Intel Reports Third-Quarter 2021 Financial Results

News Summary

       Third-quarter GAAP revenue of $19.2 billion, up 5% year over year (YoY), and non-GAAP revenue of $18.1 billion, up 5% YoY.  Achieved all-time record revenue in Intel's Internet of Things Group (IOTG) and record third-quarter revenue in the Data Center Group (DCG) and Mobileye businesses. 

       Third-quarter GAAP earnings-per-share (EPS) was $1.67; non-GAAP EPS was $1.71, which exceeded July guidance by $0.61. Exceeded July guidance for EPS and gross margin.

       Raising full-year 2021 EPS and gross margin guidance. Now expecting GAAP EPS of $4.50 and non-GAAP EPS of $5.28 and GAAP gross margin of 55% and non-GAAP gross margin of 57%1.

       Intel CFO George Davis announced plans to retire in May 2022.

 

SANTA CLARA, Calif., October 21, 2021 -- Intel Corporation today reported third-quarter 2021 financial results.

“Q3 shone an even greater spotlight on the global demand for semiconductors, where Intel has the unique breadth and scale to lead. Our focus on execution continued as we started delivering on our IDM 2.0 commitments. We broke ground on new fabs, shared our accelerated path to regain process performance leadership, and unveiled our most dramatic architectural innovations in a decade. We also announced major customer wins across every part of our business,” said Pat Gelsinger, Intel CEO. “We are still in the early stages of our journey, but I see the enormous opportunity ahead, and I couldn’t be prouder of the progress we are making towards that opportunity.”

Q3 2021 Financial Highlights

 

GAAP

 

Non-GAAP

 

Q3 2021

Q3 2020

vs. Q3 2020

 

Q3 2021

Q3 2020

vs. Q3 2020

Revenue ($B)

$19.2

$18.3

up 5%

 

$18.1

$17.3

up 5%

Gross Margin

56.0%

53.1%

up 2.9 ppt

 

57.8%

56.5%

up 1.3 ppt

R&D and MG&A ($B)

$5.5

$4.7

up 16%

 

$5.3

$4.5

up 17%

Operating Margin

27.2%

27.6%

down 0.4 ppt

 

28.8%

30.4%

down 1.7 ppt

Tax Rate

0.5%

15.2%

down 14.7 ppt

 

0.4%

15.4%

down 15 ppt

Net Income ($B)

$6.8

$4.3

up 60%

 

$7.0

$4.5

up 54%

Earnings Per Share

$1.67

$1.02

up 64%

 

$1.71

$1.08

up 59%

In the third quarter, the company generated $9.9 billion in cash from operations and paid dividends of $1.4 billion.

Intel CFO George Davis announced plans to retire from Intel in May 2022. He will continue to serve in his current role while Intel conducts a search for a new CFO and until his successor is appointed.


Business Unit Summary

Key Business Unit Revenue and Trends

 

Q3 2021

 

vs. Q3 2020

CCG

 

$9.7 billion

 

down

2%

DCG

 

$6.5 billion

 

up

10%

Internet of Things

 

 

 

 

 

IOTG

 

$1.0 billion

 

up

54%

Mobileye

 

$326 million

 

up

39%

NSG

 

$1.1 billion

 

down

4%

PSG

 

$478 million

 

up

16%

 

 

 

 

 

 

Third-quarter revenue was led by strong recovery in the Enterprise portion of DCG and in IOTG, which saw higher demand amid recovery from the economic impacts of COVID-19.  The Client Computing Group (CCG) was down due to lower notebook volumes due to industry-wide component shortages, and on lower adjacent revenue, partially offset by higher average selling prices (ASPs) and strength in desktop.

Business Highlights

       Selected by the U.S. government to provide commercial foundry services for the government’s RAMP-C program. 

       Announced Amazon as first customer to use Intel Foundry Services’ packaging services, and a partnership with Qualcomm to use the future Intel 20A process technology.

       Broke ground on two new leading-edge chip factories at Intel’s Ocotillo campus in Chandler, Arizona, three months ahead of schedule.

       Shared process and packaging roadmap updates for delivering five nodes within four years, putting Intel on a path to restore process performance per watt parity in 2024 and leadership in 2025 with key process innovations, including RibbonFET and PowerVia. Also introduced new advanced packaging technologies, Foveros Omni and Foveros Direct, for 2023.

       Detailed Intel’s biggest architectural shifts in a generation with the first in-depth look at Alder Lake, our first performance hybrid architecture with two new generations of x86 cores; Sapphire Rapids, our new standard-setting data center architecture; our new discrete gaming graphics processing unit architecture; new infrastructure processing units; and Ponte Vecchio, our tour-de-force GPU architecture with Intel’s highest ever compute density to accelerate AI, HPC, and advanced analytics workloads.

