Latest news with #TanLip-Bu
Business Times
02-07-2025
- Business
- Business Times
Intel's new CEO explores big shift in chip manufacturing business
[SAN FRANCISCO] Intel's new chief executive is exploring a big change to its contract manufacturing business to win major customers, two sources familiar with the matter told Reuters, in a potentially expensive shift from his predecessor's plans. If implemented, the new strategy for what Intel calls its 'foundry' business would entail no longer marketing certain chipmaking technology, which the company had long developed, to external customers, the sources said. Since taking the company's helm in March, CEO Tan Lip-Bu has moved fast to cut costs and find a new path to revive the ailing US chipmaker. By June, he started voicing that a manufacturing process that the prior CEO Pat Gelsinger bet heavily on, known as 18A, was losing its appeal to new customers, said the sources, who spoke on condition of anonymity. To put aside external sales of 18A and its variant 18A-P, manufacturing processes that have cost Intel billions of US dollars to develop, the company would have to take a write-off, one of the sources familiar with the matter said. Industry analysts contacted by Reuters said such a charge could amount to a loss of hundreds of millions, if not billions, of US dollars. Intel declined to comment on such 'hypothetical scenarios or market speculation'. It said the lead customer for 18A has long been Intel itself, and it aims to ramp production of its 'Panther Lake' laptop chips later in 2025, which it called the most advanced processors ever designed and manufactured in the United States. Persuading outside clients to use Intel's factories remains key to its future. As its 18A fabrication process faced delays, rival Taiwan Semiconductor Manufacturing Company's (TSMC) N2 technology has been on track for production. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Tan's preliminary answer to this challenge: focus more resources on 14A, a next-generation chipmaking process where Intel expects to have advantages over Taiwan's TSMC, the two sources said. The move is part of a play for big customers such as Apple and Nvidia, which currently pay TSMC to manufacture their chips. Tan has tasked the company with teeing up options for discussion with Intel's board when it meets as early as this month, including whether to stop marketing 18A to new clients, one of the two sources said. The board might not reach a decision on 18A until a subsequent autumn meeting in light of the matter's complexity and the enormous money at stake, the source said. Intel declined to comment on what it called rumour. In a statement, it said: 'Lip-Bu and the executive team are committed to strengthening our roadmap, building trust with our customers, and improving our financial position for the future. We have identified clear areas of focus and will take actions needed to turn the business around.' Last year was Intel's first unprofitable year since 1986. It posted a net loss attributable to the company of US$18.8 billion for 2024. The Intel chief executive's deliberations show the enormous risks – and costs – under consideration to move the storied US chipmaker back onto solid footing. Like Gelsinger, Tan inherited a company that had lost its manufacturing edge and fell behind on crucial technology waves of the past two decades: mobile computing and artificial intelligence. The company is targeting high-volume production later this year for 18A with its internal chips, which are widely expected to arrive ahead of external customer orders. Meanwhile, delivering 14A in time to win major contracts is by no means certain, and Intel could choose to stick with its existing plans for 18A, one of the sources said. Intel is tailoring 14A to key clients' needs to make it successful, the company said. Amazon and Microsoft on 18A Tan's review of whether to focus clients on 14A involves the contract chipmaking portion of Intel, or foundry, which makes chips for external customers. Regardless of a board decision, Intel will make chips via 18A in cases where its plans are already in motion, the sources familiar with the matter said. This includes using 18A for Intel's in-house chips that it has already designed for that manufacturing process, the sources said. Intel will also produce a relatively small volume of chips that it has guaranteed for and Microsoft via 18A, with deadlines that make it unrealistic to wait for the development of 14A. Amazon and Microsoft did not immediately comment on the matter. Intel said it will deliver on its customer commitments. Tan's overall strategy for Intel remains nascent. So far, he has updated his leadership team, bringing in new engineering talent, and he has worked to shrink what he considered bloated and slow-moving middle management. Shifting away from selling 18A to foundry customers would represent one of his biggest moves yet. The 18A manufacturing process includes a novel method of delivering energy to chips and a new type of transistor. Together, these enhancements were meant to let Intel match or exceed TSMC's capabilities, Intel executives have previously said. However, according to some industry analysts, the 18A process is roughly equivalent to TSMC's so-called N3 manufacturing technology, which went into high-volume production in late 2022. If Intel follows Tan's lead, the company would focus its foundry employees, design partners and new customers on 14A, where it hopes for a better chance to compete against TSMC. Tan has drawn on extensive contacts and customer relationships built over decades in the chip industry to arrive at his view on 18A, the two sources said. REUTERS
