Intel at Deutsche Bank’s 2025 Technology Conference: Strategic Moves Unveiled

On Thursday, 28 August 2025, Intel Corporation (NASDAQ:INTC) presented its strategic vision at Deutsche Bank’s 2025 Technology Conference. The company outlined its financial strategy, highlighting significant government and private investments, and discussed challenges and opportunities in its foundry and product businesses. While Intel is positioned to improve its financial health, it faces hurdles in securing external customer commitments for its process nodes.

Key Takeaways

• Intel secured $5.7 billion from the U.S. government and $2 billion from SoftBank, strengthening its cash position.
• The company aims to reduce debt by $3.8 billion this year, with further deleveraging plans.
• Intel is focused on improving its foundry business with a target for volume production by 2028-2029.
• Product roadmap updates include the upcoming release of Panther Lake and NovaLake, with adjustments in the data center segment.
• Intel’s strategy involves enhancing shareholder value through improved product portfolios and customer focus.

Financial Results

• Cash Position:

- Received $5.7 billion from the U.S. government and $2 billion from SoftBank.

- Generated $1 billion from Mobileye shares; expects $3.5 billion from Altera transaction.

• Debt Reduction:

- Targeting a $3.8 billion reduction by year-end.

- Plans to address 2026 maturing debt similarly.

• Capital Expenditure:

- Maintaining annual CapEx around $18 billion, slightly lower next year but above $10 billion.

• Gross Margin:

- Operating around 40%, with a goal to exceed this threshold.

Operational Updates

• Foundry Business:

- Emphasizing ROI; 18A node showing yield improvements, 14A requires external customer commitments.

- Engaging with customers and expects a 0.5 PDK release; targeting 2028-2029 for volume production.

• Product Roadmap:

- Panther Lake on track for year-end release; NovaLake to enhance high-end desktop market position.

- Lunar Lake gaining traction in notebooks; data center roadmap adjusted to address multi-threading gaps.

- Diamond Rapids offers incremental improvements; Coral Rapids represents a significant leap forward.

• Manufacturing:

- Improving efficiency in equipment deployment and reuse.

- Reducing time from equipment purchase to production.

Future Outlook

• Foundry Business:

- Expecting improved margins from 2026 onwards; open to financial and strategic investors.

• Product Business:

- Enhancing ASP and cost structure to improve gross margins.

- Opportunities for better pricing as product efficiency improves.

• Overall Strategy:

- Aiming for a successful foundry business to boost valuation.

- Enhancing product portfolio and customer focus for increased shareholder value.

Q&A Highlights

• Government Involvement: U.S. investment seen as a positive endorsement to secure customer wins.
• 14A Customer Acquisition: Critical for financial viability; actively pursuing commitments.
• Product Roadmap: Continued investment in refining notebook, desktop, and server product offerings.

For more details, readers are encouraged to review the full transcript below.

Full transcript - Deutsche Bank’s 2025 Technology Conference:

Unidentified speaker, Interviewer: All right, good morning, everyone. Let’s get on to the next presentation. We’re very honored to have Dave Zinsner, the Chief Financial Officer of Intel on stage. I’m going to read the Safe Harbor statement. It’s second in its excitement to the risk factors in your 10 Q that actually would be more exciting believe it or not, a little inside joke.

But before we begin, please note that today’s discussions may contain forward looking statements and 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 ks 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 our non GAAP financial measures, including reconciliations where appropriate to the corresponding GAAP financial measures. So with that fun stuff out of the way, why does the government own 10% of you guys now?

Dave Zinsner, Chief Financial Officer, Intel: Yes, unless you’ve been living under a rock here, probably saw the news. The government has put $8,900,000,000 into the company for $433,000,000 shares plus about two forty million dollars warrants. Look, we had about $5,700,000,000 of grants still outstanding. We also had received $2,200,000,000 There were certain concerns around whether we would hit many of those milestones. They also have clawback rights on the $2,200,000,000 and then there’s the secure enclave money.

