In August 2024, a frustrated Lip-Bu Tan left Intel’s board. Less than six months later, CEO Pat Gelsinger was forced to step down. After a period with two interim CEOs, Tan has returned to lead the struggling “Chipzilla.” Who is he, and what challenges await him?
Interim CEOs David Zinsner and Michelle Johnston Holthaus are returning to their previous roles as CFO and CEO of Intel Products, respectively. Frank Yeary resumes his position as chairman, thereby dropping the “interim” prefix. He has already described Malaysian-born American Lip-Bu Tan as an “exceptional leader” with extensive knowledge of the tech industry.
Impressive background
As mentioned, Lip-Bu Tan previously served as an Intel board member, specifically from August 2022 to August 2024. He has held similar positions at various tech companies, including Annapurna Labs, Nuvia, AMEC, HPE, Schneider Electric, and SambaNova. In the 1980s, he founded venture capital firm Walden International, which later merged with Catalyst Ventures. Notably, he also worked at SMIC, the Chinese equivalent of Intel Foundry/TSMC, which must make do with ASML’s older chip machines due to export restrictions.
Now he faces the challenge of getting Intel back on track. Perhaps the most relevant part of his resume in pursuit of this new challenge is his 13-year tenure as CEO of Cadence Design Systems. This company specializes in EDA (Electronic Design Automation), crucial software for semiconductor design used by Intel and competitors like Nvidia and AMD.
In 2008, Cadence was in dire straits, with bleak prospects for future R&D funding, a vital component for EDA companies. Lip-Bu Tan was originally appointed as a crisis CEO for just three months. However, as often happens, this temporary role extended and extended, and he ultimately remained at the company’s helm until December 2021. During his leadership at Cadence, he refocused the EDA developer on addressing actual customer needs.
When asked about his transformation of Cadence, Tan has stated that under his leadership, the company went from being merely an EDA builder into an ISD (Intelligent System Design) company, targeting not just a $10 billion market but one that has turned out to be three times that size. His focus on profitability is unsurprising given his extensive investment background.
Formidable challenge
Every company is different, and Intel presents a more complex puzzle than Cadence. What was once by far the largest chipmaker has now been overtaken by AMD, TSMC, and especially Nvidia. While AMD spun off its foundry division and TSMC exclusively produces chips for others, Intel has tried to compete on both fronts in recent years. Under Pat Gelsinger’s “IDM 2.0” strategy, Intel aimed to reclaim ground lost to AMD and Nvidia while also becoming a viable alternative to TSMC.
It would be an oversimplification to say the strategy was bound to fail, though ultimately it did. Several factors contributed: Intel rested on its laurels as the dominant CPU manufacturer before AMD’s resurgence between 2017 and the present day. The mobile revolution largely bypassed the American chip giant, though it still maintained dominance in desktops and laptops.
The GenAI breakthrough similarly caught Intel off guard. Nvidia captured trillions in market value thanks to its GPU leadership, while AMD quickly established itself as the main alternative to it. Meanwhile, reports suggest discontent within Intel’s GPU division, Habana Labs—where, coincidentally, Lip-Bu Tan served as a board member between 2016 and 2019.
Cutting back to move forward?
We can expect a significant shift from Gelsinger’s approach during Tan’s tenure as Intel CEO. Tan has been frustrated with Gelsinger’s policies before and has a track record of radically realigning a struggling tech company.
We believe Tan will seriously consider the proposed joint venture between Intel and TSMC for Intel’s foundry operations, which is already a separate business unit. However, we recognize that separating Intel from its foundry operations won’t happen overnight due to their deep integration. A company that both designs and manufactures chips may have unique insights into bringing new designs to market.
Yet this advantage shouldn’t be overstated. GlobalFoundries continues to operate successfully as a former AMD unit on its own, and TSMC has become one of the world’s largest companies without ever bringing chips to market directly. Tan will likely redefine Intel’s core objectives, potentially including the divestiture of certain operations.
Lees ook: Intel approaches Marvell CEO Murphy as successor Gelsinger, also Tan option