Intel’s new CEO Lip-Bu Tan wants to revamp chipmaking, cut jobs: report

Intel’s new CEO Lip-Bu Tan wants to revamp chipmaking, cut jobs: report

  • 17.03.2025 12:35
  • nypost.com
  • Keywords: AI, Chips

Intel’s new CEO Lip-Bu Tan aims to revamp chipmaking, cut jobs, and streamline AI production to boost efficiency and compete with rivals.

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Estimated market influence

Intel

Intel

Negativesentiment_dissatisfied
Analyst rating: Neutral

Lip-Bu Tan plans to revamp Intel's chipmaking operations and cut jobs, aiming to improve performance in Intel Foundry which produces chips for Microsoft and Amazon. Intel is struggling with a $19 billion annual loss in 2024, missing out on AI processor demand, and faces competition from AMD, TSMC, and Samsung.

Nvidia

Nvidia

Positivesentiment_satisfied
Analyst rating: Strong buy

Intel lost market share to Nvidia due to the initial focus on producing chips for itself rather than customers. However, Intel has since pivoted to manufacturing chips for clients like Nvidia.

Context

Analysis of Intel’s New CEO Plans and Market Implications

Overview

  • Incoming CEO: Lip-Bu Tan, former Intel board member, will focus on revamping chipmaking operations and reducing jobs to improve competitiveness.

Financial Performance

  • Annual Loss: Intel reported a $19 billion loss in 2024, its first since 1986.
  • Workforce Reduction: Previous CEO Pat Gelsinger announced a 15% workforce reduction (~15,000 jobs) but faced criticism for not acting decisively enough.

Competitive Landscape

  • Market Share Loss: Intel lost ground to rivals like AMD, TSMC, Samsung, and Nvidia, particularly in AI chips.
  • AI Chip Delay: Intel is unlikely to produce a new AI chip until at least 2027, ceding momentum to competitors like Nvidia.

Strategic Shifts

  • Focus Areas:
    • Streamlining manufacturing processes for AI chips.
    • Restarting plans for AI server chips and exploring software and robotics.
  • Customer-Oriented Approach: Tan aims to improve Intel Foundry’s customer service to compete with TSMC.

Leadership and Culture

  • Leadership Transition: Tan replaces Gelsinger, who was ousted after three years. Sources noted Gelsinger was “too nice” in managing middle management.
  • Cultural Reset: Tan wants to revive Intel’s “only the paranoid survive” ethos, emphasizing urgency and competitiveness.

Regulatory and Industry Impact

  • CHIPS Act Funding: Intel received $2.2 billion under the CHIPS Act but faces uncertainty with President Trump’s vow to repeal it.
  • Global Manufacturing Plans: Gelsinger had ambitious plans for US and European factories, which were scaled back due to demand slumps.

Workforce and Organizational Changes

  • Job Cuts Target: Middle management will face cuts to improve decision-making speed.
  • Employee Morale: Tan’s focus on urgency aims to address perceived complacency in Intel’s culture.

Market Reaction

  • Stock Movement: Intel shares rose 6.6% following the news of Tan’s plans, signaling investor optimism about potential turnaround.

Long-Term Effects

  • Turnaround Potential: Success depends on Tan’s ability to execute changes quickly and regain market share.
  • Global Semiconductor Industry: Intel’s moves could reshape competition in AI chips and contract manufacturing.

This analysis highlights the critical challenges and opportunities facing Intel under Lip-Bu Tan’s leadership, with a focus on competitiveness, cost-cutting, and cultural transformation.