So there was a significant amount of uncertainty as to whether we’d receive that much of that cash. And the government came forward said, hey, rather than do this in the form of grants, what do you think about converting that to an equity holding? And we saw a lot of advantages. One, we were already thinking, we likely will need a little bit more cash on the balance sheet given that’s one of Lip Bu’s core strategies is to solidify the balance sheet. And so this was a quick way to getting initially $5,700,000,000 in the door.

By the way, we have received it. We got it last night. So that’s on the balance sheet. So that was one thing. It eliminated the need to access capital markets in any other way in the near term.

Also, like I said, given the uncertainty, this effectively guaranteed that we get the cash. So that was also pretty important to us. And then I think having the U. S. Government invested in us and invested in our success is absolutely helpful.

At the end of the day, we’re going to have to bring out the processes and execute on the business, But to have their support and backing, think is helpful with customers. I think customers will acknowledge that, that takes us to a different level in terms of how they view us. And we don’t need to get obviously, when you take the the grant money and switch it over to equity, it is it does have a dilutive impact. We’re getting a P and L benefit from the grants and now we’re issuing shares, which is also diluting us. But when you run the math, it doesn’t take a lot of volume of foundry wafers for us to make this accretive for us.

And so we ran that math as we were doing the analysis and said, hey, I think based on this ownership, we will see that level of business going forward and thus ultimately, this should be pretty accretive to our existing shareholders. What’s the I’ve heard various interpretations of the warrant side that you mentioned in the 51% threshold and

Unidentified speaker, Interviewer: all those sorts of things. Describe why that occurred? Why is that mechanism in the agreement?

Dave Zinsner, Chief Financial Officer, Intel: Yes. Well, I mean, I think initially, government was thinking about this as some upside play for them. But when as we kind of worked the negotiations, we ultimately made the it’s a five year warrant for what was roughly about 5% of the shares outstanding. And we created a trigger that as long as we maintain a majority share of the foundry business, it would never trigger in that five year period. And so effectively, it reduced the cost of that warrant to something pretty nominal because we do have high confidence we’re going to have this foundry business.

We might, as we’ve said before, we might take outside investors into the foundry entity. We are structuring things in a way where we’re separating ERP systems and creating a separate management and board structure over time for foundry. But I don’t think there’s a high likelihood that we would take our stake below the 50%. So ultimately, I would expect it to expire worthless. Now I think from the government’s perspective, they were aligned with that.

They didn’t want to see us take the business and spin it off or sell it to somebody. And so in some ways, could view this as a little bit of a friction to keep us from moving in a direction that I think ultimately the government would prefer we not move to.

Unidentified speaker, Interviewer: Do you expect the U. S. Government being involved changes the probabilities all else being equal and we’ll get into some of the other triggers that are necessary, but all else being equal, improves the odds of your foundry business garnering external customers?

Dave Zinsner, Chief Financial Officer, Intel: I think it’s good endorsement. There’s no question about that. But ultimately, most of what will make the foundry business successful is really in our hands. We’ve got to execute on the process. We’ve got to delight our customers.

We’ve to make sure we’ve got capacity there when they need it. Those things, I think, are going to be primarily the reasons why customers come to us. But endorsement helps on the margin and I think ultimately will help be helpful for us.

Unidentified speaker, Interviewer: And then you also had a $2,000,000,000 investment from SoftBank. How did that come about and was there any interaction or relationship between the U. S. Government and SoftBank, those two moves that you made?

Dave Zinsner, Chief Financial Officer, Intel: Yes. Yes, it was coincidence that they fell all in the same week. We have been working for a number of years with SoftBank on ways to partner, and we continue to have those conversations. They’re very much invested in AI, as you know, and we’re looking for opportunities where we can intersect with that and provide solutions that either may be useful for them or may be in concert with them useful for others. And if the conversation evolved to, hey, we might be interested in making an equity stake and ultimately, as we kind of work on the development of the relationship, the SoftBank wanted to somewhat fast track the investment.

And as I said, we were looking to put some cash on the balance sheet. So it was a good opportunity for us to do it quickly, get a good quantum of capital, a good slug of capital in one fell swoop with kind of a quality investor. I think we’ll continue to have conversations with them about how we can partner and do things together that can be beneficial to both companies.

