January 9, 2018 | Equity Research

CES Trade Show: Notes From Day 1

Semiconductors

 In this note we detail announcements made by chip companies this week in conjunction with the CES Trade Show, commentary from various keynote presentations and press conferences at the show, and what we saw in booths on the show floor. We have a positive view ’s strong position in autonomous driving and the new processor products that AMD has announced. We are reiterating our Outperform

ratings on Intel (INTC, $43.62, Outperform) and AMD (AMD, $11.82, Outperform).

 Intel and Nvidia highlighted their involvement in autonomous driving. Maxim and TI announced new automotive chip products. We think that the Mobileye acquisition positions Intel as the leader in autonomous driving chips, and that Intel’s capabilities expand Mobileye’s addressed market within autonomous driving and automotive chips. In our view Nvidia has done a good job in developing chips products for autonomous driving and establishing itself as a competitor to Mobileye/Intel.

 Skyworks and Intel highlighted 5G communications products. We think that over the next few years 5G will be an important driver of new applications associated with collection, transmission and analysis of data, fueling growth of the internet-of-things.

 Intel launched five 8th generation Kaby Lake G mobile processors which include co-packaged discrete Vega GPUs (graphics processor units) made by AMD. Systems using these chips are expected in the March 2018 quarter. We think that Intel’s collaboration with AMD to create products with co-packaged AMD GPUs is interesting in that it creates the possibility of Intel perhaps extending this idea beyond the high end notebook space to the desktop segment and possibly even the server/accelerator space. AMD announced new Ryzen desktop APUs (Accelerated Processing Unit) featuring integrated Radeon Vega Graphics and some additional Ryzen mobile APUs. With these latest product announcements AMD is expanding the reach of Ryzen more broadly across the desktop and notebook market, creating the likelihood, we think, of PC processor market share gains for AMD in 2018.

 Intel and AMD provided updates on their efforts to address the computer security issues that have been in the news over the past week or so. A more information becomes available we remain hopeful that there will be little material financial or competitive impact to Intel or AMD associated with this problem. David Wong, CFA, PhD Senior Analyst|212-214-5007  Intel and AMD provided updates on their efforts to address the computer security issues that have been in the news over the past [email protected] week or so. A more information becomes available we continue to Amit Chanda think that it is likely there will be little material financial or competitive Associate Analyst |314-875-2045 impact to Intel or AMD associated with this problem. [email protected]

Keith Kan, CPA

Associate Analyst |212-214-5066 [email protected] Joy Zhang Associate Analyst |212-214-8017 [email protected]

Please see page 8 for rating definitions, important disclosures and required analyst certifications. All estimates/forecasts are as of 01/09/18 unless otherwise stated. 01/09/18 20:03:06 ET

Wells Fargo Securities, LLC 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 the report and investors should consider this report as only a single factor in making their investment decision. Semiconductors Equity Research

In this note we detail announcements made by chip companies this week in conjunction with the CES Trade Show, commentary from various keynote presentations and press conferences at the show, and what we saw in booths on the show floor. We have a positive view Intel’s strong position in autonomous driving and the new processor products that AMD has announced. We are reiterating our Outperform ratings on Intel (INTC, $43.62, Outperform) and AMD (AMD, $11.82, Outperform).

 Intel and Nvidia highlighted their involvement in autonomous driving. Maxim and TI announced new automotive chip products. o We think that the Mobileye acquisition positions Intel as the leader in autonomous driving chips, and that Intel’s capabilities expand Mobileye’s addressed market within autonomous driving and automotive chips. o In our view Nvidia has done a good job in developing chips products for autonomous driving and establishing itself as a competitor to Mobileye/Intel.

 Intel and AMD announced what we consider to be interesting new PC processor products. o We think that Intel’s collaboration with AMD to create products with co-packaged AMD GPUs is interesting in that it creates the possibility of Intel perhaps extending this idea beyond the high end notebook space to the desktop segment and possibly even the server/accelerator space. o In our view the Ryzen chips AMD launched in 2017 only address part of the desktop and notebook space. With its latest announcements of Ryzen desktop processors with integrated graphics and additional Ryzen mobile processors AMD is expanding the reach of Ryzen more broadly across the desktop and notebook market, creating the likelihood, we think, of PC processor market share gains for AMD in 2018.

