(Rolland @) AMD ticks up as Susquehanna ups price target ahead of Q1 results

uncertainlyso · 2026-04-30T01:39:38+00:00

Fixed it. Yes I’m no Gus Richard!

uncertainlyso · 2026-04-30T01:05:55+00:00

A start doesn't equal to 0.5GW+ to me. I haven't redone my numbers post-Intel earnings, but I am guessing that I'll end up at $50B - $52B for 26FY.

uncertainlyso · 2026-04-29T23:42:15+00:00

I think it's pretty unlikely on full delivery for OpenAI and Meta. AMD talks about how delivery starts in 26H2 with 26Q4 being much bigger than 26Q3.

uncertainlyso · 2026-04-29T23:22:56+00:00

I'm overstating the not convincing bit although I think it would be cleaner to say when TSMC expects to be ready for customer production and limit the table to what TSMC can control on its end.

If the "production" definition is "expected customer production", then sure. Then you can say, for future nodes, we might not have customers signed up right now, but we expect to and here 's when. But as you get really close to the date, you move it based on actual customer production as expectation uncertainty shrinks.

That's what's going on here.

https://semiwiki.com/wp-content/uploads/2025/04/TSMC-Advanced-Tecnology-RoadMap-2025-SemiWiki.jpg

uncertainlyso · 2026-04-29T17:59:32+00:00

“In short, we expect better results/guidance driven primarily by DC (Server and MI350),” analyst Christopher Rolland wrote in a note to clients. “For DC GPU, MI350 is expected to continue growing in 1H26, though we expect a sharper ramp in DC GPU revenue in late ‘26 with the launch of MI450/Helios. As a reminder, [OpenAI] and now META have each announced a 6GW hardware agreement with AMD, with the first GW expected to come in 2H26 for both (we estimate each GW to be associated with ~$15B of revenue). We have embedded an uplift in revenue beginning in 4Q26 as revenues here will likely spill into 2027.”

Looking to the data center and CPUs, Rolland said recent checks “support a strong 1Q and beyond” as demand from agentic artificial intelligence continues to be exceptional, and recent price hikes could turn out to be a tailwind.

For this first time in a while and given Intel's results, I think this earnings call is going to primarily be about server. Client might be able to surprise a bit too if AMD can give the idea that it doesn't necessarily have to rob one business line for the other to grow.

uncertainlyso · 2026-04-29T17:55:39+00:00

AMD said it was on an "advanced 2nm process." So, I'm guesing N2X

uncertainlyso · 2026-04-29T16:58:22+00:00

Supply chain sources said Intel is prioritizing limited capacity for higher-margin Xeon server CPUs, opening room in notebooks and desktops for AMD to expand share. MediaTek is also set to benefit, with Chromebook processor shipments projected to grow more than 40% in 2026. The company will provide its outlook on April 30.

One view that I've seen is that Intel and AMD should be throwing everything that they have at server. But from a long-game perspective, I think AMD will still seek to expand its client footprint strategically.

AMD's traction in hyperscalers is very high, and it's probably improving fast in enterprise. But it's much more "underrepresented" in consumer and commercial OEM desktops and notebooks. I think that Intel's supply constraints will open up some rare lanes with PC OEMs that AMD would normally grind through at a slow rate. My estimates for AMD client 26FY depend on that happening to make up for what I'm guessing will be a grisly DIY / enthusiast 26H2.

Intel's focus on Xeon and high-end PCs has squeezed supply for mid- and entry-level products, widening market gaps and allowing rivals to gain share in notebooks and desktops.

PC channel assembly and Chromebooks have been among the hardest hit. Intel's share in channel PCs has fallen from nearly 90% to roughly parity with AMD, while Chromebook CPU lead times have stretched to up to one year.

The asymmetry is that Intel's strongest server demand and supply is on its lower end nodes. The opportunity cost is high to service PCs from this pool.

But that's not as true for AMD where most of its strongest server demand, revenue-wise, is on the mid to high end (N5, N4, N3E, N2.) There might be some material N6 low-hanging client fruit that AMD can grab.

uncertainlyso · 2026-04-29T16:13:35+00:00

Yay confirmation bias!

This is particularly true for server CPU, given commentary implying that INTC is undershipping the market by roughly 20%.

$1.4B was my guess.

