Thank you for standing by, and welcome to the Intel Corporation first quarter earnings 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Mr. John Pitzer, Corporate Vice President of Investor Relations. Please go ahead, sir. Thank you, Jonathan, and good afternoon to everyone joining us today. By now you should have received a copy of the Q1 earnings release and earnings presentation, both of which are available on our investor relations website, intc.com. For those joining us online today, the earnings presentation is also available in our webcast window. I am joined today by our CEO, Lip-Bu Tan, and by our CFO, David Zinsner. Lip-Bu will open with comments on first quarter results, as well as provide an update on the progress we're making on our strategic priorities. Dave will then discuss our overall financial results, including second quarter guidance, before we transition to answer your questions. Before we begin, please note that today's discussion does contain forward-looking statements based on the environment as we currently see it, and as such are subject to various risks and uncertainties. It also contains references to non-GAAP financial measures that we believe provide useful information to our investors. Our earnings release, most recent annual report on Form 10-K, and other filings with the SEC provide more information on specific risk factors that could cause actual results to differ materially from our expectations. They also provide additional information on our non-GAAP financial measures, including reconciliations where appropriate to our corresponding GAAP financial measures. With that, let me turn things over to Lip-Bu. Thank you, John, and good afternoon, everyone. Q1 results demonstrate continued and steady progress across the business, reflecting strong demand for our products and disciplined execution to expand available supply. Revenue, gross margin, and earnings per share were all above the high end of guidance, marking our sixth consecutive quarter of exceeding financial expectations. Even as we improve factory output, demand continued to run ahead of supply for all our businesses, especially for Xeon server CPUs, where we expect sustained momentum this year and next. Intel 3-based Xeon 6 and Intel 18A-based Core Series 3 products are now in full volume production ramp, and each represents the fastest new product ramp in five years. We are maximizing and optimizing our factory output to meet customer needs. It is our top priority. Intel is now a very different company than when I first joined over a year ago. We have taken and continue to take deliberate steps to rebuild Intel into a more competitive and more profitable company. Our cultural transformation is well underway, and we are embracing our roots as data-driven, paranoid, and engineering-centric company. We are also listening closely to our customers and putting them at the center of everything we do. Intel possesses some of the most vital assets necessary to be successful and to flourish in this era of extraordinary opportunity for the semiconductor industry. With a stronger balance sheet, a new leadership team, a rejuvenated and motivated workforce, and a renewed focus on engineering execution, we are turning our attention squarely towards innovation to capture opportunities in the near term and to position the company for robust growth in the long term. Driven by tremendous demand for AI, the semiconductor industry TAM is now approaching $1 trillion. Intel is well positioned to benefit from this demand with three strategically important assets. Our x86 CPU franchise, our advanced packaging technology, and our vast manufacturing network. Artificial intelligence is now moving into the real world towards a more distributed inference and reinforcement learning workloads like agentic, physical AI, and robots and edge AI. This shift is now beginning to show up in our results, as I want to spend some time on this today. For the last few years, the story around high performance computing was almost exclusively about GPU and other accelerators. In recent months, we have seen clear signs that the CPU is reinserting itself as the indispensable foundation of the AI era. CPU now serves as the orchestration layer and critical control plane for the entire AI stack. This is not just our wishful thinking. It is what we hear from our customers, and it is evident in the demand profile for our products. Xeon server demand is seeing strong and sustained momentum. Customers are deploying server CPUs along accelerators in the ratio that is moving back towards CPU. The accelerator remains central to frontier AI, and we will continue to participate, innovate, and partner in that category. Our recent announcement with SambaNova Systems is an example of such partnership on heterogeneous compute architectures. The backbone of AI computing in production remains a CPU anchor architecture. That is good news for the x86 ecosystem. It is great news for Intel. It is a structural reason I'm confident that CPU franchise will continue to be a meaningful growth engine for the company in the years ahead, not just the quarters ahead. Turning to Intel Foundry, the accelerating deployment of AI infrastructures creates a meaningful opportunity for us as we continue to build our external foundry business. I'm pleased with the progress we have made in foundry technology development over the last year, even though I will continue to remind you this will be a long journey for us. We have made steady progress with Intel 4 and Intel 3, and 18A yields are now running ahead of the internal projections, representing a meaningful inflection in our execution and our factory finished goods output. We also continue to make steady progress on our advanced packaging technologies, including additional growth in customer backlog in the quarter. On Intel 18A-P and Intel 14A, we continue to be encouraged by our external engagements. Intel 14A maturity yield and performance are outpacing Intel 18A at a similar point in time, and we continue to develop PDKs with multiple customers actively evaluating the technology. Their partnership has been critical, and their feedback is continuing to help us define the technology so that we can cater