R. Kevin Sellers - Vice President, Investor Relations Paul S. Otellini - President, Chief Executive Officer, Director Stacy J. Smith - Chief Financial Officer, Vice President

Ross Seymore - Deutsche Bank Srini Pajjuri - Merrill Lynch Sumit Dhanda - Banc of America Glen Yeung - Citigroup Uche Orji - UBS John Pitzer - Credit Suisse James Covello - Goldman Sachs Christopher Danely - J.P. Morgan Tim Luke - Lehman Brothers Hans Mosesmann - Raymond James John Barton - Cowen & Company Joanne Feeney - FTN Midwest Securities Doug Freedman - American Technology Research John Lau - Jefferies & Company

Good day, ladies and gentlemen, and welcome to the Q1 2008 Intel Corporation earnings conference call. My name is Denise and I will be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Kevin Sellers, VP of Investor Relations. Please proceed, sir. R. Kevin Sellers: Thank you, Denise and welcome everyone to Intel's Q1 2008 earnings conference call. Joining me on today’s call are Chief Executive Officer Paul Otellini and Chief Financial Office Stacy Smith. As usual, Paul will be discussing the highlights of the quarter and then Stacy will provide more details on our financial [results of Q1] as well as the outlook for both the second quarter and full year 2008. Following Stacy’s comments, we’ll be happy to take questions. A few important items before I turn it over to Paul; first, we’ve posted our earnings release and updated financial statements to our investor website, intc.com, for anyone who still needs access to that information. Also, if during this call we use any non-GAAP financial measures or references, we will put the appropriate GAAP financial reconciliations to our website, intc.com. And last, a replay of today’s call will be posted on our website around [6:00 Pacific Time] and will remain there for approximately two months. As we begin, let me remind everyone that today’s discussion contains forward-looking statements based on the environment as we currently see it and as such, does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. So with that, let me now hand it over to Paul. Paul S. Otellini: Thanks, Kevin. The first quarter marked a very good start to 2008, driven by strong industry demand for our leading edge processors and chipsets. Our revenues grew 9% from the first quarter of last year while operating income improved by 23%. Our improved financial performance and strong balance sheet allowed us to pay a record dividend in the quarter, announce a dividend increase, and buy back $2.5 billion worth of stock -- decisions we made to increase returns for our shareholders. There was a particularly strong demand for our 45-nanometer based products and we continue to ramp that process rapidly, both in terms of volumes as well as in the breadth of product offerings. The benefits of this new process are giving Intel a unique combination of outstanding performance with low power consumption. In terms of the business, we saw all regions grow over last year with North America standing out, driven by strong server demand. In looking at inventories, the overall supply/demand equation for our processors and chipsets appears to be healthy and in balance. Our server business had a particularly strong quarter, turning in an all-time record in revenues. This was driven by three factors. First, we saw notable strength in the high-end, multi-processor segment, particularly in North America. This is due to the ramp of our Caneland MP platform. Second, in the higher volume dual processor category, we saw quad-core shipments continue to grow and now represent a majority of our Xeon DP shipments. And lastly, we saw our total Xeon processor shipments cross over to 45-nanometer based products during the quarter, further extending our leadership in this high volume segment. We have previously discussed the PC market’s transition to mobility and our results in Q1 show continued acceleration of this trend. Our unit shipments were up sharply versus last year and with the introduction of the low cost Netbook category, we believe that the shipment crossover of desktop PCs to mobile PCs will now happen this year and not next year, as we originally anticipated. Our desktop business also had a solid quarter, with good year-over-year growth. Quad-core remains a competitive strength in this segment and we are seeing two important trends in the desktop that offer good growth opportunities. First is the growth of the all-in-one category, where our power optimized 45-nanometer processors are a natural solution. The second is the growth of vPro technology in corporate environments driven by our unique manageability features. Last month I committed to our investors that I would not let our Flash memory business become a long-term drag on the financials of the company. First, in our NOR business, we closed the Numonyx transaction. This is an important step for us and one that is good for Intel and its shareholders. In our NAND business, we are making some decisions on capacity to mitigate this current over-supply situation. Recently we made a decision with Micron to push out the timing of our joint Singapore factory. We will continue to look at other options and keep you informed. I want to assure our shareholders that we entered this business to make money and we will continue to make the appropriate decisions necessary to that end. Just about a month ago, we hosted many of you here at our headquarters for our investor day and we talked in detail about our new growth initiatives. I want to take just a moment to comment on some of the progress we made during the first quarter. First, we launched our newly branded ATOM processor family, an innovative line of low power, cost optimized processors that will be used in a number of new product categories. We began shipping ATOM processors for revenue in the quarter and are very pleased with the early acceptance and interest from a broad and diverse range of customers. In addition to the momentum we are seeing in the Netbook category, we are also gaining momentum in the mobile Internet device category, announcing at our recent Intel Developers Forum a total of 35 new designs across 25 customers for this segment. And finally, I spoke briefly at our investor meeting about our embedded business and the opportunity this represents going forward. I am pleased to say that growth in this category is accelerating, showing strong double-digit unit and revenue gains year over year. In summary, as I look at the results of the first quarter and out into the rest of 2008, I see three important trends unfolding. First, the competitive position of our core business is superb. The benefits of our 45-nanometer process technology are tangible. We expect our differentiation to grow as we aggressively ramp this new technology. The second trend is our cost structure. As Stacy will discuss momentarily, our product costs declined quarter by quarter over 2008, which supports gross margin expansion throughout the rest of the year. And the final trend is momentum in our new growth initiatives where we are seeing real progress, both in terms of product development and customer engagement. Our strategy of bringing the Intel architecture to new market segments combined with the world’s most advanced process technology will prove extremely valuable to our investors. Let me now turn the call over to Stacy for a detailed look at our financial performance for the first quarter. Stacy. Stacy J. Smith: Thanks, Paul. Q1 was a solid start to the year, as microprocessor business strength and strong execution overcame a challenging Flash market and a volatile macroeconomic environment. Compared to the first quarter of 2007, revenue grew 9% with gross margin dollars up 17% and operating profit up 23% year over year. Operating income as a percentage of revenue was