This was a great event and many customers are seeing that value today.
John Pitzer: Vivek, do you have a quick follow up?
Vivek Arya: Yes. Thank you. Maybe one for Dave on the potential operating loss kind of how do we model that for the foundry business? So let’s say, if I exclude the 2 billion in depreciation headwind, which I’m assuming is almost all going to your foundry business, what is the right way, Dave, to think about foundry operating income or loss this year? And how much of external foundry revenue are you expecting this year? Thank you.
David Zinsner: Yeah, good question. The operating losses will pick up. We roughly were at like 2, 4-ish in the first-quarter. It will pick-up in the second-quarter given the start-up costs are increasing. And I would say be roughly in that range for the remainder of the year. And then what I said before is we see that improving then going into ’25. And we — I think Pat has given me the order, he wants to see every quarter some improvement in the operating loss ultimately to get to breakeven midway through the point between now and in 2030 and I think that is very achievable. I’m sorry, Vivek, what was the second question? Did we lose him?
John Pitzer: Vivek, are you still on?
Operator: No, we’ve moved on.
David Zinsner: Okay.
John Pitzer: Why don’t we go to the next caller, Jonathan?
Operator: Certainly. Our next question, one moment, comes from the line of Matt Ramsay from Cowen. Your question please.
Matthew Ramsay: Yeah, thank you very much, guys. Pat, one question I’ve been getting from some folks and I totally understand the lead times of starting some of these programs to put increased tile volume at external foundry, but you guys have made the progress on the five nodes in four years as you highlighted multiple times. Is there any flex at all to bring back some of that external volume earlier? And I think it matters to some folks because it’s a demonstration of you guys being able to ramp your own product to volume and to yield and to economics on 18A, which might give some indication to some external customers that are looking at your foundry business. So just any flex at all to pull that timeline in of sort of reshoring some of the external tiles? Thanks.
Patrick Gelsinger: Yeah. Thanks, Matt. And largely those decisions are made when the product decisions are made. So there’s limited flexibility to move them around. And if you pick a process node for a certain tile, generally, that’s the process node that it’s on. So there’s limited flexibility there. And many of those decisions, as we’ve highlighted before, Matt, were literally made years ago, right, and those choices were made. That said, we see the peak of our external tiles being this year and next year. And then the roadmap and the movement of those coming back begins to quite accelerate even starting late next year. So the plan is clearly laid out. As we said, we see a couple of fabs worth of capacity coming back into the Intel factory network as we move into ’26 and beyond, so this becomes a significant driver.
We’ve also driven significant roadmap decisions against that improving profile of our products. And I’ll say that begins in a very powerful way next year with Panther Lake and Clearwater Forest. Unquestioned, the best products and clients, the best products and server are now being built on Intel 18A. And as the question suggests, we see customers seeing that what every foundry customer that we speak to, right, understanding where we are in our product and process cycle and the ability for them to essentially benefit from Intel as customer zero in the foundry network. So overall, this is feeling very good. We’re on track to go accomplish that. And the business model that we’ve laid out and Dave and I presented as we go through the decade shows a very healthy improvement in wafer ASP, wafer volume, foundry, and these decisions are made, right.
We are on track to both have the wafer foundry capabilities, have the process technology and the products to fill those factories. And that’s why Dave and I have such confidence in the business model that we’ve laid out and the improvements that it will deliver as we go over the next several years together.
John Pitzer: Matt, do you have a quick follow up?
Matthew Ramsay: Yes, John. Thank you. I wanted to ask a question about the AI accelerator roadmap. So you guys have Gaudi 3 that you talked about and Falcon Shores coming next year. And the hardware looks quite good. I wanted to ask a question about the software that goes on top of that for both, well, really for inference, but also for training. And how do you feel about the software roadmap that you guys have in the AI space going forward? And how much compatibility or uniqueness rather is there to the software that runs on Gaudi 3 versus what will come on Falcon Shores and the forward roadmap? Thanks.
Patrick Gelsinger: Yeah, maybe three different points there. The first one is for inferencing, you need a whole lot less software compatibility, right? And as the market is more focused on inferencing going forward, if you can run the models, right, in the context of the databases and the others. So that pretends and it’s why we’re seeing the strength that we’re seeing right now, Matt, in these use cases. And clearly, some of the software compatibility issues of a GPU have led to the training environments that have been challenging for us. But now as customers get much more focused on enterprise use cases, inferencing, TCO, we’re finding a lot of strength in the offerings that we have. And as we’ve matured a number of customers now, we’ve worked through many of those use cases and getting quite a lot of acceptance of the software stack that we have with Gaudi 2 and 3.
We will have a very smooth and seamless upgrade from Gaudi 3 into Falcon Shores. But the powerful thing that will come with Falcon Shores is the full program ability that you’ll see with the complete instruction set capabilities of Falcon Shores. And at that point, we will have no deficits for any of the use cases and much greater compatibility for the full range of AI capabilities. The other thing that I emphasized is Xeon is a powerful capability with incredible programmable capabilities and we’re finding these use cases like I described with the Open Platform for Enterprise AI, RAG use cases is clearly beneficial there for us. So overall, we’re feeling like the software story is coming together very nicely and the entire industry is moving to higher level software abstractions such as Python and Triton.
So they’re moving away from any of these dependencies to an Open Software platform. So the industry trends are in the right direction. Our maturity is in the right direction and our software stack has gotten much more mature and we’ll have a very smooth upgrade to Falcon Shores.
Patrick Gelsinger: So let me just close our time together and say, thank you for the questions. Thanks for joining our call. We appreciate the update to give you on a very solid Q1. And we got a lot done in Q1 that gives us a great foundation for the future. We continue to drive our process and product and AI innovations and delivering on our process technology and leadership roadmap. If any of you are at COMPUTEX in a few months, I look-forward to seeing you there. We have a number of products and offerings that we’ll be announcing there as we continue our AI momentum and competitiveness. And as always, we look forward to talking to you next quarter. Thank you very much.
Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.
