Intel Corporation · Q2 2026 call

Q2 was another quarter of solid execution. Revenue, gross margin, earnings per share were above our guidance. This marks the seventh consecutive quarter of exceeding our financial expectations.

Industry is facing one of the most severe supply constraints in its history across leading-edge logic, silicon wafers, memory, and substrates. These shortages will persist for the foreseeable future.

Intel is well-positioned to benefit from this strong, sustained demand with three strategically important assets: Our x86 CPU franchise, our advanced packaging technology, and our vast wafer foundry network.

During Q2, our factories across Intel 7, Intel 3, and Intel 18A exceeded internal volume targets, driven by improving yields, better cycle times, and increasing wafer starts. 18A output increased meaningfully in the quarter. Yields continue to track ahead of expectations.

we remain on track for 14A risk production for our internal products in the second half of 2027, and we make the decision in Q2 to fully commit to high volume ramp in 2028.

Second quarter revenue was $16.1 billion, $1.8 billion above the midpoint of our guide. Collectively, our AI-driven businesses grew greater than 70% year-over-year, including record data center growth, and contributed approximately 70% of revenue.

DCAI revenue was $6.3 billion, an increase of 24% sequentially and 59% year-over-year, meaningfully ahead of expectations. The result was driven by strong demand across hyperscale and enterprise.

External foundry revenue was $293 million in the quarter.

Intel Foundry has driven down the cost of our primary Panther Lake SKU by roughly 50% year-to-date and is on track for an additional 20% this year, with further meaningful reductions planned in 2027.

we expect PC consumption to be sub-seasonal in the second half of the year and down low double-digits percent for all of 2026, impacted by rising memory prices and constraints.

Due to strong customer demand signals, we’re raising our outlook for 2026 and now expect our CapEx to be more than $20 billion, which is up significantly versus our expectations entering the year.

we’re forecasting 2027 capital expenditures to be significantly above the 2026 levels, with the vast majority spent across our U.S. network. In fact, as we look back from 2021 through 2026, our total capital spending in tools and space in the U.S. is approaching $100 billion, significantly higher than any other semiconductor company over that timeframe.

Some areas we are still behind, but we are catching up very fast and we try to leapfrog some of the CPU architecture, and we are putting major effort into it. Time will tell.

we’re getting $0.35 on the dollar back from the investment tax credit on everything we invest in the U.S.

I think everybody had an inkling the data center was going to be pretty strong. I was surprised at the client strength

Client obviously exceeded expectations. I would say it was largely ASP, of which some of that was mix related, some of that was our own like-for-like changes in ASPs where we thought we had seen some inflation on our cost and needed to pass that on to the end customer.

I would point out that while things will improve, we will not catch up. We will be behind in the fourth quarter.

I don’t put CapEx unless I see the yield performance, the IP is ready to serve the customer, and also customer engagement, the level of engagement I see.

We have over $30 billion of cash. We have a $10 billion revolver. We’ve got $40 billion of liquidity. That enabled us to de-lever, which we felt was important to keep us solidly in investment-grade territory, which we wanted to do.

We are likely to have to make investments in the back end as well, particularly with third parties. That could be a drag to cash flow, next year, and make getting it to a positive number a little bit more challenged.

this is a massive opportunity. I think potentially it’s over $100 billion TAM market, and we have unique opportunity to offer, beside our advanced design capability using our CPU, XPU, and also we have a strong IP portfolio, and we also have the advanced packaging

I would say that today we’re probably running at about a $2 billion run rate, or at least approaching a $2 billion run rate for that business.

the memory become the big supply constraint challenge, and we collaborating with the three big memory vendors. That’s very important to serve our customer, is our number one priority.