Intel's New CEO: A Snapshot of the Company's Current Standing

Intel, the big name in semiconductors, has just brought on board Lip-Bu Tan as their new CEO. This move comes hot on the heels of Pat Gelsinger's retirement three months ago, after which David Zinsner and Michelle Johnston Holthaus took over as co-CEOs. Tan, who was previously at the helm of Cadence Design Systems, is stepping into Intel at a pretty pivotal moment. The company's been through a rollercoaster ride over the past few years, to say the least.

When Gelsinger took the reins back in February 2021, Intel was already lagging behind in the semiconductor race. They were still smarting from missing the smartphone boom and had made some missteps in chip fabrication. It was also a wild time for the whole semiconductor industry, with big mergers like AMD snapping up Xilink for $35 billion and Analog acquiring Maxim for $21 billion happening around late 2020.

So, what did Gelsinger do during his time at Intel? He hit the ground running with a modernization plan called IDM, or integrated device manufacturing. The first step was a hefty $20 billion investment to set up two new chip factories in Arizona, aiming to ramp up chip production in the U.S. and beyond.

In 2022, they rolled out the second phase of the IDM plan, which was all about a three-pronged approach to chip making: using Intel's own fabs, working with third-party global manufacturers, and beefing up the company's foundry services. Part of this was supposed to be acquiring Tower Semiconductor for $5.4 billion to help with Intel's custom foundry services. But that deal hit a snag and got canceled in the summer of 2023 due to regulatory issues. TechCrunch noted that this could really mess with Intel's modernization plans. By September 2024, Intel decided to spin off its chip foundry division, Intel Foundry, into its own subsidiary.

The period before Gelsinger's retirement was pretty rough for Intel. Their stock took a nosedive, dropping about 50% from the start of 2024 until Gelsinger left in December. They also had to announce layoffs, cutting 15% of their workforce, around 15,000 people, in August after a terrible second quarter. Gelsinger admitted that Intel hadn't been able to ride the AI wave like its competitors and had too many employees for its current situation.

Since Gelsinger stepped down, things haven't gotten much easier. They've delayed the opening of their Ohio chip factory yet again and decided not to launch their Falcon Shores AI chips.

But with Tan now at the helm, there might be a light at the end of the tunnel. Intel just sealed a deal with the U.S. Department of Commerce to get a $7.865 billion grant for domestic semiconductor manufacturing under the U.S. Chips and Science Act. They've already pocketed $2.2 billion of that, according to their fourth-quarter earnings call. Plus, their Arc B580 graphics card has been a hit, selling out after getting some great early reviews.