Turnaround in the AI race could propel Intel back to the top

When Lip-Bu Tan took over Intel in March 2025, the company was in desperate need of a turnaround.

For years, the Silicon Valley semiconductor pioneer has struggled to maintain its leading position in the chipmaker market, losing ground to Nvidia, AMD and Qualcomm.

Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) produces 90% of the world's most advanced chips, leaving little room for Intel's own factory to compete.

The problems plaguing Intel did not go unnoticed by Tan when he made his first public comments in a quarterly earnings report. "There are areas we need to improve, and there are no quick fixes," Tan said in April 2025.

Tan, 66, a Malaysian-born executive who spent twelve years leading Cadence Design Systems, has kept a low profile since taking the helm at Intel. So when Tan gave a public speech last week at Computex, an annual trade fair in Taipei that has grown in popularity due to the AI boom, a crowd packed the venue to hear him.

Most likely, the crowd gathered to learn more about Intel's flagship product - the central processing unit, or CPU - a chip that functions as the brain of a computer. These chips have powered laptops and servers for decades.

But CPUs are now considered essential to the AI race and have received renewed attention, giving Intel a new opportunity for rebirth.

"The revival of the CPU lineup could save the company," Dan Nystedt, vice president of Asia-based private equity firm TriOrient, told CNN. "The majority of Intel's business is CPUs."

In a statement to CNN, Intel said Tan has been focused on execution and putting its customers back at the center of everything the company does. "With a stronger balance sheet, a refreshed leadership team, and an even greater focus on the engineering discipline, Intel is positioned to seize the AI-driven growth opportunities that lie ahead," the company stated.

A 'big opportunity' for Intel
Intel's recovery could get an unexpected boost thanks to agent AI, a new generation of AI capable of carrying out tasks on a person's behalf rather than just answering questions.

Graphics processing units (GPUs), the type of chip Nvidia specializes in, are ideal for training AI models. But CPUs are seeing a surge in demand because they are useful for inference, the process of putting trained AI models into practice. Inference is critical to powering the new generation of AI agents that companies like OpenAI, Anthropic, and Google are developing and deploying.

OpenClaw - which independently operates apps, web browsers and smart home appliances based on commands sent by users through messaging apps like WhatsApp - is one of the most popular AI agents today.

"The CPU is now the conductor and the GPU is the orchestra," said Nvidia CEO Jensen Huang in a keynote address in Taipei this week ahead of Computex. Nvidia announced a major investment in CPUs during the conference, introducing a new chip for laptops and desktops and revealing that its data center CPU, Vera, is now in full production.

Tan told reporters on the sidelines of Computex that many CEOs have been contacting him asking for more CPUs in the last month.

"This is a huge opportunity for us," said Tan. "We were very excited."

Analysts say that greater demand for CPUs could boost Intel's sales in the coming years, if the company can quickly increase production and ensure manufacturing quality.

"We are very focused on supply, ensuring we can delight the customer," Tan added.

Intel's turnaround
Tan's strategy at Intel appears to be a close copy of his performance at Cadence, where he optimized operations, invested heavily in engineering, expanded the company with strategic acquisitions, and cultivated strong relationships with his customers.

Tan fired approximately 34% of Intel employees and suspended factory expansion plans in Germany and Poland. He also streamlined corporate bureaucracy, hired new talent, formed new partnerships, sold non-core assets, and redirected the company's focus back to its roots.

"Intel is an engineering company at its core," Tan said during his keynote address at Computex. "And that's what I decided from day one... The entire engineering team reports to me."

Tan promoted engineers and reduced the number of middle managers, allowing him to closely monitor Intel's chip and AI businesses. He sold Intel's majority stake in a subsidiary in exchange for liquidity and hired senior executives from Qualcomm and Arm to lead the data center and AI divisions. Tan has also attracted investment from Nvidia and Softbank, securing strategic support and partnerships from influential figures in the AI sector.

"Tan has been trying to attract more external resources to Intel so that the company has time and space to not only fine-tune its chip manufacturing process, but also to attract more customers and increase production volume," Chiayang Yao, an analyst at Taiwanese market research firm Digitimes Research, told CNN.

However, Intel received a bailout from the Trump administration.

Nvidia will invest US$5 billion in stake in Intel | Money News

In August, the U.S. government invested $8.9 billion in Intel stock, representing approximately 10% of the company, to support its ongoing efforts to expand research and production facilities in the U.S. while ensuring access to a national supply chain of advanced chips for national security purposes. Intel (INTC) shares have risen about 300% since then.

The deal was part of an effort to boost U.S. semiconductor manufacturing and cement the country's position as a leader in the global chipmaking industry, a key priority of Trump's second term.

But Intel still faces major challenges, particularly in its chipmaking business, which has struggled to win more customers and improve production quality, analysts said.

Still, there was much-needed progress for a company that had languished for years.

"(Tan) managed to stop the bleeding by transferring the intensive care unit team to a regular ward," Yao said.

*CNN's Clare Duffy and Lisa Eadicicco contributed to this report.

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Source: CNN