 Intel and AMD provided updates on their efforts to address the computer security issues that have been in the news in the last week. As more information becomes available we remain hopeful that there will be little material financial or competitive impact to Intel or AMD associated with this problem. o Intel expects to issue updates for more than 90% of its products introduced within the past 5 years within a week and the remaining by the end of January. o AMD has said in an email that it is aware of a problem that has cropped up with a proposed operating system fix for its older processors and that it is working Microsoft to resolve this.

 Skyworks and Intel highlighted 5G communications products. We think that over the next few years 5G will be an important driver of new applications associated with collection, transmission and analysis of data, fueling growth of the internet-of-things.

Intel (and Mobileye)

Autonomous Driving Innovations. In his opening keynote, Intel CEO revealed Intel’s first autonomous vehicle in its 100-car test fleet and announced that 2 million vehicles from BMW, Nissan and Volkswagen will use Mobileye Road Experience Management (REM) technology to crowdsource data to build scalable maps throughout 2018. In addition, Krzanich announced two partnerships with leading automotive manufacturer SAIC Motor and digital mapping company NavInfo; SAIC will develop Level 3, 4, and 5 cars in China based on Mobileye technology and also help bring REM mapping to China. Krzanich also disclosed Intel’s new automated driving platform, which combines automotive-grade Intel processors with Mobileye EyeQ5 chips to offer Level 3 to Level 5 autonomous driving scalability and versatility. Krzanich announced that Intel and Ferrari are partnering up to bring AI to the Ferrari Challenge North America Series; the broadcast will use Intel Scalable processors and its neon framework for deep learning.

Mobileye CEO speaks at CES 2018. At CES 2018, Mobileye CEO Professor Amnon Shashua noted that Mobileye has design wins for advanced L2+ and L3 autonomous systems with 11 automakers; these designs are expected to launch in 2018 and 2019. Professor Shashua noted a combined Intel-Mobileye platform that is optimized for power-performance to enable scalabe L4/L5 autonomous vehicles; the platform features two EyeQ5 SoCs, one C3xx4 processor and Mobileye software.  Mobileye shipped close to 9 million chips in 2017 and launched multiple programs including L3 system. Mobileye achieved 30 design wins from 27 separate automakers in 2017.  In 2018, Mobileye will begin collecting REM data, enabled by software embedded on EyeQ4. 2 million vehicles from BMW, Nissan and Volkswagen will use Mobileye Road Experience Management (REM) technology to crowdsource data to build scalable maps throughout 2018.

2 | Wells Fargo Securities, LLC

CES Trade Show: Notes From Day 1 Equity Research

Mobileye is to work with NavInfo and SAIC Motor to bring REM to China. The initial use of Roadbook is expected to add value to L2+ and L3 systems; category of L2+ is developed by using RoadBook’s low-cost and low-bandwidth footprint to enable advances in both lateral and longitudinal control features at affordable cost.  Mobileye recently signed next-step agreement with Volkswagen to formalize the usage of dynamic data collected by front facing cameras on ADAS-equipped vehicles. Mobileye noted that its partners with the city of Dusseldorf, Spain Directorate – General of Traffic, Gett Taxi Limited, Berkshire Hathaway GUARD Insurance company and Buggy TLC Leasing represent landmark agreement for the use of the dynamic data collected.  Mobileye’s 100 vehicle test fleet will use a highly scalable and cost-effect L4/L5 platform.

Intel addresses security research findings at CES 2018. In his opening remarks during his 2018 CES keynote, Intel’s CEO Brian Krzanich mentioned that Intel has not received any information that security issues that have recently been in the news have actually been exploited to collect data. Intel expects to issue updates for more than 90% of its products introduced within the past 5 years within a week and the remaining by the end of January. Intel continues to expect performance impact from the updates will be highly depended on workload.