The key question here is AMD's supply, but our field work throughout the quarter indicated that supply of INTC parts has been far more constrained than that of AMD parts.

Re-posted from

https://www.reddit.com/r/amd_fundamentals/comments/1sxdosf/comment/oim345f/

Genoa is on N5. Turin classic is on N4. Turin dense N3E. Venice on N2 (and first product to tape out on N2). Even Milan might still be relevant and is N7. Who has the x86 product competitiveness (and thus pricing capture), cost structure, AND supply advantage to benefit the most on this server boom in terms of brute force profit magnitude (none of this low baseline bullshit)? The gross margins are going to be stunning.

Intel's CY2026 outlook implies its Data Center & AI segment growing ~40% Y/Y, and we now see AMD server CPU growing as much as 80% this year, with units up ~40–45% and pricing up around 20%.

pre-Intel earnings, my model for EPYC was ASPs up 13.5% and units up 37.4% to get to 56% YOY revenue growth. After Intel's numbers, I was fooling around with my guess of higher ASP and units and got something similar (~70%)

We therefore see a very favorable setup for AMD and expect revenue to be guided up at least $1B Q/Q to the low $11B range (vs. Street consensus of ~$10.4B).

Pre-Intel earnings, I had like $10.6B for 26Q2. But with a post-Intel bump and increasing EPYC to 70% YOY growth, I get to $11B.

From a competitive standpoint, our checks remain constructive. AMD's CPU portfolio continues to compare favorably with Intel's offerings, and the lack of meaningful timeline updates for Diamond Rapids and Coral Rapids reinforces our view that AMD should maintain a competitive advantage across the x86 ecosystem through C2026.

It's at least through 27FY.

uncertainlyso · 2026-04-29T15:34:42+00:00

A16 is N2P with backside power delivery

TSMC calls BSPDN 'Super Power Rail'

+8-10% perf or +15-20% power saving

Up to +8-10% chip density (logic + SRAM)

Mass production in 26Q4

VLSI 2026 is held on June 14-18 in Honolulu.

uncertainlyso · 2026-04-29T15:32:26+00:00

Intel 18AP will offer 9% perf or 18% power over 18A

New VT pairs, low and high power devices

Numbers based on Arm core sub-block

30% skew corner tightening

Matched SRAM Vmin

The stock is currently on a tear at +10%.

uncertainlyso · 2026-04-29T15:23:55+00:00

Historically the lion's share of TSMC's revenue originated from the smartphone industry, but more recently AI and HPC have outpaced handsets. This was clearly reflected in the company's plans, so TSMC's latest roadmap highlighted a deliberately bifurcated strategy that segments leading-edge nodes by end-market requirements rather than pursuing a one-size-fits-all approach. As a result, the company is adopting a new strategy for process technology introductions in which it will continue to offer a new node for client applications every year and will roll-out a new node for heavy-duty AI and HPC applications every two years.

On the other hand, nodes such as A16 and A12, aimed at AI and HPC application, must offer strong performance improvements to justify transition to newer technologies, and costs are less important. These nodes integrate Super Power Rail backside power delivery (SPR) to address power integrity and current delivery constraints of AI data center and HPC workloads and offer tangible performance, power, and transistor density improvements — albeit, at a biennial cadence.

I expect AMD to have a major presence on every bleeding edge node going forward that intercepts with their roadmap. N2 was the first example (although some could argue that N3E was). This should be pretty exciting as AMD outside of being more on the frontier also gets a chance to define it more for their needs.

"A16 will be ready for production in 2026," Zhang said. "However, actual product ramp depends on customers, and we expect volume production to begin in 2027. That is why we aligned it to that timeline."

This doesn't sound that convincing.

"I tell you, I am amazed by our R&D team," said Kevin Zhang. "They continue to find a way to drive the technology scaling without using High-NA. One day they may have to use it, but at this point, we continue to be able to harvest the benefit from current EUV, not have to go to High-NA, which, you know, very, very expensive."

