WSJ: The Clock Is Ticking Loudly for Intel’s New Boss
Lip-Bu Tan isn’t yet signaling a major departure from Intel’s past strategy, but expectations for change are high
WSJ - By Dan Gallagher, April 1, 2025 5:30 am ET
https://www.wsj.com/tech/intel-new-ceo-lip-bu-tan-2de6876f
Two weeks is admittedly not a lot of time in a new job. But time isn’t really on Lip-Bu Tan’s side.
Tan became Intel’s INTC -0.86%decrease; red down pointing triangle new chief executive on March 18 and has already started laying out some of his vision for the storied-but-troubled chip giant. In a letter to shareholders filed with the company’s annual report Thursday, Tan spoke of the need to “up our game” to make Intel’s products more competitive in the crucial market for artificial-intelligence systems. He also said he was “equally focused” on building up the foundry business—where Intel manufactures chips designed by other companies.
In other words, the same things Intel’s last CEO was trying to accomplish. Tan reiterated those points in a speech on Monday kicking off the company’s Intel Vision conference. Beyond a few aspirations including a better AI strategy and custom-built chips for niche computing work, there was little to distinguish the Tan playbook from his predecessor’s. “Stay tuned” for Intel’s plans on humanoid robots, he told the audience.
His short tenure on the job so far means Tan could well have more significant changes in mind. But one option Intel doesn’t seem to have is more of the same.
Tan’s predecessor—Pat Gelsinger—was effectively booted following an ambitious, multiyear effort to both improve the company’s chip designs and catch its manufacturing processes up to those proffered by Taiwan Semiconductor Manufacturing, or TSMC.
Intel’s stock plunged 60% in 2024 and the company ousted its CEO. That has left new CEO Lip-Bu Tan facing significant challenges, including how to fix the chip giant’s business. WSJ explains. Photo Illustration: Alexandra Larkin
That effort hasn’t worked—or at least not worked yet. Intel’s annual revenue has shrunk by 33% over the last four years, and the once-flush chip giant has been burning cash since 2022. The foundry business still mostly produces Intel-designed chips; it lost $13.4 billion last year.
One change that Tan has hinted at is more whacks at Intel’s cost structure. The company reduced its workforce by 13% last year but still employs far more people than any other company in the PHLX Semiconductor Index, according to data from S&P Global Market Intelligence.
That has resulted in some relatively subpar efficiency. Intel’s annual revenue per employee of about $488,000 last year lags behind other chip manufacturers such as Micron and GlobalFoundries. It is also far below the $906,000 per employee that TSMC generated in 2023—the most recent year for which the company’s employee count is available.
Another Tan move involves listening more closely to customers. That sounds like corporate speak, but it is meaningful at Intel. Decades of technical success and a near-monopoly on personal-computer chips nurtured a culture of arrogance. An Intel recruiter who interviewed Gelsinger for his first stint at Intel out of a technical school called him “somewhat arrogant,” and noted, “He’ll fit right in.”
Tan has signaled that he has some more ambitious aims, too. In his shareholder letter, he said Intel would compete with Nvidia to design giant cabinets of computing gear tailored for AI. That seems both costly and risky given that Intel will have a late start: Nvidia started designing such equipment last year, and it is in production now.
What so far has been absent from Tan’s strategy is a deeper shift in Intel’s business. Andy Grove, the storied Intel chief who mentored Gelsinger, would have called the current AI wave a “strategic inflection point” that required decisive action—much like when Intel itself abandoned making memory chips in the 1980s. Back then, Japanese producers were making memory more cheaply, rendering it unprofitable for Intel. So Intel took up the then-nascent market for personal-computer processors.
Today, some analysts suggest Intel should split off its manufacturing operations from its chip-design and marketing functions, following a long-established industry trend. It could gather outside investors in the manufacturing operation to bring in more capital, something the company is already in talks to do.
Investors have so far welcomed Tan, sending the company’s stock up 10% since his appointment in March. But if he doesn’t soon articulate a new way forward that is both promising and sufficiently distinct from Gelsinger’s, the market’s patience may wear thin.