All right. Good afternoon and thank you for attending the second day of J.P. Morgan's 54th annual Technology Media Communications Conference. My name is Harlan Sur. I'm the U.S. semiconductor capital equipment analyst for the firm. It is my pleasure to welcome Lip-Bu Tan, Chief Executive Officer of Intel. Lip-Bu, one of the semiconductor industry's most accomplished leaders, right? Bringing decades of experience spanning venture capital, EDA and advanced chip design. As founder of Walden International and former CEO of Cadence Design Systems, he built a track record of disciplined execution, customer-focused transformation. Lip-Bu received the Robert N. Noyce Award in 2022, which is the semiconductor industry's highest honor, right? Since taking the helm at Intel in March of 2025, Lip-Bu has fundamentally reshaped the company, flattening its management structure, strengthening its balance sheet, and retaining and attracting great talent.
Lip-Bu, thank you very much for joining us today.
Thank you for inviting me.
Yeah, absolutely. I'm gonna read the safe harbor statement very quickly. Before we begin, please note that today's discussion 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 and 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 Intel's non-GAAP financial measures, including reconciliations where appropriate, to the corresponding GAAP and financial measures. With that, Lip-Bu, again, thank you for joining us today. It's, it's been around 14 months since you've taken over as CEO. The team has certainly executed extremely well under your short tenure. I remember the first earnings call in front of investors in April of last year, right?
This is my guidepost to monitoring the execution of the team. You came out last April, and you summarized your goals very clearly. Number 1 is best products always win. Intel needs to focus on designing best-in-class products, redefine the portfolio for emerging AI workloads. Number 2, approach the portfolio with full stack systems focus. Number 3, build a world-class foundry franchise, and that means building trust with customers. 4, strengthening the balance sheet, right? 14 months later, give us your view on the team's progress on these goals, and more importantly, your confidence on executing to your strategy mid to longer term.
Yeah. Thank you for the questions. Let me address the 4 area that you asked for. 1 is the balance sheet. When I took over the balance sheet is pretty horrible. I tried to recruit some talent. They said, "You're almost a bankrupt company. Why should I join you? I love you, but not this one." I really focused on the balance sheet to strengthen that. First of all, I'm delighted, President Trump and Wilbur Ross is from, commerce secretary, let me have a chance to explain my vision. They delighted. They convert some of the chip program money to convert into equity.
We're delighted to have their support. Also my longtime friend, Jensen from Nvidia. Besides we're going a deep collaboration, multi-products, multi-years of engagement and a very good engagement. He said, "Lip-Bu, I also want to support you with $5 billion investment." Also my old time friend, SoftBank, Masa, used to be on his board, and he said, "Lip-Bu, I also like to help you." I think 3 of them helping me, and so far, knock on wood, I make money for them, and they're quite happy with it. I think overall, I think strengthen our balance sheet. I think that's very important. Because of that, also we drive more successful cash flow and operation.
We're able to, you know, divest this, bought back, this Skip two Apollo, that we can really have less dilution on the EPS. That's very helpful. Second, from the fact you mentioned about the foundry, want to be a trusted foundry partner. This is very important. At the end of the day, foundry is a service business. We really need to build a trust with the customer. Customer have to trust you enough, based on their revenue. We have to produce a wafer of good quality, otherwise they're gonna impact to their revenue, so forth. I think that something is a lot of responsibility for doing that.
For doing the foundry business, first of all, not just to improve your yield, improve your D0 density, the cycle time, make sure that you can on time to deliver the customer service. The other part, very important, you need to have all the right IPs. For example, if you have a foundry customer for mobile, you need to have low power IP. For if you're working with a big data center or cloud infrastructure, you need to have high-speed connectivity, SerDes IP to serve them. Those IP, in some way, you are working the two team of the customer. One team is a supply chain. They whether they can use your foundry. The other team, basically the design team, they have to make sure that your PDK, your IP is ready.
They can really design the chip based on your foundry nodes. Foundry capability to do that. I think overall, we're making great progress. We can talk more about it. We make great progress on Intel 18A. Our Panther Lake depend on that. I have a volume in the wafer to support my Panther Lake. We announced in CES.
