(Bloomberg) — Shares of Intel Corp. jumped 15% after the company named Lip-Bu Tan as its next chief executive officer, entrusting a former board member and semiconductor veteran with one of the toughest jobs in the chip industry.
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Tan, 65, will assume the role on March 18, the company said in a statement Wednesday. He will rejoin the board as well after stepping down in August 2024.
Tan, the former head of Cadence Design Systems Inc., is tasked with restoring the fortunes of a pioneering chipmaker that’s become an industry laggard. Intel, which dominated the semiconductor field for decades, is struggling with market-share losses, manufacturing setbacks and a precipitous decline in its earnings. It’s also burdened with debt and recently had to slash about 15,000 jobs.
The announcement stoked optimism from investors, who sent the stock up to $23.70 in New York on Thursday, marking the biggest single-day gain in nearly a month. Bank of America Corp. analysts also upgraded the shares to “neutral,” citing Tan’s “solid track record.” Through Wednesday’s close, the stock had declined more than 50% over the past 12 months as the company’s future became increasingly murky.
In a memo to Intel employees, Tan said he’s confident he can turn the business around.
“That’s not to say it will be easy. It won’t be,” he said. “But I am joining because I believe with every fiber of my being that we have what it takes to win. Intel plays an essential role in the technology ecosystem, both in the US and around the world.”
Tan’s predecessor, Pat Gelsinger, was pushed out by the board for a perceived failure to rejuvenate Intel’s product lineup. One of the most glaring challenges: creating an artificial intelligence accelerator chip that can rival the products of Nvidia Corp. That company, once in Intel’s shadow, has seen its revenue and valuation skyrocket over the past two years due to the AI computing boom.
“This is good for Intel,” said Stacy Rasgon, an analyst at Bernstein. “If I had to pick somebody, Lip-Bu would have been at the top of that list.”
Gelsinger had also set out to turn Intel into a chip foundry — a contract manufacturer that makes products for outside clients — but that effort is still in its early stages.