Key US CPU vendor's 3Q26 earnings call – key implications for our coverage

Intel expects 2H26 PC units to fall 20%+ y/y as OEMs aggressively cut inventories amid weaker sell-through; the correction has accelerated over the past two months. This aligns with Morgan Stanley's estimate at a ~25% y/y decline. Intel guides for server CPU unit growth of 30%+ in both 2026 and 2027, with upside if wafer/substrate supply improves. It sees server CPU TAM rising from US$40bn today to >US$200bn in five years, driven mainly by AI agents. Most of the previously discussed ~40% capacity increase is due in 2H27; Intel expects key component purchase commitments to rise sharply over the next several quarters. Intel is also prioritizing securing substrate capacity and improving yields for the EMIB-T. Complex designs add yield risk, which could lower effective output, worsening ABF substrate shortages but adding further support for pricing.