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Picture: REUTERS/RICK WILKING
Picture: REUTERS/RICK WILKING

Bengaluru — Intel’s quarterly results will offer the clearest look yet at new CEO Lip-Bu Tan’s turnaround strategy for the embattled American chipmaker, and investors are hoping for early signs that he is reversing years of strategic lapses.

The company is set to post its fourth consecutive quarterly revenue drop on Thursday.

Once the dominant force in global chipmaking, Intel has been losing ground to AMD in the personal computer and data centre chip market, while Nvidia has leapt ahead in artificial intelligence.

Tan, who quit Intel’s board in August 2024 after disagreements over the firm’s direction, took over as CEO in March.

“The most important thing for Intel now is Lip-Bu Tan’s playbook…. How he can give investors confidence that he is the person who can turn Intel around and whether a turnaround is possible in the first place,” said Hendi Susanto, portfolio manager at Gabelli Funds, which holds Intel shares.

Tan has already started flattening Intel’s leadership structure, with key chip groups now reporting directly to him. Streamlining operations is seen as a central part of his strategy to refocus Intel’s business and free up cash for costly investments in chip manufacturing.

Intel’s AI plan also remains in flux. The company has relegated its Falcon Shores graphics chips to internal testing, leaving it without a competitive flagship in the booming AI market. It recently named networking head Sachin Katti as chief technology officer and AI lead.

Tan’s job now is complicated by an escalating US-China trade war and the threat of tit-for-tat tariffs. While semiconductors have so far been spared from US tariffs, US President Donald Trump has warned that additional sector-specific tariffs could be announced in the coming weeks.

China has already responded with threats of its own. Chips made in the US could face tariffs of 85% or more, based on a notice from the state-backed China Semiconductor Industry Association earlier this month.

China was Intel’s largest market in 2024, generating nearly a third of its total revenue.

Still, Intel could benefit in the first quarter from manufacturers pulling forward PC shipments in anticipation of the tariffs, analysts said. Global PC shipments rose 9.4% in that period, Canalys data shows.

Routing production through Intel’s factories outside the US, such as its fabrication facility in Ireland, could also help relieve some pressure from tariffs, said Lou Miscioscia, analyst at Japanese investment bank Daiwa. That factory handles a significant portion of Intel’s chip production.

Intel is one of the few major chipmakers that designs and manufactures its processors, unlike rivals, which outsource production to Taiwan’s TSMC. But it still relies on TSMC to produce some of its advanced chips, which could shield parts of its business from Chinese tariffs.

Tan has said he remains “equally focused” on Intel’s chip products and its contract manufacturing unit, which was at the centre of his predecessor Pat Gelsinger’s strategy. The fabrication business has cost the company billions of dollars with little return so far.

Intel’s PC unit is expected to report an 11% revenue decline to $6.73bn for the March quarter, while its data centre business is expected to post a drop of 1%, its twelfth consecutive fall.

Overall, revenue is expected to drop 3.4% in the quarter, according to data compiled by LSEG. Loss is expected to widen to nearly $945m from $381m a year ago.

Reuters

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