Intel Corporation (INTC) Narrative

Sources: Annual Report on Form 10-K for fiscal year 2025 (fiscal year ended December 27, 2025), SEC accession 0000050863-26-000011; Quarterly Report on Form 10-Q for the quarter ended June 27, 2026, SEC accession 0000050863-26-000157; Current Report on Form 8-K dated July 23, 2026 (second-quarter 2026 earnings release), SEC accession 0000050863-26-000155.

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Business

From the FY2025 Form 10-K, accession 0000050863-26-000011.

What Intel is. Intel is a global designer and manufacturer of semiconductor products, principally CPUs and related silicon incorporated into computing and related end products. Customers are primarily OEMs, ODMs, cloud service providers (CSPs) and other equipment manufacturers, sold through a direct global sales organization plus distributors, resellers, retailers and OEM partners.

Intel is an integrated device manufacturer (IDM): it designs the chips and develops the leading-edge process nodes and advanced packaging technologies used to build them, manufacturing the majority of its products in its own fabs and assembly/test sites. Intel describes itself as the only company conducting both leading-edge logic R&D and high-volume leading-edge logic manufacturing in the United States, a position it frames as strategically important from a national-economic and national-security perspective. Alongside manufacturing its own products, Intel sells foundry services to external customers and aims to build that into a leading external foundry.

Headcount was 85,100 as of December 27, 2025.

Reportable segments. Three reportable segments plus a non-reportable "all other" category:

• Client Computing Group (CCG), platforms and processors for PCs and edge devices; direct customers are distributors and OEMs. Renamed Client Computing and Physical AI Group (CCPG) beginning in 2026. Primary competitor is AMD (also x86), plus ARM-based competition from Apple (M series), Qualcomm (Snapdragon) and MediaTek (Kompanio).
• Data Center and AI (DCAI), x86-based workload-optimized solutions for data centers: CPUs (Xeon), AI accelerators, NICs, IPUs and custom ASICs. Direct customers are hyperscalers/CSPs and OEMs. Competitors include AMD, NVIDIA (GPU systems), hyperscalers' own custom silicon (Amazon, Google, Meta, Microsoft), ARM/RISC-V entrants, and Broadcom in custom ASICs.
• Intel Foundry, technology development, manufacturing, and foundry services: wafer fabrication, advanced packaging, chiplet integration and design enablement. Nearly all of Intel Foundry's business supports internal manufacturing for Intel Products; external revenue is small. Competitors are TSMC (the leader at the most advanced nodes), Samsung, and GlobalFoundries/UMC/SMIC at mature nodes.
• "All other", Mobileye (publicly traded; driver-assistance and self-driving; Intel held equity interests representing an ~80% ownership interest at December 27, 2025), IMS (multi-beam mask writing tools; ~68% owned), start-up businesses, and the historical results of divested businesses including Altera.

Intel Products (CCG + DCAI) designs and sells; Intel Foundry manufactures for it and, increasingly, for others. Intersegment activity is therefore large: Intel Products and Intel Foundry are presented as if they were, respectively, a fabless semiconductor company and a foundry.

Strategy, four stated priorities.

1. Transforming the culture into an engineering-focused, customer-centric organization with disciplined execution and financial management (organizational simplification, fewer management layers, capital discipline, monetization of non-core assets).
2. Revitalizing the x86 ecosystem, advancing x86 client and data center products for inference, agentic and physical AI workloads, including a strategic partnership with NVIDIA to co-develop custom client and data center products combining Intel x86 CPUs with NVIDIA accelerated computing.
3. Growing the external foundry business, leveraging U.S.-based leading-edge process and packaging to become a trusted third-party foundry, both to earn returns on and to help fund the capital-intensive node roadmap.
4. Expanding market opportunities, purpose-built ASICs and GPUs and design services for AI-driven compute workloads.

Process node roadmap (the single most important operational variable in the story):

• Intel 7, high-volume since 2017; used for 13th/14th Gen Core and 3rd–5th Gen Xeon Scalable. Majority of internal processor production and product revenue in 2025; expected to be almost half in 2026.
• Intel 4, first EUV node, high volume from 2023; Core Ultra Series 1. Modest and declining share.
• Intel 3, derivative of Intel 4, high volume from 2024; Xeon 6 compute dies. Modest but increasing share.
• Intel 18A, most advanced node; high volume from late 2025. Introduced RibbonFET (gate-all-around) and PowerVia (backside power delivery). Used for Intel Core Ultra Series 3; expected to be the key process for multiple generations of future client and server CPUs, and Intel's first significant foundry node for government and commercial customers. Derivative node Intel 18A-P for future Intel products and external customers.
• Intel 14A, next generation, in active development, designed from inception as an external-customer offering, potentially the industry's first high-volume use of high-NA EUV. Intel has stated that if it cannot secure a significant external foundry customer for Intel 14A it may pause or discontinue pursuit of next-generation leading-edge nodes.

Packaging. EMIB (2.5D, high volume since 2017) with EMIB-T introduced in 2025 and scaling from 2026; Foveros 3D die stacking (Foveros-B and Foveros-R targeted for high volume in 2027, Foveros-S for high-speed I/O disaggregation); Foveros Direct hybrid bonding planned on Intel 18A-PT in 2028.

