Intel is preparing to downsize as the new CEO Lip-Bu Tan demands a massive change in order to rescue the declining technology company. Just one day after Tan takes over as Intel’s chief on Tuesday, he is expected to zero in on AI, manufacturing, and cutting the fat from middle management, sources said. Tan’s plan is to revamp Intel’s chip manufacturing, which now makes chips for outside companies like Nvidia and Microsoft. At a recent town hall, he told employees that there would be some ‘tough choices’ to be made, indicating possible cost cuts and job losses. According to Dylan Patel, an industry expert, former CEO Pat Gelsinger did not act on necessary layoffs, resulting in inefficiencies. Intel, which reported a $19 billion loss in 2024, has failed to challenge Arm Holdings and Nvidia in the AI processor market. For the short term, Tan plans to enhance the effectiveness of Intel Foundry by bringing in more customers and resuming the development of AI server chips. The company will also be looking at software, robotics, and AI foundation models for growth. Though Tan’s approach seems to build on the turnaround plan conceived by Gelsinger, he has knocked his predecessor for his methods. Tan’s leadership will be under close scrutiny as Intel tries to regain its competitive position after tapering down on previous factory expansion plans.
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