Intel Gets a New CEO to Oversee Its Turnaround Efforts

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[00:00:33] Welcome to Tech News Briefing. It's Friday, March 14th. I'm Shara Tipkin for The Wall Street Journal. Elon Musk has had a rough few days. His role in the government is causing tension both in D.C. and at his companies. What's the latest from Musk two months in as head of the Department of Government Efficiency, or DOGE?

[00:00:55] Then, Intel has a new CEO. We'll find out what this means for the chipmaker and how investors are reacting. WSJ Heard on the Street columnist Dan Gallagher joins us to discuss the latest. But first up, it's been nearly two months since Elon Musk joined DOGE.

[00:01:19] Since then, DOGE has laid people off, canceled contracts, and made other cutbacks to save the government money. But this past week hasn't been great for Musk. Along with political pressures, Tesla's stock tumbled 15% on Monday. Our columnist Tim Higgins joins us with the latest as part of our series looking at Musk's first 100 days in the Trump White House. Tim, what's going on with Musk right now?

[00:01:49] It is just a rocky road for Musk these days. A lot of attention, understandably, because he is slaying a lot of sacred cows in Washington. These are political hot buttons that he's pushing. And there are people out there who are very unhappy protesting stores around the country at Tesla. Now it's almost becoming commonplace in some cities to see these stickers about how they bought their Tesla before Elon went crazy. A lot of backlash.

[00:02:17] And it's not very normal in this country to have a sitting CEO, a CEO of multiple companies. SpaceX, Tesla also have a role, an active role in the government, in the White House, taking on very controversial issues. So a perfect storm, if you will. President Trump said on Truth Social last week that his cabinet secretaries will be more precise about federal layoffs. He said they'll be using the scalpel rather than the hatchet.

[00:02:46] Some people considered this to be a criticism of Musk. As you recently wrote, Tim, the doge cuts have been pretty messy. How do we interpret this? Well, it comes after Musk. Remember, that CPAC convention was waving around a chainsaw. So the idea that Musk was going to go into the government and use technology to find efficiencies and to make cuts. In some ways, some might have thought that was going to be more of the scalpel of technology.

[00:03:15] But really, it's been a very blunt force effort, a lot like a chainsaw. And that clearly was disturbing some of the folks in the administration who felt perhaps it was their job to go through and figure out how they wanted to run their agencies. Musk is leading Doge, but we can't forget he's still running several major companies, including Tesla. What's happening at Tesla right now? It's a tough period for the company.

[00:03:40] You have to remember that the overall landscape for the electric car business globally is challenged. There's a lot of competition in places like China where local EVs have really surprised Western companies with their performance and just the appeal that they're having. And Tesla is no different. Tesla is trying to respond here in the States with an updated version of the Model Y.

[00:04:06] It's yet to be determined if that's really going to help them or not. One of the challenges that Tesla has is that it hasn't really had a new mainstream product in many years. The Cybertruck, of course, made a big splash, but it doesn't seem to be generating the kind of sales that would kind of suggest it's going to be the next F-150 pickup truck.

[00:04:29] They see the long-term vision for Tesla as these vehicles being conduits for autonomous vehicles, self-driving technology. And that's where they're putting the big bet in the future. On Monday, Tesla had its worst trading day since 2020. Why did the stock drop so much this week? Lots of concerns about the future of where the company is going.

[00:04:52] You have to also remember there has been a lot of concerns about the market in general, concerns about a recession, concerns about a trade war. And Tesla is not immune to all of that. Pivoting back to Trump, after some of the scalpel comments, Trump later defended Musk saying, quote, Doge has been incredible. But he also acknowledged there have been some disagreements between people. Here is President Trump speaking to reporters on Air Force One last Sunday.

[00:05:19] That doesn't mean they don't have a little bit of an argument here and there about something or maybe personal arguments. How is the relationship going with Trump? The biggest question since the election was how long would Trump and Musk kind of stay close? And time and time again, we continue to see them making these public displays of affection. And this past week was no different.

[00:05:44] Trump hosting Musk on the White House lawn to essentially hawk Tesla vehicles, which was odd, if you will, because the campaign season, Trump was very much against electric vehicles. But here the president is out there on the lawn with the Tesla vehicles. And it was a unique kind of situation.

[00:06:05] The president talking about how these attacks on Tesla's stores, that he sees them as domestic terrorism, which is pretty tough language. How has Musk responded to all of this? It's clearly been weighing on him. He did an interview with Fox Business in which he acknowledged that it's been with, quote, great difficulty that he's been running his companies. He's been dealing with all the work he's doing at the White House and working very long hours.