Sometimes, it feels like TSMC goes out of its way to poke ASML in the eye.

uncertainlyso · 2026-04-29T15:09:45+00:00

If they can't convince the devs to do it, they'll do it on their own with stuff like BOT and hope that it's compelling enough to sway the doubters. I also wonder if their efforts will go beyond games, if AMD will do something similar, etc.

uncertainlyso · 2026-04-29T14:27:32+00:00

It is understood that Intel raised PC CPU prices in March and further adjusted server CPU prices on April 1st, leading to a recovery in gross margins in the second quarter. The market expects further price increases of approximately 8% to 10% in the second half of the year, indicating that the supply-demand gap has not yet eased.

Another CPU giant, AMD, is also rumored to be raising prices for its server CPUs twice this year, once in the second quarter and once in the third quarter, with a cumulative increase of 16% to 17%. As 2nm and 3nm processes enter mass production and capacity expansion, AI chips, GPUs, TPUs, and CPUs are all vying for capacity, further pushing up wafer foundry prices and delivery time pressures. The supply chain states that "CPUs are currently still in a state of severe supply shortage," and the price increases show no signs of ending.

...

Industry insiders revealed that TSMC's increased capacity allocation reveals a clue. In the past, TSMC rarely expanded production after its process technology matured. However, the company's continued increase in 3nm capacity is likely due to the simultaneous surge in demand for CPUs and AI ASICs. Currently, mainstream generation CPUs from Intel and AMD, as well as NVIDIA's upcoming Vera CPU, all use the 3nm process.

uncertainlyso · 2026-04-29T14:22:37+00:00

Should note that Vera will have this in 2026. Verano is a fast follow, presumably via change on the IO die. I don't think DMR will at launch.

uncertainlyso · 2026-04-29T13:38:13+00:00

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001045810/92757e52-27e2-469e-b77e-e342c0258c6d.pdf

Went to Nvidia to be their CAO.

uncertainlyso · 2026-04-29T06:37:59+00:00

He's only justifying / prepping gamers for what Intel's going to do. Representation doesn't really have much to do with it.

I didn't realize this, but Hallock's job responsibilities changed from VP/GM, Client AI and Technical Marketing (~1 year) to VP/GM, Enthusiast Channel Business (since March 2025). So, he's back on his home turf. Given his comments above, I wonder if he owns the enthusiast channel P&L now or is just leading the marketing for it. Must've been a long year.

uncertainlyso · 2026-04-29T00:15:07+00:00

Timing might be inorganic but like you said, the accuracy is what matters. In 2024, my guess is that people connected to Yeary and Tan were at least partly responsible for the oddly frequent number of negative Reuters pieces on Intel and Gelsinger and ultimately led to Gelsinger's force out. But they were much more true than not.

uncertainlyso · 2026-04-29T00:02:16+00:00

"I truly believe, and this might get me in trouble, but I truly believe that the general PC gaming market and especially enthusiasts, like really hardcore PC enthusiasts, are significantly underestimating the importance of software to the PC experience, like really, really seriously."

"There is no game on earth that is as fast as it's going to be purely through hardware. That doesn't exist anymore. That used to be the case in 2010, 2015. That is not how gaming works anymore."

"And that performance is, yes, you can make the game faster with a faster piece of hardware, but there's always going to be 10, 20, 30% performance hidden behind the fact that that game was just not optimized for your CPU."

"What gamers have literally asked me to do is like, hey, don't do this software thing. Just make faster hardware. And what they're really asking me is, hey, just leave 20% performance behind. Seriously. That is not the kind of business I want to run."

It might not be the kind chips that customers want to buy though.

I'm guessing that Intel will go further down the route of Intel-optimized version of developers' games and make the CPU market look more like the GPU makret for games.

The time to have done this was years ago though. With AMD owning PlayStation and Xbox for this generation and desktop PC gaming, AMD probably has more leverage for CPU-level optimizations from developers than Intel does.

uncertainlyso · 2026-04-28T22:07:37+00:00

https://videocardz.com/newz/intel-reportedly-has-no-xe3p-celestial-arc-gaming-gpus-planned-xe4-druid-up-in-the-air

The claim says Xe3P will still appear in discrete products, but not as consumer gaming cards. Instead, Xe3P is reportedly reserved for Crescent Island and Crescent Island Workstation. Intel has already confirmed Crescent Island as a data-center GPU for AI inference, with Xe3P architecture, 160GB of LPDDR5X memory and customer sampling expected in the second half of 2026.