       Introduced the new Intel Arc brand for our upcoming high-performance graphics products, covering hardware and software, and services. 

       Introduced four new Intel Core processor-based Surface design wins with Microsoft, including the first Surface device to be Intel® Evo™ platform verified, and two designs that bring Thunderbolt connectivity to the Surface lineup.

       Announced availability of the 3rd Gen Intel® Xeon® Scalable processor (Ice Lake) for AWS customers via the new Amazon Elastic Compute Cloud (Amazon EC2) M6i instances and for Google Cloud customers via the new Compute Engine N2

       Announced U.S. Department of Energy selected next-generation Intel Xeon Scalable processors (Sapphire Rapids) to power supercomputers.

       Announced strategic global partnerships with ZEEKR and Sixt SE and additional plans to unveil Mobileye’s robotaxi equipped with the Mobileye Drive™ system.

       Introduced second-generation neuromorphic research chip, Loihi 2, fabricated with a pre-production version of the Intel 4 process. 

As part of its IDM 2.0 strategy, Intel will be making a series of product and technology announcements at its upcoming Innovation virtual event on October 27-28, 2021. The conference is designed for developers, industry insiders, and will feature technical sessions on Intel's AI, 5G, edge, cloud connectivity, and client applications. Join the public webcast and follow the news at newsroom.intel.com at 9 a.m. PDT on Wednesday, October 27th, 2021.

Additional information regarding Intel’s results can be found in the Q3'21 Earnings Presentation available at:

www.intc.com.


Business Outlook

Intel's guidance for the fourth quarter and full year includes both GAAP and non-GAAP estimates. Our non-GAAP measures exclude the NAND memory business, which is subject to a previously-announced pending sale, as well as certain other items. Reconciliations between GAAP and non-GAAP financial measures are included below.

Q4 2021

 

GAAP

 

Non-GAAP

 

 

Approximately

 

Approximately

Revenue

 

$19.2 billion

 

$18.3 billion

Gross Margin

 

51.4%

 

53.5%

Tax rate

 

37%

 

13%

Earnings per share

 

$0.78

 

$0.90

 


Full-Year 2021

 

GAAP

 

Non-GAAP

 

 

Approximately

 

Approximately

Revenue

 

$77.7 billion

 

$73.5 billion

Gross Margin

 

55%

 

57%

Tax rate

 

15%

 

9%

Earnings per share

 

$4.50

 

$5.28

Full-year capital spending

 

$18.0-19.0 billion

 

$18.0-19.0 billion^

Free cash flow

 

N/A

 

$12.5 billion

Actual results may differ materially from Intel’s Business Outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

Earnings Webcast

Intel will hold a public webcast at 2 p.m. PDT today to discuss the results for its third quarter of 2021. The live public webcast can be accessed on Intel's Investor Relations website at www.intc.com. The Q3'21 Earnings Presentation, webcast replay, and audio download will also be available on the site.  

Intel plans to report its earnings for the fourth quarter of 2021 on January 26, 2022 promptly after close of market; related materials will be available at www.intc.com. A public webcast of Intel’s earnings conference call will follow at 2 p.m. PDT at www.intc.com.


Investor Meeting

Intel’s Investor Meeting is now planned for February 17, 2022. On today’s earnings webcast, Intel will provide additional information regarding its long-term outlook and plans.


Forward-Looking Statements

Intel’s Business Outlook and other statements in this release that refer to future plans and expectations are forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends," "goals," "plans," "guidance," "believes," "seeks," "estimates," "continues," "committed," "on-track," "may," "will," "would," "should," "could," "accelerate," "ramp," "deliver," "path," "roadmap," "progress," "forecast," "likely," "future," "potential," "positioned," "increasing," "opportunity," "upcoming" and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to Intel's strategy; manufacturing expansion and investment plans; plans and goals related to Intel’s foundry business; supply expectations, including regarding industry shortages and sufficiency of future supply; pending transactions, including the pending sale of our NAND memory business; total addressable market (TAM) and market opportunity; business plans and financial expectations; future macroeconomic conditions; future legislation; future impacts of the COVID-19 pandemic; future products, technology, and services, and the expected availability and benefits of such products, technology, and services, including product ramps, manufacturing goals, plans, timelines, and future progress, future process nodes and technologies including Intel 20A, RibbonFET, and PowerVia, process performance parity and leadership expectations, future product architectures, Alder Lake, Sapphire Rapids, and future GPU and IPU products; expectations regarding customers, including with respect to designs, wins, orders, and partnerships; projections regarding competitors; and anticipated trends in our businesses or the markets relevant to them, including with respect to future demand and industry growth, also identify forward-looking statements. All forward-looking statements included in this release are based on management's expectations as of the date of this release and, except as required by law, Intel disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. Forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Intel presently considers the following to be among the important factors that can cause actual results to differ materially from the company's expectations.