Unidentified speaker, Interviewer: Is this likely to be the end of these sorts of capital raising efforts now that you’ve gotten whatever it is $7,000,000,000 $8,000,000,000 I guess? Yes, mean, was actually, this was a

Dave Zinsner, Chief Financial Officer, Intel: great quarter for us in terms of cash raise because we sold almost $1,000,000,000 worth of Mobileye. We’re within a couple of weeks of closing Altera that will generate $3,500,000,000 We had the $2,000,000,000 from SoftBank and the $5,700,000,000 we just got from the U. S. Government. So we’re in a good cash position, would say.

I feel pretty good about where the balance sheet sits. And we’re, as you know, in the process of delevering now. So we had about $3,800,000,000 of bonds maturing this year. Some of it we kind of left the debt outstanding effectively by kind of converting it to commercial paper. But ultimately, by the end of the year, we’ll be down $3,800,000,000 in debt.

And our intention is to do the same with the debt maturing in ’twenty six. I think we’re in a pretty good place. Now, this expensive business obviously and depending how successful the foundry is, there may be some capital needs as we kind of plan out our capacity build out over time. I wouldn’t think it happens until we have pretty significant demand on 14A. And then as we talked about, there’s likely going to be some opportunity for outside investors in foundry and that will probably be our second opportunity to raise cash to fund the growth on the foundry side.

Unidentified speaker, Interviewer: Earlier this year, you and I talked about the fact that oftentimes you need a financial investor to set the value of a sub segment of your company before a strategic investor would come in. Has that already occurred with these two separate investments that we already discussed? I know it’s in the company as a whole, not just the foundry side or would we still have to have the kind of precursor be a financial before a strategic potential customer would put money into the foundry side?

Dave Zinsner, Chief Financial Officer, Intel: This is in the foundry.

Unidentified speaker, Interviewer: Yes.

Dave Zinsner, Chief Financial Officer, Intel: I don’t know. I think we’re open to both ways. It depends on the strategic and how comfortable they are at determining their own valuation for the business and whether that is relatively aligned with how we view the value of the business. Assuming that’s the case, then likelihood is we would take a strategic investor without financial. But we constantly talk to various firms out there about their level of interest on the foundry side.

And so I wouldn’t dismiss the possibility that we might take investment into from financial sponsors as well. Now I would just tell you, we’re probably a long way off from either of those things. We’ve got a lot of work to do to get the foundry business to a level where we feel confident it can operate somewhat quasi autonomously. And first, we’ve got to get through 14A evaluation with customers. We’ve got to ramp our 18A successfully, which we’re in the process of doing.

We get through those things. I think there may be an opportunity at some point to take some outside money into foundry, but it’s I think we’re years away from that.

Unidentified speaker, Interviewer: Let’s pivot over to the technology side of things. We’ll get to 14A in a minute, but is success in ramping 18A a prerequisite for 14A working or are they different enough that they’re not completely codependent? No, I mean,

Dave Zinsner, Chief Financial Officer, Intel: we’re taking all the learnings of how obviously, this was elongated in terms of our improvement on AT and A, we would have liked to have gotten yield stabilized sooner. But as we were adjusting performance, yield tends to be what gets impacted. We’re in a good really good place on the performance and now we’re making kind of steady incremental improvement on yields on 18A and we’ll take those learnings to help us on 14A. But there are differences. I mean with 18A, it was a process that we’ve intersected or intercepted early to make it a foundry node, whereas 14A from the ground up was always built to be a foundry node.

So the maturity of the PDKs is completely different in 14A, just our level of rigor around the ecosystem is completely different versus 18A. So it’s already out of the gate looking better than where we were on 18A at the same time. But we’ll port learnings. Mean, with every one of these processes, you learn a bunch of things in the previous processes that you take into the new one to help improve defect density and improve performance.

Unidentified speaker, Interviewer: And Panther Lake still on time? Still on track.

Dave Zinsner, Chief Financial Officer, Intel: Yes, we look things are looking good. Our first SKU will be out by the end of this year. And then we’ll have more SKUs in the ’6. And you’ll really start to see the volume ramp as we kind of migrate through 2026.

