Intel 2Q17 Earnings Call Notes

Brian M. Krzanich – Intel Corp.

Bought Mobileye

“We expect to close the acquisition of Mobileye in the third quarter, several months earlier than expected. Autonomous driving is a massive compute workload that will disrupt industries and save lives and we are investing to win in this important segment”

PC TAM down 15% vs four years ago

“We’re executing well to our strategy to transform from a PC-centric company to a data-centric company that powers the cloud and billions of smart and connected devices. The PC TAM is down more than 15% versus four years ago. Despite that headwind, our revenue is up more than 15% and our operating profit has grown more than 30%. More than 40% of our revenue now comes from our data-centric businesses outside the PC sector”

Look, enterprise is going to continue to decline

“look, enterprise is going to continue to decline. We estimate, and again, this is just based on what we get from our customers, talking to the industry. It’s going be in the high single-digit decline. I think you’ll see quarters like Q2 that was 11%. You’ll see quarters like Q1 that were 3% or 4%. We’ve seen quarters higher than the 11% over the last couple years. So it’s going be lumpy as we see this shift, but the overall macro shift of enterprise to cloud or traditional on-prem systems to cloud is going to continue.”

Move to 3D X-Point

” And our real goal is then to move more and more of the business towards the 3D XPoint as we move into next year because that really differentiates us again as we really change the hierarchy between memory and storage as the data center DIMM memory systems come out.”

Intel 4Q16 Earnings Call Notes

Brian M. Krzanich

An explosion of data

“By 2020, the average person will generate about 1.5 GB of data per day, while smart and connected devices of the future will produce data at many times that rate. Autonomous cars, for example, will generate about 4,000 GB of data each day. The resulting explosion of data is creating tremendous opportunity. But data alone isn’t valuable. It’s the transmission, aggregation and analysis of the data that results in value and impact. Intel will play essential role in those steps because our products are key to turning raw data into high-value insight and information.”

We power 90% of machine learning servers

“Finally, in Artificial Intelligence, we believe we have the industry’s strongest product portfolio. Intel processors power well over 90% of servers deployed to support machine learning workload, and we are winning the vast majority of AI solution based on strong product performance and customer value.”

PC is not back to zero unit or positive growth

” Those two things put us in the PC market in the unit level in the mid-single-digit decline. That’s better than if you went back a year or so ago, we were in the high single-digits, depending on how you looked at it and where you counted from the 2-in-1 devices. So, it is starting to get better, but I don’t think we’re back at a zero unit or a positive unit. But as Bob said, what we’ve really been focusing on in that space is how do you make money, how do you sell up, how do you do a better business performance in that kind of market? ”

Moving to public cloud faster than we expected

“I think that certainly some of that is, that it’s moving to the public cloud, it’s moving to those areas at a faster rate than I think we expected. It’s also been a little bit slow about developing private cloud and we’re working with several partners like Microsoft, Azure and others around the private cloud segments as well for the enterprise. But if you take a look at the long-term, we still see this as the growth engine and still getting into that double-digit regime.”

Why we’re in memory

“Sure. So let’s talk about Memory in kind of a big picture, John, and then I’ll let Bob talk a little bit about how the CapEx lays and what our view on CapEx is in the space. But we are in this space for one reason because I understand it’s a cyclical business that tends to be fairly difficult from a price capacity standpoint. But we believe we’re coming at it with two very unique technologies. Our 3D NAND technology has some of the best performance and best cost in the market. Our current version of 3D NAND has a 15% cost value over the competition, and our next version, second generation, has even a higher when you look at it on a density basis. And so we believe we’re going to be able to bring differential cost and performance in 3D NAND that will give us a unique position, and that, combined with our knowledge of the data center, should allow us to really provide compelling product for data center SSDs. 3D XPoint is very different and that is a unique technology that bridges between memory and storage, and we believe it can re-architect how big data applications, artificial intelligence applications where you want large amounts of data being brought up as close to the compute as you can, will really transform not only the architecture of those systems but the performance of those systems.”

