Intel shares surged nearly 15% following the appointment of Lip-Bu Tan as CEO. Investors are hopeful his leadership will revive the chipmaker's struggling fortunes.
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| Intel’s stock jumped 14% after the appointment of Lip-Bu Tan as CEO. Analysts are hopeful his leadership will address the company's struggles in AI and manufacturing. Image: ChicHue |
San Diego, California — March 14, 2025:
Intel's stock surged nearly 15% on Thursday, as investors responded positively to the announcement that Lip-Bu Tan, a former board member, would take over as CEO. The announcement comes amid years of struggle for Intel, a company once dominant in the semiconductor space but now grappling with market share losses in key sectors like data centers, PCs, and AI chips. The company has also faced financial setbacks, including billion-dollar losses in its manufacturing division.
Tan’s appointment marks the end of a tumultuous leadership period following the ousting of Pat Gelsinger, the former CEO. Gelsinger's ambitious plans to rejuvenate the company, including a shift toward AI and increased investments in chip manufacturing, failed to reverse Intel's fortunes. Over the past five years, Intel's stock has lost around 60% of its value, underperforming the broader market, including the Nasdaq and S&P 500, both of which have more than doubled in that time.
Tan is widely seen as a strategic choice for Intel’s next chapter. Having been involved with the company’s board until 2023, his deep understanding of Intel’s operations gives him a unique advantage in addressing the challenges ahead. Analysts have expressed optimism that Tan's leadership could steer the company through its rough patch, with particular hope for his ability to navigate Intel’s troubled AI chip business.
“Tan’s appointment is as good as stakeholders could have hoped for,” said analysts from TD Cowen, citing his vast network and relationships within the chip industry. His role in overseeing growth at Cadence Design Systems, a key player in chip-design software, has also bolstered his credibility in the semiconductor space. Analysts expect Tan to focus on Intel's contract manufacturing business, a critical area that could offer the company a new revenue stream as it competes with rivals like TSMC and Broadcom.
Tan’s strategy appears to focus on consolidating Intel’s chip design and manufacturing operations. While some industry watchers have raised concerns about Intel's ability to attract customers to its foundry business—due to its direct competition with the very companies it seeks to serve—Tan’s track record in fostering industry relationships may prove valuable. He has already expressed a commitment to making Intel a leading foundry, a term for a company that manufactures chips for other firms.
Still, any recovery will likely take years, as Tan himself indicated in a letter to employees. Intel faces major hurdles, including its underwhelming Gaudi AI chips, which have missed sales targets, and its slow progress in reclaiming leadership in the CPU space. Analysts are also concerned that Intel may need a strong external partner to succeed in its foundry ambitions, especially given the competition Intel faces from global chipmakers.
While analysts are hopeful, the road ahead for Tan is far from smooth. Intel’s market value has been stuck below $100 billion, a far cry from its peak. Despite the positive market reaction, the company remains in a precarious position, and many analysts have maintained “hold” or “sell” recommendations on its stock.
Dan Morgan, Senior Portfolio Manager at Synovus Trust, emphasized that Tan’s leadership will be tested by Intel’s ongoing struggles. “Intel may still need a strong partner regardless of who is CEO to turn the foundry business profitable,” Morgan said, underscoring the complexity of the challenges facing the company.
Tan’s leadership will also be critical in addressing Intel's shrinking market share, particularly in the data center and personal computing markets, where competitors like AMD have steadily gained ground. For now, analysts and investors alike will be closely monitoring Tan’s first moves as CEO and hoping that his leadership can pave the way for a successful turnaround.
While Intel’s stock surge under Tan’s leadership is encouraging, it remains to be seen whether the new CEO can truly revitalize the company. His deep industry relationships and prior experience with the company may help him address Intel’s challenges, but the turnaround will require more than just strong leadership. With intense competition in the semiconductor market and the increasing importance of AI, Tan’s leadership will be crucial in guiding Intel through a period of profound transformation.
Intel’s investors and industry observers alike will be watching closely as Tan takes the helm next week, with hopes high that his vision will restore the company to its former dominance in the semiconductor industry.