Troubled Chipzilla’s stock shot up 12 per cent in premarket trading as the company finally settled on Lip-Bu Tan as its permanent CEO. But Wall Street still sees Intel in the Last-Chance saloon, with the clock ticking towards High Noon.
Tan, who once ran Cadence Design Systems from 2009 to 2021, had already done a stint on Intel’s board before walking away in 2024, reportedly after knocking heads with the now-departed Pat Gelsinger. Gelsinger, a near-lifer at the chipmaker, had grand dreams of a turnaround but was tossed out.
Word on the street is that Tan was originally in the running for the CEO job in 2021 but lost out to Gelsinger, who then had to suck it up and let Tan onto the board.
While on the Board, Tan constantly pushed for a smarter artificial intelligence strategy and wanted Chipzilla to move faster—something notoriously difficult when the company is bogged down with layers of bureaucracy.
“If anyone can save Intel, it’s Lip, but it will take years and partners,” a source close to Tan told the press. Don’t expect him to carve off Chipzilla’s beleaguered foundry business immediately. Still, he might try to scrape some much-needed cash via a rumoured tie-up with Taiwan Semiconductor and Uncle Sam’s money pot.
Naturally, the axe might come swinging again, with more layoffs likely under Tan as he tries to clear out the dead wood.
Analyst KeyBanc’s John Vinh was cautiously optimistic, saying Tan’s past experience could be good news for shareholders, but the mountain of problems at Intel means he’s staying neutral for now.
Stifel’s Ruben Roy, meanwhile, called Tan’s appointment a “longer-term positive” but warned that Intel is facing a gruelling transition period to get anywhere near the AI-driven market.
Stifel analyst Ruben Roy: "Having followed Tan's transformative impact on Cadence Design Systems during his eleven-year tenure as CEO at that company as well as many successful outcomes related to investments across the semiconductor universe, we believe that Tan is uniquely qualified to attempt a reboot of Intel.
"We view Tan's appointment as a longer-term positive for Intel. However, we believe that Intel faces a lengthy transition period as the company realigns with the evolving AI-centric opportunity set that has been accelerated in recent years. In a company message released with the CEO transition announcement, Tan notes that remaking Intel will not be easy but that the goal is to restore Intel's position as a world-class products company and foundry.
"In the near-to-medium term, we expect clarity on Tan's vision and strategies to act as potential catalysts to Intel shares. However, as the AI opportunity unfolds, we expect real-time AI infrastructure beneficiaries such as Nvidia to outperform."
