Intel Corporation (INTC) Earnings Call Transcript & Summary

Statements in this presentation that refer to future plans or expectations are forward-looking statements. These statements are based on current expectations and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. [Presentation]

Hello, and welcome today, our biggest launch of the year and here in the Big Apple is the place to do that launch. Welcome all of those who are here live in New York City, the chaos and joy of New York at Christmas time. We're thrilled today for Intel, for our partners and our customers, but we wouldn't be here without the dedication and hard work of Intel employees who are joining us worldwide, celebrating our biggest launch of the year. And as we think about this period of time that we're in, wow, what a year, right, all the impacts of the geopolitical environment, the business environment and the economic cycle that we've been in. And hey, we've had a little bit of technology as well. And I don't know if you heard about this thing called AI, but boy, this year, this decade and hey, team, welcome. We're ready for a launch, right? Yes. Wow, what a year it's been and then the work of technology, this role of computing is getting more and more precedence in viewing autonomy and agency into everything that we do. And it's becoming part of the ambient environment in which we live and every piece of AI built on silicon. So welcome to the Siliconomy. This idea that every piece of the economy of our lives is becoming more dependent on digital. Everything digital runs on semiconductors. In this idea of the Siliconomy, how essential it's become, God's gift, this magic little crystalline, the most populous piece of element on Earth, fueling every aspect of our environment. Today, about 25% of our economy is built on silicon, by the end of the decade, extraordinary, and I think that understates the role that AI is going to have and maybe a full 1/3 of the entire GDP based on silicon. And here we are, and we see this driving force for silicon for a $1 trillion semiconductor market by the end of the decade. And the role of AI, just making it go faster into the future. And in a baseball analogy, we're in the early innings. Well, no, maybe we're still in warmup. No, maybe we're still in the preseason of the impact that it's going to have. But when we think about artificial intelligence, something over there, right, and something we may not understand or may not control. And we think it's a disservice to think about it that way. Instead, maybe augmented intelligence, how we integrate it into our human lives, into human intelligence, how we make it part of with us and everything that we do. And we think bringing this value into the human experience is the opportunity for AI, augmented intelligence. My family, we have a disorder. We lose our hearing at an early age. My father was almost deaf when he passed away. And my AI-enhanced Starkey hearing aids are making me better. It's not something over there. It's right here, augmenting my human experience. And we think this paradigm shift, how humans and technology come together, are going to be powerfully enabled by AI. And that harkens us back to the Intel vision, that we're going to work on technology that improves the lives of every human on Earth. And we think about technology, is it good or bad? It's mostly neutral. It's our job to shape it as a force for good, making it everywhere, making it responsible, making it safe, secure, trusted, well-engineered, regulated appropriately. And that's what we're about as a company, enabling that experience for AI Everywhere. And effectively, that's why we're here today, the AI Everywhere event and how we're driving it into every aspect of the applications but also every device, in the data center, the cloud, the edge, the PC as well. And as we think about that, we've seen high-performance computing solving these hard problems. And now AI and high-performance computing are coming together in a powerful way to enable this next generation of computing, faster memory, faster networking, larger memory capabilities, computing capabilities. And when we think about this, we also have to do it in a sustainable way. Are we going to dedicate 1/3, 1/2 of all of the Earth's energy to these computing technologies? No, they must be sustainable as well. Compute efficiency, power performance capable. And with that, we're working together with research on how this machine learning and these new platforms truly solve global issues at scale. And that's what we think about with the AI continuum, bringing AI into