Disaggregated design. Most newer and higher-end products (all current Core Ultra products and server CPUs) integrate multiple tiles into a single package, each tile made on whichever process is most appropriate, including, for some tiles and some whole products, TSMC and other external foundries. This raises yield and design flexibility but adds packaging complexity, cost, and dependence on advanced substrates (currently supply-constrained) and on a key competitor as a supplier.

Manufacturing footprint (2025). Key production fabs: Oregon (R&D plus Intel 18A ramp), Arizona (Intel 7 and Intel 18A ramp), Ireland (Intel 4 and Intel 3), Israel (Intel 7). Key assembly/test: China, New Mexico (key advanced packaging site), Vietnam and Malaysia (new advanced packaging facility under construction). In 2025 Intel initiated consolidation of Costa Rica assembly/test into Vietnam and Malaysia (targeted completion end-2026), slowed construction of the new Ohio fab, and discontinued planned expansions in Germany (fab) and Poland (assembly and test). A 2024 collaboration with UMC on a 12nm mature-node platform is expected to begin production in 2027.

Supply chain. Thousands of suppliers, with sole-source dependencies including ASML for EUV lithography tools and China as the primary global source of certain rare earth minerals.

Customer and geographic concentration (FY2025). The three largest customers were 43% of net revenue (Customer A 19%, Customer B 12%, Customer C 12%), versus 45% in 2024 and 40% in 2023. Revenue by billing location: United States $15.8B, China $12.7B, Singapore $9.5B, Taiwan $7.7B, other regions $7.2B. Sales outside the U.S. were 70% of 2025 revenue; billings to China were 24%.

Seasonality. Revenue is historically higher in the second half, peaking in Q4, a pattern disrupted in 2025 by the Altera divestiture.

R&D. $13.8 billion in 2025, $16.5 billion in 2024, $16.0 billion in 2023.

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Risk factors

Condensed from the FY2025 Form 10-K, accession 0000050863-26-000011.

Competition and lost share. The industry is highly competitive and the environment has intensified. Intel has lost market share in recent years in both client and data center x86 and in compute products generally. Its data center business has been hurt by the shift of customer spend toward GPUs optimized for AI workloads, a large, fast-growing market in which Intel says it has been "unsuccessful to date in becoming a meaningful participant." Most competitors are fabless and use TSMC or Samsung, benefiting from those foundries' process improvements while carrying far lower capital intensity than Intel's IDM model.

The Intel 14A decision, the central strategic risk. Intel has explicitly disclosed that if it cannot secure a significant external customer for Intel 14A, it may pause or discontinue development of Intel 14A and successor leading-edge nodes. It has been unsuccessful to date in securing any significant external foundry customer for any node, and calls the prospects for 14A uncertain. It has already reduced overall investment and further slowed construction of the new Ohio fabs. The disclosed consequences of a pause/discontinuation:

• Dependence on third-party foundries, the products business would become dependent on TSMC over time, with no long-term contract in place, few alternatives (only TSMC and Samsung at or near leading edge), and competitors holding longer-standing relationships.
• Asset losses, Intel had over $100 billion of net property, plant and equipment at December 27, 2025, the substantial majority relating to foundry; significant material impairments would be expected, likely including discontinuing the Ohio fabs, plus wind-down costs and headcount reductions.
• Loss of government incentive eligibility, potentially including repayment of amounts already received.
• Penalty payments under SCIP agreements, an accelerated shift to external foundries could leave Intel unable to satisfy construction and/or wafer purchase commitments to Brookfield (Arizona) and Apollo (Ireland), triggering substantial additional payments.
• Loss of technical talent, and limited external foundry potential if customers conclude Intel is no longer committed to next-generation nodes.
• Intel states any such decision "may be effectively irreversible."

Foundry inexperience. Intel has limited experience in the capital-intensive third-party foundry business, must invest ahead of customer commitments, and must overcome the concern that many of the largest potential foundry customers are fabless firms whose products compete with Intel's own.

Capital intensity and fixed costs. Leading-edge R&D and fabs require capital expenditures above historical levels (EUV and high-NA EUV). High fixed costs are difficult to reduce quickly, so demand shortfalls disproportionately hit gross margin and operating income and can force write-downs, excess-capacity charges, shortened useful lives and accelerated depreciation. Intel recorded $950 million (2025) and $3.3 billion (2024) of impairment/accelerated depreciation on manufacturing assets determined to have no remaining or reduced operational use. Its most recent accelerator effort failed: Gaudi AI accelerator inventory charges of $375 million in 2025 and $922 million in 2024.

U.S. government equity ownership. The Q3 2025 transactions with the U.S. government (equity issuances plus amendment of the commercial CHIPS Act agreement) carry distinct disclosed risks: branches of the U.S. government could later determine the transactions were unauthorized, void or voidable; only the Department of Commerce is contractually bound; the transactions eliminated Intel's contractual rights to future grant funding under the commercial CHIPS Act and Secure Enclave agreements (so Intel no longer benefits from the reduced operating costs grants would have provided) and may make other governments unwilling to grant, or inclined to convert grants to equity; the share issuance at a discount to market is dilutive, with further dilution possible if the warrant becomes exercisable; the U.S. government is now one of Intel's largest stockholders, reducing other holders' voting influence and potentially limiting future strategic transactions; and, with 70% of 2025 revenue from outside the U.S., having the U.S. government as a significant stockholder could expose Intel to foreign subsidy laws or other non-U.S. regulation.

