Intel Q4 CC transcript.
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Excerpt:
Mark Lipacis – Morgan Stanley
When do you expect to start shipping the 22-nanometer products into production systems? Paul, you may have mentioned this, I think I may have missed it, can you help us understand to what extent do you think about using the incremental 22-nanometer capacity for PC microprocessors versus tablets or cell phone microprocessors?
Paul Otellini
Well, we haven't given out the product schedules for 22-nanometer. So let me give you a status at least in much detail as I'm willing to get to make public. We have finished development of the process. We are in yield learning deployment right now, running test ships in there, ramping the yields up on the technology. We have completed the design of our first microprocessor and have working microprocessors on that technology. At this point in time our plan is to ramp production wafers of that technology in the second half of this year with products launched at some point to follow.
Stacy Smith
The second part of your question, Mark, was around the…
Paul Otellini
SoC.
Stacy Smith
22-nanometer?
Paul Otellini
Yeah. We're building some on 32 now and then the initial products on 22 will be the mainstream microprocessors, because we want to use every early wafer we can for those products, but we will move as rapidly to 22 as possible for the non-PC part of the product line.
Mark Lipacis – Morgan Stanley
If I could just follow-up, the CapEx, how should we think about that getting cut between the faster depreciation schedule for equipment versus slower depreciation schedule for buildings?
Stacy Smith
The lion's share is going to be equipment. That investment bucket, the lion's shares equipment, you'll see a little more factory spending than what you've seen in the past, but it's the equipment to fill the factory that ends up being expensive, and you can see that in the depreciation forecasted goes up from $4.2 billion in 2010 to $5 billion in 2011.
Operator
Your next question comes from the line of Kevin Cassidy with Stifel Nicolaus.
Kevin Cassidy – Stifel Nicolaus
Maybe just to ask a little more about the 22-nanometer conversion with the SoCs, are you comfortable, you have the design wins now to fill that fab?
Stacy Smith
The 2011 capital spending of $9 billion is the dollars are really being driven by the server and PC business. That's what's driving the increase in the unit CAGR. Those are big die. Remember the products that we have in smartphones, the products that we have in tablets by design are very small die. It doesn't drive a big capital spend for us. Don't take from that though that it's not important to get those products to 22-nanometer that process leadership is what lets us bring down the cost, bring down the power and provide more performance at any given level of power. So, it's strategically really important, but it's not the driver of the $9 billion of capital in 2011.
Kevin Cassidy – Stifel Nicolaus
If I could just follow up with, you're saying mid-teens in unit growth, it's assuming ASPs will come down, they were up last year, why do you think ASPs will down in 2011?
Stacy Smith
Just to say you don’t bid us up here, Paul said low to mid teens in unit growth for 2011 and 10% revenue growth, you still get to the same question, which is, that would suggest ASPs come down a little in 2011 to kind of make that revenue number work. I’ll be the first to admit this is the place where I have been wrong over the course of 2010. I did not anticipate ASPs going up to the extent that they had, the Company has surprised me positively the ability to extend the technology leadership over the competition and get paid for that leadership. That said, my thesis on the market is that the areas where we see robust growth. So remember what I said, emerging markets 2 to 1 over mature; the consumer market 2 to 1 over the business market. Those areas benefit from the standpoint that system price points come down over time, and we get a little bit of a mix down. So I believe that we're going to see, just based on that mix effect pricing coming down over time. I'll also say it's one of those places where I'd love to be wrong. The Company is working hard to try to prove me wrong, but inherent my forecast is that pricing comes down some based on growth in consumer and growth in emerging markets in 2011, and I think that trend is the one I'm betting on for the next several years. |
