Since Intel Corporation announced Lip-Bu Tan as its new Chief Executive Officer last week, the company’s shares have surged. However, as Tan officially steps into the role, investors and analysts remain uncertain about how he will tackle the challenges that have plagued the semiconductor giant.
Ahead of assuming his position on Tuesday, Tan sent a letter to employees acknowledging the difficulties ahead, warning that Intel must fight to reverse its decline. Yet, he provided little insight into his specific strategy, leaving speculation over whether he will pursue a breakup of the company—a move favored by some on Wall Street—or attempt to revive Intel’s manufacturing and product lines from within, following his predecessor’s approach.
The uncertainty has created what Joe Tigay, portfolio manager of the Rational Equity Armor Fund, describes as a “show me” moment for Intel. “We are going to need to see some improvement in their product in order for it to get back to where it once was. It’s a good start, but they are still a long way from where they were,” he said.
Despite the lack of clarity, Intel’s stock has rallied 24% since Tan’s appointment was announced, adding $22 billion (RM97.57 billion) to its market capitalization. The stock has been the top performer on the Philadelphia Stock Exchange Semiconductor Index this year. Bank of America responded to the leadership change by upgrading Intel’s rating, citing a greater opportunity for restructuring and revitalization under Tan. However, on Tuesday, shares slipped about 1% in early trading amid a broader market downturn.
A key question remains whether Tan will separate Intel’s foundry business from its chip-design division, a move that has been debated in the past. His letter referenced plans to re-establish Intel as a “world-class foundry,” but it did not clarify whether he intends to pursue a full split. Additionally, he made no mention of reports that Taiwan Semiconductor Manufacturing Co. (TSMC) may be asked by the U.S. government to operate some of Intel’s U.S. factories.
Tan’s appointment comes at a critical juncture for Intel, which has lost significant ground in the semiconductor industry. The company’s stock has declined roughly 60% from its peak in early 2000, erasing over $330 billion in market value. Intel has struggled to compete in the fast-evolving chip market, particularly as artificial intelligence (AI) drives demand for specialized processors. According to a Reuters report, Tan is considering substantial changes to Intel’s AI strategy and manufacturing operations, with a focus on improving efficiency and competitiveness.
However, even semiconductor companies that have benefited from the AI boom are facing headwinds due to macroeconomic uncertainty and shifting demand for AI chips. The Philadelphia Semiconductor Index (SOX) has dropped 21% from its July 2024 peak through Monday’s close.
Intel’s financial outlook remains shaky. In January, the company issued a weaker-than-expected revenue forecast, marking yet another disappointment for investors. According to Bloomberg data, Intel’s earnings reports have been met with positive market reactions only once in the last five quarters. Analysts have repeatedly cut estimates, now predicting a net loss of 28 cents per share in 2025—down from an expected profit of 12 cents per share just three months ago. Revenue forecasts have also dropped by more than 4% over the same period.
Currently, fewer than 10% of analysts tracked by Bloomberg recommend buying Intel stock. The company’s recommendation consensus—reflecting the ratio of buy, hold, and sell ratings—is among the worst in the SOX index. Intel is trading approximately 5% above the average analyst target price, signaling the lowest implied return among major chipmakers for the next 12 months.
Randy Hare, Director of Equity Research at Huntington National Bank, views the $19 price level as a key threshold for Intel’s stock, which last closed at $25.69. “If Intel cuts its outlook but sets a clear plan for growth, a dip below $19 could be a buying opportunity. However, if the stock falls under $19 with no strategic direction and no revenue acceleration, that’s a clear sell signal,” Hare said.
As Tan takes on the challenge of leading Intel’s turnaround, he faces mounting pressure from both investors and industry analysts. His next steps will determine whether Intel can reclaim its dominance—or if it will continue to struggle in an increasingly competitive semiconductor landscape.