       Demand for Intel's products is highly variable and can differ from expectations due to factors including changes in business and economic conditions; customer confidence or income levels, and the levels of customer capital spending; the introduction, availability, and market acceptance of Intel's products, products used together with Intel products, and competitors' products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; changes in customer needs and emerging technology trends; and changes in the level of inventory and computing capacity at customers.

       Intel's results can vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources, including as a result of ongoing industry shortages of components and substrates; product manufacturing quality/yields; and changes in capital requirements and investment plans. Variations in results can also be caused by the timing of Intel product introductions and related expenses, including marketing programs, and Intel's ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, as well as decisions to exit product lines or businesses, which can result in restructuring and asset impairment charges.

       Intel's results can be affected by adverse economic, social, political, regulatory, and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including recession or slowing growth, military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns (including the COVID-19 pandemic), fluctuations in currency exchange rates, sanctions and tariffs, political disputes, changes in government grants and incentives, and continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad. Results can also be affected by the formal or informal imposition by countries of new or revised export and/or import and doing-business regulations, including changes or uncertainty related to the U.S. government entity list and changes in the ability to obtain export licenses, which can be changed without prior notice.

       The COVID-19 pandemic has previously adversely affected significant portions of Intel's business and could have a material adverse effect on Intel's financial condition and results of operations. The pandemic has resulted in authorities imposing numerous measures to try to contain the virus. These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners. Restrictions on our manufacturing or support operations or workforce, or similar limitations for our vendors and suppliers, can impact our ability to meet customer demand and could have a material adverse effect on us. Restrictions or disruptions of transportation, or disruptions in our customers’ operations and supply chains, may adversely affect our results of operations. The pandemic has caused us to modify our business practices. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of our key personnel and harm our ability to perform critical functions. The pandemic has significantly increased economic and demand uncertainty. Demand for our products could be materially harmed in the future. The pandemic could lead to increased disruption and volatility in capital markets and credit markets, which could adversely affect our liquidity and capital resources. The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain. The impact of the pandemic can also exacerbate other risks discussed in this section.

       Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term. In addition, we have entered new areas and introduced adjacent products, such as our intention to become a major provider of foundry services, and we face new sources of competition and uncertain market demand or acceptance of our offerings with respect to these new areas and products, and they do not always grow as projected.

       Intel's expected tax rate is based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 (TCJA), and current expected income and can be affected by changes in interpretations of TCJA and other laws; changes in the volume and mix of profits earned and location of assets across jurisdictions with varying tax rates; changes in the estimates of credits, benefits, and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.

       Intel's results can be affected by gains or losses from equity securities and interest and other, which can vary depending on gains or losses on the change in fair value, sale, exchange, or impairments of equity and debt investments, interest rates, cash balances, and changes in fair value of derivative instruments. 

       Product defects or errata (deviations from published specifications) can adversely impact our expenses, revenues, and reputation.

       We or third parties regularly identify security vulnerabilities with respect to our processors and other products as well as the operating systems and workloads running on them. Security vulnerabilities and any limitations of, or adverse effects resulting from, mitigation techniques can adversely affect our results of operations, financial condition, customer relationships, prospects, and reputation in a number of ways, any of which may be material, including incurring significant costs related to developing and deploying updates and mitigations, writing down inventory value, a reduction in the competitiveness of our products, defending against product claims and litigation, responding to regulatory inquiries or actions, paying damages, addressing customer satisfaction considerations, or taking other remedial steps with respect to third parties. Adverse publicity about security vulnerabilities or mitigations could damage our reputation with customers or users and reduce demand for our products and services.

       Cybersecurity incidents, whether or not successful, can affect Intel's results by causing us to incur significant costs or disrupting our operations or those of our customers and suppliers, and can result in reputational harm.

       Intel's results can be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, commercial, disclosure, and other issues, as well as by the impact and timing of settlements and dispute resolutions. For example, in the first quarter of 2021, Intel accrued a $2.2 billion charge related to litigation involving VLSI Technology LLC (VLSI). An unfavorable ruling can include monetary damages or an injunction prohibiting us from manufacturing or selling one or more products, precluding particular business practices, impacting our ability to design products, or requiring other remedies such as compulsory licensing of intellectual property.

       Intel's results can be affected by the impact and timing of closing of acquisitions, divestitures, and other significant transactions. In addition, these transactions do not always achieve our financial or strategic objectives and can disrupt our ongoing business and adversely impact our results of operations. We may not realize the expected benefits of portfolio decisions due to numerous risks, including unfavorable prices and terms; changes in market conditions; limitations due to regulatory or governmental approvals, contractual terms, or other conditions; and potential continued financial obligations associated with such transactions. Risks and uncertainties relating to the pending sale of our NAND memory business to SK hynix are described in our Form 10-K filed with the SEC on January 22, 2021.

