Intel's New CEO Charts Bold Revival Plan, Warns Of 'Tough Decisions' Ahead-Reports - Intel (NASDAQ:INTC), Cadence Design Systems (NASDAQ:CDNS)

Intel Corp’s INTC incoming CEO, Lip-Bu Tan, is planning a major overhaul of the company’s chip manufacturing and artificial intelligence operations, aiming to breathe new life into the struggling tech giant.

What Happened: Tan is considering significant changes to the company’s approach to AI and chip manufacturing. This includes staff cuts to address what he sees as a slow-moving and bloated middle management layer, according to a Reuters report on Monday.

Revamping the manufacturing operations, which once exclusively produced chips, but now also cater to external clients like Nvidia, is one of Tan’s key priorities.

Tan, who was previously a member of Intel’s board and CEO of chip design software firm Cadence Design Systems CDNS is poised to lead the company after a decade of setbacks under previous CEOs. These missteps led to Intel missing out on the booming demand for AI processors and smartphone chips, allowing competitors like Arm Holdings and Nvidia to dominate these markets.

Under Tan’s leadership, Intel is striving to enhance the performance of its manufacturing division, Intel Foundry, by actively securing new customers. The company also plans to restart the production of chips that drive AI servers and explore areas beyond servers, such as software, robotics, and AI foundation models.

Why It Matters: Despite the ambitious plans, Tan’s strategy seems to be an enhancement of former CEO Pat Gelsinger‘s turnaround plan, which sought to reshape Intel into a contract chip manufacturer. However, Gelsinger’s plan had to be scaled back due to cooling demand for Intel’s core products.

Tan’s appointment as CEO was announced on March 13, and it led to a surge in Intel’s stock. His incoming leadership and the proposed changes are seen as a potential turning point for Intel, which has been struggling to keep up with competitors in the rapidly evolving tech industry. In a town hall address held after his appointment, the CEO cautioned employees that the company will need to make “tough decisions.”

As Tan steps into his new role, the tech industry will be watching closely to see if his planned changes can turn around the fortunes of the ailing tech giant.

Intel stock has surged more than 18% over the past 5 days to close at $24.05 on Friday, as per Benzinga Pro.

Intel holds a momentum rating of 31.37% and a growth rating of 80.60%, according to Benzinga's Proprietary Edge Rankings. The Benzinga Growth metric evaluates a stock’s historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance. For an in-depth report on more stocks and insights into growth opportunities, sign up for Benzinga Edge.