Intel’s Costly Pivot: New CEO Seeks to Regain Chipmaking Edge

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Introduction:

Intel, the long-standing giant in the semiconductor industry, is undergoing a major shift in its strategy under the leadership of new CEO, Lip-Bu Tan. After taking the reins in March, Tan has moved quickly to address the company’s declining position in the competitive chipmaking market. As Intel faces challenges in regaining its once-dominant position, Tan is reportedly considering abandoning a key manufacturing process, 18A, in favor of focusing on newer technologies. This costly pivot, while aimed at attracting top clients, could come with significant financial consequences.

Summary:

Intel’s new CEO, Lip-Bu Tan, is exploring a drastic change in the company’s foundry business, a shift that would involve scrapping the promotion of the 18A chip manufacturing process to external clients. This move would mark a break from the strategy pursued by Tan’s predecessor, Pat Gelsinger. The company has invested billions of dollars and years of research into developing 18A, but Tan’s decision comes as the process has failed to attract major clients. Notably, the 18A technology, which was touted as a game-changer, has faced repeated delays, while rival TSMC has advanced with its own chip technologies.

Tan’s strategy now involves focusing resources on the 14A chipmaking process, which Intel believes could offer it a competitive edge over TSMC’s N2 technology. This shift aims to win back key clients, such as Apple and Nvidia, who currently rely on TSMC for their manufacturing needs. Despite the potential for significant costs, including writing off part of its 18A investment, Tan is reportedly considering ceasing external sales of 18A and concentrating on in-house production. The decision is still under review by Intel’s board, and a final verdict is expected later in the autumn.

Tan’s efforts go beyond the technical shift; he has already made leadership changes, trimmed excess management, and revamped the company’s strategy. However, his tenure so far has not been without challenges, including Intel’s first unprofitable year since 1986, which saw a net loss of \$18.8 billion in 2024. The pivot to 14A could be a make-or-break moment for Intel, as it seeks to recover lost ground in an increasingly competitive market.

What Undercode Say:

Intel’s drastic shift under Tan is a bold but risky move. The decision to abandon 18A, despite the billions invested, highlights the urgency with which Tan is attempting to revitalize Intel’s fortunes. This strategy makes sense in the context of Intel’s declining competitiveness. The company has been late to adopt key technologies, including mobile computing and AI, and its once-dominant manufacturing processes have been overtaken by rivals like TSMC.

Focusing on 14A is a clear attempt to pivot away from 18A’s failure and take a new path in winning big contracts with tech giants like Apple and Nvidia. Intel’s belief that 14A offers an edge over TSMC’s N2 process could give the company a competitive foothold, but the risks are high. The semiconductor business is highly volatile, and TSMC’s proven track record makes it difficult for Intel to reclaim its lost market share without a breakthrough.

Additionally, the move to potentially cut up to 20% of its global workforce is a sign of the drastic steps Tan is willing to take. However, these layoffs may not necessarily guarantee a faster turnaround if the company fails to execute its new strategy properly. Intel needs to deliver 14A on time and meet the exact needs of its clients, which remains a major uncertainty.

In the end, Intel is trying to reassert its relevance in a market that has passed it by. This shift to 14A is critical but will need more than just cost-cutting and a new manufacturing process—it will require a complete reinvention of the company’s approach to both technology and client relationships. The pressure is on, and Intel’s survival in the foundry business depends on the successful execution of this gamble.

🔍 Fact Checker Results:

✅ Intel’s new CEO, Lip-Bu Tan, has inherited a company struggling to regain its manufacturing edge.
✅ Tan’s pivot towards 14A technology is seen as an effort to reclaim market share from TSMC.
✅ Intel plans significant workforce reductions, including at its Kiryat Gat plant, to streamline operations.

📊 Prediction:

Intel’s pivot to 14A could position the company as a serious contender in the semiconductor industry again. However, its success will depend on the timely development and flawless execution of the new chip technology. If Intel can win over clients like Apple and Nvidia, it could recover lost ground. On the other hand, any further delays could exacerbate Intel’s struggles, especially as TSMC continues to dominate the market. This strategic move is a gamble, but if it pays off, Intel could be back in the race for the lead in global chip manufacturing.

References:

Reported By: calcalistechcom_42eb17bad4c326b36bafd0f9
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