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Intel (NASDAQ:INTC) is set for big changes as incoming CEO Lip-Bu Tan takes over Tuesday. According to Reuters, he's rethinking Intel's AI and chip manufacturing strategy, with potential job cuts to streamline operations.
Tan, who led Cadence Design Systems (NASDAQ:CDNS) and briefly served on Intel's board, has been a critic of its past execution. Now, he's focused on fixing manufacturing inefficiencies and regaining Intel's edge after falling behind competitors like Taiwan Semiconductor (NYSE:TSM).
Fixing Intel Foundry and AI Ambitions
Tan's top priority is Intel Foundry, which makes chips for Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN). He wants to win more customers and improve service, areas where Intel has struggled. He's also pushing to reignite AI chip development, expanding into software, robotics, and foundation models to compete with Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD).
Tough Calls Ahead
Intel already cut 15,000 jobs last year, bringing its workforce to 109,000, but more layoffs may be coming. Meanwhile, TSMC is reportedly pitching a joint venture to take over an Intel factory, drawing interest from Nvidia, AMD, and Broadcom (NASDAQ:AVGO).
Tan told employees tough decisions are ahead but emphasized in a memo that Intel will keep control of its factories, aiming to restore its status as a top-tier foundry.
This article first appeared on GuruFocus.