Full-year revenue set an all-time Intel record of $77.9 billion, up 8 percent YoY.

16

Intel Corporation reported fourth-quarter and full-year 2020 financial results. The company also announced that its board of directors approved a cash dividend increase of five percent to $1.39 per share on an annual basis. The board declared a quarterly dividend of $0.3475 per share on the company’s common stock, which will be payable on March 1 to shareholders of record on February 7.

“We significantly exceeded our expectations for the quarter, capping off our fifth consecutive record year,” said Bob Swan, Intel CEO. “Demand for the computing performance Intel delivers remains very strong and our focus on growth opportunities is paying off. It has been an honor to lead this wonderful company, and I am proud of what we have achieved as a team. Intel is in a strong strategic and financial position as we make this leadership transition and take Intel to the next level.”

Q4 2020 Financial Highlights

	GAAP				Non-GAAP
	Q4 2020	Q4 2019	vs. Q4 2019		Q4 2020	Q4 2019	vs. Q4 2019
Revenue ($B)	$20.0	$20.2	down 1%		$20.0^	$20.2^	down 1%
Gross margin	56.8%	58.8%	down 2.0 ppt		58.4%	60.1%	down 1.7 ppt
R&D and MG&A ($B)	$5.4	$5.0	up 9%		$5.4	$4.9	up 9%
Operating margin	29.5%	33.6%	down 4.2 ppt		31.5%	35.7%	down 4.2 ppt
Tax rate	21.8%	14.4%	up 7.4 ppt		21.5%	13.6%	up 7.9 ppt
Net income ($B)	$5.9	$6.9	down 15%		$6.2	$6.7	down 6%
Earnings per share	$1.42	$1.58	down 10%		$1.52	$1.52	flat

In the fourth quarter, the company generated $9.9 billion in cash from operations and paid dividends of $1.4 billion.

Full-Year 2020 Financial Highlights

	GAAP				Non-GAAP
	2020	2019	vs. 2019		2020	2019	vs. 2019
Revenue ($B)	$77.9	$72.0	up 8%		$77.9^	$72.0^	up 8%
Gross margin	56.0%	58.6%	down 2.5 ppt		57.6%	60.1%	down 2.6 ppt
R&D and MG&A ($B)	$19.7	$19.7	flat		$19.5	$19.5	flat
Operating margin	30.4%	30.6%	down 0.2 ppt		32.5%	33.0%	down 0.5 ppt
Tax rate	16.7%	12.5%	up 4.2 ppt		16.4%	12.2%	up 4.2 ppt
Net income ($B)	$20.9	$21.0	down 1%		$22.4	$21.8	up 3%
Earnings per share	$4.94	$4.71	up 5%		$5.30	$4.87	up 9%
Cash from Operations	$35.4	$33.1	up 7%		$35.4^	$33.1^	up 7%
Free cash flow	N/A	N/A	N/A		$21.1	$16.9	up 25%

For the full year, the company generated a record $35.4 billion cash from operations, paid dividends of $5.6 billion, and used $14.2 billion to repurchase 274.6 million shares of stock.

Business Unit Summary

Key Business Unit Revenue and Trends		Q4 2020		vs. Q4 2019			2020		vs. 2019
Data-centric:
DCG		$6.1 billion		down	16%		$26.1 billion		up	11%
Internet of Things
IOTG		$777 million		down	16%		$3.0 billion		down	21%
Mobileye		$333 million		up	39%		$967 million		up	10%
NSG		$1.2 billion		down	1%		$5.4 billion		up	23%
PSG		$422 million		down	16%		$1.9 billion		down	7%
				down	11%*				up	9%*
PC-centric:
CCG		$10.9 billion		up	9%		$40.1 billion		up	8%

Fourth-quarter revenue exceeded prior expectations by $2.6 billion driven by record PC-centric revenue with PC unit volumes up 33 percent YoY led by record notebook sales. The company also achieved better-than-expected data-centric results, including record Mobileye revenue.

2020 marked Intel’s fifth consecutive year of record revenue. The Client Computing Group, Data Center Group, Non-volatile Memory Solutions Group, and Mobileye all achieved record full-year revenue. In 2020, the company invested $13.6 billion in research and development and $14.3 billion in capital expenditures while focusing to strengthen its core CPU business, improve execution and accelerate growth.

Q4’20 Business Highlights

• Started production of 10nm-based 3rd Gen Intel^® Xeon^® Scalable processors (“Ice Lake”), ramping in Q1.
• Launched 11th Gen Intel^® Core™ processors (“Tiger Lake”); announced 11th Gen Intel^® Core™ S-Series desktop processors (“Rocket Lake”), now shipping.
• Entered discrete graphics market with Intel^® Iris^® Xe MAX graphics, Intel’s first Xe-based discrete GPU.
• Announced Amazon Web Services selected Intel’s Habana Gaudi AI processors for EC2 training.
• Delivered gold release of Intel^® oneAPI developer toolkit.
• Announced expanded network infrastructure solutions portfolio.
• Introduced new Intel^® Optane™ SSD series and 3^rd gen Intel Optane persistent memory “Crow Pass” for enterprise and cloud customers.