Yes.
We have 200 design win. We finally able to get the product volume to support them. The customer is quite happy with that. The other part is, you know, clearly the Intel 14A. We announced in Q1, we have 0.5 PDK so that they can do the test chip to look at our yield and see whether they can, over time, to really design their product and fabricate with us. We are making good progress. The Holy Grail is 0.9 PDK.
Right now we're looking at October to the outside customer. Internal customer will be earlier, so that we make sure that we really, you know, kind of, clean the pipe, make sure that we're doing right, make sure that we can sell with good quality. Good news, I think we are, knock on wood, we have multiple customer engaged with us and to really define what product, what foundry location want to be, what kind of capacity we need. I think that's something, my philosophy, I don't disclose the customer. If customer want to disclose, we will support that. I think something that important to work with them. Some of them worry about our competitor know that we are working with us.
Right.
We try to keep it highly confidential while we kind of gradually win their heart, just on the foundry side. In terms of the products, you know, clearly I mentioned earlier, the long term, you know, you basically have the best product win.
That's right.
Immediately from day one, I have all the engineering report to me. It's very important so they're understanding where we went wrong, what are the mistake we make, and how we can correct that. From day one, March 18, 2025, my first day to work, and I have my big customer have dinner with me, and they told me that the product, you are far behind. 25% behind. Your product is so complicated, and you are behind the schedule to deliver. Those are the things I took in.
Yes.
I address that. Now our weekly call, we are talking about big area, big idea to work together. I think we kind of win the trust of them that we can come up with a better product. My PC client with Panther Lake was a good one. In term of the data center, you know, we used to have the leader. We have 90-plus% market share, and we lost it. A lot of mistake make. I still remember one of the big customers told me, "Lip-Bu, these are the 14 area that you guys screwed up." I take notes of every single one. He said, "Lip-Bu, we are so delighted you are the CEO. You are so humble.
In the past, you know, we are so proud, Intel, that you don't even listen to us. Actually, you lecture us.
Yes, yes.
We quietly design you out. Now you're back, you've become the CEO. We love to have you. Then one thing about you're a very good listener. You take notes. Then less than one year, they decided, "Lip-Bu, we're gonna go big time with you, and we're gonna announce couple of areas that we are working together. Stay tuned." I think that's something that across the board, a lot of customers said, "Well, Lip-Bu, we are so happy you are the CEO. We have worked with you at Cadence Design. You underpromise, over-delivering.
You work hard. You listen to us. You put together a world-class team to do that." I think all in all, I think we are making good progress to come out. Of course, as you know, some of the product, if you design, you take about 12, 15 months to come out.
That's right.
Right now I'm working on it. Hopefully, some of the new product, HILAB product can come out, can really meet the schedule and meet the timetable and the performance. One thing about timetable, I have a culture right now I just implement. I have to be A0 to production. A0 is when you tape out, first time pass. Intel don't have that culture. I kind of said, "Well, first time pass, A0. B0, you keep your job. Anything above that, you're fired.
That culture, people initially thought that I'm just joking. Now I'm starting to implement. They're starting to say, "Okay, Lip-Bu, you are very serious. You really look into all the design, all the bugs that we've tried to fix, and then all the IP that we use, you make sure that we certify and make sure we do that before we go to tape out." Those are kind of the culture we need to have. Finally, I think most important is to delight the customer. I spend a lot of time listen to customer and the customer understand what they want and make sure that we meet their requirement.
Well, that's perfect. You know, as we've talked to some of your customers, as we follow the company over the past 14 months, I would also agree that under your leadership, you know, the team has certainly improved its execution very meaningfully and articulated its strategy very well. Now it's just a matter of continuing to solidly execute on a go-forward basis. As you put in place these targets and goals, I think one of the most impactful and important decisions when you first joined was to flatten the organization to accelerate decision-making, right?
Can you discuss the response from employees, particularly engineers, how, you know, now that you've been operating under this, more streamlined model for a few quarters, you know, can you just discuss some of the early benefits that you see from this change?
