New Intel CEO Sparks Partner Questions, Concerns And Hope About Its Channel, AI Strategy And Workforce

In interviews with CRN, Intel partners voice optimism and concern about the chipmaker’s new CEO, Lip-Bu Tan, saying his outside perspective could help revitalize Intel while raising questions about its channel investments and predicting that more job cuts could be on the way.

Intel partners have voiced optimism and concern about the chipmaker’s hiring of Lip-Bu Tan as its CEO, saying his outside perspective could help revitalize Intel while raising questions about the company’s channel investments and predicting that more job cuts could be on the way.

As the ninth CEO in Intel’s 56-year history, Tan, a semiconductor veteran and longtime tech investor who started the job last week, is the Santa Clara, Calif.-based company’s first leader with no previous experience as an employee there.

Instead, Tan’s experience has been informed in part by serving on Intel’s board between 2022 and August of last year, when he allegedly left after clashing with the previous CEO, Pat Gelsinger, and other board members over a “bloated workforce, risk-averse culture and lagging [AI] strategy,” Reuters reported at the time.

Before that, Tan spent 13 years as CEO and then another year as executive chairman of a crucial Intel supplier and partner, San Jose, Calif.-based chip design software provider Cadence Design Systems. During his tenure as CEO, Tan led the company to double its revenue and increased its share price by more than 3,200 percent.

A few Intel partners told CRN they were encouraged by the idea that Tan came back to Intel as CEO with this kind of experience and previous disagreements with Intel’s board.

“That sure seems like a pretty powerful position to be able to be in,” said Chris Bogan, vice president of sales at Houston-based systems integrator Mark III Systems.

Bogan said he’s excited about the potential for Tan to turn around Intel, given Tan’s track record with Cadence, although he’s unsure about what the outcome would look like.

“If he could do that with Cadence, I think that could be something that turns Intel into something special. But what would that be?” he said.

In response to partner comments, an Intel spokesperson told CRN in an emailed statement Monday that the semiconductor giant is “deeply committed to serving the needs of customers and growing with our channel partners.”

“This will only increase under Lip-Bu’s leadership as we listen to feedback and strengthen our offerings while making it easier for partners to win with Intel. We look forward to the opportunities ahead,” the representative added.

Questions About Tan’s Views On Channel Strategy

With Tan’s previous experience of leading a company that sells software to chip and system designers, Bogan said Tan is “kind of new to the IT sphere as we know it.”

To Bogan, this means Tan will “have a little bit of schooling up [to do] on the channel,” although the semiconductor veteran likely has some understanding through board seats he has held for a variety of companies, ranging from heavy hitters like Hewlett Packard Enterprise and Schneider Electric to chip design startups such as Samba Nova Systems and Rivos.

“It’ll just be interesting to see kind of what happens with channel programs,” Bogan said.

Intel last year cut more than 15,000 jobs as part of a move to save over $10 billion in costs in response to deteriorating financial conditions. These budget cuts impacted Intel’s global partner organization, which reduced direct partner coverage and reworked its market development funds program while it increased overall partner funding, as CRN reported.

While Bogan told CRN in January that his company’s loss of direct coverage from Intel didn’t have any negative impact, he said earlier this month that cost-cutting efforts usually do not result in growth. With Tan’s experience leading significant growth at Cadence, Bogan wondered how the CEO could help create a growth-based channel strategy for Intel.

“That part gets me excited as well,” he said.

An executive at a national systems integrator found concern instead of optimism with the potential impact Tan could have on Intel’s global partner organization, which he thinks is in a poor state due to budget cuts that have been carried out across its parent group, the Sales and Marketing Group, over the past few years.

“They need somebody who is going to build up and expand their channel,” said the national systems integrator executive, who asked to not be named to speak candidly. “I don’t see the vision for them on the channel side right now, which concerns me.”

One Partner Expects Tan To Make More Job Cuts

The CEO of another systems integrator said he expects Tan to lead deeper job cuts at Intel based on the semiconductor veteran’s apparent conflict with other Intel board members last year over what he viewed as a “bloated workforce,” as Reuters reported.

“I think there will be some severe head count reduction,” said the systems integrator CEO, who asked to not be named to speak frankly, earlier this month.

The systems integrator CEO believes this is a possibility even after Intel cut 15,000 jobs across the second half of last year, which he considered “agonizing” because of how it took roughly six months for the chipmaker to carry them out.

“I think with this guy it will be much more clinical, perhaps not as ruthless as fired by a tweet or an email, but I think it’ll be a quick, quick thing,” he said.