Alternative financing and government grants. The SCIP arrangements (2022 Brookfield/Arizona, 2024 Apollo/Ireland) include commitments Intel may not satisfy and penalty terms, Intel recognized a $755 million charge in Q4 2024 for expected Ireland SCIP construction-delay penalties. Both arrangements were expected to significantly and increasingly reduce net income and EPS attributable to Intel as wafer volumes ramp in Arizona and at Fab 34.

Demand and margin variability. Demand depends on macro conditions, consumer confidence, workload shifts (notably data center spend moving to GPUs), geopolitics and trade policy, competitive pricing, customer inventories and order cancellations, and industry disruptions, currently including shortages of memory chips, substrates and foundry capacity that may impair customers' ability to build systems around Intel products.

Macro, geopolitics and trade. 70% of 2025 revenue from outside the U.S.; 24% from billings to China. Escalating U.S. export controls from 2022 through 2024 and further tightening in 2025 have reduced sales and required specific authorizations; China has responded with critical-minerals licensing. Named geographic exposures: Israel, a leading-edge fab and multiple product development centers, with a significant portion of revenue from Intel 7 products made there, no insurance for business interruption from war or political violence, and self-insured PP&E; Taiwan, many products depend on Taiwanese suppliers for critical components including compute dies, and some products are made entirely in Taiwan; Russia/Ukraine, sanctions, suspended Russian operations (no exports in 2023–2025), higher costs and elevated cyberattack risk.

AI market evolution. Markets and use cases for AI-capable products are rapidly evolving and hard to predict; Intel's own use of AI technology carries reputational, legal and regulatory risk.

Complex global supply chain. Thousands of suppliers; risks from extended lead times, capacity constraints, supplier allocation to competitors, quality issues, disasters, long qualification times for alternates, and sourcing regulation. Intel has entered supply arrangements, particularly for substrates and third-party foundry capacity, that involve prepayments and capacity commitments. It relies on single or limited-source suppliers for certain items, and on third-party foundries for a number of products and components.

Product defects, errata, and security vulnerabilities. Defects can force inventory write-offs, recalls, replacements, customer compensation, litigation and fines. Security vulnerabilities (Spectre/Meltdown class, and later variants such as Downfall) recur, and mitigations are not always timely or fully effective and can degrade performance.

Cybersecurity and privacy. Persistent, increasingly sophisticated attacks against a large global footprint, plus stringent and evolving data protection regimes across many jurisdictions.

Intellectual property. Intel cannot always protect or enforce its IP; it faces recurring third-party infringement claims (including from litigation-investment entities) with potential for damages, indemnification obligations to customers, injunctions, and forced redesign or licensing. It also depends on access to third-party IP that may not be available on reasonable terms.

Talent. Competition for engineers and technical talent is intense; Intel undertook substantial headcount reductions in 2022, 2024 and 2025 and may make more, which can hurt morale, retention and delivery. Sustained stock price weakness has reduced the retention value of share-based awards.

Strategic transactions. Acquisitions, divestitures and majority-owned businesses carry integration, retention, control, undisclosed-liability, impairment and dilution risks.

Sales concentration. Three largest customers were 43% of 2025 net revenue. Hyperscalers' significance and purchasing power have increased, and Intel's competitive position has eroded where it has not addressed their needs.

Debt. $47.2 billion aggregate principal of senior unsecured notes and other borrowings outstanding at December 27, 2025, plus a $10.0 billion commercial paper program and up to $12.0 billion of committed credit facilities. Intel suffered multiple credit rating downgrades during 2025 and prior years, raising borrowing costs and constraining capital access; further downgrades are possible if results do not measurably improve.

Other named risks. Extensive and evolving laws and regulations worldwide; catastrophic events; currency fluctuations; effective tax rate volatility (including deferred tax valuation allowances, goodwill impairments that are not deductible, and OECD Pillar Two); and environmental, health, safety and product regulation.

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Management's discussion and analysis, fiscal 2025

From the FY2025 Form 10-K, accession 0000050863-26-000011 (fiscal year ended December 27, 2025).

Significant events and unusual items

U.S. government agreements. On August 22, 2025 Intel entered a Warrant and Common Stock Agreement with the U.S. Department of Commerce (DOC). On August 27, 2025, pursuant to that agreement, Intel:

• amended its commercial CHIPS Act agreement to remove project milestone requirements and other disbursement conditions, including those attached to the $2.3 billion previously received and recognized as government incentives;
• received the full remaining accelerated disbursements under the commercial CHIPS Act agreement of $5.7 billion;
• issued the DOC 275 million shares of common stock plus a warrant for up to 241 million shares at $20.00 per share, exercisable if Intel ceases to directly or indirectly own at least 51% of Intel Foundry; and
• issued into escrow 159 million shares, to be released to the U.S. government on a $20.00-per-share basis as Intel receives the $3.2 billion of disbursements contemplated by the CHIPS Act Secure Enclave program. Three million escrowed shares had been released as of December 27, 2025.

