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Intel Corporation's (INTC) CEO Pat Gelsinger on Q2 2022 Results - Earnings Call Transcript

Jul. 28, 2022 9:38 PM ETIntel Corporation (INTC) Stock28 Comments
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Intel Corporation (NASDAQ:INTC) Q2 2022 Earnings Conference Call July 28, 2022 5:00 PM ET

Company Participants

John Pitzer – Corporate Vice President-Investor Relations

Pat Gelsinger – Chief Executive Officer

Dave Zinsner – Chief Financial Officer

Conference Call Participants

C.J. Muse – Evercore ISI

Vivek Arya – Bank of America

Matt Ramsay – Cowen

Srini Pajjuri – SMBC Nikko

Joseph Moore – Morgan Stanley

Harlan Sur – J.P. Morgan

Randy Abrams – Credit Suisse

Stacy Rasgon – Bernstein

William Stein – Truist

Operator

Good day, and thank you for standing by. Welcome to the Second Quarter 2022 Intel Corporation Earnings Conference Call. [Operator instructions] Please be advised that today’s conference is being recorded.

I will now hand the conference over to your speakers today, John Pitzer, Corporate Vice President of Investor Relations at Intel. Please go ahead.

John Pitzer

You should have received a copy of our earnings release and the earnings presentation both of which are available on our investor website, intc.com. The earnings presentation is also available in the webcast window for those joining us online.

I’m joined today by our CEO, Pat Gelsinger; and our CFO, Dave Zinsner. In a moment, we’ll have brief remarks from both, followed by Q&A.

Before we begin, please note that today’s discussion contains forward-looking statements based on the environment as we currently see it. As such it involves risks and uncertainties. Our press release provides more information on the specific risk factors that could cause actual results to differ materially. We’ve also provided both GAAP and non-GAAP financial measures this quarter and will be speaking to the non-GAAP financial measures when describing our consolidated results. The earnings presentations and the release available on intc.com include full GAAP and non-GAAP reconciliations.

With that, let me hand it over to Pat.

Pat Gelsinger

Thank

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Comments (28)

T
Stacey Rasgon calling them out is pretty hilarious.
Vivek Arya asked great questions, which PG totally avoided answering about competitive pressures, attributing the poor performance to macro environment and execution. Well, macro environment somehow did not affect others as much (AAPL, GOOG, QCOM, TSM, etc). Must be mostly execution issues, then?

I guess we'll know the answers when AMD releases earnings.
T
Well, we now have the answers, don't we?
Mike Bruzzone profile picture
Desktop upgrade cycle continues through year into q1 2023. Alder ramps with a Raptor Cap into holiday sales time as AMD Raphael launches. Dependent on how far out Meteor Lake launch is scheduled as a silver bullet, I expect Raptor run down volumes.

Desktop market is upgrading from Sandy Bridge and Haswell into the future generations. Skylake 6th gen desktop sold really well in the channel last two months suspect world market and price sales. Beyond world market, I expect 7th and 8th gen secondary desktop in the wealthy economies skipped over as the upgrade trend continues moving primarily to Alder and Vermeer surplus. In the secondary market 9900K, Comet top bin, Matisse likely cleared in trade bundles. There's a lot of Intel rot between Coffee 8700 and Alder including Coffee refresh 1 HT and all of Rocket Lake.

Intel Rocket desktop is deadweight being dumped imposing industry financial loss and the Arc GPU introduction 'hold' seems about introducing another like Rocket at cost or give away in sales package product. If Arc launched similar Ricket deadweight that's an antitrust violation and Intel would be slapped.

Mobile is stuffed with Tiger, Ice, Comet generation overage and surplus back into Whisky and Coffee. AMD has a Cezanne and Renoir mobile surplus issue to work through but nowhere near the surplus volume as Intel. Tiger U quad is the worse offending production overage mess on iSF10 validation quantities stuffed into the channel.

Commercially Xeon v3/v4 upgrade continues, enterprise market is standardized on Xeon Skylake and Cascade Lakes. AMD Milan targets the Xeon Skylake, Cascade Lake upgrade market. Xeon Ice is a run end (lagging market) product and intermediate into Sapphire Rapids which is what the market wants. The only Ice high volume customer is Dell on channel data although Fujitsu and Lenovo offer Ice but in miniscule volume.

Sapphire Rapids line AMD Genoa is primarily HPC, hyperscale and public cloud waiting whole platform product the Intel dealer group can sell in volume and this will stretch out time to volume market.

Intel channel data on q2 10Q reconciliation next.

Mike Bruzzone, Camp Marketing
wow&wow profile picture
@Mike Bruzzone

"Sapphire Rapids"

How EMIB, burying silicon in a different material, will affect the yield?
Mike Bruzzone profile picture
@wow&wow

All interconnect in package is susceptible to failures.

What is the degree of complexity? In process, in process steps, handling, validation of known good design components, complexity of the packaging steps. I'd have to research it.

Here's a start . . .

semianalysis.com/...

semianalysis.com/...

semiwiki.com/...

semiengineering.com/...

eps.ieee.org/...

I think the answer is we'll find out. The question for research is the current track record? The options are not unknown. Some more nascent, but not unknown.

I looked for a paper assessing the various options from a final test perspective it's put there somewhere . . .

mb
wow&wow profile picture
@Mike Bruzzone

"The EMIB silicon is thinned prior to package assembly (t < 75um), and thus doesn’t significantly alter the thermally-induced mechanical strain between package and die and the bumps plus underfill interface. The overall reliability is comparable to a conventional organic package."