Enterprise/cloud dynamic

“our view is that enterprise will continue to decline. A lot of that is those workloads moving to the cloud. It will get to a point though where it starts to stabilize. And those – because there are still things that – workloads that will want to be in a private cloud. At the same time, we believe as the world becomes connected, cloud will grow at a much, much faster rate. And I made a point in the prepared remarks, where if you look at the cloud of today being mostly based on people, the average person will generate about 1.5 gig of data a day. An autonomous car, when those things start hitting the road – and we’ve started to build these data centers for some of the trials we’re working with – I mean you’re talking about petabytes of data that you’re having to deal with and 4,000 gigabytes a day off is the average autonomous car. You put a couple of those on the road and you need petabytes of storage to handle that. So, we do believe that the cloud will move at a faster rate as these connected devices become basically more available. That said, the cloud is becoming bigger than the enterprise.”

Robert Swan

We’ve taken a more cautious view of PC

“Now, let me turn to guidance. First, some context. First, our guidance assumes a stable macroeconomic environment, but we have taken a more cautious view of PC consumption versus third parties, particularly in our outlook for the emerging markets including Russia, China and Latin America.”

Intel at Credit Suisse Conference Notes

Intel (INTC) Presents at Credit Suisse 20th Annual TMT Conference

Stacy Smith – EVP, Manufacturing, Sales & Operations

New role after CFO

“So, my new role is leading Intel’s sales, manufacturing and operations. And when I think about that portion of the Company, I think that it has been a big part of our competitive advantage over the last decade. Our manufacturing advantage, the ability to drive Moore’s Law faster than anybody else, the ability to bring the complex products into high value manufacturing at high yields and good margins, and then our relationship across the ecosystem and in particular our deep relationship with customers that are doing innovative work.”

Moving towards a sales force aligned by vertical markets

“That said, our sales force has been designed over the years to be a very efficient functional model. And what we’re toggling towards is a sales force that’s actually aligned by vertical markets. And so, we will have a dedicated sales force, for example for automotive that has very deep skills in that space and can go in to a customer like a BMW or a Delphi which was announced [ph] this morning, and do a solution sale that touches all of the different parts of Intel. ”

Returned almost $100b to shareholders over 10 years

“Over this ten-year horizon, we’ve returned almost a $100 billion to shareholders in terms of cash generated to the model, and that’s cash generated after we spend on CapEx, after we spend on R&D, and it’s broken out about half between the dividend and half between buyback. The average buyback price over that time period is in the low 20s. So, we’ve also benefited from the fact that the stock price has been appreciating. So, when you when you zoom out, you can see in the financial model the impacts of the investments that we make.”

We’re one of the last companies standing that invests in factories and products

” we do a lot of benchmarking. Now, it’s hard for a company like Intel because we’re kind of the last Company standing that still invests in technology development factories and products. And those products range from kinds of things as Rich [ph] was talking about earlier to high-end data centers Xeons and Xeon Phi and Silicon Photonics. So, it’s difficult for us to find two or three companies that make a benchmark for us. Specifically we would create some [ph] benchmark that would include like a TSMC and companies that we compete with”

Areas of investment

When you look at where our big investments are going right now, we’re going down in SOCs for things like phones; we’re going down in the PC segment of the business; we’re going up in the data center; we’re going up in IoT specifically and automotive which is a long-term investment for us that will we believe payoff but will take some time. And we’re going up in places like through the cross point memory where we believe we have a disruptive memory that has some tight ties to our server platform and alternatively to other platforms in the Company where we can get a very good return on that investment.”

We win by providing great performance per watt per dollar

“The way that we then work with our customers to ensure the growth of the businesses, first and foremost and coming back to my new role, we have to deliver just overwhelming performance per watt per dollar equation to the customers. At the end of the day, in every market that we serve, if we can do things that are higher performance, lower cost, more energy efficient than what anybody else on the planet can do, we win. That’s how we win in the high end of the PC market, that’s how we win in the automotive space, that’s how we win in low end IoT applications and that’s how we win in the data center.”

The last 12 months have been a bad part of the cycle for memory but moving into the sunshine more

“the last 12 months have been kind of a — it’s the bad part of the cycle for memory in general. It looks like we are moving a bit more into the sunshine as we go forward. But, certainly we’ve seen prices coming down; that’s been a part of it. But the bigger Intel specific issue is that downturn hit us at the time that we were investing and bringing Dalian up, so significant start up cost in a factory that wasn’t in production”

It’s clearly getting harder to advance Moore’s Law

“It clearly is getting harder to advance Moore’s Law, there is no question about it. If we get into the world of multi-patterning lithography, it becomes really complex. I think everyone is struggling with the yields in the early phase of a ramp for everybody or a little less than what they’ve historically been. But that’s okay as far as we saw that relative leadership because that ultimately translates into leadership product.”

