In the second quarter of 2025, Intel achieved revenue that exceeded expectations, thanks to strong demand in its business areas and the excellent execution of its team. Despite being affected by some one-time projects and impairments, the company is satisfied with the underlying operational performance for this quarter. The CEO will focus on updating the organization and culture, wafer foundry strategy, core x86 business, and AI strategy as four key important developments, and will continue to focus on these areas.

The CEO of Intel completed a systematic review of all organizations and functions reporting to the CEO over the past three months, aiming to reduce redundancy and increase efficiency within the organization. The plan includes reducing management levels, optimizing employee structure, and implementing a return-to-office policy to enhance organizational agility and collaboration. In addition, the CEO emphasized the importance of semiconductor technology development and manufacturing, and announced a more cautious approach to developing and investing in manufacturing capabilities, including adjustments to factory plans in Germany, Poland, Vietnam, Malaysia, and the United States. At the same time, the company will continue to advance process technology development for Intel 18A and Intel 14A to meet the needs of internal and external customers, and emphasize a focus on return on investment in future investments.

The core goal of Intel Corporation is currently to launch the first Pantale SKU within the year and to add more SKUs in the first half of 2026 to strengthen its dominant position in the laptop market. The company plans to launch Nova Lake at the end of 2026 to fill the gap in the high-end desktop market and improve its performance in the data center market by increasing performance per watt. In the field of artificial intelligence, Intel recognizes the past shortcomings in systems and software and plans to establish an integrated silicon system, software stack, and strategy to adapt to the next wave of computing technology in the future. In addition, the company is also working on improving its financial situation, including optimizing operating costs, reducing capital expenditures, and gradually divesting non-core assets. Despite facing challenges, the company remains optimistic about future development and believes that it can rebuild the company and improve performance through a series of reform measures.

Intel's performance in the second quarter exceeded expectations, with revenue reaching $12.9 billion, driven by strong demand from customers and data center businesses. Despite uncertainties such as changes in trade policies, inflation concerns, and regulatory risks, core market demand remains solid. Client business continued to grow, partly due to the end of Windows 10000 support and the need for outdated devices to be updated in the Covid era. In the data center sector, enterprises and cloud service providers continue to upgrade CPUs to take advantage of Intel's new products' high performance and energy-saving features. At the same time, Intel announced costs and expenses related to its restructuring plan, including layoffs, asset impairments, and accelerated depreciation, but the company is progressing according to plan towards its operating expense targets for 2025 and 2026. On the product side, Intel has launched a range of new products for AI and high-performance computing and made progress in the field of AI inference edge computing.

Intel expects revenue to be between $12.6 billion and $13.6 billion in the third quarter of 2025, a decrease of 2% to an increase of 6% from the previous quarter. This forecast is partly attributed to customers taking hedging actions due to tariff uncertainties. Although historical data shows that Q3 usually sees high single-digit sequential growth, considering current market conditions, Intel is preparing for a slowdown in seasonal growth in the second half of the year. Specifically, within Intel's products, the Client Computing Group (CCG) is expected to perform strongly, while revenue from Intel's foundry business is expected to slightly decrease due to capacity constraints with Intel's 7nm process and a reduction in external advanced packaging revenue. Other businesses, including Mobileye, Atera, and IMS, are expected to remain stable. Additionally, the company expects a gross margin of around 36%, influenced by an increase in outsourced products, early-stage costs for Panther Lake, and increased costs related to tariffs. The expected tax rate is 12%, with earnings per share (EPS) being break-even, based on non-GAAP principles.

The company expects operating expenses to be $17 billion in 2025, with a target of reducing it to $16 billion in 2026. Meanwhile, non-operating income is forecasted to be in the range of $250 to $300 million. By selling assets and optimizing capital investments, such as the $900 million financing for Mobileye and financial processing for Altera, the company plans to improve its balance sheet and reduce capital expenditures. Key strategies include focusing on core businesses, utilizing non-core assets, and optimizing financial structures to adapt to the changing market environment.

In a phone conference, the discussion focused on how Intel can quickly repair its x86 business to enhance customer trust in its foundry business. The spokesperson emphasized the strategies the company is taking, including collaborating with external ecosystem partners to improve technology and product performance, and ensuring technological progress and reliability through regular reviews. They pledged to gradually build and restore customer trust through stable product releases and performance improvements, with the goal of launching the Panta Lake SKU by the end of the year and attracting external customers by showcasing significant progress both internally and externally.

The senior management explained in detail the main factors that affected the company's third-quarter gross margin decline, including cost pressures from the Lunar Lake project and high early-stage costs of the Panther Lake project. They mentioned that with a significant increase in production volume of the Lunar Lake project and the maturity of the Panther Lake project, these factors are expected to transform into positive impacts on the company's gross margin in the future. Additionally, they emphasized that the company's focus on future leading node production will help improve gross margins, and pointed out that through improving product design and cost structure, as well as optimizing production and sales processes, the company expects to achieve continuous improvement in gross margins.

The discussion detailed the company's strategic adjustments in 14A technology development, including lessons learned from 18A, collaboration with external partners, the importance of early customer involvement, and integration with EDA and IP providers. It also emphasized that capital expenditures will not be made until clear volume commitments from internal and external customers are seen, as well as the responsibility to ensure stable and reliable outcomes for customers.

During the discussion, it was mentioned that the company plans to reduce capital expenditures (CapEx) in the next year. The main reason is that a lot of investments have been made in the past few years and now it is necessary to digest these investments. About half of the capital expenditures, which is considered to be at a normal level of $18 billion, is regarded as maintenance or maintenance-related capital expenditures.