Unidentified speaker, Interviewer: And then the 14A side, on last quarter’s 10 Q, you guys put in a risk statement, which we were joking last night nobody ever reads, but this one actually was worth reading because you scared the pants off everyone. So you basically said, 14A, you need external customers, otherwise, the return isn’t there, and Lip Bu kind of summarized that even What in the led to that risk factor being for the first time inserted documents?

Dave Zinsner, Chief Financial Officer, Intel: Yes. I mean, look, the lawyers are always looking for areas where we should be elaborating in terms of our risk. And our risk the one thing about the SEC filings is you put all the risk potential corner case risk factors that are that could materialize. You don’t put any of the mitigating factors. You don’t put any of the things that might be upsides that might happen.

I mean, that’s just the nature of an SEC document. So it’s important not to read too much into a risk factor. We’re constantly reviewing them and updating them and pretty much every risk factor you read in there sounds horrible if it were ever to happen. So it was interesting that this one got so much attention because a lot of them would be bad if obviously if they materialize. But I think more than anything, Lip Bu wants to he wants to execute on 18A, he wants to execute on 14A, but he wants to maintain financial discipline while he’s doing that.

And that’s something as he came in to be CEO, he really emphasized to the team. And so what we’re trying to communicate is that the philosophy around why we’re getting into the foundry business, there’s opportunity there. We think it’s value creating for shareholders as well. But the volumes required at these new nodes in terms of the spending level, it’s hard to get an ROI unless you’ve got more volume than we have. And we were able to do it with AT and A.

I think it will turn out to be a good node for us from an ROI perspective without foundry customers. I do think that we have an opportunity in the second wave to get foundry customers into 18A, but 14A is different. There’s enough expense associated with 14A, investment associated with 14A and the volumes for us, we are going to have to really emphasize 18A and we’re going to be able to do that with the tile structure such that by the time we’re ramping up volumes in 14A on our own, it’s not going to be enough to drive an appropriate ROI for shareholders to make that investment. So we do need customers outside of our own products business to drive volume through that business to make sure that we get to get the right ROI. And we’re just articulating that to the investors, so they understand what we’re trying to do.

We’re not going to put capital in place until we have firm commitments from customers that they’re going to use 14A and that we will get the requisite volume that drives a good return. Now, Lip Bu, I think if you ask him every day, he kicks the tires on 14A, he becomes more and more confident around our ability to be successful there. The fact that 18 we already have made this point, but the fact that 18A is now making steady improvement on the yields is also giving us a high degree of confidence that 14A will be successful. So it’s not to say that we have any diminished confidence around 14A, but we’re just going to maintain discipline around how we manage the build out to be able to get the right return.

Unidentified speaker, Interviewer: The fact that Lip Bu talked about it so proactively on the call that the risk factors and everything and you put it in the 10 Q and I know all the caveats that you just said that you don’t get to say the mitigating side of the equation. I’ve heard people think that or kind of posit the idea that you could scare potential customers away or you could kind of get them off the sidelines that they have to step up now if they ever want to otherwise they’re going to deal with the monopoly, which one ended up happening?

Dave Zinsner, Chief Financial Officer, Intel: Well, I’d say it this way. I’d say, I think customers for a couple of reasons will get real value out of us as a foundry. Number one, it helps diversify their supply chain, which is obviously helpful. But more importantly, it’s always good to have multiple suppliers to help on the pricing side. And every customer or every supplier brings something unique obviously to the table.

And I think that will be the case for us with 14A and there will be opportunities where that is the differentiated technology that certain customers will require. And so that’s how they will make the evaluation and that to me is whether how we will win the business. On top of that, they obviously have to get comfortable that our process is a good process and we are in the early stages with customers working with them on the data. We didn’t announce when we expect a 0.5 PDK, but it’s coming in the not too distant future. That will be a key milestone for customers to evaluate our technology.

And so it’s to me, I don’t think anything in our risk factor is really driving customers one way or the other. It’s what we’re doing on the field in terms of supplying them a technology that they need at a price that works for them that will ultimately determine whether we’re successful there with customers.