[00:06:35] And then the kind of challenges that his companies are facing. But he is also kind of joking around about some of those challenges. But it gets at his mindset of that he's doing something bigger, that he's doing some kind of civic duty. He sees it as one of those rare windows where regulation and government spending can get pared back. And if that is not addressed, he is warning that the government will face even harder times in the future. That was our columnist, Tim Higgins.

[00:07:04] Coming up, Intel has a new CEO. Can he turn things around at the struggling chipmaker? That's after the break. Raise the rudder. Raise the sails. Raise the sails. Captain and unidentified chip approaching. Over. Roger that. Wait. Is that an enterprise sales solution?

[00:07:32] Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. To get £100 off your first campaign, go to linkedin.com slash lead to claim your credit. That's linkedin.com slash lead. Terms and conditions apply. Intel has named Lit Bu Tan as its next CEO.

[00:07:56] He's the former CEO of Cadence Design Systems and previously served on Intel's board. Tan joins Intel next week. Dan Gallagher, a columnist for WSJ's Heard on the Street, is here now with more on what this can mean for the company and investors. Dan, what do we know about the new CEO? He's very experienced in the chip industry. Like you said, he served previously as a CEO of Cadence Design. This is a company that sells software used by chip designers.

[00:08:26] He's very knowledgeable in the whole chip design realm. And he also did a stint on Intel's board. This is significant because Intel is typically not looked outside for its CEOs. In fact, most of its CEOs have had very long tenures at the company, including the last one, Pat Gelsinger, even though he had left for a time to run another company. So Lit Bu Tan is that kind of qualifies as a major outsider. But his experience on the Intel board for the last couple years does give him a certain

[00:08:54] familiarity with how the company's been operating. How are investors reacting to this news? The stock soared nearly 15% yesterday. They're very encouraged based on the stock. The reaction from the Wall Street analysts that cover the company has been universally positive than I've seen, but it's also a little bit guarded. Everybody thinks he's a very strong candidate, but there's still a fair amount of doubt as far as like, can Intel really be saved or what can be done with this company, given the

[00:09:24] depths of their challenges? Could you take a little step back and remind us why is Intel struggling so much right now? The main problem is they fell behind in their chip manufacturing technology. They used to be considered the world's leader. They could make the chips at, you know, essentially the smallest bits of circuitry to make the most advanced processors. Then TSMC pulled ahead of them years ago, partially because Intel made some bad bets in terms of their technology.

[00:09:51] And when you lose that lead in the chip business, it's really hard to get back and you can't get it back overnight. And so Intel has been over the last, I'd say four years, really been in this ambitious race to catch up. Under the last CEO, they were trying to leapfrog their manufacturing tech to get caught up to TSMC, which was supposed to happen this year. Theoretically, that still may be going on.

[00:10:16] But now that they decided to essentially push out the last CEO, bring a new one in, suggested they don't feel like that was happening fast enough. So they need to close that gap and they also need to make their actual products more competitive. They've been losing share to AMD and things like PCs and servers, and they need to change that. Yeah. I mean, could you talk about that? What was Gelsinger's plan and what happens to that now? You know, splitting up the company. Is that something that we're still going to see happen?

[00:10:44] We don't really know because Louboutin has not really outlined what he's going to do in that respect. And you wouldn't expect that now. I mean, he doesn't even formally start until next week. His initial email to employees suggests he's going to keep going down the two tracks of trying to build out a manufacturing business that makes chips for other companies, as well as improving Intel's own products that they design, making those more competitive against AMD and NVIDIA.

[00:11:10] So for the time, it looks like he's going to still do things the way they've been doing them. But I would expect there's going to be some major changes, possibly a lot of restructuring going on. There were reports that when he left the board last year, it was out of frustration that he thought Intel was moving too slow, that it was too bloated, too many employees. So there might be some major changes on that front. But beyond that, we don't really know what he'll do ultimately.

[00:11:36] Is he going to do partnerships, sell one end of the business or the other? That all remains to be seen. That was WSJ columnist Dan Gallagher. And that's it for Tech News Briefing. Today's show was produced by Julie Chang. I'm your host, Shara Tipkin. Additional support this week from Charlotte Gartenberg and Just Jupiter. Jessica Fenton and Michael LaValle wrote our theme music. Our supervising producer is Catherine Millsop. Our development producer is Aisha Al-Muslim.

[00:12:05] Scott Salloway and Chris Zinsley are the deputy editors. And Falana Patterson is The Wall Street Journal's head of news audio. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.