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UBS Investment Research Intel Corp.
2Q Results – Much Better than Expected. Raise Estimates, Price Target
Continued consumer strength offsets weak corporate spending Intel reported much stronger than expected 2Q results and 3Q guidance based on continued consumer strength. More importantly the 550 bps sequential gross margin improvement was much better than expected, reflecting solid execution in manufacturing. We reiterate our BUY rating and raise our 2009/10 estimates and 12-month price target to $21 from $18, which is 18x/15x our 2010/11 EPS estimates. 2Q09 Results: Strong beat with continued solid COGS control Intel reported 2Q sales/clean EPS/gross margin of $8.02bn/18c/50.8%, well above our $7.38bn/7c/45.3% est and cons at $7.27bn/8c/46.3%. In particular, the strong gross margin beat (+550 bps q/q) reflects Intel’s execution controlling COGS, which barely grew q/q, even as sales grew 12% and 32nm start-up costs peaked. Intel’s $8.5bn 3Q sales outlook, 10% over prior cons estimates, extend 2Q’s beat. Raise estimates on improved sales outlook + model leverage We raise 3Q09 sales/EPS estimates by 8%/46% to $8.51bn/21c on more modest sequential growth expectations given the strong 2Q beat, some of which is likely supporting the typical 2H09 seasonal build. For ‘09, we raise sales/EPS ests by 6%/45% to $32.8bn/$0.80. EPS growth is supported by Intel’s leverage, as our ests rise for gross margin to 51.6% from 49.2% and op margin to 18.0% from 13.9%. Valuation: Raise Price Target to $21 from $18, Reiterate Buy rating We raise our DCF-based PT to $21 (18x our 2010 $1.15 EPS estimate) from $18.

Global Equity Research
Americas Semiconductors 12-month rating 12m price target Price
RIC: INTC.O BBG: INTC US

Buy
Unchanged
US$21.00 Prior: US$18.00 US$16.83

15 July 2009
Trading data 52-wk range Market cap. Shares o/s Free float Avg. daily volume ('000) Avg. daily value (US$m) Balance sheet data 12/09E Shareholders' equity P/BV (UBS) Net Cash (debt) Forecast returns Forecast price appreciation Forecast dividend yield Forecast stock return Market return assumption Forecast excess return EPS (UBS, US$) From 0.11 0.07 0.14 0.23 0.55 1.00 12/09E To 0.11 0.18 0.21 0.29 0.80 1.15 Cons. 0.11 0.08 0.16 0.21 0.57 0.91 12/08 Actual 0.25 0.28 0.35 0.17 +24.8% 3.6% +28.4% 5.9% +22.5% US$40.3bn 2.3x US$11.6bn US$24.52-12.08 US$94.2bn 5,595m (COM) 97% 66,942 1,062.9

Highlights (US$m) Revenues EBIT (UBS) Net Income (UBS) EPS (UBS, US$) Net DPS (UBS, US$) Profitability & Valuation EBIT margin % ROIC (EBIT) % EV/EBITDA (core) x PE (UBS) x Net dividend yield %

12/07 38,334.0 8,329.0 6,551.1 1.10 0.45 5-yr hist av. 25.2 41.0 9.9 22.3 1.2

12/08 37,586.0 8,954.0 5,987.3 1.04 0.55 12/08 23.8 35.7 7.6 19.2 2.7

12/09E 32,757.6 5,909.2 4,509.4 0.80 0.56 12/09E 18.0 23.2 7.8 21.2 3.3

12/10E 35,837.8 8,602.3 6,469.8 1.15 0.62 12/10E 24.0 34.7 6.0 14.7 3.7

12/11E 39,421.7 10,620.3 8,023.7 1.43 0.68 12/11E 26.9 42.5 5.2 11.8 4.0

Q1 Q2 Q3E Q4E 12/09E 12/10E

Performance (US$)
35.0 30.0 25.0 20.0 15.0 10.0 5.0 07/06 10/06 01/07 04/07 07/07 10/07 01/08 04/08 07/08 10/08 01/09 04/09 07/09 0.0 Stock Price (US$) Rel. S & P 500 140 120 100 80 60 40 20 0

Source: Company accounts, Thomson Financial, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$16.83 on 14 Jul 2009 17:53 EDT

Price Target (US$) (LHS) Rel. S & P 500 (RHS)

Stock Price (US$) (LHS)

Source: UBS

Uche Orji
Analyst uche.orji@ubs.com +1 212 713 4015

Steven Eliscu
Analyst steven.eliscu@ubs.com +1-415-352 5674

www.ubs.com/investmentresearch

This report has been prepared by UBS Securities LLC ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 13. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Customers of UBS in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.ubs.com/independentresearch or may call +1 877-208-5700 to request a copy of this research.

Intel Corp. 15 July 2009

2Q: Consumer Offsets Corporate
Even as IT spending remains weak given depressed corporate profitability, a key driver, consumer-related PC spending, particularly notebooks/netbooks has provided an important element of counter-cyclicality to Intel’s model. We do not expect a more meaningful corporate upgrade cycle until 2H10, as Intel ramps its latest 32nm processors that bring significant improvements to the installed base of hardware coupled with the likely availability of Windows 7 SP1. However, despite our modest expectations for revenue growth, given the leverage in Intel’s model, we raise our 2010 EPS by 15% to $1.15 on a 6% sales boost and accordingly raise our price target to $21 from $18, which is 18x/15x our 2010/11 EPS estimates. We reiterate our Buy rating.

2Q09 Results – Strong Beat
Table 1: 2Q09 Intel Results Summary
Sales Results Original Estimate Difference Consensus $8,024m $7,379m +8.7% $7,274m q/q +12.3% +3.3% +9.0% +1.8% y/y -15.3% -22.1% +6.8% -23.2% Gross Margin 50.8% 45.3% +5.6% 46.3% Op Margin 17.9% 8.7% +9.2% 9.5% Op Income $1,435m $640m +124.2% $691m EPS $0.18 $0.07 +182.5% $0.08

Source: FactSet, Thomson, Company reports, UBS estimates

Intel reported 2Q sales/clean EPS/gross margin of $8.024bn/18c/50.8%, well above our $7.379bn/7c/45.3% estimate and consensus at $7.274/8c/46.3%. (2Q GAAP EPS is -7c based on the inclusion of a $1.45bn expense associated with the European Commission fine.) Intel sales results reflect channel refill and inventory build ahead of 2H09 seasonality as well as better than expected end market demand, primarily consumer mobile computing.

Intel continues to execute solid COGS control
Chart 1: Intel Cost of Goods Sold (ex-D&A) + Inventory Increase
$4.0bn $3.5bn INTC COGS- DA+ Inv Incr $3.0bn $2.5bn $2.0bn $1.5bn $1.0bn $0.5bn $0.0bn Dec-06 Dec-07 Dec-08 Dec-09 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Dec-10 Jun-06 Jun-07 Jun-08 Jun-09 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Jun-10 42% 38% 36% 34% 32% 30% 28% 26% COGS-DA+Inv Inc % of Sales 40%

INTC Cash COGS + Inv Increase Source: Company reports, UBS estimates

INTC Cash COGS as % of Sales

The strong gross margin beat of 50.8% (+550 bps q/q) reflects Intel’s execution for controlling COGS, which barely grew sequentially, even as revenue grew 12% and 32nm start-up costs peaked. This result underlies a longer-term Intel
UBS 2

Intel Corp. 15 July 2009

trend for cost reduction – as shown in Chart 1, since its restructuring program was initiated in 2006, Intel has steadily lowered the cash component of its cost to build products (cost of goods sold less depreciation and amortization plus inventory increase). Intel’s free cash flow generation (4.7% 2009E FCF yield) and $11.6bn of cash should provide it sufficient capability through the downturn to return cash, including its 14c/share dividend (3.1% yield).