Intel delivers 49-qubit superconducting test chip and develops “Loihi” neuromorphic research chip. At CES, Intel announced that it has successfully designed, fabricated and delivered “Tangle Lake”, a 49-qubit superconducting test chip, two months after which it delivered its 17-qubit superconducting test chip. Intel noted that Tangle Lake represents progress toward its goal of developing a complete quantum computing system. At CES, Intel also showcased its research into neuromorphic computing; Intel Labs has developed a neuromorphic research chip called “Loihi” which features digital circuits that imitate the brain’s basic operation. According to Intel, Loihi features training and inference on a single chip to make machine learning more power efficient. Intel plans to share the Loihi test chip with university and research institutions in the first half of 2018.

Mobileye and NavInfo to build and distribute REM product in China. Mobileye and NavInfo announced that they have agreed to build and distribute Mobileye’s Road Experience Management (REM) product in China. The partnership is intended to use Mobileye’s REM technology to create a RoadBook in China integrated with NavInfo’s mapping solutions. Mobileye’s REM system is a cost-efficient precision localization/mapping solution. NavInfo software and other technology help support the rapid update of RoadBook inside NavInfo’s standard map and highly automated driving map.

VR and Immersive Media. Intel announced the debut of Intel Studios, a new studio dedicated to produce large scale content using Intel True View technology that can feature virtual reality. In addition, Intel will enable the largest scale virtual reality event with the Olympic Winter Games PyeongChang 2018 using Intel True VR technology.

Smart and connected home devices. At CES 2018, Intel announced new 802.11ax chipsets for mainstream home routers and gateways. D-Link announced a new AC2600 Wi-Fi Router powered by McAfee and based on Intel’s connected home technology; this solution features Intel Home Wi-Fi Chipset WAV500 Series. Blue Cave Wi-Fi router, from Asus features Intel Home Wi-Fi Chipset WAV500 Series. JD DingDong Play, a Chinese large display smart assistant, is powered by Intel technology and features an Intel Atom processor. Intel helps improves the Alexa experience by providing support for hands-free voice control, Smart Sound Technology for rich audio and Intel Wake on Voice.

In Intel’s booth, Intel highlighted its involvement in Autonomous Driving, Artificial Intelligence (AI) 5G Communications and Virtual Reality (VR).  Autonomous Driving o Intel had on display a BMW personal copilot autonomous driving test vehicle o In both Intel’s and Mobileye’s booths the Intel/Mobileye laid out elements of autonomous driving: . Sense, plan, act  Computer Vision (Cameras)  Smarter AI  Comfort planning  Safety validation (RSS – responsibility-sensitive safety)  Trajectory validation and issuance  Translating decision into action – communication with actuators for braking, acceleration, steering. . Mapping and sensing  Mapping and localization engine – crowdsource mapping  REM (road experience management) – roadbook maps  L2+/L3, extending to L4 L5  Delivering redundancy for path sensing and foresight

Wells Fargo Securities, LLC | 3 Semiconductors Equity Research

 Ultra-high refresh rates  Low bandwidth data packets (10KB per KM of driving)  Crowd sourcing for mapping o High resolution low cost cameras o 360 degree surround view o RADAR, Lidar, Ultrasonic sensing o Short mid and long range sensing o Radar cocoon sensing near & far o Speed and distance verification o Next level data to ensure safety . Human level perception that never blinks . Perception of dynamic and static object . Cameras . Real time 360 degree surround sensing . Planning – smarter AI  Human-like assertiveness  Comfortable  Brand experience and feel  Eliminate wasted compute  Optimized for specific tasks  Simple semantic decision making . Deep learning and compute platform. EYeQ5 + Intel atom processor  Fusing data from multiple sensors  Instantaneous decision making o Intel also is involved in automotive infotainment – its Atom 3900 series processors. . Optimized for latest android features . Advanced digital cockpit  AI - Intel had presentations and demonstration touching on various applications of AI o Fighting financial crime – Intel Saffron AML(anti-money laundering) advisor software o Low power object detection within intel AI – Intel’s Movidius chips o Augmented reality o Drones controlled by ai o Real time 3d facial recognition  VR - Intel had presentations and demonstration touching on various applications of VR o Sports immersive media o VR for drive training o Social VR within a virtual world  Intel had on display its Quantum computing test chip. o In 2015 Intel entered into a partnership with Qutech with the goal of building a quantum computing system. o Our understanding is that it will be several more years before Intel expects to have a working device. o The Qubit circuity is based on Josephson junction devices made in superconducting Niobium. Niobium has a maximum temperature 9K or 264 degrees below zero centigrade for superconducting operation.  Intel also had on display laptops running on its new 8th gen core i7 chips

Nvidia

At CES 2018 press event, Nvidia CEO Jensen noted that Nvidia is driven by gaming ($100 billion industry), artificial intelligence ($3 trillion IT industry) and autonomous driving ($10 trillion industry).

