Intel CEO Lip-Bu Tan has a long track record in the chip industry. Now he needs a big customer
Intel’s CEO Lip-Bu Tan speaks at the company’s Annual Manufacturing Technology Conference in San Jose, California, U.S. April 29, 2025.
Laure Andrillon | Reuters
When Lip-Bu Tan was named CEO of Intel a little over two months ago, he brought with him plenty of name recognition. Tan spent 12 years running Cadence Design Systems and before that was a prominent venture capitalist. He’s also held board seats at SoftBank and Hewlett Packard Enterprise.
“Lip-Bu’s Rolodex is like nobody else’s in the semiconductor industry,” Intel CFO David Zinsner said at a financial conference this month. Zinsner said Tan recently met with 22 potential customers and partners in a single day.
At age 65, Tan is going to need more than a vast database of contacts and four decades of operating and investing experience to turn around the company that put the silicon in Silicon Valley but is struggling to stay relevant in a market that’s increasingly centered around artificial intelligence.
Once the world’s largest chipmaker, Intel has lost 70% of its value since early 2020. It’s roughly flat since Tan was named as CEO on March 12.
Tan’s jam-packed schedule in large part reflects a need to change the industry’s perception of Intel. No longer the dominant player in semiconductors, Intel is trying to pivot into chip manufacturing, especially as the U.S. focuses on investing in onshoring critical technologies. Tan has been listening to customers to find out specific technical requirements they would need from Intel as a foundry, he’s said in public remarks.
Under Tan’s predecessor, Pat Gelsinger, Intel spent $90 billion between 2021 and 2024 on building the company’s foundry operations and unlocking additional U.S. government funding. Capital expenditures in 2025 are expected to reach $18 billion.
Investors, and eventually the board, lost trust in Gelsinger’s ability to generate much of a return on that investment, leading to his ouster late last year. In an industry where roadmaps and capital plans are measured in five-year increments, Tan is under pressure to start building confidence immediately.
“The foundry business, it operates at a different time scale,” said Alvin Nguyen, an analyst at Forrester. “It operates with a level of investment that is tough to stomach, and very few publicly traded companies can deal with it.”
Intel faces a plethora of other challenges that all predate Tan’s tenure. The company’s central processors, or CPUs, that for decades were the most expensive and important part in computers, have been supplanted by AI chips, primarily graphics processing units, or GPUs, from Nvidia. Meanwhile, Advanced Micro Devices has picked up substantial market share in CPUs and server chips, and Qualcomm has emerged as a big challenger as well.
Tan is working on an AI strategy under Sachin Katti, who was named chief technology officer in April after joining the company in 2021.
Tan was born in Malaysia and raised in Singapore. He moved to the U.S. in the 1970s and studied nuclear engineering at the Massachusetts Institute of Technology. He’s since touched just about every aspect of the chip industry.
Before joining Intel, he was CEO of Cadence, which makes electronic design automation, or EDA, software, widely used by engineers at fabless chip companies to design new processors. As a venture capitalist at Walden International, Tan invested in Semiconductor Manufacturing International Corporation, China’s national foundry, in 2001, and was on the board for over a decade.
He’s now betting on Intel, not just with his time but also his wallet. When he became CEO, he bought $25 million of shares, which he’ll have to hold in order to earn his full compensation over the next five years.
Tan has been keeping a fairly low profile since starting the gig in March. He’s yet to sit for a press interview, and Intel declined to make Tan available for this story. But in his two public speeches as CEO at Intel events, he’s laid out elements of his strategy.
“We need to do a better job — make it easier for all of you to use our technology,” Tan said at a foundry event earlier this month. “We will rapidly embrace industrial standards, EDA tools and best design practices.”
One big customer
The fastest way to change the trajectory would be to announce a big foundry customer. Locking in substantial orders would serve as both a vote of approval to other potential customers and a signal to Wall Street that all those expenses will soon start turning into revenue.
“One Nvidia, one Qualcomm, one Apple, one something of volume that really shows this meaningful commitment for the fab to build significant volume would really change the whole narrative,” said Daniel Newman, CEO of industry research firm The Futurum Group.
Tan’s second public appearance as CEO came in April at Intel’s Foundry Direct Connect event in San Jose, California, a few miles from the company’s headquarters. There he hinted at one of his key objectives: rebuilding confidence.
“This is a truly a service business, and that is built on the foundational principle of trust,” Tan said. “You have to be patient to earn your trust.”
Intel wafers are displayed on stage at the company’s Annual Manufacturing Technology Conference in San Jose, California, U.S. April 29, 2025.
Laure Andrillon | Reuters
At the event, populated largely by people from the insular world of chip design and manufacturing, Tan directly addressed foundry customers, discussing the company’s specific technologies in power and packaging that put it in position to take on Taiwan Semiconductor Manufacturing Company, the largest foundry in the world.