       The amount, timing, and execution of Intel's stock repurchase program fluctuate based on Intel's priorities for the use of cash for other purposes—such as investing in our business, including operational and capital spending, acquisitions, and returning cash to our stockholders as dividend payments—and because of changes in cash flows, tax laws, and other laws, or the market price of our common stock.

Detailed information regarding these and other factors that could affect Intel's business and results is included in Intel's SEC filings, including the company's most recent reports on Forms 10-K and 10-Q, particularly the "Risk Factors" sections of those reports. Copies of these filings may be obtained by visiting our Investor Relations website at www.intc.com or the SEC's website at www.sec.gov.


About Intel

Intel (Nasdaq: INTC) is an industry leader, creating world-changing technology that enables global progress and enriches lives. Inspired by Moore’s Law, we continuously work to advance the design and manufacturing of semiconductors to help address our customers’ greatest challenges. By embedding intelligence in the cloud, network, edge and every kind of computing device, we unleash the potential of data to transform business and society for the better. To learn more about Intel’s innovations, go to newsroom.intel.com and intel.com.

© Intel Corporation. Intel, the Intel logo, and other Intel marks are trademarks of Intel Corporation or its subsidiaries. Other names and brands may be claimed as the property of others.

Contacts:

Brooke Wells

Stephanie Matthew

 

Investor Relations

Media Relations

 

503-613-8230

669-342-8736

 

brooke.wells@intel.com

stephanie.l.matthew@intel.com


Intel Corporation

Consolidated Condensed Statements of Income and Other Information

 

 

Three Months Ended

 

Nine Months Ended

(In Millions, Except Per Share Amounts; unaudited)

 

Sep 25, 2021

 

Sep 26, 2020

 

Sep 25, 2021

 

Sep 26, 2020

Net revenue

 

$

19,192 

 

 

$

18,333 

 

 

$

58,496 

 

 

$

57,889 

 

Cost of sales

 

8,446 

 

 

8,592 

 

 

25,690 

 

 

25,625 

 

Gross margin

 

10,746 

 

 

9,741 

 

 

32,806 

 

 

32,264 

 

Research and development

 

3,803 

 

 

3,272 

 

 

11,141 

 

 

9,901 

 

Marketing, general and administrative

 

1,674 

 

 

1,435 

 

 

4,601 

 

 

4,423 

 

Restructuring and other charges

 

42 

 

 

(25)

 

 

2,597 

 

 

146 

 

Operating expenses

 

5,519 

 

 

4,682 

 

 

18,339 

 

 

14,470 

 

Operating income

 

5,227 

 

 

5,059 

 

 

14,467 

 

 

17,794 

 

Gains (losses) on equity investments, net

 

1,707 

 

 

56 

 

 

2,370 

 

 

212 

 

Interest and other, net

 

(76)

 

 

(74)

 

 

(328)

 

 

(416)

 

Income before taxes

 

6,858 

 

 

5,041 

 

 

16,509 

 

 

17,590 

 

Provision for taxes

 

35 

 

 

765 

 

 

1,264 

 

 

2,548 

 

Net income

 

$

6,823 

 

 

$

4,276 

 

 

$

15,245 

 

 

$

15,042 

 

 

 

 

 

 

 

 

 

 

Earnings per share—basic

 

$

1.68 

 

 

$

1.02 

 

 

$

3.76 

 

 

$

3.55 

 

Earnings per share—diluted

 

$

1.67 

 

 

$

1.02 

 

 

$

3.73 

 

 

$

3.52 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

4,061 

 

 

4,188 

 

 

4,055 

 

 

4,233 

 

Diluted

 

4,086 

 

 

4,211 

 

 

4,089 

 

 

4,269 

 

 

 

 

Three Months Ended

(In Millions)

 

Sep 25, 2021

 

Sep 26, 2020

Earnings per share of common stock information:

 

 

 

 

Weighted average shares of common stock outstanding—basic

 

4,061 

 

 

4,188 

 

Dilutive effect of employee equity incentive plans

 

25 

 

 

23 

 

Weighted average shares of common stock outstanding—diluted

 

4,086 

 

 

4,211 

 

 

 

 

 

 

Stock buyback:

 

 

 

 

Shares repurchased

 

— 

 

 

166 

 

Cumulative shares repurchased (in billions)

 

5.8 

 

 

5.7 

 

Remaining dollars authorized for buyback (in billions)

 

$

7.2 

 

 

$

9.7 

 

 

 

 

 

 

Other information:

 

 

 

 

Employees (in thousands)

 

117.2 

 

 

111.3 

 

 


Intel Corporation

Consolidated Condensed Balance Sheets

(In Millions)

 

Sep 25, 2021

 

Dec 26, 2020

Assets

 

(unaudited)

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

7,870 

 

 

$

5,865 

 