over 21% for the first quarter and we generated over $2 billion of cash flow from operations. Revenue for the first quarter was $9.7 billion, at the midpoint of the range forecasted in January, down 10% from the fourth quarter and up 9% from a year ago. Microprocessor sales were roughly seasonal, with average selling prices approximately flat while the combined revenue of NOR and NAND Flash was down 15% from the fourth quarter. More than half of total revenue, $5.3 billion, came from the digital enterprise group. Revenue for this group was approximately 8% lower than the fourth quarter and up 11% from the prior year. Server microprocessors showed particular strength, with units up significantly from Q1 2007. The mobility group accounted for more than a third of total revenue. This revenue of $3.7 billion was down 11% from the fourth quarter and up 11% from the prior year. Mobile microprocessor units were up significantly year over year and average mobile microprocessor prices declined due to the growth of the lower system price segments. Looking at a geographical breakout, all geographies experienced year-over-year growth in Q1, with the Americas region seeing the strongest growth of 17%. EMEA and APAC were both up 8% year over year and Japan was up 4%. The strength in the Americas was primarily due to strong demand for our 45-nanometer server products. Gross margin dollars were $5.2 billion, $1 billion lower than the fourth quarter. Gross margin percentage of approximately 54% was consistent with the midpoint of the revised outlook that we set at the beginning of March and two points lower than the outlook set in January. As expected, the majority of the decline from the January outlook was due to the significantly lower pricing and higher volume in our NAND memory business. In a quarter to quarter comparison, gross margin was four points lower than the fourth quarter. Four things contributed approximately equally: CPU units were lower in the seasonally down quarter; chipset inventory write-offs, including products built prior to qualification for sale; CPU unit costs higher as we ramp the 45-nanometer process; and non-product cost of sales, primarily due to start-up charges for 45-nanometer factories. In a year-to-year comparison, gross margin percentage is four points higher than the first quarter of 2007. R&D and MG&A were approximately $2.8 billion, within the forecasted range of $2.8 billion to $2.9 billion and down over 4% from the fourth quarter. In addition, we had restructuring and asset impairment charges of $329 million. Of this, $275 million was related to the assets transferred to Numonyx. The headcount reduction associated with employees transferring to Numonyx will be reflected in the second quarter. For the first quarter, the number of employees is down by 1,700 from Q4 to approximately 85,000. Gains, losses on equity investments, and interest and other income of $109 million was lower than the fourth quarter and lower than our outlook. Compared to the fourth quarter, it is lower primarily as a result of lower interest and other income. The provision for taxes in the first quarter was at a 33.5% tax rate, higher than the 31% previously forecasted. We now expect a higher proportion of profits will be generated in higher tax jurisdictions. In addition, the Q1 impairment related to assets sold to Numonyx negatively impacted our tax rate since the assets were located in lower tax jurisdictions. A combination of these two factors resulted in the higher Q1 tax rate. On the balance sheet, total inventories were down $98 million, or 3% from the quarter. Microprocessor inventories increased slightly in Q1, in line with our desire to build a bit of inventory on new microprocessor products. Total cash investments comprised of cash, short-term investments, and fixed income trading assets ended the quarter at $13.2 billion, $1.6 billion less than the fourth quarter. Cash flow from operations was over $2 billion. Capital spending was $900 million. Dividend payments were $740 million, and stock repurchases were $2.5 billion. As we turn now to the outlook for the second quarter, please keep in mind unless otherwise specified the forecasts do not include the effect of any new acquisitions, divestitures, or similar transactions that may be completed after April 14th. I will use the midpoint of the forecasted ranges when making comparisons to specific periods. We are planning for revenue, which is typically lower in the second quarter, to be between $9 billion and $9.6 billion. The midpoint of this range would be a decrease of 4% from the first quarter. As a result of the Numonyx transaction, we expect NOR Flash revenue to decline by approximately $200 million from the first quarter to the second quarter. Excluding that revenue decline, revenue is down approximately 1.5%, at the high end of the seasonal range. In Q2, we anticipate NOR Flash revenue of approximately $100 million through a supply agreement with Numonyx, declining to approximately $50 million a quarter by year-end. On a year-to-year basis, the outlook anticipates revenue growth of 7%. Excluding the decline in NOR revenue, the growth would be approximately 11% year over year. Our expectation for gross margin percentage in the second quarter is 56%, plus or minus a couple of points. Quarter to quarter, the NOR Flash divestiture and lower chipset inventory write-offs contribute about one point each. The gross margin impact of the CPU business is slightly positive, better than the decline typically seen in the second quarter. Spending for R&D and MG&A in the second quarter should be between $2.8 billion and $2.9 billion. Additionally, in a separate category for restructuring and asset impairment charges, we expect expenses of approximately $250 million. While we have no full year forecast for this category, we do expect charges as a result of our restructuring program announced in 2006 to decline through the remainder of the year. Depreciation is forecasted to be approximately $1.1 billion. Our estimate for gains and losses from equity investments and interest and other income is a net gain of $75 million, lower than the first quarter, primarily due to lower interest income. Looking beyond the second quarter as volume increases and costs decline, we expect gross margin to improve with second half margins significantly above the first half. We maintain our forecast for gross margin for the full year at 57% plus or minus a few points. Strength in the microprocessor business is offsetting the weakness in the NAND pricing environment. Spending for R&D and MG&A for the full year is forecasted to be approximately $11.5 billion, up $100 million from the prior forecast, primarily due to foreign exchange impacts of the weakened U.S. dollar. R&D spending is forecasted to be approximately $6 billion, up $100 million from the prior forecast and MG&A spending is forecasted to be approximately $5.5 billion, flat to the prior forecast. The tax rate for each of the remaining quarters in the year is now expected to be 33%, two points higher than the prior forecast based on a higher concentration of profits and higher tax jurisdictions. We enter 2008 with the strongest combination of products, silicon technology, and manufacturing leadership in our history. The first quarter results and the current outlook reflect this strength in our core business. As we look into the second half of the year, we are planning for growth and improving financial results, driven by our product leadership, the ramp of the ATOM processor, the build-out of three 45-nanometer high volume factories, declining unit costs, and the impact of our restructuring program. With that, let me turn it back to Kevin. R. Kevin Sellers: Okay, thanks, Stacy. Denise, we’d now like to have you open the line for questions and answers.

