Best question from the Q&A:
Vivek Arya
So thanks for taking my question. Pat I’m curious why didn’t Inter choose to negatively pre-announce given the extent of the shortfall. I mean, I can understand the PC market being weak but for data center to be almost 25% below expectations. That seems very strange to me. So I’m just curious why Intel took these actions, and then when we look at your data center revenue especially in the reported quarters. Most enterprise and cloud customers reported their sales and spending kind of in line with expectations. So is it mostly competitive pressures? If you could just help us understand what the thought process was for Q2? Thank you.
I'm guessing he will not be called on again!
Another good question:
Stacy Rasgon
Hi, guys. Thanks for taking my question. I’m a little confused. You said that Sapphire Rapids was on time and it’s ramping in volume in the second half, but you also said data center growth in the second half was going to be pretty muted off of a base that’s really low. And then you also said that data center pricing improvements in the second half would be less than what you’re seeing in clients. So doesn’t really sound likes Sapphire Rapids ramp is helping at all. What is going on with that? Like, how should I be thinking about the impact of that Sapphire Rapids ramp? Is that ramps into volume? Or is it the question is like most of the volume coming into 2023 or why isn’t it having more of an impact in the second half. Is it ramps?
Pat Gelsinger
Yes. We said in the prepared remarks that it’s later than we were expecting Sapphire Rapids, it’s ramping later. We have some SKUs out, which is good, but the main SKUs are not out. And they happen later in the year. And of course, they’ll contribute way more significantly to next year than they’re going to contribute to this year. We do see an opportunity in the client space, given our Alder Lake position for pricing increases that are really passing on inflation. And we know customers understand that obviously our competitive position is not as strong in the DCI business. And so there are opportunities to adjust pricing, but not across the board, so that is impacting us a bit.
Stacy Rasgon
But you’re basically saying that’s Sapphire Rapids is effectively a first half 2023 volume ramp. That seems to be what you’re saying. Yes.
Pat Gelsinger
I think there’s some ramps this year and then mostly at ramps next year. Yes.
Translation, Intel is shipping chips from R&D and not a HVM in a dedicated fab. So in reality HVM is 2023 so the chip is late. Pat got busted on this one.
And the final one which ended the Q&A on a sour note:
William Stein
Great. Thanks for taking my question. It relates to that last topic of the timeliness of delivery of new products. So while Sapphire Rapids is delayed, sounds like something on the order half the year. Pat, in the press release, it noted that the later nodes are still on track or ahead of track, I think was the language. As outsiders, what can we look to sort of judge and determine whether Intel is continuing to be on pace as we progress through the quarters, aside from just the sort of summary statements and the press release. Is there some other metric you could disclose of there some way we can better understand whether Intel is getting back on track and keeping these commitments to deliver these products as you’ve scheduled it. Thank you.
Pat Gelsinger
Yes. Maybe as we just run through the five nodes quickly Intel 7 done, volume shipments, we said five nodes, four years, Intel 7, 35 million units, you can go rip one apart. I’m sure our competitors have done, tear downs on it done. Intel 4, right, we’ve said is, hey, Meteor Lake looking good. At this point, it’s now broadly sampled to customers. So it’s looking very healthy as well. Also, we had the independent analysis of our detailed updates that we gave at the VLSI conference recently. And if you go look at some of the reports from that, people were pleasantly surprised. They said, oh, Intel 4, it looks as good as some of the three nanometer competitors.
So this is looking pretty good. So certainly we’ll be giving more of those technical updates going forward on the real performance. Also, we’ve given updates on Granite Rapids, one of the lead vehicles of Intel 3. We also have said that, we’ll give you updates on 20a and 18a test chip updates and others. We’ll also have independent assessments of those as we announce foundry customers, right, which will be another point to validation that you’ll see.
So we’re going to keep giving you more and more points of validation as we go along for, trust me, these are analyzed, the performance of each one of these process nodes, the defect density of each of these process nodes, the maturity of the design collateral, the residents from the foundry customers for each one, it’s being scrutinized extraordinarily well. And with that, I think you’ll get more and more confidence that what we’re saying is not only verified by us, but independently by industry sources as well.
So with that, let me just wrap up our time. First, I’d like to say, thank you. We’re grateful for you joining us today, opportunity that you’ve given us to update you on our business. We summarized three key messages as we finish. We’re not satisfied with the quarter and the financial results that we gave you today. We have growing confidence in the strategy and we are optimistic finally about the future.
We deserve some tough questions this quarter, but also appreciate that they’re fair and relevant to the business. Transformations are not easy, but nothing worthwhile ever is. And despite the headwinds that we’re seeing, we demonstrated substantial progress in IFS, NEX business records, PSG record in that business, the chips passage today huge, clear customer wins like AWS and Meta and NVIDIA. And for the last question, great progress on our TD milestones and our manufacturing milestones. With that, we look forward to updating you again next quarter. Thank you.
Operator
This concludes today’s conference call. Thank you for participation. You may now disconnect.