The accounting for this agreement as first presented in the Q3 2025 Form 10-Q was subsequently adjusted following consultation with the SEC staff, concluded in Q4 2025; the FY2025 figures reflect that consultation, and Intel concluded the adjustments were immaterial to the Q3 2025 statements. The escrowed shares are accounted for as a derivative liability that is remarked to fair value each period, the mechanism that later drove the very large Q2 2026 loss described below.

Private placements. SoftBank Group: 87 million shares at $23.00 = $2.0 billion, agreed August 18, 2025, completed September 26, 2025. NVIDIA: 215 million shares at $23.28 = $5.0 billion, agreed September 15, 2025, completed December 26, 2025.

Altera divestiture. Agreement signed April 14, 2025 with SLP VII Gryphon Aggregator, L.P. (an affiliate of Silver Lake Partners) to sell 51% of Altera. Closed September 12, 2025 for net purchase consideration of $4.3 billion, $4.8 billion cash received in Q3 2025, $500 million deferred (payable no later than December 31, 2027), less $400 million cash transferred with the business, less ~$469 million of separation and employee-related costs Intel funds to the buyer, less other direct costs. Altera was deconsolidated; Intel's retained 49% interest, valued at $3.2 billion, is an equity-method investment. The transaction produced a $5.6 billion pre-tax gain in interest and other, net, of which about $2.1 billion came from remeasuring the retained stake to fair value.

Restructuring. The 2025 Restructuring Plan, commenced in Q2 2025 as part of an enterprise-wide transformation, cut the core Intel workforce by approximately 15% by the end of fiscal 2025 versus the Q2 2025 ending headcount. Restructuring charges of $2.2 billion in 2025, $1.8 billion cash severance and exit costs plus $474 million of non-cash impairments from exiting non-core lines of business and consolidating real estate. The 2024 Restructuring Plan added $348 million of 2025 charges ($2.8 billion in 2024). Separately, $950 million of non-cash impairment and accelerated depreciation was recorded to cost of sales in 2025 for manufacturing assets determined to have no remaining operational use (Intel Foundry), versus $3.3 billion in 2024 (substantially Intel 7). 2024 also carried $3.1 billion of goodwill and intangible impairments and $9.9 billion of non-cash tax charges from deferred tax valuation allowances.

Non-controlling interests. Net income attributable to non-controlling interests was $293 million in 2025 (versus net losses of $477 million in 2024 and $14 million in 2023), driven by the first tranche of Arizona SCIP manufacturing assets entering service and the ramp of Fab 34 output resold to Intel from Ireland SCIP. Intel expected this to keep increasing in 2026 and rise significantly in 2027 as Fab 34 construction completes. (The Ireland SCIP portion was subsequently eliminated, see the current-quarter section.)

Capital discipline. From Q2 2025 Intel adopted a stated policy of investing in future nodes and new/upgraded facilities only where there is a clear line of sight to an acceptable return: Costa Rica assembly/test consolidated into Vietnam and Malaysia, Ohio fab construction slowed, Germany (fab) and Poland (assembly and test) expansions discontinued.

Segment results, FY2025

• Intel Products revenue $49.1 billion, down $324 million from 2024; operating income $12.7 billion, down $269 million.
• CCG: revenue down $1.1 billion. Client (notebook + desktop) revenue $27.6 billion, down $1.1 billion, on lower volume, the 2024 comparison included incremental customer incentives in H1 2024, and customers reduced inventory through 2025. Q4 2025 client volume fell because demand exceeded available supply given Intel Foundry wafer constraints, primarily on Intel 7. Client ASPs roughly flat. Other CCG revenue $4.6 billion, roughly flat. Operating income down $2.3 billion: $1.8 billion lower product profit and $1.1 billion higher period charges (inventory reserves), partly offset by $590 million lower operating expenses from restructuring.
• DCAI: revenue up $794 million on higher server revenue from hyperscaler demand; server volume +9% but server ASPs −4% (pricing actions in H1 2025 and a higher mix of lower-core-count parts, partly offset by higher H2 ASPs). Q4 2025 revenue was supply-limited on Intel 7 and Intel 3. Operating income up $2.0 billion, mainly $1.5 billion lower operating expenses plus lower Gaudi charges.
• Intel Foundry revenue $17.8 billion, up $509 million; intersegment revenue $17.5 billion (up $361 million) and external revenue only $307 million (up $148 million). Operating loss $10.3 billion, improved from $13.3 billion in 2024, mainly on lower impairment/accelerated depreciation ($950 million vs $3.3 billion) and $1.2 billion lower operating expenses, partly offset by $849 million of higher intersegment lower-of-cost-or-NRV inventory reserves from the early Intel 18A ramp.
• All other revenue $3.6 billion, down $38 million; Mobileye $1.9 billion (up $240 million); operating income $264 million versus a $57 million loss in 2024.