every platform and every experience. When you think about why is Intel going to be the company to do that? We're scale. We build world-leading technology in volume. That's what we do. But we also do it with open ecosystems, software that makes it accessible to everybody and we're end-to-end. We're uniquely positioned to be this AI Everywhere, seamlessly integrating AI into every platform that we do. We're doing that with Xeon with Gen 5 today, right? We're saying, no, you don't have to build new data centers, you don't have to stand up new networks, new management, new security. No, we're going to infuse it into every data center that's built on Xeon. And that's what we're announcing today with Gen 5. Same applications. You don't need to forklift those applications, no. We're just going to build it in and enhance what you already do with new AI capabilities. But we're also seeing that the world is moving from high-end training saying, how do we inference everywhere? A few people create weather models. Lots of people use them. The same is going to happen with AI. A few people train, lots of people inference. And they're going to do that in their data centers, in their enterprise applications and at the client and edge. And that's what we think about with these 3 laws. Why is it going to happen at the edge? First is the laws of economics. My device versus a rent-a-cloud service I pay for, economics. Second is physics, roundtrip to the cloud or do it right here immediately. And finally, the laws of the land. My data, all the geographies that we operate in, we're going to operate locally our models on the edge and on the device. And as this becomes increasingly important to the future, AI will dominate the edge workload. And that's what we think about with the AI PC. We've been seeing this excitement of generative AI, the star of the show for 2023. But we think '24 marks the AI PC, and that will be the star of the show in this coming year. Unleashing this power for every person, every use case, every location in the future. And we're going to take these large language models and follow those 3 laws and put them into every device, every PC for the future. And with that, it's going to drive a revolution in the applications. Hundreds of new applications, new communications, new form factors. And I liken this and I like to say it's like a Centrino moment. Now for those of you who don't remember Centrino, hey, helped to create WiFi. And what happened when we created WiFi? Pretty much nothing for 3 years. And then Centrino, a platform that drove volume into the industry and all of a sudden, every coffee shop, every hotel room, every business needed to become connectivity, Internet-enabled, new form factors started to emerge as a result. And we think of the AI PC as that kind of moment driving this next generation of the platform experience. Andy Grove called the PC the ultimate Darwinian device. The next major evolutionary step of that device is underway today. It's called the AI PC. And as we think about this exciting year of innovation and Intel is going through our transformation journey. And we laid out this tremendously audacious goal as we began this journey as well, 5 nodes in 4 years. We're going to do a decade of semiconductor work in just 4 years. What do you think? That's pretty crazy. On track, baby. And over here, we have Intel 7, now over 100 million devices shipping, right. Intel 4 with today's Core Ultra launch in volume, millions units this year. Intel 3 going into production next year with our server launches. Intel 20A, and as I said on our earnings call, the next-generation transistor power delivery, Picasso, Rembrandt, work of art. And the finish of this, 18A bringing this all together and finishing our journey being production-ready at the end of next year, first products going into fab at the start of the year. Now hey, at the holidays, what do you do? You all gather around the tree and you take a family photo. So kids, Papa's here. That's a family photo to be very proud of. And as we think about this idea, it wouldn't be the completion of an event like this without hearing from our friends, families, those in the industry who join us, supporting this launch today and this driving force of the coming decades. And they join with us because what's Intel's purpose? AI Everywhere. Technology is a force for good, improving the lives of every person on the planet. And as '23 started with cool technology, we're finishing the year with even cooler technology. So let's hear from some of my friends and colleagues for decades right now. [Presentation]