2Q09 Business Review
In 2Q, the weakest area for Intel’s Digital Enterprise Group was the corporate PC client market; however, the server market, supported by the ramp of the Intel’s new Nehalem EP (Xeon 5500-series) processor, has proved to be more resilient. The Mobility Group benefited from $362m of Atom processor/chipset revenue (+65% q/q) and the ramp of Intel’s recently launched CULV processors for the emerging category of ultra-thin consumer notebooks.
Table 2: 2Q09 Intel Results Breakdown by Business Unit
% of Total Digital Enterprise Mobility All Other Total Sales Q/Q Y/Y Original Ests Difference Op Income Op Margin

$4,304m $3,481m $239m
$8,024m

54% 43% 3%
—

+7% +19% +8%
+12.3%

-20% -8% —
-15.3%

$4,048m $3,090m $242m
$7,379m

+6% +13% -1%
+9%

$917m $803m -$1,732m
$1,435m

21% 23% -725%
18%

Source: Company reports, UBS estimates

Table 3: 2Q09 Intel Revenue by Geography
Sales Americas Europe Asia-Pacific Japan Total % of Total Q/Q Y/Y

$1.7bn $1.2bn $4.4bn $0.8bn
$8.0bn

21% 14% 55% 10%
100%

+12% -9% +21% +7%
+12.3%

-14% -34% -8% -19%
-15.3%

Source: Company reports

UBS 3

Intel Corp. 15 July 2009

Balance Sheet highlights
Intel’s cash & equivalents rose $1.0bn to $11.6bn. Intel’s 2Q09 inventory days declined 6 days sequentially to 65; we expect inventory days to rise to the 70day historical range exiting 2009. DSOs declined 4 days sequentially to 22 days in 2Q.
Chart 2: Intel’s Inventory should stabilize at about 70 days
$5.0bn $4.0bn Inventory Value $3.0bn $2.0bn $1.0bn $0.0bn Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 100 90 80 70 60 50 40 30 20 Inventory Days

INTC Inventory

INTC Inventory Days

Source: Company reports, UBS estimates

Intel Guidance and Revised Estimates
3Q09 Guidance
Revenue: $8.1bn ± $0.4bn Gross Margin Percentage: 53% ± 2 % R&D + MG&A: $2.8bn Depreciation: $1.2bn Restructuring charge: $40m Amortization of acquisition-related intangibles: $40m Loss from equity investments, interest and other: $80m Tax rate: 23%

2009 Guidance Revisions R&D+ MG&A: $10.6-10.8bn, up from $10.4-10.6bn Capital Expenditures: $4.7bn ± $0.2bn, down from $5.2bn Depreciation: 4.8bn ± $0.1bn, unchanged Tax Rate: 23% for the balance of 2009, down from 24% Outlook and Estimate Changes
We raise our 3Q09 sales/EPS estimates by 8%/46% to $8.51bn (+6.1% q/q)/21c on more modest sequential growth expectations given the strong 2Q beat, some of which is likely supporting the typical 2H09 seasonal build. For the full year, we raise sales/EPS estimates by 6%/45% to $32.76bn/$0.80. Strong EPS growth is supported by Intel’s model leverage, as our estimates rise for gross margin to 51.6% from 49.2% and operating margin to 18.0% from 13.9%. For 2010/11, we raise our sales forecasts by 6%/5% to $35.8bn/$39.4bn and our EPS forecasts by 15%/4% to $1.15/$1.43.

UBS 4

Intel Corp. 15 July 2009

Table 4: Intel Estimate Changes
3Q09E New Digital Enterprise Mobility Other Total Sales Growth Gross margin Operating margin EPS Old Change New 2009E Old Change New 2010E Old Change New 2011E Old Change

$4,423m $3,772m $317m
$8,512m

$4,245m $3,292m $320m
$7,857m

+4% +15% -1%
+8%

$17,382m $14,206m $1,169m
$32,758m

$16,839m $12,845m $1,177m
$30,861m

+3% +11% -1%
+6%

$18,690m $15,626m $1,522m
$35,838m

$18,119m $14,291m $1,522m
$33,932m

+3% +9% +0%
+6%

$19,929m $17,730m $1,762m
$39,422m

$19,197m $16,425m $1,762m
$37,385m

+4% +8% +0%
+5%

+6.1% q/q +6.5% q/q 53.1% 19.2%
$0.21

-0.4% +2.2% +3.9%
+46%

-12.8% y/y 51.6% 18.0%
$0.80

-17.9% y/y 49.2% 13.9%
$0.55

+5.0% +2.4% +4.1%
+45%

+9.4% y/y 55.3% 24.0%
$1.15

+10.0% y/y 54.6% 22.9%
$1.00

-0.5% +0.6% +1.1%
+15%

+10.0% y/y 56.9% 26.9%
$1.43

+10.2% y/y 58.3% 27.9%
$1.38

-0.2% -1.4% -1.0%
+4%

50.9% 15.3%
$0.14

Source: UBS estimates

Sensitivity Analysis
Versus our baseline 2010 model, we estimate that for each percentage point change in revenue, gross margin changes 37 bps and EPS changes by 3.3c. Our underlying assumptions are based on the historical P&L relationships: Y/Y Gross Profit = 1.65x Y/Y Revenue; Y/Y Operating Profit = 2.9x Y/Y Revenue:
Chart 3: INTC Y/Y Gross Profit vs Y/Y Revenue
30% Y/Y INTC Revenue 20% 10% 0% -10% -20% -30% -40% Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 50% Y/Y INTC Gross Profit 16% 0% -17% -33% -50% -67% Y/Y INTC Revenue 33%

Chart 4: INTC Y/Y Operating Profit vs Y/Y Revenue
30% 20% 10% 0% -10% -20% -30% Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 90% 60% 30% 0% -30% -60% -90% Y/Y INTC Operating Profit
8%

INTC Y/Y Revenues INTC Y/Y Gross Profit (ex-options) Source: Company reports, UBS estimates

INTC Y/Y Revenues INTC Y/Y Operating Profit (ex-options) Source: Company reports, UBS estimates

Table 5: Intel 2010 Sensitivity to Revenue Changes
-8% Revenue Gross Margin EPS -6% -4% -2% 0% $35,838m 55.2% $1.15 2% 4% 6%

$32,971m 52.0% $0.88

$33,688m 52.9% $0.95

$34,404m 53.7% $1.01

$35,121m 54.5% $1.08

$36,555m 56.0% $1.21

$37,271m 56.7% $1.28

$37,988m 57.3% $1.35

$38,705m 58.0% $1.41

Change in Gross Margin = Change in EPS = Source: UBS estimates

37 bps for each percentage change in revenue 3.3c for each percentage change in revenue

UBS 5

Intel Corp. 15 July 2009

Valuation: Raise PT to $21, Reiterate Buy
We raise our 12-month price target to $21 (18x our 2010 $1.15 EPS estimate) from $18 based on our DCF model assumptions: 4.8% 10-year revenue CAGR, 26.5% long-term operating margin, 14% long-term capex/sales, 11.0% WACC and 2% terminal growth.