Consolidated results, FY2025

Net revenue $52,853 million (down $248 million from 2024). Cost of sales $34,478 million; gross profit $18,375 million (34.8%), up $1.0 billion or 6%, primarily from lower impairment and accelerated depreciation, partly offset by $878 million of higher inventory reserves related to the early Intel 18A ramp. R&D $13,774 million; MG&A $4,624 million (R&D + MG&A $18.4 billion, down 17%, 34.8% of revenue versus 41.5% in 2024). Restructuring and other charges $2,191 million. Operating loss $(2,214) million (−4.2%). Gains on equity investments $514 million. Interest and other, net $3,257 million, driven by the $5.6 billion Altera gain, partly offset by a $1.8 billion net loss on the escrowed-share derivative and $229 million of charges related to the NAND divestiture. Income before taxes $1,557 million; tax provision $1,531 million; net income $26 million; less $293 million attributable to non-controlling interests, net loss attributable to Intel $(267) million, diluted EPS $(0.06).

The FY2025 effective tax rate rose versus 2024 mainly on valuation allowance changes, offset by the nonrecurring Altera gain. The $9.9 billion valuation allowance against U.S. deferred tax assets was first established in Q3 2024 on a three-year cumulative loss position.

Capital investments in construction in progress totaled $34.5 billion at December 27, 2025 (down from $50.4 billion) as Arizona SCIP placed its first tranche of assets into service; these assets are not yet depreciating, and depreciation will flow into cost of sales as they enter service.

Liquidity, FY2025

Operating cash flow $9,697 million (2024: $8,288 million); net capital expenditures $(11,204) million; payments on finance leases $(105) million; adjusted free cash flow $(1,612) million (2024: $(2,228) million; 2023: $(11,853) million). Investing $(14,821) million; financing $11,587 million (higher accelerated U.S. government funds attributed to common stock, warrants and escrowed shares; NVIDIA and SoftBank private placements; absence of dividend payments; Mobileye share sales).

Total cash and short-term investments $37,416 million at December 27, 2025 (from $22,062 million); total debt $46,585 million (from $50,011 million). Intel settled $3.7 billion of senior notes maturing in March and July 2025 and borrowed and repaid $3.5 billion of commercial paper; no commercial paper or revolver borrowings were outstanding at year end. In August 2025 a major credit rating agency downgraded Intel from BBB+ to BBB, citing technology-roadmap and foundry execution risk, delayed deleveraging and weaker-than-expected demand.

Other 2025 sources: $921 million net from the sale of 57.5 million Mobileye Class A shares; $1.8 billion net from completing the second phase of the NAND memory divestiture to SK hynix.

Committed capital expenditures were $9.1 billion for 2026 with $3.7 billion committed longer term; other binding purchase obligations $2.2 billion for 2026 and $4.5 billion long term.

Intel recorded a $163 million benefit in 2025 from reduction of the previously accrued €376 million ($401 million) EC fine; the fine remains unpaid on appeal, guaranteed by a third party, with $340 million deposited into legally restricted accounts in 2025.

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Current quarter, Q2 FY2026 (quarter ended June 27, 2026)

From the Form 10-Q, accession 0000050863-26-000157, with guidance from the Form 8-K dated July 23, 2026, accession 0000050863-26-000155.

Headline

Revenue $16,128 million, up 25% year over year, described by management as Intel's strongest revenue growth in more than fifteen years, with GAAP gross margin of 40.4% (from 27.5%) and GAAP operating income of $1,796 million (11.1% margin) versus a $3,176 million operating loss a year earlier. Yet the quarter produced a net loss attributable to Intel of $(11,033) million, diluted EPS $(2.16), because of a $12.5 billion non-cash mark-to-market loss on the escrowed-share derivative owed to the U.S. government. Non-GAAP EPS was $0.42. Cash from operations was $7.0 billion in the quarter.

The unusual items a reader must understand

1. Escrowed shares issued to the U.S. government (the reason the loss is enormous while operations improved). Under the August 22, 2025 agreement with the DOC, shares held in escrow are released to the government on a $20.00-per-share basis as Intel receives Secure Enclave disbursements. The obligation is carried as a derivative liability remeasured to fair value each period, so a rising Intel share price creates an accounting loss. Intel released 7 million escrowed shares in Q2 2026 and 13 million year to date, and recognized $12.5 billion of loss in Q2 2026 and $13.6 billion year to date on the net change in fair value of both released and still-escrowed shares, driven by the increase in Intel's stock price. The derivative liability stood at $15.6 billion at June 27, 2026, up from $2.7 billion at December 27, 2025, recorded within other accrued liabilities and other long-term liabilities. Of the 143 million escrowed shares not yet released, 71 million are considered not contingently issuable (and are in basic EPS) and 71 million remain contingent on DOC disbursements. The separate warrant for up to 241 million shares at $20.00 is excluded from EPS as it is neither currently nor expected to become exercisable; if exercised, Intel can elect net cash or net share settlement.

2. Repurchase of the Ireland SCIP non-controlling interest. On April 8, 2026 Intel reacquired Apollo's 49% minority interest in the majority-owned, consolidated Ireland SCIP variable interest entity (the Fab 34 vehicle established in 2024) for aggregate cash consideration of $14.2 billion, inclusive of transaction costs. Intel now owns 100% of Ireland SCIP and the related operating and ancillary agreements have been substantially terminated. Accounting effects: the $142 million Ireland SCIP non-controlling interest balance was eliminated; the $532 million derivative liability for delay-related liquidated damages was extinguished; and the residual $13.5 billion was recorded as a reduction of capital in excess of par value (an equity transaction, not an income statement item). The cash outflow appears in partner distributions within financing activities. Net income attributable to Ireland SCIP non-controlling interests ceased after the close. Separately, in Q1 2026 Intel recognized a $223 million benefit in interest and other, net from a favorable revision to the fair value of the Fab 34 delay-related liquidated damages liability (which had stood at $755 million at December 27, 2025).