Short-term investments

 

4,004 

 

 

2,292 

 

Trading assets

 

22,761 

 

 

15,738 

 

Accounts receivable

 

8,400 

 

 

6,782 

 

Inventories

 

 

 

 

Raw materials

 

1,274 

 

 

908 

 

Work in process

 

6,304 

 

 

5,693 

 

Finished goods

 

2,220 

 

 

1,826 

 

 

 

9,798 

 

 

8,427 

 

Assets held for sale

 

6,398 

 

 

5,400 

 

Other current assets

 

2,073 

 

 

2,745 

 

Total current assets

 

61,304 

 

 

47,249 

 

 

 

 

 

 

Property, plant and equipment, net

 

59,733 

 

 

56,584 

 

Equity investments

 

6,050 

 

 

5,152 

 

Other long-term investments

 

953 

 

 

2,192 

 

Goodwill

 

26,786 

 

 

26,971 

 

Identified intangible assets, net

 

7,684 

 

 

9,026 

 

Other long-term assets

 

5,452 

 

 

5,917 

 

Total assets

 

$

167,962 

 

 

$

153,091 

 

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

$

4,694 

 

 

$

2,504 

 

Accounts payable

 

6,792 

 

 

5,581 

 

Accrued compensation and benefits

 

4,026 

 

 

3,999 

 

Other accrued liabilities

 

14,060 

 

 

12,670 

 

Total current liabilities

 

29,572 

 

 

24,754 

 

Debt

 

35,610 

 

 

33,897 

 

Contract liabilities

 

62 

 

 

1,367 

 

Income taxes payable

 

4,223 

 

 

4,578 

 

Deferred income taxes

 

3,019 

 

 

3,843 

 

Other long-term liabilities

 

5,389 

 

 

3,614 

 

Stockholders' equity

 

 

 

 

Common stock and capital in excess of par value, 4,067 issued and outstanding (4,062 issued and outstanding as of December 26, 2020)

 

27,592 

 

 

25,556 

 

Accumulated other comprehensive income (loss)

 

(1,147)

 

 

(751)

 

Retained earnings

 

63,642 

 

 

56,233 

 

Total stockholders' equity

 

90,087 

 

 

81,038 

 

Total liabilities and stockholders' equity

 

$

167,962 

 

 

$

153,091 

 

 


Intel Corporation

Consolidated Condensed Statements of Cash Flows

 

 

Nine Months Ended

(In Millions; unaudited)

 

Sep 25, 2021

 

Sep 26, 2020

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

$

5,865 

 

 

$

4,194 

 

Cash flows provided by (used for) operating activities:

 

 

 

 

Net income

 

15,245 

 

 

15,042 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

7,357 

 

 

7,925 

 

Share-based compensation

 

1,587 

 

 

1,393 

 

Restructuring and other charges

 

2,597 

 

 

146 

 

Amortization of intangibles

 

1,361 

 

 

1,311 

 

(Gains) losses on equity investments, net

 

(1,113)

 

 

(105)

 

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

(1,618)

 

 

525 

 

Inventories

 

(1,212)

 

 

(570)

 

Accounts payable

 

1,095 

 

 

355 

 

Accrued compensation and benefits

 

(16)

 

 

(569)

 

Prepaid supply agreements

 

(1,577)

 

 

(91)

 

Income taxes

 

(570)

 

 

493 

 

Other assets and liabilities

 

1,058 

 

 

(361)

 

Total adjustments

 

8,949 

 

 

10,452 

 

Net cash provided by operating activities

 

24,194 

 

 

25,494 

 

Cash flows provided by (used for) investing activities:

 

 

 

 

Additions to property, plant and equipment

 

(11,579)

 

 

(10,392)

 

Additions to held for sale NAND property, plant and equipment

 

(1,118)

 

 

— 

 

Purchases of available-for-sale debt investments

 

(3,983)

 

 

(6,323)

 

Maturities and sales of available-for-sale debt investments

 

3,457 

 

 

5,037 

 

Purchases of trading assets

 

(26,343)

 

 

(14,744)

 

Maturities and sales of trading assets

 

18,813 

 

 

11,227 

 

Other investing

 

620 

 

 

83 

 

Net cash used for investing activities

 

(20,133)

 

 

(15,112)

 

Cash flows provided by (used for) financing activities:

 

 

 

 

Issuance of long-term debt, net of issuance costs

 

4,974 

 

 

10,247 

 

Repayment of debt and debt conversion

 

(500)

 

 

(4,525)

 

Proceeds from sales of common stock through employee equity incentive plans

 

1,016 

 

 

897 

 

Repurchase of common stock

 

(2,415)

 

 

(12,229)

 

Accelerated share repurchase forward agreements

 

— 

 

 

(2,000)

 

Payment of dividends to stockholders

 

(4,231)

 

 