UBS 6

Chart 5: Intel (INTC) Income Statement ($ millions, except per share data)
Income Statement FY ends December 31 ($ in millions, except EPS) Total revenues Cost of revenues Gross profits R&D expenses MG&A expenses Amortization and impairments Total operating expenses Operating income Other income, net Pretax income Income taxes UBS adjusted net income Stock based compensation (net of tax) Extraordinary items (net of tax) GAAP net income UBS adjusted diluted EPS GAAP diluted EPS Non-GAAP diluted EPS ex-SBC Dividend Per Share Diluted shares outstanding Percentage of Revenues Incremental gross margin Gross profits R&D expenses MG&A expenses Operating income Other income, net Pretax income Income taxes UBS adjusted net income 5 Year Average Q/Q Growth 5 Year Average % of Full Year H/H Growth Q-Q Growth Total revenues UBS adjusted net income UBS adjusted diluted EPS Y-Y Growth Total revenues UBS adjusted net income UBS adjusted diluted EPS

Intel Corp. 15 July 2009

Intel Corporation

36.5% 2006 35,382 17,164 18,218 5,873 6,096 597 12,566 5,652 1,416 7,068 2,024 5,044 987 0 5,044 0.86 0.86 1.03 0.40 5,880 144.3% 51.5% 16.6% 17.2% 16.0% 4.0% 20.0% 28.6% 14.3% 5.7% Mar-07 Q1A 8,852 4,420 4,432 1,400 1,277 80 2,757 1,675 198 1,873 563 1,310 199 326 1,636 0.22 0.28 0.26 0.11 5,874

36.5% 30.3% 31.4% FY2007 Jun-07 Sep-07 Dec-07 Q2A Q3A Q4A 8,680 10,090 10,712 4,605 4,806 4,486 4,075 5,284 6,226 1,353 1,521 1,481 1,284 1,378 1,462 88 128 236 2,725 3,027 3,179 1,350 2,257 3,047 179 359 214 1,529 2,616 3,261 432 743 990 1,097 1,873 2,271 170 181 1,278 0.19 0.22 0.21 0.11 5,917 163 -82 1,791 0.31 0.30 0.34 0.11 5,967 142 0 2,271 0.38 0.38 0.40 0.11 5,988

FY2008 2007 Mar-08 Jun-08 Sep-08 Dec-08 Q1A Q2A Q3A Q4A 38,334 9,673 9,470 10,217 8,226 18,317 4,466 4,221 4,198 3,857 20,017 5,207 5,249 6,019 4,369 5,755 1,467 1,468 1,471 1,316 5,401 1,349 1,430 1,416 1,263 532 329 96 34 251 11,688 3,145 2,994 2,921 2,830 8,329 2,062 2,255 3,098 1,539 950 109 58 -265 -232 9,279 2,171 2,313 2,833 1,307 2,728 728 712 819 378 6,551 1,443 1,601 2,014 929 673 425 6,976 1.10 1.18 1.22 0.45 5,936 60.9% 52.2% 15.0% 14.1% 21.7% 2.5% 24.2% 29.4% 17.1% 1.7% 146 0 1,443 0.25 0.25 0.27 0.13 5,879 98.1% 53.8% 15.2% 13.9% 21.3% 1.1% 22.4% 33.5% 14.9% -6.5% 23.8% -9.7% -36.5% -35.3% 8.3% 29.9% 28.7% 9.3% 10.2% 10.1% 168 0 1,601 0.28 0.28 0.31 0.14 5,800 140 0 2,014 0.35 0.35 0.38 0.14 5,692 137 -695 234 0.17 0.04 0.19 0.14 5,623

FY2009 2008 Mar-09 Jun-09 Sep-09 Dec-09 Q1A Q2A Q3E Q4E 37,586 7,145 8,024 8,512 9,077 16,742 3,907 3,945 3,994 3,994 20,844 3,238 4,079 4,518 5,083 5,722 1,317 1,303 1,323 1,323 5,458 1,200 1,250 1,481 1,507 710 74 91 80 60 11,890 2,591 2,644 2,884 2,890 8,954 647 1,435 1,634 2,193 -330 -18 -38 -80 -70 8,624 629 1,397 1,554 2,123 2,637 0 348 357 488 5,987 629 1,049 1,197 1,635 590 -695 5,292 1.04 0.92 1.14 0.55 5,748 213 0 629 0.11 0.11 0.15 0.14 5,634 160 -1,447 -398 0.18 -0.07 0.21 0.14 5,678 95.7% 50.8% 16.2% 15.6% 17.9% -0.5% 17.4% 24.9% 13.1% -2.7% 23.6% -17.8% 12.3% 66.8% 65.5% 164 0 1,197 0.21 0.21 0.24 0.14 5,685 163 0 1,635 0.29 0.29 0.32 0.14 5,675

FY2010 2009E Mar-10 Jun-10 Sep-10 Dec-10 Q1E Q2E Q3E Q4E 32,758 8,337 8,276 9,149 10,075 15,840 3,986 3,980 4,033 4,033 16,918 4,351 4,296 5,116 6,043 5,266 1,380 1,380 1,405 1,405 5,438 1,284 1,308 1,391 1,491 305 40 40 40 40 11,009 2,704 2,728 2,836 2,936 5,909 1,647 1,568 2,281 3,106 -206 -50 -50 -50 -50 5,703 1,597 1,518 2,231 3,056 1,194 367 349 513 703 4,509 1,230 1,169 1,718 2,353 672 -1,447 3,062 0.80 0.54 0.91 0.56 5,668 81.3% 51.6% 16.1% 16.6% 18.0% -0.6% 17.4% 20.9% 13.8% 6.2% 173 0 1,230 0.22 0.22 0.25 0.16 5,665 99.0% 52.2% 16.6% 15.4% 19.8% -0.6% 19.2% 23.0% 14.7% -8.8% 173 0 1,169 0.21 0.21 0.24 0.16 5,655 90.0% 51.9% 16.7% 15.8% 19.0% -0.6% 18.3% 23.0% 14.1% -0.8% -5.5% -8.1% -24.8% -24.6% -12.8% -24.7% -23.6% 16.7% 95.5% 94.4% -0.7% -4.9% -4.7% 3.1% 11% 12% 10.5% 46.9% 47.2% 7.5% 43.5% 44.5% 173 0 1,718 0.30 0.30 0.33 0.16 5,645 173 0 2,353 0.42 0.42 0.45 0.16 5,635

2010E 35,838 16,032 19,806 5,570 5,473 160 11,203 8,602 -200 8,402 1,933 6,470 693 0 6,470 1.15 1.15 1.27 0.62 5,650 93.8% 55.3% 15.5% 15.3% 24.0% -0.6% 23.4% 23.0% 18.1% 1.9%

