For additional key highlights of our results of operations, see "A Quarter in Review."Client Computing Group The PC is more essential than ever, enriching lives by helping people focus, create, and connect with friends, family, and coworkers around the world. Working with our partners across the industry, we intend to continue to advance PC experiences with innovations like our Intel® Evo™ platform which delivers exceptional mobile computing experiences for PC customers. As the largest business unit at Intel, CCG is investing more heavily in the PC, ramping its capabilities even more aggressively, and designing the PC experience even more deliberately, including delivering a predictable cadence of leadership products. As a result, we are able to fuel innovation across Intel, providing an important source of IP, scale, and cash flow.
CCG Revenue $B CCG Operating Income $B
[[Image Removed: intc-20210626_g7.jpg]][[Image Removed: intc-20210626_g8.jpg]]
? Platform ? Adjacent Revenue Summary Revenue in Q2 2021 was up 6% compared to Q2 2020, and YTD 2021 revenue was up 7% compared to YTD 2020. Revenue increased due to continued strong demand in notebook and strength in desktop driven by consumer and commercial recovery from COVID-19 lows, with lower notebook and desktop ASPs due to strength in the consumer and education market segments. Adjacent revenue was down compared to Q2 2020 and compared to YTD 2020 due to the continued ramp down from the exit of our 5G smartphone modem and Home Gateway Platform businesses, partially offset by strength in our wireless business. We expect strong demand for PCs will continue to be tempered by ongoing industry-wide component and substrate constraints. Q2 2021 vs. Q2 2020 YTD 2021 vs. YTD 2020 (In Millions) % $ Impact % $ Impact Desktop platform volume up 15%$ 391 up 5%$ 337 Desktop platform ASP down (5)% (124) down (5)% (266) Notebook platform volume up 40% 2,303 up 47% 5,490 Notebook platform ASP down (17)% (1,404) down (20)% (3,489) Adjacent products and (553) (629) other Total change in revenue$ 613 $ 1,443
[[Image Removed: intc-20210626_g2.jpg]] MD&A 24
--------------------------------------------------------------------------------
Table of Contents Operating Income Summary Operating income in Q2 2021 increased 32% from Q2 2020, with an operating margin of 37%. Operating income YTD 2021 increased 12%, with an operating margin of 38%. (In Millions)$ 3,760 Q2 2021 CCG Operating Income 540 Lower platform unit cost due to cost improvements in 10nm 530 Lower period charges driven by absence of reserves
taken on non-qualified
platform products in Q2 2020, partially offset by
sell-through of other
reserves in 2020 185 Higher gross margin from platform revenue (210) Higher operating expenses (65) Higher period charges primarily associated with the ramp down of 14nm (55) Lower adjacent product margin driven by exit of our
5G smartphone modem and
Home Gateway Platform businesses (7) Other$ 2,842 Q2 2020 CCG Operating Income$ 7,880 YTD 2021 CCG Operating Income 615 Lower period charges driven by absence of reserves,
including reserves taken
on non-qualified platform products in 2020,
partially offset by sell-through
of other reserves in 2020 540 Lower platform unit cost due to cost improvements in 10nm 75 Higher adjacent product margin 70 Higher gross margin from platform revenue (320) Higher operating expenses (165) Higher period charges primarily associated with the ramp down of 14nm (2) Other$ 7,067 YTD 2020 CCG Operating Income
[[Image Removed: intc-20210626_g2.jpg]] MD&A 25
--------------------------------------------------------------------------------
Table of
Contents
Data Center Group DCG develops workload-optimized platforms for compute, storage, and network functions. With unmatched scale, portfolio breadth, and ecosystem support, we are uniquely positioned to enable the world to unleash the potential of data, unlocking value for people, business, and society on a global scale. Market segments include cloud service providers, enterprise and government, and communications service providers. We serve the global appetite for cloud computing and enable transformation of the network and edge. In 2021, our DCG operating segment includes the results of our Intel Optane memory business.
