Intel is poised for a major transformation under its incoming CEO, Lip-Bu Tan, who is set to return to the company on Tuesday. According to sources familiar with Tan’s vision, the tech giant is gearing up for significant changes in chip manufacturing methods and artificial intelligence (AI) strategies in a bid to revive its struggling operations.
Revamping Intel’s AI and Chip Manufacturing Strategy
Tan’s strategy includes a major restructuring of Intel’s approach to AI, an area where the company has lagged behind competitors like Nvidia and Arm Holdings. His plan also emphasizes refining Intel’s foundry business, Intel Foundry, to attract high-profile customers such as Microsoft and Amazon. Intel Foundry aims to compete with Taiwan Semiconductor Manufacturing Co (TSMC), which dominates the contract chip manufacturing market.
Beyond semiconductors, Intel plans to expand its AI efforts into software, robotics, and foundational AI models, positioning itself as a leader in next-generation computing.
Workforce Restructuring: Eliminating Middle Management Layers
In an effort to streamline operations, Intel is preparing for workforce reductions, specifically targeting what Tan perceives as an overly bureaucratic middle management layer. Industry analysts believe that under former CEO Pat Gelsinger, the company avoided making tough staffing decisions, which contributed to operational inefficiencies. Tan, however, has signaled a willingness to take decisive action to enhance agility within the organization.
During a recent town hall meeting, Tan informed employees that difficult decisions were necessary for Intel’s turnaround. His return marks an aggressive push to revitalize Intel after years of strategic missteps, including missing out on the smartphone chip market and underestimating the demand for AI processors.
Financial Struggles and the Road to Recovery
Intel reported an annual loss of $19 billion in 2024, its first since 1986, underscoring the urgency of Tan’s restructuring initiatives. While Gelsinger’s tenure saw Intel invest billions into manufacturing facilities in the US and Europe, declining demand for Intel’s core products forced cutbacks in expansion plans. Tan, a former Intel board member and ex-CEO of chip design software firm Cadence, has been an outspoken critic of Gelsinger’s execution, sources say.
Intel’s Future Under Tan’s Leadership
As Intel embarks on this transformative journey, Tan is expected to spend significant time engaging with customers, partners, and employees. His leadership style and aggressive push for change could redefine Intel’s position in the semiconductor industry, reestablishing its competitive edge in AI and chip manufacturing.
An Intel spokesperson confirmed that Tan will work closely with the company’s leadership team to align the business for future success. However, Intel declined to provide additional comments or make Tan available for interviews.
