Author by Max A. Cherney
SAN FRANCISCO (Reuters) – Intel’s incoming CEO Lip -Bu Tan considered major changes in its chip manufacturing approach and artificial intelligence strategy before returning to the company on Tuesday, two people familiar with TAN’s ideas told Reuters that swept REUTERS to plunder the AIDS giant.
New trajectories include restructuring companies on AI approaches and staff cuts to address the tan view as a slow and swollen middle management layer. The sources said the company’s manufacturing business, which provided only bargaining chips for Intel, has been reused to make semiconductors for external customers such as Nvidia, one of TAN’s core priorities.
According to the other two, he told employees at a town hall meeting after he was appointed CEO last week.
Dylan Patel, a semiconductor industry expert, said he was “too good” under former Intel CEO Pat Gelsinger, who left the company in December. “He doesn’t want to fire a bunch of middle-level managers the way they need to,” he said.
Tan, 65, is the former CEO of CHIP design software company Cadence and Tech Investor, who was a member of Intel’s board of directors until he resigned last August. In its return as CEO, TAN will take over American Idol after a decade of wrong decisions, with three CEOs missing out on demand for AI processors that allow rivals Arm Holdings and Nvidia to dominate these markets.
Intel reported a loss of $19 billion per year in 2024, the first loss since 1986.
In the short term, TAN aims to improve the performance of Intel Foundry in its manufacturing sector by actively attracting new customers, People reported.
It will also restart production of chips to power AI servers and view areas beyond servers in multiple areas such as software, robots and AI basic models.
“Lip-Bu will spend a lot of time listening to the company of customers, partners and employees and working closely with our leadership team to position the business as future success,” an Intel spokesperson said in a prepared statement.
Intel declined to comment further or let the tan have an interview. Tan’s venture capital firm Walden Catalyst did not respond to a request for comment.
From the beginning, Tan’s strategy seemed to be Gelsinger’s strategy. At the heart of Gelsinger’s turnaround plan, it will transform Intel into a contract chip maker that will compete with Taiwan Semiconductor Manufacturing Corporation (TSMC) or TSMC, which sees Apple, Nvidia and Qualcomm as customers.
Gelsinger promised to build factories in the United States and Europe to make chips for Intel and external customers, but he was forced to reduce those ambitions to the market for Intel’s core products.
Betting on AI
According to two sources familiar with Tan’s plan, Tan has been an internal critic of the voice of Gael Singh’s execution.
For most of historicity, Intel has made only one bargaining chip for only one customer itself. When Gelsinger became CEO in 2021, he prioritized others’ manufacturing chips, but did not provide the level of customer and technical services of rival TSMC, resulting in delays and failed testing.
According to regulatory documents, Tan’s view was made by months after reviewing Intel’s manufacturing process, and the board appointed him in a special role to oversee it by the end of 2023.
Sources told Reuters that he was frustrated with the company’s culture in the assessment, saying it lost the “only paranoid” spirit that former CEO Andy Grove illuminated. He also believes a swollen workforce will slow down decisions, Reuters reported.
Tan said Tan proposed some ideas to Intel’s board of directors last year, but they refused to put it on the issue. According to Reuters, by August, Tan suddenly resigned after a disagreement with the board of directors.
Sources said he will watch Intel’s workforce when he returns to the CEO this week, which was cut by about 15,000 to 109,000 late last year.
Apart from cutting, Tan has no choice but to make Intel’s existing manufacturing operations work in the near term. Intel’s next-generation premium chips are equipped with AI capabilities, called Panther Lake, and will rely on its in-house factories to use a new set of technology and what Intel calls “18A.”
Intel’s financial success this year has been linked to strong sales of upcoming chips.
In a memo released Wednesday, Tan said he plans to maintain control of the plants that remain financially and operationally unchanged from the design business and restored Intel’s position as a “world-class foundry.”
Industry analysts and Intel executives told Reuters that Intel’s contract manufacturing business could be successful if Tan wins at least two major customers to produce large amounts of chips.
Part of the efforts to attract large customers will involve improving Intel’s chip manufacturing process to make it easier for potential customers such as Nvidia and Alphabet’s Google.
Intel has shown improvements in its manufacturing process in recent weeks and has attracted interest from Nvidia and Broadcom, which have begun early testing, according to Reuters. Advanced micro devices are also evaluating Intel’s processes.
TAN is expected to work on a higher yield or “production” approach to shift to volume manufacturing of its first internal chips this year using the so-called 18A process to deliver a higher number of chips.
The goal is to move to the annual release schedule of AI chips similar to Nvidia, but that will take years. According to three industry sources, it will be at least 2027 before Intel can develop engaging new architectures for the first AI chips and someone familiar with Intel’s progress.
(Editor of Max A. Cherney in San Francisco; Editors of Kenneth Li and Michael Learmonth)
