Intel Corporation · NASDAQ:INTC
Intel — Investor Day (November 2014)
72 slides from Intel's investor day presentation, Nov 21, 2014
Slide 1: Investor Meeting 2014
INVESTOR MEETING 2014 SANTA CLARA NOVEMBER 20
Slide 2: Stacy Smith, Executive Vice President, Chief Financial Officer
INVESTOR MEETING 2014 Stacy Smith Executive Vice President Chief Financial Officer
Slide 3: Industry Definitions
Industry Definitions MOORE'S LAW: The observation that, over the history of computing hardware, the number of transistors in a dense integrated circuit doubles approximately every two years. METCALFE'S LAW: States that the value of a telecommunications network is proportional to the square of the nu
Slide 4: 2074 Investor Meeting Haiku
2074 Investor Meeting Haiku Cloud forms, data shines Transistor density sprouts Client growth blossoms
Slide 5: Stacy's Shroud
STACY’S SHROUD: /stey-sees shroud] 1.The number of haiku’s double every Investor Meeting 2.The second haiku 1s the one that is likely to get you in trouble with the boss
Slide 6: 2014 Investor Meeting Haiku
2014 Investor Meeting Haiku Big Drones, cool robots Intelligence on the edge BK Spawns Skynet
Slide 7: Key Messages
Key Messages Return to growth in 2014 IP and Manufacturing leadership are increasingly valuable advantages Exquisitely positioned to benefit from cloud and big data We are investing in our business and returning cash to shareholders
Slide 8: 2014 Outlook
2014 Outlook Full Year Revenue at $55.8B Full Year Gross Margin at 63% YTD Operating Profit at $10.9B YTD EPS at $1.58 ‘The 2014 forecast |s based on Q1-Q3'14 acwals plus the midpoint of the Q4'14 forecast. Forecast range is based on current expectations and is subject to change without notice Sourc
Slide 9: Intel Revenue
Intel Revenue s75 $8 $50 $25 $o 2008 2009 2010 2011 2012 2013 2014F ‘The 2014 forecast Is based on Q1-Q3'14 acwals plus the midpoint of the Q4'14 forecast. Forecast range is based on current expectations and is subject to change without notice Source: Intel
Slide 10: Our Competitive Advantage 1: IP
Our Competitive Advantage 1: IP Key Segments of Our Business Our Competitive Advantage 2: Manufacturing Cash and Shareholder Return
Slide 11: R&D Scale
R&D Scale $40B R&D Spending relative to the semiconductor industry Five year history (FY2009 —FY2073) Intel investing at 2.5x to 10x the industry players Intel Qualcomm Broadcom Texas AMD TSMC Applied Marvell NVIDIA Micron Freescale Instruments Materials Source: Capital
Slide 12: Number of suppliers declining across key IP blocks
Number of suppliers declining across key IP blocks WWAN Graphics Wireless connectivity Key suppliers with a Key suppliers of Key suppliers of complete modem Be Anounced graphics units LP only WiFi, BT and GPS Si_| co Bited orexit B Both announced stack (2G,3G,and4G) | gq Complete Bai modem stack = a
Slide 13: Cross-platform IP sharing and innovation
Cross-platform IP sharing and innovation Server - Intel® Xeon® E5-2600 V3 PC - Haswell GT3e ‘Segment PCIP | Mobile IP | Specific |P Reuse Reuse Note: 1PCH —Platform Controller Hub; 2EC — Ethemer Controller, 3ECC ~ Error Correcting Code memory; 4QPI — QuickPath interconnect; SBaytrail SOC sharing Cor
Slide 14: Shared costs area
Shared costs area large portion of Intel R&D 2014) ~$1 1B Intel R&D { 100% loT MCG PCCG / DCG 75% Shared Platform Investments: Connectivity, WWAN, Graphics IP, etc. 50% Foundational Investments: Process Development, CPU & Core Design, 25% SOC Integration, Validation & Testing 0% Note: Shared platfor
Slide 15: Key Segments of Our Business
Our Competitive Advantage 1: IP Key Segments of Our Business Our Competitive Advantage 2: Manufacturing Cash and Shareholder Return
