Incoming Intel CEO Lip-Bu Tan is preparing significant changes to the company’s chip manufacturing and artificial intelligence strategies, aiming to revive the struggling technology giant.

Tan, who officially returns to Intel on Tuesday, is expected to restructure the company’s approach to AI and cut staff, particularly within what he views as a slow-moving middle management layer. He also plans to revamp Intel’s manufacturing operations, which have shifted from solely producing Intel chips to making semiconductors for external clients such as Nvidia.

At a recent town hall meeting, Tan indicated that “tough decisions” were ahead, according to people briefed on the discussion. Industry expert Dylan Patel said Intel’s former CEO, Pat Gelsinger, was reluctant to make necessary management cuts, contributing to inefficiencies.

Tan, 65, previously led chip design software firm Cadence and was an Intel board member until last August. He takes over after a decade of missteps by previous leadership, including missing out on the smartphone chip market and falling behind in AI processors to competitors like Arm Holdings and Nvidia.

Intel reported a $19 billion loss in 2024, its first annual deficit since 1986. In the short term, Tan aims to strengthen Intel Foundry by securing new clients such as Microsoft and Amazon. He is also expected to restart AI chip development and expand into areas such as software, robotics, and AI foundation models.