The EMIB silicon is thinned to t < 75um (~70um for a human hair), and the overall reliability is comparable to a conventional organic package; without numbers, the question is how comparable?
brettze profile picture
I value AMD's innovation far more than TSMC's manufacturing prowess. I wouldnt want to send troops over to Taiwan to defend TSMC so that TSMC shareholders can keep holding shares in TSMC without losing sleep. I rather see TSMC sharehlders stay awake in nights wondering than to see AMD 's shareholders do the likewise..
I like AMD and Intel both!
I am proud of both as heck!
I still hope that China won't invade Taiwan.. anyway!
whatever I dont care1
brettze profile picture
Looks like AMD had taken a big bite out of Intel's data chips Xeon stuff. with its Epyc chips. This is probably what Pat Z is referring to as competitive headwinds , an euphemism for it.
Whether AMD will continue to take more bites out in the coming quarters is anybody's own guess. I am as clueless as anyone.
I am doubtful .
Even if AMD managed to champion the data sector, Intel still has plenty of other revenues to grow on through its IFS .
I am prepared to accept that AMD will enjoy an almost permanent market share in the data sector . I am all okay with this and I am not deterred from holding Intel , anyway.
AMD deserves it. Even so, Intel still cannot lose because Intel can still make data chips for AMD if AMD need more than what they canget from TSMC. it is still a win win situation for Intel.
I am amused by other readers who frown on my suggestion that Intel can still make chips for AMD like TSMC does ..
WTF?! Intel cannot lose!
Intel is going ahead with Ohio fab constructioin thanks to Chips Act passed and to be signed by Prez Biden soon. This is a way of showing thanks by offering to make chips for AMD here.
I care less about TSMC than AMD!
USER 8983491 profile picture
How does Sapphire Rapids benchmark to Genoa?
Tim Clifford profile picture
This is complete incompetence, and Gelsinger needs to go ASAP. They need to go outside INTC as MSFT did 15 years ago. These old tech companies are inbred and making the right and hard calls is impossible for insiders.
P
Gelsinger: "And together we have reestablished OKRs throughout the organization to drive common purpose and importantly, a system of accountability."

No idea what an "OKR" might be, but wasn't there a "system of accountability" before ?

Zinser: "We also have a strong replacement cycle in front of us. We now have over 600 million PCs that are over four years old."

There is no actual need to replace a PC that is over 4 years old. Businesses that are squeezed for cash can easily delay this several years, just as consumers can.
J
@PeterB_86 that's the problem, twenty years ago it was assumed that people had good reason to upgrade a PC every three or four years, and Microsoft and other software companies depended on it, too, and forced the issue. That kind of stopped around 2010. The replacement cycle got much longer. Even a cheap five year old PC tends to be powerful enough for 95% of users. And heavy stuff has largely moved into the cloud so people can do almost everything on a phone or tablet.
P
@Just Some Guy Quite. But they're still trying to peddle this nonsense about PC upgrade cycles. They'd be far better off just telling it straight, however bad it is. But that is not, it seems, the Intel way. This sort of creeping denialism just builds up major trust and credibility issues.
brettze profile picture
@Just Some Guy oh it is Windows 11.. that will get us to upgrade.. I still have 10 and I am going to have to upgrade to have better TPM security..
there is addiitonal reasons like the need to have a discrete graphics or APU we will need to edit photos much quicker especially with raw photo files that are 30 mb each unlike one or two mb jpg that cnnnot be edited as much. I use raw photos and i find it forever to thumbnail 100 photos I took in my file manager.. youa re talking about 3 gigbits !
We are dealing with more gobs of mbs or gbs these days
Even RAM needs to be upgraded to 16 gb or more .. I had 8 gb RAM and I find it lacking..I willl probably want 64 gb RAM
Hey there comes metaverse.. so I have to insure tha I have a PC capable of all these above for next 5 years~!
my PC cannot handle them.
your phone . tablet is not PC~!
i dontthink you own a PC anymore, correct?
you ahve no idea
just say no profile picture
The CEO has been on the job 1.5+ years not counting his previous decades at Intel. And product schedules continue to slip or perhaps management is giving out bogus schedules. Feels like the same old Intel behavior when they didn't have competition.
productivityLeaps profile picture
@just say no funny how that works as if their behaviors can be habituated
wow&wow profile picture
Next, to see how EMIB, burying silicon in a different material, works out : )
P
Sapphire Rapids is delayed again and volume ramp won't happen until 2023. AMD continues to take more data center market share from Intel. AMD will release Genoa in Q4 this year, and Intel won't have anything to compete.
J
Sigh. It's so hard to parse this, so many things going on, so many things they are not saying. Like they must have given fat price breaks to the first Sapphire Rapids customers, and further breaks because they are late. If they can't hit their numbers, it's like nobody on the outside will ever figure out exactly why and that's even if anybody on the inside really knows either, LOL.

On the positive side they finally shut down Optane, which may be the longest-running mess in Intel history.

Then there's the idiotic CHIPS act, which we presume will somehow drop many billions onto Intel's head sometime soon, it's hard to know how to react to the idea that even Intel seems to have no idea just how that's going to work.

SMH
productivityLeaps profile picture
@Just Some Guy wait, the C185 poster (pretty sure that's the handle) keeps telling us Optane and CXL are big innovations. They're not?
A
@Just Some Guy a painful read indeed … love the endless list of acronyms…
J
@productivityLeaps CXL is separate, though there was the hope that CXL would make Optane somehow more useful.

In technology marketing there is one great sin, falling in love with a technology without finding an actual use for it, being too "technology driven". There has never been a clearer or larger case than Optane. It has been an absolute cluster from day zero.
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