Straits Times
24-04-2025
- Business
- Straits Times
Intel delivers disappointing forecast, moves to slash jobs
SAN FRANCISCO - Intel, the chipmaker attempting a comeback under new chief executive officer Tan Lip-Bu, gave a weak forecast for the current period and said it's cutting workers to bring costs in line with the business's smaller size. Second-quarter revenue will be between US$11.2 billion (S$14.7 billion) and US$12.4 billion, the company said in a statement on April 24. That was well short of the US$12.9 billion average analyst estimate, sending Intel shares down more than 6 per cent in late trading. Alongside the results, Mr Tan indicated that he'll quickly be putting his stamp on Intel – and trying to energise a culture that he feels has become too bureaucratic. The cost-cutting plan will involve 'eliminating management layers' to enable it to make faster decisions, Intel said. The company doesn't yet have an estimate for the one-time expenses associated with the cuts, but expects operating costs to be reduced to about US$17 billion this year and US$16 billion in 2026. Bloomberg News reported this week that Intel is planning to slash its employee ranks by more than 20 per cent. Intel's earnings report is the first under the leadership of Mr Tan, a chip industry veteran who took the job in March. The board hired him after predecessor Pat Gelsinger struggled to restore the competitiveness of Intel's products. He was ousted late in 2024 after sliding sales and mounting red ink doomed his comeback bid. A bright spot for Intel: First-quarter sales came in at US$12.7 billion, topping predictions. The chipmaker follows Texas Instruments in delivering stronger results than analysts had projected. But its weak forecast suggests that the the uptick in demand was just a blip – driven at least in part by a rush of orders ahead of looming tariffs being threatened by the United States, China and others. 'The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook,' Intel chief financial officer David Zinsner said in the statement. Mr Zinsner said he doesn't currently have an estimate for the size of the workforce reduction. In a separate memo to employees, Mr Tan said he wanted to revamp the company's culture. That includes requiring staff to work in-person four days a week starting Sept 1. 'Our existing policy is that our hybrid employees should spend approximately three days per week on site,' Mr Tan said. 'Adherence to this policy has been uneven at best. I strongly believe that our sites need to be vibrant hubs of collaboration that reflect our culture in action.' He said the layoffs would begin in the current quarter. 'We must balance our reductions with the need to retain and recruit key talent,' Mr Tan said in the memo. 'These decisions will not be made lightly.' The April 24 conference call will be the first time Mr Tan has faced questions from Wall Street on how he plans to resurrect the company's fortunes, something he's said 'won't happen overnight.' 'The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,' Mr Tan said in the statement. 'I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. We are going back to basics by listening to our customers and making the changes needed to build the new Intel.' Beyond its cost problems, the company missed out on one of the biggest bonanzas in the semiconductor industry's history: the explosion of artificial intelligence computing. Nvidia's dominance in that area has allowed it to far surpass Intel in revenue and market valuation. In the first quarter, the company had a loss of 19 US cents a share. Analysts estimated a loss of 22 US cents a share on sales of US$12.31 billion. In 2024, Intel's annual revenue was down about US$26 billion from its peak in 2021. It's now less than half the size of Nvidia by that measure, and analysts aren't predicting a rapid rebound anytime soon. Intel's CFO said the company shares Wall Street's concern that a good start to the year might not reflect underlying demand and may have been helped by stocking up ahead of tariffs. 'That probably pulled some demand we would have seen beyond the first quarter into the first quarter and softened up the second quarter,' he said. Looking ahead, the company is concerned that consumer spending and investment in areas such as data centre infrastructure may decline. Uncertainty about tariffs is making the environment harder to predict and prompted Intel to offer a wider range of sales forecasts. Intel is focused on improving its balance sheet and is cutting the budget for new plants and equipment by a further US$2 billion, Mr Zinsner said. Under Mr Tan's leadership, the chipmaker will look to focus on a small number of areas and sell off units that aren't related to those efforts. The new round of job cuts, following a roughly 15,000 reduction last year, may bring it more in line with that new scale – and what competitors are achieving with fewer workers. Nvidia has about a third of Intel's staff, and manufacturing leader Taiwan Semiconductor Manufacturing Co. gets double Intel's revenue with about 30,000 fewer people on its payroll. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