Yeah, it's a very big change. 14 months. First of all, I think it's very important. Over the years, I think they built so many layer of management. I still remember some areas like 12 layer. I said, "Well, this is not good. We need to bring it down to five layer. The main reason is the more accountability. Secondly, you know, the speed of the making decision, rather than so many business review. The most important is the middle management.
Yes.
They love meetings. I basically cut the crap of the meeting. If you have a meeting, it got to be what is the to-agenda, what are the things that we want to decide, and then what are the things that we want to bring me up to speed. If not, they cancel the meeting. I think that speed of decision making instead of, sometimes, you know, it can be 1 week to decide, sometimes in Intel is take more than 1 year. At the end, the people decide, they don't even know what is the problem.
Right.
I think, you know, this is something that we just have to eliminate. Right now I kind of work as a kind of startup environment. Everybody move fast, and then, some of the customers really like that. I call it the speed of light. We have to make decision quick. If it's a mistake, we correct right away, and we want to delight the customer. In the past, customer complained to us, we are not responding, we are not listening, and even lecture them.
Yeah.
In 24 hours, I want to know what are bad news, what are the customer. If the customer tell me something that you didn't tell me, you are in deep trouble. That kind of transparency hold the people accountable. Sometimes things get screwed up, and I say, "Who responsible for it?" Everybody pointing finger.
Right.
Nobody want to take responsibility. Now I said, "Well, I pick all the right people. You are responsible for your group, your job, and you give me daily or weekly update. You build a problem, you let me know. Share the problem, bad news first. Good news, you don't have to tell me. Later we can celebrate. Bad news, tell me first. If you have tell me the bad news, it's our problem. We fix it together." That's kind of the culture we changed. So far, the feedback from customer is really happy to hear that. Secondly, I think for the engineering used to be kind of third-class citizen.
Nobody listened to them. Now they have direct line with me. I go down to eight, nine layers now to find the real truth of the information so that we can really make some decision good for the company. I set the example is basically do what is best for the company.
Yeah.
Take away your personal interest and agenda, and let's look at what is best for the company. In fact, one thing is very similar to Cadence when I took over, same thing as Intel. When I look at the performance review, everybody outstanding, outperforming. I said, "What is this?
Right.
I changed it. Unless the company perform, nobody get outstanding performance. Unless it's super, superly outstanding. Include myself. Even I tell my board I'm just acceptable. That set the tone for the culture of the company. Let's work together. You know, I used to be a basketball player. The only way win the business is the team work together, not the individual score.
Intel brings to market some of the most complex, what we call systems-on-chip or complex compute chips to the market, right? I believe historically, Intel operated under a model that perhaps excessively relied on the use of internally developed intellectual property or IP, right? Given your background and tenure as CEO at Cadence, for example, how are you looking to shape how the engineering teams potentially integrate third-party IP, third-party design tools to expedite, improve productivity of these most complex designs that you're bringing to the market? As you mentioned, minimizing tape outs while still championing internally developed IP for, you know, the superior competitive advantage that you're targeting, right?
Very good question. You know, I think Intel has a culture and a lot of talent in Intel. The problem is each one has a silo, they work on something. Some of them, there's no differentiating. You may say use the industry standard accepted practice on IP or EDA tool. You were shocked when I came on board. We have a big team on EDA. I said, "Why are you doing that? Unless you have something differentiation you should just embrace the industry standard.
That's right.
I decided to hire Srini from Cadence. I promised Cadence that no more hiring, except this guy I really need to have. He's not an EDA guy. He's really the designer. I have him run the central engineering. You'll be shocked. I have five different organization, have different EDA effort and budget. Number is so huge. I said, "Wait a minute, why are we doing that?" I said, "Well, Srini, you come over to be central engineering, is ASIC central design team, all the people we have, you know, cut by four, at least two-third of it.
Yes.