2011E 39,422 16,985 22,436 5,830 5,826 160 11,816 10,620 -200 10,420 2,397 8,024 732 0 8,024 1.43 1.43 1.56 0.68 5,610 73.4% 56.9% 14.8% 14.8% 26.9% -0.5% 26.4% 23.0% 20.4% 1.3%

2012E 41,970 17,798 24,172 6,110 6,035 160 12,305 11,867 -80 11,787 2,711 9,076 770 0 9,076 1.63 1.63 1.77 0.74 5,570 68.1% 57.6% 14.6% 14.4% 28.3% -0.2% 28.1% 23.0% 21.6% 0.7%

2013E 44,694 18,783 25,911 6,500 6,426 160 13,086 12,824 100 12,924 2,973 9,952 809 0 9,952 1.80 1.80 1.95 0.79 5,530 63.8% 58.0% 14.5% 14.4% 28.7% 0.2% 28.9% 23.0% 22.3% 3.2%

44.9% 207.6% 50.1% 46.9% 15.8% 15.6% 14.4% 14.8% 18.9% 15.6% 2.2% 2.1% 21.2% 17.6% 30.1% 28.3% 14.8% 12.6% -8.9% 24.2% -8.7% -12.7% -12.8% -4.0% 23.2% -4.9% -1.9% -16.3% -16.9% 8.4% 24.0% 22.9%

85.7% 151.4% 52.4% 58.1% 15.1% 13.8% 13.7% 13.6% 22.4% 28.4% 3.6% 2.0% 25.9% 30.4% 28.4% 30.4% 18.6% 21.2% 7.2% 25.1% 16.2% 70.7% 69.3% 15.5% 44.0% 40.7% 9.2% 27.5% 18.7% 6.2% 21.2% 20.8% 10.5% 51.3% 48.2%

-20.7% 103.1% 55.4% 58.9% 15.5% 14.4% 15.1% 13.9% 23.8% 30.3% 0.6% -2.6% 24.4% 27.7% 30.8% 28.9% 16.9% 19.7% -3.5% 23.1% -8.0% -2.1% 10.9% 12.5% 9.1% 45.9% 48.9% 9.4% 25.5%

82.9% -110.6% 104.6% 53.1% 55.5% 45.3% 16.0% 15.2% 18.4% 15.4% 14.5% 16.8% 18.7% 23.8% 9.1% -2.8% -0.9% -0.3% 15.9% 22.9% 8.8% 28.9% 30.6% 0.0% 11.3% 15.9% 8.8% 9.1% 27.7% -3.7% 6.7% -7.6% 24.4% -13.1% -32.3% -32.4% -2.0% -8.6% -5.6%

90.0% 100.0% 53.1% 56.0% 15.5% 14.6% 17.4% 16.6% 19.2% 24.2% -0.9% -0.8% 18.3% 23.4% 23.0% 23.0% 14.1% 18.0% 10.2% 25.8% 6.1% 14% 14% 4.2% 26.3% 16.0% 6.6% 36.6% 36.8% 10.3% 75.9% 74.3%

94.0% 100.0% 55.9% 60.0% 15.4% 13.9% 15.2% 14.8% 24.9% 30.8% -0.5% -0.5% 24.4% 30.3% 23.0% 23.0% 18.8% 23.4% 8.7% 3.3% 15.7% 10.1% 37.0% 37.3% 11.0% 44.0% 45.0%

7.9% -19.5% 25.8% -53.9% 28.2% -53.3% 1.3% -23.2% 7.5% -59.1% 12.7% -56.4%

-8.9% -34.9% -31.6%

-1.0% -3.5% -2.1%

-26.1% -15.3% -16.7% -56.4% -34.5% -40.6% -54.5% -33.1% -40.5%

9.4% 43.5% 43.9%

10.0% 24.0% 24.9%

6.5% 13.1% 13.9%

6.5% 9.6% 10.4%

Source: Company reports, UBS estimates

UBS 7

Chart 6: Intel (INTC) Balance Sheet ($ millions, except per share data)
Balance Sheet FY ends December 31 ($ in millions, except EPS) Assets Cash & short term investments Trading assets Accounts receivable, net Inventories Prepaid expenses and other Total current assets Property and equipment, net Marketable equities Other assets Total assets Liabilities Short-term debt Payable & accrued Deferred income Income taxes payable Total current liabilities Deferred tax liabilities Other liabilities Long-term debt Total liabilities Shareholders' equity Total liabs and equity Operating Activity Day sales outstanding Inventory turns Days inventory outstanding Payable period Cash conversion cycle

Intel Corp. 15 July 2009

Intel Corporation

2006 8,868 1,134 2,709 4,314 1,255 18,280 17,602 398 12,088 48,368 180 5,938 599 1,797 8,514 265 989 1,848 11,616 36,752 48,368 27.9 4.0 91.7 48.0 71.7

FY2007 Mar-07 Jun-07 Sep-07 Dec-07 Q1A Q2A Q3A Q4A 7,689 8,926 10,796 12,797 1,335 1,735 2,225 2,566 2,780 2,531 2,933 2,576 4,366 4,127 3,538 3,370 1,524 2,329 1,934 2,576 17,694 19,648 21,426 23,885 17,617 17,143 16,985 16,918 359 350 1,061 987 13,086 13,153 13,567 13,861 48,756 50,294 53,039 55,651 139 5,876 611 0 6,626 221 5,708 535 0 6,464 137 6,992 628 6 7,763 142 7,465 625 339 8,571

2007 12,797 2,566 2,576 3,370 2,576 23,885 16,918 987 13,861 55,651 142 7,465 625 339 8,571 1,196 1,142 1,980 12,889 42,762 55,651 24.5 5.4 67.2 47.0 44.6

FY2008 Mar-08 Jun-08 Sep-08 Dec-08 Q1A Q2A Q3A Q4A 10,876 2,816 2,725 3,272 2,375 22,064 16,667 530 14,126 53,387 189 7,197 643 639 8,668 981 1,088 1,990 12,727 40,660 53,387 25.4 5.5 66.9 47.1 45.1 8,391 3,570 2,399 3,265 2,153 19,778 16,723 644 15,247 52,392 175 7,192 665 0 8,032 931 1,176 1,892 12,031 40,361 52,392 22.8 5.2 70.6 50.7 42.7 8,287 3,917 2,737 3,398 3,084 21,423 17,026 401 13,869 52,719 467 8,945 656 0 10,068 818 1,033 1,889 13,808 38,911 52,719 24.1 4.9 73.9 53.7 44.2 8,681 3,162 1,712 3,744 2,572 19,871 17,544 352 12,948 50,715 102 7,253 463 0 7,818 782 1,141 1,886 11,627 39,088 50,715 18.7 4.1 88.6 55.8 51.5

2008 8,681 3,162 1,712 3,744 2,572 19,871 17,544 352 12,948 50,715 102 7,253 463 0 7,818 782 1,141 1,886 11,627 39,088 50,715 16.6 4.5 81.6 52.1 46.1

