Conference Transcript - INTC 2026-03-04

Joe Moore, Analyst — Morgan Stanley

Welcome back, everybody. I'm Joe Moore, Morgan Stanley Semiconductor Research. Very happy to have with us today Dave Zinser, CFO of Intel. Before we begin, on behalf of Intel, please note that today's discussion may contain forward-looking statements that are subject to various risks and uncertainties and may reference non-GAAP financial measures. Please refer to Intel's most recent earnings release, an annual report on Form 10-K and other filings with the SEC for more information on the risk factors that could cause actual results to differ materially and additional information on non-GAAP financial measures, including reconciliations where appropriate to the corresponding GAAP financial measures.

Dave Zinsner, CFO

That was awesome. Yeah, thanks. Welcome back.

Joe Moore, Analyst — Morgan Stanley

So I guess it's been a little more than a year since the CEO transition, and it seems like there's a lot of style differences and a little bit of substance in terms of the way you're approaching some of these opportunities, but still basically sort of a very similar strategy to where you've been. So, you know, can you just talk about the big picture, you know, Is this major course corrections or small changes?

Dave Zinsner, CFO

Yeah, I think you've got it right. I think mainly it's course correction. Although I would just say Lit Bu is pretty focused on making sure we're not getting ahead of things in terms of our investment. So he wants to see real signals that we can count on from a demand perspective before we're putting investments in place. and you clearly saw that in the last couple of calls with investors. In addition, what he's done is he's really simplified the organization in a lot of ways, obviously reduced the headcount, but we also significantly reduced the layers within the organization. So he is closer to the lowest levels, and I think that's better. Decision-making is obviously better, but he also has more access to, you know, what's going on in the field, and that's helped out a lot. The third thing that he's done that has been, I think, really helpful is he, you know, Intel, I think, traditionally has been a company that kept everything within the four walls of Intel, did not expose a lot of data and information to partners. And, you know, of course, you do that because you want to, you know, maintain some confidentiality around things that are proprietary. but what you lose is the ability for those partners to help you improve the whatever in the case that I'm talking about right now more like the process and so he has opened up a lot of data to our partners and I think that has really been one of the key factors in getting yields to start to improve meaningfully on ET&A we've got several partners that help us in terms of improving yields, and yet they were dealing with, like, little to no data. And so I think that was a big improvement he's made. He also, you know, obviously, since he has spent a lot of time investing in the space, and in particular more recently investing in the AI space, he has a unique view in what AI workloads look like across the ecosystem and what we could do that could be helpful that isn't directly competing with those that are entrenched competitors but really things that are orthogonal or that really would make a big difference that really only Intel could do. And so our AI strategy, I think, is forming in a way that perhaps is significantly different than it might have without him.

Joe Moore, Analyst — Morgan Stanley

Interesting. Yeah, it seems like you've put a lot of focus back on the core business a little bit that AI is kind of more in the future, Foundry is a little bit more in the future, and you're really focused on kind of the core product.

Dave Zinsner, CFO

Well, I mean, we clearly have work to do to get our product portfolio to where it needs to be. We've got work to do to get our processes to where they need to be. So that is the most significant thing that we need to accomplish. And, you know, Lifu is very focused on that. Like I said, he's very into the details, It's kind of a style of kind of open communication that I think has allowed us to get more insight into where are the issues and how we can improve them.

Joe Moore, Analyst — Morgan Stanley

Great. And on the topic of process technology, Panther Lake being out on 18A looking like a good part seems like a really important proof point after, you know, the sort of five nodes.

