Intel’s New CEO Lip-Bu Tan Eyes Bold Overhaul of Manufacturing and AI Operations

Intel’s newly appointed CEO, Lip-Bu Tan, is planning a major overhaul of the company’s manufacturing and artificial intelligence (AI) operations. Tan, who will officially return to the company on Tuesday, intends to restructure Intel’s chip manufacturing methods and address inefficiencies in its AI strategy. Central to Tan’s vision is reviving Intel’s manufacturing arm, particularly its foundry services, which have pivoted to producing chips for external clients such as Nvidia and Microsoft. Tan also aims to streamline Intel’s middle management, which he sees as a barrier to progress.

During his appointment meeting, Tan emphasized the need for “tough decisions,” and sources indicate that he is looking to reorient Intel’s AI business, particularly by focusing on producing AI chips. His plan includes restarting efforts to develop chips for AI servers and expanding into software, robotics, and foundational AI models. These changes come after a decade of strategic missteps that allowed competitors like Nvidia and Arm Holdings to dominate the rapidly growing AI chip market. Intel’s financial performance in 2024, marked by a $19 billion loss, further underscores the urgency of these shifts.

Tan, a former CEO of Cadence and a tech investor, has been critical of his predecessors, particularly Pat Gelsinger, whose efforts to transform Intel into a contract chip manufacturer fell short. Despite investing heavily in expanding manufacturing capacity, Gelsinger’s tenure saw delays and technical issues in Intel’s process, especially compared to competitors like Taiwan Semiconductor Manufacturing Company (TSMC). Tan has reportedly expressed frustration with the company’s culture, feeling that it had deviated from the competitive and aggressive ethos of Intel’s past.

Looking ahead, Tan plans to focus on restoring Intel’s position as a leading foundry by improving its chip production processes. This includes attracting major customers and increasing manufacturing yields for next-generation AI chips. Intel’s immediate success will depend on its Panther Lake chip, which is expected to play a crucial role in the company’s recovery. While Tan’s strategy involves significant changes, it will take years to fully realize his vision, with Intel’s next AI chip launch not expected until 2027.

Source: reuters