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