The company has changed from just PC

“I was reflecting after the dinner last night. I’m not sure we had a single PC question at dinner. And again, relative to 10 years ago at my first conference, it all would have been what’s happening in Taiwan, what’s happening in the channel, how’s the PC market? It was just remarkably different and it does show that how different we are as a company today. In terms of the PC market, the napkin math that are shown in a couple of different investor meetings is even in a market where the PC market’s down in that kind of mid single digits, if we’re doing a good job of segmenting the market, a good job on our cost and OpEx side, we can grow the company.”

Intel 3Q16 Earnings Call Notes

Intel’s (INTC) CEO Brian Krzanich on Q3 2016 Results

Not going to say everything is good again in PC but signs of strength

“we’re not going to raise the flag and say everything is good again. But if you take a look at this quarter, what we saw was kind of an increased strength in the areas that have been strong in the past. So, definitely the mature markets were a bit stronger. The one that was probably a little bit of a shift is China, was a little bit better than we had forecasted as well. Enterprise was again strong, consumer was better but it’s still not back to where we consider it where we would like to see the consumer side. And it was a good mix between desktop and mobile products, laptops and devices like that. So, it’s kind of an increase in what’s been strong in the past as really what drove the growth for this quarter.”

Weakness in enterprise mostly driven by movement of those applications to the cloud

“Sure. I think there is two parts to this. A certain amount of the enterprise weakness right that has occurred over the last few years is certainly driven by movement of those enterprise applications to the cloud. And we’re very comfortable it doesn’t really matter for us from a product definition or product performance standpoint whether it goes, those applications go to the cloud or whether they stay in the enterprise.”

GPUs do have good accelerating performance in linear algorithms

“GPUs do have as we say, good accelerating performance in certain linear algorithms. Those are quite good and we have our Xeon Phi in that space. And then the highest performance area, are ASIC where they’re workload specific and designed around the algorithm specifically. ”

Not talking huge shifts in inventory

“And we compile all that data to give that forecast. Like Stacy said, we’re not talking about a major shift in the inventory, we’re talking about a couple of days, about a couple of days when you ship a million units a day is a big number, when you take a look at the ASPs and a million units a day. So, it doesn’t take a big swing, we’re not talking weeks here, we’re talking a couple of days.”

Stacy Smith

Diversified over the last 10 years

“10 years ago, virtually the entirety of our business was tied to the PC market. Today, we have a diversified portfolio of growing businesses, with roughly half of our profits coming from the Data Center and Internet-of-Things businesses. We’re also a different company in terms of how we look financially. 10 years ago, our revenue was approximately $35 billion with a gross margin of 52%. In 2016, we’re on a path to almost $59 billion in revenue with a gross margin of 63%.”

Saw some inventory restocking of PCs

” I’d say from in-market standpoint it’s pretty seasonal. And then from our business it’s the impact that Brian and I both talked about which is, we saw some strengthening of demand in the third quarter, we saw some refilling of the pipeline which was kind of lean coming in. And then in Q4, we’re expecting kind of seasonal in-demand but some depletion of inventory pipeline. And it doesn’t take much, if you think about the size of the PC market, you’re down to changes in inventory levels across the worldwide PC supply chain it was measured in days or certainly less than a week of inventory that kind of shifts around.”

Bob Swan

New CFO

Thanks Stacy and thanks Brian. I’m both excited and very honored to be joining the team at Intel. The Company has had a profound impact on the world with industry-leading technologies that has a great business model driven by Moore’s Law and an outstanding balance sheet.”

[analyst comment]

ASPs on PCs could go up next year

“Great. Thanks for that. And then a lot of discussions that I’ve had with the channel recently have been fairly positive around PC ASP increases next year. And part of this is the mix towards enterprise as consumer mix down. But others are pointing to sort of an inflection in ultrabooks, thin and light. So let’s say we got a massive ASP increase in laptops, like they’re up 10% or something like that. What kind of fall-through would we expect for CPU ASPs?”