Outside the convention center, banners still hung promoting the Nvidia GTC conference, which had taken place the prior month and packed the building’s ballroom.
Tan mostly acted like an emcee, calling up the CEOs of chip design partners such as Synopsys, Cadence and Siemens, who took the stage to discuss using Intel’s technology.
A key issue for Intel to address is the broadening of its foundry, which was originally designed for its own chip design teams, meaning some of the tools and infrastructure were company-specific. Intel has given the name 18A to its chip technology that it hopes to start producing in volume this year.
“One thing about 18A was, it was developed initially as just something for Intel, and we intercepted it relatively early,” Zinsner said earlier this month. That allowed the company to develop process design kits, or PDKs, “for the industry, but it still was not from the ground up developed as a foundry node,” he said.
Zinsner said the company’s next chip generation, 14A, will be built for external customers. Analysts say that 18A may be Intel’s first foundry process that could beat TSMC’s rival process to market.
Tan also recognizes that TSMC has created an industry standard, so using the same tools and technology would allow companies to more simply bring over work from other foundries. He said Intel is making its PDK easier to use.
“My top priority is to make it easier for the ecosystem to do business with Intel,” he said.
One of the speakers at the event was Anirudh Devgan, who succeeded Tan as CEO of Cadence. Tan asked Devgan what AI chip companies need to see if they’re to build on Intel. Devgan said the most important consideration is the need to focus on what the customer wants rather than what Intel prefers.
“Intel Foundry, as you all know, is like the service business, so the customer comes first,” Devgan said. “I know Lip-Bu has very good instincts to understand what the customer wants.”
It’s a stark change in approach for a company that for decades was focused on selling its own chips and not on creating an ecosystem. In a podcast earlier this year, TSMC founder Morris Chang said that Intel, during its glory years, acted “like they were the only guy with microprocessors.”
If there was a disappointment at the Intel event, it was the lack of an announcement about a major new customer.
Zinsner previously said, in response to a question about how many customers Intel had signed up for its foundry, that the company first needs to “eat its own dogfood,” indicating that the 18A process would be primarily used by Intel itself.
Leaner company
While Tan looks outward for business development, he’s turning inward to try to fix corporate culture, flattening the organization, which grew fiercely in recent years as it staffed up to build the foundry unit.
Intel said on its April earnings call that job cuts will come this quarter, though the company didn’t provide a specific number. An Intel representative declined to comment on the matter. Intel announced in August, while Gelsinger was still in charge, that it was laying off 15,000 employees and would explore cuts in its portfolio.
Wall Street welcomes more belt tightening but warns that the company can’t cut its way to a successful revival.
Deutsche Bank’s Ross Seymour, who recommends holding the stock, wrote in a May note that, even with the “welcome and necessary cost-cutting actions,” the company’s “path to meaningful earnings/free cash flow generation remains cloudy and highly dependent on a turnaround” in the foundry business.
Equally important to Tan is getting rid of what he views as too much bureaucracy.
“It has been eye-opening for me to see how much time and energy is spent on internal administrative work that does not move our business forward,” Tan wrote, in a memo to employees in April.
He said Intel would have to learn how to do more with fewer people and that employees must be back in the office for at least four days a week by September.
“I’ve been surprised to learn that, in recent years, the most important KPI for many managers at Intel has been the size of their teams,” Tan wrote, referring to key performance indicators. “Going forward, this will not be the case.”
Tan also promoted several engineering leaders, giving him greater visibility into the organization. Zinsner said Tan has between 15 and 17 direct reports, because he wants to be closer to the “lowest” levels of the organization.
“He’s hearing the good, the bad, the ugly of what’s going on, so that he can help address those,” Zinsner said.
WATCH: Intel is dead money in its current strategic form, says Susquehanna Rolland
Sam Altman, CEO of OpenAI, is seen through glass during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, Feb. 11, 2025.
Aurelien Morissard | Via Reuters
Elon Musk tried to derail a major artificial intelligence infrastructure deal in the Middle East after learning that his startup, xAI, would be excluded from the initiative, CNBC has confirmed.
Earlier this month, OpenAI, Oracle, Nvidia, Cisco and Emirati firm G42 announced plans to build a sweeping Stargate AI campus in the United Arab Emirates. Musk was frustrated that OpenAI, led by personal rival Sam Altman, was tapped for the deal, and he intervened in an effort to get xAI involved, said a person familiar with the matter who asked not to be named in order to speak freely.
Musk argued that President Donald Trump would not approve the deal, the person said. The announcement was delayed by several days as stakeholders, including the White House, dealt with blowback from Musk, who has been engaged in a public and legal spat with Altman and OpenAI.