Funding: a $6.5 billion 364-day senior unsecured term loan at 4.79% executed and drawn April 1, 2026, repaid in full April 30, 2026 from the proceeds of a $6.5 billion senior note issuance (below), plus existing cash and short-term investments.

3. Remaining non-controlling interests. As of June 27, 2026: Ireland SCIP 0% (from 49%), Arizona SCIP 49%, Mobileye 23%, IMS 32%. Total non-controlling interests rose to $15,601 million from $12,079 million at December 27, 2025, Arizona SCIP $13,428 million (on $4,082 million of partner contributions year to date), Mobileye $2,050 million, IMS $123 million. Q2 2026 net income attributable to non-controlling interests of $185 million was driven by Arizona SCIP income as its manufacturing assets are placed into service; the year-to-date net loss of $(368) million reflects the Q1 2026 Mobileye goodwill impairment attributed to minority holders. Arizona SCIP's production contract commenced in Q1 2026, and Intel must operate the vehicle at minimum production levels and limit on-site excess inventory or owe volume-related damages. Arizona SCIP assets on Intel's balance sheet, usable only to settle the VIE's obligations, were $6.0 billion of construction in progress and $13.8 billion placed in service at June 27, 2026.

4. Goodwill impairment. In Q1 2026 Intel recognized $3.9 billion of non-cash goodwill impairment within restructuring and other charges, substantially all related to the Mobileye reporting unit. The trigger was a sustained decline in Mobileye's market capitalization since the Q4 2025 annual test plus increased macro and geopolitical uncertainty; the driver was a significant increase in the discount rate from higher market- and Mobileye-specific risk premiums (heightened Middle East geopolitical risk and uncertainty around Mobileye's competitive position in advanced autonomous driving). A 1% higher discount rate would have added roughly $682 million of impairment. Mobileye reporting-unit goodwill was $4.3 billion at June 27, 2026, down from $8.2 billion at December 27, 2025, and could be impaired further.

5. Conflict with Iran. On February 28, 2026 the U.S. and Israel initiated coordinated military strikes against Iran, followed by retaliatory attacks by Iran and Iran-aligned groups across the region. The conflict has disrupted supply chains and shipping routes and raised energy prices; Iranian strikes on two Qatari energy fields supplying a meaningful share of global helium have produced a global helium shortage affecting semiconductor manufacturing. In late March 2026 Iran published a list of U.S. companies with Middle East operations it indicated it would target, with Intel near the top. A significant portion of Intel's current and anticipated revenue comes from Intel 7 products manufactured at its Israeli fab; Intel is not insured for business interruption from war or political violence, and also has product development centers in Israel at risk.

6. Altera comparability. Altera was deconsolidated effective September 12, 2025. Revenue from Altera as a customer was $181 million in Q2 2026 and $320 million year to date, versus $428 million and $779 million of revenue contributed by Altera when consolidated in the prior-year periods. Intel's retained 49% equity-method stake was carried at $3.2 billion.

Segment results, Q2 2026

Segment figures include intersegment activity; intersegment eliminations were $(5.5) billion of revenue in Q2 2026.

CCPG. Client revenue (notebook + desktop) $7.7 billion, up $1.1 billion, on ASP increases of 27%, mostly a richer mix of premium products, with demand-based pricing actions contributing less, partly to offset higher input costs, against a volume decline of 8%. Market demand exceeded available supply because of industry-wide constraints; Intel expects those to ease over the second half of 2026 for client. Other CCPG revenue $1.1 billion, down $127 million. Operating income rose $290 million: $701 million more product profit and $258 million lower operating expenses (2025 Restructuring Plan headcount reductions), partly offset by $669 million of higher period charges, principally an inventory-related charge to align product mix with customer demand.

DCAI. Revenue up $2.3 billion, driven by server revenue up $2.0 billion on ASP increases of 48% (again mostly premium mix) with server volume +9% on higher hyperscaler demand. Other DCAI revenue $951 million, up $304 million, on demand for purpose-built ASICs. Demand exceeded supply due to internal capacity constraints; Intel expects industry-wide supply constraints to persist into next year. Operating income up $1.8 billion on $1.7 billion of higher product profit, partly offset by higher unit costs from the premium mix.

Intel Foundry. Revenue $5.8 billion, up $1.3 billion; intersegment $5.5 billion (up $1.1 billion) on higher Intel 18A, Intel 3 and Intel 4 wafer volumes at higher ASPs than predecessor nodes; external revenue $293 million, up $271 million, primarily because Altera became an external customer. The operating loss narrowed to $(2.1) billion from $(3.2) billion, driven by $1.4 billion of lower period charges, including the absence of $797 million of impairment/accelerated depreciation taken in Q2 2025, partly offset by $340 million of lower product profit as a higher mix of costlier Intel 18A wafers substantially offset higher revenue and lower Intel 3/Intel 4 wafer costs.