Thank you to our friends and partners and the work that we're underway with. And on that note, to tell us more about what's possible, please join me in welcoming Michelle to the stage to tell us about the AI PC.

Good morning, everyone. As you heard, AI is a huge inflection point. And we believe that computers infused with AI will permanently change the PC market and fundamentally reshape how we interact with our computer. Over the last 5 years, Intel has nurtured this intersection of AI and PCs with a steady drumbeat of new machine learning, inferencing, computer vision capabilities, all within our client portfolio. And it was really to prepare for today or this moment, putting powerful AI tools into the hands of millions. The power of AI is absolutely going to grow the PC industry. We already see it driving innovation. And according to Boston Consulting Group, AI PCs are expected to comprise 80% of the PC market by 2028. All of this is driven by the seismic performance and experience improvements that we all know AI can offer. And to me, the benefit could not be more clear. Humanity is going to save tens of millions of hours. The question is, what are you going to do with all that extra time? And you might ask how? Well, e-mail threads, creating graphics, crunching your data, completing your travel itinerary, all of these have the opportunity to make you more productive, but they have to be personalized and they have to be useful. And over the next 2 years, Intel is committed to ship over 100 million client processors with dedicated AI. That's up to 5x more than all of our competitors combined. As I said, AI is a market changer. And we've been in this CPU or processor business for over 40 years, and there is some unshakable truths. CPU cores matter, graphics matter and power efficiency matters. Nailing these fundamentals enriches the entire PC experience. It's not just about 1 item. And yes, AI is absolutely a new critical dimension. But for me, it's a yes/and statement. Yes, Intel can deliver a truly exceptional processor, and we can do it with a definitive AI experience too, 1 processor that delivers on every front, CPU, graphics, power, battery life and AI to meet your needs. That's our vision for the perfect processor. And boy, do we have the technology to really nail it. And today, I'm excited to announce the launch of the Intel Core Ultra. It's beautiful, isn't it? It's the fastest processor for ultrathin notebooks. And I'm so excited because we are smashing it out of the park on conventional application performance. An example, in Adobe Premier Pro, for example, you want to look at our competitors, we're 40% better than our competitors with Intel Adobe Pro. We've radically changed our energy efficiency. Compared to previous generations, it uses 40% less power in day-to-day activity. This is Intel's most sustainable CPU, and as Pat said, that's good for the planet. On top of that, it has a world-class GPU too. So imagine a laptop under 3 pounds that you can play games on and it pulls double duty as its own powerful AI GPU processor. And finally, it delivers its first on-chip AI accelerator, the neural processing unit, also called the NPU. It's fantastic for offloading those long-running AI tasks that really allow us to improve battery life. The energy efficiency of the NPU is 2.5x better at executing the same code from our previous generation of products. 2.5x better, generation to generation. Intel Core is our most advanced integrated platform to date. We will deliver the best AI PC experience. We promised you a leadership product as part of our annual cadence of road maps, and this new processor family delivers on all of it. As you can imagine, putting all of these new technologies into 1 processor was absolutely a heavy lift. But Intel Core represents our largest shift in architecture in more than 40 years. It was a radical change in how we manufacture and assemble our microchips, but it was absolutely worth it. Amazing technologies like Intel 4, 3D performance hybrid packaging and new micro-architectures, Intel Core Ultra beats competing processors by double digits. Delivering great performance for Intel, that's pretty straightforward, but we've heard from a lot of you, getting great power efficiency is a lot harder but very important. So the same architecture and technologies that allowed us to drive this amazing leadership performance also allowed us to take us to new heights on energy efficiency. And why does that matter? Versus our prior generation, we're up to 30% lower on processor power in things like web browsing, watching movies, video conferencing, things that we're doing all day long. And we even reduced Netflix by 25% so you can browse and binge all your favorite shows from anywhere in the world. Yes, there you go. And that was Intel, generation on generation. Now let's compare to the competition. So when compared to the competition, we deliver up to 79% lower power in key metrics. It does not get better than Intel Core Ultra for an ultrathin PC. It's the most efficient x86 product in this segment. And because we took the time and invested in this incredible efficiency, we were able to expand the size of the GPU for built-in performance to deliver the next level of graphics performance. Intel Arc Graphics brings all the modern technologies and experience from our discrete graphics into the latest processor, not just gaming, media, everything. So with the Intel Arc GPU, we're seeing gaming and graphics performance that's up to 2x our previous generation. And more importantly, it's the hardware and the software innovation combined that enables us to deliver this built-in GPU with world-class performance in this space. But don't just take my word for it. I know you guys love to see things live, so let's welcome Jim Johnson to the stage. Welcome, Jim. Show them what you got.

Let's show off a few of the capabilities you just mentioned. We chose a gaming workload because it puts the highest demand on the CPU complex, the integrated GPU and the memory subsystem. A company out of Poland, One More Level, just released a title Ghost Runner 2, getting rave reviews. On the left, you see it running on our prior generation product. And on the right, you see it running on Core Ultra. Just by moving to Core Ultra, you speed up the performance 2x and by using the XeSS AI upscaling feature, you increase 3x. This processor runs at the same power envelope as prior generation and delivers on the promise of power efficiency. It's 1 of 80 titles using this capability in this architecture and you can play it right next door in our demo showcase. Back to you, Michelle.