Dave Zinsner, CFO

Yeah, for sure. And like I said, you know, there's kind of a glide path you kind of move along that you would expect to move along from a yield perspective, and we're now at or even slightly better on that glide path across our AT&A process. So things look good. We're also – there's a lot of volatility, even though you have a yield. Like some wafers are yielding a lot less and some are yielding a lot more. He's actually focused a lot on trying to minimize the volatility wafer to wafer, and we've made good improvement there. So the process looks good, and I think we would expect a pretty steady yield progression as we go through this year, probably a bit ahead of schedule, quite honestly. And then Panther Lake as a part has been well-received, obviously, particularly around battery life in particular. And so FAND has been robust there. In fact, I think our bigger challenge is making sure we get all the supply to the customers. But that's a great proof point to customers, external customers, that 18A is a good process. And while Lipu was, I think, thinking that we probably should focus on 14A as a foundry node and make 18A really just an internal node, now that we've seen some real progress there, I think he's now starting to recognize that this is actually a good node to offer to external customers as well. And we've been getting some kind of inbound interest in 18AP as a foundry node. So I think that's pretty positive.

Joe Moore, Analyst — Morgan Stanley

Great to see that progress with Panther League. So maybe talking about the demand side, start with servers. And I know it's tricky because you've had some supply challenges, and so it's always hard to assess demand. But it seems like there's a growing consensus that CPUs are really benefiting from AI and that agentic things, once they're crafted with GPUs, the agents are run on CPUs, and there's a lot of workload. So, you know, how durable are you seeing that incremental demand?

Dave Zinsner, CFO

Yeah, I think that CPU has become cool again this year, and we long believed that CPUs needed to kind of stay along with the GPUs and these data centers, and yet, like, a lot of the spending had moved towards CPUs and CPU on a unit basis was even coming down.

Joe Moore, Analyst — Morgan Stanley

Lisa Su may have used the exact same words. Lisa Su said CPUs are cool again.

Dave Zinsner, CFO

Is that really? So anyway, so I think that this back half of the year of last year where we really started to see the pickup in demand really showed that, hey, actually, as you move into, like you said, a GenTIC, as we're looking at better orchestration away from just running the LLM into the orchestration aspect. All of that has to be run on CPUs, and we're seeing the benefits now of that. So units are up. I think units were up last year from a TAM perspective, something like mid-20% year over year, and I think it's going to be up again pretty meaningfully this year. We're starting to see customers come in in that space asking for long-term agreements, that should tell you that there's legs to this. They're looking at this over a three- to five-year basis and want to lock in supply with us.

Joe Moore, Analyst — Morgan Stanley

And your strongest position in server tends to be with more enterprise-centric clouds or enterprise-centric on-prem. But are you seeing also demand side from the traditional kind of cloud hyperscalers? And how do you sort of juxtapose that with ARM starting to encroach in the head-nose?

Dave Zinsner, CFO

Yes, across the board, the demand is strong. So, you know, I guess I would say X86 is a really strong ecosystem, and, you know, the customers and the users on the other side of this generally have spent a long time, you know, maturing their networks with an X86 architecture. So I feel very good about our opportunity. You know, there'll be other competitive technologies that make progress, I'm sure, mainly because the demand is going to be so high and supply will be constrained. But I feel really good about, you know, the x86 position. And, in fact, you know, if you look at the recent announcement we had with NVIDIA to partner between our CPUs and GPUs, that really was, in a lot of ways, an endorsement around the x86 ecosystem.

Joe Moore, Analyst — Morgan Stanley

them. Yeah, maybe if you could talk about that deal, it seems really important to NVIDIA as well. You know, they've talked about bringing RackScale to ecosystems that aren't comfortable with ARM, and that's a big part of why they're doing that deal. I mean, how big an opportunity is that for you guys? People sort of focused on that as like, oh, there's definitely a foundry thing coming. It seems like it's really

Dave Zinsner, CFO

around the product. No, no, this was a really, this was a

Joe Moore, Analyst — Morgan Stanley

product. Yeah, and both CEOs said it.

Dave Zinsner, CFO

Yeah, it was a products-driven engagement between the two CEOs. It was, as you say, a lot of customers looking for an x86 solution, and, you know, I think NVIDIA wanted to be able to offer that. Of course, for us, it's great to marry our CPUs with their GPUs. They're the best in the business, for sure, and so that opportunity, you know, I think gives us a, you know, pretty good option to be able to capture, I think, meaningful growth from that business, and, So, you know, it's both a data center and a client product that we're talking about. You know, obviously it's, you know, a couple years out before those products come to market, but so far the progress has been great.

