Intel is seeking to build a world-class foundry business also serving external customers and has made significant investments in ecosystem support to enable the usage of our manufacturing network by external customers.

Intel is strategically positioning itself to create a resilient global semiconductor supply chain by investing in geographically balanced manufacturing capacity.

Intel announced its intention to implement a series of cost and capital reduction initiatives designed to adjust spending to current business trends while enabling its new operating model and continuing to fund investments in its core strategy.

The internal foundry operating model took effect in 2024, creating a foundry relationship between Intel Products and the Intel Foundry business, designed to reshape operational dynamics and drive greater transparency, accountability, and focus on costs and efficiency.

Intel made meaningful progress on its plan to operate Altera as a standalone business beginning in Q1 2024, readying the business and paving the way for value capture opportunities in early 2025.

The headcount actions in connection with the 2024 Restructuring Plan are expected to result in an approximate 15% decrease in our core Intel workforce by early 2025.

The industry in which we operate is highly competitive and subject to rapid technological, geopolitical, and market developments. When we do not anticipate or respond to these developments, our competitive position can weaken, and our products or technologies can become uncompetitive or obsolete.

To compete successfully, we must maintain an effective R&D program, develop new products and manufacturing processes, improve our products and processes, and make significant capital investments in new and existing manufacturing facilities, all ahead of competitors and market demand.

We have a highly complex global supply chain composed of thousands of suppliers. These and other supply chain issues can increase our costs, disrupt or reduce our production, delay our product shipments, prevent us from meeting customer demand, damage our customer relationships, or negatively affect our reputation.

We face intense competition across our product portfolio. Our competitors include companies offering platform products, such as AMD and Qualcomm; accelerator products such as GPUs, including those offered by NVIDIA; other accelerator products such as ASICs, application-specific standard products, and FPGAs.

Our process technology roadmap to regain transistor performance and power performance competitiveness is subject to a number of risks, and we could fail to realize our goals, including due to changes in competitor technology roadmaps, changes affecting our projections regarding our technology or competing technology.

We have limited experience in the highly competitive and capital-intensive third-party foundry business. As we pursue our strategy to establish Intel Foundry as a major provider of foundry capacity to manufacture semiconductors for others, we will face intense competition.

In 2024, we announced our intention to implement a series of cost and capital reduction initiatives designed to adjust our spending to current business trends while enabling our new operating model and continuing to fund investments in our core strategy.

To the extent we are unable to grow our revenues to offset these production costs, our gross margin and operating income will be unfavorably affected.

Our global supply chain strategy is focused on driving a resilient, diverse, and responsible supply chain that meets the needs of our customers while upholding the highest standards of safety, quality, technology, availability, and sustainability. We work tirelessly across our supply chain to minimize disruptions, improve productivity, and optimize capacity utilization and output to meet customer expectations.

R&D investment is critical to enable us to deliver on our technology roadmap, introduce leading products, and develop new businesses and capabilities in the future.

Our objective with each new generation of products is to improve user experiences and value through advances in performance, power, cost, connectivity, security, form factor, and other features.

Software unleashes the potential of our hardware platforms across all workloads, domains, and architectures.

Our first allocation priority is to invest in R&D and capital spending to capitalize on the opportunity presented by the world's demand for semiconductors.

Our capital allocation strategy historically included returning excess cash to stockholders through dividends and stock repurchases. Our most recent stock repurchase was in the first quarter of 2021 and we suspended the declaration of quarterly dividends starting with the fourth quarter of 2024.

To moderate the impact to our balance sheet and cash flows, we've implemented what we call Smart Capital. Smart Capital includes maintaining a 'shell ahead' on the longer lead time space and delaying tool purchases as long as possible ahead of high confidence demand signals while leveraging capital offsets from governments, financial partners, and customers.

Reducing our environmental footprint as we grow helps us create efficiencies, support our communities, and respond to the needs of our stakeholders.

In 2024, we linked a portion of the executive and employee performance bonus to our goal to reduce our 2024 Scope 1 and 2 greenhouse gas emissions by 25,000 metric tons of carbon dioxide equivalent, compared to 2023.

We are committed to maintaining and improving systems and processes to avoid causing or contributing to adverse impacts on human rights in our operations, products, and supply chain.

In 2024, the PC market started to stabilize from a soft macroeconomic environment and inflationary pressures, with PC supply and demand levels beginning to normalize.

We believe the AI PC is a significant potential driver of PC demand over the coming years, and believe we are well-positioned to capitalize on this trend that we expect will support a long-term PC TAM of 300 million units.

Geopolitical and security issues, such as armed conflict and civil or military unrest, political instability, human rights concerns, and terrorist activity, present significant risks to our global operations.