to their needs. We expect to see earlier design commitments emerge beginning in the second half of 2026 and expanding into the first half of 2027. I'm particularly pleased that our progress today has driven us to run more of our own future product types on Intel 14A as well. At the time when advanced wafer capacity is in a short supply, this enables us to have better control over our supply chain. Intel has pioneered nearly every major innovation that has enabled dimensional scaling and high volume manufacturing of silicon transistors over the last six decades. We have always been willing to take measured risks that have eventually paved the way for step function improvements in transistor density, cost, power, and performance. As we look to continue challenging the status quo, I can think of no better partners than Elon Musk. We recently announced our partnership with SpaceX, xAI, and Tesla to support Terafab. Elon and I share a strong conviction that global semiconductor supply is not keeping pace with the rapid acceleration in demand. We are excited to explore innovative ways to refactor silicon process technology, looking for unconventional ways to improve manufacturing efficiency that will eventually lead to a dynamic improvement in the economics of semiconductor manufacturing. A year ago, the conversation about Intel was about whether we could survive. Today is about how quickly we can add manufacturing capacity and scale our supply to meet enormous demand for our products. This is a fundamentally different company today, and we still have a lot of work ahead. I would like to take this opportunity to thank our many customers, partners, and our hardworking employees across the world for their contributions towards building a new Intel. I remain firmly convinced of and focused on the opportunity ahead for Intel. With that, I will pass it to David. Thank you, Lip-Bu. We delivered robust Q1 results reflecting strong demand and better-than-expected available supply. We also benefited from improved product mix and pricing actions, in part to offset higher costs. First quarter revenue was $13.6 billion, $1.4 billion above the midpoint of our guide. Q1 revenue would have been meaningfully higher, but demand continues to outpace our growing supply. Our collective AI-driven businesses now represent 60% of revenue and grew 40% year-over-year. These results reflect real and deliberate changes we have made to be more responsive and accountable. This quarter, our teams worked directly and diligently with customers to reach mutually beneficial outcomes in weeks, not months. We value the partnership and support shown by our customers, partners, and suppliers as we work to navigate this environment together. Non-GAAP gross margin came in at 41%, approximately 650 basis points ahead of guidance due to the combination of higher volume, which included previously reserved inventory, mix, and pricing. In addition, better yields on Intel 18A offset some of the higher costs we always incur in the early part of ramping a new node. We delivered first quarter non-GAAP earnings per share of $0.29 versus our guidance of breakeven on higher revenue, stronger gross margins, and continued spending discipline. Q1 EPS included a roughly $0.06 one-time gain in interest and other. Q1 operating cash flow was $1.1 billion, with gross CapEx of $5 billion in the quarter and adjusted free cash flow of -$2 billion. Moving to segment results. CCG revenue was $7.7 billion, down 6% sequentially and better than our expectations. Even with improved factory output, demand outstripped supply against a client TAM that remains resilient despite industry-wide component shortages and inflationary pressures. Our AI PC revenue grew 8% sequentially and now represents greater than 60% of our client CPU mix. Operating profit for CCG was $2.5 billion, 33% of revenue, and up approximately $300 million quarter-over-quarter on improved mix and product margins, sales of previously reserved inventory, better 18A yields, and lower operating expenses. Within the quarter, CCG launched Core Ultra Series 3 and expanded our offerings across consumer, commercial, and edge. This has proven to be our strongest product launch in five years, delivering better performance per watt, stronger integrated graphics, and more capable on-device AI features, all while maintaining our broad ecosystem of compatibility that partners and customers value. In Q1, CCG also expanded the reach of our Core family by launching the Intel Core Series 3 processor, which brings the latest IP, modern features, and all-day battery life to the mainstream for the first time. We're enabling a new class of mainstream systems that once again set the standard for everyday computing. DCAI revenue was $5.1 billion, an increase of 7% sequentially and 22% year-over-year, well above expectations and reinforcing the strong year of growth for DCAI we signaled 90 days ago. Strength continued across all segments and customers as investments in CPUs are accelerating to support the evolution of AI from foundational training to inference and from inference to agentic. We also saw strong ASIC growth with revenue up more than 30% sequentially and nearly doubling year-over-year. Operating profit for DCAI was $1.5 billion, 31% of revenue, and up approximately $292 million quarter over quarter on improved product margins, better cycle times and yields, especially on Intel 3, and lower operating expenses. Within the quarter, DCAI signed multiple long-term agreements, including Google, supporting our view that the current business momentum is sustainable. In addition, Xeon 6 was selected as the host CPU for NVIDIA's DGX Rubin NVL8 systems, and Xeon remains the most deployed host CPU due to its industry-leading memory, security, and networking orchestration. Lastly, DCAI also established a multi-year collaboration with SambaNova to design a next-generation heterogeneous AI inference architecture combining SambaNova's RDUs and Intel Xeon 6 processors. Intel Foundry delivered revenue of $5.4 billion, up 20% sequentially on increased EUV wafer mix driven by Intel 3 and significant growth in 18A. External foundry revenue was $174 million in the quarter. Intel Foundry operating loss in