Slide 16: PC Client Group / Mobile and Communications Group
PC Cl T GROUF MOBILE AND COMMUNICATIONS GROUP
Slide 17: Data Center Group
Data Center Group 2013 vs. 2014 Forecast DCG Financials mRevenue OMS 2014 PERFORMANCE 15 —— =~ —_— $Billion 18 ~$14.1B of Revenue: Up ~16% YoY ~$7.0B Operating margin: Up ~26% YoY ~50% of revenue 12 2013 2014F
Slide 18: Cloud + Big Data
*Forecast is based on current expectations and is subject to change without notice Source: Intel Cloud + Big D BIG DEAL >20% Growth YoY in non-enterprise market segment Tech Compute Telco SP Cloud SP 2013 Tech Compute Telco, SP Cloud SP 2014F
Slide 19: Data Center Expectations
Data Center Expectations : 4 an “, { t ie i bail i : i | ie B: 8: a‘ | | 5 bia barge: pir 7 i aed YoY Revenue growth >15% in 2015 DATA CENTER GROUP Operating Profit to grow faster than revenue ast is based on current expectations and is subject to change without notice
Slide 20: PC Client Group / Mobile and Communications Group
PC CLIENT GROUP MOBILE AND COMMUNICATIONS GROUP ( 4 ‘’ wv
Slide 21: PC Client Group & Mobile and Communications Group
PC Client Group & Mobile and Communications Group 20713 vs. 2014 Forecast PCCGG Financials MCG Financials $8 mRevenue ®OM$ $8 mRevenue BOMS 2013 2014F : 2013 2014F ast is based on current expectations and is subject to change without notice
Slide 22: PC Unit Trend: SOM
PC Unit Trend: SOM Mu PC Annual Unit SOM (excluding netbooks) NASI mm PC Platform SOM 20% eqmeY 0Y Growth 10% 0% -10% -20% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F Units are growing. PC up ~9% *Plarform includes both CPU and chipset and excludes netbook Forecast is based on current ex
Slide 23: PC Platform ASP
PC Platform* ASP aa 2007 2008 2009 2010 2011 2012 2013 2014F *Plarform includes both CPU andi chipset and excludes netbook Forecast is based on current expectations and is subject to change without notice Source: Intel
Slide 24: PC Platform Cost
PC Platform* Cost 2007 2008 2009 2010 2011 2012 2013 2014F “Platform includes both CPU and chipset and excludes netbook Forecast is based on current expectations and is subject to change without notice Source: Intel
Slide 25: PC Platform ASP and Cost
PC Platform* ASP and Cost —— oe a 2007 2008 2009 2010 2011 2012 2013 2014F *Placform includes both CPU and chipset and excludes netbook Forecast is based on current expectations and is subject to change without notice Source: intel
Slide 26: Segmented Costs to Compete Across Segments
Segmented Costs to Compete Across Segments Platform Costs* Performance Mainstream Value 08 09 10 11 12 13 14 08 09 10 11 12 13 14 08 09 10 11 12 13 14 Old Old Old Forecast Forecast Forecast *Placform includes both CPU and Chipset components Forecast is based on current expectations and is subject to
Slide 27: Segmented Costs to Compete Across Segments
Segmented Costs to Compete Across Segments Platform Costs* Performance Mainstream Value ane 08 09 10 11 12 13 14 14 08 09 10 11 12 13 14 14 08 09 10 11 12 13 14 14 Old New Old New Old New Forecast Forecast Forecast *Placform includes both CPU and Chipset components Forecast is based on current expec
Slide 28: Segmented Costs to Compete Across Segments
Segmented Costs to Compete Across Segments Platform Costs* Performance Mainstream Value 08 09 10 11 12 13 14 14 15 08 09 10 11 12 13 14 14 15 08 09 10 11 12 13 14 14 15 Old New Old New Old New Forecast Forecast Forecast *Placform includes both CPU and Chipset components Forecast is based on current
Slide 29: 2015 14nm Ramp: Broadwell Cost Curve
2015 14nm Ramp: Broadwell Cost Curve Broadwell Q1‘15 Q2'15 Q3'15 Q4'15
