.

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Speaker 3: Yeah, and you know, we look at Intel now in

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Speaker 3: these two different perspectives Intel products, and we expose through

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Speaker 3: our recast financials that we have a very solid, fabulous

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Speaker 3: business with healthy financials and we expect those to improve

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Speaker 3: over time. But the big story has been about exposing

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Speaker 3: the foundry financials and the losses associated with those, and

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Speaker 3: what we see is over the decade, you know that

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Speaker 3: we'll cross through profitability in the middle of the period

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Speaker 3: for that business as we get back to process leadership

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Speaker 3: and start to moderate the level of investment required to

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Speaker 3: go rebuild that decade of under investment. And as we

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Speaker 3: do that, if we would have that today, we'd be

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Speaker 3: more than double the earnings this year that we're forecasting.

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Speaker 3: So it becomes a huge positive lever for us. And

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Speaker 3: as I like to say, all that's in our control,

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Speaker 3: the wafers, getting back to leadership, the product implications of it,

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Speaker 3: all of these things are our control, and it gets

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Speaker 3: better as we win additional external foundry customers.

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Speaker 2: The link I think pat is that is about growing

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Speaker 2: market share as server to support the costs necessary for

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Speaker 2: the foundry business. You're asked an interesting question on the

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Speaker 2: call in the context of servers built on X eighty

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Speaker 2: six versus ARM based alternatives, and you gave a pretty

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Speaker 2: thorough explanation about the place of all of those particular

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Speaker 2: data center CPUs. But what I didn't hear was what's

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Speaker 2: happening out there in the real world, where are data

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Speaker 2: centers being built and what are they being built on

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Speaker 2: right now?

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Speaker 3: Yeah, and this is important because we've been at the

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Speaker 3: period now for a number of quarters where data center

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Speaker 3: CPUs have been fairly tepid, and we do see that improving.

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Speaker 3: We had good improvement in the first quarter of the

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Speaker 3: year and we expect that to continue through the year,

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Speaker 3: and you know, there's time for refresh in those data centers.

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Speaker 3: But we're also seeing that the CPUs now has head

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Speaker 3: nodes for AI use cases. We've posted some pretty incredible

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Speaker 3: results that we can now run seventy billion parameter models

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Speaker 3: natively on the CPU. Who I don't need a special accelerator.

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Speaker 3: I can do everything on the software stack that I

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Speaker 3: already use inside of data centers. And we're seeing that

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Speaker 3: these power efficient products that we're bringing to the marketplace,

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Speaker 3: you know, such as our x on six that we

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Speaker 3: just announced, are going to enable us to stabilize and

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Speaker 3: regain market share with much higher core counts. The asps

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Speaker 3: are going up very nicely on that through the year.

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Speaker 3: So we saw growth in Q one, We expect that

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Speaker 3: to continue through the year and as we get to

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Speaker 3: the back half of the year, our accelerator product line

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Speaker 3: with Goudy Zon plus Goudy, we become we believe becomes

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Speaker 3: a very compelling solution for enterprise customers. And we have

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Speaker 3: quite a number of announcements of those this quarter, customers

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Speaker 3: such Bosh and Dell and super Micro all bringing those

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Speaker 3: into the marketplace, Roach and IBM, and eCloud partners like Neighbor,

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Speaker 3: the fastest growing cloud provider in Asia, all of those

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Speaker 3: coming alongside the Intel strategy. So we see that momentum building.

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Speaker 4: It momentum, and we want to just remind us that

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Speaker 4: we are with TV radio audiences. The CEO of Intel,

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Speaker 4: Pat Gelsinger, Pat on not the momentum. Everyone wants to

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Speaker 4: talk about AI and all of its ways and means.

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Speaker 4: You've been focusing in on an AIPC, and I'm just

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Speaker 4: really interested in Ultimately you're going to be wat shipping

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Speaker 4: an excess originally forty million AIPC CPUs. That's the target

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Speaker 4: for twenty twenty four. But what's the demand like at

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Speaker 4: the moment, Pat, and what's the cost like?

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Speaker 3: Yeah, And when we announced the category at the end

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Speaker 3: of last year, Carolyn, it was sort of like everybody says, Wow,

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Speaker 3: what's going on the AIPC and you're seeing a flurry

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Speaker 3: of interest of other people coming into that market, but

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Speaker 3: Intel questionably the leader first to declare the market, first

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Speaker 3: to describe the use cases, and our first product, Core Ultra,

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Speaker 3: is having a very robust ramp into the marketplace, and

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Speaker 3: to some degree, I'm racing to catch up to the demand.

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Speaker 3: We're meeting all of our supply commitments, but not all

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Speaker 3: of the upside requests yet that we're getting from customers.

