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Exclusive-Intel’s new CEO plots overhaul of manufacturing and AI operations

Exclusive-Intel’s new CEO plots overhaul of manufacturing and AI operations

  • 17.03.2025 03:47
  • theprint.in
  • Keywords: AI

Intel’s new CEO, Lip-Bu Tan, is planning significant changes to revive the company by overhauling its manufacturing and AI strategies. He aims to cut staff, improve efficiency, and position Intel as a leading contract chip manufacturer while addressing past missteps under former leadership.

Nvidia ProductsINTCsentiment_dissatisfiedNVDAsentiment_satisfiedCDNSsentiment_dissatisfiedMSFTsentiment_neutralAMZNsentiment_neutralQCOMsentiment_neutralAAPLsentiment_neutralAVGOsentiment_neutralCPTsentiment_neutralARMsentiment_satisfied

Estimated market influence

Intel

Intel

Negativesentiment_dissatisfied
Analyst rating: Neutral

Lip-Bu Tan plans significant changes to Intel's manufacturing and AI strategies. The company is facing financial losses and has lost market share to competitors like Arm Holdings and Nvidia.

Nvidia

Nvidia

Positivesentiment_satisfied
Analyst rating: Strong buy

Nvidia is a competitor benefiting from Intel's struggles, as Intel failed to meet demand for AI processors.

Cadence

Cadence

Negativesentiment_dissatisfied
Analyst rating: Buy

Lip-Bu Tan, former CEO of Cadence, is now leading Intel with new strategies.

Walden Catalyst

Neutralsentiment_neutral
Analyst rating: N/A

Tan's venture firm, Walden Catalyst, did not respond to comments.

TSMC

Positivesentiment_satisfied
Analyst rating: N/A

Taiwan Semiconductor Manufacturing Co. (TSMC) is a competitor Intel aims to rival in contract manufacturing.

Microsoft

Microsoft

Neutralsentiment_neutral
Analyst rating: Strong buy

Microsoft is a customer of Intel's manufacturing arm, Intel Foundry.

Amazon

Amazon

Neutralsentiment_neutral
Analyst rating: Strong buy

Amazon is a customer of Intel's manufacturing arm, Intel Foundry.

Qualcomm

Qualcomm

Neutralsentiment_neutral
Analyst rating: Buy

Qualcomm is a customer of TSMC.

Apple

Apple

Neutralsentiment_neutral
Analyst rating: Buy

Apple is a customer of TSMC.

Broadcom

Broadcom

Neutralsentiment_neutral
Analyst rating: Strong buy

Broadcom has launched early test runs with Intel's manufacturing process.

AMD

AMD

Neutralsentiment_neutral
Analyst rating: Buy

Advanced Micro Devices is evaluating Intel’s chip manufacturing process.

Arm Holdings

Arm Holdings

Positivesentiment_satisfied
Analyst rating: Buy

Arm Holdings has dominated markets that Intel failed to enter, such as smartphone chips and AI processors.

Context

Analysis: Intel’s New CEO and Business Strategy Shifts

Overview

  • Incoming CEO Lip-Bu Tan plans significant changes to Intel’s manufacturing and AI strategies to revive the company.
  • Tan, 65, previously led Cadence and was a tech investor, joins Intel after a decade of challenges under former CEOs, including missed opportunities in smartphones and AI processors.

Manufacturing Overhaul

  • Intel Foundry (contract chip manufacturing arm):
    • Prioritizes aggressive customer acquisition to improve performance.
    • Aims to restart AI server chip production and expand into areas like software, robotics, and AI foundation models.
    • Intel’s financial success in 2024 hinges on strong sales of its next-generation Panther Lake chips using the 18A process.

AI Strategy

  • Tan criticizes former CEO Pat Gelsinger for not executing AI plans effectively.
  • Focuses on:
    • Developing advanced AI chips with a goal of annual releases (similar to Nvidia).
    • At least 2027 before Intel can deliver a compelling new AI chip architecture.

Workforce Changes

  • Plans significant staff cuts, reducing the workforce by ~15,000 employees, bringing total headcount to nearly 109,000 at the end of 2024.
  • Targets bloated middle management and slow decision-making as key issues.

Financial Challenges

  • Intel reported its first annual loss since 1986 in 2024, amounting to $19 billion.
  • The company’s financial recovery is tied to the success of its AI chips and manufacturing improvements.

Competitive Landscape

  • Faces intense competition from:
    • Nvidia: Dominates AI processors.
    • Arm Holdings: Leads in smartphone chips.
    • TSMC: Market leader in contract chip manufacturing.

Strategic Considerations

  • Tan aims to position Intel as a world-class foundry by winning large customers like Nvidia and Google.
  • Focus on improving chip yield (chips per silicon wafer) during volume manufacturing of the 18A process.

Long-Term Implications

  • Success depends on:
    • Securing high-volume chip contracts from major clients.
    • Reviving Intel’s position as a global semiconductor leader.
    • Addressing cultural and operational challenges identified by Tan.

Market Impact

  • Potential to reshape the semiconductor industry, but success will require execution over multiple years.