Intel CEO: "Our strategy is clear and the pace of execution is accelerating"
Lip-Bu Tan says improving execution, surging AI demand and renewed confidence in its manufacturing roadmap are driving the company's turnaround.
When Lip-Bu Tan became Intel's CEO, he inherited a company struggling to regain its technological edge as the semiconductor industry shifted toward AI chips and specialized accelerators. Fifteen months into an ambitious turnaround, Tan says Intel's overhaul is beginning to show measurable results.
Speaking after Intel reported second-quarter earnings that comfortably exceeded its own guidance, Tan argued that the company's operational improvements are translating into stronger financial performance. Intel posted its strongest revenue growth in more than 15 years, with sales rising 25.4% year over year to $16.13 billion, driven largely by surging demand for computing infrastructure as artificial intelligence moves beyond model training toward inference and autonomous AI agents.
"Our core message is simple," Tan told investors. "Strong demand for our products continues to outpace our growing supply. Our design manufacturing execution is improving, and the operating discipline we put in place 15 months ago is beginning to show tangible results."
A central theme of Tan's remarks was that the next phase of AI could play to one of Intel's traditional strengths.
While the first wave of generative AI investment centered on graphics processors used to train large language models, Tan said the growing use of inference and AI agents is increasing demand for general-purpose server processors.
"As AI expands from training to inference and increasingly to agentic and multi-agent systems, general-purpose server CPU density continues to increase, and our core server CPU franchise is growing faster than ever," he said.
That shift helped Intel's Data Center and AI business grow 59% year over year to $6.26 billion. Tan described the company's Xeon 6 processor as "one of the fastest-ramping products in Intel history," arguing that cloud providers increasingly view x86 processors as an essential complement to AI accelerators rather than a technology being displaced by them.
Intel is also trying to expand beyond standard processors. Tan highlighted growing demand for custom AI chips, pointing to partnerships with SambaNova and Fortinet and rapid growth in Intel's design services business.
"We are the only company that can design, manufacture, and build the entire range of computing solutions, from general-purpose CPUs and GPUs to purpose-built ASICs optimized for agentic AI," he said.
Beyond AI, investors remain focused on Intel Foundry, the contract manufacturing business at the heart of the company's long-term turnaround.
Tan said manufacturing execution continues to improve, particularly on Intel's advanced 18A process, where second-quarter output exceeded internal targets by 25%. He said the progress has given management enough confidence to fully commit to high-volume production of Intel's next-generation 14A manufacturing technology in 2028.
The decision marks a significant shift. Last year, Intel warned it could scale back or even abandon 14A if it failed to attract major external customers.
"My confidence in our foundry process roadmap has grown significantly since joining over a year ago," Tan said. "I keep raising the bar on the internal targets, and the team continues to meet the challenge."
According to Tan, early development metrics for 14A, including defect density and transistor performance, are already ahead of where 18A was at the same stage of development.
He also pointed to strong customer interest in Intel's advanced packaging technology, EMIB-T, which allows companies to combine multiple chips in a single package regardless of where the individual wafers are manufactured.
"Customer interest for EMIB-T continues to be very high," Tan said, adding that Intel is building capacity to support customer production ramps beginning in 2027.
Tan also emphasized changes inside Intel itself, describing an effort to simplify decision-making and build what he called an "AI-first mentality" across the company. Intel has expanded its collaboration with Google Cloud and reorganized its PC business into a new Client Computing and Physical AI Group to target emerging opportunities in edge AI and robotics.
Despite the stronger quarter, Tan acknowledged that challenges remain. Supply constraints across advanced manufacturing, memory and packaging continue to affect the industry, while rivals including AMD and Arm remain aggressive competitors in the data center market.
Still, Tan argued that Intel's turnaround is beginning to gain momentum.
"While there's still significant work ahead, our priorities are clear: leverage our x86 computing franchise to strengthen our product leadership and establish Intel Foundry as a world-class wafer and packaging foundry business," he said. "Our strategy is clear and the pace of execution is accelerating."