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Speaker 3: So this is very robust. We expect that we'll exceed

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Speaker 3: the forty million units this year. We'll be introducing our

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Speaker 3: next generation product in the middle of this year, so

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Speaker 3: all of these pieces, we are very optimistic. And you're

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Speaker 3: seeing use cases and communications where all of a sudden,

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Speaker 3: I get summarization, contextualization, translation in real time, all running

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Speaker 3: on my PC. Developers, gamers, all of these use cases

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Speaker 3: are now becoming AI enabled and Intel leading the AIPC parade.

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Speaker 3: It's a very exciting time where I believe will be

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Speaker 3: the biggest cycle of PC refresh and expansion that we've

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Speaker 3: seen in likely decades.

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Speaker 4: Pat this is a conversation about your technology and about

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Speaker 4: ultimately your fundamentals of a business. I'm just going to

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Speaker 4: take a turn for a moment, and it's a sensitive question,

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Speaker 4: so I'll give you a moment to think about it.

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Speaker 4: But given your relationship with Israel and the fact that

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Speaker 4: you are one of the largest employers over there, how

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Speaker 4: are you currently feeling about students in the United States

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Speaker 4: protesting against endowments being invested in companies that are associated

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Speaker 4: with Israel at this moment.

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Speaker 3: Well, we have been in Israel for forty years now

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Speaker 3: and it's been an incredible country for us, incredible innovators,

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Speaker 3: and extraordinary resilience by the Israeli people, and they continue,

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Speaker 3: despite the challenges of the war that's going on there,

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Speaker 3: to deliver against their objectives. So we're very committed to

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Speaker 3: support our teams wherever they are in the world that said, hey,

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Speaker 3: we seek peace, and we've been clearly emphasizing that we

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Speaker 3: need to find routes of sustainable peace in the region,

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Speaker 3: and I have been supporting perspectives that reinforce that across

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Speaker 3: the region. And as we look across the world, we say, boy,

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Speaker 3: you know, there continues to be the turbulence, and fundamentally,

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Speaker 3: our strategy is around building globally resilient supply chains that

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Speaker 3: are balanced across the world. So our core strategy is

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Speaker 3: emphasizing that there will be these challenges across the world,

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Speaker 3: you know, whether that's in Israel, Ukraine, or Asia, and

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Speaker 3: we are committed to making sure that we can support

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Speaker 3: the global markets that we serve right with a strategy

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Speaker 3: that really was built for a turbulent world.

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Speaker 2: Pat let's end on AI accelerators. GOWDI is on track

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Speaker 2: for five hundred million this year. AMD's I three hundred

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Speaker 2: X will probably do three and a half billion, and

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Speaker 2: Nvidia with its generations will do forty billion. You've said

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Speaker 2: that choice is important, and also the CPU is important,

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Speaker 2: and I accept that many share it, but do you

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Speaker 2: see a clear path where the numbers I just outlined

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Speaker 2: rebalance in your favor in the AI accelerator market going forward.

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Speaker 3: Given the strength that we saw at our Vision event

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Speaker 3: that we had, we had twenty plus customers coming out

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Speaker 3: publicly in support of our accelerator and our Xeon plus

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Speaker 3: accelerator strategy, we're really starting to see that pipeline of

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Speaker 3: activity converted. And ultimately much of the activity that you've

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Speaker 3: seen so far on generative AI has been in cloud

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Speaker 3: training and now and I think the ultimate monetization of

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Speaker 3: AI happens as business deployments start to occur, and those

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Speaker 3: are the areas that we see strength. We launch the

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Speaker 3: open platform for Enterprise AI. How do we enable these

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Speaker 3: use cases inside of the enterprise, but in an open

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Speaker 3: architecture that many get to participate in. We announced the

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Speaker 3: open AI Networking from closed proprietary networking to standard Ethernet

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Speaker 3: based scale up and scale out networking. We announced that

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Speaker 3: this quarter. And obviously the momentum that we're seeing with GOUDI,

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Speaker 3: you know, all of that half a billion, almost all

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Speaker 3: of it's in the second half of the year, so

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Speaker 3: you can see a very accelerated cycle, a lot of

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Speaker 3: enthusiasm for Goudy, you know, the unquestioned leader in CCO

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Speaker 3: total cost of ownership for enterprises, building on the Xeon franchise,

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Speaker 3: and the position that we have in the enterprise and

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Speaker 3: literally ISVs and cloud providers, but most importantly enterprise customers

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Speaker 3: seeing that value proposition. Yeah, we feel like we're gaining

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Speaker 3: a lot of momentum now in this category and feel

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Speaker 3: good about the potential for our AI Everywhere AI p C,

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Speaker 3: AI Edge, AI Enterprise and AI cloud.

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Speaker 4: Ending on an optimistic mote We thank you so much.

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Speaker 4: Intel CEO Pat Gelsinger there on all things AI, all

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Speaker 4: things Intel numbers,