Intel Corporation Q4 FY2025 earnings call

• 2025 was a year of progress with organization simplification, leadership recruitment, and balance sheet strengthening.
• AI drives demand for semiconductors across multiple domains, and Intel's IP positions it to capitalize on AI trends.
• Client Computing Group: Series 3 launched, Nova Lake coming in 2026, PC as part of AI infrastructure.
• Data Center and AI: Centralized under Kevork, focusing on Diamond Rapids and Coral Rapids, reintroducing multi-threading.
• ASICs: Growing business with design services and manufacturing capabilities.
• Foundry: Shipping first products on 18A, 14A development on track, advanced packaging differentiation.

Intel Products' Q4 revenue was $12.9 billion, up 2% sequentially. CCG revenue was $8.2 billion, down 4% quarter-over-quarter even as AI PC units grew 16%. DCAI revenue was $4.7 billion, up 15% sequentially. Intel Foundry delivered revenue of $4.5 billion, up 6.4% sequentially on increased EUV wafer mix. All Other revenue came in at $574 million and was down 42% sequentially due to the Q3 25 deconsolidation of Altera. CCG launched 3 SKUs of Series 3 ahead of expectations, with favorable performance reviews. DCAI's custom ASIC business grew more than 50% in 2025, reaching an annualized revenue run rate greater than $1 billion in Q4. Intel Foundry met key 18A and 14A milestones, with EUV wafer revenue increasing from less than 1% in 2023 to over 10% in 2025.

• Q1 2026 revenue forecast $11.7B - $12.7B, midpoint $12.2B. Intel Products: CCG revenue decline more pronounced than DCAI, Intel Foundry revenue up double digits Q/Q.
• Full year 2026: Factory supply improvement from Q2, server market growth, client CPU inventory lean, component pricing pressures.
• CapEx: Flat to slightly down, focusing on tool spending, planning positive adjusted free cash flow, retiring all $2.5B maturities.

• Supply constraints impacting revenue capture.
• Yield improvement challenges affecting supply.
• Component pricing pressures, especially in the client market.
• Competition in the semiconductor industry.

Q: On short-term supply and long-term CapEx, are yield improvements sufficient and when will CapEx be loosened?

A: David Zinsner says improving yields is a great driver of supply with good ROI, CapEx is nuanced with focus on tool spending and improvement in wafer starts across nodes.

Q: On gross margin guidance, how to think about it?

A: David Zinsner explains Q1 gross margin decline due to revenue drop and Panther Lake's dilutive impact, but expects improvement from yield and throughput increases.

Q: On server prospects, time frame for Copper Rapids?

A: Lip-Bu Tan talks about centralizing data center and AI under Kevork, focusing on Diamond Rapids 16-channel and accelerating Coral Rapids introduction.

Q: On external foundry efforts, when will revenue start and success definition?

A: Lip-Bu Tan says engagement with customers on 14A is active, real production in 2028, with advanced packaging revenue as an early indicator of success.

Q: On memory impact, customer reaction and gross margin?

A: Lip-Bu Tan mentions memory constraints and pricing challenges, David Zinsner notes Lunar Lake has memory in place but memory in package impacts gross margins.