Hi guys. Thanks for letting me ask a question. I have a near-term one and then for my follow-up would be a longer-term one. So the near-term one is on the demand picture. Dave, you were helpful in breaking up kind of the non-core impacts in the first quarter versus the core, but the low end of seasonality is a little bit of a surprise given that cyclical pressures seem to have been abating and some of the market share trends should have been going in your favor, at least also not worsening. So can you just talk a little bit about why you're at the low end of seasonality in the first quarter for your core businesses and what gives you confidence in super seasonality thereafter? Pat Gelsinger (CEO): Yes. Hi, thanks, Ross. I'll start and ask Dave to follow-up. And first, what's seasonality Q4 to Q1? There's a wide range of perspectives, anywhere from 3% to 20% historically. So I'll just say it's a wide statement of what that looks like. Obviously, as we come into the year, it's coming off a very strong Q4. Our product lines are strong. We feel our inventory positions are healthy. We're gaining momentum across it. And obviously, we've built the forecast consistent with our customers and channel partners that we believe is merited. Obviously, Dave talked about some of the discrete events, which as we added them up, were a little bit larger than we forecast, but the core business we see is healthy. For it, we see no areas for market share loss and the products are getting stronger. So, we'll say it really reflects as we view the market, but we've also said, hey, we're improving every quarter as we go through the year, like improving on revenue, top line, improving on profitability as we go through the year. And we've quite scrutinized that outlook for the year. And obviously, as the year improves, new product lines are merging, tailwinds in areas like AIPC, Gaudi ramping for accelerators. Overall, a lot of things just keep improving as we go through the year. Combined with good cost discipline, we feel quite comfortable that we're starting strong and we're going to have an improving year as the year progresses. David Zinsner (CFO): And what's the long-term question, Ross?

You just, the confidence in, oh, the second half. The long-term question is one, yes, sorry. The long-term question is one of the manufacturing nodes. The five nodes in four years is going well, but one of your biggest foundry, well, customers and competitors is doubling down on their ability to keep the leadership positioning. So what gives you confidence that 18A will in fact have the leadership node? And how do we reconcile the fact that you seem to be using that customer as a foundry partner for some of your heterogeneous products, whether it be Arrow Lake or Lunar Lake going forward? If you have the leadership, why wouldn't you be doing that internally? Pat Gelsinger (CEO): Yes, thank you. I'll do that and ask Dave to pile on both of those a little bit. But with respect to the manufacturing, I'll just say, hey, we look at this every single day and we're scrutinizing carefully our progress on 18A. And obviously the great news that we just described those Clearwater Forest taping out, that gives us a lot of confidence that 18A is healthy. That's a major product for us. Panther Lake following that shortly. We've also had our fourth customer this quarter. Some of the IP providers are giving us very strong affirmation on the competitiveness of the process technology. And particularly, we're just way ahead on backside power. And that's not even, everybody in the industry is recognizing that. And many of the customers who are looking at it are seeing substantial gains, not just in power performance, but in area savings as well. So overall, we feel very confident that our roadmap is strong in the process technology side. We do use external foundries and obviously that grew as we were dealing with some of our own challenges for process competitiveness. And as we create more and more focus in the business, more wafers will come in internal to the Intel factory network. But long-term, we're going to continue to use external foundries to complement, manage our capital requirements. And to make sure that our teams always are building the best products in the industry and using the best technologies to accomplish that. So overall, we feel super good with our strategy. You'll see more use of our own factory network, even as we leverage external foundries where appropriate. David Zinsner (CFO): The only other thing I'd add is just the use of external foundries as part of our smart capital strategy. It's one of the five pillars. So as Pat said, that will continue to be part of our strategy. Obviously, we're going to maximize how much we can do internally, but we're always going to be using external foundries based on smart capital. John Pitzer (Head of Investor Relations): Thanks, Ross. Jonathan, can we have the next question, please? null (Operator): Certainly. One moment for our next question. And our next question comes from the line of Timothy Arcuri from UBS. Your question, please.

