Pat Gelsinger: Yes. Thank you, Ross. And overall, I think what you’re seeing is the industry is excited around the AIPC. And as I declared this generation of AIPC at our Innovation Conference a couple of months ago, we’re seeing that materialize and customers, competitors seeing excitement around that. ARM and Windows client alternatives, generally, they’ve been relegated to pretty insignificant roles in the PC business. And we take all competition seriously. But I think history as our guide here, we don’t see these potentially being all that significant overall. Our momentum is strong. We have a strong road map, Meteor Lake launching this AIPC generation December 14. Arrow Lake, Lunar Lake, we’ve already demonstrated the next-generation product at Lunar Lake, which has significant improvements in performance and capabilities.
We’ll be signing Panther Lake, the next generation in the fab in Q1 and Intel 18A. We announced our AI Acceleration program, which already has over 100 ISVs part of it. We’ll have — we expect in the next two years over 100 million x86 million AI-enhanced PCs in the marketplace. This is just an extraordinary amount of volume. The ecosystem benefits that, that brings into the marketplace. When thinking about other alternative architectures like ARM, we also say, wow, what a great opportunity for our foundry business. And given the results I referenced before, we see that as a unique opportunity that we have to participate in the full success of the ARM ecosystem or whatever market segments that may be as an accelerant to our foundry offerings, which are now becoming, we think, very significant around the ARM ecosystem with our foundry packaging and 18A wafer capabilities as well.
John Pitzer: Ross, do you have a quick follow-up?
Ross Seymore: Yes, I do. One for Dave. The OpEx side of things, you guys did great in the third quarter. You talked about it going up in the fourth quarter, but I still think the full-year is ahead of what you originally had targeted. How do we think about next year’s OpEx just conceptually? I know you said you’re going to have $3 billion in total cost savings this year, $8 billion to $10 billion longer term. What are the puts and takes on OpEx as we look into 2024?
David Zinsner: Yes. So again, back to the pride thing, I’m really proud of what we did in the third quarter and really what we’ve been able to execute for the year on that spend reduction. There was a lot of work associated with that. We had to drive a lot of, obviously, efficiency. But more importantly, as Pat talked about, we kind of end of — or we took 10 programs or product areas and either divested of them or closed them out in an effort to improve our spending. And as we see — and in addition to that, I would say that we also looked at businesses where we thought we could dramatically unlock value. And we think we’ve done the three areas that we thought most likely unlock value. So I think from that perspective, we feel we’re pretty done with the activities associated with spending.
And so that said, we are — we do think we’ll see benefit from our internal foundry model not only on the cost side but also on the OpEx side. And so that’s the area that we’ll focus over the long-term in terms of managing spending. And ultimately, the goal is to get to 60% gross margins but it’s also to get to 40% operating margins. So that does entail driving efficiency in OpEx and we think there’s plenty of opportunity. I’d say the same thing on OpEx that I said on gross margins. We’ll save the fourth quarter — or the ‘24 visibility for ‘24 when we close out ‘23.
John Pitzer: Perfect. Thank you, Ross. Jonathan, can we have the next question, please?
Operator: Certainly. One moment for our next question. And our next question comes from the line of Joe Moore from Morgan Stanley. Your question, please.
Joe Moore: Great. Thank you. I think you talked about the Gaudi pipeline doubling in the last 90-days, so I guess you’re nearing kind of $2 billion of visibility there. Can you talk to that a little bit, how much of that is training versus inference?
Pat Gelsinger: Yes, thank you. And overall, I’d just say there’s a lot — a surge of interest in this category, Joe. In the Gaudi business for us, we’re coming from a small base but it’s expanding rapidly. We do see a mix of training opportunities and inferencing opportunities. When we go to the inferencing side of the workload, which we think will be the significant expansion of workload going forward, a few people generate models, a lot of people use them. Sort of like how many people do weather modeling? Not many. How many people use weather models? A lot. And that’s how we think about training and inferencing? So the power, the market will be in the inferencing deployments. And that will be both a Gaudi play as well as a Xeon play.
And I would point to the example that we spoke about, for instance, with Dell where they really see bringing together both of those to give us a full portfolio of adding inferencing to existing workloads where our AI-enhanced Xeons will be strong as well as creating farms for inference, inference or for training where Gaudi will be more of a play. Now the interest that we’ve seen in Gaudi is a worldwide statement. So we have demand portfolio that really sort of matches the Intel balance across all geographies. We’re also seeing a huge upsurge in the amount of cloud where this provides the fast on-ramp to the Intel AI and all of our advanced silicon offerings. But I’d also say, Joe, that this is an AI everywhere play, as I said in my formal comments, which is also edge and client as well.
So we view it as edge, client, on-premise data center as well as a cloud. And this AI continuum is a unique position for Intel that we think gives us a very large opportunity to see this upside of capabilities that the AI workload is going to drive across all elements of computing.
John Pitzer: Joe, do you have a follow-up?
Joe Moore: Yes, I do. In terms of that Gaudi business, do you anticipate any impact from the China export controls? And more broadly, are there any other impacts from the China export controls on Intel’s business?
