Intel’s incoming chief govt plans to revamp the embattled tech big’s chipmaking operations and slash jobs to higher compete with trade rivals, in line with a report.
Lip-Bu Tan, a former Intel board member who takes over Tuesday, shall be centered on streamlining Intel’s manufacturing course of to churn out extra AI chips for purchasers like Nvidia, sources with data of his considering advised Reuters.
His plans additionally embrace workers cuts to the agency’s bloated middle-management layer, which he has argued slows down Intel’s decision-making course of, the report mentioned.
Intel declined to remark.
Intel shares rose 6.6% Monday morning.
After Intel introduced Tan’s appointment final week, he advised staff at a city corridor assembly that the corporate might want to make “tough decisions,” in line with sources briefed on the assembly.
Tan takes the reins from Pat Gelsinger, who was pushed out in December after three years on the helm.
One criticism of Gelsinger was that he was “too nice,” in line with semiconductor trade skilled Dylan Patel.
“He did not want to fire a bunch of middle management in the way they needed to,” Patel mentioned.
Gelsinger did announce final August that the chipmaker would slash 15% of its large workforce — about 15,000 jobs.
Tan, 65, the previous chief govt of chip design software program agency Cadence and the pinnacle of a enterprise capital agency, seems able to shake issues up even additional after months of disappointing earnings.
The flailing firm reported an annual lack of $19 billion in 2024 – its first since 1986 because it struggled to compete with main semiconductor rivals like AMD, TSMC and Samsung.
Intel missed out on the demand surge for AI processors, dropping market share to Nvidia, because it initially solely produced chips for itself. The corporate has since pivoted to manufacturing chips for patrons.
Tan desires to enhance efficiency throughout Intel Foundry, the agency’s manufacturing arm that produces chips for Microsoft and Amazon, by aggressively wooing new clients, sources mentioned.
The corporate may also restart plans to provide chips that may energy AI servers, and look to future developments in software program and robotics, in line with the report.
Gelsinger had beforehand unveiled a turnaround plan that sought to rework the corporate right into a booming contract chip producer that would tackle TSMC.
The previous CEO pledged tens of billions of {dollars} to construct factories within the US and Europe to spice up chip manufacturing, however was pressured to cut back these plans amid a droop in demand.
The struggling firm was one of many first to obtain funding from former President Joe Biden’s CHIPS Act, receiving $2.2 billion in federal grants earlier this 12 months.
Final month, President Trump vowed to repeal the CHIPS Act.
As a board member, Tan was a vocal critic of Gelsinger, who failed to supply customer support on the identical degree as rival TSMC, sources mentioned.
Tan argued that Intel’s work tradition had misplaced the “Only the paranoid survive” ethos put in place by Andy Grove, who served because the agency’s chief govt from the late Eighties to the late Nineteen Nineties, in line with sources.
After months of reviewing Intel’s manufacturing course of in a particular function, Tan offered a few of his concepts to the corporate’s board final 12 months, however it declined to pursue them, in line with sources.
He abruptly resigned from the board in August.
Now, Tan is predicted to concentrate on methods to enhance Intel’s output so it will possibly ship extra chips as it really works towards producing its first in-house chip someday this 12 months.
Intel is unlikely to provide a brand new AI chip till at the least 2027, trade sources and an individual conversant in Intel’s progress mentioned.
He may also be taking up the corporate quickly after its workforce was slashed by about 15,000 to round 109,000 on the finish of final 12 months.
With Submit wires
