Intel’s Q3 2023 Financial Results Launched, Shaping Tech Industry’s Future

Intel Corporation, the semiconductor manufacturer, announced its financial results for the third quarter of 2023. The company showcased significant progress in its process and product roadmaps, secured agreements with new Foundry customers, and demonstrated momentum in its AI initiatives. Pat Gelsinger, Intel CEO, expressed his satisfaction with the standout quarter, highlighting the company’s commitment to its IDM 2.0 transformation and dedication to customer satisfaction.

Intel CFO, David Zinsner, emphasized the company’s consistent performance that exceeded expectations for the third consecutive quarter. The company’s revenue surpassed the high end of its guidance, and strong operating leverage and expense discipline contributed to favorable earnings per share. Zinsner also highlighted Intel’s focus on capital allocation and value creation for shareholders.

In terms of business unit summary, Intel had previously announced the integration of its Accelerated Computing Systems and Graphics Group into its Client Computing Group and Data Center and AI Group. This strategic move aims to enhance go-to-market capabilities, accelerate business growth, and reduce costs. Consequently, the company adjusted its segment reporting to align with these changes and other reorganizations.

Intel remains on track to achieve its goal of five nodes in four years and regain leadership in transistor performance and power efficiency by 2025. The company’s Intel 7 and Intel 4 nodes are progressing well, with Intel 4 being the first node to utilize extreme ultraviolet (EUV) technology and already in high-volume manufacturing. Additionally, Intel achieved a significant milestone with the release of the 0.9 PDK for Intel 18A. The company also launched plans for glass substrates for advanced packaging in the future, enabling further transistor scaling and advancing Moore’s Law.

Investing in manufacturing capacity to establish a secure and resilient supply chain, Intel inaugurated Fab 34 in Leixlip, Ireland, during the quarter. This facility, along with planned facilities in Germany and Poland, will contribute to creating a comprehensive semiconductor manufacturing value chain in Europe. Furthermore, Intel plans to install the world’s first high-NA EUV tool for commercial use by the end of the year at its Gordon Moore Park in Oregon, further enhancing its infrastructure and modernization efforts.

Intel has submitted four major manufacturing proposals, representing over $100 billion of investments, to the U.S. Department of Commerce’s CHIPS Program Office. These proposals in Arizona, New Mexico, Ohio, and Oregon aim to strengthen domestic manufacturing and research capabilities.

In terms of partnerships and customer commitments, Intel announced a significant agreement with a major customer for Intel 18A and Intel 3, resulting in a meaningful pre-payment. This commitment enables Intel to expedite the construction of two leading-edge chip factories at its Ocotillo campus in Arizona. Additionally, Intel will provide foundry services and manufacturing capacity to Tower Semiconductor, facilitating Tower’s global operations.

At the Intel Innovation 2023 event, the company outlined its strategy to democratize AI by making it accessible across various workloads. Intel showcased its AI capabilities across hardware products and emphasized open multi-architecture software solutions.

In the Data Center and AI segment, Intel’s 4th Gen Intel Xeon Scalable processor continues to gain traction among cloud service providers. The company’s 5th Gen Intel Xeon processor, codenamed Emerald Rapids, entered production and started shipping to customers this month. Intel Gaudi 2 accelerators also demonstrated competitive performance validated by MLCommons benchmarking results. Intel is collaborating with Stability AI to build one of the world’s largest AI supercomputers utilizing 4th Gen Intel Xeon Scalable processors and Intel Gaudi2 AI accelerators.

In client computing, Intel introduced the Intel Core Ultra processors (codenamed Meteor Lake), which usher in the era of AI PCs. Built on Intel 4, these processors began shipping to customers in the third quarter and will officially launch on December 14, alongside the 5th Gen Intel Xeon processor. Intel also launched the new Intel Core 14th Generation desktop processor family, offering exceptional frequencies and an unparalleled desktop experience for enthusiasts.

In the network and edge segment, Intel released the latest version of the OpenVINO toolkit, a popular AI inferencing and deployment runtime. The toolkit enables developers to accelerate their applications on client and edge platforms. Companies like ai.io and Fit:match demonstrated how they leverage OpenVINO to enhance their applications at Intel Innovation.

Mobileye, Intel’s subsidiary specializing in autonomous driving technology, achieved record revenue in the third quarter, with an 18% year-over-year growth. Mobileye also secured significant design wins for its advanced SuperVision and Chauffeur solutions with automakers FAW and Polestar.

To unlock value for shareholders, Intel announced its plan to separate its Programmable Solutions Group (PSG) operations into a standalone business. This move will grant PSG the autonomy it needs to accelerate growth and compete more effectively in the FPGA industry. Intel may explore opportunities with private investors while retaining a majority stake. Additionally, Intel agreed to sell a 10% stake in its IMS Nanofabrication business to TSMC, further emphasizing its commitment to advancing its IDM 2.0 strategy and creating value across its assets.

