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After months of uncertainty, Intel (NASDAQ:INTC) has finally named Lip-Bu Tan as its new CEOan industry veteran stepping into what might be the toughest job in tech. Intel has been losing ground to AMD (NASDAQ:AMD) in CPUs, struggling to break into AI chips, and falling behind Taiwan Semiconductor Manufacturing (NYSE:TSM) in manufacturing. Tan, who previously served on Intel's board, is now tasked with reversing years of underperformance. His appointment signals a push to keep Intel's product design and manufacturing under one roof rather than splitting off its foundry business. Investors seemed optimistic, sending Intel's stock up nearly 16% at 9.51am today. But optimism only goes so farexecution is what really matters.
Tan's real challenge? Making Intel competitive again before time runs out. The company's 18A process tech is supposed to bring it on par with TSMC's 2nm chips, but the gap remains wide. Meanwhile, Intel's AI business is nowhere near Nvidia's dominance, and the fate of Intel Foundry hangs in the balance. Some analysts believe the unit should be spun off or outsourced to TSMC, while others argue that keeping it in-house is critical for U.S. semiconductor security. One thing is clearIntel can't afford to keep moving at its usual bureaucratic pace. Significant restructuring is inevitable, and Tan's willingness to shake things up will determine whether Intel can pull off a comeback or fade into irrelevance.
Adding another layer of complexity, geopolitical forces could reshape Intel's future. TSMC just announced a $100 billion U.S. investment, raising questions about Intel's role in America's chip race. There's even been talk of TSMC acquiring a stake in Intel Foundrya move that would have major implications for the industry. The U.S. government might have a say in how this unfolds, but in the end, it all comes down to execution. Can Tan streamline Intel's operations, reestablish its competitive edge, and make it a real player in AI and chip manufacturing? If not, Intel risks becoming a relic of its former self rather than a leader in the next era of semiconductors.
This article first appeared on GuruFocus.