Q1 was $2.4 billion and improved $72 million quarter- over- quarter as better yields across Intel 4, 3, and 18A drove higher gross margins. This was mostly offset by increased operating expenses associated with an intentional step-up in Intel 14A investments to support both internal and external customer evaluations. As a reminder, Intel Foundry carries the bulk of the costs associated with the early ramp of Intel 18A. We expect Intel Foundry's operating loss to improve through the year as 18A continues to ramp into volume and yields improve further. Within the quarter, Intel Foundry delivered output above our expectations, drove steady improvements in yields, and met key 14A milestones. Intel Foundry also added to its backlog of advanced packaging services and announced a multi-year expansion of our backend facilities in Malaysia. This expansion will help support the committed demand that will begin to convert to revenue in 2027. Turning to all other. Revenue came in at $628 million and was up 9% sequentially due to a strong quarter for Mobileye. Collectively, the category delivered an operating profit of $102 million. Now turning to guidance. As we look ahead, we remain mindful that the macroeconomic and geopolitical environments are dynamic. Views on global growth, policy, and trade continue to shape customer behavior and investment decisions. In addition, constraints and rising prices around key components like memory, wafers, and substrates are driving higher costs that could impact demand for our product at some point in the year. We're prudently planning for PC demand to weaken in the second half of the year and expect the full-year PC unit TAM to be down low double-digit% in line with industry peers and experts. Offsetting this, near-term customer order patterns remain very robust across all of our businesses. In addition, our confidence in the sustained growth of CPUs driven by the AI infrastructure build-out is growing. Our outlook for server CPU demand has improved over the last 90 days, and we expect a strong year of double-digit unit growth for the industry and for us, with momentum extending into 2027. Combining all of these factors, we're guiding Q2 revenue to a range of $13.8 billion-$14.8 billion, up 2%-9% sequentially. As we work hard to support the needs of all of our customers, we expect sequential revenue growth in both CCG and DCAI on improved supply and a full quarter of pricing actions, with DCAI up double digits. At the midpoint of $14.3 billion, we forecast a gross margin of 39%, a tax rate of 11%, and EPS of $0.20, all on a non-GAAP basis. Our Q2 gross margin guide declines modestly from Q1 due to a meaningfully larger contribution from Intel 18A, still early in its ramp, and some inventory benefits in Q1 that aren't expected to repeat in Q2. Before I close, I'll share some additional insights on the full year. We expect our factory network to continue increasing available supply in the third and fourth quarters, though at a more measured pace than we anticipated 90 days ago, reflecting the base effect of much stronger than expected first-half output. We also expect 2026 revenue on a half-on-half basis to follow the seasonal trends experienced over the last 10 years, with servers above and PCs below. We were very pleased with Q1 gross margins, and we will continue to push for gross margin expansion. It's my top priority. Our foundry team is delivering consistent yield and throughput improvements across all process nodes, which will help gross margins. With that said, Intel 18A is still early in its ramp, and rising input costs, especially in memory, present growing headwinds in the second half that we need to overcome. For OpEx in 2026, we have been directionally targeting $16 billion but are likely to be higher due to inflationary pressures, variable compensation, and targeted investments we are making to capture the opportunities ahead. Th e drive for efficiency is core to the new culture Lip-Bu is creating, and we will remain laser-focused on finding additional operational improvements and maximizing ROI on all of our investing activities. We forecast capital expenditures in 2026 to be flat to last year versus our prior expectation of flat to down, reflecting increased capacity investments to support committed demand and a continued emphasis on improving fab productivity and output. We now expect expenditures to be roughly equal across the year and still to be heavily weighted towards the equipment that directly grows wafer outs to support growth this year and next. We recently closed the transaction to repurchase the 49% equity interest in the joint investment in Fab 34 in Ireland, a highly accretive deal allowing our shareholders to participate in the full economic benefits from a fab just now hitting its stride. As a result, we now expect non-controlling interest, or NCI, to net to approximately $250 million in each of Q2, Q3, and Q4 of this year and be approximately $1.1 billion for 2027 and 2028 on a GAAP basis. Lastly, excluding the buyout of the Fab 34 joint investment, we still expect positive adjusted free cash flow for the full year. As a reminder, we funded our purchase with approximately $7.7 billion in cash and $6.5 billion in new debt. We remain committed to retiring all $2.5 billion of maturities as they come due this year and all $3.8 billion in 2027. In closing, Q1 was a strong quarter financially and operationally. All demand signals continue to emphasize the growing and essential role of the CPU in the AI era and the unprecedented demand for leading-edge wafers and advanced packaging to realize the vision of driving silicon-based intelligence to the edge efficiently and at scale. Our confidence is growing. We have the right team and the broad IP portfolio needed to solve our customers' most pressing economic challenges and drive long-term value for our shareholders. With that, I'll turn it over to John to start the Q&A. Thank you, Dave. As a reminder, please ask one question and a brief follow-up in order to allow us to accommodate as many callers as possible. With that, Jonathan, can we please take the first question? Certainly. Our first question comes from the line of Ben Reitzes from Melius. Your