FY2009 Mar-09 Jun-09 Sep-09 Dec-09 Q1A Q2A Q3E Q4E 7,792 2,807 2,086 3,045 2,412 18,142 17,815 412 12,085 48,454 31 5,842 468 0 6,341 662 1,217 1,170 9,390 39,064 48,454 26.3 5.1 71.1 38.4 58.9 9,021 2,603 1,938 2,805 2,100 18,467 17,515 513 12,566 49,061 24 6,575 480 0 7,079 556 1,174 1,205 10,014 39,047 49,061 21.7 5.6 64.9 39.4 47.2 9,283 2,761 2,175 2,958 2,228 19,406 17,279 544 12,641 49,870 24 7,008 509 0 7,541 590 1,174 1,205 10,510 39,360 49,870 23.0 5.4 67.6 42.0 48.6 9,844 2,944 2,420 3,014 2,375 20,599 17,484 580 12,718 51,381 24 7,482 543 0 8,049 629 1,174 1,205 11,057 40,324 51,381 24.0 5.3 68.9 45.0 47.9

2009E 9,844 2,944 2,420 3,014 2,375 20,599 17,484 580 12,718 51,381 24 7,482 543 0 8,049 629 1,174 1,205 11,057 40,324 51,381 27.0 5.3 69.5 46.0 50.4

FY2010 Mar-10 Jun-10 Sep-10 Dec-10 Q1E Q2E Q3E Q4E 9,666 2,705 2,316 3,127 2,182 19,995 17,423 533 12,797 50,748 24 7,032 499 0 7,554 578 1,174 1,205 10,511 40,237 50,748 25.0 5.1 71.6 45.0 51.6 9,670 2,685 2,299 3,062 2,166 19,882 17,362 529 12,878 50,651 24 7,080 495 0 7,599 573 1,174 1,205 10,552 40,100 50,651 25.0 5.2 70.2 47.0 48.2 9,754 2,968 2,541 3,226 2,394 20,884 17,302 585 12,960 51,731 24 7,635 547 0 8,206 634 1,174 1,205 11,219 40,512 51,731 25.0 5.0 73.0 47.0 51.0 10,835 3,268 2,463 3,044 2,637 22,246 17,533 644 13,045 53,469 24 8,195 603 0 8,821 698 1,174 1,205 11,898 41,570 53,469 22.0 5.3 68.9 47.0 43.9

2010E 10,835 3,268 2,463 3,044 2,637 22,246 17,533 644 13,045 53,469 24 8,195 603 0 8,821 698 1,174 1,205 11,898 41,570 53,469 25.1 5.3 69.3 47.9 46.4

2011E 10,849 3,480 2,622 3,295 2,808 23,054 18,367 686 13,407 55,513 24 8,720 642 0 9,385 743 1,174 1,205 12,508 43,006 55,513 24.3 5.2 70.8 48.1 47.0

2012E 11,060 3,717 2,801 3,445 2,999 24,021 19,319 733 13,806 57,879 24 9,263 685 0 9,972 794 1,174 1,205 13,145 44,734 57,879 24.4 5.2 70.6 48.0 47.0

2013E 11,915 3,957 2,981 3,629 3,192 25,674 20,445 780 14,246 61,145 24 9,834 730 0 10,588 845 1,174 1,205 13,812 47,333 61,145 24.3 5.2 70.5 47.9 47.0

1,554 1,049 1,268 1,196 1,202 1,235 1,253 1,142 1,848 1,848 1,853 1,980 11,230 10,596 12,137 12,889 37,526 39,698 40,902 42,762 48,756 50,294 53,039 55,651 28.3 4.0 90.1 46.3 72.1 26.2 4.5 81.8 42.6 65.4 26.2 5.4 67.2 43.8 49.6 21.6 5.3 68.5 47.4 42.8

Source: Company reports, UBS estimates

UBS 8

Chart 7: Intel (INTC) Statement of Cash Flows ($ millions, except per share data)
Statement of Cash Flows FY ends December 31 ($ in millions, except EPS) Net Income Depreciation & Amortization Share-based Compensation Other Changes in assets and liabilities Trading assets Accounts receivable, net Inventories Accounts payable Accrued liabilities Income taxes payable Other Assets and Liabilities Cash Flow from Operations Capital expenditures Acquisitions/Divestitures Other assets Other Cash Flow from Investments Dividends Short term debt Long term debt Issuance of common stock Repurchase of common stock Other Cash Flow from Financing Change in Cash Beginning Cash Ending Cash

Intel Corp. 15 July 2009

Intel Corporation

2006 5,044 4,912 1,375 -639 -72 324 1,217 -1,116 7 0 -60 -444 10,620 -5,779 752 153 -33 -4,907 -2,320 -114 -581 1,046 -4,593 123 -6,439 -726 7,324 6,598

FY2007 Mar-07 Jun-07 Sep-07 Dec-07 Q1A Q2A Q3A Q4A 1,636 1,278 1,791 2,271 1,251 1,213 1,163 1,171 284 237 227 204 -116 2 -686 625 -1,503 -201 17 -65 17 -723 -432 -116 1,552 -313 -400 334 227 -94 356 -746 10 2,417 1,389 -489 -329 582 157 170 1,130 168 3,884 501 -339 294 -44

2007 6,976 4,798 952 -175 74 -1,429 316 700

FY2008 Mar-08 Jun-08 Sep-08 Dec-08 Q1A Q2A Q3A Q4A 1,443 1,601 2,014 234 1,165 1,105 1,127 1,219 219 243 197 192 219 17 340 1,096 -831 38 -172 75 -23 -1,095 337 9 2,215 -138 11 312 -4 41 310 -886 78 2,828 -391 34 -611 -131 128 161 268 -240 3,287 -145 110 731 -335 -117 55 -553 -36 2,596

2008 5,292 4,616 851 1,672 -1,505 193 260 -395 29 -569 -834 -189 10,926 -5,197 69 -771 34 -5,865 -3,100 -40 0 1,105 -7,195 212 -9,018 -3,957 7,307 3,350

FY2009 Mar-09 Jun-09 Sep-09 Dec-09 Q1A Q2A Q3E Q4E 629 -398 1,197 1,635 1,270 1,286 1,286 955 213 258 176 176 259 1,330 -25 -25 -1,993 13 -374 686 -721 -921 -230 -446 378 1,649 204 148 240 57 676 0 324 4,125 -215 -158 -237 -153 138 295 0 -99 2,419 -124 -183 -245 -56 133 341 0 -114 2,617

2009E 3,062 4,797 823 1,539 -683 -124 -708 717 -393 391 -230 -334 9,539 -4,700 0 1,599 -998 -4,099 -3,125 -76 35 1,200 -1,000 0 -2,966 2,473 3,350 5,823

FY2010 Mar-10 Jun-10 Sep-10 Dec-10 Q1E Q2E Q3E Q4E 1,230 1,169 1,718 2,353 1,311 1,311 1,311 1,019 187 187 187 187 -41 -33 -33 -24 -69 240 104 -112 -4 -447 0 149 2,617 162 20 17 65 85 -37 0 12 2,797 -311 -283 -242 -164 27 527 0 -176 2,871 333 -300 79 183 0 560 0 -187 3,868

2010E 6,470 4,951 747 -130 115 -324 -42 -29 109 604 0 -202 12,153 -5,000 0 -391 69 -5,322 -3,441 0 0 1,600 -4,000 0 -5,841 990 4,649 5,640

2011E 8,024 5,111 789 -130 -229 -212 -160 -251 131 394 0 -132 13,564 -5,945 0 -403 45 -6,303 -3,747 0 0 2,000 -5,500 0 -7,247 15 5,640 5,654

