Intel’s new CEO, Lip-Bu Tan, is signaling he’s ready to take bold steps to revitalize the US chipmaker’s business and reclaim its competitive edge.
“In areas where we are behind the competition, we need to take calculated risks to disrupt and leapfrog,” he wrote in a letter to employees that was made public.
The letter offers a glimpse of how Tan, the former CEO of Cadence Design Systems, will lead Intel when it faces intense competition from Apple, AMD, and Nvidia, which use Taiwan’s TSMC to build cutting-edge chips.
In naming Tan CEO, Intel’s board cited “his proven track record of creating shareholder value”—which can be a worrying sign for PC builders and technologists more concerned about the company’s chip prowess than its financials. But in his letter to employees, Tan said, “Under my leadership, Intel will be an engineering-focused company.”
“We will push ourselves to develop the best products, listen intently to our customers, and hold ourselves accountable to the commitments we make so that we build trust,” he added.
(Credit: Intel)
In terms of strategy, Tan says he’ll push Intel to “double down” on areas where the company already excels. In areas where it’s behind, Tan will try to boldly leapfrog. “And in areas where our progress has been slower than expected, we need to find new ways to pick up the pace.”
One of Tan’s chief goals is to “establish ourselves as a world-class foundry,” which indicates that he plans to keep Intel’s chip foundry business rather than spin it off. In 2021, the company made another bold bet by expanding into the foundry business under previous CEO Pat Gelsinger, who sought to compete directly with TSMC in contract semiconductor manufacturing.
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However, the endeavor is costing Intel tens of billions of dollars. An Ohio factory has also been delayed to the early 2030s. Meanwhile, TSMC is preparing to spend $165 billion to build six new fabs in Arizona.
For now, Intel appears to be bullish on its upcoming 18A manufacturing process, which will start producing cutting-edge PC chips in the second half of this year. Both Intel and clients—including Microsoft, Amazon, and Arm—have signed up to use the 18A process.
Although Tan’s letter is meant to rally the troops, industry watchers also expect layoffs. Before becoming CEO, Tan was an Intel board member for two years. But in August, he abruptly resigned over disagreements with Gelsinger. This included Tan demanding deeper cuts to Intel’s “bloated workforce” and bureaucracy, according to Reuters. Gelsinger initiated layoffs, but only to 15% of the company’s employee base.
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About Michael Kan
Senior Reporter