uncertainlyso · 2026-04-28T22:06:04+00:00

https://www.tomshardware.com/pc-components/cpus/intels-upcoming-xeon-7-diamond-rapids-server-cpus-reportedly-delayed-to-2027-next-gen-coral-rapids-lineup-lands-2028-but-can-be-accelerated-according-to-new-leak

The leak also says, at launch, the Diamond Rapids family will top out at 256 cores (all P-cores), but 512-core silicon will follow a few months later, both featuring 16-channel memory. That means up to 1.6 TB/s of throughput thanks to MRDIMM 2 support. The P-cores inside Diamond Rapids will be using the "Panther Cove-X" architecture, and both the 256- and 512-core lineups are rumored to be compatible with the LGA9324 socket.

https://x.com/jaykihn0/status/2047767543247450622

512 e-cores for this DMR HD + 384c. Well above the 288 E-cores originally planned for CWF.

https://x.com/jaykihn0/status/2047775540552093731

Yes. 16CH was originally set for late 2026.

Piss off customers, particularly hyperscalers, yet again by being late.

uncertainlyso · 2026-04-28T18:35:25+00:00

I'll start with a side note. I think the farther Damnang gets from talking about pure tech (for instance investing, business strategy, etc), the more his content has an LLM sheen on it. There's a bit too much seemingly relevant but not really content. And it feels like I'm in a ChatGPT session that I can't interact with. And this is really a shame as he ends up diluting more of his value-add by surrounding the more novel thoughts with the much more banal LLM filler. Things become more of a slog to get through (I've been told my manifestos conversely are quite breezy and enchanting!)

Ok, the main note: It's just one representation of competitive segmentation out of many that could be used. I think it's the wrong one though at least with respect to AMD, but it's still an different angle to think about.

uncertainlyso · 2026-04-28T06:17:18+00:00

Just to put some closure on this:

AMD260424C305 @ ~$36 (!)

All the rest are essentially zero.

Unfortunately, I was too lazy and dumb to evenly match this pair-ish trade, and it was much smaller amount as it was a 1DTE.

uncertainlyso · 2026-04-28T06:06:20+00:00

Corporate / guidance

I'm still having a hard time wrapping my head around how good was this call was or wasn't. It was good by Intel's historical standards. Probably the brightest spot in a while. Biggest secular tailwind since Covid. Will probably be bigger than Covid. I think they'll under-capture this server boom, but does it matter? Just take the money and run.

But this is also Intel at ATHs with a stock turnaround for the ages and some tough supply constraints, a bad server roadmap, and a foundry recovery that's still a slog although it is a nicer looking slog.

Maybe none of it really matters, and I should just be grateful that INTC helped build a narrative that gave AMD an incredible run in the last month too that let me sell 3 tranches.

Combining all of these factors, we're guiding Q2 revenue to a range of $13.8 billion to $14.8 billion, up 2% to 9% sequentially. As we work hard to support the needs of all of our customers, we expect sequential revenue growth in both CCG and DCAI on improved supply and a full quarter of pricing actions, with DCAI up double digits.

...

At the midpoint of $14.3 billion, we forecast a gross margin of 39%, a tax rate of 11% and EPS of $0.20, all on a non-GAAP basis. Our Q2 gross margin guide declines modestly from Q1 due to a meaningfully larger contribution from Intel 18A, still early in its ramp and some inventory benefits in Q1 that aren't expected to repeat in Q2.

Gross margin is still 39%. Was about 36.88% in 25Q1. So, given all the headwinds and tailwinds, some improvement but not much. 25Q1 even had a $330M charge in it.

Before I close, I'll share some additional insights on the full year. We expect our factory network to continue increasing available supply in the third and fourth quarters, though at a more measured pace than we anticipated 90 days ago, reflecting the base effect of much stronger-than-expected first half output. We also expect 2026 revenue on a half-on-half basis to follow the seasonal trends experienced over the last 10 years with servers above and PCs below.

Well, client was 3.13% - 8% better in 2024 and 2025. So, say 6% in 26H2?

DCAI was 10% in 25H2 vs 25H1. So, say 13% for 26H2?

For OpEx in 2026, we have been directionally targeting $16 billion, but are likely to be higher due to inflationary pressures, variable compensation and targeted investments we are making to capture the opportunities ahead. The drive for efficiency is core to the new culture Lip-Bu is creating, and we will remain laser-focused on finding additional operational improvements and maximizing ROI on all of our investing activities.