2012E 9,076 5,277 830 -130 -170 -237 -178 -150 102 441 0 -147 14,883 -6,229 0 -446 51 -6,624 -4,048 0 0 2,250 -6,250 0 -8,048 211 5,654 5,865

2013E 9,952 5,448 872 -130 -182 -240 -181 -184 125 447 0 -149 15,959 -6,574 0 -488 51 -7,011 -4,344 0 0 2,500 -6,250 0 -8,094 855 5,865 6,720

22 102 197 0 -200 -248 571 633 4,772 12,625 -5,000 -76 -5,176 326 -9,926 -2,618 -39 125 3,052 -2,788 278 -1,990 709 6,598 7,307

-1,361 -1,278 -1,088 -1,273 0 0 -42 -34 -1,880 -1,126 -1,115 -1,055 25 24 77 200 -3,216 -2,380 -2,168 -2,162 -650 -42 0 586 -400 44 -462 -2,126 6,598 4,472 -652 82 0 776 -100 94 200 237 4,472 4,709 -657 -659 -84 5 0 125 884 806 -750 -1,538 26 114 -581 -1,147 1,135 4,709 5,844 1,463 5,844 7,307

-907 -1,151 -1,374 -1,765 75 0 -9 3 -46 -475 -14 -236 -43 3 65 9 -921 -1,623 -1,332 -1,989 -739 -800 -783 47 -14 292 0 0 0 468 360 275 -2,501 -2,576 -2,118 7 21 4 -2,718 -3,009 -2,330 -1,424 -1,804 7,307 5,883 5,883 4,079 -375 4,079 3,704 -778 -365 0 2 0 180 -961 -354 3,704 3,350

-1,509 -981 -1,050 -1,160 0 0 0 0 1,901 -83 -106 -113 17 -1,088 34 39 409 -2,152 -1,122 -1,234 -779 -69 0 247 0 0 -601 186 3,350 3,536 -784 -782 -7 0 35 0 247 247 0 -500 0 0 -509 -1,035 1,464 3,536 5,000 262 3,826 4,088 -781 0 0 459 -500 0 -822 562 4,088 4,649

-1,250 -1,250 -1,250 -1,250 0 0 0 0 -32 -77 -139 -144 -51 -4 60 64 -1,333 -1,331 -1,328 -1,330 -863 -861 -859 -858 0 0 0 0 0 0 0 0 400 400 400 400 -1,000 -1,000 -1,000 -1,000 0 0 0 0 -1,463 -1,461 -1,459 -1,458 -178 4,649 4,471 4 4,471 4,475 84 4,475 4,559 1,081 4,559 5,640

Source: Company reports, UBS estimates

UBS 9

Intel Corp. 15 July 2009

UBS 10

Intel Corp.
Income statement (US$m)
Revenues Operating expenses (ex depn) EBITDA (UBS) Depreciation Operating income (EBIT, UBS) Other income & associates Net interest Abnormal items (pre-tax) Profit before tax Tax Profit after tax Abnormal items (post-tax) Minorities / pref dividends Net income (local GAAP) Net Income (UBS) Tax rate (%) Pre-abnormal tax rate (%)

12/04
34,209.0 (19,190.0) 15,019.0 (4,889.0) 10,130.0 0.0 287.0 0.0 10,417.0 (2,901.0) 7,516.0 0.0 0.0 7,516.0 7,516.0 27.8 27.8

12/05
38,826.0 (22,001.0) 16,825.0 (4,595.0) 12,230.0 0.0 520.0 (140.0) 12,610.0 (3,946.0) 8,664.0 0.0 0.0 8,664.0 9,010.0 31.3 29.3

12/06
35,382.0 (24,818.0) 10,564.0 (4,912.0) 5,652.0 0.0 1,416.0 0.0 7,068.0 (2,024.0) 5,044.0 0.0 0.0 5,044.0 5,044.0 28.6 28.6

12/07
38,334.0 (25,207.0) 13,127.0 (4,798.0) 8,329.0 0.0 950.0 (113.0) 9,166.0 (2,190.0) 6,976.0 0.0 0.0 6,976.0 6,551.1 23.9 29.4

12/08
37,586.0 (24,016.0) 13,570.0 (4,616.0) 8,954.0 0.0 (330.0) (938.0) 7,686.0 (2,394.0) 5,292.0 0.0 0.0 5,292.0 5,987.3 31.1 30.6

12/09E
32,757.6 (22,051.4) 10,706.2 (4,797.0) 5,909.2 0.0 (206.0) (1,447.0) 4,256.2 (1,193.8) 3,062.4 0.0 0.0 3,062.4 4,509.4 28.0 20.9

% ch
-12.8 -8.2 -21.1 3.9 -34.0 -37.6 54.3 -44.6 -50.1 -42.1 -42.1 -24.7 -10.0 -31.5

12/10E
35,837.8 (22,284.2) 13,553.6 (4,951.3) 8,602.3 0.0 (200.0) 0.0 8,402.3 (1,932.5) 6,469.8 0.0 0.0 6,469.8 6,469.8 23.0 23.0

% ch
9.4 1.1 26.6 3.2 45.6 -2.9 97.4 61.9 111.3 111.3 43.5 -18.0 9.9

12/11E
39,421.7 (23,690.3) 15,731.4 (5,111.1) 10,620.3 0.0 (200.0) 0.0 10,420.3 (2,396.7) 8,023.7 0.0 0.0 8,023.7 8,023.7 23.0 23.0

% ch
10.0 6.3 16.1 3.2 23.5 0.0 24.0 24.0 24.0 24.0 24.0 0.0 0.0

Per share (US$)
EPS (local GAAP) EPS (UBS) Net DPS Cash EPS BVPS

12/04
1.16 1.16 0.16 1.94 5.99

12/05
1.40 1.46 0.32 2.23 5.89

12/06
0.86 0.86 0.40 1.72 6.30

12/07
1.18 1.10 0.45 1.95 7.33

12/08
0.92 1.04 0.55 1.87 6.98

12/09E
0.54 0.80 0.56 1.67 7.22

% ch
-41.3 -23.6 2.3 -11.0 3.6

12/10E
1.15 1.15 0.62 2.06 7.49

% ch
111.9 43.9 10.7 23.4 3.7

12/11E
1.43 1.43 0.68 2.38 7.80

% ch
24.9 24.9 9.7 15.8 4.2

Balance sheet (US$m)
Cash and equivalents Other current assets Total current assets Net tangible fixed assets Net intangible fixed assets Investments / other assets Total assets Trade payables & other ST liabilities Short term debt Total current liabilities Long term debt Other long term liabilities Total liabilities Equity & minority interests Total liabilities & equity

12/04
17,172.0 6,886.0 24,058.0 15,768.0 3,719.1 4,598.0 48,143.1 7,805.0 201.0 8,006.0 703.0 855.0 9,564.0 38,579.1 48,143.1

12/05
12,772.0 8,422.0 21,194.0 17,111.0 3,873.1 6,136.0 48,314.1 8,921.0 313.0 9,234.0 2,106.0 792.0 12,132.0 36,182.1 48,314.1

