Intel’s stock rose on Monday as investors reacted to reports that incoming CEO Lip-Bu Tan is preparing sweeping changes to the struggling chipmaker’s operations. The stock closed 6.82% higher at $25.69, after climbing as much as 8% earlier in the day.
Tan, who officially takes over as Intel’s chief executive on Tuesday, is reportedly considering major structural changes, including cutting middle management, reshaping its AI strategy, and aggressively expanding its contract manufacturing business. The news, first reported by Reuters, was well received by markets, making Intel one of the top gainers on the Nasdaq.
A New Strategy for Intel
Intel has struggled in recent years, falling behind Nvidia and AMD in high-performance chips, particularly in AI-driven computing. The company posted a $19 billion annual loss in 2024, its worst performance in decades, as it continued to lose market share in data centers and PC processors.
Tan is expected to take a more aggressive approach than his predecessor, Pat Gelsinger, who retired last year. He has already indicated to Intel employees that the company will need to make “tough decisions” and that significant changes are coming.
Key elements of Tan’s reported turnaround plan include:
- Cuts to Middle Management: Tan believes Intel has a “slow-moving and bloated middle management layer” and is considering major layoffs.
- Revamping AI Strategy: Intel plans to re-enter the AI chip race, with a goal of having a new AI processor ready by 2027 and releasing updates annually.
- Rebuilding the Foundry Business: Intel has struggled to attract large-scale clients for its contract chip manufacturing division. Tan reportedly aims to bring in at least two major customers to increase production volume and make the unit competitive with Taiwan Semiconductor Manufacturing Co. (TSMC).
- Expanding Beyond Chips: The company is also expected to push into software, robotics, and AI foundation models.
Tan’s background makes him a strong candidate for Intel’s restructuring. He previously served as CEO of Cadence Design Systems, a key player in chip design, where he doubled revenue and significantly boosted stock value. He was also a member of Intel’s board until stepping down last year.
Investor Confidence Rising
Despite Monday’s gains, Intel’s stock remains down about 40% year-over-year. However, investors appear hopeful that Tan’s leadership could reignite growth.
Adding to market optimism, Intel confirmed in a regulatory filing on Friday that Tan will receive a $1 million base salary and has committed to purchasing $25 million in Intel stock within his first month.
Meanwhile, reports that Broadcom and TSMC have discussed breaking up Intel into separate design and manufacturing divisions continue to circulate. However, Tan has indicated he does not plan to split the company.