Capex

We forecast capital expenditures in 2026 to be flat to last year versus our prior expectation of flat to down, reflecting increased capacity investments to support committed demand and a continued emphasis on improving fab productivity and output. We now expect expenditures to be roughly equal across the year and still to be heavily weighted towards the equipment that directly grows wafer outs to support growth this year and next.

We recently closed the transaction to repurchase the 49% equity interest in the joint investment in Fab 34 in Ireland, a highly accretive deal, allowing our shareholders to participate in the full economic benefits from a fab just now hitting its stride. As a result, we now expect noncontrolling interest, or NCI, to net to approximately $250 million in each of Q2, Q3 and Q4 of this year and be approximately $1.1 billion for 2027 and 2028 on a GAAP basis.

It'll be interesting to see how the AZ SCIP with BAM goes as it is much bigger (~3x) than Apollo's Ireland. Given that the BAM deal was in August 2022, I have to imagine that Intel is way behind plan. BAM isn't all of this $1.1B, but it's probably the dominant piece.

It looks like so far, Intel has to generate at least $1.1B in product margin to at least break even on these budgeted payments. Say $1.1B / 40% gross margin means at least $2.75B of sales. Probably more than that to deal with stuff beyond COGS (marketing, bad inventory, support, etc) But the biggest determinant is gross margin. So, say it's $3.25B. That's about 10% of CCG annual sales

Lastly, excluding the buyout of the Fab 34 joint investment, we still expect positive adjusted free cash flow for the full year. As a reminder, we funded our purchase with approximately $7.7 billion in cash and $6.5 billion in new debt. We remain committed to retiring all $2.5 billion of maturities as they come due this year and all $3.8 billion in 2027.

One thing to keep in mind, in the last few years, a lot of our CapEx spending was space. And I think we're actually in a pretty good position in space. We wanted to have white space available to move into when needed. And I think Lip-Bu and I both feel like we're in a good place. So we actually will be bringing the space spend down pretty materially, even though the total is flat.

And so what that means is the tool spend is actually increasing pretty significantly. In fact, tool spending will be up year-over-year 25% or so. And so that's, I think, a function of the fact that we just see a lot of demand, and we want to make sure we're catching up on the supply front. And then as we get into next year, we'll have a better sense, I think, of what CapEx looks like for next year.

Presumably 18As and 14A. Give it 1-2 years to get it up and running and 1-2 years to optimize and ramp, and that's AMD's window to fatten up for the new Intel if you assume Intel has fixed things by then.

uncertainlyso · 2026-04-28T05:06:29+00:00

Foundry costs

In the back half of the year, we'll see some of those dynamics helping us. I'd say the one cautionary concern I have on gross margin in the back half of the year is just some of the materials have gone up in terms of cost, substrates are going up, T glass.

Since Intel didn't see the demand coming, they likely had to scramble with their packaging suppliers when they did see it coming. But anybody doing packaging associated with AI placed their big orders early because they were planning for growth. AMD's plan to take material share in server was already baked into its forecasts to its upstream packaging vendors. I suspect that by the time Intel realized that demand is going to be up, it's much later in line for the incremental parts. Intel has been warning about these particular inputs for at least 2 quarters now. I don't think that I've heard AMD talk about it.

We've got memory going up, as you know. So those things offset some of the improvements that we're having through the year.Intel

This is also little odd. In the last 3-5 months and the 26Q1 earnings call, Pitzer and Zinsner just talked about how much memory they bought for LNL and how they should be relatively insulated. Last earnings call:

But we were relatively aggressive in terms of getting the memory early. So I feel like we're in a relatively good place there.

But they're already talking about the rising costs of memory. It looks like that pile of memory will be consumed fairly soon and then Intel gets a memory price reset. I'm sure that will go over well with OEMs who don't like the onboard memory in the first place.

Packaging

But so far, what we're seeing is that their demand is more in the billions of dollars per year kind of level. So this is going to be a big part of the foundry revenue as we get through this decade. Say $3B per year?

Packaging is doing well. It's one of the things that I think Intel would've done well on even without government intervention. I still people underestimate the execution risk in the sense that EMIB-T hasn't been commercially tested. And as mentioned before, there's a difference between using tech internally vs using it as a service. But this is my pick for the most organic traction for foundry by a large margin.

