Pat Gelsinger rang in his first quarterly earnings call as Intel’s CEO by touting the company’s recent achievements and pivot to becoming a foundry operator.

“We shipped a record volume of notebook CPUs, we launched new, competitive Intel Core and Xeon processors, Mobileye had its best quarter ever, and with tremendous industry support we unveiled our IDM 2.0 strategy setting a bold new course for technology leadership at Intel,” he said.

Under Gelsinger, Intel has moved rapidly to transform the company and address delays that have put the chipmaker behind the competition in process technology. The company’s Integrated Design Manufacturing 2.0 (IDM 2.0) initiative and accompanying Intel Foundry Services business will see the chipmaker open its fabs to outside contractors. To support these efforts, Intel plans to invest $20 billion this year to construct two foundry facilities in Arizona, with more planned for the coming years.

While the investments will dramatically increase Intel’s wafer capacity, Gelsinger said he expects the semiconductor shortage, which has hobbled production of everything from the latest game consoles to automakers, will take several years to address.

“We expect that will take a couple of years for the ecosystem to make the significant investments to address these shortages,” he said.

Despite ongoing challenges, Gelsinger kept the tone upbeat.

“You can feel the energy inside of Intel, the passion to innovate, and the drive that made us great. We are reigniting our culture to attract, retain, and motivate the best and brightest engineers in the industry,” he said. “Given the incredible demand for computing, the strength of our IDM 2.0 strategy, and the technology investments we're making, I'm certain Intel's best days are in front of us.”

“Intel delivered a strong Q1 that beat our January guide in both the top and bottom line driven by exceptional demand for our products,” Gelsinger said.

And while Intel’s revenues exceeded guidance by $1 billion dollars, revenues still declined 1% year over year to $19.7 billion. Net income fared even worse, sliding $2.3 billion, or 41% year over year, to $3.4 billion during the quarter.

Intel CFO George Davis expressed confidence that Intel would return to sequential growth as the company emerges from “an adverse macroeconomic environment driven by COVID-19.”

Strong PC sales continued to prop up the chipmaker during the quarter with the company’s Client Computing Group up 8% year over year to $10.6 billion.

The chipmaker’s Data Center Group, however, remained a pain point for Intel, falling 20% year over year. Intel’s Mobileye autonomous driving division and Internet of Things Group (IOTG) were the only data-centric business units with positive growth during the quarter. Mobileye ended Q1 with revenues up 48% year over year to $377 million, while IOTG grew 4% to $914 million.

Looking to the second quarter, Intel is predicting revenues of $18.9 billion and full-year revenues of approximately $77 billion. Capital expenditures are expected to come in at between $19 billion and $20 billion in line with the chipmaker’s planned foundry expansion.

“We continue to see very strong demand for PCs with fulfillment challenges on industry wide component and substrate shortages. In data center, we believe revenue bottomed in Q1 and will increase in Q2 as cloud digestion impacts begin to subside and enterprise and government momentum continues,” Davis said.

However, Intel expects PC revenues, which have helped to offset steep declines in the company’s Data Center Group, to be front-heavy in 2021, trailing off toward the end of the year due to the ongoing supply chain shortage and the ramp down in modem and Apple Mac revenues.

Apple is in the process of eliminating all Intel-based Macs from its product lineup in favor of its own Arm-based silicon, a fact that has reportedly stung the new CEO.