By Adam Clark

Intel's new Chief Executive Lip-Bu Tan has a tough job but the stock market is reacting favorably to early reports about how he plans to revive the chip company.

Intel shares were up 2.0% in premarket trading on Monday, adding to a 21% gain over the last five trading sessions. The appointment of Tan -- a former Intel board member and previously CEO of Cadence Design Systems -- has energized the stock.

Tan is planning to potentially cut back on middle management, improve the company's chip-manufacturing performance, and introduce new semiconductors to power artificial-intelligence servers, according to a Reuters report that cited people familiar with his thinking.

Intel declined to comment on the report.

The need to improve Intel's foundry, or chip-manufacturing business, is clear after the business division lost $13.4 billion last year. The signs are that Tan intends to maintain the company in its present form rather than spinning off the chip-manufacturing operations, despite reports of a potential deal with Taiwan Semiconductor Manufacturing.

Intel already said last year that it was cutting 15,000 jobs, reducing its head count by more than 15%. That might make it difficult to find more cuts but Tan reportedly believed the company had a bloated workforce during his time as a board member from 2022 to 2024.

Perhaps the biggest surprise from the Reuters report is the suggestion that Intel might have new architecture ready for an AI chip by 2027, with the hope of subsequently releasing new versions each year. Intel has barely made a dent in the AI hardware market compared with Nvidia or even other chip designers such as Broadcom.

Write to Adam Clark at adam.clark@barrons.com

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March 17, 2025 07:55 ET (11:55 GMT)

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