Okay, we're gonna get started. Thank you for being here. I'm Tim Arcuri. I'm the semiconductor analyst here at UBS and very pleased to have Intel. We have Dave Zinsner, who is the CFO and the interim Co-CEO. And we have Naga Chandrasekaran, who is the Chief Global Operations Officer and the EVP and GM of Intel Foundry Manufacturing and Supply Chain. So thank you to both, Dave and Naga. Yeah, thanks for having us. So I have to read a safe harbor for Intel before we start. Before we begin, please note that today's discussions may contain forward-looking statements that are subject to various risks and uncertainties and may reference non-GAAP financial measures. Please refer to Intel's most recent earnings release, an annual report on Form 10-K, and other filings with the SEC for more information on the risk factors that could cause actual results to differ materially and additional information on their non-GAAP financial measures, including reconciliations where appropriate to the corresponding GAAP financial measures. Okay. With that out of the way, well, it's been an interesting few days. So, Dave, let me start with you. Big announcement. Yet there wasn't a financial update in the announcement. You're, you know, two-thirds of the way through the quarter. Wondering if there was anything you wanted to say about that. And yeah, just. Yeah, no, I mean, we, you know, we typically don't provide updates, and we still have another month to go, a lot of wood to chop. We stand by the guidance that we gave at earnings, and more to update, obviously. We only do our earnings at the end of January, which I'll be doing double duty on, it sounds like. Okay. Great, and then I guess a bigger picture question that I'm getting, and I'm asking both of you, actually, is if I'm an external foundry customer and I've been engaging with you and, you know, you're making progress on 18A, but given this change, does this cause me to pull back and see what the direction of the company's gonna be, going forward? Does this affect that at all? Yeah, it should. I mean, the board was pretty clear that the core strategy remains intact. We still wanna be a world-class foundry. We wanna be the Western provider of leading-edge silicon to customers. That remains our goal, but we also understand that it's important for the number one customer of foundry to be successful in order for foundry to be successful, and so the board wants to also put emphasis on execution around the product side of the business to make sure that the foundry business remains successful. We're still engaged with customers. As we talked about at the last earnings, we've got a number of RFPs we're working through. Actually, just an hour and a half earlier, I was on a call around one of those RFPs, which looks pretty good. So, you know, we intend to continue to focus on adding customers to our long lifetime deal value for the foundry side. I'd say the one thing that has definitely come out of the way the board's thinking about this is they do recognize and have pushed us that hey, we've made a lot of investments from a capital perspective in foundry, and we need to start seeing some incremental ROIC on those investments. So that's what we're committed to do. That's gonna be one of my major focuses, definitely while I'm CFO or as I'm CFO, but of course in the interim period where I'm CEO, I'll obviously be focused on that as well. I think, you know, as you think about, like, when they're looking at CEOs, you know, to come in, they're gonna look at that kind of model, and that kind of, you know, aspiration, from the CEO. We're gonna—well, I'm gonna guess. Obviously, I'm not in the process, but I'm guessing that the CEO will have, you know, both some capability around foundry as well as on the product side. Yeah, I wanted to ask about that. And there was a question last night at our dinner that I thought was a good one, that it was notable that MJ also got promoted to head of Intel Products and also co-, you know, interim CEO. So more of an emphasis on the board's part on the product side, maybe in recognition that there's been. I'm not saying too much, but there's been a lot of foundry, foundry, foundry, foundry. And so that kind of in conjunction with, with kind of, you know, where you are, does that. There's a question of who, like, if the product business is what's important to the board now. I mean, Pat knew the products better than anybody. There is some confusion, I think, among some investors, if that's the emphasis for the board. Pat seemed like the perfect guy. Yeah, I wouldn't read into the fact that the board wants to focus, make sure we, you know, build out the product business and continue to execute there while, you know, standing up a foundry business is something related to Pat and the board deciding that now is the right time. That was, you know, for personal reasons, specific to Pat and the board. I think, though, it was very important that they had MJ, Michelle, for two reasons. One, I think her stepping into the product CEO position is important. I think that has been one thing that we have noticed is there are things that transcend all the business units on the product side that, you know, probably we're getting sub-optimized. And I think having a leader over all of it allows us to be a little bit more functional about how we drive products, have excellence across all