Intel at Citi Conference Notes

Murthy Renduchintala – President, Client and Internet of Things Businesses and Systems Architecture Group, Intel Corporation

Left QCOM for INTC

” I spent 12 really enjoyable years at Qualcomm. It was a great company to work for. I learnt a hell of a lot, made a tremendous number of friends and some very strong relationships in the industry. But as I looked at the opportunity at Intel, it provided me with an opportunity to personally grow in terms of scale at which I could contribute, as well as learn. And I think at the high-tech industry every executive needs to be looking for opportunities to learn. And I spent quite a bit of time with Brian understanding the strategy of the Company. And I really got to profoundly believe in it.”

Intel has made strides in delivering wireless

“I think that there is a tremendous future for Intel and others as the wireless opportunity continues to become fundamental in many areas of technology, as we see the collision of IoT and 5G capability and real prowess in the wireless area is going to be really, really important. And I think for Intel, I think it’s made some good strides in really being able to master the basics of what it takes to deliver really good wireless technology.”

Connectivity is a fundamental ingredient

“I think it’s really important to realize that connectivity and wireless in general is material to Intel now and it’s going to be material to Intel in the future. It’s one of these things that I think is going to be a fundamental ingredient to almost everything that Intel plays in. I regard it as, for example, essentially an elemental need of the Company, you know, just as good CPU technology is going to be necessary, just as good transistor technology is going to be necessary, these are kinds of things that are going to be the basic building blocks used by the product regimes of Intel, and really whether it comes to broadband cellular connectivity or technology that drives unlicensed band connectivity, those are going to be real raw materials, and mastery and capability in those space is going to be fundamental, particularly as you see the collision of IoT and 5G going forward, and essentially a redefinition of the wireless landscape beyond just mobile broadband and into the connectivity of everything”

Lines between licensed and unlicensed communications are blurring

“I think you’re seeing the lines between licensed and unlicensed communications continuing to blur. You’ve got the advent of technologies such as LAA, which really are requiring a mastery of all wireless technologies. It’s no longer just to be good at cellular, you have to be really great at Wi-Fi, you have to be great at Bluetooth. And as you look at narrowband IoT, there are other technologies that we’re going to have to be really good at.”

Transition to 5G is not for the faint of heart

“I think if you look at the future as it relates to what’s going to be required to deliver on the full vision of 5G and its interconnectedness with IoT, what’s really becoming apparent is that this is not an R&D equation for the faint-hearted. It’s going to require a lot of stamina and the ability to actually invest now for a route to revenue that may be some distance in the future, but for those that have the ability and stamina to invest now, I think the opportunity is really broad and really pervasive. So I think you really need to have a well-structured business that can provide you the investment capability to be able to invest in that in the long term. Again these are not just incremental investments.”

5G is going to be a fundamental transition

“I think the transition to 5G is going to be as fundamental as the transition from analog to digital, and it’s going to be as much about the transformation in the network and the infrastructure of the network than it is just the air interface. So for me, 5G is another G but it’s a fairly profound G. And I think the investment hurdle to really be a leader in that space is going to be much more significant than for maybe the transition from 3G to 4G.”

5G will see a transformation of the client environment and an explosion of data

“I think 5G is going to see a transformation of the client environment. It’s going to be move beyond just the simple definition of smartphones and connected PCs and move towards an environment where we’re talking about connected cars, robots, drones, connected factories and connected homes. And that environment is going to see an explosion of data in the client environment for megabytes per hour and gigabytes per day, to more like gigabytes per hour and hundreds if not thousands of gigabytes per month, for example, in the case of a connected car or connected factory.”

The explosion of data will transform the network

“And that explosion of data in the cloud environment is going to transform the network, because of the client’s intolerance of latency and the enormous amount of data creating a real bottleneck as it relates to backhaul. And to solve both those problems, I think the network will go through a fundamental transformation, where technologies that used to live in the cloud-based infrastructure now get distributed into the fabric of the very network, transports that data, to minimize latency and to deal with the issue of backhaul being a limitation.”

Will see 5G in the 2018/2019 time frame, mainstream in 2020

“I think 5G is going to be something that transitions over time as we see various flavors and elements that are all key parts of 5G become real. And I think you’ll see trial networks and real experimentation in the 2018 timeframe, 2019 timeframe, some very well-publicized trials to that effect. But I think you’re really going to see the mainstream advent probably in the 2020 timeframe and beyond. ”

Intel 2Q16 Earnings Call Notes

Intel (INTC) Brian M. Krzanich on Q2 2016 Results

Preference for performance in data center

“In the data center, we’re seeing an ongoing preference for performance up and down the pricing stack. Average selling prices increased year over year in every microprocessor product segment from Atom and Xeon D SOCs at the low end, up through Xeon and Xeon Phi at the high end.”

