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INTC · Forward model · Intersegment eliminations · Bull case

What has to happen in Intersegment eliminations

Model as of

This page changes Intersegment eliminations inside the complete INTC model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

INTC forward model
Horizon
Consolidated fair value $77.13 all other verticals held in this portfolio case
Final-quarter revenue −$9.54B -32% of company revenue
Explicit segment contribution $1.92B EBITDA less segment capex, before corporate items

Demand stays ahead of supply for longer than the base case assumes and Intel converts it. Management raised 2026 capital expenditure by roughly $3B and lifted tooling 40% because of demand signals, and says the constraint runs into 2027 - which means the 2026 Q2 ASP level is defended rather than competed away. Guidance of $15.8-16.8B already sits well above the $15.1B the street carried into the print. This case adds growth everywhere and more of it to DCAI and Intel Foundry, so external foundry revenue grows faster than internal wafer transfer and the eliminations ratio falls below the base case's terminal 0.90. Revenue reaches $114.1B across the four quarters to 2031 Q2 against $83.1B in the base case, and the exit multiple goes to 13x - and even then the case values Intel at $77.13, below the $88.24 price.

Intersegment eliminations

Basis quarter−$5.48B
Final quarter−$9.54B
Final revenue mix-32%

Not a business line but the contra-line that makes the model reconcile: it removes Intel Foundry's internal wafer sales to Intel Products on consolidation. It is the only shape that reproduces reported consolidated revenue with zero residual in all ten disclosed quarters, and it is projected as a coupled ratio of Intel Foundry revenue rather than as an independent growth line.

Last four quarters
2025 Q3 −$4.23B Reported
2025 Q4 −$4.34B Reported
2026 Q1 −$5.25B Reported
2026 Q2 −$5.48B Reported
Elimination of Intel Foundry intersegment revenueA small residual from other intersegment activity, $5M in 2026 Q2
Sequential growth +1.7%/qtr decaying toward +1.5% +1.73%, which is Intel Foundry's +2.0% less 0.27 points, so eliminations fall to 0.948 of Foundry revenue.
Intersegment eliminations

Latest: −$9.54B (2031Q2E)

Period Value
2024Q1 −$4.38B
2024Q2 −$4.28B
2024Q3 −$4.32B
2024Q4 −$4.31B
2025Q1 −$4.70B
2025Q2 −$4.42B
2025Q3 −$4.23B
2025Q4 −$4.34B
2026Q1 −$5.25B
2026Q2 −$5.48B
2026Q3E −$5.64B
2026Q4E −$5.80B
2027Q1E −$5.97B
2027Q2E −$6.14B
2027Q3E −$6.32B
2027Q4E −$6.50B
2028Q1E −$6.68B
2028Q2E −$6.87B
2028Q3E −$7.06B
2028Q4E −$7.26B
2029Q1E −$7.46B
2029Q2E −$7.67B
2029Q3E −$7.88B
2029Q4E −$8.10B
2030Q1E −$8.32B
2030Q2E −$8.55B
2030Q3E −$8.79B
2030Q4E −$9.03B
2031Q1E −$9.28B
2031Q2E −$9.54B

Assumptions & reasoning

  • The ratio of eliminations to Intel Foundry revenue sat near 1.00 through 2025 Q3 and has fallen to 0.950 as external foundry revenue ramped from $22M in 2025 Q2 to $293M in 2026 Q2.
  • The growth rate here is deliberately 0.27 points below Intel Foundry's in both the first and terminal quarter, which glides the ratio from 0.948 in 2026 Q3 to 0.901 by 2031 Q2 - the assumed terminal 0.90 - without an independent driver.
  • The EBITDA margin is negative on a negative revenue line and so contributes positive EBITDA: the disclosed $254M of eliminations operating income on $(5,477)M of eliminated revenue is (4.64)%.
  • Modelled as an independent growth line rather than as a coupled ratio, this vertical would silently break the consolidated revenue total by hundreds of millions a quarter.
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