those functions, perform better, execute better, and be, you know, cohesive across the business units in terms of how they go to market. I think that was absolutely important, and I think that's, you know, the primary reason why the board felt MJ should have that role on a permanent basis. And then the fact that we had MJ allows the timing to work out the way it is. I mean, the good news is that we had somebody very capable that could step in. She's—and she knows all the customers really well. They all love her. She's been in that business unit or sales role for, I don't know, decades. So she understands the business quite well. So she was kind of the perfect person not only to take on the product CEO job, but also to slot in as this kind of in this co-CEO role. And then I can, you know, the areas that probably aren't, you know, or haven't been, you know, areas where she's had a lot of exposure to, like finance and investors and some of the more operational activities, I can, you know, take on that slack. And the good news is that, you know, I got people like Naga that are amazing at that and, you know, augment what I'm not as good at. Great. Let me ask, you know, Naga, the question so you've been at Intel, I think, for maybe six months? three months. Three months. Okay. Okay. Time goes fast. Seems like 10. Seems like, so can you just give us a little bit, I mean, you were SVP of technology development at Micron prior to coming to Intel. Can you tell us what brought you to Intel, what opportunities you saw here, and what are your impressions in the first few months? So thanks for having me here, first. And yeah, I was with Micron for 23 years, and I was doing technology development, manufacturing, and different roles within Micron. I was very happy and satisfied with where we were positioned as a company and as a technology development team. And I'm thankful to Micron for everything that they have done for me. Then it was opportunistic that I started talking with Pat and Ann. And over a period of months that I was talking with them, I really believed in the consequential journey of trying to set up a foundry. I believe that Intel Foundry is very important for Intel. It is very important for the semiconductor ecosystem, and it is very important to have some level of competitive space that's going to continue to drive innovation. So I truly believe in the mission that Pat and Ann and everyone in Intel is driving towards with this foundry. That's number one. Number two, I was very happy with where we have brought Micron as part of the journey. We have set Micron as technology leaders in memory packaging and financial stability where the company was. And also, my team was in a very good place. So I thought, if I'm going to go do something else, then this was a pretty good time. I was with Micron for 23 years, and I was telling Tim this yesterday that I joined in 2001, June, and then 2001, September 11 happens, and my first increment was a 10% pay cut. And probably for the next 10 years, I never sold the stock because the only direction it went was downwards. But I still stayed with the company because I liked the challenge. I liked what I was doing with Micron and really liked the journey. And the last 10 years, it was transformational. So I felt I had done a good role, and the company was in a good place for me to go do something different. And that's the third piece was, personally, there's very few people who can do technology development roles in the industry. There's very few that can do technology development and manufacturing. And then there's very few who can do both in memory and logic. This was a great opportunity also for me personally to say, how can I expand myself? So that's the combination of those three. That's why I'm here. And how, how do you see, how are you gonna run manufacturing differently than it's been run? I think last night we talked a little bit about, you were talking about building a little more to what you call demand certainty. Can you just talk about that? Yeah. I and I didn't address your last part. I'll dovetail on it, which is what I've observed is there's a significant cultural change that needs to happen within Intel for us to transition from being an IDM 1.2 to becoming a foundry. And even not just a foundry, but to be successful in semiconductor, there's different aspects how TD and manufacturing work together. TD is technology development. I see it as a relay race where there's four labs or how manyever labs, and it doesn't matter how one does in an individual lab. The real result is who wins the race. And it doesn't matter what happens in TD, what's in manufacturing. It's the continuity all the way to how we deliver to our customers. And that's a change that we want to drive. Part of what I see happening today is TD is driving the technology, but manufacturing doesn't have the mindset of continuous improvement, year-over-year changes, constant innovation. Innovation doesn't mean it's only backside power, but small changes in process and equipment that drives cost reduction, performance improvement. That mindset is not there. As a company, when we had monopoly and we were IDM 1.0, we were building to inventory, but now we have to change ourselves build to order. That's a very different mindset. The other mindset that I'm seeing is we are very driven towards no wafer left behind. That