Thanks a lot, Dave. I had a question about gross margin. It was obviously much, much better in December, and the March guidance is actually pretty good. So does this include the sale of any previously written down inventory and maybe help us get a clean margin number? Is this March number pretty clean that we can carry that incremental forward through the year? David Zinsner (CFO): Yes. I mean - what I said in the prepared remarks, I think, is that we think that a 60% fall through is probably the best rule of thumb. That said, as you know, quarter-to-quarter, things can move that number up and down. In Q4, we saw a better fall through. Largely, it was related to a better sell through of previously reserved product. We also actually did better on the factory side in terms of spending and yield. And so that also benefited us to some extent. And then in Q1, I think we're going to do a little worse. We're going to see the fall through be a little harder on us. And largely, that's some of that stuff going away a little bit. But I think if you look at it on a year-over-year basis, it's kind of a '23 to '24, '24 to '25, we'd largely expect it to be this 60% fall through. We're going to have these quarter-to-quarter movements that kind of violate that, because of just one-off things. But I think in general, you'll see 60% fall through be the right measure. Longer term, we're obviously going to want to see that number go up, because it's going to drive us to the 60% gross margins we ultimately want to attain. But in the near term, we're kind of dealing with a lot of the costs associated with five nodes in four years. It's just a lot of startup costs back. We'll probably hit our peak start-up cost in 2024. So that's a huge headwind we'll have to deal with. So, that's going to keep us in this 60% fall through range for the next couple of years. John Pitzer (Head of Investor Relations): Tim, do you have a follow-up question?

I do. I do, Dave. Yes. Just how you get to that 60%. So it seems like there could be persistent headwinds in terms of capacity utilization. I mean, I think a lot of us see that there's this plan to cut over to internal, starting with Panther Lake, but that doesn't really ramp into high volume until probably 2026. So are you managing to some sort of like utilization rate for your internal capacity to sort of get to that 60%? Thanks. David Zinsner (CFO): Yes. Well, maybe step back a little bit on the 60%. I mean, it will be driven by a number of factors, one of which is just revenue. Revenue growing on a largely fixed cost business is going to help gross margins. Obviously, we have optimism around how we can drive the growth of the business. The second, as you point out, is loadings. And we are managing our capital spend and our investment with an eye on loadings to make sure that we keep those in a good place. Obviously, last year, we had some underloadings to deal with. But as we kind of break out of that and start to move into the next year, I think we'll start to see some improvements there. Third, as we get, as Pat was talking about, to leadership in terms of nodes and products, ultimately across the entire product portfolio, that's going to help out on margins. It's going to help out from a cost structure perspective, but also better performing products are just going to yield better pricing and so forth, better profitability. And then lastly, we've got this internal foundry model that Pat mentioned, and I mentioned in the prepared remarks that we think is going to deliver tons of savings for the company. I think every week that Pat and I spend on this, somebody brings up another big rock that they found of savings they can identify, because they were looking at the business in an entirely different way than they're used to looking at it. The product groups are now hyper-focused on test times and how many - and what sort of hot lots they do and how much sample activity they use. The factories now, as you point out, very, very hyper-focused on loadings and making sure they're properly thinking about their capital investments associated with the loadings. So, we're way more focused in terms of steppings and so forth. So, I think we'll get, like I said in a call a couple of quarters ago, $4 billion to $5 billion of savings from this internal foundry model ultimately. And so that's another big step function that I think gets us to the 60% gross margin. Pat Gelsinger (CEO): I'd also add things like we just announced with UMC, right. We're taking older factories. And as Tim, as you might've heard me say in the past right, a bug in the Intel business model, just when a factory got very good and depreciated, we moved to the next node. Well now, we're starting to fill that with long-term foundry business as well. So all of these are improving the discipline of running the business as well as how we utilize our factory networks long-term. And we really do think that the 60-40 is what Dave and I are driving the business to and we're going to get there. John Pitzer (Head of Investor Relations): Thanks, Tim. Jonathan, can we have the next question, please? null (Operator): Certainly. One moment for our next question. Our next question comes from the line of Joseph Moore from Morgan Stanley. Your question, please.

Great. Thank you. I wonder if you could talk about the data center decline in Q1, how much of that is a function of the weakness in FPGAs that you've talked to already and then just any sense of what the cloud and server environment is like in the first quarter? Pat Gelsinger (CEO): Yes. So, overall, when you fact, obviously, we've spoken separately about the FPGA business. So, let's just move that to the side. Overall, I'll say it's fairly seasonal quarter-to-quarter in what we expect. That said, we're seeing strength from our server customers. For instance, more of the OEM responses are strong with regard to the momentum they're seeing in the enterprise server business. And obviously, our product line is improving there. We do expect year-on-year growth here. We see our market share stabilizing. And obviously, as we're ramping, Gen 4, Gen 5, Granite Rapids, Sierra Forest, the momentum is building for us overall. And as we indicated, we think more of the AI surge is going to result in AI inferencing on-prem, which we're well positioned to be a beneficiary of. I would just cite that here we are in year 20 of the public cloud, and you have 60% plus of compute in the cloud, but 80 plus percent of data remains on-prem. Customers want to realize the value of that on-prem data with AI, and that's an enterprise strength for Intel. So, we do see all of these trends giving us a very favorable outlook for the year. And there's nothing surprising about the Q1 guide here. And we're going to be very focused on beating those numbers and building on the momentum of improving our product line. John Pitzer (Head of Investor Relations): Joe, do you have a follow-up question?