12/08
10,002.0 8,278.0 18,280.0 17,602.0 3,861.1 8,625.0 48,368.1 8,334.0 180.0 8,514.0 1,848.0 1,254.0 11,616.0 36,752.1 48,368.1

12/07
15,363.0 8,522.0 23,885.0 16,918.0 3,916.1 10,932.0 55,651.1 8,429.0 142.0 8,571.0 1,980.0 2,338.0 12,889.0 42,762.1 55,651.1

12/08
11,843.0 8,028.0 19,871.0 17,544.0 3,932.1 9,368.0 50,715.1 7,716.0 102.0 7,818.0 1,886.0 1,923.0 11,627.0 39,088.1 50,715.1

12/09E
12,788.9 7,810.1 20,599.0 17,484.0 3,932.1 9,366.3 51,381.3 8,024.9 24.0 8,048.9 1,205.0 1,802.9 11,056.9 40,324.5 51,381.3

% ch
8.0 -2.7 3.7 -0.3 0.0 0.0 1.3 4.0 -76.5 3.0 -36.1 -6.2 -4.9 3.2 1.3

12/10E
14,103.0 8,143.2 22,246.2 17,532.8 3,932.1 9,757.5 53,468.6 8,797.2 24.0 8,821.2 1,205.0 1,872.1 11,898.3 41,570.3 53,468.6

% ch
10.3 4.3 8.0 0.3 0.0 4.2 4.1 9.6 0.0 9.6 0.0 3.8 7.6 3.1 4.1

12/11E
14,329.4 8,724.7 23,054.1 18,366.5 3,932.1 10,160.7 55,513.4 9,361.5 24.0 9,385.5 1,205.0 1,917.4 12,507.8 43,005.6 55,513.4

% ch
1.6 7.1 3.6 4.8 0.0 4.1 3.8 6.4 0.0 6.4 0.0 2.4 5.1 3.5 3.8

Cash flow (US$m)
Net income Depreciation Net change in working capital Other (operating) Net cash from operations Capital expenditure Net (acquisitions) / disposals Other changes in investments Cash from investing activities Increase/(decrease) in debt Share issues / (repurchases) Dividends paid Other cash from financing Cash from financing activities Cash flow chge in cash & equivalents FX / non cash items Bal sheet chge in cash & equivalents Core EBITDA Maintenance capital expenditure Maintenance net working capital Operating free cash flow, pre-tax

12/04
7,516.0 4,889.0 484.0 230.0 13,119.0 (3,843.0) (53.0) (1,136.0) (5,032.0) (7.0) (6,622.0) (1,022.0) 0.0 (7,651.0) 436.0 572.0 1,008.0 15,019.0 (3,843.0) 484.0 11,660.0

12/05
8,664.0 4,595.0 1,507.0 57.0 14,823.0 (5,818.0) (191.0) (353.0) (6,362.0) 1,849.0 (9,435.0) (1,958.0) 0.0 (9,544.0) (1,083.0) (3,317.0) (4,400.0) 16,825.0 (5,818.0) 1,507.0 12,514.0

12/06
5,044.0 4,912.0 (72.0) 736.0 10,620.0 (5,779.0) 752.0 120.0 (4,907.0) (695.0) (3,547.0) (2,320.0) 123.0 (6,439.0) (726.0) (2,044.0) (2,770.0) 10,564.0 (5,779.0) (72.0) 4,713.0

12/07
6,976.0 4,798.0 74.0 777.0 12,625.0 (5,000.0) (76.0) (4,850.0) (9,926.0) 86.0 264.0 (2,618.0) 278.0 (1,990.0) 709.0 4,652.0 5,361.0 13,127.0 (5,000.0) 74.0 8,201.0

12/08
5,292.0 4,616.0 (1,505.0) 2,523.0 10,926.0 (5,197.0) 69.0 (737.0) (5,865.0) (40.0) (6,090.0) (3,100.0) 212.0 (9,018.0) (3,957.0) 437.0 (3,520.0) 13,570.0 (5,197.0) (1,505.0) 6,868.0

12/09E
3,062.4 4,797.0 (682.6) 2,362.3 9,539.2 (4,700.0) 0.0 600.7 (4,099.3) (41.0) 200.0 (3,125.4) 0.0 (2,966.4) 2,473.5 (1,527.6) 945.9 10,706.2 (4,700.0) (682.6) 5,323.6

% ch
-42.1 3.9 -54.6 -6.4 -12.7 -9.6 -30.1 0.8 -67.1 -21.1 -9.6 -54.6 -22.5

12/10E
6,469.8 4,951.3 115.2 617.0 12,153.3 (5,000.0) 0.0 (322.1) (5,322.1) 0.0 (2,400.0) (3,441.0) 0.0 (5,841.0) 990.2 324.0 1,314.1 13,553.6 (5,000.0) 115.2 8,668.8

% ch
111.3 3.2 -73.9 27.4 6.4 29.8 10.1 96.9 26.6 6.4 62.8

12/11E
8,023.7 5,111.1 (229.0) 658.5 13,564.2 (5,944.8) 0.0 (357.9) (6,302.8) 0.0 (3,500.0) (3,746.8) 0.0 (7,246.8) 14.7 211.7 226.4 15,731.4 (5,944.8) (229.0) 9,557.5

% ch
24.0 3.2 6.7 11.6 18.9 18.4 8.9 24.1 -34.6 16.1 18.9 10.3

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Note: For some companies, the data represents an extract of the full company accounts.

UBS 11

Global Equity Research
Americas Semiconductors 12-month rating 12m price target

Intel Corp.
Buy
US$21.00
Valuation (x)
P/E (local GAAP) P/E (UBS) P/CEPS Net dividend yield (%) P/BV EV/revenue (core) EV/EBITDA (core) EV/EBIT (core) EV/OpFCF (core) EV/op. invested capital

5Yr Avg
22.2 22.3 12.5 1.2 3.8 3.8 9.9 15.3 14.8 6.2

12/07
19.9 21.2 12.0 1.9 3.2 3.3 9.7 15.2 15.5 5.2

12/08
21.7 19.2 10.7 2.7 2.9 2.8 7.6 11.6 15.1 4.1

12/09E
31.1 21.2 10.1 3.3 2.3 2.5 7.8 14.1 15.7 3.3

12/10E
14.7 14.7 8.2 3.7 2.2 2.3 6.0 9.5 9.5 3.3

12/11E
11.8 11.8 7.1 4.0 2.2 2.1 5.2 7.6 8.5 3.3

Company profile
Intel Corporation is the leading maker of semiconductor integrated circuits (ICs). The company's principal products are microprocessors and chipsets used in all major computing segments worldwide. Intel also designs and makes other products, such as PC motherboards, communications products, storage products, and Flash memory.

