Intel’s incoming chief executive plans to revamp the embattled tech giant’s chipmaking operations and slash jobs to better compete with industry rivals, according to a report.
Lip-Bu Tan, a former Intel board member who takes over Tuesday, will be focused on streamlining Intel’s manufacturing process to churn out more AI chips for clients like Nvidia, sources with knowledge of his thinking told Reuters.
His plans also include staff cuts to the firm’s bloated middle-management layer, which he has argued slows down Intel’s decision-making process, the report said.
Intel declined to comment.
Intel shares rose 6.6% Monday morning.
After Intel announced Tan’s appointment last week, he told employees at a town hall meeting that the company will need to make “tough decisions,” according to sources briefed on the meeting.
Tan takes the reins from Pat Gelsinger, who was pushed out in December after three years at the helm.
One criticism of Gelsinger was that he was “too nice,” according to semiconductor industry expert Dylan Patel.
“He did not want to fire a bunch of middle management in the way they needed to,” Patel said.
Gelsinger did announce last August that the chipmaker would slash 15% of its massive workforce — about 15,000 jobs.
Tan, 65, the former chief executive of chip design software firm Cadence and the head of a venture capital firm, appears ready to shake things up even further after months of disappointing earnings.
The flailing company reported an annual loss of $19 billion in 2024 – its first since 1986 as it struggled to compete with major semiconductor rivals like AMD, TSMC and Samsung.
Intel missed out on the demand surge for AI processors, losing market share to Nvidia, since it initially only produced chips for itself. The company has since pivoted to manufacturing chips for customers.
Tan wants to improve performance across Intel Foundry, the firm’s manufacturing arm that produces chips for Microsoft and Amazon, by aggressively wooing new customers, sources said.
The company will also restart plans to produce chips that can power AI servers, and look to future developments in software and robotics, according to the report.
Gelsinger had previously unveiled a turnaround plan that sought to transform the company into a booming contract chip manufacturer that could take on TSMC.
The former CEO pledged tens of billions of dollars to build factories in the US and Europe to boost chip production, but was forced to scale back those plans amid a slump in demand.
The struggling company was one of the first to receive funding from former President Joe Biden’s CHIPS Act, receiving $2.2 billion in federal grants earlier this year.
Last month, President Trump vowed to repeal the CHIPS Act.
As a board member, Tan was a vocal critic of Gelsinger, who failed to provide customer service on the same level as rival TSMC, sources said.
Tan argued that Intel’s work culture had lost the “Only the paranoid survive” ethos put in place by Andy Grove, who served as the firm’s chief executive from the late 1980s to the late 1990s, according to sources.
After months of reviewing Intel’s manufacturing process in a special role, Tan presented some of his ideas to the company’s board last year, but it declined to pursue them, according to sources.
He abruptly resigned from the board in August.
Now, Tan is expected to focus on ways to improve Intel’s output so it can deliver more chips as it works toward producing its first in-house chip sometime this year.
Intel is unlikely to produce a new AI chip until at least 2027, industry sources and a person familiar with Intel’s progress said.
He will also be taking over the company soon after its workforce was slashed by about 15,000 to around 109,000 at the end of last year.
With Post wires
