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Struggling chip giant Intel (INTC) could have a shot at future glory days.
But it’s not guaranteed, and it won’t be for a while, one analyst said.
“I think Intel has a much better shot of remaining viable in this industry [under new CEO Lip-Bu Tan],” Bank of America semiconductor analyst Vivek Arya said on Yahoo Finance’s Opening Bid podcast (see video above or listen below). “It’s not going to be easy — competition is not sitting still. Their competition, remember, is Nvidia. It’s AMD. It’s Arm Holdings. It’s a Taiwan Semiconductor. It is Broadcom. It’s Marvell.”
Intel announced Tan as its next CEO on March 12. He officially began last week.
Tan was the CEO of Cadence Design Systems (CDNS) from 2009 to 2021. After serving on Intel’s board for two years, he left in August 2024 following clashes with now-ousted CEO Pat Gelsinger on how to position the business, a source told me.
The source said Tan was interviewed for the CEO role of Intel at the same time as Gelsinger. Gelsinger ultimately got the gig in 2021 but had to play nice by agreeing to put Tan on the board. Tan frequently pushed for a better artificial intelligence strategy to take on Nvidia (NVDA) and faster decision making at the notoriously bureaucratic Intel.
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Gelsinger led aggressive efforts to turn around the troubled US chipmaker for more than three years. He slashed thousands of jobs, improved costs, secured CHIPS Act funding, built chip foundries, and promised fast AI chips that could compete with Nvidia and AMD (AMD).
He was fired in early December amid missed targets and a cash drain on the foundry business.
Intel’s fourth quarter sales fell 7% year over year to $14.3 billion, and net earnings plunged 76%. The company forecasts it will only break even on the profit line this year.
Tan must stabilize the business, likely through more cost cuts and new leadership, and regain trust with Wall Street.
Arya thinks Tan could look for partners to fund the expensive production of chips, a potential cash-saving strategy some on the Street have pushed Intel to consider. He upgraded his rating on Intel’s stock to Neutral following Tan’s appointment.
The stock is too cheap based on Intel’s intellectual property, Arya added.
“So all we are saying is that the only value on Intel [right now] is just right the bricks and mortar of its fabs, right? Which is obviously not the case,” Arya explained. “Now, should it really be valued as one of these growth companies? Obviously not. So I think what we were trying to say is that under his leadership, Intel has a better chance of adding [value] … and getting recognized for its IP value because [Tan] comes from that background.”
