Intel Reports Profits for its Client Segment in Q2 2023 Earnings Call, All Products Set to be on Track

During its most recent earnings call, Intel said that Arrow Lake is already running in Fabs and that all other products and programs are on or ahead of schedule.

After numerous consecutive quarterly losses, Intel finally turned a profit in the second quarter of 2023. The PC market has stabilized, and this has led to some good news. The company reported that its client business, which includes users of generic PCs, performed better than projected and that it gained market share in the second quarter while keeping its supply of central processing units (CPUs) at a healthy level.

I am pleased to report that all our programs are on or ahead of schedule. We remain on track for 5 nodes in 5 years and to regain transistor performance and power performance leadership by 2025.

Intel 7 is done and with the second-half launch of Meteor Lake, Intel 4, our first EUV node is essentially complete with production ramping. For the remaining three nodes, I would highlight Intel 3 met defect density and performance milestones in Q2, we reached PVK 1.1 and is on track for overall yields and performance targets. We will launch Sierra Forest in first half of 24 with Granite Rapids following shortly thereafter, our lead vehicles for Intel 3.

On Intel 20A, our first process node using both RibbonFET and PowerVia, Arrow Lake, our volume client product is currently running its first stepping in the fab. In Q2, we announced that we will be the first to implement back-side power delivery silicon 2+ years ahead of the industry enabling power savings, area efficiency, and performance gains for increased compute demand, ideal for use cases like AI, CPUs, and graphics. In addition, backside power improves ease of design, a major benefit not only for our own product but more so even for our foundry customers.

On Intel 18A, we continue to run internal and external chips and we remain on track to be manufacturing-ready by the second half of 2024.

Pat Gelsinger (Intel CEO during Q2 23 Earnings Call)

Intel CEO Pat Gelsinger stated during the call that the company was on track or ahead of schedule with all of their projects, so we should expect the forthcoming Client and Data Center processors on time. It was noted that preparations for the launch of Meteor Lake are proceeding according to plan and that manufacturing has begun to ramp up.

Arrow Lake, the generation after Meteor Lake, will be delivered in 2024 with Lunar Lake CPUs, and is thus the second “Volume” client product discussed. Intel’s first Arrow Lake chip generation is now being manufactured in factories. Launching between 2024 and 2025, these chips will use many ground-breaking technologies—including Foveros, 3D chiplets, Power Via, and Backside power routing—to achieve greater efficiency within a fully decoupled chip design.

Intel 18A was also highlighted as a product that is on schedule to enter production by the end of the second quarter of 2024. The business has already begun undertaking chip testing and verification both internally and outside.

Moving to products, our client business exceeded expectations and gained share yet again in Q2 as the group executed well. Seeing a modest recovery in the consumer and education segment as well as strengths in premium segment where we have leadership performance.

We have worked closely with our customers to manage client CPU inventory down to healthy levels as we continue to execute against our strategic initiatives we see a sustained recovery in the second half of the year as inventory has normalized. Importantly, we see the AI PC as a critical inflection point for the PC market over the coming years that will rival the importance of Centrino and WiFi from early 2000s.

We remain positive for the long-term outlook for PCs as household density is stable to increasing across multiple regions and usage remains above pre-pandemic levels.

Building on strong demand of our 13th Gen Intel processor family, Meteor Lake is ramping well and in anticipation of a Q3 PRQ, we will maintain and extend our processor leadership and share gains over the last four quarters. Meteor Lake will be a key inflection point in our client process roadmap as the first platform built on Intel 4, first EUV node, and the first planned chiplet design enabled by Foveros advanced packing technology, delivering improved power efficiency and graphics performance. Meteor Lake will also feature a dedicated AI engine “Intel AI Boost”.

With AI Boost, our integrated neural VPU enabling dedicated low-power compute for AI workloads, we will bring AI use cases to life for key experiences people will want and need for hybrid work, productivity, security, and creator capability.

Pat Gelsinger (Intel CEO during Q2 23 Earnings Call)

Intel’s Plans for Data Centers

Intel has confirmed the upcoming releases of three important products for the data center: 5th Generation Emerald Rapids in Q4 2023, Sierra Forest with Intel 3 in 1H 2024, and Granite Rapids shortly thereafter. Multiple clients have turned on the first chips for the next-generation “2024” Xeon CPUs, and now the processors are undergoing volume validation. Both the power and performance goals set for the silicon are being met. Falcon Shores, Intel’s GPU line for HPC, is slated for release in 2024–2025; its successor, Falcon Shores 2, is expected to debut in 2026; and both products are aimed at the artificial intelligence (AI) area alongside Gaudi 3.

Our data center CPU roadmap continues to get stronger and remains on or incrementally ahead of schedule with Emerald Rapids, our 5th Gen Xeon Scalable, set to launch in Q4 2023, Sierra Forest, our lead vehicle for Intel 3 will launch in first half of 24, Granite Rapids will follow shortly thereafter.

For both Sierra Forest and Granite Rapids, volume validation with customers is progressing ahead of schedule. Multiple Sierra Forest customers have powered on their boards and silicon is hitting all performance and power targets. Clearwater Forest, the follow-on to Sierra Forest, will come to market in 2025 and be manufactured on Intel 18A.

Pat Gelsinger (Intel CEO during Q2 23 Earnings Call)

While most of this is a rerun of previous statements by the corporation, it is encouraging to learn that all products are on track and there have been no significant delays. The company’s ability to successfully release these chips remains an open question.

For reading the detailed notes during the call, you can visit here.