Intel's new CEO, Lip-Bu Tan, is gearing up to address the company's deepening challenges by focusing on restructuring its manufacturing processes and expanding its AI business. Tan, who previously led Cadence Design Systems and served as a board member for Intel, aims to reverse a decade of missteps that have seen Intel struggle to compete in the AI and smartphone chip markets.

One of Tan's primary objectives is to enhance Intel's manufacturing capabilities, particularly within Intel Foundry, which produces chips for external clients. Sources reveal that Tan is considering significant changes to improve the efficiency of these operations, which have struggled to meet the demands of companies like Nvidia and Alphabet. Intel has long been known for manufacturing chips exclusively for itself, but Tan sees the need to compete with the likes of Taiwan Semiconductor Manufacturing Co. (TSMC), which has dominated the contract manufacturing market.

Under Tan’s leadership, Intel intends to refocus on AI processors, an area that has seen explosive growth, particularly in industries such as robotics, software, and AI infrastructure. Intel’s existing AI chip production, such as its forthcoming Panther Lake chips, will be crucial for the company’s financial future, with Tan emphasizing the importance of leveraging in-house manufacturing to keep costs and output in check.

The company is already in talks with major players like Nvidia and Broadcom, who have expressed interest in Intel’s manufacturing capabilities. As part of Tan’s broader plan, he is working to attract large customers by improving the manufacturing process and enhancing the yield of each chip. Intel has demonstrated some recent improvements in this area, with early test runs from Nvidia, Google, and other tech giants showing promise.

However, the road ahead remains challenging. Intel's previous CEO, Pat Gelsinger, faced difficulties in building customer trust, resulting in delayed chip releases and underwhelming customer service. Tan, known for his assertive leadership style, plans to address what many see as a bloated and inefficient management structure. Sources say Tan is prepared to make "tough decisions," which may include significant staff cuts as part of a broader overhaul.

Despite the challenges, Tan's leadership has already led to a bump in Intel’s stock price, reflecting investor confidence in the company's renewed strategy. Tan’s short-term focus will be on maximizing output at Intel's factories while pushing for major innovations in AI chip architecture. It is expected that Intel could take several years, at least until 2027, to introduce a compelling new AI chip that could compete with the likes of Nvidia’s advanced offerings.

With Tan at the helm, Intel’s future hinges on its ability to innovate in AI and manufacturing while regaining its competitive edge in the semiconductor industry. While the company has already begun demonstrating progress, the coming months and years will reveal whether Tan’s vision is enough to turn Intel around.

PHOTO: BLOOMBERG/DAVID PAUL MORRIS

This article was created with AI assistance.