Intel Gets Their Tan
Stephen Nellis & Max A. Cherney
Seemingly good – perhaps great – news in Intel land:
Lip-Bu Tan may be one of the most powerful technology executives you've never heard of. As he steps into one of the highest-profile jobs on the planet, CEO of troubled, storied chipmaker Intel, his performance will be on full display.
Tan, named Intel CEO on Wednesday, faces an enormous challenge in turning around the operations of a company that put the "silicon" in Silicon Valley.
Well, some people have heard of him – and please forgive me for allowing myself to quote... myself, a lot, below – one of my ten predictions for 2024 was about Intel's future, including the following:
First things, first, Intel needs to put in place a new leadership team. I'll keep my (early) money on Lip-Bu Tan here – if he can overhaul the entire board as well...
By then, it was reported that Intel had approached him – but I circled him as a clear choice right before that report too, noting that his departure from Intel's board was a bit of a "canary-in-the-coal-mine" moment for Intel. That's also easy to say in hindsight – but I also said it well before it was in hindsight, as I wrote back in August – several months before Pat Gelsinger was pushed out:
This report about Lip-Bu Tan, the one Intel board member with critical industry knowledge, leaving that position is pretty damning. Per the report, Tan paints a picture of a bloated company that is risk-averse. The fact that he only lasted two years in the seat (after having been tasked with actual hands-on work by CEO Pat Gelsinger) is even more damning. He's been on the board of HP (Enterprise) for almost a decade. HP! It increasingly feels like Intel needs a Hail Mary. They're not in the dire straits that Apple was in back in the 90s – they have almost $30B in cash, for one thing – but the perception is bad and getting worse. Time is not on their side. They're under assault from all sides. Activists are circling... Who can they buy? Who would they be allowed to buy?
Well, they bought no one – and no one bought them, though many groups seemingly kicked some tires there with at least parts of Intel's business. That, in part, led to my prediction cited above that they would be "bailed out" in some form by the US government – especially if the CHIPS Act was under fire, which it now is. But at the same time, the US obviously doesn't want to – and can't afford to – lose Intel as the homegrown player in chips. And so, as Tripp Mickle notes for NYT:
This year, the Trump administration began meeting with Intel’s leadership about how to restore its business, one of the country’s last in advanced semiconductor manufacturing. One proposal was to have a rival, Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, assume operations for Intel’s ailing manufacturing business. Frank Yeary, Intel’s chairman, was open to that idea, The New York Times has reported.
Yes, the Trump administration has been trying to get TSMC to bail out Intel (and TSMC has subsequently approached NVIDIA, AMD, and Broadcom to see about spreading the burden, in particularly with Intel foundry, as it were). But again, the first domino was getting a new leader of Intel in place. And now they have him.
But Tan is also seemingly a man who likes to do this his way, not necessarily the way he's being directed – see also: his brief stint on Intel's board, per above. He's also seemingly one hell of a dealmaker, with basically all the connections in the world – or, at least, this world. Back to the Nellis and Cherney report for Reuters:
While little known to the public, his advantage is that virtually every one of Intel's former and potential customers knows him and has done business with him, either buying one of the many startups he backed or using software from a company he ran.
Tan rubs shoulders with the likes of Lisa Su from Advanced Micro Devices and Nvidia's Jensen Huang, two AI chip leaders who, according to Reuters reports, had been pitched to invest in Intel. His efforts are also likely to be closely watched by U.S. President Donald Trump, who is eager for Intel to rebound.
Tan "can leverage his experience and especially his industry connections, while also pursuing excellence within Intel," said independent analyst Jack Gold. "Hopefully the board will stay out of his way as he makes needed changes."
That last bit remains key. It's pretty clear that Intel's board – which again, Tan was a member of, briefly – was at least part of the problem over the past few years. Maybe a big part. Perhaps the biggest part, as I wrote after Gelsinger's ouster:
Put another way: Pat Gelsinger failed to save Intel because no one could save Intel. Certainly not in the three years he was given to do so.
Concluding with:
Where Intel goes from here is beyond murky. They clearly need some sort of visionary CEO who can come in and put in place a plan for where the world is going next. But they also have to execute on that plan and stay the course through the turbulence. It doesn't seem like Intel's current board is going to allow for that. Ultimately, fingers must be pointed beyond the CEO as well...
Just over a decade ago, I recall wondering the same thing about a then-floundering Microsoft. Ultimately, that led to the ouster of Steve Ballmer. But without a revamp of the board, one has to wonder if Satya Nadella would have been able to turn around Microsoft as he has – in spectacular fashion. If I'm Lip-Bu Tan or any of the other would-be candidates to run Intel, I need to make sure the board is in place to allow the company to succeed.
Something Steve Jobs learned the hard way.
Well, alongside his appointment as CEO – a move which has Intel's stock up over 10% in pre-market trading – guess who is back on the board?
M.G. Siegler
M.G. Siegler
M.G. Siegler