Joe Moore, Analyst — Morgan Stanley

Yeah. Okay, great. Competitiveness within server, you know, LipBoo, I think, has actually done a good job of bringing a lot of humility to those conversations, and I mean that sincerely, that, you know, I think building credibility with the channel is really important and with the cloud guys. But it's also sort of been open that Diamond Rapids didn't do everything that he wanted it to do, and we need Copper Rapids next year to sort of retake share. Does any of that matter right now? I mean, you're coming out of such a supply-constrained situation that you should have a nice rebound as we get through that. How do you think about market share in the service?

Dave Zinsner, CFO

Yeah, I mean, I think from the perspective of what we can capture, supply is going to be our greater challenge. certainly this year and probably even next year. But, you know, that said, we want to bring out products we're proud of. And, you know, I think Lipu, when he came in, he looked at the Diamond Rapids roadmap, didn't like that it didn't, wasn't capable of multi-threading. And, you know, there were reasons those decisions were made. But, you know, Lipu, I think, spends a ton of, you know, this is probably another thing that I think he's really good at is listening to customers and taking that back and, you know, developing a roadmap based on that. And he, you know, felt really strongly that we needed to be able to provide that. So we'll have this hole in Diamond Rapids, but it's actually Coral Rapids, not Copper Rapids. So many rapids. No kidding. Coral Rapids will, you know, we're going to look to try to, you know, bring that in as early as we possibly can. There's only so much we can do about that. But in the meantime, there are parts – it's not like everything shifts over to a given product anyway. We're still selling some of our products that we've introduced five years ago. So we'll have plenty of opportunity to, I think, address the market with our portfolio.

Joe Moore, Analyst — Morgan Stanley

Great. So then you talked about the supply constraints, which have been severe. Can you – I know you've gone through this a lot, but just to help us understand why they're so severe right now when the growth is not that high. And then it seems like Q1 is the worst of your under-shipping relative to demand and improves from here. Can you talk about that back?

Dave Zinsner, CFO

Well, I mean, first, you know, we kind of build our plans based on, you know, the demand we get from customers. And, you know, we started this, obviously, as others did, see the signals in the back half of last year that demand was going to be stronger. The challenge is the lead time. By the time you start wafers and get those through, it's a couple of quarters before those products come out. And so there's a time lag to it. In the meantime, we were operating off of inventory that we had, but we've leaned that inventory out to the point where the first quarter, really there isn't much in the way of finished goods. Lots of whip in the inventory level, but not much in the way of finished goods to be able to support that demand. So as we come out into the second quarter, things will improve. I would say, you know, wafers is part of the challenge around supply, but the industry is suffering shortages all over the place. You know, memory, of course, you know about. Substrates, they're short. Tea glass, it's short. I mean, there's a lot of things that are short across the board that all have to get caught up as we progress through the year. But we feel pretty good that we'll be able to bring more and more supply online every quarter, and things, you know, should have a relatively rapid improvement as we get through the year. But you do feel like you're supply constrained for a while? Certainly this year.

Joe Moore, Analyst — Morgan Stanley

Yeah, okay. But that view that Q1 is the kind of worst under shipment? Yeah, okay.

Dave Zinsner, CFO

And then with regards to client. By the way, maybe one other thing I could say is, you know, it's not like we're sitting on our hands. We're operating these fabs that, you know, above 100% in terms of what they're specced to supply. but there's an ability to get it even more above 100% if we can, and that's what we're focused on is squeeze out every wafer we can from the system this quarter.

Joe Moore, Analyst — Morgan Stanley

I mean, there was a bit of a transition where it seemed like Intel 7 was kind of coming down, and then Intel 7 became the binding constraint for a lot of your business. Is that part of this as well, that you sort of have, there's more demand on the Intel 7?