question, please. Hey, guys. Thanks a lot. Congrats on the quarter, and this is good news for the country too. With regard to my question, the first one is on LTAs. If you could just talk about the Google deal, and there's a comment, I believe, in the release that you signed other LTAs, and how are these structured, and how do they give you better visibility long-term in the data center? Yeah, good question, Ben. I think, let me describe. Google is one of the major long-term contract agreements in Q1, and this is significant. Google, we have the Xeon IPU and building a long-term trusted partnership, which is very important for us. It is a very good evidence of a strong demand for our CPU and some of the ASIC business. That is important to us. This is a good example of how we win in AI infrastructure build-out. Stay tuned. At the right time, we will announce other contract. Dave, anything to add? Yeah, maybe just to add, most of these agreements are structured with volume and pricing. They're usually somewhere between three and five years. The Google one, I think both parties wanted to see an announcement. In some cases, customers want to keep that confidential, and we respect their desire to maintain confidentiality. Some of them we just didn't announce. It's a win-win, I think, in a lot of ways. We get a good understanding of the volumes that we can then build into our assumptions around supply. It's good for the customer because they know where the supply is coming from, and they get a good sense of what pricing they can expect. Ben, do you have a brief follow-up? Yeah. Thanks, John. With regard to CapEx, is there anything in there with regard to investing in foundry customers, or is that still not in there? When do you think we'll hear more about that within the CapEx figure? I would say, let me unpack CapEx just for a minute. What we're now calling it is flat year-over-year. The initial thinking was that it was going to be down. I think we kind of moved it last quarter to flat to down, and now I think we're looking at flat. That is really a function of the current demand environment we're seeing. One thing to keep in mind, in the last few years, a lot of our CapEx spending was space. I think we're actually in a pretty good position in space. We wanted to have white space available to move into, when needed, and I think Lip-Bu and I both feel like we're in a good place. We actually will be bringing the space spend down pretty materially, even though the total is flat. What that means is the tool spend is actually increasing pretty significantly. In fact, tool spending will be up year-over-year 25% or so. That's, I think, a function of the fact that we just see a lot of demand, and we want to make sure we're catching up on the supply front. As we get into next year, we'll have a better sense, I think, of what CapEx looks like for next year. As it relates to external customers on the foundry side, our expectation, in which we've been pretty consistent on this through almost, I think, a year, is that we thought that customer signals would be more concrete in the back half of this year and into early next year. as we kind of pull that information together, combined with our own requirements, which are growing over time here, that'll give us a good sense of what supply we need over the next few years, and we'll be putting the spend in place. Lastly, maybe just to tack on, I think our relationship with the equipment vendors is quite strong. I think we have a pretty good ability to flex as needed. Naga and Lip-Bu are in regular engagement with all of the CEOs of the equipment suppliers. I think we'll be able to manage and course correct as necessary, as we get a better sense of the supply dynamics for us, both internal and external, and move our capacity accordingly. Thank you, Ben. Jonathan, can we have the next caller? Certainly. Our next question comes from the line of Ross Seymore from Deutsche Bank. Hi, guys. Thanks. May I ask a couple questions? First on the CPU side of things, the server CPU side. Can you talk about how Intel's positioned competitively? Is the strength that you're seeing more that the market demand is just that high, or do you believe that your product line actually has some competitive differentiations, versus either other x86 competitors or Arm offerings? Yeah, Ross, I think it's a good question. First of all, I think the feedback from the customers, CPU is very important when they move from training to inference. The inference side, I think in terms of orchestration, control plane, and also managing all the different agents with data, CPU is much more efficient. I think the ratio of CPU to GPUs used to be one and eight, and now it's one to four, and I think towards parity or even better. I think the demand is very strong. Then secondly, I think address your question. I think clearly we continue to refine our roadmap in terms of, at the end of the day, it's the best product win. We have a lot of changes in terms of the CPU architecture change to focus on optimizing for the different workloads. The other part is, I think we have a very big advantage with not just the CPU, we have advanced packaging and foundry. We can really effectively driving some of the changes more quickly to serve the customer in terms of their different workload. I think overall, I think it's exciting time that we call it the XPU. Besides CPU, we're also quietly building up the GPU with a new hire. We are moving into the accelerators, and so that we can serve the customer from the edge and then to the physical AI, and then really drive some of the new initiative to drive the competitiveness. Ross, maybe one other thing to add is that it's obviously early in the Granite Rapids life cycle here. So far, the early traction has been quite good. At least that's a positive step for the data center CPU business. Ross, do you have a follow-up question? Yeah, I do. Lip-Bu, it's following up on something you said in your preamble where you said a year ago Intel was trying to survive, and now it's all trying to scale the supply, and that's a very positive change year-over-year. How does the business model and the spending behavior strategically change in that? Dave talked about increasing CapEx a