How Intel's new CEO plans to rescue the struggling chipmaker
What's the story
Intel's newly appointed CEO, Lip-Bu Tan, is gearing up for a major overhaul of the company's chip-making and artificial intelligence (AI) strategies.
The move comes as part of an effort to revive the tech giant, which has been struggling in recent years.
Tan's plan involves streamlining Intel's AI approach and cutting down staff. He thinks the current middle management layer is inefficient and needs restructuring.
Revamp
Tan's focus on manufacturing operations
A major aspect of Tan's strategy is to overhaul Intel's manufacturing.
The company, which used to make chips only for itself, has been manufacturing semiconductors for third-party clients such as NVIDIA.
This transition is a key goal in Tan's new strategy, according to Reuters reports.
In a recent town hall meeting after his CEO appointment last week, he told employees that "tough decisions" would be necessary moving forward.
Market recovery
Strategy to restore Intel's market position
Tan hopes to bring Intel back to being a "world-class foundry" by concentrating on its manufacturing arm, Intel Foundry.
The company manufactures chips for other design firms like Microsoft and Amazon.
As part of this effort, Tan plans to aggressively target new customers and revive plans to manufacture chips powering AI servers.
He also plans to look beyond servers into software, robotics, and AI foundation models.
Strategy comparison
Tan's approach mirrors Gelsinger's strategy
Tan's approach seems to be in line with former CEO Pat Gelsinger's strategy of turning Intel into a contract chip manufacturer.
Gelsinger had pledged billions of dollars to establish factories in the US and Europe to manufacture chips for Intel as well as external customers.
However, he had to dial back the plans amid market fluctuations impacting Intel's core products.
Past experience
Insights from previous tenure at Intel
Tan spent months analyzing Intel's manufacturing process after being appointed to a special role overseeing it in late 2023.
His review revealed issues with the company's culture and decision-making speed due to an oversized workforce.
These insights will likely shape his strategy as he takes over the helm of Intel once again this week.