Awesome. Thanks, Jim. And just to recap that, we tripled our energy efficiency. And that's absolutely incredible and something that we've been hearing from all of our customers that they absolutely want. Now you're here to hear about the hero of the hour, AI. With Core Ultra, we're reducing the all-new NPU to enable low-power AI across the client. But I think important that in addition to the NPU, we architected our CPU and our GPU cores to deliver the most AI-capable and power-efficient client processor in Intel's history. Every engine on our chip can handle AI workloads. So whether you're using AI to edit your videos or create music, you're building images from scratch, all of these are going to be easier and much less time-intensive. So for example, if you're a video editor, you're in Adobe Premier. We've cut the time for you to edit a video by more than 56% versus previous generations. We know how many creators are out there. This is an absolute game changer for them. And with Core Ultra, you can do generative AI locally, so you can use something like Stable Diffusion and create a picture or a graphic that you want in half the time it used to take you. And we're very excited and look forward to Intel Core Ultra AI PCs running the exciting Microsoft experiences like Copilot and Windows Studios Effects coming to the market very soon. But it's not enough to have AI hardware. The real difference maker is going to be the partnership and the way that you bring software to your hardware platform. And we tested nearly 20 local AI models and workloads before launching this processor. The workload spanned from video to image editing, Stable Diffusion, machine vision, teleconferencing and so much more, all the things that you would expect. The Intel Core Ultra is the only processor that successfully ran every single one of these AI workloads. For users, that means compatibility that translates into frictionless and easy experiences with AI software on the PC. I've talked to many of you, and you all say what is the experience in the software that's going to come? And we can show you right here, it already runs on Intel Core Ultra. And it's all because of this massive industry investment that we're making in the AI ecosystem. We recently launched the AI PC Acceleration program. This is a first-of-its-kind global initiative really designed to increase and enable AI software development within the PC ecosystem, bringing those developers back to the heart of the PC. And this is a multi-generation program where we're providing hardware and software engineering to really create and dream that next great AI-powered application. We don't know what that is, but I guarantee you developers will absolutely figure it out. And the momentum to date has absolutely been incredible. As I mentioned, we're committed to delivering over 100 million PCs. That's the scale that Pat talked about. That's the scale that gets developers to come to your platform. And we expect to have 300 AI-accelerated features enabled on the PC. And we've already started doing that work. We're going to have 100 software partners, partners like Adobe, Dolby and Zoom on our platform, and we're on track to hit this milestone in less than a year. And many of them are available today, and if you go to the showcase, you'll see just a few of them. That's why developers are coming to Intel. We're frictionless. We support more models and more frameworks, giving developers a wealth of choice and a variety of tools and AI models that they can choose from. We don't tell them how to do it. We offer them the tools and they can choose. And why would customers pick an Intel AI-powered PC? Because no one else in the industry has worked with more partners to bring features and experience to end customers. And AI PC, it translates to experiences, and those experiences are customized and specialized for each person. And I believe that AI will scale the fastest because we bring it to the PC. We bring it to hundreds of millions. And while others love to talk about what's to come, we're delivering this impact starting today. Yes, exactly. You could buy it today. And let me just show you what I mean. We're going to do another demo of a music production. And so I have the amazing independent music artist, composer and performer, Kawehi with me here. Hello, Kawehi. Nice to see you. All right. So Kawehi, maybe tell people in the audience what you do.

So I am a 1-woman band. Well, now we're a 2-woman band. I'm excited for it. So typically, I generate all of the tracks on my own. But recently, your engineering teams turned me on to the work that you're doing with Audacity. So now I can AI-generate drums, bass lines, melodies. It really cuts the time down by a lot.

And were you using AI to create your music before?

I was, but I didn't really have anything that creatively, I could use until now, really.

Great. So what are you creating here?

So usually, it takes me about a week or so to complete a project. But with the power of AI, I was able to do this song in under 24 hours.

Yes, we didn't give her much time.

Yes, 24 hours right here in New York, I was able to just kind of create this track with the power of AI. So let me show you.

Yes, please.

Using Audacity, I'm going to generate a very, very funky piano. And in just a bit, we're going to hear what it comes up with. This is basically what you do, you just keep generating these new tracks and you find inspiration somewhere. Okay, so let's hear what we got.

That is really funky.

It is funky. I feel like wearing a beret. Yes, it's really great.

And how long would it have taken you to create and iterate on these tracks before to kind of get to what you wanted for your piece?

I mean, at least a week or so to complete just 1 project.

So we gave you back 6 hours of time and I know you say you're going to gigs all the time. So being able to do it locally and on your PC really is important to you, where you may not have or be able to connect to the cloud and get that boost to performance?

Absolutely. It's portable creativity powered by AI and Intel.

Awesome. All right. So did you create a piece for us?

I did. You guys want to hear it? All right. Let's do it. I'm excited. There we go. Now it's the front.

