Four months after Intel (NASDAQ:INTC) CEO Pat Gelsinger resigned, the struggling chip manufacturer appointed Lip-Bu Tan as new CEO last Wednesday. Effective March 18th, he will try to regain Intel’s lost glory while also re-joining the company’s board of directors.
Over the week, INTC stock gained 30% value to the present price of $25.80, which is in line with the WSJ’s average price target of $25.24 per share. Intel has much ground to make from its all-time high price of $62.07 in April 2021.
But is even a higher INTC price level likely with Lip-Bu Tan at the helm?
Why Did the Market React Positively to the New Intel CEO?
The fact that Intel no longer has a leadership vacuum is itself positive news. After all, Intel accrued $18.75 billion net loss in 2024 compared to $1.69 billion net income in 2023. Such 1,210% decline in profitability requires all hands on deck, led by someone with an effective plan.
Lip-Bu Tan is a known quantity, having served on Intel’s BoD from September 2022 to August 2024. At the time, it was reported that he resigned following disagreements with Pat Gelsinger. Namely, that Intel has a bloated middle management workforce, stagnating risk-averse culture, and has failed to onboard the AI hype train on time.
Previously, Tan was the CEO of Cadence Design Systems (NASDAQ:CDNS) between 2009 and 2021. The company develops software tools that semiconductor manufacturers like TSMC use to design chips and integrated circuits (ICs). Following Tan’s departure, Cadence shifted to AI-driven solutions with Cadence.AI initiative as a chips-to-systems intelligent design acceleration.
More importantly, during Tan’s tenure as Cadence CEO, CDNS stock gained over 3,000% value. Over the last five years, after Tan’s departure, CDNS stock is up 360%, having further extended partnerships with Nvidia (NASDAQ:NVDA), TSMC and Apple (NASDAQ:AAPL).
Just like TikTok CEO, Tan was raised in Singapore, although born in Malaysia. Following his education at MIT for nuclear engineering, Tan was naturalized as a US citizen. In his investing career via Walden International VC, he made the right call to gain a stake in Israeli chip designer startup Annapurna Labs, which Amazon (NASDAQ:AMZN) bought in 2015 for $350 million.
Likewise, Tan’s investment in Nuvia, a CPU design company, paid off when Qualcomm (NASDAQ:QCOM) acquired it for $1.4 billion in March 2021. In the most recent investment call, Tan contributed to the new funding round for Celestial AI startup, having raised $250 million last Tuesday.
Suffice to say, 65-year old Lip-Bu Tan has a solid track record in both leadership and investing roles. And in these roles, he gained overview of the entire semiconductor design and manufacturing landscape.
Intel Boosting Core Business First, with an AI Focus Later
According to insider sources relayed to Reuters, Tan plans to continue Gelsinger’s broader strategy. As covered previously, this consisted of delivering “five manufacturing technology nodes in four years”.
During 2025, the company will roll out its cutting-edge Intel 18A (1.8nm) chips, dubbed Panther Lake, which appear to be superior to TSMC’s equivalent 2nm design. Tan aims to leverage this rare advantage for Intel, after fumbling the 10nm process rollout which landed the company in current financial woes.
Therefore, Tan’s immediate efforts will focus on improving Intel Foundry output, not only in terms of silicon wafer yields but ensuring it lands contracts for hyperscaler customers such as Amazon, Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).
“Together, we will work hard to restore Intel’s position as a world-class products company, establish ourselves as a world-class foundry and delight our customers like never before. That’s what this moment demands of us as we remake Intel for the future,” said Lip-Bu Tan, new Intel CEO on March 12th.
To further that goal, it is likely that Tan will start cutting the aforementioned middle management bloat as a part of “tough decisions” ahead. The timing is just right, following President Trump’s wide-sweeping anti-DEI initiatives. Semiconductor analyst Dylan Patel likens Tan’s efforts to resetting Intel’s culture.
“We expect significant restructuring of the slow and ineffective middle management at Intel. Although his recent time was spent in management, Lip-Bu has technical bona fides and should approach the role with a technical eye,” said Dylan Patel of SemiAnalysis.
Intel 18A process will power both client CPUs, Panther Lake, with new AI features but also Clearwater Forest lineup specifically designed for AI data center throughput. In early March, Broadcom (NASDAQ:AVGO) and Nvidia created an optimistic buzz around Intel 18A as they began early tests for large volume manufacturing.
Long term, Intel should move to a regular AI chip release schedule on par with Nvidia, but this is not expected for at least two years. Prior to 18A rollout at scale, Intel will have to rely on the marketing for existing Xeon 6 and Gaudi 3 AI accelerators for the data center market.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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