Please note that this is an edited transcript of a Q&A session with Intel’s CFO, David Zinsner. I have highlighted certain portions of the transcript that are relevant to my long options position in Intel stock. I have also included the unabridged audio file of the session at the bottom of this page.
Intel Corporation (INTC) Citi 2023 Global Technology Conference September 6, 2023
Company Participant
Dave Zinsner – CFO
Conference Call Participant
Chris Danely – Citi
Chris Danely:
I’m Chris Danely, your friendly neighborhood semiconductor analyst here at Citigroup. Next up, it’s our pleasure to have one of the big kahunas of semis, very appropriate for a lunchtime keynote, Intel. And we have CFO extraordinaire, Dave “The Hammer” Zinsner here to answer my questions
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Question-and-Answer Session
Q – Chris Danely
I’d say one of the bigger positive surprises for Intel this year, Dave, has been you guys gaining back market share earlier than some of us would have forecasted on both the desktop and the notebook side. So let’s talk about what triggered that and what we can expect going forward. Do you expect those share gains to continue?
Dave Zinsner
Yes. So obviously, we have had some challenges on the product side and on the process side. And Pat came in at the beginning of ’21, job number one was to get that rectified. And on the client side, I think he’s done a really good job of getting products to market in a timely fashion with good performance. Of course, we’ve got a really strong ecosystem, in particular, in the enterprise side of the clients’ space and that’s helped us kind of get the share back. And I’m really excited for Meteor Lake when it comes out, we should qualify that this quarter, we’ll have our pre-PRQ and then ramping thereafter. And so that product has particularly good performance. It’s the first tile architecture for us. It’s also on Intel 4, so we’re starting to get into EUV processes for the product, and it has [MP], so it actually is our first product on the client side that addresses AI in some respect. So I think that’s helped out a lot. We’ve gotten, I think, much more focused in terms of providing value to customers, getting a stronger engagement with the customer base. I think that’s also helped a lot in terms of rectifying things. I think at this point, based on where we sit on share, we feel pretty good. I mean, we feel like we’ve really righted the ships on the client side of the business and now it’s a matter of just continuing to execute on the products, continue to bringing them out with new processes. And I think that business will largely be defined on how the market grows. We actually think ’24 is going to be a pretty good year for client, in particular, because of the Windows refresh. And we still think that the installed base is pretty old and does require a refresh and we think next year maybe the start of that, given the Windows catalyst. So we’re optimistic about how things will play out beginning in ’24.
Chris Danely
So let’s dig into that a little bit. I think what’s really interesting to note is you guys raised pricing and then your market share went up. So do you think that any particular products on the client side really spurred that? And then maybe talk about some additional products down the line that you think will give you another step function higher in terms of share and performance as well?
Dave Zinsner
Yes. I mean, Alder Lake was a great part when we introduced it and we knew it was a great part, we thought it drove good value to the customers. Generally speaking, our customers get a premium with our particular CPU. So we recognize that there were some cost — inflationary costs that we incurred over the course of the last couple of years and had not passed that on to customers, given the performance of the part, the quality and so forth. We thought it was a good time to even raise pricing and still be able to drive a commanding share.
Chris Danely
Great. And so switching gears a little bit to the server side. The death of your server business has been greatly exaggerated. You’re still going in roughly three quarters of the market out there. Why do you think your share has not eroded like some would have predicted or even like what it’s done in previous cycles when your main competitor grabbed the upper hand?
Dave Zinsner
Yes. Well, I have to say, even coming into this year, we would have expected market share erosion. And in fact, in Q1 and Q2, we — if you look at the surprises we had relative to our guidance, I think that was in large part due to the fact that our share did better on the data center side. I think Sapphire Rapids has turned out to also be a pretty good product. One area where it really distinguishes itself is in AI workloads. And as it turns out, that just so happened to be the place where things were really moving rapidly over the course of this year, and so I think it benefited from that fact. And actually, when you look at it, we were thinking we would need to see China come back in a big way, which would help out in the enterprise side of the business, and we’re more better positioned even on the cloud space in China. And yet that has not happened. We have not really seen China come back in any material way, and yet that business actually has performed better than expectations. That said, I don’t think we’re out of the woods yet in data center. Sapphire is a good part but it doesn’t address customers’ needs in all cases from a TCO perspective. And so we still have to get more products out. Emerald will come out later this year, that will be a good step in the right direction. But really, it’s when Sierra Forest and Granite come out in ’24 on Intel 3 that we think can really start turning the corner on a product performance basis. And then I think we have a real opportunity to improve our market position from here on.