means you cannot miss any demand. You're okay to have built out extra capacity, believing that there is going to be some demand, and in a monopoly, that's okay. But now you have to go to no capital left behind where you're eking out every wafer out of a tool and trying to drive efficiency further. That's a cultural change that needs to happen. So a lot of changes where the team operates as one team, continuous improvement, and a big focus on customers, that's another change that needs to happen is having a mindset of customer focus. All of those easier said than done. There's going to be challenges, but all those changes need to happen culturally. Good. Thank you. So I wanted to ask about progress on 18A. I know Pat put this, which is now, you know, famous, you know, D0 number of 0.4 out, and I've written a couple of notes on this, just trying to put it into context, like, what that means. And it depends on the die size to, you know, translate the yield. But can you talk a little bit, A, about where 18A is versus where you think it needs to be to sort of intersect the second half of 2025 ramp? And B, the thing that I hear from some of the customers is that, or some of the prospective foundry customers is that 18A is still a bit more geared toward HPC. As a broad foundry node, the customers that I talk to are sort of like, "18A's great if you have an HPC application. 14A might be the node that's more broadly applicable to external foundry customers." Can you talk about that as well? Yeah. Yeah. So when Pat announced the defect density D0 less than 0.4, it was a point in time, and it was to give the indication that we are progressing as expected. If I look at it today, we are progressing. There's several milestones that we have met, and there are still many milestones ahead for the technology development. If I wear my technology development hat for a minute, there's always challenges when you're introducing new technologies. There's ups and downs, but what I would say is there's nothing fundamentally challenging on this node. Now it is about going through the remaining still challenges, defect density challenges, continuing to improve it, improving process margin, and getting it ramped. Will there be challenges? There will be. But I think we are progressing. Next year, as I look at it, primarily the first half will be getting the node into engineering samples into our customer's hand and getting the feedback and starting a ramp in Oregon. The second half of 2025, our milestone is certifying the node, getting it ramped in Arizona, and getting the product on the shelf so that customers can buy it. So that's the milestones, and we are working towards meeting all those milestones over the next year. It's very critical for us. 18A, to your second part of the question, when we said we are going to be foundry, Intel 7 was way past. Then Intel 3 also had several decisions already made. Even 18A, to some extent, decisions were made. So you're absolutely right. There are certain aspects of 18A that's extremely powerful for compute applications, especially the backside power. It's going to be very beneficial for compute applications. It can benefit mobile depending on how the designs are done. But because the customer engagement is more later, it doesn't address the full time, and 18A, our biggest customer for the next two, three years, is still Intel Products, which goes back to what Dave was saying. The Intel Products, we know the demand. We know what needs to happen, and our focus is to ramp it and continue to get more customers on 18A, but all this learning is getting implemented into 14A, so as 14A comes in, there will be a broader market that 14A will address, including compute and mobile and other applications, and also how the PDKs are done so that it's not just for with Intel focus, but it's also focused on the broader ecosystem taking 14A and applying it to their designs. Great. Thank you. Dave, maybe I couldn't ask you this question as the CFO as much as I can as the interim co-CEO. But when you think about the transformational act that you're trying to pull off over the next few years, do you think that there's still an aspect of your making decisions for the product business that aren't the best thing for the foundry business, and you're making, you know, vice versa? Because there is, and my question really revolves around. I know you've created a separation between the two, and the product business is keeping the foundry business honest, as you say. But at the end of the day, you're still part of one company. At the end of the day, the product business, namely the client business, is what keeps the fabs full. Yeah. And so, is there still a push to make decisions? There, it seems to me like there's still a bit of a push where you're making decisions that might not be the best thing for the product business to keep the IFS manufacturing where you want it to be. Yeah. I mean, I might say it a little differently. I'd say that, you know, we are definitely guiding the products business to drive a lot of volume into our Intel foundry, for sure. 