Tan reaffirms commitment to rebuilding Intel's foundry business

Hiring of former SK hynix CEO raises hopes for competitiveness

On AI slowdown debate: 'I don't overreact — but we must explain the downsides'

Intel CEO Lip-Bu Tan delivers a keynote address at Computex in Taipei on June 2. [Getty Images]
Intel CEO Lip-Bu Tan delivers a keynote address at Computex in Taipei on June 2. [Getty Images]

Intel CEO Lip-Bu Tan warned that the global shortage of memory chips and the surge in their prices will worsen next year as AI adoption continues to accelerate.

Speaking Tuesday (local time) at the AI Infrastructure Summit at the Santa Clara Convention Center in California, Tan said he had predicted early last year that memory would become a bottleneck — a call many dismissed at the time. "It turned out I was right," he said. "Next year, the situation will get even worse."

Tan said memory production capacity remains severely constrained and prices have risen dramatically. "As you know, they've gone up five times, six times, seven times," he said. He added that cost pressure on companies has become acute, with memory now accounting for 70 to 80 percent of the total cost of low-end smartphones and laptops.

The outlook reinforces expectations that South Korean memory chipmakers Samsung Electronics and SK hynix will continue to lead the AI market next year, buoyed by sustained strong demand.

Beyond memory, Tan identified power, optical technology and thermal management as key areas where future bottlenecks are likely to emerge.

Tan also shared results of the sweeping restructuring he has pursued since taking the helm. He said Intel had cut its workforce from more than 100,000 to around 78,000 and slashed its organizational hierarchy from 10 to 12 layers down to four or five. "That has significantly improved efficiency and accountability," he said.

Tan expressed strong determination to rebuild Intel's foundry business. He outlined a plan to set expectations low and then beat them, proving the division's capabilities quarter by quarter through results. He said Intel would focus particularly on advanced packaging — a back-end process — and noted that the recent recruitment of Lee Seok-hee, a former Intel executive who went on to serve as CEO of SK hynix, as executive vice president would help strengthen the company's competitiveness.

On the debate over an AI slowdown that has stirred controversy in Silicon Valley, Tan said some degree of moderation is natural. "I don't overreact to it," he said.

He cautioned, however, that while enthusiasm for AI runs extremely high in Silicon Valley, strong anti-AI sentiment exists in other parts of the United States. "We need to keep building a positive narrative, but we also have to clearly explain the downsides to the public," he said.


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