Chris Danely
So do you think that either Sierra Forest or Granite will start to result in you increasing market share?
Dave Zinsner
I think it’s stabilized. I think ’24 will be a year of stabilization, quite honestly. And then as we get into the ’25 time frame, Granite is starting to really ramp in terms of customer traction. We start to see Clearwater Forest come out, then I think you start seeing what we would expect is a better share because we start to have real product performance advantages.
Chris Danely
Great. In terms of other hot topics, I would probably be run out of town if I didn’t ask about AI and Intel. It sounds like you guys have been talking about some nice traction for the Gaudi product. Maybe give us an update there and then we’ll move to other areas as well.
Dave Zinsner
Yes. So we have Gaudi1 and Gaudi2 out. And given the — I think, the challenge is in getting GPUs, I think we see more customers taking a look at Gaudi as an alternative. In addition, the price points are better and more attractive. And when you look at in certain models and in particular, as you look beyond the really big parameter training that requires scrubbing the whole Internet, and you start to look at it in a more contained environment, particularly on-prem searches, it has definitely got a real performance level that is equivalent to what you see from competitors. So we think that we have an opportunity to really drive some good traction on that and particularly together with Sapphire on the CPU side. We talked about on the earnings call that we had over $1 billion worth of pipeline. Our pipeline is what you might imagine. It’s just basically any customer that we could potentially see some business from, which expressed some interest we’re counting, that then has to be converted to real dollars. And of course, not all of that converts to real revenue. But the pipeline itself is building every day. And it’s meaningfully bigger now than it was when we talked about the $1 billion number. I would suspect it will be meaningfully bigger by earnings call relative to where we stand today so we continue to see that business be attractive. And that will really be our story in ’24 is driving Gaudi together with CPUs. Ultimately, we’ll have our Falcon Shores product, our GPU out in ’25. And a lot of that is building the software ecosystem. We think we provide some real advantages from a GPU perspective with that software ecosystem. We’ve talked about this oneAPI, this notion of an open platform that’s really hardware agnostic, we think that’s where the industry wants to go ultimately. And so that’s how we’re going to support our customers as they build out their AI with Gaudi.
Chris Danely
So would you expect Gaudi to ramp before Falcon Shores?
Dave Zinsner
Absolutely. Gaudi’s ramping today. We’ll have Gaudi3 out here in a reasonable period of time, and those products should ramp all through next year.
Chris Danely
When do you think it will be, I guess, material revenue, let’s say, hundreds of million? You guys are pretty big, so let’s say hundreds of million?
Dave Zinsner
I think next year will be material. I mean, we’ll have revenue this year that’s not negligible by any stretch. But it takes time to get customers comfortable and having run the accelerators on their particular workload. So that takes months. But I would say, if you look at — we stood up Boston Consulting Group. They wanted to do a large language model within their own environment, fully secure within their environment. But it had significant amount of parameters that it was searching. And I think we did that in about 12 weeks from the time we started talking to Boston Consulting to the time they were actually running that. And by the way, I was just at a dinner with a couple of their consultants, they are super excited about it. They’re seeing real opportunity to leverage this with their customer base. So I think this will be one of those things where it just has to build momentum. Every quarter, we’re going to — I think we’ll be able to say we’ve built in and seeing strength and I think next year it will be a material number.
Chris Danely
Great. And I know you’re a finance guy and a margin guy. What should we think of the margin profile for this product, for Gaudi?
Dave Zinsner
Margins are accretive, yes. This is a good business for us.
Chris Danely
Great. Sorry, I’m just scribbling all this down. And is that manufactured at Intel now or is that on foundry?
Dave Zinsner
It’s not — we’re using foundry…
Chris Danely
Come over to Intel…
Dave Zinsner
Yes. I mean, really, what will happen is Gaudi will converge with Falcon Shores, so it will be one product offering. And I think you’ll see over time, our foundry will compete with other foundries for that business along with others.
Chris Danely
Yes, so let’s talk about Falcon Shores and then graphics, particularly as it pertains to AI. Maybe just give us an update on that. And then when would we expect, I guess, meaningful revenue in discrete graphics from you guys?
Dave Zinsner
Yes. 2025 is when it will be out. Obviously, it will take time for it to ramp. And obviously, the software has got to be there, which is what we’re developing as we speak, and obviously, that takes time as well. And as it relates to — and you mean discrete graphics in like the client side, is that what you’re asking?