(Operator Instructions) From Deutsche Bank, your first question comes from the line of Ross Seymore. Please proceed. Ross Seymore - Deutsche Bank: Just looking at the demand environment in general, it appeared that the microprocessor side was exactly in line with your expectations but can you give us just a little color if there were any gyrations throughout the quarter of strengthening or weakening? Just linearity I guess would be the easiest way to say it. Stacy J. Smith: Sure. The quarter came in -- on the microprocessor side of the business, the quarter came in as expected and we didn’t see anything unusual when you look at how the quarter unfolded. It was pretty normal. Ross Seymore - Deutsche Bank: What about on the ASP side of things? Your competitor clearly had a negative pre-announcement. It looks from our side there like there’s some price increases they are trying to put through. You guys had the flat ASPs but are you noticing any change on the pricing environment? Stacy J. Smith: Our ASP was roughly flat in the first quarter relative to the fourth quarter. If you look across the last three or four quarters, it’s been roughly flat now. This is the fourth quarter in a row. So I would characterize the pricing environment as being pretty much the same as what we’ve seen. I think we really are benefiting from the strength of our product lineup. Ross Seymore - Deutsche Bank: And then the final question on the CapEx, it looks like you under spent the annual rate, even though you reiterated the full year guidance. Anything going on there? Stacy J. Smith: No, nothing unusual. It’s just a little bit of linearity in terms of the spends as we are ramping 45-nanometer, but we are still on track to the capital forecast for the year. Ross Seymore - Deutsche Bank: Great. Thank you.

Your next question comes from the line of Srini Pajjuri from Merrill Lynch. Srini Pajjuri - Merrill Lynch: Thank you. Stacy, you said your NOR is going down to about $100 million and then it is going to go down to 50, so I’m just wondering, should we expect a benefit to gross margins? And then on the NAND front, it looks like you are assuming a fairly weak market. What is the risk that that’s going to come back and surprise us at some point on the positive or negative side? Stacy J. Smith: Surprise us on the negative side or the positive side? Srini Pajjuri - Merrill Lynch: Both. Stacy J. Smith: I would love a positive surprise in the memory business but I’m not banking on it. In the NOR, the way the supply agreement is set up on the NOR side, the gross margin impact from Q1 to Q2 is about a point as the $200 million goes to Numonyx. I don’t expect that to be significant going forward, so I think that’s pretty much the impact you are going to see. What we have baked in on the NAND side for the year is an assumption of a continued over-supply in the NAND market, which brings bit pricing down, although our costs get better quarter on quarter, so I think it kind of isn’t going to be the same magnitude that we saw from Q4 to Q1, but it continues to be a pretty weak pricing environment as I see it going forward and it could be a little better than that, it could be a little worse but that’s how we’re calling the business right now. Srini Pajjuri - Merrill Lynch: Okay and then on inventories, you said your CPU inventories went up a little bit. Just looking out to the next couple of quarters, do you think -- do you feel comfortable where you are or do you need to take it up a bit from here? Stacy J. Smith: In Q4 we were a little less than we’d like, and so I told you in the call last quarter that I wanted to put a little bit of inventory in place on some of our new CPU products. You would typically see us build a little bit of inventory in the second quarter and that’s pretty consistent with how I’m viewing the inventory right now. Srini Pajjuri - Merrill Lynch: Okay, and then my final question for Paul; Paul, it looks like you did pick up some share from AMD just based on their pre-announcement. I’m just wondering if this is mostly from server market or just looking out to the other two as well, notebooks and desktops. And also my question is how sustainable do you think these share gains are? And also, if you could give us -- help us understand what is driving these share gains. Thank you. Paul S. Otellini: I think that we’ll follow the practice we’ve used the last few quarters on share, which is we’ll wait for the -- all the numbers come in and have the independent parties report and then we’ll absorb it. What I can say is that as I pointed out in my comments, we had a very strong quarter in server, in the server segment this last quarter, particularly driven by our ramp of the MP Caneland platform and that allowed us to achieve record server revenues. So I suspect there is some good news in share gain in that number set. The other thing that was strong this quarter was mobile and as we look forward in the course of the year with the crossover from the desktop to the notebook happening essentially a year sooner than we first had thought, I think that is good news for Intel given the strength of our product line, both on the Centrino side and now with the Netbooks and ATOM starting to show fairly good volume projections. Srini Pajjuri - Merrill Lynch: Thank you.