Uber selects Nvidia technology for its self-driving vehicles. Nvidia and Uber announced that Uber has selected Nvidia technology for the artificial intelligence computing systems in its self-driving vehicles. Since early 2015, Uber’s self-driving vehicles have completed more than 50,000 passenger trips and logged over 2 million autonomous miles. Uber began to use Nvidia GPU computing technology in its first test fleet of XC90 SUVs and now uses Nvidia processors to run deep neural networks in both self- driving cars and freight trucks.

Volkswagen and Nvidia collaborate to incorporate AI into future vehicles. Nvidia and Volkswagen announced that a new generation of intelligent Volkswagen vehicles will utilize Nvidia DRIVE IX technology to offer new driving experiences and improve safety; Nvidia DRIVE IX Intelligence Experience platform is a software development kit designed to create AI-enabled applications including facial recognition, surround perception, gesture recognition, natural language understanding, and gaze tracking. The two companies highlighted the new Volkswagen I.D. Buzz, an electric car which uses DRIVE IX technology to create intelligent co-pilot applications, including convenience and assistance systems based on processing sensor data from both inside and outside of the car. Volkswagen will launch its electric car campaign with the I.D.

4 | Wells Fargo Securities, LLC

CES Trade Show: Notes From Day 1 Equity Research

family (of which I.D. Buzz is part of) and gradually introduce autonomous driving starting in 2020; Volkswagen expects to have more than 20 fully electric vehicle models planned by 2025.

Nvidia DRIVE Xavier SoCs (System-on-Chip) are sampling to customers in Q1’2018. Nvidia announced that first samples of its Xavier processors are being sent to customers this quarter, with production expected for later this year. Xavier is an autonomous machine processor and will power Nvidia DRIVE software stack (DRIVE AV (autonomous vehicle platform), DRIVE IX (intelligent experience SDK), and DRIVE AR (augmented reality SDK)). Xavier is built around a custom 8-core CPU, a new 512-core Volta GPU, a new deep learning accelerator, new computer vision accelerators and new 8K HDR video processors. Xavier has more than 9 billion transistors and took $2 billion in research and development. According to Nvidia, Xavier is instrumental to Nvidia DRIVE Pegasus AI computing platform; Pegasus features two Xavier SoCs and two next-generation Nvidia GPUs. First samples of Pegasus will be delivered in mid-2018. Nvidia also noted that its DRIVE ecosystem now has 320 partners up from 225 a year ago.

Nvidia and Aurora are collaborating to create new self-driving hardware platform featuring Nvidia DRIVE Xavier. Nvidia and Aurora announced that they are collaborating to create new Level 4 and Level 5 self-driving platform using Nvidia DRIVE Xavier processor. Aurora expects to bring Level 4 and Level 5 vehicles to market in the coming years.

Nvidia, ZF and Baidu create first AI autonomous vehicle computing platform for China. Nvidia, ZF and Baidu announced that they have created the first AI autonomous vehicle computing platform for China; the system is based on new Nvidia DRIVE Xavier, ZR’s new ProAI car computer and Baidu’s Apollo Pilot (an autonomous driving product designed for mass production). According to Nvidia, Xavier can perform 30 deep learning TOPS (trillions of operations per second) using only 30 watts of power. ZR’s ProAI can process inputs from multiple cameras, plus lidar and radar, and create a safe path through traffic. Baidu’s Apollo open autonomous driving platform supports all major functions of self-driving car. The computing platform solution is designed for any vehicle maker planning to do business in China and is able to scale from Level 2 automated driving to Level 5 fully autonomous robotaxix. Production vehicles using AI self-driving technologies from Nvidia, ZF, and Baidu are expected to be driven in China beginning 2020.