Unidentified speaker, Interviewer: On the 18A side of things, the way you guys structured the technology was very kind of high performance compute friendly and a little less kind of mobile friendly. Does the same thing apply to 14A? And I know there’s different flavors of 18A, but just kind of at

Dave Zinsner, Chief Financial Officer, Intel: the Yes. Highest of Look, I think with backside power in our solution, definitely gives certain customers an advantage and that generally is in the high performance compute. So that is the area that we’re generally targeting. That said, I think the mobile handset area is an opportunity for us. It’s not we’re not going to win every customer obviously.

And obviously, the incumbent is a machine in terms of their ability to execute. What we’re looking for are just we don’t need a ton of volume from customers, and most of them have some form of high performance compute in their portfolio that could be a pretty interesting opportunity for us to win. But I wouldn’t dismiss handset. There could very well be opportunities in the handset space to win as well.

Unidentified speaker, Interviewer: So, 14a customers are going to happen and they’ll probably not be named by you, but if you were to win a foundry customer for 14a, what is the timeline necessary as you try to balance the ROI and the investments and all those sorts of things?

Dave Zinsner, Chief Financial Officer, Intel: Yes, I think next year is going be an interesting year for us. We’ll see whether we get to a point where we have the ability to announce a win. Lip Bu has been also when it came in, he emphasized this. He’s not declaring a customer win until it’s a customer win with a real commitment and signature behind it. So all the pipeline stuff, obviously, we track internally, but we’re not declaring anything until we’ve got somebody signed on the dotted line.

I expect next year will be a good year to evaluate us. But if we don’t win a big customer next year, I don’t think that takes us out of the window of opportunities for 14A. I think ’27, we could win customers as well and that still would get us a good business on 14A.

Unidentified speaker, Interviewer: So whether it’s an external customer and internal Intel ramp on 14A, is the timeframe kind of ’28, ’29, ’30?

Dave Zinsner, Chief Financial Officer, Intel: Yes, I think most well, those in the foundry space competing at that node are generally talking about this as a ’28, 29 type introduction. Obviously, the expectation would be it would last a fairly long time after that, but that kind of very late in the decade is probably when you’ll start to see volume in the leading edge customers. Got you.

Unidentified speaker, Interviewer: Why don’t we talk a little bit about the product roadmap side of things, so much of what we discussed so far has been on the Intel foundry side, but if we pivot over to the product side of things, talk about between notebook, desktop and server where you think the product line is strong or needs some work and what are you guys doing to address it?

Dave Zinsner, Chief Financial Officer, Intel: Yes. I think on notebook, we’re in pretty good shape. We’re now in the process Meter Lake was our product kind of last year. We introduced Lunar Lake this year. It’s in the process of gaining adoption.

We’re expecting this quarter to be a pretty good quarter for Lunar Lake. So notebook, I think is good, solid, share is solid. As you know, we kind of fumbled the football on the desktop side, particularly high performance desktop side. So we’re as you kind of look at share on a dollar basis versus a unit basis, we don’t perform as well and it’s mostly because of this high end desktop business that we didn’t have a good offering this year. But NovaLake, which is the next product, is a more complete set of SKUs.

It does address the high end desktop market. And so we would expect that we will improve our position next year. So all in all, I actually feel pretty good about the client. It’s not executing flawlessly, but it’s executing pretty well. And that’s our business that generates good operating margin, drives good cash flow and funds the rest of the business.

On the data center side, it’s been pretty mixed. We are continuing to bring out products that do perform better than the prior product, but we’re still not there relative to the competition. We’re really performing well in areas where there’s single threaded solution. We’re performing well in what they call the head node, which is a CPU that runs alongside the GPUs. So those areas are bright spots, but collectively across the entire data center, we still have more work to do to get products that are really performing across the spectrum and are meeting our customers’ expectations.

We were already on a path towards doing that. I would say as Lip Bu has come in, he has really rolled up his sleeves and torn apart that strategy and looked at the roadmap and there were pockets there were gaps quite honestly in that roadmap that we were allowing that Lip Bu is not going to allow and so particularly around multi threading. And so we will be adjusting the roadmap to make sure that we are listening to customers and delivering products that customers want and need. That

Unidentified speaker, Interviewer: takes a

Dave Zinsner, Chief Financial Officer, Intel: bit of time. Think we’ll make some incremental improvement over the course of the next couple of years, but it’s going to be a multiyear process to get the portfolio to be really where we want it to be.

