Intel Corp.'s new Chief Executive Officer Lip-Bu Tan is streamlining the semiconductor giant's leadership team, with key chip units reporting directly to him, according to a memo from the former chief executive seen by Reuters.

Intel also promoted network chip chief Sachin Katti to chief technology officer and head of artificial intelligence, according to the memo.

The leadership changes are the first major move by Lip-Bu Tan since he took over last month. Intel's data center and artificial intelligence chip groups and PC chip groups will report directly to Lip-Bu Tan.

They were previously overseen by Michelle Johnston Holthaus, Intel's chief product officer.

"I look forward to working hand in hand with the engineering and product teams to learn how to strengthen our solutions," Lip-Bu Tan wrote. "As Michelle and I drive this work together, we plan to improve and expand her responsibilities, and more details will be announced in the future."

Details about the Memo

Carty, who is also a professor at Stanford University, will replace Greg Lavender, who is retiring from Intel, according to the memo.

The memo came after Tan publicly stated that he wanted to streamline the company's management layers so that executives can work more closely with engineers.

"It's clear to me that organizational complexity and bureaucratic processes have been slowly suffocating the culture of innovation we need to win," Tan said in the memo. "It takes too long to make decisions. New ideas are not given room or resources to incubate. And unnecessary silos lead to inefficient execution."

Intel may be fighting alone

Intel Corp.'s shares have been buoyed by a wave of potential deals or partnerships that could ease its turnaround burden. But in the past few weeks, two company CEOs have been rumored to be interested in such arrangements but hinted they would not work with the chip giant.

This is another sign that CEO Lip-Bu Tan will work alone to restore Intel's glory. Last month, Broadcom Inc. CEO Hock Tan said he was not interested in any large M&A deals because he was "too busy" with artificial intelligence. Earlier reports said Broadcom was interested in acquiring Intel's design and product business.

On Thursday, TSMC CEO Wei Zhejia said on the company's earnings call that he has no joint ventures or technology transfers with any U.S. companies.

"I'm pretty sure Intel will go it alone," said Dan Hutcheson, vice chairman of semiconductor research firm TechInsights Inc.

Since being named Intel CEO last month, Lip-Bu Tan has made a major strategic move. Intel announced this week that it would sell a majority stake in its Altera business to private equity firm Silver Lake Partners. Intel sold the shares at a loss, but retained 49% of Altera, giving the company upside. Altera makes custom field-programmable gate array (FPGA) chips for the communications industry.

Intel has a poor record in acquisitions, including the purchase of Altera, whose revenue has declined under Intel's leadership. Lip-Bu Tan seems to realize that Intel needs to focus on its strengths and regain the entrepreneurial spirit of its founding by innovating internally.

Even with all these hints, clues and comments, Wall Street seems disappointed that Intel can't get much outside help. Intel is currently in a chaotic and turbulent environment due to the Trump administration's tariff policies. Analysts believe that these tariff policies have caused PC manufacturers and some other companies to stockpile chips.

In addition, as Bernstein Research analyst Stacy Rasgon pointed out, Intel may also be hit by tariffs because its products are both in and out of China.

Intel shares rallied earlier this year after initial comments from the Trump administration led investors to believe Intel was trying to negotiate a joint venture with TSMC. But Intel shares have fallen sharply in recent weeks after the market initially collapsed on Trump's tariffs, and despite a brief rally in February and March, they are now down 22% so far this year.

Wall Street may get some clarity when Intel reports first-quarter earnings on April 24. It will be Lip-Mou Chen's first earnings call with analysts, and he must convince them that Intel has enough cash and customer support to continue on its solo path. Intel posted its first net loss in decades in 2024, and its foundry business is not expected to break even until 2027.

Investors' predictions

Some investors also expect Intel to cut more jobs, as the company still has a large workforce. Some former executives have expressed frustration with its slow culture, endless PowerPoint presentations and layers of middle management.

As Chen said in his first public appearance earlier this month, he has received a lot of feedback from Intel's customers and partners. He also promised to inject an entrepreneurial spirit into Intel, refocus its engineering culture and put customers first.

Analysts hope that the new way of thinking - which would be a major cultural shift for a company with a past reputation for arrogance - will also attract new customers for its foundry business, which is currently losing money and needs to fill its wafer fabs.

UBS analyst Tim Arcuri said in a note to clients earlier this week that Nvidia and Broadcom are in talks with Intel about manufacturing, but he noted that their interests are "more about Intel's 18AP node (power-optimized version of 18A), which is about a year behind 18A, meaning Intel still needs a way to make up for the shortfall in cash flow and resources over the next few years."

The company's 18A process has just been launched, and Intel's Panther Lake processors for high-performance laptops are expected to be the first to be mass-produced using the process. "The ability of foundries to attract external customers for 18A remains limited," Arcuri said.

Intel had a cash position of $8.2 billion at the end of last year.

"I think the next logical move for Intel is to talk to the top fabless chip companies - Nvidia, AMD, Broadcom and Qualcomm - to see if there is interest in investing in a joint venture," Dan Morgan, senior portfolio manager at Synovus Trust Company, said in an email Thursday. "This will encourage these fabless companies to use U.S. factories instead of TSMC's."

Morgan said one of the many questions he has received from investors is about Chen's overall strategy at Intel. In an earnings note to investors, he noted that Chen is well-qualified, especially after his "transformative impact" at Cadence Design Systems Inc.

"That said," Morgan wrote, "he may not have the time that his predecessor had to restart Intel's nascent AI chip business … recapture leadership in CPUs… and become profitable in the foundry business."

Reference link https://www.marketwatch.com/story/it-looks-like-intel-may-have-to-go-it-alone-can-ceo-lip-bu-tan-fix-the-company-solo-b22b54d2

Source: Content compiled from Reuters

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