'Cause we need to keep the foundry full. We need to get the learnings and so forth. But we are giving them some ability. And, you know, obviously, some of the products that are coming out next year have, you know, heavy external foundry content. And, so they do have that flexibility, built in. They're also, you know, they're all Intel shareholders too. They wanna make sure the whole company's successful. So they're gonna be biased towards driving volume into foundry. But that said, they gotta sell good products. And so that's the tension. And that is, you know, should make Naga and his team better. You know, they'll drive to be better because they know they're competing against external foundries that, you know, one of which is world-class. And that only serves to make our processes better over time. And so I think it's a good model, actually. Ultimately, probably there'll be more and more independence, but I think foundry will also be better and better and more competitive as time progresses too. And so I think it works out. And how do you think about, just, you know, Naga's comment about the building, or, you know, planning CapEx more to the high confidence part of demand? I think, you know, we can all debate how successful we think foundry's gonna be. But as the CFO, when you're thinking about CapEx and now with sort of what the board wants to do, how should we think about how you're planning CapEx? Because, is this still too much? It seems like it could still come down quite a bit. Right? Oh, it can come down, you're saying? Yeah. That's not. Yeah. I would say, you know, bringing, you know, Naga bringing in this memory mindset to the company has been super helpful. And as I was leaving last night after to grab dinner with somebody, one of the guys that works for Naga came over to me, and he said, "Oh, you would not believe the amount of detail we're going through on CapEx. We're going line by line through this stuff, and he's challenging everything. I mean, then we're like picking off things." And you know, some of it's for reuse. You know, he's challenging the reuse assumptions. He's challenging whether it needs to even be invested in or some specific tool. So there. 360 is going to be really bad this time. But the discipline is, I think, great. So I think that we are starting to grok how we need to operate as a foundry. You gotta, you know, absolutely think about every dollar going into capital and scrutinizing it, for sure. In addition, you know, we're just thinking about how to invest differently, I think, you know, which is, you know, Pat had talked about in prior earnings calls. We're really moving towards a model where, hey, we're gonna assume a relatively, you know, GDP-type growth rate for the business. And by the way, it's not just capital. It's also operating expenses too. We're thinking we're gonna invest, based on those growth rates. And if, you know, things turn and we think they're gonna be even stronger, maybe it requires us to have a little bit more investment either on OpEx or capital. We'll make those decisions. But the fall through should be quite good if we're modeling it that way. And so I think that's absolutely the right way to run the business. If Naga was already intimating, it's not the way Intel necessarily thought about capital investment in the past. And so, what we should see is incrementally better ROIC for capital dollars that get deployed because we're just, you know, way more conservative around how we roll out capital. So, how did you think? I mean, you know, you've been here for, you know, many years. How is this? I think it's still hard for, you know, some of us. And I've been getting this question a lot the last few days. This tone from you, how is that different than, you know, what it's been the last two years? Because it isn't like you've been throwing money up on a wall. Yeah. Of course not. But, you know, we have been investing at a rate that's assumes a rate of growth for our cut first customer that's higher than probably we should have assumed. Clearly, you know, in the, like, 2021, 2022 era, that for sure was happening 'cause we thought PC volumes were gonna go up, not down from, you know, kinda 2021 level. So that clearly is a big change for us in terms of the mentality. I would say also, you know, you rely on the team to understand, you know, how to drive reuse. And if everyone only knows, you know, a certain kind of, you know, way of developing the lines, they're gonna go with a certain way of doing that. And so I think it does take some fresh perspective. You know, the one thing that Micron, I think, has done incredibly well, like, even before it started to see this recovery is they just knew how to squeeze, you know, every wafer out of a piece of equipment they could 'cause they were competing against, you know, overseas competitors that, you know, had much lower cost of capital and much lower cost of operating. And so they just, you know, they're just very good at that. And that's, you know, kinda the culture that Naga brings to the organization that I think is just a refresh for us. I would also say a couple of things, if I may add a couple of things. One is the technology development that had to happen in the last three years to catch up from being behind on 10 nanometer to be on par and competitive required more investment into TD. So that's one part of the investment. Now, as we look at getting to an on-par pace, after 18A, as you look at the next few nodes and getting into a regular cadence, there can be more rationalization of what CapEx needs to happen in technology development. And then when you take the space capital, there's been a lot