The Wall Street Journal first reported that Musk attempted to block the deal.
In a statement to CNBC, White House press secretary Karoline Leavitt didn’t mention the dustup.
“The United States and the UAE signed a groundbreaking framework agreement establishing the first AI acceleration partnership,” Leavitt said. “The framework advances the buildout of AI infrastructure in the United States and the UAE. This was another great deal for the American people, thanks to President Trump and his exceptional team.”
Musk wasn’t in the UAE when the deal was signed, but was with the president in Saudi Arabia during an earlier part of the Middle East trip, according to a senior White House official. The official said Musk has relayed his concerns about the government fairly treating all AI companies.
OpenAI declined to comment. Musk didn’t respond to CNBC’s request for comment.
Musk, who is also CEO of Tesla and SpaceX, is a complicating character in Trump’s effort to solidify U.S. leadership in AI. Musk spent close to $300 million to send President Trump back to the White House, and has since been leading the Department of Government Efficiency (DOGE), slashing the size of the federal workforce. His time as a special government employee is coming to an end this month.
When it comes to AI, Musk has in recent years been a vocal critic of Altman, a former friend and colleague. The pair helped form OpenAI as a research lab in 2015, but Musk later had a public break with the project and has consistently criticized its structure and close alliance with Microsoft.
While xAI has been building its commercial efforts, acquiring Musk’s social media company X in March and this week partnering with Telegram to roll out its Grok chatbot, Musk has been trying to thwart OpenAI’s effort to convert into a for-profit entity.
Musk has sued OpenAI for breach of contract and to try and stop the conversion, and a Musk-led investor group made an unsuccessful bid to buy control of the startup for $97.4 billion in February.
It’s also not the first time Musk has been critical of Stargate.
In January, Trump unveiled the Stargate project, with OpenAI, Oracle and Softbank committing an initial $100 billion, and up to $500 billion, of investment in AI infrastructure in the U.S. over four years. Musk was quick to cast doubt on the financing behind the project.
“They don’t actually have the money,” Musk wrote in response to an OpenAI post on his social platform X. He later added that SoftBank had “well under” $10 billion secured.
Two months later, SoftBank led a $40 billion investment in OpenAI at a $300 billion valuation.
— CNBC’s Eamon Javers contributed to this report.
WATCH: Elon Musk tried to block Sam Altman’s big AI deal in the UAE
A Dell Technologies sign is seen in Round Rock, Texas, on June 2, 2023.
Brandon Bell | Getty Images
Shares of Dell Technologies rose on Thursday in extended trading after the company raised its full-year earnings forecast and issued a stronger-than-expected forecast for the current quarter.
However, Dell’s adjusted earnings per share came up short versus LSEG estimates on in-line revenue.
Here’s how the computer maker did versus LSEG consensus estimates:
- Earnings per share: $1.55 adjusted vs. $1.69 estimated
- Revenue: $23.38 billion vs. $23.14 billion estimated
Dell said it expects $2.25 in adjusted earnings per share for the current quarter, with between $28.5 billion and $29.5 billion in revenue. That was significantly higher than LSEG expectations.
Company officials attributed the strong guidance to $7 billion in artificial intelligence systems that are expected to ship during the quarter, which are higher-margin than other Dell systems.
For the full year, Dell still expects about $103 billion in revenue, in line with LSEG expectations, but it raised its forecast for full-year adjusted earnings to $9.40, which was a 10 cent increase from the company’s prior outlook.
Dell is one of Nvidia’s primary vendors that builds systems around the chipmaker’s AI graphics processing units. Dell said on Thursday that it was seeing “unprecedented demand” for AI systems, especially for second-tier cloud providers, such as Coreweave.
Texas-based Dell said that it has $14.4 billion in confirmed orders for AI systems in its backlog that will ship in the coming quarters. It recorded $12.1 billion in confirmed AI orders during the first quarter, the company said. These numbers will turn into recorded revenue when Dell ships the system to its clients. In February, Dell said it expected $15 billion in AI server sales during its fiscal 2026, up from $10 billion last year.
Overall, Dell’s revenue grew 5% on an annual basis. It said it expects revenue to grow 8% during the fiscal year.
Dell’s server business is reported as part of its Infrastructure Solutions Group, which had $10.3 billion in sales during the quarter, a 12% rise. Of that, $6.3 billion was sales for servers and networking, and $4 billion was for computers that store data.
The company’s laptop and PC business, its Client Solutions Group, recorded $12.5 billion in sales as the global PC market is expected to recover this year after several slumping years.
The computer maker also said it significantly stepped up its shareholder capital return during the quarter, spending $2.4 billion on share repurchases and dividends during the period. It spent $2.58 billion on share repurchases for all of its fiscal 2025, which ended in January.
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