[LAS VEGAS] Intel chief executive officer Tan Lip-Bu said the chipmaker will spin off assets that are not central to its mission and create new products including custom semiconductors to try to better align itself with customers.
Intel needs to replace the engineering talent it has lost, improve its balance sheet and better attune manufacturing processes to meet the needs of potential customers, Tan said. Speaking at his first public appearance as CEO, at the Intel Vision conference on Monday (Mar 31) in Las Vegas, Tan did not specify what parts of Intel he believes are no longer central to its future.
“We have a lot of hard work ahead,” Tan said, addressing the company’s customers in the audience. “There are areas where we’ve fallen short of your expectations.”
The veteran semiconductor executive is trying to restore the fortunes of a company that dominated an industry for decades, but now finds itself chasing rivals in most of the areas that define success in the field. A key question confronting its leadership is whether a turnaround is best served by the company remaining whole or splitting up its key product and manufacturing operations.
Tan gave no indication that he will seek to divest either part of Intel. Instead, he highlighted the problems he needs to fix to get both units performing more successfully. Intel’s chips for data centre and AI-related work in particular are not good enough, he said.
“We fell behind on innovation,” the CEO said. “We have been too slow to adapt and meet your needs.”
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The appointment of Tan, 65, who assumed the role on Mar 18, first sparked optimism and lured some investors back to the stock. But since then, the shares have declined along with a general sell-off in technology companies. The stock slipped about 1.2 per cent in extended trading after the executive’s presentation.
Tan had been an Intel board member before stepping down in August 2024. The CEO said he has been asked why he took on the job this late in his career.
“It was very hard for me to see it struggle,” Tan said. “I simply could not stay on the sidelines knowing that I could help.”
Tan’s predecessor, Pat Gelsinger, was pushed out by the board for a perceived failure to rejuvenate Intel’s product lineup. One of the most glaring challenges: creating an artificial intelligence accelerator chip that can rival the products of Nvidia. That company, once in Intel’s shadow, has seen its revenue and valuation skyrocket over the past two years due to the AI computing boom.
Gelsinger had also set out to turn Intel into a chip foundry – a contract manufacturer that makes products for outside clients – but that effort is still in its early stages.
Tan said the company needs to listen to prospective outside customers for its factories and let them specify the design and manufacture of their products, rather than Intel dictating the way it will be done. Tan said many large customers want custom parts – and his company will do it for them.
The CEO repeatedly emphasised that there’s no quick fix to Intel’s problems, but that he’s committed to staying at the company as long as it takes.
“It won’t happen overnight, but I know we can get there,” he said. BLOOMBERG