relatively small amount, maybe $17 billion-$18 billion this year. But if you're scaling supply is under demand across the board, is that something that you can handle with just improving yields? Or does structurally CapEx need to go up and maybe call into question that you're not going to spend on 14A until you actually get customers' thesis that you've said in the past? Yeah, good question. I think in terms of spending, like Dave mentioned earlier, over the last year, we drive a lot of efficiency, driving a lot of layers out of the management team. Now we are really focused on. I spend a lot of time meeting with customers. We are understanding the workload, understanding the engineering side, how do we drive improvement in terms of the architecture, the execution in terms of tape out and the design to really drive efficiency there. The more important, I think, is talk to the foundry side. Now clearly, we really drive the yield improvement. We see a very nice yield improvement on the 18A. The 14A, we already have the 0.5 PDK available, and now we are aiming for the 0.9 PDK. That's where customers starting to decide which product, how much volume capacity we need to have. Besides just driving the yield, we're also driving the improvement in the cycle time so that we can really meet the customer demand and timing that they request and then really optimize for them. Jonathan, can we have the next question, please? Certainly. Our next question comes from the line of Stacy Rasgon from Bernstein Research. Your question please. Hi, guys. Thanks for taking my questions. For the first one, I did want to dig into the segment outlook and I guess the implications for gross margin. You said data center up, I guess double digits. That puts it up, I guess 14% year-over-year, something like that. I'm assuming PC sequential is or year-over-year is similar up maybe low single. I guess I'm just surprised, the gross margins. I understand the inventory benefit in Q1, but it feels to me gross margins are probably flat, excluding that inventory benefit, maybe even down a little bit. I guess I'm just surprised given the magnitude of the server growth, especially given the 18A yields are supposed to be improving. Are they still low enough that the 18A mix is just completely offsetting that? I guess any color you can give us in more detail on the gross margin drivers in the near term would be really helpful. I'm just a little confused. Yeah. Okay. I obviously don't have your model in front of me, but I'd say gross margins, if I unpack 2Q, we will see some benefit from pricing. We got a little bit of pricing benefit in the first quarter, but I would expect us to see some more meaningful improvement in the second quarter. That's certainly going to help. Mix, I don't know. It's going to plus or minus be in the ZIP code. Yeah, data center is obviously going to grow faster, I think, but I'm not sure that mix is going to drive much. 18A is going to be a pretty decent headwind to our gross margins. If you look at Panther Lake volume increases, it's going to be going up, I don't know, 6x or 7x in the second quarter relative to the first quarter. While the gross margins are improving in Panther Lake quarter to quarter, it's still below the corporate average. When you have that big a shift in the mix with gross margins below the corporate average, it kind of weighs down on the gross margins. We're roughly in the ZIP code of what Q1 was like anyway, so I'm not too concerned about it. In the back half of the year, we'll see some of those dynamics helping us. I'd say the one cautionary concern I have on gross margin in the back half of the year is just some of the materials have gone up in terms of cost, substrates are going up, T-glass, we've got memory going up, as you know. Those things offset some of the improvements that we're having through the year. Longer term, I'm still hyper-focused on gross margins and I think we have elements of the roadmap in the right place in terms of cost structure, certainly on client, definitely seeing improvement. On the foundry side, we got more work to do on the data center front, but our goal is to get the gross margins up, clearly. Stacy, do you have a follow-up question? I do. Thanks. To push on the PC a little bit. You said industry volume's probably down double digits, so it's going to be even worse, I guess, in the second half, given where you guys are running pretty strong in the first half. I guess, do you expect your full year client revenues to be down consistent with that industry outlook? Or is pricing helping you or hurting you? Is share helping you or hurting you? Yeah, I think. How do we think about the shape of your client business in the wake of that industry forecast? Yeah, good question. Well, one thing you got to kind of separate is when we talk about the industry, we're generally talking about consumption and when we're obviously, that's different than our billings, because of the inventory movements at customers. We're not going to be as impacted as the industry can, because we expect partly because of pricing a little bit, but also because of inventory replenishment at the customer level. I think, from a modeling perspective, if whatever we get to in 2Q is probably what we run the rest of the year, roughly. It's going to be kind of flattish from Q2 onward, from a revenue perspective. At least that's how we're modeling it. Jonathan, can we have the next question, please? Certainly. Our next question comes from the line of Timothy Arcuri from UBS. Your question, please. Thanks a lot. I wanted to ask just about the evolution of your foundry model. Of course, you're pursuing typical foundry customers, but it seems like Terafab is a little bit of a different deal and maybe even like a process licensing agreement. I wouldn't normally ask about one particular customer, but he did talk about it yesterday. I'm wondering if you can just talk about that. Is that going to be a typical foundry arrangement or are you sort of going to possibly turn the keys over on an entire fab to them? Thanks. Yeah. Timothy, thanks so much for the question. I think on the 14A, I think we are making great progress in terms of yield and the cycle time. Clearly, we're engaging