Unidentified speaker, Interviewer: Is Diamond Rapids something that you hope closes the gap is better than Granite, but it doesn’t get you to It

Dave Zinsner, Chief Financial Officer, Intel: doesn’t get us quite there. I mean, does in certain cases, the performance is actually better. But in other cases, it’s not. And so we’ve got more work to do to finally get to a place and it’s really not I think Lip Bu actually named the product in some forum, but Coral Rapids is the next product. And that’s our real opportunity, I think, to begin to take a really good step forward.

Unidentified speaker, Interviewer: And if we think across those products just to kind of blend the product and the foundry side, talk a little bit about the external to internalization of where those are produced from you talked about Panther versus LUNAR and then Nova and then same thing on Diamond versus Granite, etcetera?

Dave Zinsner, Chief Financial Officer, Intel: Yes. So obviously, Panther Lake, we that’s an 18A process, a lot of wafers coming back for that. Generally speaking, our data center products are done internally to help support foundry. But the great thing about just in general where the architecture is going is it’s moving more and more to these tile architectures and that allows us to kind of pick and choose. In a lot of cases, our Intel foundry business will be the best combination of price and performance.

But in other cases, external foundry will be the right balance. I think the foundry business has a great opportunity to continue to grow the wafers as they move to 18A and 14A, prices get better, margins get better. They’re really in a good place. But we do want products to have the flexibility to pick the right silicon for what architecture they need. And so likely for sure the majority of our wafers will come from Intel foundry on the product side, but they will continue to be a significant purchaser of external wafers for solutions that require it.

Let’s talk a

Unidentified speaker, Interviewer: little bit about the CapEx side of things. You guys, I think, have alluded to next year will come down year over year. I know there’s a gross versus a net dynamic to think about. Now we have change in what were grants from the government and now equity investments that you won’t get next year. Just talk a little bit about how you’re thinking of CapEx and kind of where is the normalized level Intel can operate on whichever one you want gross or net?

Dave Zinsner, Chief Financial Officer, Intel: Yes, mostly looking at on a gross basis. I think where we are here in this roughly kind of $18,000,000,000 level is I think a pretty good level for the next few years. We have the advantage at this point. We spent a lot in prior years, and we built up what we call our assets under construction, work in progress CapEx that we’re digesting now. So that’s enabling us to deploy more capital than the $18,000,000,000 on an annual basis, but not spend more than $18,000,000,000 because we can leverage what we’ve already purchased.

And Naga and Lip Bu have been pushing on reuse too. And I don’t think we did a particularly good job on reuse. We can do better. And so they’re really forcing the organization to not dispose of equipment and sell it at pennies on the dollar, but reuse it in the process rather than going to something brand spanking new on the equipment side and that’s also helping us keep the $18,000,000,000 check-in check. And then lastly, just in general, we were kind of out of benchmark with when we bought equipment and brought it in and worked our way to getting it in service and that time span versus what our peers do was way more elongated.

And so we’ve tightened that up to be more efficient in terms of when capital comes in and the timeframe from that point to the time it goes into production and squeezing that time period has been a big measure for us more recently. We still think though that next year we can bring the CapEx in a bit. I said the question got asked in the call was around maintenance capital and then that question kind of came in and somewhat I think confused the conversation a bit. I think we’ll be down in CapEx, but I’m not I don’t think it’s going go to $9,000,000,000 or anything close to $9,000,000,000 It’s going to be somewhere in the teens, a couple of billion dollars below. ’eighteen is probably the best we could probably pull off.

And then after that, I think it’s normalized to this kind of roughly in this high teens level for a couple of years. And then we see what we need in terms of equipping out 14A. We will have a high class problem if we do win a significant slug of the foundry wafers on 14A because that we will have to invest for that and that’s likely to push the CapEx back up. But I think hopefully, we are making a good amount of progress on the product side in terms of improving revenue and margins there and that should generate cash flow, which should help support those CapEx investments.

