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Intel's Vice President of Corporate Planning and Investor Relations, John Pitzer, shared details about the key tenets of CEO Lip-Bu Tan's turnaround strategy and the firm's AI plans earlier today at the Goldman Sachs Communacopia + Technology Conference. He also commented on Intel's 14A chip manufacturing process, noting that 14A is a different technology from the ground up since Intel has involved its external customers from the first stage of the technology's development.
Intel CEO Lip-Bu Tan's Layoff Strategy Is Vastly Different From Predecessor, Says Head Of Investor Relations
The conversation started out with Goldman Sachs' semiconductor analyst Jim Schneider, asking Pitzer about the most important changes CEO Lip-Bu Tan brought to the company, including the most important changes that investors might find difficult seeing.
In response, the Intel executive outlined that most of Tan's changes revolve around Intel's culture. "I think a lot of that occurred in Q2 when we did some of the restructuring. If you remember we did restructuring a year ago, Q2," he said.
"But I would argue that that was a cost-cutting exercise only, it didn't really change the way that we operated the business or structured the business. I would actually argue what we did in Q2 of this year was much more about changing organizational structure and operations. That led to I think reduction in cost, pretty significant reduction in cost," Pitzer added.
According to him, Tan's biggest target was Intel's bureaucracy. The new Intel CEO thought the old organization culture "was driving too slow and poor decisions." As part of his efforts to streamline Intel's structure, Tan cut the firm's 11 layers of management in half, Pizer explained.
The Intel VP believes CEO Tan is "trying to drive I think a flatter organization with more accountability." As part of his accountability and culture shifts, he has mandated a return to office which Intel implemented last week on Tuesday, said Pitzer.
Schneider then asked him about Intel's top priorities over the coming months. According to Pitzer, the firm has four priorities, which are to fix its x86 chip business, develop an AI strategy, make the foundry business operational and improve Intel's balance sheet.
Intel's CFO David Zinsner explained in detail the firm's balance sheet strengthening efforts earlier this month. Pitzer commented on the AI strategy as he remarked that Intel owes it "to our investors to give a deeper sort of view of where our AI strategy is going," and added that the firm will probably share more details at its third-quarter earnings.
When further prodded about his firm's role in the AI accelerator market over the next five years, he replied:
"I think we want to have meaningful presence over the next five years. I think in general, the way I would think about it, is fixing our core x86 business probably gives us the opportunity to have consistent growth business in that three to five percent range. I think Lip-Bu's aspirations are higher than that, I think, you know to achieve those aspirations, were really have to have a bigger footprint in AI. We think that our x86 ecosystem brings value to that market and we think we can find ways to be disruptive especially in inference around power and agentic around power as well. So stay tuned."
Intel's second-quarter earnings report created doubts about the firm's next-generation 14A manufacturing process, as management remarked that it would only invest in the process if it could generate customer interest. This led investors to wonder whether the firm would have to incur billions in write-offs, with the uncertainty contributing to a 14% drop over the days following the report.
However, Pitzer asserted that Intel was "all in on 14A development." According to him, "If you look at what those external customers are looking at, it's really two things. It's PDK readiness and maturity, and the yield curve. We feel very good about where we are in 14A development."
The PDK is Intel's Process Design Kit and the field curve measures the process's quality. Pitzer outlined that there are three phases to every process technology. These are the definitional, development and high volume manufacturing phases. According to him, while Intel didn't engage external customers with its 18A until the development phase, with 14A, the firm is "actively engaged with external customers to define the node" in its definitional phase.
As a result, he believes that not only might 14A be suitable for external customers, but also that Intel will be able to discuss design choices with customers that should be made in H2 2026 or H1 2027. As a result, the firm will be in a better position to understand the technology's trajectory to potentially tailor its investment decisions.
As for making the foundry business profitable, Intel is "driving the organization to be profit break even exiting 2027 on a run-rate business," he said. At the heart of this attempt is ramping production with the 18A manufacturing technology by driving more volume primarily on the back of Intel Products. "We don't need to see a lot of external foundry revenue to get to op profit breakeven exiting 2027," Pitzer added.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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