Intel has a shot at being ‘viable’ with new CEO on the wheel: Analyst

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Struggling chip big Intel (INTC) may have a shot at future glory days.

But it surely’s not assured, and it will not be for some time, one analyst mentioned.

“I feel Intel has a significantly better shot of remaining viable on this business [under new CEO Lip-Bu Tan],” Financial institution of America semiconductor analyst Vivek Arya mentioned on Yahoo Finance’s Opening Bid podcast (see video above or pay attention under). “It is not going to be straightforward — competitors just isn’t sitting nonetheless. Their competitors, bear in mind, is Nvidia. It is AMD. It is Arm Holdings. It is a Taiwan Semiconductor. It’s Broadcom. It is Marvell.”

Intel introduced Tan as its subsequent CEO on March 12. He formally started final week.

Tan was the CEO of Cadence Design Methods (CDNS) from 2009 to 2021. After serving on Intel’s board for 2 years, he left in August 2024 following clashes with now-ousted CEO Pat Gelsinger on the best way to place the enterprise, a supply informed me.

The supply mentioned Tan was interviewed for the CEO position of Intel concurrently Gelsinger. Gelsinger finally bought the gig in 2021 however needed to play good by agreeing to place Tan on the board. Tan regularly pushed for a greater synthetic intelligence technique to tackle Nvidia (NVDA) and quicker choice making on the notoriously bureaucratic Intel.

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Gelsinger led aggressive efforts to show across the troubled US chipmaker for greater than three years. He slashed 1000’s of jobs, improved prices, secured CHIPS Act funding, constructed chip foundries, and promised quick AI chips that would compete with Nvidia and AMD (AMD).

He was fired in early December amid missed targets and a money drain on the foundry enterprise.

Intel’s fourth quarter gross sales fell 7% 12 months over 12 months to $14.3 billion, and web earnings plunged 76%. The corporate forecasts it should solely break even on the revenue line this 12 months.

Tan should stabilize the enterprise, seemingly by means of extra value cuts and new management, and regain belief with Wall Road.

Arya thinks Tan may search for companions to fund the costly manufacturing of chips, a possible cash-saving technique some on the Road have pushed Intel to think about. He upgraded his score on Intel’s inventory to Impartial following Tan’s appointment.

The inventory is simply too low-cost primarily based on Intel’s mental property, Arya added.

“So all we’re saying is that the one worth on Intel [right now] is good the bricks and mortar of its fabs, proper? Which is clearly not the case,” Arya defined. “Now, ought to it actually be valued as certainly one of these development firms? Clearly not. So I feel what we had been attempting to say is that underneath his management, Intel has a greater probability of including [value] … and getting acknowledged for its IP worth as a result of [Tan] comes from that background.”