of space expansion that has happened in the last three years, of course, with the demand curve that was in mind. And as you re-rationalize the demand curve, you still have that space that you can put to utilization so you can meter how you're going to spend on space going forward that's more rationalized to the higher confidence demand. Till that space is fully utilized, you do not want to be continuing to go on a building space. And then the last part is the equipment capital. That's where some of the mindset changes and the cultural changes and how we run our business needs to come, which is back to being extremely capital efficient. Don't starve the growth. We want to spend to this high confidence demand curve, but eke out as much as you can to get the growth. So operationally, try to get more efficiency from the fab. But be prudent about it and then have the right triggers where if more capacity, more demand comes in, then you can go spend the CapEx. I do feel there's efficiencies that can be gained. That's step one. And that's where we are focused. Dave, when you sort of think about in this new world that, you know, we're gonna see the next six months or so at Intel, what's the part of CapEx that is sort of sacred? I mean, I would think that you wouldn't wanna cut into technology development to that part of CapEx. Yeah. The way I think is a pretty significant piece of CapEx. Yeah. And it is. The way I break it out is I think there's three components to CapEx. There is the TD and, you know, just advancing the process type CapEx investment. We clearly don't touch that. You know, that's the, the crown jewels of the company. The second is shell ahead. We can flex that. You know, we do wanna have some white space available so that if we do see upside, we can, you know, equip it. It's, it's not, you know, it's certainly less than 50% of the total CapEx spend is, is shell. So it's and it's depreciated over 20 years. And you're gonna get a good ROI on it almost regardless. So you're willing to put a little in there, although we have adjusted it based on, you know, the demand profile. And then there's just the strict, you know, kinda capacity level CapEx. That's the thing that mostly Naga and the team are flexing, to, you know, move the CapEx envelope down from where we were. Just the question around, like, how much you can do with the manufacturing network given the skips, both one and two. You know, we kinda read those documents, and it reads as, in some ways, there are certain milestones you have to meet in those fabs. Does that limit your ability to do what you want with the fab network, the skips you sign? Not really. I mean, look, once you've built a fab and you've equipped the fab, you wanna fill a fab regardless of whether there's a skip attached to it or anything. The worst thing in the world is to have a fab and have it half running half full. So we are absolutely motivated based on the structure to fill the fabs. It's not to 100%. You know, we have a capacity that's very manageable for us. But you know, we were gonna have to do that anyway, and you know, it is up to us to you know, Naga has a complicated network of you know, processes running in different factories. And we're always trying to optimize that to make sure that you know, we're filling what we need to fill to drive the best cost per wafer possible. You know, so the SCIP do allow us flexibility around that to be able to do that. Dave, how much? I get asked this question a lot with the new administration coming in. There's some questions maybe the CHIPS Act money probably doesn't get pulled, the grants, but there's some potential renegotiation of the milestones you have to hit to get that money. And I know you had the skips, but the CHIPS grants are a fairly big piece. And of course, the, you know, credits are gonna be, you know, not just, however you, you know, however you spend the money, you get the credit. But the grant piece, is that a piece that you see as maybe at risk potentially? I don't think so. I mean, we signed an agreement. It's an ironclad agreement. It, you know, lays out all the milestones and when the payments come. It's, you know, we're already actually a third of the way probably through the milestones, quite honestly. So we, we should start as soon as we can, you know, get the payments processed, we'll, we'll start receiving them. You know, there's always potential for some adjustment and thinking from the administration. And if that's the case, we'll work with them. But I, my sense is that the new administration does value U.S. manufacturing. I think they do see the security risks of not having leading-edge manufacturing on U.S. soil. So I, I would assume that, you know, we're gonna be aided by the new administration as we execute on the strategy. I'd also point out, you know, that when you look at the incentives that we're getting, to invest in the U.S., you know, 75% of it is actually investment tax credit. It's not the grant money. That's a little bit more straightforward in terms of how it comes to us. You know, we make an investment. It somewhat depends on whether it's fab space or equipment. But, we make these investments. There's a time period in which an offset is triggered, and then we file it with our tax returns, and then the money comes back. So it's pretty straightforward, and I think we have a good line of sight. It's