Dave Zinsner, CFO

Yeah, I mean, there's demand on, you know, So things are tight across all of our boundaries and our processes. And keep in mind, we're ramping two processes at one time, basically, which is not typical for Intel. We have Intel 3 and 18A both ramping and trying to catch up on the yields and so forth. So that clearly is driving some of it. That said, Raptor Lake, for example, which is an Intel 710 process, has great demand on it. You've got to play the algebra here of how much capacity you want to add on on that node, given that it's an older node and you're really trying to migrate customers into Intel 3 and 18A. So we're kind of managing the shell game there. It will probably, as we've talked about, we are going to be required to increase our wafer capacity on Intel 10.7, But we're going to try to push customers also to take products that are on those newer nodes to smooth things out. The other thing is the more we can drive Panther Lake on 18A, since it's only client, that does free up the other nodes a bit. So, you know, obviously we have more demand than we have supply on Panther Lake. But the more we can ramp that, the better we will be across all nodes.

Joe Moore, Analyst — Morgan Stanley

Great. And on the topic of client, I mean, you guys did talk about memory being something of a constraint to market growth this year. That seemed like at the time it was kind of more applying common sense to what's happening rather than something that you're seeing. But, like, just can you update on that? Does memory continue to be a concern for end demand?

Dave Zinsner, CFO

I think, you know, my expectation is that memory is going to be short all through this year and probably all through next year you know and you know given the importance of memory into data center and in particular into AI workloads you know if it is going to create a more significant constraint in the client space for sure and so you know we talked about this on the call our expectation is that hey you know in the back half of the year you know they're gonna suffer probably from the lack of memory. And so we've built that into how we're planning the year and what capacity we want to bring online on given products. And we talked that we were going to kind of give up some of the small core in the client space, push into the mid and high end of the client space, but then try to push as much as we can into data center to make sure we can alleviate the constraints there.

Joe Moore, Analyst — Morgan Stanley

Okay. Okay. So you're sort of working through these constraints, but they're still a factor probably in all the businesses because you're going to build less for the client business as well. Correct. Yeah. Okay. And then I want to get to the external foundry prospects, but just if we think about the foundry losses that are kind of weighing on you, a lot of the path to break even is not external foundries. A lot of the path to break even is just internal. Can you update us on that? Like how do we get those losses down? And if it's just because you're charging this product group more for wafers, are we sure we're going to see the

Dave Zinsner, CFO

So there's a meaningful improvement in margins in 26 versus 25 for Foundry. Part of that is that we had a lot of startup costs that we were running through the P&L, and now we're at a point where we're just ramping fads that we've built out. And so our expectation is that we should see some pretty good improvement in what we call our other cost-of-sales line, you know, this period cost line where a lot of those startup costs show. So that should help meaningfully in terms of gross margins for Foundry. On top of that, as you point out, you know, the newer processes, yeah, they get a better AC, but mostly it's around their cost structure is better for their performance. And so, you know, the notion is that, yes, they'll be charging more for those wafers, but it's because it's working to charge more for those wafers and the product company part of the business gets that benefit. So that will also help a lot in terms of margin. Now, obviously, you know, we're in the really early innings of 18A ramping in the FAP. So those margins are negative right now. And, you know, as they become more of the mix, it actually pulls the margins down a bit. But as we progress through this year, certainly as we go into next year, those margins get better and better, which will also help. So I think we still feel good about our original guidance, which is we expect to exit 27 at break-even operating margins for Foundry. The only caveat to that would be we're planning a certain level of external Foundry wins in that number. If it's stronger, it actually could count against us on the profitability side because we need to invest more, which would push the profitability out of it. But it'll be a good problem to have because that means we're going to have more demand in the out years beyond that.

Joe Moore, Analyst — Morgan Stanley

So on that kind of process, you sort of – it seems like you're still committed to the potential of being a major foundry supplier, but you're not going to spend the money until you have the customer commitments. Is that a fair statement, and where does all that stand?

