Intel Appoints Lip-Bu Tan as CEO to Navigate AI Race Challenges
Intel Corporation has named Lip-Bu Tan as its new chief executive officer, the company announced on Wednesday. The move comes as the US computer chipmaker strives to gain ground in the fiercely competitive artificial intelligence (AI) sector.
Tan, a respected figure within the tech industry, expressed a focus on engineering in a message to the Intel team, acknowledging the challenges ahead. “It won’t be easy” to overcome the obstacles the company faces, he stated.
Tan, who was born in Malaysia, will assume the role of Intel chief starting next Tuesday, the company said. Following the announcement, Intel shares saw a rise of over 10 percent in after-market trading.
Intel, once a dominant force in Silicon Valley, has seen its position challenged by Asian competitors such as Taiwan Semiconductor Manufacturing Co (TSMC) and Samsung Electronics Co, which lead the made-to-order semiconductor market. Intel also lagged behind the rapid rise of Nvidia Corp, the graphics chip maker that has become the dominant AI chip provider.
Tan takes the helm after the previous CEO, Pat Gelsinger, was removed in December of last year. The board had reportedly lost confidence in Gelsinger’s turnaround plans, which came after a company decision to cut over 15,000 jobs and delay construction on several chip-making facilities as part of cost-reduction measures.
“I believe with every fiber of my being that we have what it takes to win,” Tan said in a message to his team. He vowed that Intel would be an engineering-focused company. “In areas where we are behind the competition, we need to take calculated risks to disrupt and leapfrog,” he added.
Tan’s track record includes a transformation of Cadence Design Systems Inc, where he served as chief from 2009 to 2021, more than doubling its revenue during his tenure, according to the Intel board.
Intel recently extended the timeline for completing two new fabrication plants in Ohio, citing a cautious approach to the US$28 billion project. Incoming CEO Tan has also signaled his intent to continue the strategy of producing chips for other companies.
“We will work hard to restore Intel’s position as a world-class products company, establish ourselves as a world-class foundry and delight our customers like never before,” Tan stated in his letter to the team. “That’s what this moment demands of us as we remake Intel for the future.”
This strategy puts Intel in direct competition with TSMC, a leader in the market, producing chips for major clients such as Nvidia, Apple Inc, and Advanced Micro Devices Inc.
Raymond James Financial Inc analyst Srini Pajjuri raised the question of whether Tan might split the foundry business from the chip-design operations, and Intel would need to demonstrate the ability to produce superior products.
Additionally, the US government considered the possibility of TSMC backing a spinoff of Intel’s factory business, but TSMC’s plans to invest US$100 billion in its own factories suggest they are not pursuing that idea, according to Pajjuri.
“In case of no split, the stock will likely remain a show-me story until investors get a better sense of the company’s manufacturing road map,” Pajjuri noted. Intel faces additional challenges in the AI chip sector, where Nvidia prevails as the dominant player.
“Intel lacks an AI narrative,” Pajjuri said. “As such, we remain on the sidelines as we await to hear from the new CEO on his plans for the company.”