All Other. Revenue down $352 million on the Altera deconsolidation; Mobileye revenue $507 million, flat year over year.

Consolidated statement of operations

Weighted average diluted shares were 5,104 million in Q2 2026 versus 4,369 million in Q2 2025, the increase reflecting the U.S. government, SoftBank and NVIDIA share issuances of 2025 and escrowed share releases. Anti-dilutive shares excluded: 70 million in Q2 2026.

Gross profit rose $3.0 billion (84%) year over year on $1.5 billion of higher product profit and $1.5 billion of lower period charges (chiefly the absence of the prior-year $797 million impairment/accelerated depreciation), partly offset by an inventory-related charge taken in Q2 2026 to align product mix with customer demand. R&D + MG&A of $4.5 billion was down 6% and fell to 28.2% of revenue from 37.5%; Intel expects total R&D and MG&A to decrease in 2026 relative to recent periods on the 2024/2025 restructuring plans and the Altera deconsolidation.

Restructuring charges were modest in Q2 2026 ($161 million of severance versus $1.5 billion in Q2 2025); the year-to-date figure of $4,240 million is dominated by the Q1 2026 $3.9 billion goodwill impairment. Total expected and cumulative cost of the 2025 Restructuring Plan was $2.2 billion as of June 27, 2026; the substantial majority of actions were completed in 2025, with the remainder expected in 2026, as is the case for the 2024 plan.

Taxes: Intel continues to be unable to benefit from its domestic loss before taxes because of the domestic valuation allowance; the provision fell year over year primarily on increased stock-based compensation deductions.

Supply, demand and trends

Market demand exceeded available product supply in both Q2 2026 and year-to-date 2026, from a combination of Intel factory capacity constraints and industry-wide shortages. Intel expects industry-wide shortages of substrates, memory and other critical components to persist into next year, potentially limiting its ability to meet demand, and is responding by adding factory capacity and securing component supply through long-term supplier agreements. Client-specific constraints are expected to ease over the second half of 2026; DCAI supply constraints are expected to persist into next year.

Node and capacity roadmap developments

At the start of 2026 Intel released its first products manufactured on Intel 18A in high volume. Intel 18A-P entered risk production in June 2026. During Q2 2026 Intel committed to completing development of Intel 14A, with a number of future Intel products designed for the node and manufacturing expansion projects underway for it; Intel also reported continued progress toward performance and design milestones for potential significant customers evaluating Intel 14A. Intel intends to accelerate various manufacturing expansion projects, but states the scale and pace will ultimately be dictated by the amount of committed Intel 14A demand it can obtain from its own product roadmap and from design wins with potential significant external customers. It reiterates the discipline of investing only where there is a clear line of sight to an acceptable return.

From the July 23, 2026 earnings release: Intel Foundry entered high-volume manufacturing for a subset of Intel Core Ultra Series 3 processors (Panther Lake) using ASML EXE High-NA EUV; Intel launched Xeon 6+, its first server-class product on Intel 18A; announced a €5 billion investment to expand capacity and increase production of Xeon 6 and next-generation Xeon on Intel 3; expanded Bowers campus mask-operations capacity; and expanded purpose-built silicon beyond networking and IPUs through a collaboration with Fortinet on the Fortinet Security Processor 6. Management stated it is "meaningfully increasing our investments in equipment, clean room space, and substrates" to support expected growth this year and next.

Liquidity and capital resources

Total cash and short-term investments $29,727 million at June 27, 2026 (cash and equivalents $12,874 million; short-term investments $16,853 million), down from $37,416 million at December 27, 2025, the decline principally reflecting the $14.2 billion Apollo buyout. Total debt $50,537 million, up from $46,585 million.

Debt activity: Q1 2026, settled $1.5 billion of senior notes due February 2026 and amended the 364-day $5.0 billion credit facility into a three-year $3.0 billion facility maturing January 2029 (the $7.0 billion revolver remains available until February 2029). Q2 2026, settled $1.0 billion of senior notes due May 2026 and issued $6.5 billion of senior notes: $1.0 billion 4.65% due 2031, $1.0 billion 5.00% due 2033, $2.2 billion 5.30% due 2036, $1.8 billion 6.13% due 2056, $500 million 6.20% due 2066. No commercial paper outstanding (authorization up to $10.0 billion) and no revolver borrowings at June 27, 2026; no debt was extinguished prior to maturity in Q2 2026.

Cash flows, six months ended June 27, 2026 versus June 28, 2025: operating $8,102 million (from $2,863 million); investing $(669) million (from $(2,005) million); financing $(8,548) million (from $586 million provided). The financing swing is driven by the Apollo partner distribution, term debt repayment, absence of commercial paper issuance and higher finance lease and RSU withholding payments, partly offset by higher partner contributions and the term debt issuance. Investing benefited from higher net sales/maturities of short-term investments and lower capital expenditures, offset by lower government incentive proceeds, cash for the Mentee Robotics acquisition and the absence of prior-year NAND divestiture proceeds. Net decrease in cash, cash equivalents and restricted cash: $(1,115) million.