Dave Zinsner, CFO

Yeah, so to be clear, we are spending the money on all the R&D development associated with 14A, And that includes the CapEx investment for the R&D in 14A. So there's a pilot line that's got to be put in place. We're investing in all of that. What we're holding back on is the high volume and when to put that in place based on what we do in terms of customer wins on 14A. The engagements have been good, so I think we're cautiously optimistic that this will be a successful node. We also have internal demand on 14A, so even still, I think we've got to think about that as part of the CapEx cycle. In addition, we have seen more engagement from external customers on 18AP as well, so we're starting to see some demand there, which also could go hand-in-hand with this. So the likelihood is we'll start to see some of this stuff fall into place in the back half of this year, maybe some of it into early next year, and then we're going to have to make an assessment as to what that means from a CapEx perspective.

Joe Moore, Analyst — Morgan Stanley

And the timing has always sort of been risk production 28, volume 29. I know there was some confusion maybe around the call, but that's still the case.

Dave Zinsner, CFO

Now, that's more a function of what customers want. We can pull it in. For our internal demand there, we have the ability to go risk production in 27, which is likely what we're going to do. So I guess if a customer wanted to do that at the same time frame, we could do that. And risk production can have useful output. But, you know, right now, from what we hear, when customers, remember they've got to spend a lot of money when they're moving to a new node, and so they're going to want to make sure that they're layering that into their product roadmap in a way that generates the best ROI. And when they do that, that seems to suggest that it's more a 28 to 29 time frame, that they really need these kind of wafers.

Joe Moore, Analyst — Morgan Stanley

But there was no delta around the quarter like that.

Dave Zinsner, CFO

We haven't changed it. And, in fact, when you look at, you know, we plot out yield and performance even as early as, you know, now on 14A. And we look at it relative to where was 18A at this time frame, where was Intel 3 at this time frame. And we're actually ahead. So the good news is that actually we could be seeing better, one would hope, better performance for yield than we had in the prior nodes.

Joe Moore, Analyst — Morgan Stanley

So it kind of comes back to the execution is good, but there's more like humility about timeframes.

Dave Zinsner, CFO

And we've got to make sure that these customers have unique requirements that go above and beyond just the process in terms of deal terms and so forth. So we've got to get all that pulled together to make it work.

Joe Moore, Analyst — Morgan Stanley

Can you talk about EMIBT and the advanced packaging technology as a foundry offering? It seems like that's a lot bigger than you originally thought it was.

Dave Zinsner, CFO

Yeah, so good point. You know, ironically, you know, this is probably the more interesting part of the foundry business today, quite honestly. You know, of course, there's supply shortages, But EMIB is actually great from a technology perspective relative to what's out there competitively. You can get 30% more radical space on EMIB or EMIB-T. So this looks like a great offering for us, and we've gotten, I think, really good engagement from customers on this business. So originally, when I was thinking about it and talking to investors, I was calibrating everybody to, hey, this is like, you know, think about these wins in the hundreds of millions versus, you know, wafer wins, which would be in the billions. You know, that's the way you should think about it. And I've since revised that because we're actually, you know, at the close to closing some deals that are in the billions of dollars per year in terms of revenue on packaging. So lo and behold, this is going to be, I think, a really good business for us.

Joe Moore, Analyst — Morgan Stanley

That size, we're clearly talking about AI, A6.

Dave Zinsner, CFO

Yeah, of course, and that's what's driving a lot of this. Because of the advanced packaging, this is what makes this so interesting in terms of an offering. And I think we're likely to see some announcement potentially even before that back half of the year in this part of our business. The gross margins for the overall foundry, we were targeting at about 40%. That's kind of where we want to have our run rate gross margins land. And I think a lot of people think about, okay, wafers get better margins than packaging, and that's the way we should think about it. But in reality, of course, you've got to get the technology up and you've got to get the scale up and so forth. But when it's running at kind of normal state, the margins in this business should be just as good as the wafer margins.

Joe Moore, Analyst — Morgan Stanley

And you used to have some sort of lower-end, lower-margin packaging business.

Dave Zinsner, CFO

You know, that was a little bit, like, COVID-driven, you know. And that wasn't about business we were looking to get in. We did a solid for some customers. But, you know, this stuff has, you know, got real capabilities and real advantages to customers that they're willing to pay for.

