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Intel 10nm and Intel 7 yield status (Q1 2022)

Fred Chen

Moderator

Pat Gelsinger -- Chief Executive Officer

Intel 10, it's ramping very well. We're seeing good yields on that as Dave reflected, which overall gives us good momentum. In terms of products, Alder Lake has been a star, and it's ramping comfortably ahead of our expectations there, which has reaffirmed the health of Intel 7. Sapphire Rapids that you called out, it was first PRQ this quarter, and many of the additional SKUs, PRQ, and Q2 in the second half of the year, and that's why you might be getting some of that views of the more muted ramp there.

But we delivered on exactly what we said. First-quarter PRQs of Sapphire Rapids, and we'll see strength in that as we go through the rest of the year. Also, Ice Lake has ramped very nicely now for our 10-nanometer server part. So overall, the technology and the manufacturing machine are performing quite well and really bode well for our outlook for this year and the years to come.

So Dave, if you might add?


Dave Zinsner -- Chief Financial Officer

Yes. So we had a good quarter in the first quarter in terms of yields. We are going to see a little bit of pressure on 10-nanometer in the second quarter. That's part of the reason we're seeing margins down to the low end of our stated range of 51%.

But we do expect a nanometer to become a tailwind for us as costs improve through the back half of the year. And although Intel 7 is behind that, we're expecting the same from Intel 7.


So basically, the 10nm yields are "good", but margins are weighed down.
 
To add a little - Pat does later say " Now on the inventory piece, we did talk about that we are building 10-nanometer inventory. " (Building inventory without sales = margin pressure)

FWIW - looking ahead near term:

" The speed at which the team was able to achieve this milestone is a significant sign of the health of both Meteor Lake and our Intel 4 process technology. We plan to deliver several additional milestones in 2022, demonstrating our process technology development remains on track. This includes early Sierra Forest preproduction wafers on Intel 3, IP test wafers on Intel 28, and foundry customer test chips and initial IP shovels on Intel 18a."
 
To add a little - Pat does later say " Now on the inventory piece, we did talk about that we are building 10-nanometer inventory. " (Building inventory without sales = margin pressure)

FWIW - looking ahead near term:

" The speed at which the team was able to achieve this milestone is a significant sign of the health of both Meteor Lake and our Intel 4 process technology. We plan to deliver several additional milestones in 2022, demonstrating our process technology development remains on track. This includes early Sierra Forest preproduction wafers on Intel 3, IP test wafers on Intel 28, and foundry customer test chips and initial IP shovels on Intel 18a."
Thanks - I was struggling to understand how a process shrink with a big density increase and "good yields" could possible result in "margin pressure".

How can people get away with saying things like "building inventory" as though this is a good thing - especially in a world of chip shortages and rising prices ?
 
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