Maxim collaborates with Nvidia on autonomous driving and safety applications. Maxim and Nvidia are working together to support Level 5 full-autonomy system, the Nvidia DRIVE Pegasus platform, as well as Nvidia DRIVE Xavier for Level 4 driving. Maxim’s automotive safety integrity level (ASIL) solutions and high performance analog integration, includes gigabit multimedia serial link (GMSL) serializer and deserializer (SerDes) technology and a power system monitoring solution. Maxim’s 6 gigabit per second GMSL SerDes technology supports automotive infotainment, ADAS and autonomous driving.

In Nvidia’s booth we saw on display:

 Nvidia DRIVE Xavier system-on-chip o Autonomous machine processor o 30 TOPS (trillions of operations per second) o 30 Watts o >9 billion transistors o Carmel ARM64 CPU o 512-core Volta GPU o Video processor o 256 LP DDR4 o Sampling to customers during March 2018 quarter

 Nvidia DRIVE Pegasus o Artificial Intelligence supercomputer for Level 5 o Size of a license plate o Artificial Intelligence platform for Nvidia DRIVE AV autonomous vehicle platform, and two new software platforms including DRIVE IX and DRIVE AR o 320 TOPS (trillions of operations per second) for Artificial Intelligence referencing o 400 watts o Built on 2 Xavier system-on-chips and 2 next generation Nvidia GPUs. o Samples of Pegasus available in mid-2018

 Volkswagen I.D. Buzz on display o Will use Nvidia’s Drive IX technology

Wells Fargo Securities, LLC | 5 Semiconductors Equity Research

 Nvidia intends to partner with startup Aurora Innovation for self-driving cars. Nvidia is also working with ZF and Baidu on self-driving auto platforms targeting China.

AMD

AMD announced new Ryzen desktop APUs (Accelerated Processing Unit) featuring integrated Radeon Vega Graphics.  The Ryzen desktop APUs introduced today are the Ryzen 5 2400G and Ryzen 3 2200G.  According to AMD, the latest desktop Ryzen APUs include the highest performance graphics engine in a desktop processor, with advanced quad core performance with up to 8 processing threads and 1080p HD+ gaming performance without a discrete graphics card.  The two new Ryzen desktop APUs’ specifications are: o Ryzen 5 2400G: 4 CPU (Central Processing Unit) cores, 8 threads, 3.9GHz (Gigahertz) max boost clock, 11 graphics compute units, 1250 MHz max GPU clock, 6MB (megabyte) L2/L3 cache, and 45-65 watt cTDP (Configurable Thermal Design Power) o Ryzen 3 2200G: 4 CPU cores, 4 threads, 3.7GHz max boost clock, 8 graphics computer units, 1100 MHz max GPU clock, 6MB L2/L3 cache, and 45-65 watt cTDP.  The new desktop Ryzen APUs are expected to be available beginning February 12, 2018.

AMD detailed the additional Ryzen mobile APUs, including Ryzen 3 and Ryzen PRO chips.  Ryzen 3 mobile processors featuring Radeon Vega Graphics, which include Ryzen 3 2300U and Ryzen 3 2200U. We expect these chips will appear in systems in the current, March 2018 quarter. o Ryzen 3 2300U: 4 CPU cores, 4 threads, 3.4GHz max clock, 6 graphics compute units, 1100MHz max GPU clock, 6MB L2/L3 cache, and 15 watt nominal cTDP o Ryzen 3 2200U: 2 CPU cores, 4 threads, 3.4GHz max clock, 3 graphics compute units, 1000 MHz max GPU clock, 5MB L2/L3 cache, and 15 watt nominal cTDP  Ryzen PRO mobile APUs are designed for powering enterprise notebook and are expected to launch in Q2 2018. The lineup includes the following three Ryzen PRO mobile processors: o Ryzen 7 PRO 2700U: 4 CPU cores, 8 threads, 3.8 GHz max clock, 10 graphics compute units, 1300 MHz max GPU clock, 6MB L2/L3 cache, and 15 watt nominal cTDP. o Ryzen 5 PRO 2500U: 4 CPU cores, 8 threads, 3.6 GHz max clock, 8 graphics compute units, 1100 MHz max GPU clock, 6MB L2/L3 cache, and 15 watt nominal cTDP. o Ryzen 3 PRO 2300U: 4 CPU cores, 4 threads, 3.4 GHz max clock, 6 graphics compute units, 1100 MHz max GPU clock, 6MB L2/L3 cache, and 15 watt nominal cTDP.