Working capital and commitments: inventories rose to $12,492 million from $11,618 million. Intel entered long-term customer arrangements in Q1 2026 including $1.7 billion of deposits, with the cash received in Q2 2026. Supplier prepayments to secure component supply totaled $934 million year to date. No accounts receivable were sold under non-recourse factoring in H1 2026 (versus $1.6 billion in H1 2025). Restricted cash was $723 million. Long-term funding requirements contemplate expanding Arizona, New Mexico and Oregon and a new leading-edge facility in Ohio in the long term.

No shares were repurchased in the quarter; $7.2 billion of the $110.0 billion authorization remained available.

Litigation status (as of June 27, 2026)

Accrued liabilities of $1.0 billion for VLSI litigation and $308 million (including revaluation and interest) for the EC fine. Key developments: in December 2025 the EU General Court reduced the EC fine to €237 million ($277 million), and Intel appealed to the Court of Justice in February 2026. In April 2026 the Federal Circuit reversed and remanded the first VLSI California case as to one patent. In the EireOg matters (alleged past and future damages in excess of $2.0 billion across customer indemnities), an April 2026 jury verdict found no infringement by Cisco and found the factual predicate for Intel being licensed to the asserted patent; remaining cases were stayed. A stockholder derivative lawsuit filed in the Delaware Court of Chancery in March 2026 challenges the August 22, 2025 Warrant and Common Stock Agreement with the DOC, naming Intel's directors, the Department of Commerce and Secretary Howard W. Lutnick, alleging breach of fiduciary duty and waste and that the agreement was unlawful; it seeks invalidation of the agreement plus damages on Intel's behalf. The DOC removed the case to federal court in Delaware in April 2026, and defendants moved to dismiss in May 2026.

Guidance, Q3 2026

From the Form 8-K dated July 23, 2026, accession 0000050863-26-000155.

Gross margin and EPS outlooks are based on the midpoint of the revenue range.

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Subsequent events

The Form 10-Q for the quarter ended June 27, 2026 (accession 0000050863-26-000157) contains no separate subsequent-events note, and neither does the FY2025 Form 10-K (accession 0000050863-26-000011). No acquisition, divestiture, financing or litigation event occurring after June 27, 2026 is disclosed in the quarterly report, which was signed July 23, 2026 and filed July 24, 2026. The only company disclosure dated after the quarter end is the second-quarter earnings release furnished on Form 8-K dated July 23, 2026 (accession 0000050863-26-000155), which contains the Q3 2026 guidance set out above.

For completeness, the material events that occurred after the end of fiscal 2025 and are disclosed across these filings, with their specifics:

• Mobileye's acquisition of Mentee Robotics. In January 2026 Mobileye entered a definitive agreement to acquire Mentee Robotics, an AI-first humanoid robotics company, for an aggregate purchase price of approximately $900 million subject to customary adjustments and closing conditions (as disclosed in the FY2025 Form 10-K). The transaction closed February 3, 2026 at a purchase price of $637 million, consisting primarily of $596 million in cash, net of cash acquired, with the residual in Mobileye Class A shares not contingent on continuing employment. The purchase price net of cash acquired was allocated primarily to $128 million of intangible assets (developed technology) and $498 million of goodwill, expected to be deductible for tax purposes. Mentee's results, not material for the three and six months ended June 27, 2026, are reported within Mobileye in the "All Other" category. The accounting is preliminary and may change during the measurement period.
• Repurchase of Apollo's 49% interest in Ireland SCIP, closed April 8, 2026 for $14.2 billion in cash, inclusive of transaction costs; eliminated $142 million of non-controlling interest, extinguished a $532 million liquidated-damages derivative liability, and reduced capital in excess of par value by $13.5 billion.
• $6.5 billion 364-day senior unsecured term loan at 4.79%, executed and drawn April 1, 2026 to fund that repurchase, repaid in full April 30, 2026.
• $6.5 billion senior note issuance on April 30, 2026, $1.0 billion 4.650% due 2031, $1.0 billion 5.000% due 2033, $2.25 billion 5.300% due 2036, $1.75 billion 6.125% due 2056 and $500 million 6.200% due 2066, with net proceeds of approximately $6.47 billion before expenses. Intel also settled $1.5 billion of senior notes due February 2026 and $1.0 billion due May 2026, and amended its 364-day $5.0 billion credit facility into a three-year $3.0 billion facility maturing January 2029.
• Q1 2026 non-cash goodwill impairment of $3.9 billion, substantially all related to the Mobileye reporting unit.
• Onset of the conflict with Iran on February 28, 2026, including the resulting global helium shortage and Iran's late-March 2026 targeting list naming Intel near the top.
• Delaware derivative lawsuit filed March 2026 challenging the Warrant and Common Stock Agreement with the U.S. Department of Commerce; removed to federal court in April 2026, motions to dismiss filed May 2026.
• EC fine appeal, after the General Court reduced the fine to €237 million ($277 million) in December 2025, Intel appealed to the Court of Justice in February 2026.
• Change in principal accounting officer, on April 24, 2026, Scott Gawel, Corporate Vice President and Chief Accounting Officer, resigned as principal accounting officer effective immediately; David A. Zinsner, EVP and CFO, assumed the principal accounting officer role in addition to principal financial officer.