Intel Corporation (INTC) saw its stock surge by 6.82% on Monday, closing at $25.69, after reports revealed that incoming CEO Lip-Bu Tan is preparing a bold overhaul of the struggling semiconductor giant. The stock climbed as much as 8% intraday, making Intel one of the top gainers on the Nasdaq.
Tan’s Bold Plan to Reshape Intel
Lip-Bu Tan officially takes over as Intel’s chief executive on Tuesday, succeeding Pat Gelsinger, who retired last year. Tan reportedly plans to implement aggressive structural changes, aiming to streamline operations, refocus the company’s AI strategy, and strengthen its contract manufacturing business.
According to Reuters, Tan has already signaled to employees that “tough decisions” are ahead, indicating potential layoffs and restructuring.
Key Components of Tan’s Turnaround Strategy
- Middle Management Cuts:
- Tan believes Intel has a bloated middle management layer that slows down decision-making.
- Major layoffs are expected as part of a push to increase efficiency and reduce costs.
- AI Strategy Revamp:
- Intel plans to re-enter the AI chip race, aiming to release a new AI processor by 2027.
- The company will focus on annual updates, aiming to compete with Nvidia (NVDA) and AMD (AMD) in the AI sector.
- Expanding Contract Manufacturing:
- Intel’s foundry business has struggled to attract large-scale clients, falling behind Taiwan Semiconductor Manufacturing Co. (TSMC).
- Tan reportedly aims to sign at least two major customers to boost production volume and establish Intel as a competitive contract manufacturer.
- Diversifying Beyond Chips:
- Intel plans to push into software, robotics, and AI foundation models, diversifying its revenue streams.
- This expansion could help Intel reduce its reliance on PC and data center processors, where it has been losing market share.
Lip-Bu Tan’s Strong Leadership Background
Tan’s impressive track record makes him a compelling candidate to lead Intel’s turnaround.
- As former CEO of Cadence Design Systems, he doubled revenue and significantly boosted stock value.
- He also served on Intel’s board until 2024, giving him deep knowledge of the company’s operations.
- His commitment is underscored by a $25 million personal investment in Intel stock during his first month as CEO, according to a regulatory filing.
Investors Show Renewed Optimism
Despite Monday’s rally, Intel shares remain down about 40% year-over-year. However, the market welcomed Tan’s appointment and his plans for decisive action.
Speculation about Intel potentially splitting into separate design and manufacturing divisions continues to swirl, with Broadcom (AVGO) and TSMC reportedly interested. However, Tan has made it clear he has no plans to break up the company.
With a clear focus on efficiency, innovation, and AI competitiveness, Tan’s leadership could mark a pivotal chapter in Intel’s turnaround story.
