Returning As CEO, Will Pat Gelsinger Save Intel?

Earnings season is once more upon us, and once again leading the charge is $Intel(INTC.US)$, who reported their Q4 2020 financial results yesterday. For the fourth quarter of 2020, Intel reported $20.0B in revenue, which is a drop of $0.2B over the year-ago quarter. Intel saw a very good Q4 a year ago, and while Q4 2020 is once again their strongest quarter of the year, Intel's momentum as a whole is starting to back off on a quarterly basis. More significantly, Intel's net income has dropped 15% YoY, with Intel booking $5.9B there. Come and see what happened in the Q4 2020 earnings call!

This article is a script from the Q&A session of Intel's earnings call on January 21. In order to facilitate reading, we have made appropriate cuts. If you want to know more details, you can click the link provided by @moo_Live below to re-watch the earnings call.

A: We have made an exhaustible effort for six months for tremendous progress on 7nm. It gives us a lot of comforts to have a predictable cadence of products, to deliver on our 2023 products. The team has given us the confidence to leverage our IDM advantage. Intel’s disaggregated product designs enable Intel flexibility to see what tiles will make at Intel (majority of 2023 roadmap), but flex to make what we need to outside the company. These trade-offs include managing predictable performance gains, economics, capacity, and control of the supply chain so customers can count on delivery. It is all about maintaining Intel’s IDM advantage.
 
Q: In those 2-3 years while 10nm/7nm has had issues, the competition is making progress. What is the conceptual state of Intel competitive play when we get to 2023?

A: (1) Our belief on delivering leadership products. Process technology is very important, but also packaging technology, having a multitude of architectures (CPU to XPU), memory, security, software. The six pillars of technology required to deliver product leadership.
(2) We're going to continue to invest in process tech. Some of the progress we made in 7nm is important for the next gen of product. As we leverage six pillars, we will also continue to invest in next gen beyond 7nm.

A: We view 5G and network transformation as a significant opportunity for Intel's role as compute moves DC to cloud to the network. Dumb pipes become smart pipes. We have made tremendous progress for general purpose compute in the network – it is a big source of growth, from a 1B business when we started to a 5B business last year. That came by leveraging the core GPU in the network environment. We expanded the role as more and more happened at the network. That included the radio access space with general purpose compute, but also custom architectures like FPGAs and ASICs. Having more technology here allows us to play a bigger role in our customer success. It has been a key target for Intel for a while. We've targeted 40% share in that radio share by 2022, and we hit 40% share in 2020.

A: There are four areas I will focus on. First is for Intel to have great product. We will be the leader in each category for which we play. We will deliver leadership products and have the consistent development machine to do that. Second is Execution. We will have the best abilities to execute on our roadmap, and our roadmap to be the best. We want to deliver the best products, and make sure our customers can rely on us. Third is Innovation. We want to be a continual delivery vehicle for innovation in the industry. This means leveraging our IDM model, our 7nm process. We have and need radical areas to innovate. More and more of every aspect of humanity is coming online, and Intel needs to be there. Finally it is also a point of Intel’s culture. I trained at the feet of Grove, and we will have the Grovean attitude to execution. This will be data driven as we rebuild the company. The best days for Intel are in front of us. This is a priority for Intel, the industry, and our nation.