Unidentified speaker, Interviewer: Let’s talk about gross margin a little bit. You guys have kind of been around the 40,000,000 mark plus or minus. You have a target that’s significantly above that, but we can talk about how you get there in a bit. In the near term, say, next year or two, what are the pluses and minuses to getting above the 40 or you guys trying to fix so many things at once that operating at this level is not your goal, but you are kind of fine with it because there is bigger things to address?

Dave Zinsner, Chief Financial Officer, Intel: Yes. No, we definitely want to get back to a four handle. Mean, obviously, we have quoted much higher numbers for our model. By the way, a good running business should be more in those model numbers, but we’ve got a lot of work to do in the near term just to get the business up above 40%. I think on the foundry side, we’re in pretty good shape.

Like I said, 18A and 14A have very good cost structures relative to older nodes. The pricing is better. They enjoy that pricing from the products business, but also as we win foundry customers, we’ll get that price as well. So they should be on a steady path to improving both gross and operating margins as we go into ’twenty six and beyond. So I think I see that as a pretty good tailwind.

I think on the products business, we ’ve got to get our portfolio to a place where we’re getting the right ASP really and that will be the single biggest I think driver of gross margins on the products business is to bring out. So Nova Lake in the client side, great opportunity for us. As we progress from Diamond Rapids to Coral Rapids and so forth, great opportunity for us to command better pricing as we deliver more per watt to our customers. But we still have a lot of work to do on the cost side too quite honestly and that’s in a lot more in our control in the near term is to kind of chip away at our cost. Some of it takes longer, like for example, how much silicon is being used in the design.

I don’t think we were very efficient in terms of how we use silicon. But packaging, we’ve tended not to be as focused as we should be in terms of our use of advanced packaging. We rarely focused on test times in the past. That’s become a real focus of the products business. They spend a lot in terms of samples.

Of course, you want to give samples, but I don’t think they were really paying attention to how much they were giving away in terms of sample activity. They’ve kind of looked at that and tried to be more efficient around that. And then lastly, just the throwaway cost of inventory reserves. We’ve had a lot of inventory reserves over the last couple of years and we can do a lot better. So I think there’s a lot of opportunity over the next twelve to eighteen months to improve gross margins on the product side.

It might not come in the first few quarters, but I do expect that to be a tailwind. And then obviously, as I said, foundry should start to see margins improve next year, which will help as well.

Unidentified speaker, Interviewer: So all this being equal, should be, knock on wood, pass the trough in gross margin?

Dave Zinsner, Chief Financial Officer, Intel: I would think so, yes.

Unidentified speaker, Interviewer: So in the last minute or so we have left, I just want to wrap things up with Lip Bu coming back, I was on the board for a period left and now came back, you saying at Intel, both of guys are industry veterans, highly respected. You’re not taking on an easy job turning around the company, but clearly you see something that keeps you excited about it. So why don’t you just summarize in a minute literally that we have left, what’s the vision you guys have? Don’t answer anything in a minute, Ross. Yes, where Intel could be?

Dave Zinsner, Chief Financial Officer, Intel: Yes, look, I think there is a vision out there. We get this foundry business to be successful. A successful foundry business can trade at multiples of net book value, one measure of it. And we have a lot of net book value in our foundry business. So there’s a real opportunity and I think we’re getting virtually nothing for it at this point in terms of our valuation.

So there’s a great opportunity to create shareholder value through getting through making this successful. It’s going to take some time as I talked about, but I see the opportunity. And with Lip Bu coming in and the talent he’s recruiting, I feel really good about the opportunities there. On the products business, this is just blocking and tackling. We’ve just got to do better in terms of executing on the product portfolio.

We’ve to listen to customers more and we’ve got to be disciplined around our cost structure. We do those things and the valuation there should be significantly above where we are. So that’s the thesis and I’m excited for Lip Bu joining and I’ve already seen some real changes at the company that lead me to conclude that we have a real opportunity to drive some significant shareholder value over the course of the next four or five years.

Unidentified speaker, Interviewer: Perfect. Well, Dave, we truly appreciate you coming down to the DB Tech Conference and spending some time with us. So thank you very much.

Dave Zinsner, Chief Financial Officer, Intel: Thanks for having us there. Yes, thanks.

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