Slide 30: 14nm vs. 22nm Cost Curve Comparison
14nm vs. 22nm Cost Curve Comparison — Broadwell Q1‘15 Q2‘15 Q3'15 Q4'15 Ivy Bridge Q2‘12 Q312 Q4'12 Q1'13 Haswell Q3 ‘13 Q4'13 Qi‘14 Q2'14 Timing adjusted for volume ramp + 1 quarter. Volume ramp defined as the first quarter shipments exceed 1Mu Forecast is based on current expectations and Is subje
Slide 31: PC Segmentation
PC Segmentation YoY Growth 5% re = ge geo inside” inside" inside” inside COREi7 COREIS CORE i3 CORE'm YoY Growth 14% CELERON" PENTIUM™ *Platform includes both CPU and chipset Forecast is based on current expectations and is subject to change without notice Source: Intel Core Mix Ramp over 2014F 75%
Slide 32: Extending the Cost Curve in Client
Extending the Cost Curve in Client Lowest PC Client Platform Cost Sandy Bridge Celeron Bay Trail Bay Trail Celeron 2013 2014 2015 Forecast Forecast
Slide 33: Forecast
2014 Forecast Revenue $M Other names and brands may be claimed as the property of others *Forecast is based on current expectations and is subject to change without notice Source: Intel Multi-Comms 2015 Forecast CUSTOMERS
Slide 34: PC and Tablet Unit Trend: SOM
PC and Tablet Unit Trend: SOM Ma Annual Unit SOM (excluding netbooks) mw PC @ Tablet 2010 2011 2012 2013 2014F *Platform includes both CPU and chipset and excludes netbook Forecast is based on current expectations and is subject to change without notice Source: Intel
Slide 35: PC and Tablet Unit Trend: SOM YoY Growth
PC and Tablet Unit Trend: SOM YoY Growth Annual Unit SOM (excluding netbooks) YoY Growth Ma 20% mePC mafablet —=YoY Growth 10% = 0% -5% 2010 2011 2012 2013 2014F *Plarform includes both CPU and chipsetand excludes netbook Forecast is based on current expectations and is subject to change without not
Slide 36: PC and Tablet Unit Trend: MSS
PC and Tablet Unit Trend: MSS Annual Unit MSS (excluding netbooks) 100% eelSS 75% 50% 25% 0% 2010 2011 2012 2013 2014F *Plarform includes both CPU and chipset and excludes netbook Forecast is based on current expectations and is subject to change without notice Source: Intel
Slide 37: 2014 Tablet Progress
2014 Tablet Progress Performance Bay Trail BOM Dela see On track to ship 40M Bay Trail Entry Designs — across Android, Cost: ~90% of Bay Trail Windows and Chrome BOM Delta: ~$8 Enabled the China Clover Trail + Cost: ~40% of Bay Trail Tech ecosystem BOM Delta: >$15 Entry *Forecast is based on current
Slide 38: 2015 Introducing New Products for Value and Entry
2015 Introducing New Products for Value and Entry 2014 2015 I Bay Trail I SoFIA LTE SoFIA 3G I I I I I l Cost: ~40% of Bay Trail Cost: ~25% of Bay Trail BOM Delta: >$15 I BOM Delta: ~$0 BOM Delta: ~$0 i *Forecast is based on current expectations and Is subject to change without notice Source: Intel
Slide 39: MCG R&D Breakout
MCG R&D Breakout Unique vs. Shared Investment Intel R&D (2014) 100% PCCG / DCG 75% Shared Platform Investments: Connectivity, WWAN, Graphics IP, etc. 50% — Foundational Investments: Process Development, CPU & Core Design, SOC Integration, 25% Validation & Testin : g MCG R&D Spending —— 100% Tablet S
Slide 40: PCCG & MCG 2015 Expectations
"Fo PCCG & MCG 2015 Expectations PC CLIENT GROUP MOBILE AND COMMUNICATIONS GROUP — =— ~ Flat Units and : Revenue slightly down Ramping LTE COGS higher: SoFIA in value and entry 10Onm start-up costs and elevated Operating margin Broadwell costs in 1H '15, better in 215 improvement ~$800M recast is ba
Slide 41: IoT Group / Software and Services Group / All Other
loT GROUP SOFTWARE AND SERVICES GROUP ALL OTHER Security @
Slide 42: Internet of Things Group
