Intel stock up as new CEO Lip-Bu Tan eyes cuts to ‘slow-moving and bloated middle management’: Report
Shares of Intel Corporation (NASDAQ:INTC) rose over 8% in early morning trading on Monday on news that incoming CEO Lip-Bu Tan has big plans to turn around the ailing chipmaker, including restructuring the company’s approach to AI, resurrecting its manufacturing operations, and eyeing cuts to what Tan views as a “slow-moving and bloated middle management layer,” according to a Reuters report.
Tan said he’ll need to make “tough decisions” when he takes Intel’s helm on Tuesday, after the company posted $19 billion in annual losses in 2024. Tan’s appointment comes three months after the company ousted former CEO Pat Gelsinger, as it struggled after missing out on the generative artificial intelligence boom and losing market share to Nvidia and AMD.
One problem with Gelsinger’s leadership, a semiconductor industry expert told Reuters, was that Gelsinger was “too nice” and did not want to “fire a bunch of middle management in the way they needed to.”
The Reuters report also said Intel could have architecture ready for an AI chip by 2027, and would plan to release a new version of it each subsequent year. This would be a big coup for Intel, which is lagging behind Nvidia and Broadcom (AVGO) in the AI hardware market.
In the past several quarters, Intel has lost market share in data centers and PCs, and lost billions in its manufacturing business.
Tan also plans to restart production of chips that power AI servers, and expand beyond servers into software, robotics, and AI foundation models, per Reuters.
Tan’s appointment comes amid ongoing reports that Broadcom and Taiwan Semiconductor Manufacturing Co. (TSMC) are among several investors in talks to divide the ailing chipmaker’s business into two parts, spinning out its chip-design and marketing business and its manufacturing arm. However, Tan has indicated he won’t split up the company.
Tan was a member of Intel’s board until he resigned last August. He spent a decade as CEO of Cadence Design Systems, an Intel supplier and chip-design software company, where he doubled revenue and sent the stock price soaring.