Intel stocks drop as Dour hides and predicts CEO turnaround promises
Zaheer Kachwala and Kanchana Chakravarty
(Reuters) – Intel shares fell more than 8% on Friday. The company’s revenue and profit forecasts are because it overshadowed new CEO Lip-Bu Tan’s strategy to stimulate the struggling chip maker.
While years of bad decisions remain the icon of American chipmaking, struggling in the lucrative artificial intelligence industry, the fierce trade war in China has raised questions about the short-term demand for PC processors.
Tan on Thursday gave a glimpse into Intel’s plans to revive the culture of innovation by focusing on core engineering and removing unnecessary management work and reducing the workforce.
“Intel is so huge, shifting the course is like turning a battleship. You can’t do it with a dime,” said an analyst at Evercore ISI.
Tan also didn’t provide much detail about how it would restore Intel’s leadership position in manufacturing, nor did it provide plans to attract more external customers to the company’s foundry, JPMorgan analysts said.
Tan has focused on contract manufacturing and recently met with the CEO of rival TSMC to discuss how the two companies can work together.
Management said first quarter sales were raised by stockpiling tips as rising tariff tensions between the US and China made buyers wary of future purchases.
Ben Baringer, global technology analyst at Kilter Shebiot, said China could also benefit from introducing certain exemptions on US imports, considering the large presence of the company in Asian countries.
AI strategy in question
Sharp Intel’s existing products to cut comments that are best suited to new AI trends has raised questions about companies planning to move ahead in the booming artificial intelligence sector and challenge Nvidia, the market leader.
“Intel needs to streamline quickly. They’re investing a lot to keep up with AI,” said Stifel analyst Reuben Roy.
Historically, Intel has relied on startup purchases to promote AI ambitions. Other than Mobileye, which Intel spun a few years ago, other transactions have not helped the company gain much traction.
“Intel should have always had its own internal solution, but they missed the boat and tried to get a path to AI,” said Anshel Sag, principal analyst at Moor Insights & Strategy.
One of Intel’s biggest failures was its failure to take advantage of the booming demand for AI chips, allowing Nvidia to dominate the market.
Intel is currently facing a difficult battle in challenging the AI heavyweight division, as it lacks the same level of GPU intellectual property that is essential for AI workloads, Barringer added.