Chris Danely
Exactly. Ponte Vecchio and whatever follow-ups are after that…
Dave Zinsner
Yes. So on the discrete graphics side, what we’re — obviously, what we have strengthened is integrated graphics to even today. So we actually have a good position. Our discrete — we have a plan to build out the discrete graphics business over the course of the next couple of years. And I think we’re leveraging the GPU technology across both the data center and the client space in a way that I think should be pretty efficient way of developing those products. So all looks good.
Chris Danely
Sounds good. So a comment that your boss made last week, I would feel remiss if I didn’t ask about that. You guys are…
Dave Zinsner
He made a lot of comments.
Chris Danely
Yes, that’s why I love him.
Dave Zinsner
He was excited.
Chris Danely
So he stated that the quarter was progressing better than expected, and that was like halfway through the quarter. So it must be a lot better than expected if he’s already saying that. Could you just talk about where you guys are seeing the upside?
Dave Zinsner
Yes. So what he said was that we are tracking above the midpoint. Of course, quarter is not over yet. We got to finish strong in order to be above the midpoint for the quarter. But things are going better than we had planned. We had expected client to be up and client is up. So it’s relatively consistent with what we thought coming into the quarter. I’d say on the networking business, the NEX business, we expected that to be weak, and that’s played out largely as expected. Really where the surprise has been, has been in the Data Center business, the DCI business. Now we do expect that to be down quarter-over-quarter. But I think it’s safe to say that it’s at least tracking better than we had anticipated. So it’s maybe not as down as we had originally thought coming into Q3. And why is that? So China is still relatively soft so it hasn’t been from that, but Sapphire as a product has done better. And we’ll see how — as we exit the quarter, how we do in terms of market share, I suspect we will have done better than we had anticipated for the quarter once everything is set, I think that’s part of it. And as I said, Sapphire is a product that happens to be pretty suited for AI workloads. So I’m sure we’re seeing some benefit from that across both enterprise and cloud.
Chris Danely
Great. Just so I have it straight, the better than expected was entirely from data center and basically everything else is about…
Dave Zinsner
Everything else is pretty much as expected, although doing different things…
Chris Danely
And has this strength flowed into bookings as well for the future, have you guys seen bookings start to…
Dave Zinsner
Yes. I mean, probably early to say how Q4 is evolving. I would say maybe the best thing is we felt like the second half of the year for ’23 was going to be a strength for us relative to the first half. And that is playing out as we anticipated and even surprising us a little bit to the upside.
Chris Danely
And where would you be most excited about for 2024? So you mentioned that you think your server data center market will stabilize. You expect to keep gaining share in desktop and notebook. How about the rest of the businesses, let’s leave Q4 out, but let’s talk about next year?
Dave Zinsner
Yes, I think data center, given the new products and the opportunities within AI for Gaudi, I’m excited about the data center business. On the client side, that business doesn’t necessarily grow at breakneck speeds. But given the opportunity for a refresh midway through the year, so — and how good the Meteor Lake product is and just the opportunity, given its application to AI, I feel really good about the client business as well. Maybe go back to the other thing on the data center side is we have suffered through inventory reductions for several quarters, that’s likely to continue through the rest of this year, but I think after that we’ll have kind of worked our way through inventory. And so that business has, I think, an opportunity for a tailwind like client is seeing right now where it just kind of moves up to what basically instead of bleeding through inventory, our customers now have to buy everything from us. So we get that lift from that as well. NEX will likely have that similar dynamic, it might be a quarter or so later than data center. But sometime next year, we should start to see a little bit of a lift from them. And I have to say the other one that I’m excited about is the foundry business. While it’s probably early to get a lot of loadings on wafers, particularly since a lot of it’s going to come…
Chris Danely
And it’s down from foundry revenue, right?
Dave Zinsner
But packaging is looking very good for us. In packaging, we can turn to revenue in a relatively short period of time, measured in months, not years. Wafers, it’s years before you turn that into revenue, and we are getting a lot of traction. And I like the fact that not only are we getting revenue from it, which pays the bills, but also it’s a great kind of lead-in for customers where we get them engaged with us on a packaging side and then kind of convert them over to be customers on the wafer side. And so I would — relative to the size of our business, is it going to move the needle significantly? No. But it’s a good bit of business and it definitely, I think, gives us inroads for later on the wafer side.
Chris Danely
Great. So just to run through some of those, I guess how do we reconcile what certain large semiconductor companies are saying about AI and all of the budgets are going towards graphics? And then obviously, you guys are seeing a little bit better than expected trends, and we don’t really see a lot of the CSPs increasing CapEx. I know you guys talk to them all the time. What do you think is going on, do you think it’s maybe not as bad as some had feared or what’s your sense?