The enterprise side for servers was more stable than it had been. Second half seasonal buying pattern expected

“The enterprise side was down only about 1%, which is a bit more stable than it has been. Second thing is we are ramping our Broadwell E server in the second half of the year, and so we expect strong demand. And we typically see an ASP uplift as people by up in the stack with these new server systems coming out. And we have customer signals that just indicate that there’s a second half seasonal buying pattern kicking in a bit as well. So those three things are the second half keys.”

The cloud is continuing to expand

“if you take a look at a broader view of this or just overall, our view of the data center and really the cloud continues to be that the cloud is going to continue to expand. It’s going to be driven by the many, many machines that connect to the cloud that drive orders of magnitude more data than what the average human creates today, and that’s getting to the cloud. ”

Strongest growing IoT are industrial and security applications

“The verticals that have been the strongest growing for us, especially in recent, has been industrial and in the security video type applications. Those have been the two real growers. We have a lot of I’ll call it longer-term growth vectors. Retail is a longer-term growth vector. And then you saw, as we mentioned on the call, the automotive ADAS section in the announcement with BMW.”

We are hearing from CIOs that there’s a comfort with conversion to Win 10 and want to do it on new hardware

“But we are hearing similar things around the enterprise conversion. It’s comfort with Windows 10, ability to make that transition, and wanting to do it on new hardware.”

Data growth will continue to be immense

“When I think of the cloud, the cloud that we have today is really built on the backs of people. It’s your Facebook data, it’s your Salesforce data, it’s your Twitter data. It’s all data that is really across the devices that we pretty much handle day to day. The current estimates are, if you look out into 2020, that average person will generate about 1.5 gigabytes a day of data off those devices, and those are going to be all your posts and pictures and all that kind of information. If you take a look at the average autonomous car in 2020, the estimates right now are it will throw off about 40 gigabytes a minute of data. If you take a look at the average autonomous drone doing some kind of scan, looking for somebody lost in the forest or scanning a mine, it’s going to throw off about 20 gigabytes a minute. If you take something like our replay technology that is filming in virtual reality, a basketball game or a football game, it’s throwing off 200 gigabytes a minute right now. And as we continue to refine the accuracy of that, that number will likely just grow. So it’s that growth in data and the need to both process it at the edge and then through the data center and into the cloud, to be able to store it, to be able to apply machine learning to all of those applications. Those all tell me that the cloud is going to continue to grow.”

Spending is lumpy but not slowing down

“It’s going to be lumpy. These guys don’t build out their data centers in a linear fashion. They build out a big chunk of overcapacity so that they can go and then sell that and have expansion space, and they don’t build for a while. And so I know people worry about is it slowing down? But these trends in data that tell me no, it’s not slowing down over the long term, and what you’re really going to see is just the buying patterns and the build-outs of the various structures that are going up.”

Stacy J. Smith – Chief Financial Officer & Executive Vice President

Second half seasonal uptick

“We have I think pretty good insight into the large cloud customers, and so we had some good insight into the buying patterns as those customers went from Q1 to Q2. And now as we look at the back half, we see several purchasing cycles kicking in for some of the large guys. So we expect that the cloud piece will accelerate as we get into the back half.”

PC inventory levels are pretty healthy

“So overall we continue to see inventory levels as being very healthy. I think that the PC, the worldwide PC supply chain has moved towards a stance of being fairly lean and fairly cautious, and we see that continuing. You would typically see an inventory burn in the second quarter. It was a little bit less of an inventory burn then what we expected. I think it goes back to Brian’s comments that he made at the beginning of the call that from their perspective, the PC market was a little better in Q2, so I think they probably just brought down inventory levels a little bit less”

Intel at Bernstein Conference Notes

Brian Krzanich – Chief Executive Officer

The PC is not dead but it is declining

“the PC is not dead, right so it is a declining market. It is what you’re seeing is the effects of replacement cycle pushing out and some other functions eroding, but it is still a very profitable business for us”

Growth drivers will be data center IOT and memory

“The growth engines we believe are going to be the three pillars of the data center, IOT and memory. And so, that’s really the transition you are seeing us go through is really push much more of the resources, much more of the focus on to those three segments.”