Okay. Are you guys waking up now? That's awesome. All created in less than really 12 hours because I'm assuming you slept last night.

I guess just a little bit. After I had some pizza, I had a good night's rest.

Awesome. This is fantastic. And it's just 1 example of how all these creative minds can use AI to really hone their craft and really it and bring it to life. So with that, Kawehi, I want to give you the first Intel Core Ultra PC so you have AI in your hand starting today to go and create and make amazing music.

Thank you so much.

That's just 1 example of all the time-saving goodness that's available starting today. And we have a full range of Intel Core Ultra processors. And you can expect to see more than 230 designs from our global OEMs, including Acer, ASUS, Dell, HP, Lenovo, LG, MSI, Samsung and more. And many are on the show floor for you to take a look at. As well as in addition to starting today, you'll be able to buy these machines in select retail stores, including Intel's latest Intel Evo Edition laptops. And you can go just down the street in New York City to your local B&H retail store and get 1 today. So if you have a Christmas list that you need to fill, that's where you do it. Yes, exactly. And they're also going to be available online at select retailers, Amazon, Best Buy, Costco, Newegg and Walmart, all of your favorites, you can buy them starting today. And the momentum, it doesn't stop here. You're going to hear more about Intel-powered vPro commercial systems with AI coming to market in Q1 '24. Our supply chain is strong. We're firing on all of our cylinders and the excitement is growing across the industry for these new Intel-powered AI PCs. And don't just take my word for it. Look at what our customers are saying about this product. They told you the best is yet to come in the earlier video, and it arrived today. I'm so excited if you can't tell, yes. And we hit on some important themes today, and this is such a momentous occasion with hundreds of thousands of hours of work coming together across the amazing Intel global teams to bring you Intel Core Ultra. So let me do a quick recap. This is the largest architecture change in the last 40 years, the best AI experience for PCs, a world-class Arc GPU, a dramatic improvement in power. Intel Core Ultra is the best for ultrathin laptops. And just as Intel is transforming the client market with powerful AI capabilities, we're also transforming the data center market. Please welcome my friend and colleague, Sandra Rivera.

Thank you so much, Michelle. So moving from all the exciting news around the AI PC, I'm going to talk about everything we've been doing in the data center and server business. So at Intel, we've been on a journey to evolve our data center platforms to align with customers' needs today so they can plan for the future. Over multiple generations, our investments have focused on delivering hardware and software innovations tailored to provide leadership and the workloads that our customers care most about. And today, that workload is AI. Intel started building AI acceleration into our Xeon processors more than a decade ago. Today, Xeon has established itself as the industry standard for powering the AI workflow. In 4th Gen Xeon, we integrated a revolutionary technology called Advanced Matrix Extensions, which boosts AI performance by up to 10x. Most of the world's leading companies have adopted 4th Gen Xeon to accelerate their AI, including all of the top 10 hyperscalers. Of course, we're seeing adoption beyond CSPs as well. The South Korean search company, Naver, for example, adopted Xeon as a cost-effective alternative to GPUs. And the demand for AI solutions has never been greater, and Intel remains firmly committed to bringing AI Everywhere by delivering the hardware and software that makes it easier to deploy. Today, I'm pleased to launch our next-generation 5th Gen Xeon processors. This is the most power-efficient, highest-performant and security-enabled Xeon we've ever delivered, offering a 21% average performance gain over the previous generation. Privacy and control over data is paramount, and 5th Gen Xeon offers increased confidentiality and security with in-trust domain extensions, which will be generally available to all OEM and CSP solution providers. AI offered all within the same power envelope as the previous generation. 5th Gen Xeon is the best data center CPU for AI, period. We have built AI accelerators in every 1 of the processor's 64 cores, giving users up to 42% higher inference performance versus the prior gen. This means enterprises can easily and cost-effectively use the CPU to run the latest generative AI models like GPT-J, DALL-E and LLaMA 2. 5th Gen Xeon can fine-tune large language models like the 1.5 billion parameter BioGPT model in just minutes while meeting critical SLAs for the 70 billion parameter model, LLaMA 2 when scaling out to multiple nodes. And 5th Gen Xeon is deployed on the same platform as a previous generation and purpose-built to scale and bring AI everywhere. In the cloud, AI-powered natural language processing applications will operate up to 23% faster. In the network, 5G user plane functions will flow on average of 50% faster. And at the edge, objects can be classified up to 24% faster. These savings enabled businesses to operate smarter and at lower costs. For years, we've worked closely with the ecosystem to accelerate the adoption of AI in the enterprise. Our collaboration with IBM is a great example of this work. With over a decade of experience from its Watson solutions, IBM has evolved its AI to deliver its watsonx platform. watsonx enables businesses to customize and scale AI based on their unique data. I've invited Vikram Morali to talk about their use of Intel's AI solutions to help power watsonx. Let's take a look. [Presentation]