Of the people gone. Then consolidated the design, the budget, to focus on EDA, what we really need. Then internal, we still do some, but something that is very different that industry don't have. Unless that, otherwise just use industry standard. Same thing for foundry. You know, we have to really embrace the standard, that's why in the Intel Foundry days, I highlight, I have all four EDA leader CEO on stage with me. We are embracing them. They are important partner, just like Jensen embrace them.
Right. That's right.
That's something that we do the same.
Got it. Going back to the partnerships that you talked about in terms of your discussion on shoring up the balance sheet, right? You've signed important partnerships with industry leaders and industry innovators, Nvidia, SoftBank, Google, SambaNova, Ericsson, obviously the U.S. government as it relates to U.S. supply chain assurance and resiliency. Terafab is another good example of that. You've also strengthened your partnership, as you mentioned, with the value chain companies like Cadence and Synopsys, right? It's a great endorsement and reflection of the importance of Intel in the technology value chain, right? You highlighted the financial benefits from some of these partners, but how has Intel been able to sort of leverage these partnerships in driving towards your product excellence, foundry leadership aspirations? How have these partnerships helped along those lines?
Yeah, good question. I think one of them is basically, I'm a long-term guy. I like to build in a company five years, 10 years from now. Then you have to look at from long term where you want to go and then take steps to get there. For example, you know, full stack, and then rather than just work on the silicon level you have to build the software, you have to build the memory o ptimization. You need to really drive the, you know, platform so that you can provide the chassis to the customer. I think all this along the way, you can't do it alone.
Right.
You need partners to help and also need partners to support you in the ecosystem support. Those is very important to have, but you have to be very selective w hich are the right partners. Jensen is a good example. Old friend of mine, he's done such a great job into building up the platform. I still remember many years ago, he asked me to support CUDA. He's no more a semiconductor, he's a platform company. Giving credit, he did.
Right.
I think in some way, I'm so happy from day one, I asking him, "What can I help you?" He turned around, he said, "You're not helping me. I'm gonna help you. As a friend. I'm delighted to have that collaboration with him. Likewise, like for example, Google, we have a big announcement. They are the important, you know, player. The Gemini 3 and 4 are really stand out, and then we want to embrace. Some of the silicon, they are working with us, and then we are deep partnership with them. Something that we like to have the kind of win-win for both. They're successful, and we will be successful together.
Yes.
We even see more and more of this partnership. I strongly believe in partnership. One thing good I bring into the table at Intel, one is my network of contacts. Secondly, you know, I'm very strong with the partnership with customer. They build trusting relationship with me for a long time. I think with that, from the foundry customer side, from the product side, even some of the customer customers tell me what the product should be, I help my customer to really deliver that together with them. I think all in all, I think it's create a win-win partnership. I think that's the best thing so that we can create value rather than compete with each other.
Absolutely. Let's focus over to the topic of AI and accelerated compute. Again, I'm gonna rewind back to the April 2025 earnings call when you first joined. I believe as a part of your opening commentary in terms of defining your goals, you also mentioned the opportunity of agentic AI. It's coming, and it's gonna create a lot of opportunity for Intel and for the semiconductor industry. Interestingly enough, by the second half of 2025, we saw that inferencing inflection, right? Moving past training workloads. Because obviously your customers move from training to monetization, right? One shot to, you know, agentic-based workloads. We saw that complexity increase. We saw the inflection of inferencing over training exactly as you predicted back in April.
The market is now seeing the re-emergence of CPU, right, as a key contributor to the AI computing fabric with a ratio of server CPUs potentially reaching parity with the number of accelerators in the data center segments the market. Can you just unpack for investors, like the type of conversations you're having with customers on this front, how you see CPU intensity progressing over the next few years, and puts and takes based on sort of various types of agentic applications?
Yeah, it's a very good question. You know, clearly, you know, this agentic AI, I kind of forecast that it would take off.
That's right.
That turned out to be very accurate. Also very helpful. We thank you for that. In some way, that's where the drive the CPU demand.
Right.