Joe Moore, Analyst — Morgan Stanley

And billions of dollars in what time frame?

Dave Zinsner, CFO

It'd be out in that same time frame that I talked about, potentially a little bit earlier than the wafer business. Okay, cool.

Joe Moore, Analyst — Morgan Stanley

Gross margins overall, it seems like you have a lot of things going in the right direction over the course of the year to the extent that revenue can rebound. You get through these capacity constraints. You talked about startup costs coming down. Just any update on thoughts on gross margins?

Dave Zinsner, CFO

Yeah, I think we should expect to see gross margins improve through the year. And, you know, my current thing is we've got to get gross margins to start with a four. And once we're there, we can talk about where the gross margins go after that. But there's no reason when you look at these businesses, if they're competitive, if the cost structure's in the right place, you know, with our margin stacking advantage, there's no reason why the margins shouldn't be significantly higher than they are. But we've got, you know, near-term issues, obviously, or near-term headwinds that are, you know, because we're driving so many nodes through at the same time. We've got a few products that aren't at a competitive cost structure at this point that we have to improve. But I feel pretty good about it. I mean, I think that's one thing. Another thing that this has really brought is a lot more focus on balancing, bringing out products that have performance with products that actually have a cost structure that can be competitive as well. And so you'll see that in the roadmap as we progress. Yes, Wildcat Lake has got a great cost structure that's part of the Panther Lake offering. Nova Lake's cost structure is significantly better than prior products on the client side. And then on the data center side, you know, I think if we look at the Coral Rapids, you'll start to see a much different cost structure for that that will help drive better profitability.

Joe Moore, Analyst — Morgan Stanley

Okay, in that time frame, Coral Rapids is more in the second half next year?

Dave Zinsner, CFO

Coral Rapids is out beyond this year. So this year it's about kind of just getting Panther Lake up in terms of yields. Wildcat Lake is margin accretive, so that should help out meaningfully as well. Obviously the revenue drives, we get fall-throughs, so the revenue improves gross margins as well. We have a few things that kind of will work against us. We're selling a lot of Raptor Lake and some of the older server products that had better cost structures, So our mix probably won't be as good this year, which will be the headwind to gross margins. But beyond this year, I think that starts to improve as well.

Joe Moore, Analyst — Morgan Stanley

And then puts and takes with regards to CapEx, given everything that's going on. You have a decent amount of tool spending this year. You have a lot of shelf space if you need it. How do you think about all of this?

Dave Zinsner, CFO

Yeah, exactly. We guided flat to down, call it flat-ish in terms of capital spend. And we have a pretty big step-off of spend on the clean room side, the space side, and we're actually increasing our tool spend this year versus last year, not surprisingly. We got all the space, now we're tooling it out. I think we're pretty locked in, quite honestly. I mean, most of the POs had to be put in place already to drive the CapEx dollars for this year. Depending on when tools turn on and so forth might influence a little bit the CapEx, But for the most part, I think we have a pretty good line of sight where CapEx will land this year. Right now, we're in the throes of trying to figure out, okay, now, you know, what does the CPU demand that we're seeing on the data center side look like over a multi-year period? What can we expect from a client perspective? And then what sort of wins are we going to get on the foundry side? And that, you know, we'll layer all that in and build out a CapEx plan over the next few years that manages the capacity.

Joe Moore, Analyst — Morgan Stanley

So I have one more question, and then I'll open it to the audience. OPEX, I think you talked about a $16 billion a year. You know, where are you investing more from an R&D perspective? What are the focus areas?

Dave Zinsner, CFO

I mean, not surprisingly, you know, Lippoo kind of went back to let's make sure we get the core working appropriately. So, you know, a lot of the allocation is to the core products and data center and client, making sure that, you know, they're performance-driven, and have the right cost structure. We are also obviously investing in the AI space in solutions that we think can be unique and competitive in the marketplace.