with multiple customers, heavily engaging. As usual my style is under promise, over delivering. We have no plan to announce the customer unless the customer want to announce it, and we are supporting that. I think back to the Terafab, clearly Elon and I, we believe that global supply chain is not keeping pace with the rapid acceleration and the demand. We both share the vision that we're going to learn a lot together, exploring the innovative way and then the, in the process of the manufacturing. Saying all this, clearly it's a very broad relationship and then, we would update you as we go. Clearly this is a very exciting customer to work with and we have multiple other customer we are engaging. Stay tuned. We'll update you when we can. Tim, do you have a follow-up? I do, yeah. David, is there a way to sort of quantify how much demand you're sort of missing out on? How much are you under shipping the market still in Q2? Is it as much as 10%? If you were unconstrained, revenue would be 10% higher. Is that a reasonable number? I'd probably not want to put a specific number. Let's just say it starts with a B. So it's meaningful. Jonathan, can we have the next caller, please? Certainly. Our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please. Thanks for taking my question. For the first one, I just wanted to understand the server CPU TAM growth this year. I think, Dave, you mentioned up double-digit. I was hoping you could help kind of tighten that. Is it 10%, 15%, 15%, 20%? And then how much ASP expansion do you expect this year also? And what I'm really curious to understand is the new server TAM growth that you have, how does this compare versus what you thought six months ago, just so that we can get a better sense for what does this agentic CPU workload mean in terms of incremental unit and ASP growth? I think when we're talking about the market, we're generally talking about units. Six months ago, we certainly expected it. Well, I'd say probably at that point we were thinking it would be up instead of down from a units perspective. Now obviously it's going to be up meaningfully. I'll probably leave it to the industry analysts to come up, pinpoint the exact number. ASPs, we have moved obviously to offset some of the cost increases we've seen over the last couple of quarters. But it's not the biggest driver, obviously of our revenue outlook. We think the unit volume is going to be the biggest driver. Now that's on an ASP per core basis. Obviously core count is increasing significantly in the data center CPU space, and so we get the lift as core count increases. We get the lift on the ASPs from that, and that obviously is meaningful. Vivek, do you have a follow-up question? Yes. Thank you, John. Maybe the follow-up, Lip-Bu is for you on server CPU competition. Both when we look at a competition versus x86 against AMD, do you think you are gaining share? Do you expect to gain share against them? Then broader, I think the competition against Arm, because NVIDIA is planning to launch a standalone Vera CPU rack. Recently, we heard Amazon talk up their Graviton option. I think Google yesterday said they would launch Axion and connect it with every TPU. Just near term, how do you look at competition versus AMD and x86, and then medium to longer term, how do you see the competition develop against Arm? Thank you. Yeah. Good question, Vivek. I think clearly a couple of things. One, the CPU is in great demand right now. I think we all enjoy that. In terms of our product roadmap, we have been fine-tuning the last year. Typically, a new chip comes out, it will take about 12 to 18 months. We are laser-focused on execution. Multithreading, I think we are putting in, so we're going to have Coral Rapids have the multithreading, then we can compete effectively with AMD. We try to accelerate that Coral Rapids ahead. The other part is we're also looking at some of the CPU and GPU architecture. I've been recruiting some of the top talent to really refine the new product to effectively compete against. In terms of your second question about Arm, clearly we know Arm a lot. A lot of respect for them. Rene's a good friend of mine. They have a licensing model. They have been very effective. Of course, they continue to have to raise the loyalty fee. Now they also have the silicon team, and they're building the silicon to compete, and then provide us reference. Clearly, some of Amazon, Google, they are using that. That's not news. I sold the Annapurna Labs back to Amazon, so very familiar with that. Good news is, I think clearly we have this OEM customer working with us, and then we also have a long-term relationship with some of these important customer. The roadmap from Granite Rapids to Diamond Rapids, and then now to Coral Rapids is coming up strong. We very much like our portfolio. On the server side, we also look at besides the x86, and we also have SambaNova partnership, so that we do the dataflow architecture to really driving that whole together. We already have some success on that. The other part, we also recruit some of the top talent. Kevork used to be running the Arm data center server chips, so he know very well. Srini used to be working with me at Cadence. We optimize for all the Arm products with the customer, so he know how to optimize all the requirement in terms of tweaking the performance to meet some of the requirement. I think all in all, I think we have the team, we have the technology roadmap. I think we're, over time, going to be a very effective competitors to them. Keep in mind, Vivek, that beyond the product side, we have another bite at the apple or maybe multiple bites at the apple on the foundry side. We can provide customers with advanced packaging. We can provide customers with wafers. We have a pretty strong breadth of offerings to customers to help support their CPU needs or AI needs in the marketplace. Thanks, Vivek. Jonathan, can we have the next caller, please? Certainly. Our next question comes from the line of C.J. Muse from Cantor Fitzgerald. Your question please. Yeah, good afternoon. Thank you for taking the question. I guess I was hoping you could walk through how you're planning to drive increased output through the second half of the year. How