We have to move the culture to focus on different things

“Now what that means is that we have to really get a culture that’s been all about the PC, PC first, innovation around the PCs to be focused on innovation in these other new areas. And that’s really – at the last earnings announcements we announced a headcount reduction and the movement of resources, that’s really an effort to do the last push of the organization over from being very PC centric to much more cloud and IOT centric which is what we’re going to drive moving forward.”

Organizationally people get the roadmap now but there is a lot of work technically that still needs to be done

” Organizationally I think this will be the last big push we need to do. If you talk, if you look into the halls of Intel, if you talk to the people, they understand the strategy much, much clearer now. They’ve bought into this transition and they understand how this is the big push organizationally right from kind of an emotional standpoint. Technically there is still a lot more work to do.”

When I became CEO three years ago people were saying tablets were going to replace PCs

“Remember three years ago when I became the CEO tablet’s were growing at 30%. People were really worried tablets were going to replace PCs. We made a pretty strong effort to make sure that we built our position there that allowed us to if that did happen we were going to be well positioned and we actually become the number one merchant producer of tablet silicon. So what happened though is, you are right in that three years tablets have rolled over. They are actually declining somewhere 10% to 20% now depending on whose numbers you get and what they see.”

PC replacement cycle has extended

“What’s happened in the PCs is it has kind of continued to decline at this mid to high single digits. I think that’s a combination of two things and they are somewhat related to the tablet as well. First, the replacement cycle for the PC has extended. It was – we talked about four years was the average, now it has moved to about five or six years.”

Leadership is about a cost per transistor and performance per watt type of number rather than transistor density

“to me, process leadership is cost per transistor and performance per watt type of number and that’s really where we believe we’ll continue to have leadership. We try and classify that with our consistent scale ourselves, but it is our scale, it is not going to necessarily correlate to our competitors’ scale.”

Competitors may come out with a new node but the performance improvement isn’t real

” this gets back to what level of performance are you really providing with each one of those nodes. So if you come out with a new node, but you have very little improvement, but you say, hey I went from 14 or 16 nanometers to 10 nanometers, but I provided a 5% to 10% improvement, that’s not really a node, they are not well. What we’ll do is stay forward out a little bit longer, but yes we’re going to provide a standard 20% improvement, 50% scaling factor. So we’re going to keep all those numbers very consistent as we go and that’s actually what we believe continues to keep us in our leadership.”

The data center is no longer one segment–it’s now three

“Sure, so let’s step back for a second and talk about the data center, right? The data center is no longer one segment. It is really, you talk about enterprise data center and cloud based data center and high performance computing data centers and those are all growing at different rates and seeing different types of technology needs.”

Public cloud is better from a security standpoint

“There is just scale and virtualization and the public cloud is working through the security issues and you can argue and especially for smaller companies, security is better in the public cloud, they have back up all kinds of things that says for many, many small businesses, small-to-medium businesses, the public cloud is a much better space to put your business into. ”

Machine learning is part of what’s going to fuel the cloud

“Sure. So let’s talk about that, machine learning is absolutely a space that is going to be – it’s part of what’s going to fuel the cloud. When you think about machine learning, this machine learning occurs on the device, the autonomous car, the robot, whatever you want the electrical device or whatever it is you want to put out there at the Edge and then there’s the cloud, and those two are constantly sharing data and sharing algorithms back in forth. I absolutely believe that machine learning will be one of the key drivers for this 20 plus percent comp growth. We think we factored in the right amounts of what machine learning is going to drive into our growth forecasts, but I’ll be honest it is so nascent to that it could be much, much bigger than even what we’ve estimated.”

I wish I could go back and know that tablets were going to decline

“So three years ago right, we were all worried to death about the tablet and 30% growth and I guess if I could go back and look at it I’d say, you know what take your beatings you’ll be right. The tablets are going to fade away and don’t make the investments. I don’t think any of us could have known, but sure I would have loved to have that foresight and say, yes tablets are going to die within a year and start declining 10% to 20% would it have saved us a lot of efforts and all.”