Dave Zinsner
Look, I think that at the moment, given these big large language models, 100 billion-plus level parameters, there’s a need for heavy duty GPUs to do that work. We, I think, are a beneficiary of that because of the CPU that we have. But clearly, the biggest beneficiary is the company that sells those GPUs. But over time, we view AI as a workload, it’s not necessarily a market. And so if it’s a workload, it’s a workload over every market we serve. It’s yes on the cloud side but also on the enterprise side, the client side at the edge and the network. And as you move farther away from the cloud, the opportunities for it get bigger. Because the architecture that works for a cloud service provider is not the architecture that works for an enterprise customer in terms of the cost of these systems and the power usage of these systems. And so we think there’s a lot of opportunity for us to play in this space and generate revenue that will — that makes this a meaningful tailwind to our business, regardless of what market we’re talking about. So I actually think that this is a huge positive for Intel. Now in the near term, we acknowledge that there’s a lot of dollars going to GPUs for large language models. And that definitely takes a little bit of wind out of the sails of our data center business and a part of the reason why we think Q3 and Q4 will be more muted than they have been in the past. But I think as we go into ’24, I think there’s a real opportunity for us to see meaningful growth from AI.
Chris Danely
Great. Before we dig into manufacturing, another announcement you guys made recently was signing up a foundry. I think it was a prepayment, a down payment, something like that, layaway, whatever, for 18A. So can you expand upon that? Where — what kind of customer is it, when can we expect this to be delivered? And is — are they locking into a contract or is it just we see the capacity coming on and we want to get first dibs, how exactly…
Dave Zinsner
Yes. I would characterize it as — and we’re engaged with several customers. And as we talked about, we thought we could get what we call a whale done…
Chris Danely
Will this be a whale?
Dave Zinsner
By the end of the year, this will be a whale, by the end of the year on 18A. And so one of these particular customers was pushing us to move a bit quicker. And yet we’re not all lined up in terms of the definitive agreement and all that stuff. And so the request was to — what ultimately the request was driving was an acceleration of our Arizona build out, which, of course, requires capital but also we needed to see a little bit of commitment from the customer to make sure that they were really serious about the demand. So that is kind of, I call it, a show of good faith and to support us in terms of accelerating Arizona, put up what Pat said was a meaningful prepayment. You could call it a down payment, too, I guess you could — just is right. And so we’re going to get good going on accelerating Arizona to get that out. 18A really isn’t in production for foundry customers probably until the 2025 time frame. So it would have to be out a few years before we actually see the revenue from it. But in order to get going now to get production out, we got to accelerate what we’re planning to do.
I look at it as a great endorsement of 18A. Obviously, we had — they had to put 18A through its paces a bit to get comfortable that we would be the right partner. So I think it’s a good validation of where we stand. That said, we still don’t have our 0.9 PDK yet out, that should be out pretty soon. And that, I think, is really where you start seeing customers get real serious around, okay, now we’ve got a 0.9 PDK, we can kind of track our way to 1. It’s time to start locking in agreements for the volume. And the good thing about this business, I think we’re well situated in terms of the dynamics that are going on across the industry. Again, we got geopolitical concerns, we went through a lot of supply chain issues in the past that weigh on the minds of customers. There’s competitiveness, challenges that purchasing departments have. And so our goal is to help alleviate that in the industry and be kind of the Western supplier for wafers for customers.
Chris Danely
And I think earlier in the year, you guys mentioned you were working on two potential large customers?
Dave Zinsner
That’s still the case, yes.
Chris Danely
So was this one of those two or could there be…
Dave Zinsner
Yes, this is one of them.
Chris Danely
And then should we expect something on the other customer by the end of the year? Do you think this helps your case certainly with the other customers?
Dave Zinsner
Yes, maybe. I mean, look, nothing’s done until it’s done. So we’re working with both customers to try to make sure they’re comfortable with our process and our manufacturing and what the plan is and get them comfortable with the terms that we can both live under. And it’s never over until we get all that stuff sorted out and documents signed. I’m optimistic that both of them could be signed. I think we are absolutely committed to try to get one signed this year. And I’d just point out that in addition to that, we’re likely to, I think, have some announcements on the packaging side as well. So some of those may be overlap, some of those might be other customers that are — that we’re engaged with.
Chris Danely
Yes. Certainly, we would think packaging would ramp a lot quicker than foundry?