Joe Moore, Analyst — Morgan Stanley

So that means kind of finding an area where you're sort of competitive

Dave Zinsner, CFO

rather than trying to take on the video director. Exactly, and, you know, we talked about the fact that we have our own now ASIC business, which actually, you know, we had actually a set of products that were ASIC products, we pulled together and kind of built the business around that. That business is going to grow significantly this year versus last year. You talked about $250 million a quarter.

Joe Moore, Analyst — Morgan Stanley

Is that more of the traditionally I think of you guys that's around the calm infrastructure space and stuff like that?

Dave Zinsner, CFO

The calm infrastructure is part of it, but we have IPUs selling into the hyperscalers. That I think is going to be a good product this year. So, I mean, we have a foundation. Now, is it down the fairway directed at AI? not yet. I mean, we still have to work on building out the IP, making sure we understand what customers really want us to do, and building products that solve those problems. But I kind of like where that business is going to go just in the year that we've kind of reformed it.

Operator

Great. Well, let me see if we have questions from the audience.

Joe Moore, Analyst — Morgan Stanley

If not, maybe we could just touch on the board changes last night. It seems like you've sort of developed a board that has a lot, over time, a lot more semiconductor expertise than what you had two or three years ago. Can you just talk about the change and anything that that may signal to us?

Dave Zinsner, CFO

Yeah, so our most recent hire into the board, Craig Barrett, obviously well-known in the semiconductor space, and brings up significant technical capability along with him. I mean, I've worked with him now for a few months, and it's been pretty amazing how the depth of his understanding about the markets and so forth. So I think that was a great addition. Frank, the chairman, is stepping down. He's been at the company for 17 years, led a lot of changes that needed to happen. So, you know, it's not, I think after 17 years, not unusual that somebody would like to hang up the saddle there. And, you know, excited for Craig to come on to be the chairman. I think he's going to be great. He had a strong relationship with Lipu in the past. So that's also, I think, helpful that, you know, they kind of see the world in a very similar way and I think can work together to, you know, to make the company successful.

Joe Moore, Analyst — Morgan Stanley

Yeah, that's great. We do have a question up in front. Can you wait for the mic?

Dave Zinsner, CFO

In addition to the yield comments you've made,

Joe Moore, Analyst — Morgan Stanley

you've talked about increasing throughput. And could you elaborate on that

Dave Zinsner, CFO

and what the opportunity is there? Yeah, so, and there's actually two parts to the throughput. There's a front end and a back end kind of aspect of the throughput. As you might imagine, you know, when you're trying to, like, lock yields down and get on a kind of a steady path, you somewhat give up on the throughput a little bit to make sure that you're delivering yields. So our days per mask layer, kind of how we measure it, you know, has kind of eked up a little bit. just to get the yields to start to follow along the right progression. Now that we're there, I think looking at days per mass layer and trying to shrink that, I think, makes a lot of sense. When you look at our number competitively and even year over year, it's not where it should be. So there's certainly clearly opportunity there. And I think that's one of the ways, you know, hopefully we can improve the supply as we progress through the year is just by improving the throughput. The other, so that's in the front end. The back end also, quite honestly, isn't, you know, at peak performance. You know, as we build out, you know, what we need across our network, we have, you know, maybe allowed some of that to atrophy a little bit. So, you know, Naga and Lipu are very focused on how we can improve the back end cycle times to get product out once it's through the wafer portion more expeditiously.

Joe Moore, Analyst — Morgan Stanley

I think we had another question, just a really quick one, if we could.

Operator

Yeah, a really quick one. I was a little late into the presentation. Perhaps you have already commented on that. Could you please comment a little bit about your 14A process and especially when do you expect the PDK to be out? Thank you.

Dave Zinsner, CFO

Yeah, so we have, you know, obviously less mature versions of 14A out today. Customers are working with it using, you know, running test chips through 14A. Our expectation as we get towards the end of the year will be at a maturity level for 14A that we'll get actual customer yay or nay on the process, and, you know, we'll go from there.

Joe Moore, Analyst — Morgan Stanley

All right. We're out of time. We'll wrap it up there. Thanks so much.

Dave Zinsner, CFO

All right. See you. Bye.