The inquirer mentioned that Intel 7 is in short supply before the end of the year, and asked about the reasons and whether the company can increase production. The respondent explained that strong demand for Rappler Lake products is the main reason, with consumers and businesses showing high willingness to purchase such PCs at the current price point. In addition, it was mentioned that Lunar Lake will ramp up production in the next quarter, while also gradually increasing the production capacity and wafer lines of Intel 4 and 3 to meet future demand.

The conversation mainly revolves around the company's strategy in capital expenditure (CapEx), especially regarding the utilization and depreciation of a large amount of assets under construction. The company has already converted some assets under construction, such as the project in Arizona, for productive use, and is gradually reducing the total amount of assets under construction, with the goal of further reducing them for the remaining time this year and next year. At the same time, the company emphasizes that it will continue to invest to maintain flexibility in response to changes in demand, especially in the project in Ohio, where progress has slowed down, but has not completely stopped.

The discussion focused on the expected trends in server market share, especially in the third quarter and the outlook for the next year. Despite the current market position being less than ideal, improvements such as the release of Granite Rapids and Diamond Rapids are expected to enhance competitiveness and improve market position. Furthermore, despite the competitive performance position, a relatively stable market share has been maintained, which is seen as a strong proof of the strength of the x86 ecosystem and the ecosystem system capabilities provided to customers.

The company plans to gradually announce its AI strategy in the coming months, with a focus on reasoning and agent-based AI. They will consider everything from system software to silicon chips in order to improve performance, accuracy, and speed. Through their 86 architecture and accelerators, their goal is to become the computing platform of the future. At the same time, the company is actively recruiting more software talents to seize market opportunities, and has received positive feedback from customers.

In the discussion, Intel expressed its strategic pursuit of comprehensive solutions in the field of artificial intelligence (AI), as well as its strategy to compete with competitors such as Nvidia and AMD in the cloud services and ASIC markets by leveraging its advantages in x86 architecture. Intel also mentioned its willingness to collaborate with system companies to provide customized AI platforms to enhance performance, demonstrating their openness to the ASIC market.

In the quarterly financial report under discussion, the company mentioned the issue of impairment of equipment and inventory. It was specifically pointed out that while inventory impairment is a normal part of sales costs, the main focus of this discussion was on the impairment of equipment, including adjustments for old tools where the carrying value exceeds the market value, and reclassifying some additional costs originally included in inventory as period costs. After some newly purchased tools replaced old tools, the old tools were impaired due to their carrying value exceeding the market selling price, and these tools will be classified as assets held for sale.

The conversation discussed the future development of Intel's 18A and 14A technologies. It was planned that the 18A technology would be used for products in the next three to four years, while the 14A technology is expected to be launched between 2025 and 2029. It also emphasized the importance of focusing on technological progress, customer feedback, and prudent deployment of capital expenditure to ensure that investments are made only after seeing production performance and customer commitments.

The discussion pointed out that the 18A technology node is expected to reach peak production in the early next decade, indicating that this node will be used for a long time with an expected good return on investment. Although initially serving internal needs, it does not rule out the possibility of attracting external customers in the future, especially as performance and production improve significantly, there will be more opportunities to expand into external markets.

In the conversation, the company's projected capital expenditures (CapEx) for the next fiscal year were discussed. It was mentioned that although the exact figures have not been confirmed yet, they are expected to be higher than 9 billion but lower than 18 billion. At the same time, it was emphasized that the assets under construction are not sufficient to support all capital expenditure investments, even including maintenance CapEx. The company will finalize its specific capital expenditure plan at the beginning of next year.

The conversation discussed the intensifying competition in the server CPU market leading to an 8% decrease in average selling price, particularly mentioning the disadvantage in the high-performance server sector due to neglecting synchronous multi-threading technology. At the same time, the discussants emphasized taking measures to narrow the performance gap, including closely collaborating with large-scale enterprises and high-end businesses to understand their workload requirements, and working closely with customers in the early stages of product development to improve the clarity of the product roadmap and streamline the collaboration process in order to regain market share, especially through the launch of new products. Additionally, the threat of competition from Arm was mentioned, with Arm claiming to occupy half of the server market share.

The conversation discussed how the gross profit margin will change if sales growth reaches mid-single-digit percentage, especially considering the impact of product mix and outsourcing demand. Although specific numbers were not provided, it was mentioned that the gross profit margin may potentially increase to a certain extent from the current 35.6%, depending on various factors, aiming to approach the higher range under favorable conditions. Finally, the speaker mentioned that there is only time to answer one more question.

The conversation discussed the company's strategy in the server market, especially the progress of the Clearwater and Diamond Rapids product lines. Mention was made of possible key milestones in the second half of 2026, as well as the company's plans to solidify and possibly expand market share through reviewing the product roadmap and working closely with customers. Additionally, there was mention of new leadership changes and competition strategies in the data center business, emphasizing the importance of the data center business to the company and expressing determination to regain competitiveness.

During the meeting, the progress of the company's transformation towards a more financially disciplined wafer fab factory was discussed, including the resetting of interactions with customers and partners and the simplification of operations. Models predicting the performance of the wafer fabs in Arizona and Ireland were mentioned, with an expected headwind of $500 million this year and significant growth in the coming years, especially by 2027. The company committed to continuously updating these forecasted data as the project progresses.