Intel Welcomes New CEO Lip-Bu Tan Amid Industry Challenges

Intel, a leading semiconductor company, has appointed Lip-Bu Tan as its new CEO. This decision comes on the heels of the retirement of Pat Gelsinger, who stepped down from both his position and the company’s board three months earlier. During the interim, Intel's Chief Financial Officer David Zinsner and Executive Vice President of Client Relations Michelle Johnston Holthaus acted as co-CEOs.

Tan joins Intel after serving as the CEO of Cadence Design Systems. His return to Intel’s board coincides with a critical period in the company's history, as it navigates various challenges in the semiconductor market.

When Gelsinger took over the company in February 2021, Intel was already facing significant issues. The company was lagging behind its competitors in the semiconductor industry, largely due to past mistakes in chip manufacturing and missing opportunities during the smartphone boom.

This period also saw significant changes in the broader semiconductor market, with companies like AMD and Analog Devices pursuing acquisitions to strengthen their positions.

During Gelsinger's tenure, he implemented a modernization strategy called IDM, which stands for integrated device manufacturing. This strategy kicked off with a massive $20 billion investment aimed at constructing two new chip manufacturing facilities in Arizona. The goal was to enhance chip production capabilities both in the United States and globally.

In 2022, the second phase of the IDM plan was introduced, focusing on a three-part manufacturing approach. This included integrating Intel's own manufacturing facilities, leveraging external global manufacturers, and expanding the company's foundry services. As part of this strategic plan, Intel also aimed to acquire Tower Semiconductor for $5.4 billion to develop its custom foundry services.

However, this acquisition plan was ultimately abandoned in the summer of 2023 due to regulatory complications. The failure of this deal posed a risk to Intel's modernization goals. Following Gelsinger's retirement, Intel began restructuring its chip foundry division, transitioning Intel Foundry into an independent subsidiary.

In the months leading up to Gelsinger's exit, Intel faced considerable turbulence. The company's stock price saw a drastic decline of around 50% from early 2024 until his departure in December. In August, Intel announced it would lay off 15% of its workforce—approximately 15,000 employees—following disappointing second-quarter results. Gelsinger acknowledged that Intel had fallen behind its competitors in capitalizing on the AI surge, suggesting that the company's workforce had continued to grow despite these setbacks.

Since Gelsinger's departure, Intel has faced additional delays, including setbacks in opening its Ohio chip factory and the decision to hold off on launching its Falcon Shores AI chips.

As Lip-Bu Tan steps into his role, there are signs of a potential turnaround. Intel secured a significant grant of $7.865 billion from the U.S. Department of Commerce for domestic semiconductor manufacturing, thanks to the U.S. Chips and Science Act. So far, Intel has already received $2.2 billion from this grant, as noted in its latest financial report. Additionally, Intel achieved success with the launch of its Arc B580 graphics card, which quickly sold out following positive reviews.

Intel, CEO, semiconductors