Used to be a training is 1 CPU to 8 GPU. Now in the agentic AI with all the agents, people, you know, I work a lot with the function model, some of the startup I involve. They're all telling me, "Lip-Bu, CPU actually is more useful, even single threading." He said that most important is the reinforced learning, the orchestration of all the different agents, also the optimizing for some of the workload. CPU is even more important. I can starting to see not just my wishful thinking, customer is feedback to me, "Lip-Bu, it's more like 1 to 1." Now even some of them tell me it is 4 to 1. 4 CPU to 1 GPU.
GPU.
The infant and agent. I think that part is very. You know, sometimes in life you need some breaks. This is a good break for me. So CPU become high demand, and I try to make sure that we can meet the requirement from the customer. Then the other part, the next frontier, gonna be the physical AI.
Yes.
That's also coming up. In a way, it's smarter than human. You have to look at the compute requirement for managing the agent from the personal and also to the commercial side.
That's right.
That market is quite big. I think there's opportunity for me to work on the CPU and then drive new architecture to drive the purpose-built workload to optimize for particular workload gonna be. Same thing with accelerator. Make sure that we have that. Back to the AI. You know, we have 10 years ago, I backed two ideas because I thought GPU power hungry. I backed this wafer scaling. This is several investment products. I was series A investor. The other one I backed is the data flow architect. That is SambaNova.
That's why we have a deep partnership with SambaNova. You know, the 86, you know, CPU and GPU, and with SambaNova accelerator or LPU, we call it. That we can go together and then win some of this cloud infrastructure play, and there'll be much lower power requirement. Those are the things that you have to think way ahead. Right now, we are thinking the next big frontier is physical AI. Recently, I just hired Alex from Qualcomm. He used the compute and mobile wearable and physical AI. Come over here to help me to build the physical AI, all the way full stack from silicon optimize through all the way to the software, to the system platform engineering, and drive the solution for robotic or digital workers.
I think those are humongous opportunity to address this whole agentic AI, millions of agents and worker, digital worker. I think it's a new era that we can really capture the opportunity.
Yeah. We were talking about it last night, I remember. When it comes to physical AI, a lot of the use cases are in areas like industrial, automotive, edge AI, and we were talking about it last night, but we call these the embedded segments of the market, right? In embedded, interestingly enough, Intel still holds very, very strong market share. I think it's a big opportunity from the perspective of there's a lot more intelligence and compute opportunities with physical AI. In this case, Intel is starting from a position of very, very strong leadership. Would you agree with that?
I agree with that. In fact, not just embedded and also the FPGA. We spin out the Altera. The CEO is a very good friend of mine. Rajib is very good.
Yeah.
I kind of played a role to recruit him to be the CEO and the FPGA together with the embedded, and then we can really drive some of the new physical AI, and then will be very exciting opportunity for us.
I think what we've been hearing from certain shareholders is that they like the focus on the CPU architecture continuing to continue to drive the roadmaps very aggressively. Obviously, we'll be talking about the foundry in a little bit. The market is a little bit concerned that as you continue to focus on building back leadership in these two areas, that they wonder that does Intel, you know, have the additional resources and capabilities to also execute a strong AI accelerator family of products, right? Try to move toward that full stack sort of AI sort of implementation. We know that you have your Gaudi-based accelerator family of products. You talked about the partnership with SambaNova for inferencing applications.
Help us understand the team's strategy around accelerators and your ability to compete with merchant GPU or ASIC XPU that are already out in the marketplace.
Yeah, good question. I think we need to do both. At the CPU side, we have to do more architecture change to purpose-built silicon. On the accelerator side, you know, we're gonna team up with SambaNova to do that. We also have an internal plan in the AI development. So that we can come out kind of leapfrogging to some of the area that can drive some performance benefit. You know, in the agentic AI, physical AI, I think there's a new area that we can really capture.
Yes.
In some area we are behind and no point to just do catch up. We do something new. I think we try to get into area that less crowded and something that we can differentiate in term of performance or power or you know, or software that we can do that. I think that we have to do. The other part is the system level and the full stack. Some of the area I don't have is the IO high-speed connectivity.
Yes.
