ntel’s incoming CEO Lip-Bu Tan has considered significant changes to its chip manufacturing methods and artificial intelligence strategies ahead of his
return to the company on Tuesday. It is also worth mentioning that the new trajectory includes restructuring the company’s approach to AI and staff cuts to address what Tan views as a slow-moving and bloated middle management layer.
Revamping the company’s manufacturing operations, which at one time only made chips for Intel, yet they have been repurposed in order to create semiconductors for outside clients such as Nvidia, is one of Tan’s core priorities, these sources said.
The sources also mentioned that the plans are under creation and could be changed. Intel shares grew more than 8% in mid-day trading on Nasdaq. At a town hall meeting following his appointment as CEO, he also told employees that the economy would need to make “tough decisions” according to two other people briefed in a meeting.
Even more so, Dylan Patel, the semiconductor industry expert said that a big problem regarding Intel CEO Pat Gelsinger who left the company in December was “too nice” also adding “He did not want to fire a bunch of middle management in the way they needed to,”.
Former CEO of chip design software firm Cadence, Tan, was a member of Intel’s board until he resigned last August. However, returning as CEO, Tan is set to take over the American icon after a decade of bad decisions by three CEOs in which it did not succeed in building chips for smartphones, also missing surging demand for AI processors. This also allowed competitors from Arm Holdings and Nvidia to dominate those markets.
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In 2024, Intel reported theri first $19 billion annual loss since 1986. However, in the near term, Tan is looking forward to improving performance regarding its manufacturing arm, Intel Foundry, which also develops chips for other well-known companies such as Microsft and Amazon.
A spokesperson from Intel also reported, “Lip-Bu will be spending a lot of time listening to customers, partners, and employees as he comes on board and works closely with our leadership team to position the business for future success”.
Tan’s strategy seems to be a fine-tuning of Gelinger, as Gelsinger’s centerpiece turnaround plan was to transform Intel into a contract chip manufacturer company, similar to Taiwan Semiconductor Manufacturing Company, also known as TSMC. TSMC is the producer for Apple, Nvidia, and Qualcomm, reported Reuters.