24-04-2025
- Business
- Business Times
Intel delivers disappointing forecast, moves to slash jobs
[SAN FRANCISCO] Intel, the chipmaker attempting a comeback under new chief executive officer Tan Lip-Bu, gave a weak forecast for the current period and said it's cutting workers to bring costs in line with the business's smaller size. Second-quarter revenue will be between US$11.2 billion and US$12.4 billion, the company said on Thursday (Apr 24). That was well short of the US$12.9 billion average analyst estimate, sending the shares down more than 6 per cent in late trading. Alongside the results, Tan indicated that he will quickly be putting his stamp on Intel – and trying to energise a culture that he feels has become too bureaucratic. The cost-cutting plan will involve 'eliminating management layers' to enable it to make faster decisions, Intel said. The company does not yet have an estimate for the one-time expenses associated with the cuts, but expects operating costs to be reduced to about US$17 billion this year and US$16 billion in 2026. Bloomberg News reported this week that Intel is planning to slash its employee ranks by more than 20 per cent. Intel's earnings report is the first under the leadership of Tan, a chip industry veteran who took the job last month. The board hired him after predecessor Pat Gelsinger struggled to restore the competitiveness of Intel's products. He was ousted late last year after sliding sales and mounting red ink doomed his comeback bid. A bright spot for Intel: First-quarter sales came in at US$12.7 billion, topping predictions. The chipmaker follows Texas Instruments in delivering stronger results than analysts had projected. But its weak forecast suggests that the uptick in demand was just a blip – driven at least in part by a rush of orders ahead of looming tariffs being threatened by the US, China and others. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook,' Intel chief financial officer David Zinsner said. 'We are taking a disciplined and prudent approach to support continued investment in our core products and foundry businesses while maximising operational cost savings and capital efficiency.' Zinsner said he does not currently have an estimate for the size of the workforce reduction. In a separate memo to employees, Tan said he wanted to revamp the company's culture. That includes requiring staff to work in-person four days a week starting Sep 1. 'Our existing policy is that our hybrid employees should spend approximately three days per week on-site,' Tan said. 'Adherence to this policy has been uneven at best. I strongly believe that our sites need to be vibrant hubs of collaboration that reflect our culture in action.' He said the layoffs would begin in the current quarter. 'We must balance our reductions with the need to retain and recruit key talent,' Tan said in the memo. 'These decisions will not be made lightly.' Thursday's conference call will be the first time Tan has faced questions from Wall Street on how he plans to resurrect the company's fortunes, something he's said 'will not happen overnight'. Gelsinger had concentrated on Intel's factory network, once its most powerful asset. He laid out plans to spend tens of billions of US dollars on giving the company the world's best production technology again, and luring rivals into using it as an outsourced provider of manufacturing. 'The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth,' Tan said. 'I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. We are going back to basics by listening to our customers and making the changes needed to build the new Intel.' Beyond its cost problems, the company missed out on one of the biggest bonanzas in the semiconductor industry's history: the explosion of artificial intelligence (AI) computing. Nvidia's dominance in that area has allowed it to far surpass Intel in revenue and market valuation. Intel shares, after several years of being shunned by investors, have performed relatively well in 2025, eking out a 7.2 per cent gain. The Philadelphia Stock Exchange Semiconductor Index, in contrast, has fallen almost 16 per cent. In the first quarter, the company had a loss of 19 US cents a share. Analysts estimated a loss of 22 US cents a share on sales of US$12.31 billion. Last year, Intel's annual revenue was down about US$26 billion from its peak in 2021. It's now less than half the size of Nvidia by that measure, and analysts are not predicting a rapid rebound anytime soon. Intel's CFO said the company shares Wall Street's concern that a good start to the year might not reflect underlying demand and may have been helped by stocking up ahead of tariffs. 