Even though earlier I invest in Astera Labs and Credo, they both went public very nicely. Cadence, I bought a company called nusemi, basically has a high speed SerDes. Right now, I think it's moving to optical now. We need to look at what are the optical area that we can disrupt. Same thing, just besides CPU, GPU, accelerator, we also look at the memory. Memory becomes a big shortage h as become a bottleneck. How do we use CPU and memory to really couple together to make full optimization of the memory? That's something that we're working with the memory player. Also we're gonna recruit some of the talent. We used to have memory business.
Right.
We sold it to SK hynix. Right now we have to figure out a way to really secure some of the memory requirement to serve our customer. Those are the things that we are focused on.
If we turn to your manufacturing and your foundry business, can you just give us a progress report on your 18A-P, next gen 14A process technologies, qualitatively, you know, yields, costs, manufacturability? Maybe compare that relative to your prior generation nodes. Also maybe importantly, you know, compare it to TSMC's metrics that I'm sure you guys track internally as well.
Yes, good question. I think, you know, the Intel manufacturing used to be our strength. We lost some of them. Secondly, we never do the foundry service business. It's a culture change. I need to have a separate team that really know how to serve the customer. That's why I think you see that some of the people I hire for Samsung Foundry, Shan Han, know him for 15 years, to come over to help me. Secondly, we're also gonna look at how can we improve the yield. From the Intel 18A, you know, good news is, much better than I took over. I can see 7% yield per month i mprovement. Right now it's ahead of schedule compared to end of the year target. Intel 14A, we are engaging with customer with real engagement. The IP block are also gradually building it up.
I think overall, still a long way to go. TSMC, Morris took them at least 10 years to build what they have.
That's right.
It's not going to be overnight. Good news, 14A, my risk production is 2028, and volume production in 2029 is about the same time as A14 from TSMC.
That's right.
Now I'm starting to work at the 10A, 7A, the roadmap. People don't go to you, just one node. They're looking for the roadmap for the future. We have to build a long-term business, and then we can drive the efficiency, the defect density, and then we can go to that Rule of 40, how to drive the operating efficiency, the profitability, cash generation. Those kind of a multi-per-year milestone that we are going there.
You talked about, you released your 0.5 process development kit for Intel 14A, beginning of this year. We know of multiple customers that are designing test chips, running them through Intel's fabs right now. You also have your 18A-P process, which is your current generation process, which you are opening up for foundry this year. Opening up for foundry as well. I know you had anticipated early design commitments in the second half of this year, but we are in an overall very, very tight foundry supply situation. Geopolitical dynamics are, you know, still pretty volatile. I would think that some of your customers want an accelerated timeline. Has the Intel team already secured design commitments on 18A-P and/or Intel 14A, or is it still a little bit too early?
Yeah, Intel 18A, you know, when I took over, I decided to eat my dog own dog food. In a way, I kind of focus on internal, which is that Panther Lake is taking off successful. Customers hear that we are getting improved, so they're asking about 18A-P. We are engaging with couple of customers looking for, you know, the supply resilient and robustness, rather than depend on one single vendor, foundry. I think we have opportunity there. The Intel 14A, we already engaged with multiple customers.
My philosophy, don't announce ourselves. If a customer want to announce, we welcome them to announce. We support them to do it. I think, you know, I think we're making good progress. The other part is also very happy surprise for me. We have a very good advanced packaging. This is something that couple of customers come to me, the EMIB is so good, we want to use that. In fact, right now, as you know, some of the substrate material i s very shortage. 2 from Taiwan, 2 from Japan, they're all asking us to prepay the substrate commitment.
We ask our customer, "If you are serious to use our EMIB, can you help me on the substrate prepay?" They jump on it. That means that they show the commitment. They really want our technology. This is not few million, it's $ billions in the next few years. I think it's exciting, you know, with the advanced packaging, with the foundry, and now we have all the new CPU architecture come in. I think we are in very unique area that we're going to go after some of the ASIC business.
Yes.
That we can really purpose build for some of the customer in a very fast turnaround time and the best performance to optimize all this together. That's something that's very exciting for me.
Great execution. Great opportunities in front of the Intel team. Lip-Bu, thank you very much for participating today.
Thank you.