Intel’s new CEO, Lip-Bu Tan, is planning significant changes to the company’s chip manufacturing methods and artificial intelligence strategies as he takes the reins on Tuesday. Tan aims to overhaul Intel’s approach to AI and streamline operations by cutting down on middle management roles. Additionally, he plans to restructure the manufacturing division, which previously only produced chips for Intel but now serves external clients like Nvidia.
During a recent town hall meeting, Tan emphasized the need for tough decisions to revitalize the technology giant. Industry experts believe that Tan’s predecessor, Pat Gelsinger, was too lenient in making necessary organizational changes.
Tan, a former CEO of Cadence and tech investor, aims to address the aftermath of a decade of missteps that led to Intel’s annual $19 billion loss in 2024. His initial focus includes boosting the performance of Intel Foundry, attracting new clients, and investing in AI server chips.
While Tan’s strategy aligns with Gelsinger’s vision of transforming Intel into a contract chip manufacturer, he plans to enhance customer service and technical support to compete effectively with industry leaders like TSMC. Tan’s approach signals a shift towards customer-centric operations and strategic partnerships in key growth areas such as AI, robotics, and software development.
According to a regulatory filing, Tan’s perspectives on Intel were influenced by his extensive examination of the company’s manufacturing process, a task he undertook in a special role assigned by the board in late 2023. Sources have disclosed to Reuters that Tan expressed discontent with the company’s culture, noting a departure from the “only the paranoid survive” ethos established by former CEO Andy Grove. Tan believed that decision-making processes were hindered by an oversized workforce. Despite presenting his ideas to Intel’s board the previous year, they opted not to implement them, leading to Tan’s sudden resignation in August, as reported by Reuters.
Upon his return as CEO this week, Tan will closely assess Intel’s workforce, which had been reduced by around 15,000 employees to nearly 109,000 by the end of the previous year. In the immediate term, Tan will need to make Intel’s current manufacturing operation effective. The success of Intel’s upcoming generation of advanced chips, Panther Lake, featuring AI capabilities, hinges on the utilization of new techniques and technologies dubbed “18A” within its in-house factories.
Tan, in a memo made public by Intel on Wednesday, expressed intentions to maintain oversight of the factories, emphasizing the restoration of Intel’s status as a premier foundry. Analysts and Intel executives informed Reuters that to ensure the success of Intel’s contract manufacturing, Tan must secure commitments from at least two major clients for substantial chip production.
Attracting significant customers will involve enhancing Intel’s chip manufacturing processes to facilitate adoption by potential clients such as Nvidia and Google’s Alphabet. Recent advancements in Intel’s manufacturing processes have garnered interest from Nvidia, Broadcom, and AMD.
In the pursuit of enhancing output, Intel aims to improve the yield of chips manufactured on each silicon wafer as it transitions to volume production of its first chip using the 18A process this year. The objective is to establish a regular release schedule for AI chips, a strategy akin to Nvidia’s roadmap. However, achieving this goal is anticipated to take several years, with industry sources suggesting that Intel may not introduce a compelling new architecture for an AI chip until at least 2027.