We think we’re now world class in modem

” Our modem technology we believe now is world class. We are able to stay up with the competition really within ahead of or right on top of or just shortly behind them in performance and characteristics. We think that’s going to be critical as we go into the 5G world. We believe we’re leaders in 5G right now, both of the base station and in the connectivity portion. ”

We’ve made a lot of investments in phone but that looks like it’s starting to level out now

“On the phone, we’ve made a bunch of investments. We’ve started to produce silicon, but you said yourself it appears that the phone business is starting to slow and may be its starting to level off. The profit is becoming very tight in that market and so we’ve been very careful about not getting into that market in a way that’s going to erode profitability and erode margin in the company, so we’re going to continue with the modem development.”

Intel 1Q16 Earnings Call Notes

Brian M. Krzanich – Chief Executive Officer & Director

Evolving from a PC company to one that powers the cloud

“We are evolving from a PC company to a company that powers the cloud and billions of smart connected and computing devices. The Data Center and Internet of Things businesses are now Intel’s primary growth engines, and combined with Memory and FPGAs form and fuel a virtuous cycle of growth.”

Not worried that PC will shrink to a point where we wont be able to fund innovation

“I’m not worried that PC will shrink to a point where the scale will get large enough to fund either the factories or the other innovations. The fact that we talked about the restructuring actually makes us more profitable in the PC. That’s allowing us to invest even more in those growth areas. Remember also, those growth areas are growing, and so they are replacing some of the volume in the factories as they grow.”

Restructuring to move into growing segments besides PCs

“Now, let’s talk about the PC. You asked, how do we take a look at the PC long term and how do we make sure we’re making the right investments, which to me that’s the key. That’s what we really tried to do with this restructuring, is take a look at the areas that are growing, that we believe we can bring innovation to, that will make a difference to the end user. You’re going to see more investments in 2-in-1s. You’re going to see more investments in thin-and-light devices. You’re going to see us push even harder on high-end gaming systems, which are growing at a very fast rate, and they tend to buy up the stack to the very, very top. And then we’re continuing to gain share in segments like set-top boxes, which are becoming more and more PC-like in their capabilities, if you think about it from a hardware standpoint.”

We are always paranoid about the competition, always driving

“having been raised by Andy Grove, always paranoid about the competition, always driving. And we know that we live or die by the performance of our products. We believe if you take a look at our roadmaps, we have a strong competitive leadership that should allow us to continue to have the position in the market that we currently have.”

Strategy is going beyond the CPU

” our strategy that is becoming much, much broader than just the CPU. What we are trying to do is really provide top-of-rack to bottom-of-rack solutions that bring, that work together and bring performance across the whole rack. And that starts with Rack Scale Architecture itself, which is a very unique architecture that will allow people to build racks in a much denser and lower cost way to Silicon Photonics for within rack communication. Then we’ve got a 3D XPoint, and then you have our whole CPU architecture from networking, storage, up through server.”

Stacy J. Smith – Chief Financial Officer & Executive Vice President

Expect PC markets to decline in the high single digits in 2016

“We now expect the PC markets to decline in the high single digits in 2016 versus our prior forecast of mid-single-digit decline. Our projection of the PC market remains more cautions than third-party estimates. ”

TAM wasn’t strong and customers were bringing down inventory levels

“We were impacted by a TAM that wasn’t terribly strong and the fact that our customers were bringing their inventory levels down some.”

Micron at Raymond James Conference Notes

Ernie Maddock

DRAM is mature market

“If you think about how we project the industry growing over the course of the next three to four years. DRAM which is the more mature of the two markets it is a little bit slower growing, so less elastic demand. Our belief is that from a – how will supply come into the market, it is predominantly a technology transition story. So we don’t foresee the need for significant wafer additions in the long-term.”

Capex will be in NAND

“If you look at the NAND demand, very highly elastic this transition to 3D we believe is a major breakthrough in the industry in terms of both cost and performance, you get better cost and better performance and we do believe that over the long-term the wafer capacity will be required for NAND. That will be return on capital dependent and then finally emerging memory such as 3D XPoint and others we think will be emerging over this period of time, we a CAGR would have put it off the chart in terms of absolute scale, but these technologies will grow to be reasonable part of the portfolio, but certainly from a significance point of view NAND and DRAM over this timeframe will be the most significant technologies in which the company participates.”