Your next question comes from the line of Sumit Dhanda from Banc of America Securities. Please proceed. Sumit Dhanda - Banc of America: A couple of questions; Stacy, your outlook for the core business in the second quarter, high end of seasonal, down 1.5%, just curious as to what’s driving that expectation. Is it the ramp of the Netbook type products, your expectations of more share gain just given what is ostensibly the perception of the macroeconomic backdrop as a big headwind? Stacy J. Smith: It’s a variety of things but I would call out the ramp of the Netbook product as something that I see being a contributor over the course of the year and we are going to start to see the impact of that in the second quarter. It does look to be driving some incremental unit growth beyond what I thought when I first set my forecast for the year. Paul S. Otellini: Let me come back to -- let me tag on that and then come back to your comment on macroeconomics. Just to remind you, we’ve got 75% of our revenues are not in the U.S. now and much of the concern on macroeconomic debate has to do with the U.S., particularly the Manhattan portion of the U.S. So we don’t see this really impacting our business at this time and haven’t seen it so far in the last couple of quarters. And then secondly in my experience, when there are more difficult economic times, people do two things -- they turn to information technology for productivity gains for their enterprises and they tend to buy the best-of-breed products that are out there. As that happens, if it happens, Intel is in a pretty good position. Sumit Dhanda - Banc of America: Just a follow-up or two; Stacy, on the OpEx line, your employee count down 1,700 following the divestiture of the NOR Flash business -- was this benefit all accounted for in your initial projections or is there a negative offset to this positive development here as you head into the back-half of the -- in other words why the [inaudible] forecast not come down? Stacy J. Smith: The divestiture of the NOR business was encompassed in my annual forecast. As I told you last quarter, we were counting it in in Q1 and then out for the rest of the year. It closed on day two of -- or day one of Q2 so pretty much as I anticipated when I set the guidance for the year. The increase we are seeing in the OpEx line is the impact of foreign exchange rates being higher has caused us to raise that by $100 million. Sumit Dhanda - Banc of America: Okay and just one last final two-parter; first, on the tax rate, is it possible that it reverts back to a lower figure? Because clearly the Americas outperformed, or is the fact that NOR is no longer part of the mix a permanent headwind so to speak? And then secondly, what were the chipset unit inventory write-offs that you were able to -- Stacy J. Smith: Sure. That’s not a two-part question, that’s two separate questions but I’ll be happy to answer it. On the tax rate, we see two effects in Q1 that are both attributable to the Numonyx transaction. One is that transaction changes our distribution of revenue so that we have a higher proportion of our revenue in higher tax jurisdictions. That’s an underlying rate issue and then we had a one-time issue in the quarter which is the impairment on the assets that we took for Numonyx. That impairment hit lower tax jurisdictions, so we got less of a tax effect than you’d expect and that raises our rate for the quarter. To your question of could it come back down, yeah, my expectation is that when we get out in time, then we’ve ramped the Israel factory on 45-nanometers, the third of three factories, that it will start to move the distribution of our revenue back out of the U.S. into some lower tax jurisdictions. It’s likely to be more of a 2009 effect than a 2008 effect. To your chipset question, what you see there is just a very normal process of the build that we had on chipsets prior to qualifying that product for sale, so we reserved those -- we reserved that chipset product and you see that reversing in the second quarter where we don’t retake that and so that’s part of the one point of good news in the second quarter. Sumit Dhanda - Banc of America: Thank you very much.

Your next question comes from the line of Glen Yeung from Citigroup. Please proceed. Glen Yeung - Citigroup: Thanks. Paul, could I just ask you to clarify about your statements on the macro? We’ve been seeing some signs that the European business may be slowing down and I just want to double-check your views on Europe looking into the second quarter. Paul S. Otellini: Well, we had I think a very, very good Q4 in Europe, as you may remember, Glen. And we had a very good Q1 in North America this time, so I’d look at the integral six months and say that from a macroeconomic standpoint, the two most mature of our markets are not showing any signs of weakness. I was just in Europe two weeks ago meeting with customers and I did not pick up anything other than what I’ve indicated today. Stacy J. Smith: It’s also notable that we had 8% year-on-year growth in Europe and that’s pretty close to the average on a year-on-year basis, so we saw growth across every geography in Q1 on a year-on-year basis. Glen Yeung - Citigroup: That’s good to know. Okay, thanks. Second question is on unit costs in the second quarter. I think I heard one of the two of you say that they would be down, so I just want to double-check that. And then I guess I’m trying to understand what’s going on with 45-nanometer mix. I know you set a target at the beginning of the year which I don’t remember if you made public or not but I know that there is a target and I wonder if that target is now more than originally thought. And I guess an add-on question to this is what is 45-nanometer as a proportion of inventories and does that sort of account for all the -- for where inventories are? Stacy J. Smith: I’ll take one and three and Paul will take two. I didn’t break out costs for the second quarter. What I said was that you normally see the CPU business being slightly negative on the overall gross margin in the second quarter and we are really not seeing that in this second quarter. That’s a comment on the strength of the business. So normally what you’d see is volumes down, costs down a bit, you know, it causes the overall gross margin to be down a bit. And we’re not seeing that effect this time as we do the forecast for the second quarter, so it’s roughly flat on the overall Q2 gross margin. And on your question about 45-nanometer inventory, virtually all of the products that were put into inventory over the course of the first quarter was new microprocessor products, so we look at that pretty carefully in terms of the Asia products and it’s a very healthy inventory level and the product that’s in inventory is also very healthy product. Paul S. Otellini: And lastly on the mix, I did show that slide at the investor meeting and it shows a crossover in the third quarter and we are still on track to that and we are ramping as fast as we can. And we’ve -- I think I said at the analyst meeting, we have shipped in excess of 4 million units. At this point in time, we’ve shipped in excess of 8 million units, so we are moving very quickly up the ramp curve. Glen Yeung - Citigroup: That’s great and then just last question here for Stacy on the interest income line -- I want you to just walk us through the decline in that number going forward and just what’s driving that. Stacy J. Smith: Sure. I told you at the analyst meeting that our cash balances were a little higher than we wanted and higher than the target we set with the board. So talking through the Q1 to Q2 reduction, it really is driven by interest income and there’s a couple of components to that. As you know, interest rates are down so we earn a bit less on the portfolio that we have but also I plan to bring the cash balance down a bit more in the second quarter. Glen Yeung - Citigroup: All right, thanks.

