INTEL CORPORATION 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 up its capabilities even more aggressively, and designing the PC experience even more deliberately, 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
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? Platform ? Adjacent
Revenue Summary
Revenue in Q3 2021 was down 2% due to lower notebook volume and adjacent
revenue, partially offset by higher platform ASPs and increased desktop volume.
Notebook volume declined in the consumer and education market segments due to
industry-wide component shortages. Platform ASPs were higher in both notebook
and desktop from a higher mix of large core products. Desktop demand
strengthened due to consumer and commercial recovery from COVID-19 lows.
Adjacent revenue was down compared to Q3 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 wireless and connectivity.
Revenue YTD 2021 was up 4% compared to YTD 2020 due to continued strong demand
in notebook and continued strength in desktop driven by consumer and commercial
recovery from COVID-19 lows, partially offset by lower notebook and desktop ASPs
due to strength in the consumer and education market segments. Adjacent revenue
was down 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 wireless and connectivity.
Q3 2021 vs. Q3 2020 YTD 2021 vs. YTD 2020
(In Millions) % $ Impact % $ Impact
Desktop platform volume up 16% $ 394 up 8% $ 648
Desktop platform ASP up 4% 106 down (1)% (77)
Notebook platform volume down (14)% (847)
up 24% 4,364
Notebook platform ASP up 10% 525 down (12)% (2,685)
Adjacent products and (361) (990)
other
Total change in revenue $ (183) $ 1,260 [[Image Removed: intc-20210925_g2.jpg]] MD&A 25
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Operating Income Summary
Operating income in Q3 2021 decreased 7% from Q3 2020, with an operating margin
of 34%. Operating income YTD 2021 increased 5%, with an operating margin of 37%.
(In Millions)
$ 3,317 Q3 2021 CCG Operating Income
(440) Higher period charges driven by sell-through of reserved non-qualified
platform products net of other reserves in Q3 2020, and reserves taken on
non-qualified platform products in Q3 2021(215) Higher operating expenses driven by increased investment in support of
leadership products
(205) Higher period charges primarily associated with the ramp up of Intel 4
(105) Lower adjacent product margin primarily driven by the exit of our 5G
smartphone modem and Home Gateway Platform businesses
(85) Higher period charges primarily associated with the ramp down of 14nm
510 Higher gross margin from platform revenue
185 Lower platform unit cost primarily due to costimprovements in 10nm SuperFin
125 Lower period charges primarily driven by a decrease in engineering samples
(7) Other
$ 3,554 Q3 2020 CCG Operating Income
$ 11,197 YTD 2021 CCG Operating Income
855 Lower platform unit cost primarily due to costimprovements in 10nm SuperFin
450 Higher gross margin from platform revenue
255 Lower period charges driven by lower reserves taken on non-qualified
platform products
125 Lower period charges primarily driven by a decrease in engineering samples(540) Higher operating expenses driven by increased investment in support of
leadership products
(280) Higher period charges primarily associated with the ramp up of Intel 4
(250) Higher period charges primarily associated with the ramp down of 14nm
(39) Other
$ 10,621 YTD 2020 CCG Operating Income
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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
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? Platform ? Adjacent Revenue Summary Revenue in Q3 2021 was up 10% on higher platform volume and higher ASPs, primarily due to recovery in the enterprise and government market segment, compared to COVID-driven lows, and stronger core mix, partially offset by lower revenue in the cloud service providers market segment compared to a strong, COVID-driven Q3 2020. Adjacent revenue was down, primarily due to accelerated 5G networking related purchases in Q3 2020, partially offset by the inclusion of the Intel Optane memory business, which grew year over year. Year over year, the enterprise and government market segment was up 70%, the communications service providers market segment was up 18% and the cloud service providers market segment was down 20%. Revenue YTD 2021 was down 7% compared to YTD 2020 on lower ASPs in a competitive environment, product mix, and on lower platform volume compared to a strong, COVID-driven YTD 2020. During Q3 2021, demand for DCG products was adversely impacted by industry component supply constraints, as well as demand softness inChina , including among cloud service provider customers, as customers adapt to regulatory changes. We expect these trends to continue in Q4 2021. Q3 2021 vs. Q3 2020 YTD 2021 vs. YTD 2020 (In Millions) % $ Impact % $ Impact Platform volume up 8%$ 422 down (2)%$ (377) Platform ASP up 3% 174 down (6)% (1,121) Adjacent products down (1)% (5) down -% (2) Total change in revenue$ 591 $ (1,500)
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Operating Income Summary
Operating income in Q3 2021 increased 8% from Q3 2020, with an operating margin
of 32%. Operating income YTD 2021 decreased 38%, with an operating margin of
28%.
