Intel Corporation Q3 FY2025 earnings call

• Core x86 Franchise: AI driving demand for compute architectures, collaboration with NVIDIA, formation of Central Engineering Group, client product launches (e.g., Panther Lake SKU), server progress with Granite Rapids.
• Intel Foundry: Progress on Intel 18A, 18AP, advanced packaging, confidence in long-term foundry TAM bolstered by AI adoption.
• Balance Sheet: Significantly improved cash position with U.S. government funding, investments from NVIDIA and SoftBank, monetization of Altera and Mobileye.
• Execution: Rightsizing the company, evolving talent mix, reestablishing engineering-first mindset.

Intel Products revenue was $12.7 billion, up 7% sequentially. CCG (Client Computing Group) revenue was $8.5 billion, up 8% quarter-over-quarter. PC AI revenue was $4.1 billion, up 5% sequentially. Operating profit for Intel products was $3.7 billion, 29% of revenue. Intel Foundry delivered revenue of $4.2 billion, down 4% sequentially. Operating loss in Q3 was $2.3 billion. All Other revenue came in at $1 billion, with Altera contributing $386 million, down 6% sequentially.

For Q4 2025, revenue range $12.8B - $13.8B. Midpoint ~flat QoQ. Intel products modestly up, CCG down, PC AI up strongly. Intel Foundry up QoQ. All Other down. Gross margin ~36.5%, EPS $0.08 non-GAAP. 2025 CapEx anticipated at $18B, more than 2024's $17B.

• Supply Constraints: Tight on Intel 10 and 7, substrate shortages, reliance on inventory.
• Foundry Yields: 18A yields need improvement for better margins.
• Market Volatility: Macroeconomic factors affecting customer purchasing behavior and inventory levels.

Q: Congratulations on the strong results. Lip-Bu, the first one for you is going to be on the foundry side...

A: Yes, Ross, thank you so much for the questions. So I think a couple of announcements we make is, I think, clearly more on the product side. And also, one is the SoftBank because they are building up all the infrastructure, AI infrastructure. That definitely will need more capacity on the foundry side. So I think that would be the answer. But meanwhile, I've been saying that, I think, clearly, from what I received from the 18A and 14A, we made tremendous good progress, the steady progress on 18A. And Panther Lake will depend on it. And then clearly, we see the yield in a more predictable way. And I visited fab 52 that fully in operation for the 18A. And then on the 14A, clearly, we're engaging with multiple customers in terms of milestone basis. And we're also really driving some of the yield and performance, reliability that are seeing improvement. And also more exciting, the advanced packaging, we also see important demands from some of the key customer from foundry -- from the cloud able and also enterprise side. So I think overall, I think we are looking quite excited to build this long-term trust with some of the customers and scaling it. And we also focus on hiring some of the top talent, driving some of the process technology improvement.

Q: Joseph Moore from Morgan Stanley asks about foundry customer conversations...

A: Yes, Joseph, thank you so much for the question. I think on the foundry side, clearly, we are engaging with multiple customers. And as the building the trust of the customer, you need to really show the yield improvement, reliability and also, you need to have all the specific IP that they require. It's a service industry. You need to have all the right IP. That's why I formed the Central Engineering to get all the right IP to matching with the customer requirement. And then I think the best way is really show the performance, the yield and then we can [ data ] test chip so that they can really work on it. And then they can starting to deploy their most important revenue wafer to depend on us so that we can drive the success for them. So I think those are very important. In terms of potential investment and collaboration, I think with a different customer, different requirements, we are working with them. But more important is to get their commitment to the foundry and the support. I think that's building the trust that's more important.