Intel Shares Surge 14% as Lip-Bu Tan Named New CEO
Intel shares jumped 14% on Thursday after the company appointed former board member Lip-Bu Tan as its new CEO. Tan, who left the board in August due to disagreements over Intel’s direction, will take over next week.
Tan faces the challenge of reviving Intel after the company missed out on the artificial intelligence-driven semiconductor boom. Intel has struggled with market share losses in data centres and PCs while investing heavily in its chip-making business. Over the past five years, Intel’s stock has lost about 60% of its value, while the Nasdaq Composite Index and S&P 500 have more than doubled.
Analysts at TD Cowen said Tan’s appointment was the best outcome for stakeholders, citing his strong industry relationships that could attract customers to Intel’s contract manufacturing business.
Tan’s return comes three months after Intel ousted CEO Pat Gelsinger. He had joined the board two years ago to help turn the company around but left over disagreements regarding workforce size and corporate culture.
Concerns about Intel’s future have grown, with reports that competitors such as Broadcom have considered acquiring its chip design and marketing business. Meanwhile, Taiwan Semiconductor Manufacturing Co. (TSMC) has reportedly explored taking control of some or all of Intel’s manufacturing plants.
Analysts expect Tan to maintain Intel’s strategy of keeping chip design and manufacturing operations together. In a letter to employees, he pledged to make Intel a leading contract chip manufacturer. However, some analysts believe the foundry business may struggle to attract orders from chip designers wary of working with a competitor.
Tan previously led Cadence Design Systems, an Intel supplier and chip-design software company, through more than a decade of strong growth. Analysts believe his reputation as a neutral figure could help Intel navigate its challenges.
Stacy Rasgon of Bernstein noted that Tan’s prior experience on Intel’s board gives him insight into the company’s internal issues. Rasgon suggested Tan would take a more realistic approach than previous leadership, which had been overly optimistic.
Despite the leadership change, analysts expect Intel’s turnaround to take years. The company’s market value remains below USD 100 billion for the first time in three decades, and its Gaudi AI chips have missed sales targets.
More analysts currently recommend selling Intel stock than buying it, with most maintaining a hold rating, according to LSEG data.
Dan Morgan, senior portfolio manager at Synovus Trust, which owns Intel shares, warned that Tan may not have as much time as his predecessor to revive Intel’s AI chip business, regain leadership in CPUs, and make the foundry business profitable.
"Intel may still need a strong partner regardless of who is CEO to turn the foundry business in the black," Morgan said.
Intel shares rose 14% after Lip-Bu Tan was named CEO.
Tan previously served on Intel’s board but left over strategic disagreements.
Analysts expect him to maintain Intel’s chip design and manufacturing strategy.
Source: REUTERS