AMD also shared updates on its process technology roadmaps for processor and graphics architectures, and product roadmaps for Ryzen desktop and mobile processors and Vega graphics. X86 Processors:  AMD noted that its Zen core is currently shipping in Ryzen desktop and mobile processors and is in production at both 14nm and 12nm, with 12nm samples shipping now. AMD indicated that Zen 2 design, which improves upon its original Zen design, is complete.  AMD noted that its 2nd generation Ryzen desktop processor, its first 12nm-based processor, is scheduled for introduction in April 2018.

Graphics Processors:  AMD announced the expansion of the Vega product family in 2018 with Radeon Vega Mobile GPU for ultrathin notebooks.  AMD’s first 7nm product will be a Vega-based GPU built specifically for machine learning applications.

The roadmaps presented by AMD show the following:  AMD’s Zen 3, built on 7nm+ technology process, is on track for implementation in 2020.  In terms of graphics, AMD’s second 7nm product will be a Navi-based GPU, followed by a “next-generation”-based GPU based on 7nm+ process technology.  In the second half of 2018, AMD expects to launch 2nd generation Threadripper processors and 2nd generation Pro desktop processors.

Update on Reported Security Issue with AMD processors. Microsoft Support indicated that it received reports of customers with AMD processors entering into an unbootable state after installing the latest Windows operating system security updates. After investigation, Microsoft indicated that some AMD chipsets do not conform to the documentation previously provided to Microsoft to develop the mitigations to protect against Meltdown and Spectre. Microsoft has now temporarily stopped sending certain windows

6 | Wells Fargo Securities, LLC

CES Trade Show: Notes From Day 1 Equity Research

operating system updates to devices with impacted AMD processors. AMD has said in an email that it is aware of this issue with the older generation processors following the installation of a Microsoft security update. AMD noted that it is working with Microsoft on an update to resolve this issue and expect to roll out this update shortly for impacted users.

Skyworks Solutions

Skyworks introduces Sky5 Platform. Skyworks Solutions introduced Sky5, its solutions that support 5G wireless communications and offers new applications across the mobile and Internet of Things ecosystems. The Sky5 solutions utilize innovative transmit and receive systems. These new solutions will address new 5G waveforms and spectrum, enhanced carrier aggregation, dual connectivity (4G/5G) and massive MIMO requirements. 5G use cases include autonomous vehicles, augmented reality and billions of machine to machine IoT connections.

Qorvo

Qorvo IoT solution powers senior home care. Qorvo’s chipsets for the Internet of Things (IoT) power a new eHealth system targeting senior home care. Health insurer CZ intends to provide the system to 3,000 elderly customers in the Netherlands. The system that CZ will deploy uses a set of motion and open/close sensors and a gateway. It combines cloud expertise from Sensara with Zigbee Green Power RF solutions from Qorvo.

Qorvo distributed Wi-Fi increases mesh performance and service quality for operators. Qorvo introduced a portfolio of 802.11ax products that improves Wi-Fi coverage, enables smaller devices and lowers costs. These products include Wi-Fi front end modules, Wi-Fi BAW 2.4GHz bandedge and LTE coexistence filters and Wi-Fi integrated front end modules (iFEMs). Distributed Wi-Fi networks use multiple routers to spread Wi-Fi signals through the home. Qorvo helps maximize the output power of in- home WiFi signals while optimizing their efficiency and helping lower power consumption.

Maxim

Maxim announces its MAX17843 Battery Management System chip. Maxim introduced its MAX17843, a 12 channel, high-voltage smart sensor data-acquisition, single-chip device for electric vehicles, hybrids, and plug-in hybrids. The MAX17843 meets the highest safety standards of ISO 26262 and ASIL D (Automotive Safety Integrity Level D). Currently, the MAX17843 is available at Maxim's website for $7.61.

