Intel’s Bold Strategy: All Future Products Must Deliver 50%+ Margins

After years of setbacks and declining revenue, Intel is drawing a hard line in the sand-profitability first. Under the renewed leadership of CEO Lip Bu-Tan and Products CEO Michelle Johnston Holthaus, the chip giant is undergoing a major transformation. At the recent Bank of America Global Technology Conference, Johnston made it clear: if a product doesn’t promise at least 50% gross margins, it won’t even make it past the planning phase.

This signals a seismic shift in Intel’s product development philosophy. The once expansive R&D efforts will now be tightly filtered, with engineering resources reserved solely for high-margin projects. “If it’s not hitting 50% or higher in gross margins, it doesn’t move forward-period,” Johnston stated.

Historically, Intel has struggled to gain traction in key growth sectors like artificial intelligence and data centers. The Gaudi AI chips failed to capture market interest, and CPUs like Arrow Lake didn’t make the expected splash. This tough new stance is a direct response to those financial missteps.

Looking ahead, upcoming chip families like Panther Lake and Nova Lake are expected to meet these profitability thresholds. Interestingly, Nova Lake will employ a dual-foundry approach, using both Intel Foundry Services (IFS) and TSMC to ensure the best possible output. The long-touted “IDM 2.0” strategy from former CEO Pat Gelsinger now appears to be on the back burner.

Johnston emphasized flexibility and optimization in manufacturing: “We’ll use Intel Foundry, TSMC, even Samsung if needed. The priority is delivering competitive, high-margin products.”

Intel’s new strategy may seem ruthless, but in a market dominated by aggressive AI-focused competitors, it may be the only way to regain footing. Team Blue has a tough road ahead, but at least it’s now one with a map-and a bottom line in mind.