Intel Corporation ( INTC ) shares are trading higher Monday following reports that incoming CEO Lip-Bu Tan is preparing a sweeping overhaul of the company's chip design, manufacturing operations and AI strategy.

What To Know: According to Reuters, Tan's plan includes cost-cutting measures, a restructuring of management and a renewed focus on AI chip production. Tan, who was previously a board member and CEO of chip design software firm Cadence, is stepping in after Intel's ( INTC ) years of missteps under multiple CEOs.

He has been openly critical of former CEO Pat Gelsinger's execution, particularly in manufacturing and decision-making. One of Tan's key priorities is revamping Intel Foundry, which produces chips for companies like Microsoft and Amazon. He is also expected to restart AI initiatives beyond servers, including software, robotics and AI foundation models.

Intel ( INTC ) has struggled to compete with industry leaders such as Nvidia and Taiwan Semiconductor Manufacturing Co. (TSMC). Under Gelsinger, Intel ( INTC ) aimed to establish itself as a major contract chip manufacturer but execution problems and a weakening market forced cutbacks. Tan's strategy involves securing large customers for Intel's ( INTC ) foundry business while improving manufacturing efficiency.

Despite an annual loss of $19 billion in 2024, Intel's ( INTC ) financial outlook is tied to the success of its next-generation AI chips, known as Panther Lake, which will rely on the company's new 18A manufacturing process. Tan is expected to push for an annual release schedule of AI chips to compete with Nvidia, though industry experts estimate it will take years before Intel ( INTC ) can produce a truly competitive AI architecture.

At an internal town hall, Tan acknowledged the need for "tough decisions" as he looks to streamline operations. His approach marks a significant shift in leadership style, with a focus on aggressive restructuring and efficiency.

INTC Price Action: Intel ( INTC ) shares were up 7.92% at $25.95 at the time of writing, according to Benzinga Pro.

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