Dave Zinsner
Sure. Yes.
Chris Danely
And what would be the margin profile in the packaging business?
Dave Zinsner
You know, remarkably, because this is advanced packaging, pretty good, difficult to do and does drive performance advantages to customers, the margins are actually fairly good.
Chris Danely
Average good or good close to corporate average…
Dave Zinsner
In the foundry space, the margins are lower than the corporate average. So obviously, that’s — you got to take that into account. But I mean, this will be accretive to the — certainly to the the foundry margins.
Chris Danely
Got it, yes. So maybe just spend a minute on when we could expect meaningful revenue from — I mean, you already have about $1 billion for foundry or something like that. But in terms of the leading edge or the bigger customers, when we could expect meaningful revenues from that business? And then what’s sort of the business model when you guys are maybe not fully loaded, but let’s say five years out when we’re looking at the foundry business? Are we thinking 10% growth per year, and are we thinking 50% gross and 30% op margin, give us a sense of what the sort of the ideal business model would be in, say, five years…
Dave Zinsner
So it will take time to reap this thing, it’s going to be somewhere in that kind of range for several years. But I do think by the time you start running into maybe ’26, ’27, you’ll start to see some real revenue that moves the needle, that’s probably what to expect. Obviously, we’ve got to get the customers to sign up. But assuming we can do that, I think that’s really where you’ll start to see meaningful revenue. I’ll get in trouble from Pitzer if I announce the model before he wants to announce the model. I would just tell you that these margins can be quite good. The gross margins are likely to be lower than the corporate average. But the OpEx intensity is likely to be much better than the corporate average. And so operating margins actually can be pretty comparable to the overall model, maybe not quite to the 60-40 model but certainly at a healthy level.
Chris Danely
Sure. Before we hit manufacturing, might as well talk about the long-term model. And by the way, this is intended to be interactive. So if anybody has any questions from the audience, it’s hard to see, but feel free to raise your hand, and we’ll come grab you with a mic and hopefully, somebody will get my attention. You guys recently came out, not recently, but came out with sort of this growth model with double digit revenue growth is the goal. Maybe just run down how you guys got to that and then what would you expect to drive that growth? What will be the higher growing areas and then some of the lower growing areas?
Dave Zinsner
Yes. I mean, obviously, the model is heavily dependent on the TAM growth and how TAM grows over time. But I would say client is this kind of low to mid single digit growth market. Data center with AI and so forth is certainly in the double digits. NEX, last I looked, was kind of in the high single digits, maybe getting approaching double digits. Then we have what I call the wildcard, which is the foundry business, which may be immeasurable, given that if it comes, it will be a more in terms of its growth. And so that gives us a lot of opportunity to drive revenue. But I have to say, the way we’re planning the business is more modest than that. We’re thinking, okay, let’s do all those things necessary to drive that growth. But let’s manage the business from a capital investment perspective and operating expense and to be conservative around that. And so a lot of that stuff then becomes upside if it shows up, but we haven’t gotten ahead of our skis in terms of spending for the business. So that’s been my approach to how to manage.
Chris Danely
Okay. And on the margin side, I’ve known you for 20 years and four different companies. So Intersil’s margins went up 10 points, ADS margins went up 10 points, Micron’s margins went up 40 points or something like that. What is — the Intel gross margin range was, I think, 55% to 65%, then it was 55% to 60%. What should we think of as sort of the long term gross margins for Intel? And then what will be the drivers to take it to the high end of the range or higher or, God forbid, what could disappoint and bring it to the lower end of the range?
Dave Zinsner
Yes. I mean, the trick of this is to drive a margin that is really good but also takes into account the size of our business and the share we want to have and so forth. And the fact that we want to be in the foundry business, which doesn’t generally operate at 60-plus percent gross margins with one possible exception. And so I think the goal would be to drive a 60% and Pat’s talked about this model that’s driving 60% gross margins, that’s probably the optimal spot for us…
Chris Danely
50% to 60% kind of thing?
Dave Zinsner
60%, to try to be in that 60% range. Now we’re 15 percentage points below that roughly and so we’ve got a lot to do to cover the gap. And I think it’s a couple of things. One, getting process leadership and getting products back to their rightful place, I think it’s the number one most important thing we can do for the business to generate good profitability, that kind is number one thing. Outside of that, there is a ton of efficiencies that we can get within the business. And so we’ve talked about this thing where we’re kind of separating out kind of the manufacturing, which is going to look like a foundry business that provides wafers and packaging services to not only external customers but also our own internal customers. And so by doing that, we kind of isolate that business’s P&L now and be able to measure that relative to peers. And you’re not going to be surprised to hear that it’s woefully inadequate. It’s not in a good place.