DCG Revenue $B DCG Operating Income $B
[[Image Removed: intc-20210626_g9.jpg]][[Image Removed: intc-20210626_g10.jpg]]
? Platform ? Adjacent Revenue Summary Revenue in Q2 2021 was down 9% on lower ASPs in a competitive environment, and on lower platform volume compared to a strong, COVID-driven Q2 2020. Revenue was also impacted by lower adjacent revenue, primarily due to accelerated 5G networking related purchases in Q2 2020, partially offset by growth in Optane and Ethernet in Q2 2021. Year over year, the cloud service providers market segment was down 20%, communications service providers was down 6%, and the enterprise and government market segment was up 6%. Revenue YTD 2021 was down 15% compared to YTD 2020 on lower ASPs in a competitive environment, and on lower platform volume compared to a strong, COVID-driven YTD 2020. Q2 2021 vs. Q2 2020 YTD 2021 vs. YTD 2020 (In Millions) % $ Impact % $ Impact Platform volume down (1)%$ (72) down (7)%$ (893) Platform ASP down (7)% (406) down (10)% (1,201) Adjacent products down (20)% (184) up -% 3 Total change in revenue$ (662) $ (2,091)
[[Image Removed: intc-20210626_g2.jpg]] MD&A 26
--------------------------------------------------------------------------------
Table of Contents Operating Income Summary Operating income in Q2 2021 decreased 37% from Q2 2020, with an operating margin of 30%. Operating income YTD 2021 decreased 51%, with an operating margin of 27%. (In Millions)$ 1,941 Q2 2021 DCG Operating Income (465) Lower gross margin from platform revenue (375) Higher operating expenses (165) Higher platform unit cost primarily from increased mix of 10nm products (115) Higher period charges primarily associated with the ramp up of 7nm (75) Higher period charges primarily associated with the ramp down of 14nm 40 Higher adjacent gross margin (3) Other$ 3,099 Q2 2020 DCG Operating Income$ 3,214 YTD 2021 DCG Operating Income (1,975) Lower gross margin from platform revenue (615) Higher operating expenses (360) Higher platform unit cost primarily from increased mix of 10nm products (240) Higher period charges primarily associated with ramp up of 7nm (180) Higher period charges primarily associated with the ramp down of 14nm (7) Other$ 6,591 YTD 2020 DCG Operating Income
[[Image Removed: intc-20210626_g2.jpg]] MD&A 27
--------------------------------------------------------------------------------
Table of
Contents
Internet of Things More industries are harnessing the power of data to create business value, innovate, and grow. This requires that intelligence move closer to the edge, allowing data to be acted on where it is created. Working with our partners, we are using our architecture, accelerators, and software to develop and scale a growing Internet of Things portfolio and ecosystem. Our Internet of Things portfolio is comprised of our IOTG and Mobileye businesses. IOTG develops high-performance compute platforms that solve for technology and business use cases that can scale across vertical industries and embedded markets. Our customers include retailers, manufacturers, health and life sciences, governments, and education providers. We reduce complexity in the ecosystem with a common architecture and software to help enable our customers to create and process data at the edge to analyze it faster and to act on it sooner. Mobileye is the global leader in driving assistance and self-driving solutions. Our product portfolio employs a broad set of technologies, covering computer vision and machine learning-based sensing, data analysis, localization, mapping, and driving policy technology for ADAS and AVs. Mobileye's ADAS products form the building blocks for higher levels of autonomy. Our customers and strategic partners include major global OEMs, Tier 1 automotive system integrators, fleet managers, and transportation operators.
