Among his top priorities is revamping Intel’s chip manufacturing division, which was originally focused on internal production but has since expanded to making semiconductors for external clients like Nvidia.
At a recent town hall meeting, Tan warned employees that “tough decisions” lie ahead, signaling his intent to shake up the company’s operations.
Intel’s Struggles and the Need for Change
Intel has faced years of setbacks under previous leadership, losing ground in key markets like AI and mobile chips. Despite ambitious plans under former CEO Pat Gelsinger, the company failed to compete effectively with rivals such as Arm Holdings and Nvidia, allowing them to dominate the AI and mobile processor markets.
In 2024, Intel reported a staggering $19 billion annual loss—its first since 1986—highlighting the urgency for a turnaround.
Tan, a seasoned semiconductor executive and former Intel board member, has been an internal critic of Gelsinger’s strategy, particularly regarding Intel’s inefficiencies, slow decision-making, and underwhelming execution in chip manufacturing.
Industry expert Dylan Patel described Gelsinger as “too nice”, suggesting that he hesitated to make tough staffing decisions—an issue Tan is expected to address head-on.
Overhauling Intel’s Manufacturing and AI Strategy
Tan’s near-term focus is on improving Intel Foundry, the company’s contract chip manufacturing arm that serves clients like Microsoft and Amazon. He plans to aggressively court new customers and refine Intel’s manufacturing process to make it more competitive with Taiwan Semiconductor Manufacturing Co. (TSMC).
At the same time, Tan will revive Intel’s AI ambitions, looking beyond server chips into software, robotics, and AI foundation models.
- Intel’s AI-powered "Panther Lake" chips will be key to its comeback, relying on a new manufacturing process called 18A.
- Winning over major clients like Nvidia, Google, and Broadcom is crucial for Intel’s foundry business.
- Intel is already making progress, with Nvidia and Broadcom running test chips on its updated manufacturing processes.
According to sources, Tan believes Intel lost its "only the paranoid survive" culture, a motto championed by former CEO Andy Grove. He sees the company’s bloated workforce and slow decision-making as key obstacles to innovation.
Tough Cuts and Leadership Overhaul Expected
Tan’s leadership will likely bring significant workforce reductions, especially in middle management, which he sees as an unnecessary bottleneck.
While Intel cut about 15,000 jobs last year, Tan is expected to conduct a deeper evaluation of staffing and restructure teams for greater efficiency.
Despite internal resistance last year, Tan is now in a position to execute his vision without board opposition.
Can Intel Compete with AI Giants?
Intel aims to transition to annual AI chip releases, following Nvidia’s successful model, but industry insiders believe it could take until at least 2027 before Intel develops a truly competitive AI chip architecture.
To succeed, Tan must:
- Improve Intel’s chip yields, ensuring a higher number of usable chips per wafer.
- Attract major AI clients, proving Intel’s foundry can rival TSMC’s reliability and efficiency.
- Secure long-term investments in AI chip development, balancing immediate restructuring with future innovation.
Intel has already shown manufacturing improvements in recent weeks, sparking renewed interest from Nvidia, Advanced Micro Devices (AMD), and Broadcom, all of whom are evaluating Intel’s updated processes.
What’s Next for Intel?
Tan has signaled his intent to keep Intel’s factories under company control, maintaining the separation between its design and manufacturing divisions while ensuring that the foundry business remains a core focus.
With Intel’s financial future tied to its upcoming AI chips, 2024 and 2025 will be crucial in determining whether the company can recover from its years of missteps.
Industry analysts say Intel’s turnaround hinges on landing at least two major clients for high-volume chip production. If Tan can fix Intel’s foundry business, boost AI innovation, and streamline operations, he may be able to restore Intel’s position as a technology leader.
But if the execution falters, Intel risks falling further behind in the AI race, leaving it vulnerable to Nvidia, AMD, and TSMC’s dominance.
Tan has little room for error—and Intel’s future depends on his ability to deliver results quickly.