Li-Bu Tan Takes Helm at Intel, Can He Steer A Turnaround?

Lip-Bu Tan. Source: Intel

Intel Corporation has announced the appointment of Lip-Bu Tan, former CEO of Cadence Design Systems and a seasoned semiconductor industry leader, as its new CEO. Tan, who officially assumes the role on March 18, is known for his transformative leadership and investments in cutting-edge technology startups. His appointment comes as Intel seeks to recover from recent struggles under former CEO Pat Gelsinger, whose ambitious turnaround strategy failed to meet investor expectations.

Tan has expressed a commitment to maintaining Intel’s integrated chip-design and manufacturing model, countering speculation about a potential spin-off of Intel Foundry Services. Industry experts believe Tan’s leadership will mark a pivotal chapter for Intel as he works to restore the company’s position as a global leader in semiconductors. Following the announcement, Intel’s stock surged by 12% to $23.12, reflecting renewed investor confidence in the company’s future under Tan’s guidance. Putting it in perspective, Intel was trading in the $60s, when Gelsinger became CEO four years ago.

Tan, a Malaysian by birth, is an alumnus of the Massachusetts Institute of Technology (MIT), and a recipient of Robert N. Noyce Award, the Semiconductor Industry Association’s highest honor. He was invited to join Intel as a board member in 2023, but resigned in a year due to disagreement with Pat Gelsinger on whether to spin off the foundry operation.

Pat Gelsinger didn't accept the proposal to split production and design at that point and was pushed out by the Board after another quarter.

In an internal letter to Intel staff, Tan wrote, “In areas where we have momentum, we need to double down and extend our advantage. In areas where we are behind the competition, we need to take calculated risks to disrupt and leapfrog. And in areas where our progress has been slower than expected, we need to find new ways to pick up the pace.”

“Intel has a powerful and differentiated computing platform, a vast customer installed base and a robust manufacturing footprint that is getting stronger by the day as we rebuild our process technology roadmap,” Tan said in a statement. “I am eager to join the company and build upon the work the entire Intel team has been doing to position our business for the future.”

Share

However, Tan is an expert in electronic automation design (EDA), which is more on the software side, not foundry or manufacturing. He has been a venture capitalist after he retired from Cadence, and thus it is reasonable for him to consider a spin-off as the priority of Intel for turnover, since the foundry is the main reason for Intel’s financial strains.

If Intel is to spin off the foundry operation, who will buy it? As a recipient of CHIPS Act funding, Intel is obliged to hold the majority stake in its foundry. That left buyers little incentives to take part in Intel. We reported in February that Trump prescribed three options for TSMC, including investing in Intel as a minority stakeholder along with several customers. However, TSMC chose to expand its investment by US$100 billion instead, which includes three more fabs, two advanced packaging facilities, and a research and development center.

Multiple rumors have circulated about Broadcom taking over Intel Products and TSMC taking over Intel Foundry, but Broadcom CEO Hock Tan and TSMC chairman C.C. Wei have flatly denied the rumors at their respective earnings conferences. As for how Lip-Bu could revive the Intel Foundry from the ICU, TechSoda has different views. 

Read the rest of the article: https://techsoda.substack.com/p/li-bu-tan-takes-helm-at-intel-what