Yes, I do. Along the same lines, can you talk about Sierra Forest and Granite Rapids? And I guess, how do you see the long-term mix between those? What kind of appetite do you see for the Sierra Forest and higher core count designs? Pat Gelsinger (CEO): Yes, thank you. And I would love to talk for hours about Sierra Forest and Granite Rapids. I am super excited about those products, both of them on Intel 3. And if I build on the last question from Tim about factory loadings, we are driving hard to accelerate those products into the marketplace, and they're really the drivers of Intel 3 capacity. The mix between them, obviously, this is our first volume mainstream offering for a high core count. I sort of view this as the cloud guys just want VMs at scale or just want containers at scale. That's what Sierra Forest is about, is sort of that bulk workload. And it doesn't have some of the performance capabilities, peak capabilities, feature capabilities that Granite Rapids has. I expect the bulk of the market to stay on Granite Rapids type products, the P-core products, certainly in '24 and '25. But we do see a pretty steady rise in the use of Sierra Forest. And then as we move to Clearwater Forest in '25, a very compelling product. We do see a pretty healthy split between those for the cloud and data center customers. I think most of the enterprise customers will stay with the P-core products that they will have. And it really is Sierra Forest, Clearwater Forest, and successors being sort of that bulk mainstream cloud offering that's very focused on TCO. So with that, we feel super good about our product portfolio, P-cores, E-cores, really allowing us to stretch the offerings to the highest performance with high core count and to the best TCO. And with that, this is a portfolio that will allow us to regain share in the core data center market. John Pitzer (Head of Investor Relations): Thanks, Joe. Jonathan, can we have the next question, please? null (Operator): Certainly. One moment for our next question. And our next question comes from the line of Ben Reitzes from Melius Research. Your question, please.

Yes. Hi. Thanks. Appreciate it. I wanted to revisit the gross margins, and I appreciate the 60% flow-through comment that we should use as a rule of thumb. But Dave, starting at 44.5% in the first quarter, how do you - are you still looking for the overall reported non-GAAP number to be up year-over-year from the 43.6%? And you mentioned some volatility there. I just want to clarify on the call how the gross margin trajectory is going to look year-over-year and understanding there's that volatility there? David Zinsner (CFO): Yes. Yes, to be clear, the way I was looking at gross margins is on a year-over-year basis on the 60% fall-through. So you should take the full year gross margins that we had in '23, which were roughly 43.5%. And think about this 60% fall-through based on the 43.6% gross margins. I think when you do that, we obviously start off at a level that's better on a year-over-year basis, but obviously down on a quarter-to-quarter basis. And so, you should expect generally improving dynamics through the year. The only challenge will be this quarter-to-quarter always has volatility to it. So there could be quarters in which we get less ship through of previously reserved products. Sometimes it's more. And so and kind of avoiding trying to pinpoint every quarter, because of the difficulty around pinpointing that, but we feel very confident around the 60% fall-through. John Pitzer (Head of Investor Relations): Ben, do you have a follow-up?

Yes, thanks, John. Could you talk a little bit more about the client market? There was - you mentioned that corporate, you said some strength and Dell had said there was some weakness. And heading into the first quarter, can you talk about the revenues on client and what makes you so confident that it's really going to pick up? Pat Gelsinger (CEO): Yes. So as we look at the market year-on-year, we expect it to be a few points bigger than it was last year. So last year was 270. This year, a couple of points higher than that. I think that's consistent with the various market forecasters that we have. Our market share position is very stable. We had good execution of market share through last year. And the product line is better this year with a number of tailwinds, like we said. So overall, we think it's going to be a very solid year for us in our client business. Obviously, as we start the year, everybody is, I'll say, managing through what their Q1 outlook looks like, even as they expect to see stronger business as we go through the year. I'd also comment, Ben, that some of these tailwinds really only start to materialize as you go into second quarter and second half. AIPC is just ramping right now. The Windows 10 EOS goes into effect. And customers are starting to look at the post-COVID refreshes. So a lot of those benefits materialize as you go through the year. But our position in gaming, commercial, very strong for us overall. And I'll tell you, we're just seeing a lot of excitement for the AIPC. I describe this as the Centrino moment. The most exciting category-defining moment since Wi-Fi was introduced two-plus decades ago. So, we do think that it's going to bring a multi-year cycle of growth, great ISVs, great new use cases, and a product line that is clearly leading the industry established in this category. John Pitzer (Head of Investor Relations): Thanks, Ben. Jonathan, can we have the next question, please? null (Operator): Certainly. One moment for our next question. And our next question comes from the line of Vivek Arora from Bank of America Securities. Your question, please.