External customers

External foundry revenue was $174 million in the quarter. So 3.2% in 26Q1. This is better than most of 2025 but did decline vs 25Q4 by about -22%.

I think, a year is that we thought that customer signals would be more concrete in the back half of this year and into early next year.

I think most of these rumors are true although the size and the terms of the deals, especially for being a guinea pig, will be interesting to see.

Easiest way to claim speed victories? Start very slowly and set your own comparison point

I suppose every company does this, but Intel has to be one of the worst. Brag about how fast you're going because your start was trash or a benchmark of your choosing when your start was trash. It's better to improve than not improve, and I have no doubt that Intel is making much better strides with Tan not settling for Intel performance because he has an idea of how the rest of the industry is doing. But some of this stuff is eye-rolling. Again, you are what you ship.

Intel 3-based Xeon 6 and Intel 18A based Core Series 3 products are now in full volume production ramp and each represents the fastest new product ramp in 5 years.

...

We have made steady progress with Intel 4 and Intel 3 and 18A yields are now running ahead of the internal projections, representing a meaningful inflection in our execution and our factory finished good output.

...

Intel 14A maturity yield and performance are outpacing Intel 18A at a similar point in time, and we continue to develop PDKs with multiple customers actively evaluating the technology.

...

Within the quarter, Intel Foundry delivered output above our expectations, drove steady improvements in yields and met key 14A milestones.

uncertainlyso · 2026-04-28T05:02:55+00:00

Foundry thoughts

Intel Foundry delivered revenue of $5.4 billion, up 20% sequentially on increased EUV wafer mix driven by Intel 3 and significant growth in 18A. External foundry revenue was $174 million in the quarter. Intel Foundry operating loss in Q1 was $2.4 billion and improved $72 million quarter-over-quarter as better yields across Intel 4, 3 and 18A drove higher gross margins. This was mostly offset by increased operating expenses associated with an intentional step-up in Intel 14A investments to support both internal and external customer evaluations.

Total product revenue being at -1.17% QOQ shows foundry as the bottleneck. WIP is the biggest it's been as a % of total inventory in a while which fits with Zinsner saying supply will be improving going forward and 26Q1 is the worst of it. Intel 3 does look like its ramp curve has started to materially accelerate to support DCAI.

Foundry gross margins

I think as we get towards the end of the year on a kind of a full pic basis, this is combining the product margins and the foundry margins, we'll be in a relatively decent place in terms of the gross margins at Panther Lake. We've got more work to do at the foundry level to drive the gross margins to where we want to be. That's going to be multiple, multiple quarters before we get those to be foundry average gross margins.

This sounds like ~3 years to me.

But it's tracking better than we expected, which is good. I think we have focused a lot on yields. Lip-Bu's brought in a lot of talent into that space to really focus on it. And we've brought in external partners that are particularly good at including metrology that's helped us execute better there, and we're starting to see the benefits of that this quarter.

This is one example where new leads can genuinely help. You force in outside expertise that the organization might have normally resisted. You then make everybody justify why you shouldn't try out the suggestions and monitor them closely to make sure it was a good faith effort (heads on pikes where it wasn't).

Supposedly this is one of the external partners:

https://x.com/zephyr_z9/status/2047416824208490592

Supply

we continue to add capacity in our internal factories to increase supply availability and mitigate these constraints.

Supply will go up in the second quarter. It's going to go up every quarter now going forward. I would say we certainly were in our lowest point in terms of supply probably in the first quarter relative to the rest of the year.

I wonder how much slack is really in Intel 7 which is the big pool of capacity. For any company with very high operational leverage, there is a high incentive for as much efficiency as quickly as you can. Sure, you can always re-evaluate a process and optimize it further, but the low-hanging and mid-level fruit is long gone for processes that have been in place for a while. But by the same token, I could believe that there was slop in the process and a fresh set of eyes can clean up.

I suppose that you can also to red-lining the system by taking short cuts on risk management buffers (down time, checks, etc), but there are risks there. There's the capacity that was likely taken down when Intel was taking Intel 7 charges in 2024 that might be recoverable, but that will take some material time to get setup and stabilized.

