Intel Corp Deutsche Bank 2026 Technology Conference

All right. Good morning, everybody. Let's get moving to the next fireside chat. I'm Melissa Weathers. I'm one of the lead analysts covering semis here at Deutsche Bank. This morning, we have the pleasure of hosting David Zinsner, EVP and CFO of Intel Corporation. Thanks for being here, Dave.

Thank you, Melissa. I'll just kick us off with a very exciting safe harbor statement.

Today's discussion may contain forward-looking statements that are subject to various risks and uncertainties and may reference non-GAAP financial measures. Please defer 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 for additional information on Intel's non-GAAP financial measures, including reconciliations where appropriate, to the corresponding GAAP financial measures.

Good job. I think you guys have had a very busy month this month, so it's great to connect.

I think if we could kick it off, can you talk about your historic equity offering that you did earlier this month? I think the final number was about $23 billion in capital raised. Talk about what was the reasoning behind that financing action, where's the capital going towards, and what does this say about how you're feeling about the core business at this point?

Yeah. The capital raise precedes capital investment. We talked about on the earnings call that we would be increasing CapEx significantly next year, and we had already upticked the CapEx in 2026 by a couple of billion dollars from $18 billion to $20 billion. We also talked about the fact that substrates are really constrained and we're going to need to make investments associated with substrates as well next year, given the significant demand. I think what you can take away from this is two things are happening. Number one, from an execution perspective, particularly on our process and also in terms of the advanced packaging, it's going extremely well. Intel 18A yields are progressing, beating the milestones that we've internally set.

Intel 14A, when you look at the defect density, is tracking better than the target curve we had for Intel 14A, and it's also doing better than any of the previous nodes in terms of how quickly we're bringing down the defects. In fact, we haven't seen this performance since 22 nanometer, which is arguably one of the best nodes Intel's ever put out. Things are going very well. So we feel very confident around process. We feel very confident around how we're performing in terms of advanced packaging, in particular EMIB-T. On the other side is also the demand dynamic, and we talked about on the earnings call, we're seeing significant demand in CPUs in data centers. We're seeing this ratio of GPU to CPU move more in the direction of CPUs. That's driving significant demand on our business.

We think that both Intel 18A and Intel 14A will have significant demand in terms of our own wafer usage for products, but also externally, we'll see demand there. We now have confidence in demand. We have confidence in terms of execution, in terms of process. It's the right time to think about increasing capital so that we can make the CapEx investments necessary to take advantage of that growth.

On that process node side, one of the things I found most exciting from your earnings call, Intel 14A, I think the 0.9 PDK comes out in October.

I think you also said on the call that you are now officially committing to high volume manufacturing for that Yep node in 2028.

Can you talk about what gave you confidence to specifically ramp up, commit to high volume manufacturing for Intel 14A?

Yeah. We are now within two months of the 0.9 PDK, so you can pretty much now expect us to land in October with that 0.9 PDK. That is pretty significant. Obviously, there is another version. There is a 1.0 PDK, but the step to go from 0.9 to 1 is not as significant as going from 0.5 to 0.9. So, we have a significant amount of confidence there. I would say also, we have allowed the internal customers, let us call them, to somewhat choose their process, whether they go internal or external, what they do from an internal perspective. We are now seeing demand from our internal customers on Intel 14A. They are actually probably the most cynical bunch out of anybody, and the fact that they are now designing products on Intel 14A was a good confidence boost for us as well.

The engagements with customers externally, from a foundry perspective, has significantly increased. Lip-Bu and the team are now meeting on a weekly basis with customers. They are moving away from just looking at data to thinking about, "Well, how much capacity can I get? What does that supply look like?" We are now at a point where we have conviction around customers on 14A externally as well. Those things just have us now going, "Okay, we are going to be at the 0.9 PDK in October. We are going to now need to start doing risk production in 2027." We got to put the capital in place to be able to do that. We also, if we are going to ramp into high volume production in 2028 on 14A, given the lead times of products, we got to start putting out orders.

That effectively was one of the biggest drivers of the capital raise was putting all those things in place requires us to make some commitments to suppliers, and I need to know that we have got the cash to be able to make those commitments.