By Max A. Cherney and Stephen Nellis

(Reuters) – Struggling U.S. chipmaker Intel on Wednesday named former board member Lip-Bu Tan as its CEO effective on March 18, more than two months after it ousted company veteran Pat Gelsinger.

Tan, a respected semiconductor industry veteran, has long been seen as a CEO contender. He was approached by Intel’s board in December, Reuters had reported, to gauge his interest in taking up the job.

Shares of the company rose 11% in extended trading.

Intel is undergoing a historic transition as it attempts to emerge from one of its bleakest periods. While struggling to cash in on a boom in investment in advanced AI chips, the company is spending heavily to become a contract manufacturer of chips for other companies, leading some investors to worry about pressure on its cash flows.

Tan, who formerly led chip design software maker Cadence Design Systems, left Intel’s board last year over disagreements on how to turn around the company. Tan felt Intel had too many layers of middle management and that the chip contract manufacturing effort was insufficiently customer-centric, Reuters previously reported.

The most consequential decision faced by Tan will be whether to keep Intel’s chip design and manufacturing operations together or split them apart. Reuters reported that Intel rival Taiwan Semiconductor Manufacturing has approached some of Intel’s biggest potential manufacturing customers about forming a joint venture to operate Intel’s factories.

(Reporting by Stephen Nellis and Max A. Cherney in San Francisco, Bhanvi Satija in Bengaluru and Juby Babu in Mexico City; Editing by Arun Koyyur, Sayantani Ghosh and Matthew Lewis)