The Six Five team discusses Intel Earnings.
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Transcript:
Patrick Moorhead: Dan and I both had the chance also to sit down and talk with Intel CEO Pat Gelsinger right after the call, and I’m going to hit those insights later. But net-net, Intel beat on revenue. They beat on gross margin, and they beat on EPS. It was really a trifecta, and their stock is going crazy. Now, I think it was a very conservative forecast last quarter, which I applaud Intel for doing. You don’t want to be flexing particularly in an area of high risk in the PC industry, where inventory is bleeding off. And then the uncertainty of the CSP re-up out there and the competition for the fourth or fifth quarter in a row in the data-center side. Intel acknowledged competitive pressures in their slide deck.
But I want to hit some of the highlights, though. The thing that really gets me, and hopefully, I’ve been crystal clear on this. The first thing I look for, I want to know the status of five nodes in four years. Why is that important? Because it’s all about IFS, their foundry business. If Intel doesn’t have a successful foundry business, they’re not going to have the scale, and therefore, they’re going to have higher costs and not compete as well with AMD and NVIDIA and Qualcomm. So it’s the first thing I looked at. Pat Gelsinger was all thumbs up. And in fact, I think he called the transistor a work of art. Is that what he called it? A Picasso or a Michelangelo. Pat was very proud of that.
Daniel Newman: He really doesn’t call it anything else.
Patrick Moorhead: I mean, it was cool. I mean, you could tell how proud and how stoked he was for it. So I was-
Daniel Newman: He was feeling it.
Patrick Moorhead: … feeling the positive vibes from his positive vibes. The other thing that went a little unnoticed, maybe they brought it up on the call, I don’t know, is in the Pat G press release, he talked about new customers for IFS. And I might butcher that, but I think he said three new wafer customers and two packaging customers just this quarter. Now, I want to know who they are. You want to know who they are. I have no idea who they are. I need to do some back of the envelope because I’ve seen Qualcomm commit to TSMC. I’ve seen AMD and NVIDIA commit to TSMC, so I’m kind of scratching my head. Is it MediaTek? I’m pretty sure AWS is a packaging customer for some of their own custom silicon, but we’ll have to see. I don’t trade in rumors, but I would like to know, just to see how big-
Daniel Newman: We don’t trade at all.
Patrick Moorhead: … of a deal.
Daniel Newman: Just to be clear.
Patrick Moorhead: No. In fact, any company that I have an NDA with, I do not trade in their stocks.
Daniel Newman: Just want to make sure that’s on the record.
Patrick Moorhead: I appreciate that.
Daniel Newman: But yeah, it was good to talk to Pat. We had a week between F1 of seeing quite a few people. We saw the head of IFS Japan, which probably felt pretty good about himself, given their near 300% growth. And yes, it’s a small-
Patrick Moorhead: He had a big smile on his face, didn’t he?
Daniel Newman: It’s a smaller part of the business, but I’ve said this for a long time, Pat, I think Foundry… But people that don’t understand policy and the macroeconomy, they don’t understand the importance of the US being more prevalent and capable. And Intel’s really the only company that’s US based that has the capacity to step up to scale at the leading edge. They’re the only one.
Patrick Moorhead: Yes.
Daniel Newman: Is it happening fast enough? It’ll never be fast enough, but that growth is good. Packaging, wafer wins. You could tell Pat’s feeling it there. The Mobileye business continues to be rock solid, and it gives some encouragement for what they’re doing with the PSG business as they spin it off, is that they’ve got this kind of we spin you off, we let you go public. We control most of this stock, but we let the shareholders get the value. And of course, Intel gets the value as that grows. So some good financial engineering there.
Patrick Moorhead: What was his response to the Qualcomm stuff? I don’t know if we’re going to hit that or not, but I think that was-
Daniel Newman: Yeah, so that’s all on there. But I want to see year-over-year growth. We’re still not getting it. I mean, we did get beatings on expectations. The bar wasn’t super high, but you know what? He’s executing. He’s executing. He’s executing. You know what? That’s what the market wants to see.
Patrick Moorhead: That’s right.
Daniel Newman: But I did ask him about the Qualcomm Snapdragon PCs, and you know what? He really didn’t argue the quality. What he argued was is they’re basically telling a story about a product that will ship sometime next year. And when it starts to ship, you’re talking hundreds of thousands of units. And yes, what they’re committing to the market is higher performant than what they have in market today. But what he’s kind of saying is, look, we have in-market products with X amount of TOPS, 10 TOPS. We’re shipping these things today. We’re ramping them up. We’re going to have millions and millions and millions of units that will have shipped by the time this new stuff has even shipped. And by the way, by the time the new stuff has shipped, we’re going to be on to next-generation technology that’s going to be higher performance, lower power. And by the way, that’s the problem with this whole benchmarking game, is it’s always leapfrog. Like you said, by next Monday, we may see a completely new competitive landscape when Apple’s emergency event comes out. And who knows what other announcements are going to get made?
Patrick Moorhead: Right.
Daniel Newman: Overall, though, Pat, I mean, I think it’s an encouraging moment for Intel. It’s good to see Pat in good spirits. It’s good to see Intel… A successful Intel is good for the world. It is good for the world because with the supply chain, with semiconductors, with innovation, with what’s going on, the tensions around the world, we need more than one strong foundry at the leading edge. We just do.
Patrick Moorhead: Yeah. And in fact, we’re even regionalized now in that it’s no longer a global game.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