Your next question comes from the line of Uche Orji with UBS. Please proceed. Uche Orji - UBS: Thank you very much. Paul, first question is for you; I’m just a little bit positively surprised by the comments you made on North America, especially on servers. If you don’t mind, I would just like to probe that a little bit. My question is how much of this could have been the pent-up demand for 45-nanometer and of course I know it’s continued into Q2 but if you were to look through your various categories of customers, is there a particular area where strength is coming from? I mean, if I look at -- you mentioned Manhattan. If I look at financial services, of course we are not seeing IT budgets going up, so if you can give us any more color just to explain this that would be very helpful. Paul S. Otellini: Those questions may best be answered by Hewlett-Packard and Dell and IBM when they come up but from our perspective as we look through, I actually disagree with you on financial services. I think that you are right on the PC side, we have heard about some softness as the banks cut back employees and so forth. But on the back office stuff, they are still deploying the most advanced technology they can to get the -- for the obvious advantage of speed of transactions. So I take issue with your assertion there. We saw pretty broad-based wide customer-based adoption of MP at a very strong ramp on Caneland, and as I said the quad-core, particularly 45-nanometer quad-core mix, accelerated over the quarter as our volume grew. We are -- to mix your question and Glen’s together on 45-nanometer, we are filling from the top. The bulk of our 45-nanometer output starts out in servers, moves to mobile, then moves to desktop. Uche Orji - UBS: Another question, Paul -- thanks for that, that’s helpful. Another question is regarding your pricing strategy. If I look at your strategic positioning [inaudible] your strategy with pricing say for the rest of the year to kind of keep it flattish, or do you have a chance now to kind of [inaudible] you know, into higher speeds or higher ASP as a way to kind of create more value? So if I look through the rest of the year, is it possible for you to talk through what will be your strategy for pricing? Of course I know this is dependent on what the environment looks like, but from your perspective any sense of what we should be thinking about when we think about price would be helpful. Paul S. Otellini: I can assure you that we are always trying to sell up to the highest performing products in any of our segments, so that’s just -- that’s just standard operating procedure. When our mix is as competitive as it is today, we have a better chance of doing that and so look to try to see us move towards MP, towards faster Xeons, towards faster notebooks as much as possible. Offsetting that I have to say is, and this is the unknown, is the ramp of which things like the Netbook, the ATOM based Netbooks start taking off, which have a lower average selling price but as we’ve shown you at the analyst meeting, awfully good margins. And that segment we still think is going to -- it will be net accretive to the overall TAM for notebooks. Uche Orji - UBS: Right, that’s helpful. Thank you very much, Paul. Appreciate it.

Your next question comes from the line of John Pitzer from Credit Suisse. Please proceed. John Pitzer - Credit Suisse: Thanks, guys. Congratulations. Paul, a couple of questions, just getting back to the macro, you said 75% of your business is outside the U.S. On the server front, I’m assuming there’s a much higher concentration within the U.S. and I’m just kind of curious -- do you think market share gains or mix is a better driver? Because you’ve now had I guess three consecutive quarter, Q3, Q4, and now Q1 where server demand has been extremely strong for you guys. Paul S. Otellini: I think we’ll let the server, the MSS question sort itself out but I think it’s probably a bit of both as it sorts out. One of the things that we’ve talked about is this growth of the large Internet data centers who are now consuming a very measurable part of the server output and sometimes they buy from us directly and sometimes they buy through our OEM customers. Their growth, I mean, you saw the stories about Amazon and Google in the papers in the last couple of days, their growth is really quite large as they try to build up their infrastructure for cloud computing. And I think that is a driver that is measurably different in the last couple of quarters than in the previous few before that. And on top of that, you’ve got the quality of the product line which may be helping on share. John Pitzer - Credit Suisse: And then Paul, on the mobility side, if you look over the last four quarters, revenue growth is still very healthy but is decelerated from above 20% to now about 11.7. Is that all pricing and mix as you get into these new end markets? Is that the primary contributor there? Paul S. Otellini: Yeah, it’s by far -- it’s the predominant driver by far. John Pitzer - Credit Suisse: And then Stacy, just two quick housekeeping questions around the NAND front; first, any money that you guys give to IMFT, does that show up in the $5.2 billion capital budget? And can you give us a sense of how much capital you are planning to commit to that joint venture this year? Stacy J. Smith: So it does not show up in the CapEx spending, so the $5.2 billion is what we are spending for our internal factories. And as we push out the Singapore factory a bit, it’s a little premature to say how much CapEx will do. It’s likely to come down from what we thought a few weeks ago. John Pitzer - Credit Suisse: And then lastly, just to help us given that the pricing of NAND was an issue to Q1 gross margins, how much does NAND pricing have to fall in Q1 before we need to start to worry about your gross margin guidance for the quarter? Stacy J. Smith: It’s probably best if I talk about what I see for the rest of the year and I’ll give you a little bit of color commentary on what we saw Q4 to Q1 and then over the rest of the year. We see a continued over-supply in the NAND market. That’s pretty consistent with what most of the external analysts are saying as well. So we do see pricing coming down on a gigabit level. We are taking some actions to improve our mix and our financial performance but we do see pricing coming down and also our costs come down, so it should be relatively gross margin neutral from here on out to what we have modeled in. The real difference is Q4 to Q1, our gigabit production doubled. We had a new factory that had come on line and we now see that kind of flattening out over the rest of the year. So even if there is a big drop in NAND pricing, it’s not going to have the same magnitude on any given quarter as what we saw Q4 to Q1 because of that bit doubling that hit us at the same time that the prices came down by half. John Pitzer - Credit Suisse: Great, thanks, guys.