Looking ahead, Intel’s board of directors declared a quarterly dividend of $0.125 per share on the company’s common stock. The dividend will be payable on December 1, 2023, to shareholders of record as of November 7, 2023.

Intel’s fourth-quarter 2023 guidance includes both GAAP and non-GAAP estimates. The company will hold a webcast today to discuss its third-quarter results, which will be accessible on Intel’s Investor Relations website. The webcast replay and earnings presentation will also be available on the site.

Background Information

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About Intel: Intel Corporation, a global technology leader, is for its semiconductor innovations that power computing and communication devices worldwide. As a pioneer in microprocessor technology, Intel has left an indelible mark on the evolution of computing with its processors that drive everything from PCs to data centers and beyond. With a history of advancements, Intel's relentless pursuit of innovation continues to shape the digital landscape, offering solutions that empower businesses and individuals to achieve new levels of productivity and connectivity.

  

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About Tower Semiconductor: Tower Semiconductor, also known as TowerJazz, is a global semiconductor foundry company that provides advanced analog and mixed-signal process technologies. Founded in 1993, Tower Semiconductor is headquartered in Migdal HaEmek, Israel, and operates multiple manufacturing facilities worldwide. The company offers a wide range of specialized semiconductor manufacturing services, including CMOS (Complementary Metal-Oxide-Semiconductor), RF (Radio Frequency), power management, and more. Tower Semiconductor serves various industries such as consumer electronics, automotive, industrial, medical, and aerospace by producing custom-designed chips and integrated circuits. Tower Semiconductor is for its expertise in specialty semiconductor manufacturing, enabling the production of chips with unique features and capabilities. The company's focus on analog and mixed-signal technologies caters to applications that require precise signal processing and connectivity. Their collaborative approach with clients often involves developing tailored solutions to meet specific requirements, positioning them as a reliable partner in the semiconductor manufacturing industry.

  

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About TSMC: TSMC, or Taiwan Semiconductor Manufacturing Company, is a semiconductor foundry based in Taiwan. Established in 1987, TSMC is a important player in the global semiconductor industry, specializing in the manufacturing of semiconductor wafers for a wide range of clients, including technology companies and chip designers. The company is known for its semiconductor fabrication processes and plays a critical role in advancing semiconductor technology worldwide.

  

Technology Explained

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EUV: Extreme Ultraviolet Lithography (EUV or EUVL) is an advanced semiconductor manufacturing technique that employs extremely short wavelengths of light in the extreme ultraviolet spectrum to create intricate patterns on silicon wafers. Utilizing a wavelength around 13.5 nanometers, significantly shorter than traditional lithography methods, EUVL enables the production of smaller and more densely packed integrated circuits, enhancing the performance and efficiency of modern microprocessors and memory chips.

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Foundry: A foundry is a dedicated manufacturing facility focused on producing semiconductor components like integrated circuits (ICs) for external clients. These foundries are pivotal in the semiconductor industry, providing diverse manufacturing processes and technologies to create chips based on designs from fabless semiconductor firms or other customers. This setup empowers companies to concentrate on innovative design without needing substantial investments in manufacturing infrastructure. Some well-known foundries include TSMC (Taiwan Semiconductor Manufacturing Company), Samsung Foundry, GlobalFoundries, and UMC (United Microelectronics Corporation).

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FPGA: Field Programmable Gate Arrays (FPGAs) are a type of technology used in the computer industry. They are integrated circuits that can be programmed to perform specific tasks. FPGAs are used in a variety of applications, including digital signal processing, networking, and embedded systems. They are also used in the development of artificial intelligence and machine learning algorithms. FPGAs are advantageous because they can be reprogrammed to perform different tasks, allowing for greater flexibility and faster development times. Additionally, FPGAs are more energy efficient than traditional processors, making them ideal for applications that require low power consumption.

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IDM 2.0: Intel IDM 2.0 is Intel's integrated device manufacturing (IDM) strategy introduced at 2021. It is a major evolution of the company's traditional IDM model, which has been in place since its founding in 1968. Under the IDM 2.0 strategy, Intel will continue to design and manufacture its own chips, but it will also become a major provider of foundry services to other companies. This will allow Intel to tap into the growing demand for semiconductor manufacturing capacity, while also generating new revenue streams.

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Xeon: The Intel Xeon processor is a powerful and reliable processor used in many computer systems. It is a multi-core processor that is designed to handle multiple tasks simultaneously. It is used in servers, workstations, and high-end desktop computers. It is also used in many embedded systems, such as routers and switches. The Xeon processor is known for its high performance and scalability, making it a popular choice for many computer applications. It is also used in many cloud computing applications, as it is capable of handling large amounts of data and providing high levels of performance. The Xeon processor is also used in many scientific and engineering applications, as it is capable of handling complex calculations and simulations.