Enterprise value (US$m)
Average market cap + minority interests + average net debt (cash) + pension obligations and other - non-core asset value Core enterprise value

12/07
137,370.2 0.0 (10,607.5) 0.0 0.0 126,762.7

12/08
115,301.7 0.0 (11,548.0) 0.0 0.0 103,753.7

12/09E
94,163.8 0.0 (10,707.4) 0.0 0.0 83,456.4

12/10E
94,163.8 0.0 (12,217.0) 0.0 0.0 81,946.9

12/11E
94,163.8 0.0 (12,987.2) 0.0 0.0 81,176.6

Value (EV/OpFCF & P/E)
20.0x 15.0x 10.0x 10.0x 5.0x 0.0x 5.0x 12/07 12/08 12/09E EV/OpFCF (LHS) P/E (RHS) 12/10E 0.0x 12/11E 25.0x 20.0x 15.0x

Growth (%)
Revenue EBITDA (UBS) EBIT (UBS) EPS (UBS) Cash EPS Net DPS BVPS

5Yr Avg
6.2 -0.2 0.5 6.9 4.4 53.9 6.7

12/07
8.3 24.3 47.4 29.5 13.6 12.5 16.3

12/08
-2.0 3.4 7.5 -6.1 -4.0 21.6 -4.8

12/09E
-12.8 -21.1 -34.0 -23.6 -11.0 2.3 3.6

12/10E
9.4 26.6 45.6 44.3 23.4 10.7 3.7

12/11E
10.0 16.1 23.5 24.9 15.8 9.7 4.2

Margins (%)
EBITDA / revenue EBIT / revenue Net profit (UBS) / revenue

5Yr Avg
39.0 25.2 19.0 5Yr Avg 41.0 17.9 5Yr Avg 5.5 26.1 NM 5Yr Avg 1.6 1.7 NM 5Yr Avg 1.0 13.6 1.0 5Yr Avg (32.6) (48.6) -9.11

12/07
34.2 21.7 17.1 12/07 34.4 24.3 16.5 12/07 2.5 40.0 NM 12/07 1.6 1.8 NM 12/07 1.0 13.0 1.0 12/07 (31.0) (44.9) (8.4)

12/08
36.1 23.8 15.9 12/08 35.7 24.8 14.6 12/08 27.1 1.9 51.8 NM 12/08 1.5 1.8 NM 12/08 0.8 13.8 1.1 12/08 (25.2) (33.7) (11.1)

12/09E
32.7 18.0 13.8 12/09E 23.2 18.3 11.4 12/09E 28.7 1.4 69.3 NM 12/09E 1.3 1.5 NM 12/09E 0.9 14.3 1.0 12/09E (28.7) (40.2) (12.8)

12/10E
37.8 24.0 18.1 12/10E 34.7 26.7 15.8 12/10E NM 1.9 53.2 NM 12/10E 1.4 1.7 NM 12/10E 1.0 14.0 1.0 12/10E (31.0) (44.9) (14.9)

12/11E
39.9 26.9 20.4 12/11E 42.5 32.7 19.0 12/11E NM 2.1 46.7 NM 12/11E 1.6 1.8 NM 12/11E 0.9 15.1 1.2 12/11E (30.5) (43.8) (16.0)

Profitability
28.0% 26.0% 24.0% 22.0% 20.0% 18.0% 16.0% 12/07 12/08 12/09(E) 12/10(E) ROIC (RHS) 12/11(E) 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0%

Return on capital (%) EBIT ROIC (UBS) ROIC post tax Net ROE Coverage ratios (x) EBIT / net interest Dividend cover (UBS EPS) Div. payout ratio (%, UBS EPS) Net debt / EBITDA Efficiency ratios (x) Revenue / op. invested capital Revenue / fixed assets Revenue / net working capital Investment ratios (x) OpFCF / EBIT Capex / revenue (%) Capex / depreciation Capital structure (%) Net debt / total equity Net debt / (net debt + equity) Net debt (core) / EV

EBIT margin (LHS)

ROE v Price to book value
20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 12/07 12/08 ROE (LHS) 12/09(E) 12/10(E) Price to book value (RHS) 12/11(E) 3.0x 2.8x 2.6x 2.4x 2.2x 2.0x 1.8x

Growth (UBS EPS)
40000 38714 37429 36143 34857 33571 32286 31000 12/07 12/08 Revenue (LHS) 12/09(E) 12/10(E) UBS EPS Growth (RHS) 12/11(E) 38.6% 27.1% 15.7% 4.3% -7.1% -18.6% -30.0%

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Valuations: based on an average share price that year, (E): based on a share price of US$16.83 on 14 Jul 2009 17:53 EDT Market cap(E) may include forecast share issues/buybacks.

Uche Orji
Analyst uche.orji@ubs.com +1 212 713 4015

Steven Eliscu
Analyst steven.eliscu@ubs.com +1-415-352 5674

UBS 12

Intel Corp. 15 July 2009

Intel Corp. Intel Corporation is the leading maker of semiconductor integrated circuits (ICs). The company's principal products are microprocessors and chipsets used in all major computing segments worldwide. Intel also designs and makes other products, such as PC motherboards, communications products, storage products, and Flash memory.

Statement of Risk Our investment thesis on Intel is predicated on a gradual recovery of global economic growth, driving corporate profits, which in turn will drive corporate IT spending on computing hardware. Sustained weaknesses in the global or regional economies could adversely impact Intel’s sales of processors and chipsets.

Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

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Intel Corp. 15 July 2009

Required Disclosures
This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request.
UBS Investment Research: Global Equity Rating Allocations
UBS 12-Month Rating Buy Neutral Sell UBS Short-Term Rating Buy Sell Rating Category Buy Hold/Neutral Sell Rating Category Buy Sell Coverage 44% 39% 17% 3 Coverage less than 1% less than 1%
1

IB Services 38% 36% 25% 4 IB Services 33% 33%

2

1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 30 June 2009.

UBS Investment Research: Global Equity Rating Definitions
UBS 12-Month Rating Buy Neutral Sell UBS Short-Term Rating Buy Sell Definition FSR is > 6% above the MRA. FSR is between -6% and 6% of the MRA. FSR is > 6% below the MRA. Definition Buy: Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event. Sell: Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.

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Intel Corp. 15 July 2009

KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. EXCEPTIONS AND SPECIAL CASES UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.

Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities LLC: Uche Orji; Steven Eliscu.

Company Disclosures
Company Name 4, 6a, 6b, 6c, 7, 8, 16, 18 Intel Corp. Reuters INTC.O 12-mo rating Short-term rating Buy N/A Price US$16.83 Price date 14 Jul 2009

Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 4. 6a. 6b. 6c. 7. 8. 16. 18. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided. Within the past 12 months, UBS Securities LLC has received compensation for products and services other than investment banking services from this company/entity. The equity analyst covering this company, a member of his or her team, or one of their household members has a long common stock position in this company. UBS Securities LLC makes a market in the securities and/or ADRs of this company. The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Intel Corp.

Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.

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Intel Corp. 15 July 2009

Intel Corp. (US$)
Price Target (US$) 50.0 40.0 30.0 20.0 10.0 0.0 01-Apr-05 01-Apr-06 01-Apr-07 01-Apr-08 01-Jan-05 01-Jan-06 01-Jan-07 01-Jan-08 01-Jan-09 01-Apr-09 01-Jul-04 01-Jul-05 01-Jul-06 01-Jul-07 01-Jul-08 01-Oct-04 01-Oct-05 01-Oct-06 01-Oct-07 01-Oct-08 01-Jul-09 Stock Price (US$)

Buy 2 Neutral 2 Buy No Rating

Source: UBS; as of 14 Jul 2009 Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6% above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 = FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA, lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6% below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities. A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities. From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.

UBS 16

Intel Corp. 15 July 2009

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