Your next question comes from the line of Jim Covello from Goldman Sachs. James Covello - Goldman Sachs: Good afternoon. Maybe Stacy, first question -- can you help us quantify how much NAND is dragging down overall gross margins for the full year 2008? Stacy J. Smith: More than we thought when we originally set the forecast for the quarter, but I’m not going to break it out. You know, we had a big impact in Q1 and I think it’s going to be pretty much gross margin neutral as we go through the year from where we are. Again, I’ve got costs coming down about the same rate that I see pricing coming down. And then we are also looking at a series of other options to both improve our business on a tactical basis and if it’s not going to give the kind of financial performance that we are holding it to, then we’ll go take other options. I think that’s all I can say on NAND right now. James Covello - Goldman Sachs: That’s helpful. And then, relative to the margins in Q1, which were as you said were lower because the NAND, and then the guidance for the full year gross margins remaining the same, what is helping in the back half of the year offset the weakness in the first quarter? Stacy J. Smith: Yeah, it’s not just the back half of the year. It’s actually Q2 is up a bit from what I thought a quarter ago, and what we are seeing is just continued -- some growing strength in the core business. Specifically, I see some incremental growth coming from the ATOM processor. I see costs coming down and that’s offsetting the weakness that we are seeing in NAND. James Covello - Goldman Sachs: Is it -- I think you guys had commented on originally that some of the gross margin you had assumed for the year you were assuming a competitive product from your competitor and assuming some price competition as a result of that. Any possibility that some of that isn’t as bad as you might have expected because of your product differentiation? Stacy J. Smith: I think we’ll have to wait and see as we get into the second half on how their products perform and the rate at which they are able to ramp it. James Covello - Goldman Sachs: Okay, and then final question, just around the competitive environment, obviously our product differentiation is creating a difficult situation for your competitors, or your competitor. Is there a point at which the competitive environment gets too dire for them and how do you think about strategically your actions in the face of the competitive environment, giving how well you are doing and how poorly they are doing? Paul S. Otellini: I think you’ll have to ask them the first part of that question. I don’t think I’m qualified to answer it but in terms of the way we look at it, my job is simply to bring out the best products as possible and meet customer needs and drive dynamism in the marketplace in terms of new products and new technologies that stimulate market growth. That’s been the Intel CEO’s job for two decades and I don’t see it changing. Stacy J. Smith: And it’s really stark if you look at the difference in our results back a year-and-a-half ago when we didn’t have product leadership to today when we do. It really drives a very different set of financial execution for us. James Covello - Goldman Sachs: Great. Final question and then I’ll be done -- [Hallum] still on track? Paul S. Otellini: Yes, sir. James Covello - Goldman Sachs: Great. Thanks very much.

Your next question comes from the line of Chris Danely from J.P. Morgan. Christopher Danely - J.P. Morgan: Could you talk about what utilization rates did in Q1 and where you expect them to go for the rest of the year, or is it that everything is kind of running flat out right now? Stacy J. Smith: It’s pretty much the same that I showed you at the analyst meeting about a month ago. Utilizations are what I would consider in the sweet spot over the course of 2008. You know, not too hot, not too cold. Christopher Danely - J.P. Morgan: And then Stacy, it sounds like you are also going to deploy some more cash in Q2 so we can assume another buy-back? Stacy J. Smith: You know, we have an ongoing buy-back program. We did a good buy-back in Q1. It was $2.5 billion. We paid a dividend. We actually announced an increase in our dividend. As I told you at the investor meeting, we’ll utilize both of those mechanisms to keep cash at the level agreed with the board. Beyond that, I can’t go any further in commenting on the first quarter. Christopher Danely - J.P. Morgan: That’s fine. And it sounds like the NOR business is about $300 million. Why are you guys keeping $100 million in revenue for Q2 and the 50 for Q3 and Q4? Stacy J. Smith: So it’s not that we’re -- we’re actually supplying wafers to Numonyx on a supply agreement for some products in factories that they didn’t take and so that supply agreement will run the course over 2008, maybe a little bit at the beginning of 2009 and then it will be done. Christopher Danely - J.P. Morgan: Okay, and then last question just for Paul -- so Paul, to reiterate, you see no troubling signs of demand either from the U.S. or Europe or Asia? Paul S. Otellini: No we haven’t. Christopher Danely - J.P. Morgan: Thanks.

Your next question comes from the line of Tim Luke with Lehman Brothers. Tim Luke - Lehman Brothers: Thanks so much. Stacy, I was wondering, with respect to the mobility business, it looked like what your outlying strength in the server business in terms of the revenue and the profitability, that while I think Paul was saying that your notebook business was strong relative to your expectations, the operating margin there looked lower versus the fourth quarter but lower than it’s been in a while. Do you have any color on the operating level there and what some of the issues might have been? Stacy J. Smith: Sure, and actually it’s probably best seen -- you see the same impact year-on-year, so let me give you Q107 to Q108. It’s best seen there and it really is the price of success for the mobile business. They pick up now a larger percentage of the allocated costs across the company. As Paul said, we’re seeing that crossover point a year earlier than we thought so they are picking up a larger percentage of the process technology development spending that we do that we allocate to the group. So that’s a chunk of it. We also made the decision to transition our advertising from the first half of last year where we were doing Core 2 Duo based advertising. It is now Centrino based advertising, so they are picking up a much larger percentage of the overall advertising budget of the company. It really is those kinds of things that are impacting the operating margin. Tim Luke - Lehman Brothers: Do you have any color -- in saying that the ASPs were flat, maybe the server ASPs were up because you had strong revenue and new product. How was the notebook ASP and maybe the desktop ASP? Stacy J. Smith: I pretty much said the notebook ASP in my speech. We saw notebook ASPs coming down some, same as last quarter as the notebook form factors moving into the consumer segment and emerging markets, we see good strong unit growth and it’s partially offset by the ASP coming down as it’s hitting these new price segments of the market. That was true in Q1 as it was true in Q4. Tim Luke - Lehman Brothers: And the desktop ASP obviously lower as well, right? Stacy J. Smith: I’m not going to go segment by segment. The two significant ones was we saw good growth in the server market, we saw good growth in units in the notebook market offset a little bit by ASP. Tim Luke - Lehman Brothers: And going forward then, the operating margin for the mobility business, we would think about it being more in this mid to low 30s range, is that how we should think about it? Stacy J. Smith: Going forward, their allocation over the course -- we’re not making a new advertising decision, so that’s kind of all in the Q1 result. We do the allocation methodology on a semi-annual basis, so it’s probably going to look a little better as the revenue grows over the course of the year would be my guess. Tim Luke - Lehman Brothers: Separately, just with respect to the chipset revenues versus the MP revenues, it looks like the sequential decline in chipsets was more pronounced than the sequential decline in microprocessors and similarly in the prior quarter, the revenue growth had lagged what it was in microprocessors. Any color on some of the dynamics in chipsets for both enterprise and mobility versus microprocessors? Stacy J. Smith: Let me give an aggregated comment on chipsets and then maybe Paul wants to give some color on the different segments, I don’t know. We had a very strong Q4 in chipsets. What we saw in Q1 in total on chipsets was pretty much as we expected and kind of within the wide range of outcomes that you typically see from a Q4 to Q1, so we didn’t see anything unusual there. You also have to keep in mind that within that chipset and other revenue segment, we had some revenue that’s gone away. We were providing some supply agreements due to our divestiture of the handheld business. We had some other small divestitures, that kind of hits that line item. So a little bit of what you are seeing is due to some of those effects and I articulated those at the beginning of the quarter. Tim Luke - Lehman Brothers: Paul, anything on that? I mean, should we continue to expect chipsets to lag the microprocessor revenue growth or is there going to be a catch-up at some point? Paul S. Otellini: They lead and they lag. It depends on the season. In the second half of the year they tend to build up. There’s about an eight to 12-week, depending on the form factor, lead time of chipsets ahead of microprocessors. So as you move towards the volume parts of the year, the chipsets start to pick up in advance of microprocessor seasonality and then as you come into this part of the year, you have the trough because Q2 is typically lower than Q1. So I think what you are seeing -- I wouldn’t read anything into that. Our view of our -- our competitiveness in chipsets is unchanged. We think we are -- we have a very strong position here. Tim Luke - Lehman Brothers: Lastly, if I may, just on the NAND bit growth, I think at the analyst meeting Stacy you had suggested that the bit growth in NAND would be maybe even flattish going forward after a strong ramp in the first calendar quarter. Do you have any color there? And then separately, given the industry commentary around the battery fire in perhaps in the notebook outlook, I was just wondering if there was -- it doesn’t seem like in your guidance there’s any impact there at all but I was just wondering if you had any color there on how we should think about that. Stacy J. Smith: Sure. So on NAND, consistent with what I said at the analyst meeting, we saw incremental capacity coming on in Q4 and Q1 that absolutely impacted our results. Over the course of the rest of the year, we don’t have incremental capacity coming on. Our bits grow a little bit as yields improve but compared to what we saw last couple of quarters, that will be pretty minor. And we had the next increment of capacity coming on with the Singapore factory and in conjunction with Micron, we’ve made a decision to push that out while we watch the market. In terms of the battery fire, our forecast encompasses what we see there. We’re not seeing that as an impact on the quarter. Tim Luke - Lehman Brothers: Thanks. Good luck.