TI

January 9, 2018. TI introduces automotive headlight systems with DLP technology. TI has unveiled its new high-resolution headlight system at the CES (Consumer Electronics Show). The new DLP chipset combines full programmability and high resolution and has more than one million addressable pixels per headlight. TI’s automotive partners use the DLP solution to design headlight systems that maximizes brightness for drivers on the road and minimizes the glare to oncoming traffic and reflections from traffic signs. TI’s customers are now sampling and designing with the DLP5531-Q1chipset. The DLP5531-Q1chipset will be more broadly available in the second half of 2018.

Rating Basis Information: AMD Thesis: We think AMD's unique combination of expertise in both x86 microprocessor and graphics circuit design helps it develop differentiated products with which it can drive profitable revenue growth in various computing and other markets.

INTC Thesis: Intel has a dominant position in microprocessors for datacenter, PC and other computing applications. The company has a history of leadership in chip manufacturing, as well as profitability and return of cash to shareholders.

Wells Fargo Securities, LLC | 7 Semiconductors Equity Research

Required Disclosures

8 | Wells Fargo Securities, LLC

CES Trade Show: Notes From Day 1 Equity Research

Additional Information Available Upon Request

Wells Fargo Securities, LLC | 9 Semiconductors Equity Research

I certify that: 1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed; and 2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this research report.

. Wells Fargo Securities, LLC and/or its affiliates, have beneficial ownership of 0.5% or more of any class of the common stock of Intel Corporation. . Advanced Micro Devices, Inc. currently is, or during the 12 month period preceding the date of distribution of the research report was, a client of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided investment banking services to Advanced Micro Devices, Inc.. . Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from Advanced Micro Devices, Inc. in the past 12 months. . Wells Fargo Securities, LLC, or any of its affiliates, intends to seek or expects to receive compensation for investment banking services from Advanced Micro Devices, Inc., Intel Corporation in the next three months. . Wells Fargo Securities, LLC maintains a market in the common stock of Advanced Micro Devices, Inc., Intel Corporation. . Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from Intel Corporation in the past 12 months. . Intel Corporation currently is, or during the 12-month period preceding the date of distribution of the research report was, a client of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided non-investment banking securities-related services to Intel Corporation. . Wells Fargo Securities, LLC or its affiliates has a significant financial interest in Advanced Micro Devices, Inc., Intel Corporation.

AMD: Company-specific risks include the fact that AMD has yet to clearly demonstrate consistent profitability. Sector risks include uncertainty as to what long term secular growth might be. INTC: Company-specific risks include competition from AMD and rising capital spending. Sector risks include the possibility of decelerating growth in PC shipments.

Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions. Wells Fargo Securities, LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm, which includes, but is not limited to investment banking revenue.

STOCK RATING 1=Outperform: The stock appears attractively valued, and we believe the stock's total return will exceed that of the market over the next 12 months. BUY 2=Market Perform: The stock appears appropriately valued, and we believe the stock's total return will be in line with the market over the next 12 months. HOLD 3=Underperform: The stock appears overvalued, and we believe the stock's total return will be below the market over the next 12 months. SELL SECTOR RATING O=Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months. M=Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months. U=Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months. VOLATILITY RATING V=A stock is defined as volatile if the stock price has fluctuated by +/-20% or greater in at least 8 of the past 24 months or if the analyst expects significant volatility. All IPO stocks are automatically rated volatile within the first 24 months of trading.

As of: January 9, 2018

46% of companies covered by Wells Fargo Securities, LLC Equity Wells Fargo Securities, LLC has provided investment banking Research are rated Outperform. services for 43% of its Equity Research Outperform-rated companies. 51% of companies covered by Wells Fargo Securities, LLC Equity Wells Fargo Securities, LLC has provided investment banking Research are rated Market Perform. services for 30% of its Equity Research Market Perform-rated companies. 3% of companies covered by Wells Fargo Securities, LLC Equity Wells Fargo Securities, LLC has provided investment banking Research are rated Underperform. services for 21% of its Equity Research Underperform-rated companies.