Internet of Things Group 2013 vs. 2014 Forecast 1OTG mRevenue MOMS 2014 PERFORMANCE $2B ~$2.1B of Revenue: Up ~18% YoY ~$0.6B Operating margin: ~26% of rev $0 2013 2014F
Slide 43: Internet of Things Group
Internet of Things Group Revenue/Design Win Mapping mmRevenue «= Design Win $ @ © $2B Design win momentum continues across all segments 2015: Expect uptick in growth $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F “Forecast is based on current expectations and is subject to change without noti
Slide 44: Software & Services operating segment
Software & Services operating segment 2013 vs. 2014 Forecast Software and Services Financials mRevenue mOMS 2014 PERFORMANCE $2B ~$2.3B of Revenue: Up ~3% YoY ~$0.1B Operating margin: ~5% of rev $0 2013 2014F
Slide 45: Non-Volatile Memory Solutions Group
Non-Volatile Memory Solutions Group Revenue $ Operating Profit $ $2B 2010 2011 2012 2013 2014F $0 2008 2009 2010 2011 2012 2013 2014F
Slide 46: Our Competitive Advantage 2: Manufacturing
Our Competitive Advantage 1: IP Key Segments of Our Business Our Competitive Advantage 2: Manufacturing Cash and Shareholder Return
Slide 47: Cost Reduction On Track
Cost Reduction On Track WU L + ‘eo WU OL *e wu pL uu gz uu Ze Wu GP wugg $/transistor WuUd6 WN EL'O “4 be s (uojs|suen/$) soys1sues| Jad jsoD paziyeuuoN 0.01 WU OL wupyL Wu eZ wu ze wu Gp wug9g wug6 mmé?/transistor wn elo d q a i o Uoysisuen/ 2) YMo5 J0}s|Sue| /ealy PaZ}}/PULON $/mm? E € 2 iS) = (,t
Slide 48: Capex by Peak Wafer Start By Generation
Capex by Peak Wafer Start By Generation WY mm Equip Capex / Peak Wafer Starts per Week mam w/o Additional Reuse @mmPeak WS Oo Capex / Peak wafer starts per week 65nm 45nm 32nm 22nm 14nm Forecast *Forecast (5 based on current expectations and is subject to change without notice Source: Intel a 20M Ja
Slide 49: Weighted Average Die Size
Weighted Average Die Size Platform* 2008 2009 2010 2011 2012 2013 2014 2015 Forecast Forecast Forecast is based on current expectations and is subject to change without notice Sources: Intel *Plarform includes CPU and chipset
Slide 50: The Broadwell Advantage
The Broadwell Advantage HASWELL 2 X 2 (22nm) 960M | Transistors | 37% Smaller 1.3B Transistors BROADWELL 2 X 2 (14nm) ‘Intel® Core™ M-5Y70 processor compared to Intel® Core™ iS-4302V processor 14nm Delivers Cost AND Performance Benefits: SUB 5 WATT enables fanless designs Up to 40% higher 3D graphic
Slide 51: Capacity & Loadings
Capacity & Loadings 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F e=eT otal Loadings e@=eTotal Equip Capacity © eLinear (Total Equip Capacity) *Forecast {s based on current expectations and is subject to change without notice Source: Intel
Slide 52: So hold on there Tex...
So hold on there Tex... Can you tell me again why it takes $11B of Capex to run your business?
Slide 53: 2014 Capex Breakout
2014 Capex Breakout 450mm Non- Manufacturing Development "The 2014 forecast (s based on Q1-Q3'14 actuals plus the midpoint of the Q4'14 forecast. rent expectations and is subject to change without notice
Slide 54: Capital Trends: 2011 - 2014F
Capital Trends: 2011 -— 2014F $11B 2011 20il2 2013 2014 Forecast “The 2014 forecast is based on Q1-03'14 actwals plus the midpoint of the Q4'14 forecast. Forecast range is based on current expectations and is subject to change without notice Source: Intel
Slide 55: Capital Trends: 2011 - 2015F
Capital Trends: 2011 — 2015F $11B 2011 20il2 2013 2014 Forecast "The 2014 forecast is based on Q1-Q3'14 actuals plus the midpoint of the Q4'14 forecast. Forecast range is based on current expectations and is subject to change without notice Source: Intel
Slide 56: So hold on there Tex (part 2)...