gonna be a pretty significant number for us, and helps us a lot on the CapEx side. And also, you know, we end up, you know, it's an offset to depreciation, so it helps on the cost per wafer. Dave, how do you think about the, you know, who knows what happens with tariffs, but how are you wargaming around the risk of tariffs? I mean, part of it is, and Naga can chime in too, but part of it is it's, you know, we have a global footprint for that reason. I think that puts us in a good place, quite honestly, relative to others, you know, just because we have a good geographic dispersion of our factories, we can, you know, move things around based on what we need. In fact, actually, in the prior tariff that was hit in, you know, China coming back to the U.S., because we had this, you know, kinda global network, we were able to flex it. Actually, tariffs were a very minimal impact to us as a result. That's right. And with the factory availability in China where we can do local for local, and that's part of the strategy also. So we do have the flexibility. Great. And then, I mean, the skips are basically, you know, you're sharing the economics in, you know, Ireland and Arizona. So, how do we think about, like, what the long-term margin potential is for the business? Because, 'cause in some ways, does that cap what the long-term margin potential is for the company? And, you know, how should we think about the potential progression of margins? I know you're not very optimistic about next year. It's more sort of out into 2026 where we could see a bigger, you know, bigger inflection in gross margin. Yeah. Can you talk through that? Okay. So I was thinking you were talking about foundry, but you mean the total company. Total margin. Total margin. Yeah. Company, yeah. Yeah. So on the margin front, I'd say the bigger challenge for us SCIPs don't really factor in. It ends up being a non-controlling interest item on our P&L. So what you kinda roll it down to net income, then there's a non-controlling interest, and then there's a net income with non-controlling or adjusted for non-controlling interest. So that's where we kinda see that cost show up. As it relates to margins, you know, that for us, I think the big thing that's influencing margins next year is Lunar Lake. You know, we have Lunar Lake, which is largely fabbed outside. There is a component of it that is fabbed inside. It's got memory in the package, and we're just a pass-through. Couldn't get Naga to give me a good deal on memory. So it's a pass-through on memory. So that, you know, suppresses the margins. And, you know, depending on how that product goes, it's, you know, it's a kind of a headwind to us on the gross margin front. That said, you know, on the foundry side, their margins are gonna be looking better in 2025. They'll start to see a lot of the cost reduction improvements that we've seen. They'll see more mix to EUV wafers, which have higher margins, should improve their business. So I'm expecting their margins to improve. And it, it ends up just being how strong is Lunar Lake next year. Does that weigh down a little bit and kinda suppress any sort of incremental margin we might, we might see? So at the end of the day, what we were thinking was, hey, there's probably it's probably like a 60% fall-through, or, you know, 40%-60% fall-through that we'll see on margins, based on how Lunar Lake goes. Now, as you point out, the next year, then we start seeing some real improvement because the next major product on the product side is Panther Lake. Panther Lake is an 18A, or has 18A component in it. So we start to see wafers come back. So we'll see this memory thing go away. We'll see more wafers going internal. You know, we'll do better in terms of our cash cost per wafer. So that should be a nice tailwind for gross margins for us. And then, you know, we're obviously continuing to do the blocking and tackling type improvements on the foundry's gross margins. The product margins, you know, I think beyond just this memory issue, you know, we do have a few products on the roadmap that are all kinda roughly in the same kinda range on margins. And so you, you'll note that margins are kind of in the low 50s. You know, they'll slip into something with a four handle on it. That's likely to be a story on the product side for a couple of years, as we start to work through towards the generation of products that where we're really starting to, we were designing for cost, really focusing on the architecture, then those margins actually have some material improvement. In the meantime, what the product business is doing, what we're trying to focus them on in terms of improving gross margins is all the kinda ancillary aspects of, you know, now that they're a fabless company, they can't rely on volume to, you know, to be the variable for their margins. So they're now, they're worried about test times, which is not something they particularly spend a lot of time on. You know, the packaging and what specific packaging they use, they're focused on that. So they'll do a lot of those things, which was the basis of creating this new reporting structure that will, you know, be the things that incrementally improve their margins. Great. I have many more questions to ask you, but we're unfortunately out of time. So, thank you. Thank you to both of you. Yeah. Thank you, Tim. Appreciate it. Thanks.