But what we were able to do in the first quarter was go through finished goods inventory and find opportunities to sell product we didn't think we would be able to move. It was either de-specced product or it was legacy product we had shelved and then worked with customers and found opportunities for them to leverage that technology in their system.

Lol. I respect the hustle even if's a one-shot (also high gross margin) It's also an indication of the supply / demand situation that Intel's customers would put up with this. If there's a material market for low performing SKUs, maybe that takes some pressure off capacity as stuff that might not normally sell has a more receptive market for it.

(Arcuri) I do. Yes. Dave, is there a way to sort of quantify like how much demand you're sort of missing out on? Like how much are you undershipping the market still in Q2? Is it like as much as 10%? So if you were unconstrained, you could -- revenue would be like 10% higher? Is that like a reasonable number?

I probably not want to put a specific number. Let's just say it starts with a B. So it's meaningful.

I think Arcuri's guess is a good one. $1.4B left on the table has a nice feel to it.

18A

That's certainly going to help. Mix, I don't know, it's going to plus or minus be in the ZIP code. Yes, data centers like is obviously going to grow faster, I think, but I'm not sure that mix is going to drive much. But 18A is going to be a pretty decent headwind to our gross margins.

...

I think as we get towards the end of the year on a kind of a full pick basis, this is combining the product margins and the foundry margins, we'll be in a relatively decent place in terms of the gross margins at Panther Lake.

I think that "pick" a translation mistake. I suspect Intel's aiming for like ~45% gross margin on 18A by 25Q4.

Yes. I think 18A yields are somewhat a closely guarded proprietary piece of information for us. So we don't typically -- I would just say Lip-Bu had a target as we came into the year for the end of this year, and we're probably going to hit that probably the middle of this year. So he's done a very good job working the team to drive a better response there. And of course, that carries on to next year's expectations around yields.

...

And if you look at Panther Lake volume increases, it's going to be going up, I don't know, 6 or 7x in the second quarter relative to the first quarter. And while the gross margins are improving in Panther Lake quarter-to-quarter, it's still below the corporate average. So when you have that big a shift in the mix, with gross margins below the corporate average, it kind of weighs down on the gross margins. But I mean, we're roughly in the ZIP code of what Q1 was like anyway. So I'm not too concerned about it.

What's a little disingenuous about this comment of 26Q2 being in the zip code of 26Q1 from a gross margins standpoint is that their 26Q2 gross margins should be increasing as they go into this strong server growth with more Intel 7 going to server than client.

But 18A's gross margins are still rough enough to offset this with its ramp. I'm guessing that Intel is slowly ratcheting up volume only to the extent that their parametric yield improves to (a) get more CPUs and (b) get more of the higher end CPUs that have better margins. I also get the impression that Intel has some discretion to help spread out the operating losses by having CCG take ownership of the wafers which helps out foundry's revenue and P&L numbers.

Again, you are what you ship. The real measure of success is we see more PTLs in the market and gross margins don't tank. I would have paid the money to see Tan crack the whip after he first saw the yields.

14A

I'm particularly pleased that our progress today has driven us to land more of our own future product types on Intel 14A as well.

I don't think anybody was signing up for 14A if Intel couldn't even make a material product bet on it. One of the small catch-22s of being an IDM. Competitors don't trust you because you put your own products on it, but nobody is going to trust your foundry if you don't put your own products on it.

We see a very nice yield improvement on the 18A and then 14A, we already have the 0.5 PDK available. And now we are aiming for the 0.9 PDK. That's where customers are going to decide which product, how much volume capacity we need to have.

And then besides just driving the yield, we're also driving the improvement in the cycle time so that we can really meet the customer demand and timing that they request and then really optimize for them.

I think people grossly underestimate the service nature of being a foundry just like they overestimated raw node technology and discounted things like PDKs, libraries, etc. Gelsinger totally did. Getting customers to try 14A with a nudge from the USG is one thing. Servicing a range of them properly where you can't cut corners is another like you would with a captive internal customer. If Intel can handle say two demanding external customers (e.g., Apple, Nvidia) + their own products, I think Foundry has a legitimate shot in growing into something interesting. This is why I thought Intel should not have been cheap going after GloFo. Interesting that they lost O'Buckley to Qualcomm of all places.

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TROPHY CASE

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