Intel plans comprehensive overhaul of manufacturing and artificial intelligence operations

Intel's new CEO, Lip-Bu Tan, is considering major changes to its chip manufacturing methods and artificial intelligence (AI) strategy, in a sweeping effort to turn around the struggling tech giant.

Restructuring AI Approach and Cutting Staff

The new direction includes restructuring the company’s approach to AI and cutting staff to address what Lip-Bu Tan described as a slow and cumbersome middle management layer. A revamp of its manufacturing operations—which once made chips for Intel but are now being repurposed to make semiconductors for outside customers like Nvidia—is a core priority.

CEO Lip-Bu Tan is expected to make sweeping changes to Intel's manufacturing operations.

Intel's stock jumped 15% after the company announced the appointment of Lip-Bu Tan as its new CEO. Yesterday, Intel shares rose more than 8% in midday trading on the Nasdaq.

At an internal meeting after being named CEO last week, Mr. Tan told employees that the company would need to make “tough decisions,” according to two other people briefed on the meeting.

Semiconductor industry expert Dylan Patel said a major problem under former Intel CEO Pat Gelsinger, who left the company in December, was that he was "too gentle." "He didn't want to fire a bunch of middle managers the way he needed to," Patel said.

Tan, 65, was CEO of chip design software company Cadence and a tech investor and board member of Intel until his resignation in August 2024. When he returns as CEO, he will take over the American icon after a decade of missteps by three previous CEOs that left Intel unable to make chips for smartphones and missed the boom in demand for AI processors, allowing rivals like Arm Holdings and Nvidia to dominate those markets.

Intel reported an annual loss of $19 billion in 2024, its first since 1986.

In the short term, Mr. Tan aims to improve performance at Intel Foundry — the division that makes chips for other design companies like Microsoft and Amazon — by aggressively attracting new customers.

The company will also restart plans to make chips for AI servers and expand into areas other than servers, such as software, robotics, and AI platform models. "Lip-Bu will spend a lot of time listening to customers, partners, and employees as he takes over, and working closely with the leadership team to position the company for future success," an Intel spokesperson said.

From the start, Mr. Tan’s strategy seemed like a subtle tweak of Gelsinger’s plan. The centerpiece of Gelsinger’s turnaround plan was to transform Intel into a contract chipmaker to compete with Taiwan Semiconductor Manufacturing Co. (TSMC), which counts Apple, Nvidia, and Qualcomm among its customers. Gelsinger had pledged tens of billions of dollars to build factories in the U.S. and Europe to make chips for both Intel and outside customers, but he was forced to scale back his ambitions as the market for Intel’s core products cooled.

Intel bets on artificial intelligence

Mr. Tan has been a fierce internal critic of Gelsinger’s approach. For much of its history, Intel manufactured chips for itself. When Gelsinger became CEO in 2021, he prioritized manufacturing chips for others, but failed to provide the same level of customer service and engineering as TSMC, leading to delays and failed tests.

Intel plans to develop a new architecture for its first AI chip.

Mr. Tan’s views were formed over months of reviewing Intel’s manufacturing processes after the board appointed him in late 2023 to a special role overseeing the topic.

In his personal assessment, Mr. Tan expressed frustration with the company culture, saying that Intel had lost the “survival of the fittest” spirit coined by former CEO Andy Grove. He also believed that decision-making was slowed by a bloated workforce.

The Malaysian-born CEO presented several ideas to Intel’s board last year, but they declined to implement them. In August 2024, Tan abruptly resigned after disagreements with the board. When he returns as CEO today (March 18), Tan will oversee Intel’s workforce, which was cut by about 15,000 to nearly 109,000 at the end of last year.

Aside from cuts, Tan has little choice but to make current manufacturing more efficient in the short term. Intel's next generation of advanced AI chips, called Panther Lake, will rely on in-house foundries using a new set of techniques and technologies Intel calls "18A." Intel's financial success this year will be tied to strong sales of the upcoming chip.

Mr. Tan signaled in a memo Intel released tomorrow that he intends to retain control of the factories, which remain financially and operationally separate from the design business, and restore Intel's status as a " world- leading foundry."

Intel’s contract manufacturing business could be successful if Mr. Tan wins at least two major customers to produce a significant number of chips. Part of the effort to attract big customers will involve improving Intel’s chip manufacturing process to make it easier for potential customers like Nvidia and Alphabet’s Google.

Intel has recently demonstrated improvements in its manufacturing process and has attracted interest from Nvidia and Broadcom, which have begun initial trials. Advanced Micro Devices is also evaluating Intel's process.

Mr Tan is expected to look to improve yields or “fill rates” to deliver a higher number of chips per silicon wafer as it moves to mass produce its first in-house chips using the 18A process this year.

The goal is to move to an annual AI chip release schedule, similar to Nvidia, but that will take years. It will take Intel until at least 2027 to develop a compelling new architecture for its first AI chip, according to three industry sources and a person familiar with Intel’s progress.

Intel shares traded at around $26 a share yesterday (March 17). Since the beginning of 2025, Intel shares have increased 30%, including a 25% increase after the announcement of Lip-bu Tan as CEO on March 13. In addition to the role (CEO), Intel also announced that this veteran chip industry expert will return to the company's board of directors.

Source: https://www.baogiaothong.vn/intel-len-ke-hoach-cai-to-toan-dien-hoat-dong-san-xuat-va-tri-tue-nhan-tao-192250318114342382.htm