Intel's new CEO Lip-Bu Tan eyes sweeping overhaul of manufacturing and AI pperations

Intel’s incoming CEO Lip-Bu Tan is reportedly planning a comprehensive restructuring of the company’s manufacturing processes and artificial intelligence strategies—a bold move aimed at reviving the tech giant’s fortunes, according to two people familiar with his plans.

The overhaul, which Tan is expected to outline upon his return as CEO on Tuesday, would involve significant changes to Intel’s chip production methods and a revamp of its approach to AI. Sources say Tan is particularly focused on addressing what he views as a slow-moving, bloated middle management layer, hinting at potential staff cuts to streamline decision-making and boost efficiency.

One of Tan’s core priorities is to reengineer Intel’s manufacturing operations. Once known primarily for producing chips for its own products, the company has since repurposed many of its factories to serve external clients, including industry heavyweights like Nvidia. Tan intends to refocus these operations on winning new customers and improving production yield, especially as Intel gears up to launch its next-generation advanced chips, codenamed Panther Lake, which will incorporate a suite of AI features based on a new set of manufacturing techniques known as "18A."

In a town hall meeting following his appointment as CEO last week, Tan warned employees that the company would need to make “tough decisions” to restore its competitive edge. Industry expert Dylan Patel noted that Tan’s criticism of former CEO Pat Gelsinger centered on the latter’s reluctance to cut inefficient layers in management—a factor that Tan believes hindered Intel’s responsiveness in a rapidly evolving semiconductor market.

Tan, 65, who previously led chip design software firm Cadence and served as an investor and board member at Intel until his resignation last August, is stepping in at a time when Intel is grappling with fierce competition from rivals such as TSMC and Nvidia. The company reported an annual loss of $19 billion in 2024, its first loss since 1986, underscoring the urgency of a turnaround.

Beyond reworking its internal processes, Tan is set on reclaiming Intel’s stature as a “world-class foundry.” A spokesman for the company said that Tan will spend considerable time listening to customers, partners, and employees to position Intel for future success. The immediate challenge for Tan is to optimize Intel Foundry’s performance—improving yield rates and customer service—to attract larger volume commitments from potential clients like Nvidia and Alphabet, among others.

While Tan’s strategy builds on elements of Gelsinger’s previous turnaround plan, his approach appears more focused on internal cost-cutting and operational efficiency. Industry sources expect that while the company will continue to invest in AI research, it could be at least until 2027 before Intel unveils a next-generation AI chip architecture that competes compellingly in the burgeoning market.

As Intel braces for these transformative changes, the semiconductor industry watches closely to see if Tan’s sweeping reforms can restore the company’s long-dorm

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