Thanks for taking my question. But I'm curious, now that we are a year into the generative AI deployments, what's your view on how cloud customers are thinking about the CapEx between traditional and AI servers? Because when we look at the revenue growth across your GPU competitors, they seem to be capturing nearly all of the incremental CapEx and in some cases, even more than just the CapEx at the public cloud company. So does that really leave much room for your CPU business to grow beyond just the seasonal variations? So just how are you looking at the AI market overall? And what part of that is Intel really able to capture when we just look at how much is being or needing to be dedicated to your GPU competitors? Pat Gelsinger (CEO): Yes, thank you. And let's just maybe three different aspects to it. The first one is clearly the high end cloud guys and what they're doing for maximizing training environments. Clearly that's been an accelerator market so far. But that even is giving, I'll say a bit of a tailwind in the sense there are lots of head nodes associated with that. We do think, as we said, that the market moves much more from high end training to inferencing. Of where our product line is more substantive for it. But the enterprise market, as we see it for data centers, is very much going to be an on-premise play, taking advantage of inferencing in that data pools that they already have. And that's an area of good strength for Intel. And we're starting to see that in some of the conversations with our OEM customers. And as I finished, probably 50 meetings between World Economic Forum and Davos and CDS with customers, I'll say we have absolute unanimous response that they're going to be deploying a lot of their AI on premise in their data centers. And, you know, Xeons and our on premise offerings are simply the preferred way for them to be taken advantage of those capabilities inside of their data centers. Inside of the TCO envelopes, power, networking management that, they have in place. Obviously, we need to be participating more in the accelerator piece of that. And we're seeing the growing pipeline of our opportunities. We saw a nice uptick in revenue in Q4 from a small number, but a lot of momentum as we come into the year. And Gaudi3 is getting a lot of excitement, you know, clearly leading in TCO. So, we're going to be competing much more for that high end accelerator footprint. But I think the message of 2024 is going to be inferencing, AI everywhere. That's going to be at the edge, that's going to be the AIPC. And it's going to be in the enterprise data center, all areas that Intel has a much stronger footprint. John Pitzer (Head of Investor Relations): Vivek, do you have a follow-up question?

Yes. Thank you, John. Thank you, Pat. So on the foundry side, I think you mentioned IFS, you know, some declines in Q1 after the strong Q4 that you had. So, I was hoping if you could just help us size what is IFS in Q1. And then longer term, you know, you mentioned now you have four 18A wins, but how do we quantify what they mean for '24 or '25 or '26? And I think on the call you had mentioned somewhere about $10 billion in lifetime wins. I'm hoping that that's what you meant for 18A. But when I look at that $10 billion over multiple years, that is not really that big relative to I think the $130 billion plus annual foundry market. So could you just help us size what does Intel's external foundry business mean for 2024 or 2025 perspective? Thank you. Pat Gelsinger (CEO): Yes. And the two things in the Q4 to Q1 numbers on IFS, one is the - I'll say the natural ending of our traditional packaging volume. So that affects Q4 as we go into Q1. And obviously our focus there isn't doing traditional packaging. You know, that's best supplied by OSAT vendors, but we were in a unique position to help our customers as we went through the COVID cycle. All of our packaging focus going forward is advanced packaging where our technology is differentiated, the margins are good. And as you saw, we just announced the New Mexico facility, as the first major advanced manufacturing facility on U.S. soil. A lot of excitement from customers across the world. Also, we had our foundry equipment business, which was another factor Q4 to Q1, very consistent with the profile that you might've heard from people like ASML, right? As they saw the quarter-to-quarter implications on the equipment business. So I'll say Q4 to Q1, all explainable in those contexts. The business we're winning 18A foundry customers, Intel 3 packaging, it takes quarters for that to materialize and for wafer customers' years. And that's why we said lifetime deal value is probably the best metric that we can give you to help you understand the nature of that business as it's growing. And as I said, we saw a big uptick from our prior update to this one. Obviously, we need to, as your question suggests, get to a much bigger number. And that's exactly what we're going to do. We're now well underway. We're seeing healthy growth in lifetime deal value. We'll be giving you periodic updates on it as a good metric of seeing how rapidly that business is growing for us. And I've emphasized that number is just external foundry, right? Our internal business is what's going to be driving the factory build out. And that really gives us the scale to then start adding these additional external customers to it. Those deals, as we say, they could be a year or two, or they could be multiple years in length. There'll be a varying contract length associated with them. And we just want to give some visibility, transparency to the business and a rapidly growing lifetime deal value is a good way for us to give you some characterization of that business outlook. Finally, I want to see you on February 21. We're going to hold a big industry ecosystem event, our IFS direct connect and meeting with the ecosystem, our customers, but we're inviting analysts to listen in to the great conversations we're going to have and the disclosures that we'll be giving there. John Pitzer (Head of Investor Relations): Thanks Vivek. Jonathan, if you have time for one more question, please. null (Operator): Certainly. One moment for our final question for today. And our final question for today comes from the line of C.J. Muse from Cantor Fitzgerald. Your question, please.

