“We expect gross margin fall-through to significantly improve in 2026 driven by the vastly improved cost structure of Intel 18A, the return of tiles to a meaningfully underutilized Intel Foundry and operational efficiencies.”

In context

“ring charges disclosed today and the uncertainty around the timing of capital offsets as we approach year-end. In 2025, with OpEx of approximately $17.5 billion and gross and net CapEx of $20 billion to $23 billion and $12 billion to $14 billion, respectively, we expect to achieve positive adjusted free cash flow. Before I close, let me take a moment to remind you of a couple of items as you model 2025 and that today's restructuring and impairment charges are in service to achieve this financial model. First, we are positive on the growing market adoption of the AI PC and our strong product positioning. As our mix of outsourced products and CCG grows in calendar year 2025 and we ramp Intel 18A to support Panther Lake, gross margin expansion could be muted, particularly in the second half. We expect gross margin fall-through to significantly improve in 2026 driven by the vastly improved cost structure of Intel 18A, the return of tiles to a meaningfully underutilized Intel Foundry and operational efficiencies. Second, the estimated $700 million on a GAAP basis of noncontrolled income from Mobileye, Altera, IMS and the portion of the SCIPs earned by our partners is expected to be heavily weighted to the second half of 2025 and will continue to grow in future years with the ramping of wafer outs at our SCIP fabs in Arizona and Ireland. In closing, our profitability remains well below the standards we've set and recognize there's much more work to be done to improve the efficiency of the business. We're encouraged by the progress we made this quarter to rightsize the spending, and our process and product execution, combined with a strong external customer traction in the quarter, give us confidence our strategy will deliver compelling shareholder returns. I'll now turn it back over to John to star”