So hold on there Tex (part 2)... Even at $7B - $8B of CapEx, won't the increase in depreciation lower your Gross Margins?
Slide 57: Depreciation Trends
Depreciation Trends COS Depreciation as a % of Revenue 20% 15 10 03 04 05 06 O07 08 O09 10 11 12 13 14 15 Forecast Sources: Intel Forecast is based on current expectations and is subject to change without notice COS Depreciation as a % of Total Cost of Sales 40% 30 20 10 03 04 05 O06 O7 08 O09 10 11
Slide 58: For illustrative purposes only, not a forecast
For illustrative purposes only, not a forecast.
Slide 59: Gross Margins
Gross Margins Gross Margin % Annual 2004-2015 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Forecast "The 2014 forecast Is based on Q1-03'14 actuals plus the midpoint of the Q4'14 forecast, Forecast range is based on current expectations and is subjectto change without notice Source: I
Slide 60: Si technology is becoming rare
Si technology is becoming rare Number of players with a leading edge fab 02-03 (130nm) 08-12 10-12 12-14 14-15 (45/40nm) (32/28nm) (22/20nm) (16/14nm) Note: IBM Fabs are currently getting acquired by Global Foundries Source: Analyst reports; company information
Slide 61: Cash and Shareholder Return
Our Competitive Advantage 1: IP Key Segments of Our Business Our Competitive Advantage 2: Manufacturing Cash and Shareholder Return
Slide 62: Strong Cash Generation
Strong Cash Generation $B Cash from Operations Free Cash Flow $15 $B $25 $0 $0 2009 2010 2011 2012 2013 2014F 2009 2010 2011 2012 2013 2014F Source: Intel
Slide 63: Investing and Returning Cash to Shareholders
Investing and Returning Cash to Shareholders First: Invest in our business Second: Dividend Third: Share Repurchases
Slide 64: Investing and Returning Cash to Shareholders $B
Investing and Returning Cash to Shareholders 250 $B o Dividend and on™ Share Repurchases Sis $98B are i Repurchase since 2004 200 150 100 R&D and Capital Expenditure $153B ae Capital since 2004 Expenditure 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 32014 Source: Intel
Slide 65: Announcing Dividend Increase Starting in Q1'15
Announcing Dividend Increase Starting in Q1‘15 Dividend/Share 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Forecast is based on current expectations and is subject to change without notice
Slide 66: Buyback History
Buyback History (Q1 ‘04 to Q3 14) Dilutive Shares BillionShares 7 Buyback program in place since 1990 Returned ~$98B cash and 5 repurchased 4.6B shares from inception Last 5 years returned $29B in cash and repurchased 1.2B shares VOLO GO,LO 90,L0 LO.LO 80,L0 60,L0 OLLO LLLO ZLLO ELLO VLLO
Slide 67: Putting It All Together: 2015 Full Year Outlook
Putting It All Together 2015 Full Year Outlook Revenue Growth in the Mid Single Digits Gross Margin at 62% (+/- 2 points) Spending at $20B (+/- $400M) Spending as a Percent of Revenue Down Capital Spending at $10.5B (+/- $500M)
Slide 68: Key Messages
Key Messages Return to growth in 2014 IP and Manufacturing leadership are increasingly valuable advantages Exquisitely positioned to benefit from cloud and big data We are investing in our business and returning cash to shareholders
Slide 69: Slide 69
Slide 70: Investor Meeting 2014
INVESTOR MEETING 2014 SANTA CLARA NOVEMBER 20
Slide 71: Legal Disclaimers
Legal Disclaimers Software and workloads used in performance tests may have been optimized for erformance only on Intel microprocessors. Performance tests, such as SYSmark and obileMark, are measured using specific computer systems, components, software, operations and functions. Any change to any o
Slide 72: Risk Factors
Risk Factors The statements in the presentations and other commentary that refer to plans and expectations for the fourth quarter, the year and the future are forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “plans,” “bel