Analyst Conference Summary

conference date: October 16, 2007 @ 2:30 PM Pacific Time
for quarter ending: September 30, 2007 (3rd quarter 2007)

Forward-looking statements

Overview: Intel is back with a strong quarter.

Basic data:

Revenues $10.1 billion, up 16% sequentially from $8.7 billion, up 15% over year-earlier.

Net income $1.9 billion, up 46% sequentially from $1.3 billion and up 43% over year-earlier.

EPS $0.31, up 41% sequentially from $0.22 and up 41% from year-earlier.

$12.5 billion cash and equivalents at end of quarter.

Guidance:

Q4 revenue between $10.5 to $11.1 billion. 57% gross margin plus or minus a couple of points, 5% higher that Q3. Spending ($&D + MG&A) between $2.8 billion. 29% tax rate. $1.1 billion in depreciation. Expect lower unit costs for goods.

Conference Highlights:

Record microprocessor units with flat average selling prices. Record chipset and flash units sold. Motherboard units lower.

Broad based growth across geographies and segments. Unusually high seasonal growth.

Gross margin 52.4%, up from 46.9% sequentially. 45nm start-up costs were lower.

Costs increased to $2.9 billion.

Quad core launched in November 2006. Sold over 2 million units in Q3. Server units were up double digit. Now have Core microarchitecture across all lines.

Mobile grew 27% year-over year.

Desktop saw increased units, ASPs and revenues both sequentially and year-over-year. Sold more high-end products for mix.

Chipset orders strengthened in quarter; expect strong Q4.

NOR flash had higher volumes but lower ASPs. 12% overall flash growth.

Factory network is strong source of differentiation against competitors.

November 12 new family launch on new process technology.

88,000 employees at end of quarter as headcount continues to decrease.

Digital enterprise group microprocessor revenue was $3.9 billion and chipset and motherboard revenue was $1.3 billion. Mobility group microprocessor revenue was $2.8 billion with $1.1 billion in chipset revenue. Flash memory revenue was $553 million.

Q&A:

Pricing in Q4? Q3 had record numbers in servers and mobile. Strength of dual and quad core processors. [no comment on Q4]

Soft demand out of Taiwan? Have not seen any double-ordering in market place. Chipset business accelerated over quarter, with 4 to 10 week lead times over processors. Strength in Europe, solid in Japan and U.S. Saw strong chipset sales in last 2 weeks of September.

Cash use? No comment on future buy backs. Have a program currently. $750 million was used in quarter. Strategy is to return cash to shareholders through dividends and buybacks.

Should revenue growth have caused better margins? No, some of the revenue growth was in low-margin products. We typically have 90 days in inventory, so what you build one quarter you ship the next. Factories running full tilt so good margins.

We walked away from low-end desktop and mobile business. Our desktop ASPs were up, a change from trend this last year.

Inventories? There is no simple answer to what inventories need to be. We are now in a product transition, so we build a little extra inventory in case products don't quality. No way to insure we don't overshoot. If market softens we will have to work down inventory. But if we hit our guidance we will be low on inventory at the end of Q4.

Shifted advertising from Core to Centrino based. Result was heavy chipset volume in mobility segment, which is growing as percent of business. Santa Rosa helped, but low end segment of notebook market hurt.

Why such strong Q3? Don't think it is a pull-in from Q4. Notebooks as a generic product type have ignited in global markets. Prices are falling in consumer segment, but are still higher than desktop segment.

Below headcount target? Yes, lower than we originally planned, but we are past that time target too.

Financial turmoil does not seem to have dampened consumer demand for PCs.

Market share gains from AMD or general market gains? Strong general market. But we did do very well in servers. We are working on new low-price point products.

Channel inventory issues? Our distributor inventories are in good shape; we might like to have a little bit more. We don't see any back up at all.

Quad core desktops? Beginning to populate upper price end of market.

Any capacity utilization constraints? Not a cost issue. Meeting customer commitments for Q4, but if demand is higher we will be hard-pressed to keep up with the market.

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