Thank you, Vikram. I'm excited to see how enterprises will use watsonx to accelerate their business outcomes. The features we've built into 5th Gen Xeon enable customers to lower operating costs and advance their sustainability goals. Customers upgrading legacy Xeon servers will experience up to a 77% TCO improvement with AI workloads. And we worked closely with our OEM partners to put these innovations into customers' hands. Servers based on 5th Gen Xeon will be broadly available starting in Q1 of 2024 from leading providers, including Cisco, Dell, HPE, IIT Systems, Lenovo and Super Micro. And as more enterprises move to cloud-based environments, our collaboration with the world's hyperscalers is a strategic advantage for many businesses who want to access Xeon's unique features in the cloud. For over a decade, we worked with Google Cloud to ensure our mutual customers have early access to the latest services offered by our data center solutions. Now let's hear from Mark Lohmeyer to talk about our work together. [Presentation]

Thank you, Mark and Team Google Cloud. We're looking forward to what you're coming with 5th Gen Xeon early next year. So across on-prem, hybrid and cloud environments, companies are experiencing firsthand the leadership TCO that Xeon delivers. One such company is Gallium Studios, a leading indie game studio. The team at Gallium were looking for ways to meet the high-throughput, low latency demands of real-time natural language processing applications. And now I'd like to welcome to the stage the CEO and Co-Founder of Gallium Studios, Lauren Elliott. Please join me. So welcome, Lauren. Thank you for being here with us today. So can you talk a bit about how Gallium Studios is using AI in your workflow and your applications?

Sure. Gallium Studios is an independent gaming company that I co-founded with Will Wright, who is the author of a lot of Sims and Sim Cities, amongst them and inspired to how memories are stored in your brain. We're building a new AI simulation game called Proxi and where players enter their memories as visualizing them as 3D globes, and these 3D snow globes are full of imagery and animation and everything that makes the memories. From those memories, we create the proxy, personality and intelligence. And we bring that to life so that the players can interact with them. We like to say you can learn from it and it can learn from you. This is actually a simulation running live of memories. It's our simulation. And those memories are all connected to one another as the brain does. And so it's running live and that's kind of cool.

So all these simulations must use a lot of AI compute power. So how do you talk about just the way that AI is helping with this process?

Yes. As you can imagine, the whole process is full of a bunch of AI and large language models. And we began building Proxi, we were using external APIs into these services. But they were slow and costly and they didn't scale for us as a gaming company. So we decided to bring everything internal on our own GPUs. That did improve the speed and latency but the cost of the GPU-based cloud instances was way too high for a gaming company.

So then why did you choose Numenta?

Good question. So we moved to Numenta platform for something they called intelligent computing. The platform is designed specifically to deploy and scale LLMs on GPUs and not CPUs, and it gets the best performance on Intel chips. We started working from Proxi -- at Proxi as a kind of a neuroscience gaming company. And Numenta's approach with their AI research-based orientation resonated strongly with us. So the match was perfect, and we're excited to work with them on their platform to bring Proxi to life.

So tell us what kind of results you got.

Well, that's the great part of it. Once we switch to Numenta and the Xeon processors, we're able to run inference about 6.5x faster than their previous -- than our previous GPU solutions. And that brought the cost down significantly so that we could bring it on mobile devices and also reduced the latency of creating these thousands of memories that we have to do in real-time for the players.