Forward-Looking Statements

• Intel’s Business Outlook and other statements in this release that refer to future plans and expectations are forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “forecasting,” “guidance,” “believes,” “seeks,” “estimates,” “continues,” “launching,” “aim,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to the pending sale of our NAND memory and storage business, market opportunity, business plans, future macroeconomic conditions, future products and technology and the expected availability and benefits of such products and technology, and anticipated trends in our businesses or the markets relevant to them, also identify forward-looking statements. All forward-looking statements included in this release are based on management’s expectations as of the date of this release and, except as required by law, Intel disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. Forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Intel presently considers the following to be among the important factors that can cause actual results to differ materially from the company’s expectations.
• The COVID-19 pandemic has adversely affected significant portions of Intel’s business and could have a material adverse effect on Intel’s financial condition and results of operations. The pandemic has resulted in authorities imposing numerous measures to try to contain the virus. These measures have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners. Restrictions on our manufacturing or support operations or workforce, or similar limitations for our vendors and suppliers, can impact our ability to meet customer demand and could have a material adverse effect on us. Current and future restrictions or disruptions of transportation, or disruptions in our customers’ operations and supply chains, may adversely affect our results of operations. The pandemic has caused us to modify our business practices. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of our key personnel and harm our ability to perform critical functions. The pandemic has significantly increased economic and demand uncertainty. Demand for our products has been harmed in several areas of our business and/or could be materially harmed in the future. The pandemic has led to increased disruption and volatility in capital markets and credit markets, which could adversely affect our liquidity and capital resources. An economic slowdown or recession can also result in adverse impacts such as increased credit and collectibility risks, adverse impacts on our suppliers, failures of counterparties, asset impairments, and declines in the value of our financial instruments. The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, and our Business Outlook is subject to considerable uncertainty. The impact of the pandemic can also exacerbate other risks discussed in this section.
• Demand for Intel’s products is highly variable and can differ from expectations due to factors including changes in business and economic conditions; customer confidence or income levels, and the levels of customer capital spending; the introduction, availability and market acceptance of Intel’s products, products used together with Intel products, and competitors’ products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; changes in customer needs and emerging technology trends; and changes in the level of inventory and computing capacity at customers.
• Intel’s results can vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; and product manufacturing quality/yields. Variations in results can also be caused by the timing of Intel product introductions and related expenses, including marketing programs, and Intel’s ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, as well as decisions to exit product lines or businesses, which can result in restructuring and asset impairment charges.
• Intel’s results can be affected by adverse economic, social, political and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including recession or slowing growth, military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns (including the COVID-19 pandemic), fluctuations in currency exchange rates, sanctions and tariffs, political disputes, changes in government grants and incentives, and continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad, including the United Kingdom’s withdrawal from the European Union. Results can also be affected by the formal or informal imposition by countries of new or revised export and/or import and doing-business regulations, which can be changed without prior notice.
• Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term. In addition, we have entered new areas and introduced adjacent products, where we face new sources of competition and uncertain market demand or acceptance of our products, and these new areas and products do not always grow as projected.
• The amount, timing, and execution of Intel’s stock repurchase program fluctuate based on Intel’s priorities for the use of cash for other purposes—such as investing in our business, including operational and capital spending, acquisitions, and returning cash to our stockholders as dividend payments—and because of changes in cash flows, tax laws, and other laws, or the market price of our common stock. Our stock repurchase program may be suspended or terminated at any time.
• Intel’s expected tax rate is based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 (”TCJA”), and current expected income and can be affected by evolving interpretations of TCJA; changes in the volume and mix of profits earned and location of assets across jurisdictions with varying tax rates; changes in the estimates of credits, benefits, and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.
• Intel’s results can be affected by gains or losses from equity securities and interest and other, which can vary depending on gains or losses on the change in fair value, sale, exchange, or impairments of equity and debt investments, interest rates, cash balances, and changes in fair value of derivative instruments.
• Product defects or errata (deviations from published specifications) can adversely impact our expenses, revenues, and reputation.
• We or third parties regularly identify security vulnerabilities with respect to our processors and other products as well as the operating systems and workloads running on them. Security vulnerabilities and any limitations of, or adverse effects resulting from, mitigation techniques can adversely affect our results of operations, financial condition, customer relationships, prospects, and reputation in a number of ways, any of which may be material, including incurring significant costs related to developing and deploying updates and mitigations, writing down inventory value, a reduction in the competitiveness of our products, defending against product claims and litigation, responding to regulatory inquiries or actions, paying damages, addressing customer satisfaction considerations, or taking other remedial steps with respect to third parties. Adverse publicity about security vulnerabilities or mitigations could damage our reputation with customers or users and reduce demand for our products and services.
• Intel’s results can be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, commercial, disclosure, and other issues, as well as by the impact and timing of settlements and dispute resolutions. An unfavorable ruling can include monetary damages or an injunction prohibiting us from manufacturing or selling one or more products, precluding particular business practices, impacting our ability to design products, or requiring other remedies such as compulsory licensing of intellectual property.
• Intel’s results can be affected by the impact and timing of closing of acquisitions, divestitures, and other significant transactions. In addition, these transactions do not always achieve our financial or strategic objectives and can disrupt our ongoing business and adversely impact our results of operations. We may not realize the expected benefits of portfolio decisions due to numerous risks, including unfavorable prices and terms; changes in market conditions; limitations due to regulatory or governmental approvals, contractual terms, or other conditions; and potential continued financial obligations associated with such transactions. Risks and uncertainties relating to the pending sale of our NAND memory and storage business to SK hynix are described in our Form 8-K filed with the SEC on October 20, 2020.