Internet of Things Revenue $B Internet of Things Operating Income $B
[[Image Removed: intc-20210626_g11.jpg]][[Image Removed: intc-20210626_g12.jpg]]
? IOTG ? Mobileye ? IOTG ? Mobileye
Revenue and Operating Income Summary
Q2 2021 vs. Q2 2020
IOTG revenue was$984 million , up$314 million , driven by higher demand for IOTG platform products amid recovery from the economic impacts of COVID-19. Operating income was$287 million , up$217 million year over year. Mobileye revenue was$327 million , up$181 million driven by improvement in global vehicle production year over year. Operating income was$109 million , up$113 million year over year. YTD 2021 vs. YTD 2020 IOTG revenue was$1.9 billion , up$345 million , driven by higher demand for IOTG platform products amid recovery from the economic impacts of COVID-19, partially offset by lower ASPs. Operating income was$499 million , up$186 million . Mobileye revenue was$704 million , up$304 million , driven by improvement in global vehicle production compared to the same period in 2020. Operating income was$256 million , up$172 million . [[Image Removed: intc-20210626_g2.jpg]] MD&A 28 -------------------------------------------------------------------------------- Table of
Contents
Non-Volatile Memory Solutions Group OnOctober 19, 2020 , we signed an agreement with SK hynix Inc. (SK hynix) to divest our NAND memory business. The transaction will occur over two closings as described in detail in "Note 8: Acquisitions and Divestitures" in Notes to Consolidated Condensed Financial Statements. Our NAND business continues to develop storage solutions using our innovative Intel® 3D NAND Technology. Our data center products are optimized to deliver world-class performance and drive lower total cost of ownership, and our client SSDs provide a fast and productive computing environment for a variety of segments. Our Intel Optane memory business is expressly excluded from the sale to SK hynix, and beginning in 2021, the results of our Intel Optane memory business are included in our DCG operating segment, and our NSG operating segment is composed entirely of our NAND memory business.
NSG Revenue $B NSG Operating Income $B
[[Image Removed: intc-20210626_g13.jpg]][[Image Removed: intc-20210626_g14.jpg]] Revenue and Operating Income Summary
Q2 2021 vs. Q2 2020
Revenue was$1.1 billion , down$561 million from Q2 2020, driven by$323 million lower ASPs due to market softness and pricing pressure,$123 million lower volume primarily due to raw material constraints, and due to the transfer of the Intel Optane memory business to DCG ($116 million in Q2 2020). Operating income was$402 million , up$80 million from Q2 2020 due to$401 million improvements in unit cost, primarily driven by the absence of depreciation expense from NAND property, plant and equipment that is held for sale, partially offset by$437 million lower revenue on ASP decline. Operating income also benefited from the transfer of the Intel Optane memory business from Q2 2021 NSG results (a loss of$101 million in Q2 2020). YTD 2021 vs. YTD 2020 Revenue was$2.2 billion , down$792 million , driven by$657 million lower ASPs due to market softness and pricing pressure, and due to the transfer of the Intel Optane memory business to DCG ($212 million YTD 2020), partially offset by$77 million higher volume on strong demand. Operating income was$573 million , up$317 million from YTD 2020, due to$687 million improvements in unit cost, primarily driven by the absence of depreciation expense from NAND property, plant and equipment that is held for sale, and$286 million of lower period charges, partially offset by$748 million lower revenue on ASP decline. Operating income also benefited from the transfer of the Intel Optane memory business from YTD 2021 NSG results (a loss of$357 million YTD 2020). [[Image Removed: intc-20210626_g2.jpg]] MD&A 29 -------------------------------------------------------------------------------- Table of
Contents
Programmable Solutions Group PSG offers programmable semiconductors, primarily FPGAs, structured ASICs, and related products, for a broad range of applications across our embedded, communications, and cloud and enterprise market segments. Our product portfolio delivers FPGA acceleration in tandem with Intel microprocessors, which enables us to combine the benefits of our broad portfolio of technologies to allow more flexibility for systems to operate with increased efficiency and higher performance.
PSG Revenue $B PSG Operating Income $B
[[Image Removed: intc-20210626_g15.jpg]][[Image Removed: intc-20210626_g16.jpg]] Revenue and Operating Income Summary
Q2 2021 vs. Q2 2020
Revenue was$486 million , down$15 million due to customer inventory digestion, and PSG was also impacted by supply constraints. Operating income was$82 million , up$2 million . YTD 2021 vs. YTD 2020 Revenue was$972 million , down$48 million due to customer inventory digestion, and PSG was also impacted by supply constraints. Operating income was$170 million , down$7 million . [[Image Removed: intc-20210626_g2.jpg]] MD&A 30 -------------------------------------------------------------------------------- Table of
Contents
© Edgar Online, source