Your next question comes from the line of Hans Mosesmann from Raymond James. Hans Mosesmann - Raymond James: Paul, a quick question on the NAND situation -- what is on the table with your discussions with Micron regarding possible action and in terms of that, could you possibly consider getting out of the NAND business completely? Paul S. Otellini: Well, I really don’t think it’s appropriate to get into that, Hans. I mean, there’s a lot of ideas that we have here and talking about them publicly before they are realized or discussed I think is inappropriate and weakens our negotiating position and our options. So I really can’t comment on that prior to doing it. We had similar questions raised on NOR a year-and-a-half ago about what are you going to do about it and we couldn’t answer those, even though we were in discussions with ST, so it’s just -- I would -- that’s why I put the statement I made in my commentary on this has our focus and you have our commitment on the long-term, non-drag on the business. Hans Mosesmann - Raymond James: Okay, fair enough. Thank you. That’s it.

Your next question comes from the line of John Barton from Cowen & Company. John Barton - Cowen & Company: Thank you very much. Paul, as you start to see more and more design wins for the ATOM roll in and you start the shipping for revenue, as you look at those wins is there anything that’s changed in your view with respect to what the real adopters would be as far as either emerging economies, mature economies, MIDs, notebooks, et cetera? Paul S. Otellini: I think it’s too soon to call that. Certainly some of the -- I think the bulk of the early sales of the Netbooks has been in -- either in mature markets or tier one cities of places like China, and most people that are buying them are buying them as a fashion accessory, as a second or third notebook in the household, or women because of the form factor, both the keyboard is more amenable to their hand size or fits in a purse and those kinds of things. But I think we are in the early stage of it still. I mean, it’s like the early days of the iPod and as you have different versions come out and different price points come out, I would expect us to move in particularly well in emerging markets. John Barton - Cowen & Company: And as you review the design wins and the competitive dynamics out there, what actually do you see as the primary competition for an alternate processor choice and then how you think that potentially evolves through the following year? Paul S. Otellini: Well, you’ve seen some already. I mean, HP has one based upon Via already, so that’s certainly one that’s out there today. But in terms of the overall technology, in terms of performance and battery life and integration of chipsets, we think we are in a pretty good position to take advantage of the category we are creating. John Barton - Cowen & Company: With respect to overall PC demand, you know, you were pretty adamant about your statements the June quarter looks basically seasonal, you are not seeing anything to make you fearful of North America, et cetera. Can I extrapolate from that that your view of 2008 really hasn’t changed much since the last time you made a comment? I think you had low double-digit PC unit growth shipments for ’08. Is that fair? Paul S. Otellini: Yes. Yes it hasn’t change and yes that was our view at the time and I haven’t moved from there. John Barton - Cowen & Company: Great. Thank you very much.

