Intel’s Bold Bet: Can Tan Turn the Semiconductor Giant Around?

Intel's strategic transformation under the leadership of CEO Lip-Bu Tan has set the semiconductor giant on a new trajectory, marked by significant operational restructuring, workforce reductions, and a recalibration of its approach to AI and foundry manufacturing. Appointed in March 2025, Tan has initiated sweeping changes designed to streamline operations, reduce costs, and refocus the company's priorities to align with evolving market demands and competitive pressures.

One of the most immediate and visible changes under Tan has been a substantial reduction in the workforce. By the second quarter of 2025, Intel had announced a 15% global workforce reduction, with an additional 20% cut planned for the remainder of the year, impacting over 25,000 employees. These cuts are part of a broader restructuring effort to eliminate redundancy, reduce bureaucracy, and redirect resources toward high-priority projects. The company has also consolidated its manufacturing operations, halting factory projects in Germany and Poland and shifting assembly work to Vietnam and Malaysia. Management layers have been reduced by 50%, and a return-to-office policy has been enforced to improve agility and decision-making [1].

The restructuring has been accompanied by a strategic refocus on key areas, particularly in AI and foundry manufacturing. Tan has personally overseen silicon design approvals to ensure cost efficiency, a marked departure from past practices that sometimes prioritized overengineering. The company is now emphasizing financial discipline, with a particular focus on cost control and demand-driven manufacturing. The Data Center Group now reports directly to Tan, and Naga Chandrasekaran has been given an expanded role overseeing manufacturing and technology development, reinforcing a shift toward engineering-driven priorities [3].

Financial results for Q2 2025 reflect both the challenges and opportunities of this strategic shift. Despite revenue of $12.9 billion, the company reported a GAAP net loss of $2.9 billion, driven by restructuring charges and impairments. Gross margins fell to 27.5%, down from 35.4% a year earlier, raising concerns among investors. The Data Center and AI segment, however, showed resilience, reporting $3.9 billion in revenue, a 4% year-over-year increase driven by Xeon 6 series CPUs and partnerships like the Xeon 6776P in NVIDIA’s DGX B300 systems [5].

Intel is also pivoting its focus in the AI space, emphasizing inference and agentic AI, while developing a cohesive silicon-software stack to compete with rivals like NVIDIA and AMD. The company is leveraging its Gaudi chips, which are 50% cheaper than NVIDIA’s H100, to target cost-sensitive markets. However, challenges remain, including delays in the development of the 18A manufacturing node and a fragmented product portfolio that could hinder differentiation in a crowded AI landscape [4].

The company’s long-term ambitions include becoming the world’s second-largest foundry by 2030, but attracting external clients remains a challenge given its historical reliance on internal demand. Additionally, quality and yield issues with the 18A node delay its timeline, raising questions about Intel’s ability to meet its manufacturing goals. Analysts remain divided, with some projecting a rebound to $28 if Intel stabilizes its 18A node and delivers on product promises, while others warn of long-term competitiveness challenges [1].

Despite these uncertainties, Intel’s strategic overhaul and a $5.7 billion U.S. government investment—granting the government a 10% equity stake in the company’s foundry operations—have provided a financial lifeline. This funding supports foundry ambitions and manufacturing investments but also raises governance concerns and potential risks to international market access [4].

For investors, the balance between strategic boldness and execution risk remains a key consideration. While the restructuring reflects a necessary shift in direction, the success of Tan’s vision will depend on Intel’s ability to stabilize its manufacturing processes, maintain momentum in AI, and navigate the competitive landscape effectively. The company’s path to recovery is neither guaranteed nor linear, but the strategic pivot and government backing offer a potential floor for long-term value creation.

Source:

[1] [Lip-Bu Tan: Steps in the Right Direction] (https://newsroom.intel.com/corporate/lip-bu-tan-steps-in-the-right-direction)

[2] [Intel Restructures Manufacturing Leadership as CEO Lip-Bu Tan Drives Strategic Overhaul] (https://www.globalsmt.net/advanced-packaging/intel-restructures-manufacturing-leadership-as-ceo-lip-bu-tan-drives-strategic-overhaul/)

[3] [Intel's Restructuring 2025: A New Era Begins] (https://theusaleaders.com/news/intels-restructuring-2025/)

[4] [As Intel Nabs $5.7 Billion in U.S. Cash, Should You Buy INTC ...] (https://finance.yahoo.com/news/intel-nabs-5-7-billion-172333597.html)

[5] [Intel's Tumbling Fortunes: Navigating Challenges] (https://stockstotrade.com/news/intel-corporation-intc-news-2025_08_07/)