INTEL CORP files 10-Q: quarterly report (10-Q)

Overview

This report should be read in conjunction with our 2025 Form 10-K where we include additional information on our business, operating segments, risk factors, critical accounting estimates, policies, methods and assumptions used in our estimates, among other important information.

Significant Events and Trends Impacting Results

The following discussion highlights significant events, key developments and trends that we believe meaningfully impacted our consolidated financial results and financial position during Q3 2026 or that we believe may continue to influence our future operating results and financial position, as well as specific matters that occurred in 2025 that impact the comparability of our results.

Common Stock Issuance

On August 12, 2026, we issued approximately 242 million shares of our common stock through a public offering. We intend to use the net proceeds of $22.6 billion for general corporate purposes, including capital expenditures and working capital. Refer to "Note 4: Earnings (Loss) Per Share and Stockholders' Equity" within the Notes to Consolidated Condensed Financial Statements for additional information.

Future Node Development and Manufacturing Expansion Projects

At the start of 2026, we released our first products manufactured on Intel 18A, our most advanced leading-edge semiconductor manufacturing technology, or node, in high volume production. We continue to develop its derivative node, Intel 18A-P, designed for future Intel products and external Intel Foundry customers, and entered into risk production of products on such node in June 2026. We are focused and have made substantial progress in recent periods on the continued development of Intel 14A, the next generation node beyond Intel 18A and Intel 18A-P. During Q2 2026, we committed to completing development of Intel 14A, with a number of future Intel products designed to utilize the node and manufacturing expansion projects underway for production of products on the node. Since then, we have continued to make progress towards meeting performance and design milestones for potential significant customers to evaluate Intel 14A for their future products. We have also accelerated various manufacturing expansion projects, though the scale and pace of our manufacturing expansion projects will ultimately be dictated by the amount of committed demand for Intel 14A that we are able to obtain from our Intel products roadmap and design wins with potential significant external customers.

The design, development and manufacturing of leading-edge nodes is risky and capital-intensive, and it takes years for capital investments to yield a return. We remain committed to maintaining a disciplined approach of investing capital in future node development and new or upgraded manufacturing facilities only where we have a clear line of sight to an acceptable return on that capital.

Market Trends

In Q3 2026 and YTD 2026, demand for our data center products remained strong amid continued investments in AI infrastructure. We expect strong demand to continue into Q4 2026 and beyond. In the client market, demand for our products declined in Q3 2026 as compared to the first half of 2026 due to industry-wide impacts from higher component prices, particularly memory, constrained IT budgets and tighter inventory management. We expect these trends to worsen in Q4 2026 and persist in 2027.

Industry Supply Constraints

In Q3 2026 and YTD 2026, our results of operations were impacted by industry-wide supply constraints of substrates, memory and other critical components. Among other things, these constraints impacted our availability of product to meet demand, particularly for our data center CPUs that rely upon substrates for the advanced packaging utilized in their manufacture. Other parts of the market, especially those that are more price-sensitive such as the client markets, have seen demand impacted adversely by high memory prices as a result of memory supply constraints. During Q3 2026, customer demand for certain client products eased as compared to the first half of the year, while demand for certain data center products continued to exceed available supply. We expect the industry-wide shortages of substrates, memory and other critical components to persist into next year, which may limit our ability to fully meet demand in some areas and adversely impact demand in other areas. We continue to take actions to mitigate these constraints where possible, including by adding capacity in our manufacturing facilities and securing supplies through long-term agreements, though our ability to mitigate the impact of other constraints, such as those with respect to memory, is very limited.

Israel Fab Business Disruption

In mid-October 2026, an accident at our manufacturing facility in Kiryat Gat, Israel resulted in employee casualties and injuries and halted manufacturing operations at the facility. Operations have remained suspended for approximately two weeks and are expected to resume by the end of October 2026. We expect to incur charges associated with scrapped inventory, facility remediation and cleanup activities and excess capacity charges resulting from the under-absorption of overhead costs in Q4 2026. In addition, we expect the reduced production volumes and operating inefficiencies during the stoppage and restoration period to adversely affect manufacturing costs, gross profit and operating results in Q4 2026 and through the first half of 2027.

Our assessment and remediation efforts are ongoing and we are currently unable to reasonably estimate the financial impact from the incident or the amount of insurance recoveries we may receive. The ultimate financial impact of the incident will depend on the duration of operational disruptions, the extent of property damage, the timing and cost of remediation efforts, insurance recoveries, and our ability to mitigate production shortfalls through our global manufacturing network. We maintain insurance coverage applicable to certain losses arising from the incident and are evaluating potential recoveries under the policy. The amount and timing of any insurance recoveries remain subject to the terms of the applicable policy, including deductibles, coverage limits and claims resolution processes.