Yes, good afternoon. Thank you for squeezing me in. I'll combine both my questions into one. Typically, you know, in a manufacturing transition, you take on one, maybe two kinds of technical challenges. Here at 18A, you know, you're taking on backside power, gate all around and high in A. So, we'd love to hear kind of maybe some of the struggles you've seen, how you've worked through them, and what kind of feedback you're getting from customers in all three of those and kind of the confidence on delivering the goods in the timeline that we set out? Thank you. Pat Gelsinger (CEO): Very good. So let me characterize a little bit more carefully, because we've been trying to carefully manage the risk that we're taking on. So first was the move into EUV. We began that with Intel 4 and Intel 3. And those, as we said, are high volume manufacturing underway done. So, we sort of took the risk of EUV off the table there. Backside power, right, we ran an internal node, something we didn't disclose to external foundry customers. But we ran many, many wafers using Intel 3, with backside power to go de-risk backside power before we put it into Intel 20A and Intel 18A. So, we had a major step to de-risk backside power. And then of course, gate all around the transistor. So 18A brings those two together, backside power and the gate all around transistor. But I'll tell you, as we've been going through the development process. Backside power on 18A has been elegant, beautiful, high yield, very clean in its introduction into the process. And really the focus has been on the new transistor structure with gate all around. As customers are taking advantage of that now, as they're starting to look at that, they're really seeing great benefits from backside power. In some cases, almost as much performance benefit and significant area benefit from that. And gate all around transistors making good progress are 0.9 PDK that we delivered in Q4. And we'll be having the 1.0 PDK in Q2 on track. And as I said, Clearwater Forest is the first product. And it's now in fab on 18A, a huge milestone for us, both on the product side, as well as on the process side. High-NA, the next generation of EUV is not part of 18A. That will be part of the next major node. We'll talk more about that at the Intel Foundry Day, as we said on February 21, but we're not introducing that as a risk factor into 18A. You know, it's the EUV tools that are in production today that we've already de-risked as part of the Intel 4 and Intel 3. So, we think we've done a very careful management of risk. And we look at this all the time as we're rebuilding our momentum. And as I said, overall, we are confident five nodes in four years. This was audacious. It's been superbly executed, and we are on track to deliver it and get back to process, technology leadership for both our products, as well as to establish a major foundry opportunity for the industry. Rebuilding Western supply chains, the momentum we're seeing in our whole factory network. You know, this is really incredible, the progress, and I couldn't be prouder of our team for getting it done. So with that, you know, let me say thank you for joining us on the call as always. We appreciate the opportunity that we have to update you on a strong Q4, beating on top and bottom line, finishing an incredible year in 2023. And we're just excited about the momentum we see across the business for both our products, our business and financial execution, the manufacturing technology, foundry design wins really across the board. Our say-do ratio has been extremely high, and we appreciate the interest. And as I said, we look forward to the opportunity to give you some more updates as part of Foundry Direct Connect, February 21 in San Jose. And I hope to see many of you there as we lay out an exciting update to the industry, and it'll be a great day for us. Thank you so much for joining us. null (Operator): Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.