3D X point is split 50/50 between us and Intel

“So the 3D XPoint is coming out of the joint venture, the joint venture and which roughly each participant gets 50% of the output at cost because we have each contributed to the capital and to the R&D. And so really it is about each companies opportunity to leverage that from a market perspective and if Intel is able to say garner higher value from its customers for the products and it includes 3D XPoint in markets and it will be benefitting disproportion but not as a result of any detriment in my comment. ”

The balance sheet should just be a function of what cash is coming in and going out

“The ideal balance sheet, gosh, I know I don’t have it. I know I’m not going to have it for a little bit of time and so it’s frankly not something I spend a lot of time thinking about because at the end of the day it’s a function of what cash is coming in, what cash is going out and believe it or not, folks expect a different answer from the CFO. I’m a big fan of investing capital if in fact the capital generates returns and consistent with the prior answer, I have a belief when I make the decision to do it but it’s a while before I determine that.”

Intel increasing NAND capacity speaks to the importance of memory

“And its, clearly Intel feels quite strongly about the memory space so on one hand it’s a really strong statement about the importance of memory in a way that it hasn’t been important to processor makers before. “

Intel 4Q15 Earnings Call Notes

Brian Krzanich

Macro weakness weighed on enterprise demand, but DCG has strong underlying trends

“Data Center Group grew 11% over last year to an all-time record of $16 billion in revenue. Macro weakness weighed on enterprise demand and resulted in slower growth than we expected at the beginning of the year. However DCG’s overall performance highlighted the underlying trends driving data center demand as cloud and communication service providers’ revenue, both, grew more than 20% for the year.”

First quarter reflects caution especially on China

“While our outlook for the first quarter reflects some caution about overall demand, particularly in China, we continue to expect solid growth in the business in 2016.”

Changed cadence of depreciation based on longer technology wave

“The depreciation change was not included in my forecast that I provided back in November. We were in the middle of the analysis. What prompted it was, we did an in-depth analysis based on the cadence of moving from one process technology node to the next. We talked about that at the beginning of 2015, and the third wave of products and we kind of completed our long range planning in the fourth quarter and that has what triggered the change in the depreciation cadence.”

We believe 2015 is starting with very healthy inventories

“We believe that 2015 ended with I would just call it very healthy inventories. In fact, one of the things we saw was a slight decrease in the inventory levels as we exited the fourth quarter. If you take a look at what we had originally projected and what would have been more an industry norm would have been a slight increase in inventory. We expect those kind of healthy inventory levels to extend through ’16. There is no sign that anybody is adding inventory or not moving of a cautious position on inventory and that is what has been built into our forecast as well.’

We are pushing to get to a two year cadence on Moores law

“10 nanometers would be closer to that two-and-a-half years than two years that we would continue to strive to get back on two years. Some of that was as we go to the fine 7 nanometers, what the complexity technology looks like, whether UV is ready or not, but absolutely we are pushing to get back on that two-year cadence.”

Stacy Smith

Worldwide PC supply chain is healthy inventory

“We continue to believe the worldwide PC supply chain is healthy with appropriate levels of inventory.’

I don’t think we’re surprised by where we came in on data center

“Let me just add one thing to the premise of your question. I think we were not surprised by where we ended up in the Data Center. If you recall back in November, we talked about Data Center growth rate for the year being in the low double digits. That is exactly where we came in.”

We have a cautious stance. Sell through to the end customer was less than we thought

“we have a cautious stance as we start the year. There were a couple of things that feed into that. Units were a little weaker for us in the Client segment and Q4. As we worked our way through the Christmas selling season, what we saw was the sell-through all the way to the end customer was a less than we thought. We made up for that with a rich mix, so that is why we ended up with a pretty good result, but a little – we are watching that carefully.”

Our team on the ground in China has gotten fairly cautious about what is going on there right now

“our team on the ground in China has gotten fairly cautious about what is going on in China right now. As you know, that is the largest PC market, so we are just little cautious on the growth rates there.”

Accounting change to depreciable life is not a signal that Moores law is slowing

“please do not take the accounting of the depreciable life to be somehow signal that we are letting our foot off the gas on process technology cadence and process technology leadership. That is the heartbeat of the company and we are driving it hard. The accounting just as looking at how long that equipment is economically viable in our factories and it is pretty clearly five years as we go forward.