(In Millions)
$ 2,057 Q3 2021 DCG Operating Income
530 Higher gross margin from platform revenue
285 Higher adjacent gross margin
100 Lower period charges driven by absence of reserves,including reserves taken
on non-qualified platform products in 2020, and by sell-through of other
reserves in 2021
(285) Higher operating expenses driven by increased investment in leadership
products
(225) Higher period charges primarily associated with the ramp up of Intel 4
(170) Higher platform unit cost primarily from increased mix of 10nm SuperFin
products
(75) Higher period charges primarily associated with the ramp down of 14nm
(6) Other
$ 1,903 Q3 2020 DCG Operating Income
$ 5,271 YTD 2021 DCG Operating Income
(1,445) Lower gross margin from platform revenue(900) Higher operating expenses driven by increased investment in leadership
products
(530) Higher platform unit cost primarily from increased mix of 10nm SuperFin
products
(390) Higher period charges primarily associated with the ramp up of Intel 4
(260) Higher period charges primarily associated with the ramp down of 14nm
285 Higher adjacent product margin
25 Lower period charges driven by an absence ofreserves, including reserves
taken on non-qualified platform products in 2020, partially offset by other
reserves recorded in 2021
(8) Other
$ 8,494 YTD 2020 DCG Operating Income
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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
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? IOTG ? Mobileye ? IOTG ? Mobileye
Revenue and Operating Income Summary
Q3 2021 vs. Q3 2020
IOTG revenue was$1.0 billion , up$365 million , driven by higher demand for IOTG platform products amid recovery from the economic impacts of COVID-19. Operating income was$276 million , up$215 million year over year. Mobileye revenue was$326 million , up$92 million driven by improvement in global vehicle production year over year. Operating income was$105 million , up$58 million year over year. YTD 2021 vs. YTD 2020 IOTG revenue was$2.9 billion , up$710 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$775 million , up$401 million . Mobileye revenue was$1.0 billion , up$396 million , driven by improvement in global vehicle production compared to the same period in 2020. Operating income was$361 million , up$230 million . [[Image Removed: intc-20210925_g2.jpg]] MD&A 29 -------------------------------------------------------------------------------- Table of
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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-20210925_g13.jpg]][[Image Removed: intc-20210925_g14.jpg]] Revenue and Operating Income Summary
Q3 2021 vs. Q3 2020
Revenue was$1.1 billion , down$48 million from Q3 2020, primarily due to supply chain constraints,$151 million lower ASPs due to mix shift, and the transfer of the Intel Optane memory business to DCG ($86 million in Q3 2020), partially offset by$188 million higher volume. Operating income was$442 million , up$413 million from Q3 2020 due to$411 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$186 million lower revenue on ASP decline. Operating income also benefited from the transfer of the Intel Optane memory business from Q3 2021 NSG results (a loss of$116 million in Q3 2020). YTD 2021 vs. YTD 2020 Revenue was$3.3 billion , down$840 million , driven by$814 million lower ASPs due to market softness and pricing pressure, and due to the transfer of the Intel Optane memory business to DCG ($298 million YTD 2020), partially offset by$271 million higher volume on strong demand. Operating income was$1.0 billion , up$730 million from YTD 2020, due to$1.1 billion of improvements in unit cost, primarily driven by the absence of depreciation expense from NAND property, plant and equipment that is held for sale,$376 million of lower period charges, and$162 million of lower operating expenses partially offset by$940 million of 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$473 million YTD 2020). [[Image Removed: intc-20210925_g2.jpg]] MD&A 30 -------------------------------------------------------------------------------- Table of
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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-20210925_g15.jpg]][[Image Removed: intc-20210925_g16.jpg]] Revenue and Operating Income Summary
Q3 2021 vs. Q3 2020
Revenue was$478 million , up$67 million driven by recovery in all market segments from COVID-19 lows, led by embedded. Operating income was$76 million , up$36 million . YTD 2021 vs. YTD 2020
Revenue was
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