much of it is yields, how much of it is cycle times, how much incremental wafer fab equipment as well as outsourcing to TSMC. Would love to get a feel for that, please. Yeah. Okay. First and foremost, we are increasing wafer starts in all three of our nodes, Intel 7, Intel 3, and Intel 18A. More meaningfully, the EUV nodes, of course, but even Intel 7 will be increasing wafer starts this year. That's a key component of our ability to meet demand. That said, Lip-Bu has pushed the team really hard to provide more supply the old-fashioned way with better yields and better throughput. I think that's largely how we got it in the first quarter. We can expect him to do that through the year, and I think that will be a meaningful contributor to our output. Of course, we use outside foundries as well, and we flex them as needed as well. Lip-Bu's got great relationships with the external foundries, and so he's able to leverage that to help us in that area as well. It'll be certainly a component of it as we move through the year. Just to add on to that, TSMC is a very important partner for us. Morris and CC have decades of friendship. Clearly, our product group will decide which is the best foundry. I think we're going to use a multi-foundry approach, our own internal and also external. We really have good relationship, continue to build from both sides to benefit the customer. C.J., do you have a follow-up? I do. Thanks, John. I just would love to level set where we are on the advanced packaging front. You talked about rising backlog. Anything you can share in terms of what that number looks like, revenue targets this year or next, the number of customers? Any help there would be great. Thank you so much. Yeah, I think I've actually said this in the past. We have been really pleased with our traction there, and I think maybe naively, I had thought that these opportunities would come in the hundreds of millions of dollars level. So far what we're seeing is that their demand is more in the billions of dollars per year kind of level. This is going to be a big part of the foundry revenue as we get through this decade. The good news is advanced packaging really is a differentiated offering for us, and it does a lot for the customer in terms of allowing them to use larger reticles. There's real value to the customer. As a result, we get very attractive pricing relative to some of the other areas of the foundry business. We'd expect this to be at least Foundry corporate average or Foundry average gross margins over time. Thanks, C.J. Jonathan, can we have the next caller, please? Certainly. Our next question comes from the line of Srini Pajjuri from RBC. Your question, please. Thank you. My first question on the 18A yields, Dave. You obviously said the yields are better than you expected, and looks like they're improving further. At the same time, it is still a headwind to your gross margin. If you could give us some context as to how much better they are. Also, as you go through the year, I guess, when do you expect that being a headwind to your gross margin? When do you expect that to, I guess, at least neutral to gross margins? Yeah. I think 18A yields are somewhat a closely guarded proprietary piece of information for us, so we don't typically. I would just say Lip-Bu had a target as we came into the year for the end of this year, and we're probably going to hit that the middle of this year. He's done a very good job working the team to drive a better response there. Of course, that carries on to next year's expectations around yields. I think as we get towards the end of the year on a kind of a full ticked basis, this is combining the product margins and the foundry margins will be in a relatively decent place in terms of the gross margins at Panther Lake. We've got more work to do at the foundry level to drive the gross margins to where we want to be. That's going to be multiple quarters before we get those to be foundry average gross margins. It's tracking better than we expected, which is good. I think we have focused a lot on yields. Lip-Bu Tan's brought in a lot of talent into that space to really focus on it. We've brought in external partners that are particularly good at including metrology that's helped us execute better there, and we're starting to see the benefits of that this quarter. Srini, do you have a follow-up question? Yes, John. Thank you. On the ASIC business, Dave, I think you said it doubled year-over-year. If you could maybe help us with what is included in that. I believe it's IPUs, but I just want to get a better sense how big it is. As you look out to the next few years, what's the strategy for that business to grow? Are you going after the classic ASICs in terms of XPUs, or is this more some of the adjacencies like what you're doing with IPUs? Any color would be, I think, helpful. Thank you. Well, thank you, Srini. I think it's a good question. I think this ASIC business, sometimes I call it the purpose-built silicon optimized for specific workload a customer want, and that's very important. I spend most of my time, besides running and now focus on engineering improvement, is spending a lot of time with customer. It's very important to understand that workload, and then how do we drive the workload, and then to purposely tailor for their requirement. Clearly, it's very important to really have the right strong IP portfolio to able to do that. We are very unique position. We have the CPU, XPU, and then we also have the advanced packaging and also advanced processing so that we can really optimize for the customer. That I think is a very exciting opportunity. It's a fast-growing area. Clearly, we have something unique to offer. We are already engaging with a couple of customers. The feedback from the customers is very exciting, very positive to work with us, and I think stay tuned on that one. The next five years are going to be fast-growing for us. I think one thing that people have been surprised about is how big the business is already. It's at a run rate that's north of $1 billion already, and I think Lip-Bu and his partner, Srini, have barely gotten started in terms of what we can make from that. It's got a really strong base in which to grow