Your next question comes from the line of Joanne Feeney from FTN Midwest is next. Joanne Feeney - FTN Midwest Securities: Just one last question on the spending side of the budget, with the restructuring that you are completing now, can we expect that to bring down in absolute terms your research and your selling budgets, or is that likely to remain flat -- Stacy J. Smith: Our long-term goals haven’t changed, which is to grow spending at a rate that’s slower than revenue and have an expanding operating margin. In terms of the absolute spending level, that’s going to be to a large extent dependent on the revenue environment that we are in. But the long-term goals here are the same that I communicated to you a month ago -- it’s grow operating margin percent and have spending grow slower than revenue. Joanne Feeney - FTN Midwest Securities: And would you say that after the restructuring, you feel like you have more -- when conditions change, you are able to reduce those variable costs a bit more quickly than in the past? Stacy J. Smith: Could you repeat that question? There’s a little bit of feedback on the line. Joanne Feeney - FTN Midwest Securities: Sorry about that. I was just wondering, given the restructuring, has the firm become a bit more nimble? I mean, if demand goes down, can you cut out some of these expenses fairly quickly? Stacy J. Smith: There’s no question in my mind that we’ve become more nimble. I mean, if you -- the way we went about the restructuring and one of the reasons it’s taken some time to do it is we tried to address the underlying efficiency of the company, you know, the efficiency of our manufacturing organization, the efficiency of our research and development organization. There’s no question in my mind that we’ve addressed some of the underlying efficiency and frankly it’s a focus that we will continue over the course of time, even after the restructuring program that we announced two years ago goes away. I think it’s an incredible competitive tool for us. Joanne Feeney - FTN Midwest Securities: And that $250 million that we should expect this quarter, you said it was likely to reduce over the course of the year. Is that something you are going to wind up you think this year or should that continue into next year as well? Stacy J. Smith: We will continue to focus on efficiency and productivity hopefully forever. In terms of the restructuring program and the pretty significant charges you’ve been seeing hitting the restructuring line, I think they drop off pretty dramatically when we get into the second half of the year. Joanne Feeney - FTN Midwest Securities: Okay. Thanks very much.

Your next question comes from the line of Doug Freedman with American Technology Research. Doug Freedman - American Technology Research: You know, you’ve answered almost everything here but if you could, Stacy, talk a little bit about the impact of the Euro. You mentioned that it’s impacting OpEx but are there any benefits from the exchange rates that you are seeing and not just the Euro, but anything that you can offer there? Stacy J. Smith: Yeah, absolutely. So on the spending, as you mentioned, it’s -- the weaker dollar is increasing our cost in some of the other geographies of the world. Two jobs ago I was actually the head for Europe, Middle East, and Africa and one of my rules of thumb is the best time to be in that region is when the dollar is weak and the time to leave is when the dollar becomes strong because it does lower the PC prices in the marketplace. And I think that’s part of the strength that Paul alluded to in Q4 as we are just seeing the price of technology coming down in Europe because a lot of components are priced in dollars. Doug Freedman - American Technology Research: And then can you talk about if you’ve seen any impact from what’s happening in the commodities market and whether that is having an impact, expected to have an impact and how you are working that into your thinking? Stacy J. Smith: I’d say it’s the same as what we see on the macroeconomic side of the business. It’s one of the inputs that goes into how we look at the business and how we look at our costs, but in general what we are seeing, and I think this is as a result of our technology leadership right now and the strength of our products, we’re seeing a pretty strong market and I see costs coming down quarter by quarter by quarter, so those are kind of the two components there. Doug Freedman - American Technology Research: And then lastly, you know, you talked about success of ATOM happening and you’ve talked about strength in the server market and the drivers there. You also talked at the analyst day about the mix there being very important for gross margins going forward. Any help you can offer on how quick you think the ATOM class processors are going to ramp in comparison to sort of where we are seeing pretty strong strength in the server market now? Is this something where the mix is going to become more of an issue of 2009? Anything you can offer there. Stacy J. Smith: Yeah, sure. Too early to call. My view hasn’t change from what I showed you a month ago. We are pretty excited about the level of interest we are seeing on ATOM. I think it is driving some incremental strength but we are also seeing strength in the server business, so -- Paul S. Otellini: But I think it’s fair to say that the 57% gross margin for the year you are projecting includes the impact of ATOM for 2008. Stacy J. Smith: Yes. If that was your question, absolutely. Doug Freedman - American Technology Research: Okay. R. Kevin Sellers: Doug, real quickly -- Denise, we just need to take one more question because we are running out of time here and it needs to be a quick one. If you can just pull the next, last one and we’ll wind up the call.

Yes, sir. Your next question comes from the line of John Lau from Jefferies & Company. John Lau - Jefferies & Company: Great. Thank you very much. Most of the questions have been answered but in terms of the underlying dynamics for the PC, Paul, much of the growth is outside the United States now. Does the outsourcing trend and the infrastructure build-out in the emerging market still look strong? And is that really the dynamics that we are looking for to offset more of the mature markets in the United States and Europe? Paul S. Otellini: Well, to your first approximation, yeah, most of the growth over the next few years, five years, is going to be -- will be non-U.S. but the U.S. market has been pretty resilient based upon the transition to notebooks. People buy them more frequently than they do desktops and there’s more notebooks per person, et cetera. So I wouldn’t necessarily write it off. I think a notebook is becoming a bit of a fashion statement and that has a cache associated with it and we are seeing some of that. You have certainly seen that with the Apple product line growth. But I really think the unknown dynamic is what happens when these $200 to $300 Netbooks are unleashed in India and China and Indonesia and we don’t -- there is no model for that at this point in time because you are dealing with something that’s never existed before. So we are optimistic but we just don’t know at this point. John Lau - Jefferies & Company: And even before the ATOM hits those emerging markets, Paul, are you seeing -- what can you comment with regard to the adoption rate for the middle class and the general population with regard to Notebooks in these emerging markets now? Have you seen an up-tick there? Paul S. Otellini: Yeah, it is and some of that is also back to Stacy’s last question on the dollar, I mean, as the dollar weakens against most currencies, particularly in some of these emerging markets, the amount of money it takes to buy a PC relative to local disposable income is less and less. And so we are seeing PC penetration move more rapidly in some of these markets than we had seen in previous years. And that’s one of the reasons you see us pointing to a growth forecast in terms of low double-digits for the units this year. John Lau - Jefferies & Company: Great. Thank you very much.

I’ll go ahead and turn the call back over to Mr. Kevin Sellers for closing remarks. R. Kevin Sellers: Thank you, Denise. I want to thank everybody for joining the call today. As a reminder, our quiet period for the second quarter will begin at the close of business on May 30th and our second quarter earnings conference call is schedule for Tuesday, July 15th. Thanks again for joining and we’ll talk to you soon. Good night.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.