So 6.5x faster, that's pretty amazing results and pretty amazing savings, yes. Well, I can't wait to experience Proxi firsthand. Thank you so much for being with us today. Well, we know that when it comes to AI, there is no one-size-fits-all. AI is a complex workload and requires heterogeneous platforms to meet customer requirements. Today, Xeon is the industry standard CPU for powering AI across the entire workflow. But for training and deploying large-scale generative AI models, we have our Gaudi2 Accelerator. We've demonstrated Gaudi2 delivers leadership price performance compared to the most popular GPUs. Based on the most recent MLPerf training benchmarks, an estimated range of server pricing, Gaudi2 delivers between 40% to 50% better price performance than NVIDIA's H-100 for training the 175 billion parameter GPT-3 model. That's pretty good. For decades, Intel has been on the forefront of extreme scale and performance, and we're bringing that experience to AI. Using Gaudi2 and Xeon, we're building one of the world's highest-performing AI supercomputers. This system will leverage many of the same design and system principles behind the Aurora Supercomputer, one of the world's most powerful AI and HPC systems in the world. And the key to scaling AI and bringing the technology everywhere requires a platform approach built around a common software stack of foundational silicon and a pervasive network based on open standards. This allows for greater programmability, model portability and ecosystem adoption. We've optimized our AI platform at every level through silicon systems, through all layers of the software stack all the way up to the application layer. Our approach allows developers to use the tools and language they're already familiar with and are using, PyTorch, TensorFlow, DeepSpeed, Hugging Face and many other industry standard frameworks and libraries have Intel optimizations included as default. And as the lines between cloud and edge blur, we see the increased deployment of smaller, more nimble AI models that span cloud, edge and client environments, as you heard from Michelle. Hybrid AI is rapidly becoming the most effective approach to deploying AI Everywhere. Hybrid AI lets users deploy AI models wherever it makes the most sense based on latency, cost, or regulatory considerations. With Intel's software tools and foundational hardware, developers can build unified code that targets CPUs, GPUs and AI accelerators, and they can scale their AI models from the cloud to the network to the intelligent edge. We also work closely with leading software providers to validate and optimize their software on our platforms. This work helps to further accelerate the deployment of highly-optimized AI solutions. Intel and VMware recently announced a collaboration where we're delivering a jointly validated AI stack. And this solution allows customers to use their existing infrastructure and Intel's software suite to rapidly build, deploy and secure their AI models. Through our work with this broader ecosystem and AI community, we're delivering state-of-the-art solutions to train, fine-tune and deploy AI models on Intel silicon. Let's hear from a few of those community members now. [Presentation]

And that's just a small example of all the work we're doing with the software ecosystem. So we've covered a lot of ground today but that's because we have so much to celebrate with the launch of 5th Gen Xeon, so let me summarize. 2023 was an incredible year. We kicked it off with the launch of 4th Gen Xeon in January and now we cap-zone it with 5th Gen. We're proud of what 5th Gen Xeon delivers. It is simply the best CPU for AI, period. 5th Gen also arrives with significant leaps in performance and efficiency all within the same platform as the previous generation. 5th Gen offers greater security with enhanced privacy and control of your data with a broad available -- broad availability of Intel TDX. And beyond the hardware, Intel is committed to continue delivering high-performance ready-to-use open software ecosystems and environments. Intel is truly bringing AI Everywhere. Working together with our partner ecosystem and software providers, we're scaling AI in the data center, network and across a broad range of vertical edge markets. Now here to share more about our partners and how customers can get their hands on these solutions is Christoph Schell. Welcome, Christoph.

Thank you so much. All right, so I'm going to bring this home. And you heard from Sandra and from MJ about the great products and the systems that we're building. I'm here to tell you how we are thinking about this from a go-to-market point of view. For the PC, for the edge, for the networking, for the cloud and for the data center, it takes a village to bring AI Everywhere. And I'm going to use one of these to double-click and that's the edge. And the reason why I'm choosing the edge is because it is the fastest-growing segment for compute. And if you look at my funnel, this is where a lot of action happens. This is where a lot of customers are engaging with us. And the reason why they are engaging with us is because they can drive productivity and really competitive differentiation at the edge. It's very important to think about this in vertical industries. So I'll give you a couple of examples. Health care. Think about what ultrasound can deliver versus what the human eye can see. Think about an energy management system, a smart grid, how to effectively transport energy from point A to point B with less redundancy. I'm from Stuttgart, Germany, you can hear my accent. For me, life is all about automotive. Think about EV-powered cars, self-driving cars and how these cars become edge devices, how these cars can be connected. So for my team and I, super important to have vertical expertise. The edge represents $445 billion of global market opportunity. This is huge. And within the edge, AI is the single fastest-growing workload. Intel has been investing in the edge since 2018. You saw one of the products, OpenVINO. That was the first product that we really took as a platform and we have been investing. And what is cool about this is that we have so many developers, system integrators, ISVs that are innovating together with us. And it takes that village of an ecosystem to make that happen. Because of this investment, we have 90,000 edge deployments to date, 90,000. The wealth of experience that we have from these projects informs how we are deploying AI at the edge now. And if you are a developer, the one scarcity you have is talent. So you have to think about where do I spend my time? And Intel is this one-stop shop for a developer. You can innovate on the same software stack, as Pat said, whether that's Intel Core Ultra on the PC or the 5th Gen Intel Xeon for networking and edge, it's a one-stop shop for everything that you can build on. Today's innovation is an absolute breakthrough. And what I want you to understand is this ecosystem is important but it's also really second to none on how we engage with customers. And I have 1 video of 1 customer that we've been working closely with for the past 5 years. It's a company that brings video conferencing to over 300 million users every day. The company is Zoom and here with me today on video is Zoom's Chief Technology Officer, Xuedong Huang. Let's hear from him. [Presentation]