(4,215)

 

Other financing

 

(900)

 

 

605 

 

Net cash provided by (used for) financing activities

 

(2,056)

 

 

(11,220)

 

Net increase (decrease) in cash and cash equivalents

 

2,005 

 

 

(838)

 

Cash and cash equivalents, end of period

 

$

7,870 

 

 

$

3,356 

 

 


Intel Corporation

Supplemental Operating Segment Results

 

 

Three Months Ended

 

Nine Months Ended

(In Millions)

 

Sep 25, 2021

 

Sep 26, 2020

 

Sep 25, 2021

 

Sep 26, 2020

Net revenue

 

 

 

 

 

 

 

 

Client Computing Group

 

 

 

 

 

 

 

 

Platform

 

$

8,954 

 

 

$

8,762 

 

 

$

27,968 

 

 

$

25,703 

 

Adjacent

 

710 

 

 

1,085 

 

 

2,410 

 

 

3,415 

 

 

 

9,664 

 

 

9,847 

 

 

30,378 

 

 

29,118 

 

Data Center Group

 

 

 

 

 

 

 

 

Platform

 

5,747 

 

 

5,151 

 

 

$

16,261 

 

 

$

17,759 

 

Adjacent

 

749 

 

 

754 

 

 

2,254 

 

 

2,256 

 

 

 

6,496 

 

 

5,905 

 

 

18,515 

 

 

20,015 

 

Internet of Things

 

 

 

 

 

 

 

 

IOTG

 

1,042 

 

 

677 

 

 

2,940 

 

 

2,230 

 

Mobileye

 

326 

 

 

234 

 

 

1,030 

 

 

634 

 

 

 

1,368 

 

 

911 

 

 

3,970 

 

 

2,864 

 

Non-Volatile Memory Solutions Group

 

1,105 

 

 

1,153 

 

 

3,310 

 

 

4,150 

 

Programmable Solutions Group

 

478 

 

 

411 

 

 

1,450 

 

 

1,431 

 

All other

 

81 

 

 

106 

 

 

873 

 

 

311 

 

Total net revenue

 

$

19,192 

 

 

$

18,333 

 

 

$

58,496 

 

 

$

57,889 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

Client Computing Group

 

$

3,317 

 

 

$

3,554 

 

 

$

11,197 

 

 

$

10,621 

 

Data Center Group

 

2,057 

 

 

1,903 

 

 

$

5,271 

 

 

$

8,494 

 

Internet of Things

 

 

 

 

 

 

 

 

IOTG

 

276 

 

 

61 

 

 

775 

 

 

374 

 

Mobileye

 

105 

 

 

47 

 

 

361 

 

 

131 

 

 

 

381 

 

 

108 

 

 

1,136 

 

 

505 

 

Non-Volatile Memory Solutions Group

 

442 

 

 

29 

 

 

1,015 

 

 

285 

 

Programmable Solutions Group

 

76 

 

 

40 

 

 

246 

 

 

217 

 

All other

 

(1,046)

 

 

(575)

 

 

(4,398)

 

 

(2,328)

 

Total operating income

 

$

5,227 

 

 

$

5,059 

 

 

$

14,467 

 

 

$

17,794 

 

 

We derive a substantial majority of our revenue from platform products, which are our principal products and considered as one product class. We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package based on Intel architecture. Platform products are used in various form factors across our CCG, DCG, and IOTG operating segments. Our non-platform, or adjacent products, can be combined with platform products to form comprehensive platform solutions to meet customer needs.

Revenue for our reportable and non-reportable operating segments is primarily related to the following product lines:

       CCG includes platforms designed for end-user form factors, focusing on higher growth segments of 2-in-1, thin-and-light, commercial and gaming, and growing adjacencies such as connectivity and graphics.

       DCG includes workload-optimized platforms and related products designed for cloud service providers, enterprise and government, and communications service providers market segments. In 2021, the DCG operating segment includes the results of our Intel® Optane™ memory business.

       IOTG includes high-performance compute solutions for targeted verticals and embedded applications in market segments such as retail, industrial, healthcare, and vision.   

       Mobileye includes development of computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology for advanced driver assistance systems (ADAS) and autonomous driving.

       NSG includes development of storage solutions using our innovative Intel® 3D NAND technology, primarily used in SSDs. In 2021, the NSG operating segment no longer includes the results of our Intel Optane memory business.

       PSG includes programmable semiconductors, primarily FPGAs and structured ASICs, and related products for communications, cloud and enterprise, and embedded market segments.

We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments.

We have an "all other" category that includes revenue, expenses, and charges such as:

       results of operations from non-reportable segments not otherwise presented;

       historical results of operations from divested businesses;

       results of operations of start-up businesses that support our initiatives, including our foundry business;

       amounts included within restructuring and other charges;

       a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and

       acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.