According to the systems integrator CEO, “more cuts are absolutely necessary” and will make Intel a better company, especially considering the higher-revenue-per-employee ratios of competitors like Nvidia.

“They are definitely bloated,” he said.

A senior executive at a third systems integrator told CRN that he would like to see Intel become leaner and more aggressive based on recent interactions.

“There [are] just too many cooks in the [kitchen], and things just end up dying,” he said.

The systems integrator executive cited issues with management-level employees when it comes to pushing projects through.

“They need to be lean, and they need to be aggressive. If they can do that, I think they can do good things. If they can’t, then they’re in big trouble,” he said.

Partners Want To See Intel Do Better With New Product Lines

Partners said they are curious about what Tan will do differently with Intel’s AI strategy, which has failed to find momentum in the data center market.

These partners spoke with CRN before Reuters reported a little more than a week ago that Tan plans to “restart plans to produce chips that power AI servers” with the goal of moving to an annual release cadence for such chips. The news agency said the first new AI chip may not arrive until 2027 at the earliest. Tan is also reportedly looking into “several areas such as software, robotics and AI foundation models” to boost the chipmaker’s business.

Bogan—the sales executive at Mark III Systems, which has been named a top Nvidia partner for multiple years—said he doesn’t think it’s “very wise” for Intel to take Nvidia head on because of how far ahead the AI computing rival is. Rather, Bogan thinks Intel could prosper by pursuing other kinds of innovation that are “additive to the global economy.”

“The way Intel has been heading is clearly not the right way,” he said.

Dominic Daninger, vice president of engineering at Burnsville, Minn.-based systems integrator Nor-Tech, said one of the biggest problems that has hurt Intel’s ability to compete with Nvidia is its history of failing to commit to new product lines after a few years.

The Nor-Tech executive cited multiple times when Intel would introduce a new product line and later announce that it would no longer create fresh offerings in that area. His examples included OmniPath, a high-speed interconnect technology competing with Nvidia’s InfiniBand that was spun out of Intel but only after it halted internal development, as well as Optane, a new type of memory Intel had developed with Micron.

“That makes people like us not want to buy into anything like that because it's likely going to be gone [in a few years],” Daninger told CRN.

The accelerator chip category is another area where Intel has canceled several projects going as far back to 2010, when Intel canned the Larrabee general-purpose GPU project that would evolve into the Xeon Phi series, which was killed off several years later.

Most recently, Intel Products CEO Michelle Johnston Holthaus announced in January that the company had canceled Falcon Shores, its GPU follow-up to last year’s poorly received Gaudi 3 chip, so that it could focus on a rack-scale solution based on the more advanced Jaguar Shores GPU. Falcon Shores was originally conceived as the successor to a data center GPU called Rialto Bridge, which was canceled nearly two years prior.

“It takes a lot of bandwidth to commit to something like that, and then you have it disappear. That’s just wasted time. [We] can’t afford to do that very often,” Daninger said.

Kent Tibbils, vice president of marketing at Fremont, Calif.-based distributor ASI, told CRN that he found promise with comments Tan made in the CEO’s letter to Intel employees, including Tan’s views about the “essential role” Intel plays in the tech ecosystem.

“He’s absolutely right that Intel plays a very critical role in the technology ecosystem, especially for the channel and for distributors and a lot of resellers that rely on the innovations and the manufacturing that Intel provides,” he said.

The distribution executive is also optimistic about Tan’s apparent desire for Intel to become nimbler, a quality he said the semiconductor giant has lacked in the past when it comes to launching new product lines.

“If you know some of the things that he’s talking about or he’s thinking about that he can’t really elaborate in an employee letter [in terms of] ‘how do we change some of this culture within Intel and become more agile,’ I think that would be a definite positive,” he said.

When, for example, Intel introduced its Arc graphics cards for PCs a couple years ago, Tibbils said the chipmaker required ASI to get approval for any channel partners who wanted to buy the product from the distributor. To Tibbils’ understanding, Intel was doing this to ensure a smooth launch, but the roadblock remained in place until about six months ago.

“We told them many times, ‘You guys are new to this market. You make this so difficult for a customer to purchase it. They’re not going to buy it. They’re not going to buy it just because you’re Intel and just because you’re an alternative to Nvidia,’” he said.

In response to Tibbils’ comments, an Intel spokesperson told CRN in an emailed statement that this feedback was specific to Intel Arc Pro graphics products for workstation PCs and said it “highly” values and prioritizes “all customer feedback.”

“As a result, we removed requirements originally intended to ensure end-customer satisfaction as soon as Arc Pro products achieved wider ISV certifications and underwent further optimizations to support a broader range of end-customer workloads,” the representative added.