Staff Report
Intel (INTC) is at a pivotal moment, and its new CEO, Lip-Bu Tan, is under immense pressure to steer the company back to success. With the chipmaker struggling to compete in an AI-driven industry and facing financial setbacks, investors are placing their bets on Tan’s leadership.
Tan, a seasoned semiconductor executive, was appointed CEO on March 12. His impressive resume, including his tenure as CEO of Cadence Design Systems and board roles at 14 semiconductor companies, initially reassured investors—Intel’s stock surged over 15% following the announcement. But the real challenge is just beginning.
A Company in Crisis
Intel’s recent struggles have fueled speculation about a potential breakup, with Wall Street analysts and industry insiders debating whether the company should sell off its manufacturing arm. The semiconductor giant has lost ground to competitors like AMD and Nvidia, while its foundry business has struggled with profitability. Some reports even suggest that the Trump administration supported discussions about possible deals to restructure the company.
Despite these challenges, Tan has signaled his commitment to keeping Intel intact—at least for now. In a company-wide letter on March 12, he emphasized restoring Intel’s reputation for innovation and positioning it as a leading foundry while enhancing customer satisfaction.
Yahoo Finance consulted Wall Street analysts and current and former Intel employees—including senior executives—to understand Tan’s potential roadmap. Here are the key steps they say he must take to avoid a breakup and reposition Intel as a global leader.
1. Strengthening Intel’s Foundry Business
Unlike most chipmakers, Intel both designs and manufactures its own semiconductors. However, while competitors like Nvidia and AMD have outpaced Intel in chip design, the company has also struggled with manufacturing delays.
Former CEO Pat Gelsinger launched Intel Foundry Services (IFS) in 2021 to open up the company’s manufacturing facilities to external customers. While IFS has secured deals with Amazon (AMZN) and Microsoft (MSFT), the foundry business lost $13.4 billion on $17.5 billion in revenue in 2024, raising concerns about its long-term viability.
For Tan, attracting more high-profile clients to Intel’s foundry will be crucial. Analysts believe his industry connections will be an asset, but execution is key. The company’s upcoming launch of its 18A manufacturing process is seen as a critical milestone—success could restore credibility, while failure could further weaken Intel’s standing.
2. A Smarter Approach to AI Chips
Intel has repeatedly stumbled in its attempts to break into the AI chip market. Its 2009 Larrabee project aimed to compete with Nvidia’s GPUs but was ultimately scrapped. A second attempt under AMD veteran Raja Koduri also failed, and Intel’s latest effort, Falcon Shores, was abandoned in January.
Tan has already indicated his intent to refocus Intel’s AI chip strategy. Industry experts believe that long-term investment, rather than a short-term focus on profitability, is necessary for Intel to gain ground in this market. A former Intel executive noted, “You only learn from deploying. If you intend to be in that market long term, you might as well have access to the market, even if it costs you through the first generation.”
3. Revamping Corporate Culture
Intel’s culture has been described by employees as bureaucratic and slow-moving. While the company’s deep talent pool and employee loyalty are strengths, insiders argue that Tan must streamline operations and cut unnecessary layers of management.
Layoffs may be inevitable. Intel has already hinted at making “hard decisions,” and employees fear that significant job cuts could come in the second or third quarter. However, downsizing could risk further disruption, particularly as the company works to deliver on its 18A process.
Balancing cost-cutting with employee morale will be one of Tan’s biggest tests. “The answer lies in inspiring the people you have,” said a former Intel executive.
The Road Ahead
Lip-Bu Tan has taken the reins at a critical moment in Intel’s history. While his background gives investors hope, execution will be key. Whether Intel can regain its competitive edge depends on his ability to strengthen the foundry business, make smart AI investments, and streamline corporate operations without destabilizing the workforce.
Intel’s future is hanging in the balance, and Tan’s leadership will determine whether it reclaims its place at the forefront of the semiconductor industry—or fades into irrelevance.
