“Suffocating innovation”: Intel’s new CEO dismantles hierarchy

Just weeks into his tenure, Intel’s new CEO Lip-Bu Tan is wasting no time in reshaping the struggling chipmaker, unveiling sweeping changes designed to strip away bureaucracy and restore a culture of engineering-led innovation.

In a memo seen by employees, Tan announced a flatter leadership structure, effective immediately. Key chip divisions—including Intel’s data center and AI chip group and its personal-computer chip group—will now report directly to him. These units were previously under the oversight of Michelle Johnston Holthaus, who remains in a senior leadership position and will take on expanded responsibilities.

Intel CEO Lip-Bu Tan.

“I want to roll up my sleeves with the engineering and product teams so I can learn what’s needed to strengthen our solutions,” Tan wrote. “It’s clear to me that organizational complexity and bureaucratic processes have been slowly suffocating the culture of innovation we need to win.”

The leadership shake-up is Tan’s first major move since taking over last month and comes at a pivotal moment for the once-dominant Silicon Valley giant. Intel has been grappling with an erosion of market share, technological missteps, and growing pressure from rivals like Nvidia. The company’s legacy of vertical integration—designing and manufacturing its own chips—has struggled to keep pace in a fragmented and fast-moving global industry.

Tan’s response is surgical. Alongside the reorganization, he promoted networking chip executive Sachin Katti to serve as Chief Technology and AI Officer. Katti, who is also a professor at Stanford University, will oversee Intel’s AI strategy, lead Intel Labs, and manage the company’s relationships with startup and developer ecosystems. He replaces Greg Lavender, who is retiring.

In his expanded role, Katti will be responsible for building a coherent AI product roadmap—something Intel has lacked despite multiple acquisitions of AI startups, including Israeli startup Habana Labs. The company's most recent AI chip effort, Falcon Shores, was shelved in January.

Tan is also bringing technical expertise closer to the top. Rob Bruckner, Mike Hurley, and Lisa Pearce—three long-time technical leaders—will now report directly to him, underscoring his belief that Intel must once again become an engineering-first company.

At the same time, Intel is searching for a new head of government affairs to replace Bruce Andrews, a former Obama-era Commerce Department official who left after the U.S. elections. That role will also report directly to Tan—an indication of how critical geopolitics have become to Intel’s future as global tariffs and government incentives reshape the semiconductor landscape.

The transformation under Tan is both structural and strategic. Earlier this week, Intel announced it would sell a 51% stake in its Altera unit to private equity firm Silver Lake, valuing the programmable chip group at $8.75 billion. Intel acquired Altera for nearly $17 billion in 2015, but its integration into Intel’s broader portfolio never lived up to expectations. The sale is expected to provide a cash injection at a time when Intel is investing heavily in its manufacturing capabilities and seeking to streamline its operations.

Together, the management overhaul and the Altera divestment mark a clear departure from Intel’s recent past. For Tan, these are the opening moves in what appears to be a no-holds-barred effort to reverse the company’s decline.

“New ideas are not given room or resources to incubate,” Tan wrote in the memo. “It takes too long to make decisions. And unnecessary silos lead to inefficient execution.”

If Tan has his way, that era is over.