But just having that clear view of how it operates will drive a lot of behavioral changes at the company. Better loadings, more intelligence around how we increase our capacity, less hot lots and unexpected wafer starts, a better dynamic of how we mix our business. Right now, they’re constantly moving the mix around, which is not an efficient way to run a fab that now supports multiple customers, less sample activity, only the sample activity that we need. And so there’s like billions of dollars of savings opportunity there that I think will greatly improve the business. We’ll also — once we get through these 5 nodes in four years, there’s a huge amount of cost in start up costs, billions of dollars incrementally higher than we normally operate in terms of start up costs that go away and improve. And then, of course, revenue serves a lot. And so as we improve our revenue the fall-through is quite significant. We should see good margin expansion from that as well.
Chris Danely
Do you think just regaining process leadership should probably get you to 60%? And then anything after that in terms of the costs, et cetera, would be well above that? That’s what we’ve written…
Dave Zinsner
That’s what you want?
Chris Danely
Well, I want to, yes. I’m an American, right? I want Intel to succeed. I’m a semi guy. No Intel, no Danely job, no good.
Dave Zinsner
I think getting leadership will be an important part of the gross margin improvement. I think what we feel committed to is driving the 60% number. If things turn out better than expected, then obviously we’ll take it. But for now, I think you should think about it as the main goal is to get to 60%…
Chris Danely
Yes. And then on the cost cuts, I think you’re $3 billion into the $8 billion to $10 billion. Is that correct?
Dave Zinsner
That’s correct.
Chris Danely
And where would you say it’s come from so far? And it sounds like you’re pretty confident that you could snag another $5 billion to $7 billion?
Dave Zinsner
Yes, and I kind of listed off a bunch of areas where I thought we could get the $5 billion to $7 billion where we have line of sight to. The $3 billion was mostly a — we’re in a down market. We need to spend less. And so it was about driving kind of overhead efficiency at the company. And also, I would say just driving austerity and eliminating pet projects and the like. So that’s really where we caught most of the savings. I think now a lot of the savings is going to be driven off of just driving efficiencies, just operating more efficient fab, operating a more efficient engineering road map, being more efficient in terms of our overhead, in terms of our go-to-market. It’s going to be tough, that’s kind of driving efficiencies, which in one respect or more permanent, but take longer, you kind of iterate your way through those improvements and those usually take multiple years to show up. So the goal is to kind of exit ’25 with most of that savings in the bag and really feel it in ’26.
Chris Danely
Okay, great. One other thing I wanted to ask was on product lines. As you start cutting these costs, are you going to have to jettison any of the product lines, or do you think it can just be all internal efficiencies?
Dave Zinsner
Well — and by the way, I think this is an area where I’d say we — but Pat, in particular, we don’t get enough credit for in terms of just enhancing shareholder return is, we’re being very aggressive in terms of looking at places to unlock value where it may not make sense to fully operate that business within the four walls of Intel and that unlocking it to allow our owners to get a return from that is like top of mind every day. And so Mobileye is a perfect example. The IMS business, the mass writing business, another example of that. We’re going to transition the NOOK business from Intel. And there will be others, I think, over time, where we’ll just — we’ll have done a good job building it to a certain level. But to really unlock the value requires it to be more of an independent company and that we’ll be very pragmatic about how we do that.
Chris Danely
Great. Just to make sure we reiterate, so manufacturing is on track as far as the 4 nodes in five years, everything is fine?
Dave Zinsner
5 nodes in four years.
Chris Danely
5 nodes in four years, sorry.
Dave Zinsner
Yes, completely on track, things are going well. Like I said, I would expect a 0.9 PDK here pretty soon on 18A. I already said Intel 7 done. Intel 4’s pretty much there. We’re ramping Meteor Lake in the factories as we speak. We pulled in the time lines for both Sierra and Granite. I know we’re on Intel 3 so they look good. So I have to say this has been one of the most significant transformations we’ve made. And I think in large part, the credit goes to Pat and the engineering teams that literally are meeting on this thing, I attend some. Some of them are just completely over my head, but on a weekly, sometimes daily basis to get this right, to get products out on time to meet customers’ requirements and to do it as cost effectively as possible.
Chris Danely
Great. All right. I think we’re out of time. Thanks, everyone.
Dave Zinsner
Thanks. Appreciate it.