SANTA CLARA, California: Intel's stock soared nearly 15 percent this week following the announcement that former board member Lip-Bu Tan will take over as CEO.

Investors cheered the decision, hoping Tan's leadership could help the struggling chipmaker regain its competitive edge after years of underperformance.

Tan, a seasoned industry veteran, faces a significant challenge in reviving Intel. The company has fallen behind in the AI-driven semiconductor boom while investing heavily in its chip manufacturing business. The company has endured multiple quarters of market share losses in both data centers and PCs, and its manufacturing unit has posted billion-dollar losses. Over the past five years, Intel's stock has declined by about 60 percent, even as the Nasdaq and S&P 500 more than doubled.

"Tan in as CEO at Intel was as good as stakeholders could have hoped for," analysts at TD Cowen said, highlighting his "deep relationships" across the semiconductor industry that could help attract customers to Intel's contract manufacturing business.

Tan's appointment comes three months after Intel ousted CEO Pat Gelsinger. He had served on the company's board for two years before departing in August due to disagreements over corporate strategy, including workforce size and company culture. His return signals a renewed effort to steer Intel back on track.

There has been speculation that Intel might separate its chip design and manufacturing operations, especially as rivals like Broadcom and TSMC have explored acquiring parts of the company. However, analysts expect Tan to stick with Intel's existing strategy of keeping both divisions together. In a letter to employees, Tan emphasized his commitment to making Intel a top foundry, a move that could reassure customers wary of relying on a competitor for chip production.

Tan's industry credibility could benefit Intel. He previously led Cadence Design Systems, a key Intel supplier, through a decade of strong growth.

Stacy Rasgon of Bernstein noted that Tan's prior tenure on Intel's board will likely aid his turnaround efforts.

"That should have given him a pretty good idea of where all the bodies are buried, and he should be much more realistic in his evaluations and outlook than prior leadership," Rasgon said, referencing Gelsinger's overly optimistic projections.

Despite the market's enthusiasm, analysts caution that any turnaround at Intel will take time. The company's market value has remained below $100 billion for the first time in decades, and its Gaudi AI chips have struggled to meet sales expectations.

While most analysts currently rate Intel as a "hold," Rasgon believes Tan's leadership could bring much-needed change.

"He has a big job in front of him and a lot of wood to chop," Rasgon said. "But if he fails, it was probably unfixable."