The American manufacturer Intel was once a star in the field of computer components, but in recent years it has ceased to be so clear. Strong competition and strategic mistakes put the company at a disadvantage with its first loss in nearly 40 years. A change can be brought about by the new CEO of Lip-Bu Tan. Although it has not yet brought a clearer plan, its arrival has taken the market very positively. The former head of Cadance Design was able to revive the then declining company and restore its shine with an enormous growth in shares.* Can he repeat this success with Intel or will he need help from the giant TSMC?
Loss of market position
The newly appointed CEO comes to the helm of Intel to improve the position of the once dominant player. He has recently faced many problems that have led to the deterioration of his financial situation and a loss of almost 20 billion euros. For many years, the company produced its own products only for itself and was unable to adapt quickly enough to changes in the technology sector, such as the arrival of advanced mobile technology and later artificial intelligence (AI), in which Nvidia semiconductors are the unit. Stronger competition began to prevail in the market, among which, for example, Taiwan Semiconductor Manufacturing Comp. (TSMC) stands out, which was able to produce and distribute advanced chips to the largest companies such as Nvidia and Apple. The former CEO of Intel, Pal Gelsinger, was not able to translate his big visions into reality and the company continued to suffer from unfavorable developments. As a result, it postponed plans to build the world's largest chip factory, and had to lay off more than 17,000 employees last year and suspended dividend payments to save money.
The new face of Intel
Therefore, the change was necessary, and therefore Intel's board of directors appointed Lip-Bu Tan as the head of the company, who will take over the leadership on March 18, 2025. Tan, who was a member of the board of directors, comes to this position with enormous experience. He was able to restore profitability to Cadence Design, where he was CEO from 2009 to 2021, and increase the value of its shares by more than 3,000%. The company added big names such as Apple, Broadcom and Amazon to the list of clients. He was also able to turn small companies into huge businesses. According to Reuters, Tan believes that a good idea from newcomers can compete with the giant giants. One such is Annapurna Labs, which later became the hub of Amazon's cloud division. His appointment therefore brought a wave of positive reactions. According to Investing.com, Wall Street believes that his many years of experience make him the most qualified person and they see change as a long-term positive. In a letter to employees, Tan writes that he will turn Intel into a foundry unit that learns from mistakes and pleases external clients with its products. It is not yet clear what Tan's steps will be in his new role and whether he will want to keep the problematic foundry division.
A lifebuoy from Taiwan?
Separation and cooperation with a joint venture, which should be led by TSMC, would also be an option. The companies are expected to be in the early stages of talks, according to Reuters sources, but the Taiwanese company should have invited other giants Nvidia, Advanced Micro Devices and Broadcom to join the joint venture. Reuters also reports that TSMC should have been asked by the US president for help in rescuing Intel. If an agreement is reached, which must pass approval in the White House, TSMC will not own more than 50% of the foundry division. According to the sources, Intel executives are divided into two camps, with some supporting the talks and some opposing them. Several companies have been interested in the American manufacturer in the past, such as Broadcom. It is therefore questionable how the talks between the companies will develop and whether TSMC will eventually go into this agreement, as it is already planning a 100 billion investment in the US for the construction of new plants.
Intel shares improved
The announcement of the change of leadership was also positively reflected in shares on the Nasdaq stock exchange, which added more than 10% after the market closed on March 12, 2025. On March 13, 2025, they ended the regular trading day with a gain of almost 15% at $23.70. The growth was previously supported by news about TSMC. Nevertheless, Intel's performance on the stock market remains unflattering. For comparison, the value of shares a year ago was around $42, which means a 44% drop from current values. Looking at the 5-year performance, the price difference is even higher, at 56%. According to Companiesmarketcap.com, Intel's market capitalization as of March 13, 2025 was about $102.62 billion, significantly lagging behind its biggest competitors Nvidia, Broadcom, TSMC, AMD, and others.*
The evolution of Intel stock prices over the past 5 years. (Source: Investing.com)*
Conclusion
Intel is currently at a crossroads in its history. Although the new boss's past successes suggest that he could be a good choice, there are still huge challenges ahead of him that he has to overcome. Although the market has reacted positively and expectations are high, this is not the only thing the company needs to revive and maintain stability. Intel can take advantage of the growing demand for semiconductors, as the market capitalization of the sector is expected to grow to $2 trillion by 2030, according to Fortune Business Insight, so there is certainly room in the market, but the company would have to be able to respond quickly and innovatively. [1]
*Past performance is not a guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which is subject to change. Such statements are not a guarantee of future performance. They involve risks and other uncertainties that are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
Sources
https://apnews.com/article/intel-new-ceo-lipbu-tan-chips-efcf8ab220b5927783924dd316cb4575
https://finance.yahoo.com/news/intel-appoints-lip-bu-tan-205950580.html
https://finance.yahoo.com/news/intel-ceo-signals-ll-stick-002917046.html
https://companiesmarketcap.com/semiconductors/largest-semiconductor-companies-by-market-cap/
https://www.fortunebusinessinsights.com/semiconductor-market-102365