meaningfully from. Jonathan, can we have the next caller, please? Certainly. Our next question comes from the line of Joshua Buchalter from TD Cowen. Your question please. Hey, guys. Thanks for taking my question, and congrats on the very strong numbers. I actually wanted to follow up on Vivek's question from earlier. You gave some metrics on the near term CPU TAM, but I think investors are directionally really struggling with how to model the CPU demand from agentic workloads. Any help you can provide us longer term about how we should think about growth, whether in terms of units, cores, gigawatts, CapEx, just anything you can give us? I mean, to put it bluntly, is the $100 billion number that ARM gave reasonable in your view? Thank you. Yeah, maybe I'll start, and Lip-Bu Tan can pile on here. I think one statistic that we look at is the ratio of CPUs to GPUs. If you look at training solutions, they're generally running in the kind of seven to eight GPUs to one CPU. As we look into inference, it's probably getting into the three to four to one kind of level. As you get into agentic and multi-agent, it's one potentially even flip in the other direction a little bit. That's one way to think about it. As you think about the growth rate now going forward, it's going to become a significant part of the AI TAM. Keep in mind also, I would just say, data center obviously is where we're focusing a lot of our conversation on, but there is going to be AI and particularly CPU opportunities in a lot of different areas. The client space is, of course, as I already said, migrating towards AI PC in a more meaningful way. There's edge computing, there's physical AI, specifically. All of those, I think, can benefit a lot from CPUs because of the nature of the power consumption relative to the performance. Those areas could have even more explosive growth than the data center space. Yeah. Just to add on to it, I think we have to think about the full stack. You address some of this agentic AI and later on the physical AI, how the CPU optimize working together with the foundation models, how to optimize that and using the data to really drive the massive opportunity in the agentic AI. I think the inference is going to be a much bigger market, and the physical AI is another big market. I think with that's the opportunity for us and hard to quantify, but I think as you go, we will update you on that. Josh, you have a quick follow-up? Yeah, sure. Thank you for all the color there. As we think about your capacity tightness, the leading-edge foundries are also quite tight as well. Has this driven any near to medium-term share gains? Longer-term, how important is your captive capacity to winning business with customers on a multi-year basis? Thank you. Obviously, all the supply right now or the lion's share of the supply is all internal. We do expect, obviously, to win customers over time. I think, I don't know. Is there anything else you want to add, Lip-Bu? I don't. Yeah. Jonathan, I think we have time for one more question, please. Certainly. Our final question for today comes from the line of Aaron Rakers from Wells Fargo. Your question, please. Yeah. Thanks for taking the question. I want to go down the path of the supply side as well. I think in prior quarters, the suggestion was that you were reallocating maybe some supply of wafers from client to data center. I think the notion was that maybe 1Q would be the peak degree of constraints. As you rolled up your guidance for this current quarter, I'm curious of how you would frame the level of constraints that you see in the guidance this quarter and, maybe, does the back half improve that dramatically? Supply will go up in the second quarter. It's going to go up every quarter now going forward. I would say, we certainly were in our lowest point in terms of supply, probably in the first quarter relative to the rest of the year. What we were able to do in the first quarter was go through finished goods inventory and find opportunities to sell product we didn't think we would be able to move. It was either de-spec'd product or it was legacy product we had shelved and then worked with customers and found opportunities for them to leverage that technology in their system. That helped out a lot. I'm not sure we have that benefit in the second quarter. Obviously, we will scrutinize our finished goods inventory to see if we can find some opportunities. For the most part, what we're relying on from a volume growth perspective, Q2 versus Q1 is going to be increasing supply. Aaron, do you have a quick follow-up? I do. Thank you, John. I guess as a follow-up, I know you talked about the path of the server CPU, and the competitive dynamics there. I can appreciate that you're not giving descriptive timing of roadmaps or future generation products, but how do we think about the progression of your CPU on the server side, Xeon to Diamond Rapids, Coral Rapids, and really closing that gap with simultaneous multithreading? Just any kind of color on the cadence of the roadmap would be helpful. Yeah. Thank you. I think it's clear that the demand is strong and that we fine-tune the roadmap. I think clearly we highlight the Diamond Rapids after the Granite Rapids we have. Coral Rapids is the next one that with multithreading. I think that is our roadmap. We laser focus on execution. Meanwhile, we're going to use our ASIC business to really drive some of the customer requirement. We can build some purpose-built silicon in the short term, and that is a huge opportunity for us. We have all the unique asset that we can really provide. I think those are kind of a roadmap and execution. I think year 2026, I call it the year of execution. We are improving the execution. Back to what David mentioned about the yield, productivity, the cycle time to make sure that the supply chain we can catch up with the demand. With that, I would like to thank everyone again for joining us today. It has been an eventful first year for me at Intel. It is gratifying to see our progress, even as we know we have a lot more to do. I'm looking forward to seeing many of you at the JP Morgan conference in May and at the Computex in June. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.