Intel’s CEO, Lip-Bu Tan, has unveiled a new strategy aimed at narrowing the gap with Nvidia in the fiercely competitive AI chip market.

This decisive move comes after years of missed opportunities and unsuccessful acquisitions. Now, the firm is shifting its focus to in-house innovation to reclaim its position in the tech industry.

Previously, the company attempted to catch up with Nvidia by acquiring smaller companies, such as Movidius, Nervana, Habana Labs, and Mobileye, between 2016 and 2019.

Under Tan’s leadership, however, the approach is set to change. “It is not just a turn,” Tan said in his first earning call.

His strategy will be to consider what the company already has under the hood in its current portfolio of products and enhance them, if need be, to take on the demand for increasingly sophisticated AI workloads, such as robots and smart agents that already carry out user tasks.

Tan said Intel’s new strategy was to try to develop the best AI chips and software in its shop, not in Silicon Valley startups that they would acquire.

The firm is reimagining its entire product portfolio, he said. According to Tan, the firm aims to become the platform of choice for customers through delivering end products with the complexity of artificial intelligence.

Analysts have described Intel’s new strategy as aggressive but risky. Bob O’Donnell at Technalysis Research said, “If they can build the appropriate set of software support to help make it easy to deploy these new chips, then they have a chance—but that is a big if.”

Intel takes action to cut costs and streamline operations

Intel’s shift comes at a challenging moment for the company. It recently reported a $800 million loss in the first quarter of 2025. Intel’s shares are down 38% over the past 12 months. The firm is slashing costs and collectively cracking down on its budget to help stem the losses.

David Zinsner, the company’s chief financial officer, said the company won’t make any major acquisitions. “The balance sheet is number one for us,” he noted.

This means fewer acquisitions, a leaner workforce, and less money going out the door. Intel said it would reduce capital spending by $2 billion this year. It is overhauling its organization so it can make decisions more quickly and put more of a focus on its engineering teams.

And these financial reforms are being ushered in even as Intel benefits from significant U.S. government support. Intel received $7.86 billion under President Biden’s CHIPS Act to strengthen American semiconductor manufacturing. However, analysts caution that funding alone will not be enough to secure Intel’s long-term success.

Intel struggles to gain ground in AI chip race

Intel is joining a race where others have already taken the lead. Nvidia became the king of AI chip—not just by selling hardware but by providing full systems. Nvidia’s lineup includes everything from high-powered GPUs to software tools and networking gear. That gives it a big edge.

Intel will now do the same, Tan said. It intends to make not just chips but complete platforms — hardware, software, and support—with all it takes.

But it would not be easy to catch up. Alongside Nvidia, cloud beasts like Amazon and Google are also building their own AI chips. Those are deep-pocketed companies with strong tech teams competing fiercely.

Some investors have been optimistic about Intel’s plan. Hendi Susanto, a fund manager at Gabelli Funds, said he likes the focus on AI chips and “edge computing.” However, he also cautioned that it remains unclear how big and fast Intel’s growth will be in these areas.

Intel is betting its decades of chip-making experience and Tan’s vision will help it battle back. It will have more products focused on AI next year, showing that it can still innovate.

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