Intel Corporation

Supplemental Platform Revenue Information

 

 

Q3 2021

 

Q3 2021

 

YTD 2021

 

 

compared to

Q2 2021

 

compared to

Q3 2020

 

compared to

YTD 2020

Client Computing Group

 

 

 

 

 

 

Desktop platform volumes

 

11%

 

16%

 

8%

Desktop platform average selling prices

 

2%

 

4%

 

(1)%

Notebook platform volumes

 

(26)%

 

(14)%

 

24%

Notebook platform average selling prices

 

20%

 

10%

 

(12)%

Adjacent revenue

 

—%

 

(35)%

 

(29)%

 

 

 

 

 

 

 

Data Center Group

 

 

 

 

 

 

Platform volumes

 

6%

 

8%

 

(2)%

Platform average selling prices

 

(5)%

 

3%

 

(6)%

Adjacent revenue

 

—%

 

(1)%

 

—%

 

 

 


Intel Corporation

Explanation of Non-GAAP Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this document contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. Certain of these non-GAAP financial measures are used in our performance-based RSUs and our annual cash bonus plan.

Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects where applicable. Income tax effects have been calculated using an appropriate tax rate for each adjustment. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated.

Non-GAAP adjustment or measure

Definition

Usefulness to management and investors

NAND memory business

Our NAND memory business is subject to a pending sale to SK hynix, as announced in October 2020.

We exclude the impact of our NAND memory business in certain non-GAAP measures because these adjustments reflect how management currently views the core operations of the company. While the sale of the NAND memory business is still pending and subject to closing conditions, management does not currently view the business as part of the company’s core operations or its long-term strategic direction. We believe these adjustments provide investors with a useful view, through the eyes of management, of the company’s core business model and how management currently evaluates core operational performance. We believe they also provide investors with an additional means to understand the potential impact of the divestiture over time. In making these adjustments, we have not made any changes to our methods for measuring and calculating revenue or other financial statement amounts.

Acquisition-related adjustments

Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our U.S. GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years.

We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends.

Restructuring and other charges

Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include a charge related to the VLSI litigation, goodwill and asset impairments, pension charges, and costs associated with restructuring activity.

We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends.

Gains (losses) from divestiture

Gains or losses are recognized at the close of a divestiture.

We exclude gains or losses resulting from divestitures for purposes of calculating certain non-GAAP measures because they do not reflect our current operating performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results.

Ongoing mark-to-market on marketable equity securities

After the initial mark-to-market adjustment is recorded upon a security becoming marketable, gains and losses are recognized from ongoing mark-to-market adjustments of our marketable equity securities.

We exclude these ongoing gains and losses for purposes of calculating certain non-GAAP measures because we do not believe this volatility correlates to our core operational performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results.

Free cash flow

We reference a non-GAAP financial measure of free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Free cash flow is operating cash flow adjusted to exclude additions to property, plant and equipment.

This non-GAAP financial measure is helpful in understanding our capital requirements and provides an additional means to evaluate the cash flow trends of our business. In calculating free cash flow, we do not subtract additions to held for sale NAND property, plant and equipment because the additions are not representative of our long-term capital requirements and we expect these assets to be sold.


Intel Corporation

Supplemental Reconciliations of GAAP Actuals to Non-GAAP Actuals

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the reconciliations from U.S. GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable U.S. GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

 

 

Three Months Ended

(In Millions, Except Per Share Amounts)

 

Sep 25, 2021

 

Sep 26, 2020

GAAP net revenue

 

$

19,192 

 

 

$

18,333 

 

NAND memory business

 

(1,105)

 

 

(1,067)

 

Non-GAAP net revenue

 

$

18,087 

 

 

$

17,266 

 

 

 

 

 

 

GAAP gross margin

 

$

10,746 

 

 

$

9,741 

 

Acquisition-related adjustments

 

322 

 

 

310 

 

NAND memory business

 

(616)

 

 

(303)

 

Non-GAAP gross margin

 

$

10,452 

 

 

$

9,748 

 

 

 

 

 

 

GAAP gross margin percentage

 

56.0 

%

 

53.1 

%

Acquisition-related adjustments

 

1.7 

%

 

1.7 

%

NAND memory business

 

0.1 

%

 

1.6 

%

Non-GAAP gross margin percentage1

 

57.8 

%

 

56.5 

%

 

 

 

 

 

GAAP R&D and MG&A

 

$

5,477 

 

 

$

4,707 

 

Acquisition-related adjustments

 

(53)

 

 

(52)

 

NAND memory business

 

(174)

 

 

(158)

 

Non-GAAP R&D and MG&A

 

$

5,250 

 

 

$

4,497 

 

 

 

 

 

 

GAAP operating income

 

$

5,227 

 

 

$

5,059 

 

Acquisition-related adjustments

 

375 

 