'That probably pulled some demand we would have seen beyond the first quarter into the first quarter and softened up the second quarter,' he said. Looking ahead, the company is concerned that consumer spending and investment in areas such as data centre infrastructure may decline. Uncertainty about tariffs is making the environment harder to predict and prompted Intel to offer a wider range of sales forecasts. Intel is focused on improving its balance sheet and is cutting the budget for new plants and equipment by a further US$2 billion, Zinsner said. Under Tan's leadership, the chipmaker will look to focus on a small number of areas and sell off units that aren't related to those efforts. The new round of job cuts, following a roughly 15,000 reduction last year, may bring it more in line with that new scale – and what competitors are achieving with fewer workers. Nvidia has about a third of Intel's staff, and manufacturing leader Taiwan Semiconductor Manufacturing Company gets double Intel's revenue with about 30,000 fewer people on its payroll. Intel's adjusted gross margin – the percentage of sales remaining after excluding the cost of production – was 39.2 per cent in the first quarter and will be 36.5 per cent in the current period. At its peak, Intel regularly reported a gross margin of well above 60 per cent. Nvidia's is above 70 per cent. Sales at Intel's foundry business – a unit that makes chips for outside customers – rose 7.1 per cent to US$4.67 billion. That topped the estimate of US$4.3 billion. Personal computer chip sales were US$7.63 billion, down 7.8 per cent. Analysts had projected US$6.93 billion. Intel's data centre and AI chip unit had sales of US$4.13 billion. BLOOMBERG
South China Morning Post
23-04-2025
- Business
- South China Morning Post
Intel to announce plans this week to cut over 20% of staff
Intel is poised to announce plans this week to cut more than 20 per cent of its staff, aiming to eliminate bureaucracy at the struggling chipmaker, according to a person with knowledge of the matter. Advertisement The move is part of a bid to streamline management and rebuild an engineering-driven culture, according to the person, who asked not to be identified because the plans are private. It would be the first major restructuring under new chief executive officer Tan Lip-Bu, who took the helm last month. The cutbacks follow an effort last year to slash about 15,000 jobs – a round of lay-offs announced in August. Intel had 108,900 employees at the end of 2024, down from 124,800 the previous year. A representative for Intel declined to comment. Tan is aiming to turn around the iconic chipmaker after years of Intel ceding ground to rivals. The Santa Clara, California-based company lost its technological edge and has struggled to catch up with Nvidia in artificial intelligence (AI) computing. That contributed to three straight years of sales declines and mounting red ink. Intel CEO Tan Lip-Bu. Photo: Handout Tan, a veteran of Cadence Design Systems, has vowed to spin off Intel assets that are not central to its mission and create more compelling products. Last week, the company agreed to sell a 51 per cent stake in its programmable chips unit Altera to Silver Lake Management, a step toward that goal.
Straits Times
23-04-2025
- Business
- Straits Times
Intel to announce plans this week to cut more than 20% of staff
The layoffs would be the first major restructuring under new CEO Tan Lip-Bu, who took the helm in March. PHOTO: REUTERS Intel to announce plans this week to cut more than 20% of staff TAIPEI – Intel is poised to announce plans this week to cut more than 20 per cent of its staff, aiming to eliminate bureaucracy at the struggling chipmaker, according to a person with knowledge of the matter. The move is part of a bid to streamline management and rebuild an engineering-driven culture, according to the person, who asked not to be identified because the plans are private. It would be the first major restructuring under new chief executive officer Tan Lip-Bu, who took the helm in March. The cutbacks follow an effort in 2024 to slash about 15,000 jobs – a round of layoffs announced in August. Intel had 108,900 employees at the end of 2024, down from 124,800 the previous year. A representative for Intel declined to comment. Mr Tan is aiming to turn around the iconic chipmaker after years of Intel ceding ground to rivals. The US chip giant lost its technological edge and has struggled to catch up with Nvidia in artificial intelligence computing. That contributed to three straight years of sales declines and mounting red ink. Mr Tan, a veteran of Cadence Design Systems, has vowed to spin off Intel assets that aren't central to its mission and create more compelling products. Last week, the company agreed to sell a 51 per cent stake in its programmable chips unit Altera to Silver Lake Management, a step toward that goal. Intel needs to replace the engineering talent it has lost, improve its balance sheet and better attune manufacturing processes to the needs of potential customers, Mr Tan said in March at the Intel Vision conference. The company is scheduled to report its first-quarter results on April 24. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