Thank you. So Zoom is a really good example to illustrate how you can engage with Intel across the entire compute spectrum. And we have been doing this for 5 years. AI has been at the center of our collaboration and we will continue to work with Zoom. Now I come back to this ecosystem because it's such a huge advantage that Intel has, the breadth of that ecosystem, the global reach of that ecosystem are second to none. It's very robust. And it's based on very open and transparent standards. And that's what the ecosystem partners like. This ecosystem was also very foundational to how we are engaging with another customer, a company called Samsung Medison. They are a pioneer in health care innovation. They have ultrasound imaging applications that use AI for really driving effectiveness for patient care. Previously, when we worked with them, we engaged on an Intel Core CPU and a competitor's GPU, so 2 different products, 2 different companies. When we started talking with them about Intel Core Ultra, they first didn't really want to engage because it had a built-in GPU. And then they saw the performance. They saw the performance of an integrated product. Think about a new generation CPU and a discrete GPU in 1 combo. What they saw blew them away. They were able to really bring AI features to the ultrasound devices on 1 CPU without the need for CPU. Their cost reduced significantly. And just think about what this means for our customers. It's an absolute game changer in how are they thinking about architecture, how they think about compute power going forward. It has a huge impact on how we think about the addressable market that we will have in the future. So AI Everywhere from client to the edge, from network into the cloud. Today is a huge day to make a major step towards this vision. Why do Intel customers like us? Four reasons. And I was an Intel customer for 25 years before I joined Intel so I actually know what I'm talking about. They like our open approach. They like the fact that we embrace open standards, that data is accessible. It's not in a black box. They know what happens to their data. They can innovate with their code, with their innovation on top of our stack. They really like the depth of our engineering. They like the fact that they can talk to our hardware engineers and to our software engineers. They like this ecosystem. It's a go-to-market for them, ready globally, and they like our execution. They like that we are predictable. So '23 has been a huge year, and I'm so much looking forward to what is going to happen in 2024, and I really invite all of you to go out there, go shopping. Pat, you're not supposed to be on stage right now. This is my...

I'm the boss.

You're the boss. Well, then come back on. What have you got?

Well, I'd like to just have 1 other little thing to show off here, and they just brought it out of the lab.

I saw that, yes.

The first ever Gaudi3 in public. So here we go the next generation accelerator. So Gaudi3 out of fab, in the lab being powered on, looking healthy and not just Core Ultra, not just Gen 5 Xeon but the next generation of accelerators, we are executing like crazy. This is great, Chris.

So team, you're obviously all watching, our quota has just gone up for next year, okay? But I'm very happy for our engineers to deliver this. Thank you so much.

Thank you, Christoph.

Let me try and bring this home now, okay? Super excited about 2023. You saw that our PCs and our 5th Gen, they are not just on PowerPoints. They are real, okay? So please go out there today, do the Christmas shopping, get your holiday gifts, okay? And why don't you close us out?

Hey, and AI Everywhere, right, and Core Ultra and Gen 5 Xeon and the next generation of accelerator. Working with our partners, as you saw today, the ISVs, the ecosystem, the excitement that this is bringing, truly making a part of every one of our lives, truly changing humanity. Thank you so much for joining us today.