 

362 

 

Restructuring and other charges

 

42 

 

 

(25)

 

NAND memory business

 

(442)

 

 

(145)

 

Non-GAAP operating income

 

$

5,202 

 

 

$

5,251 

 

 

 

 

 

 

GAAP operating margin

 

27.2 

%

 

27.6 

%

Acquisition-related adjustments

 

2.0 

%

 

2.0 

%

Restructuring and other charges

 

0.2 

%

 

(0.1)

%

NAND memory business

 

(0.6)

%

 

0.9 

%

Non-GAAP operating margin1

 

28.8 

%

 

30.4 

%

 

 

 

 

 

GAAP tax rate

 

0.5 

%

 

15.2 

%

Income tax effects

 

(0.1)

%

 

0.2 

%

Non-GAAP tax rate

 

0.4 

%

 

15.4 

%

 

 

 

 

 

GAAP net income

 

$

6,823 

 

 

$

4,276 

 

Acquisition-related adjustments

 

375 

 

 

362 

 

Restructuring and other charges

 

42 

 

 

(25)

 

(Gains) losses from divestiture

 

— 

 

 

(6)

 

Ongoing mark-to-market on marketable equity securities

 

192 

 

 

146 

 

NAND memory business

 

(442)

 

 

(145)

 

Income tax effects

 

 

 

(62)

 

Non-GAAP net income

 

$

6,997 

 

 

$

4,546 

 

Our reconciliations of GAAP to non-GAAP gross margin and operating margin percentage reflect the exclusion of our NAND memory               business from net revenue.

(In Millions, Except Per Share Amounts)

 

Sep 25, 2021

 

Sep 26, 2020

GAAP earnings per share—diluted

 

$

1.67 

 

 

$

1.02 

 

Acquisition-related adjustments

 

0.09 

 

 

0.09 

 

Restructuring and other charges

 

0.01 

 

 

(0.01)

 

(Gains) losses from divestiture

 

— 

 

 

— 

 

Ongoing mark-to-market on marketable equity securities

 

0.04 

 

 

0.03 

 

NAND memory business

 

(0.10)

 

 

(0.04)

 

Income tax effects

 

— 

 

 

(0.01)

 

Non-GAAP earnings per share—diluted

 

$

1.71 

 

 

$

1.08 

 

 

 

 

Three Months Ended

(In Millions)

 

Sep 25, 2021

GAAP cash from operations

 

$

9,900 

 

Additions to property, plant and equipment

 

(4,006)

 

Free cash flow

 

$

5,894 

 

GAAP cash used for investing activities

 

$

(10,682)

 

GAAP cash provided by (used for) financing activities

 

$

3,906 

 

 


Intel Corporation

Supplemental Reconciliations of GAAP Outlook to Non-GAAP Outlook

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP, and the financial outlook prepared in accordance with U.S. GAAP and the reconciliations from this Business Outlook should be carefully evaluated.

Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable U.S. GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

(In Billions, Except Per Share Amounts)

 

Q4 2021 Outlook

 

Full-Year 2021

 

 

Approximately

 

Approximately

GAAP net revenue

 

$

19.2 

 

 

$

77.7 

 

NAND memory business

 

(0.9)

 

 

(4.2)

 

Non-GAAP net revenue

 

$

18.3 

 

 

$

73.5 

 

 

 

 

 

 

GAAP gross margin

 

51.4 

%

 

54.9 

%

Amortization of acquisition-related intangible assets

 

1.7 

%

 

1.6 

%

NAND memory business

 

0.3 

%

 

0.7 

%

Non-GAAP gross margin1

 

53.5 

%

 

57.2 

%

 

 

 

 

 

GAAP tax rate

 

37 

%

 

15 

%

Income tax effects

 

(24)

%

 

(6)

%

Non-GAAP tax rate

 

13 

%

 

%

 

 

 

 

 

GAAP earnings per share—diluted

 

$

0.78 

 

 

$

4.50 

 

Acquisition-related adjustments

 

0.09 

 

 

0.36 

 

Restructuring and other charges

 

— 

 

 

0.64 

 

(Gains) losses from divestiture

 

(0.24)

 

 

(0.24)

 

Ongoing mark-to-market on marketable equity securities

 

— 

 

 

0.08 

 

NAND memory business

 

(0.06)

 

 

(0.32)

 

Income tax effects

 

0.33 

 

 

0.26 

 

Non-GAAP earnings per share—diluted

 

$

0.90 

 

 

$

5.28 

 

1    Our reconciliation of GAAP Outlook to non-GAAP Outlook gross margin percentage reflects the exclusion of our NAND memory business from net revenue.


(In Billions)

 

Full-Year 2021

GAAP cash from operations

 

$

31.0 

 

Additions to property, plant and equipment

 

$

18.5 

 

Free cash flow

 

$

12.5