10 | Wells Fargo Securities, LLC

CES Trade Show: Notes From Day 1 Equity Research

Important Disclosure for International Clients

EEA – The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. For recipients in the EEA, this report is distributed by Wells Fargo Securities International Limited (“WFSIL”). WFSIL is a U.K. incorporated investment firm authorized and regulated by the Financial Conduct Authority. For the purposes of Section 21 of the UK Financial Services and Markets Act 2000 (“the Act”), the content of this report has been approved by WFSIL a regulated person under the Act. WFSIL does not deal with retail clients as defined in the Markets in Financial Instruments Directive 2007. The FCA rules made under the Financial Services and Markets Act 2000 for the protection of retail clients will therefore not apply, nor will the Financial Services Compensation Scheme be available. This report is not intended for, and should not be relied upon by, retail clients.

Australia – Wells Fargo Securities, LLC is exempt from the requirements to hold an Australian financial services license in respect of the financial services it provides to wholesale clients in Australia. Wells Fargo Securities, LLC is regulated under U.S. laws which differ from Australian laws. Any offer or documentation provided to Australian recipients by Wells Fargo Securities, LLC in the course of providing the financial services will be prepared in accordance with the laws of the United States and not Australian laws.

Canada – This report is distributed in Canada by Wells Fargo Securities Canada, Ltd., a registered investment dealer in Canada and member of the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund (CIPF). Wells Fargo Securities, LLC’s research analysts may participate in company events such as site visits but are generally prohibited from accepting payment or reimbursement by the subject companies for associated expenses unless pre-authorized by members of Research Management.

Hong Kong – This report is issued and distributed in Hong Kong by Wells Fargo Securities Asia Limited (“WFSAL”), a Hong Kong incorporated investment firm licensed and regulated by the Securities and Futures Commission of Hong Kong (“the SFC”) to carry on types 1, 4, 6 and 9 regulated activities (as defined in the Securities and Futures Ordinance (Cap. 571 of The Laws of Hong Kong), “the SFO”). This report is not intended for, and should not be relied on by, any person other than professional investors (as defined in the SFO). Any securities and related financial instruments described herein are not intended for sale, nor will be sold, to any person other than professional investors (as defined in the SFO). The author or authors of this report is or are not licensed by the SFC. Professional investors who receive this report should direct any queries regarding its contents to Mark Jones at WFSAL (email: [email protected] ).

Japan – This report is distributed in Japan by Wells Fargo Securities (Japan) Co., Ltd, registered with the Kanto Local Finance Bureau to conduct broking and dealing of type 1 and type 2 financial instruments and agency or intermediary service for entry into investment advisory or discretionary investment contracts. This report is intended for distribution only to professional investors (Tokutei Toushika) and is not intended for, and should not be relied upon by, ordinary customers (Ippan Toushika).

The ratings stated on the document are not provided by rating agencies registered with the Financial Services Agency of Japan (JFSA) but by group companies of JFSA-registered rating agencies. These group companies may include Moody’s Investors Services Inc., Standard & Poor’s Rating Services and/or Fitch Ratings. Any decisions to invest in securities or transactions should be made after reviewing policies and methodologies used for assigning credit ratings and assumptions, significance and limitations of the credit ratings stated on the respective rating agencies’ websites.

About Wells Fargo Securities Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, Wells Fargo Securities Canada, Ltd., a member of IIROC and CIPF, Wells Fargo Bank, N.A. and Wells Fargo Securities International Limited, authorized and regulated by the Financial Conduct Authority.

This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information. The information in this report has been obtained or derived from sources believed by Wells Fargo Securities, LLC, to be reliable, but Wells Fargo Securities, LLC does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of Wells Fargo Securities, LLC, at this time, and are subject to change without notice. All Wells Fargo Securities research reports published by its Global Research Department (“WFS Research”) are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Additional distribution may be done by sales personnel via email, fax or regular mail. Clients may also receive our research via third party vendors. Not all research content is redistributed to our clients or available to third-party aggregators, nor is WFS Research responsible for the redistribution of our research by third party aggregators. For research or other data available on a particular security, please contact your sales representative or go to http://www.wellsfargoresearch.com. For the purposes of the U.K. Financial Conduct Authority's rules, this report constitutes impartial investment research. Each of Wells Fargo Securities, LLC and Wells Fargo Securities International Limited is a separate legal entity and distinct from affiliated banks. Copyright © 2018 Wells Fargo Securities, LLC

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

Wells Fargo Securities, LLC | 11