As Intel Welcomes a New CEO, A Look at Where the Company Stands

Semiconductor giant Intel has appointed Lip-Bu Tan, a semiconductor veteran, as its new CEO. This transition comes just three months after Pat Gelsinger announced his retirement and stepped down from the company’s board. During the interim, Intel CFO David Zinsner and Executive Vice President of Client Relations Michelle Johnston Holthaus had taken on the roles of co-CEOs.

Tan, who previously served as the CEO of Cadence Design Systems, is stepping into leadership at a pivotal time for Intel. The company has experienced significant challenges and fluctuations in recent years.

When Gelsinger took over leadership in February 2021, Intel was already facing complications and noticeably lagging behind competitors in the semiconductor industry. The company was still feeling the effects of missing the smartphone revolution, coupled with its setbacks in chip manufacturing.

The broader semiconductor landscape was also shifting during this time, with numerous acquisitions taking place in late 2020. Notable deals included AMD’s acquisition of Xilinx for $35 billion and Analog Devices’ purchase of Maxim for $21 billion.

Let’s delve into Gelsinger’s tenure at Intel.

Upon assuming his role, Gelsinger quickly initiated a modernization strategy known as Integrated Device Manufacturing (IDM). The first phase included a $20 billion investment to construct two new semiconductor manufacturing facilities in Arizona, aimed at increasing chip production within the U.S. and beyond.

In 2022, Intel revealed the second phase of its IDM strategy, which outlined a three-pronged approach: utilizing Intel’s own fabrication plants, collaborating with global manufacturing partners, and expanding the company’s foundry services. As part of this initiative, Intel announced plans to acquire Tower Semiconductor for $5.4 billion to enhance its custom foundry capabilities.

Unfortunately, this acquisition faced regulatory challenges and was ultimately canceled in summer 2023. Reports indicated that this setback would significantly affect Intel’s modernization plans. In September 2024, Intel announced a shift to operate its chip foundry branch, Intel Foundry, as a separate subsidiary.

Gelsinger’s final months at Intel were marked by turmoil. The company’s stock price suffered a nearly 50% decline from early 2024 until Gelsinger's exit in December. In August, Intel disclosed plans to lay off about 15% of its workforce, translating to roughly 15,000 employees, following disappointing second-quarter results. Gelsinger acknowledged that the company struggled to take advantage of the AI surge like its competitors did, with the workforce growing unsustainably.

Since Gelsinger's departure, Intel has faced additional delays, including the postponed opening of its Ohio chip factory and the decision to refrain from launching its Falcon Shores AI chips.

However, under Tan’s leadership, there are signs of potential recovery. Recently, Intel finalized an agreement with the U.S. Department of Commerce to receive a $7.865 billion grant to support domestic semiconductor production under the U.S. Chips and Science Act. So far, Intel has received $2.2 billion from this grant, as reported in its fourth-quarter earnings call. Additionally, the popularity of Intel’s Arc B580 graphics card has shown promising early sales following favorable reviews.

Intel, CEO, Semiconductor