Li-Bu Tan Takes Helm at Intel, Can He Steer A Turnaround?
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.
“I subscribe to a simple philosophy: Stay humble. Work hard. Delight our customers. When you anchor yourself in those three core beliefs, good things happen,” Tan encourages Intel staff in an open letter.
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.
Lip-Bu Tan, a Malaysian-born American, is an alumnus of the Massachusetts Institute of Technology (MIT), where he earned a master’s degree in nuclear engineering. He also holds an MBA from the University of San Francisco. Tan is widely recognized for his contributions to the semiconductor industry, including being honored with the Robert N. Noyce Award, the highest accolade from the Semiconductor Industry Association. This award underscores his enduring impact and leadership in advancing semiconductor innovation globally.
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 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,” Tan wrote.
“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.”
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 and served as CEO at Cadence, and thus it was 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.
1. No Spin-Off: Who Will Be Intel’s Savior?
Craig Barrett, Intel’s former chair and CEO, is against breaking up the company. Lip-Bu’s letter to Intel staff also gave the impression that keeping the company's unity is his priority at the moment. However, we do believe that spinning off the foundry is inevitable for Intel’s profitability, even though Tan is unlikely to do so in the short run. With no incentives for other semiconductor companies to take over, private equity emerges as a potential solution. U.S. financiers are renowned for their M&A expertise (so is Lip-Bu Tan), but success will hinge on finding a strategic partner to enhance Intel Foundry Services' yield. Only by improving production efficiency and reliability can Intel attract the customer orders it desperately needs to regain competitiveness in the semiconductor market.
The cruel competition at the advanced chip level is all about yields. You cannot depend on NA-EUVs alone. Intel has already lagged below 10nm levels. There’s no shortcut to achieving commercially viable yield, as many TSMC engineers have testified. Intel must restore its manufacturing discipline during the Andy Grove era.
The challenges for Intel Foundry include:
Process Roadmap Execution: While Pat Gelsinger had made progress on the "5 Nodes in 4 Years" strategy, the new leadership must ensure its completion.
Scale-up Difficulties: Successfully producing prototypes is only part of the challenge. The real test lies in scaling up production efficiently.
Yield Improvement: Boosting yields is crucial for Intel Foundry to become competitive with established players like TSMC.
Customer Acquisition: Intel Foundry needs to attract and retain customers to establish itself as a viable alternative in the foundry market.
The new CEO of Intel Foundry, whoever that may be, will need to possess a combination of technical expertise, strategic vision, and operational excellence to overcome these hurdles. They will be tasked with not only continuing the progress made under Gelsinger's leadership but also addressing the critical scale-up and yield challenges to make Intel Foundry a formidable competitor in the global semiconductor manufacturing landscape.
2. Coopetition with TSMC
Intel must continue outsourcing chip production to ensure timely product launches while its manufacturing capabilities catch up. The company has high hopes for its 18A process to surpass TSMC, but doubts persist regarding Intel's ability to deliver satisfactory performance. As TSMC founder Morris Chang famously stated, scaling up manufacturing is a steep learning curve, and Intel is no exception. For now, Intel must persevere and focus on improving its processes.
Until Intel achieves stable performance with its own nodes, maintaining a cooperative yet competitive relationship with TSMC is crucial. At the Morgan Stanley Technology, Media & Telecom Conference, John Pitzer, Intel’s vice president of corporate planning and investor relations, confirmed the shift in strategy: "A year ago, we were talking about trying to get [usage of TSMC] to zero as quickly as possible, but that is no longer the strategy."
TSMC remains an essential partner for Intel to stay competitive against AMD and Nvidia. With TSMC's production lines for AI chips fully booked through next year, Intel cannot afford to risk canceling its orders and relying solely on its foundry. Such a move could have catastrophic consequences for upcoming product launches and market competitiveness
3. Long-term Alignment
Intel’s board composition – dominated by financial experts rather than semiconductor veterans – has historically prioritized short-term returns over multi-year manufacturing investments. This tension culminated in Pat Gelsinger’s 2024 retirement after his IDM 2.0 strategy failed to meet the board’s three-year turnaround expectations. Under new CEO Lip-Bu Tan, Intel now faces dual challenges: maintaining investor confidence while executing a 5-7 year roadmap to restore process leadership.
To rebuild capabilities, Intel must focus on:
A. Mature Node Optimization
Prioritize yield improvements at legacy nodes (Intel 7/Intel 4) to stabilize cash flow and restore operational discipline.
Implement the internal foundry model, where product groups pay market-rate prices to manufacturing – incentivizing efficiency gains worth $8–10B by 2025.
B. Advanced Process Execution
Accelerate 18A/20A node development using lessons from TSMC collaborations on 3nm tiles for Core Ultra processors.
Leverage Foveros 3D packaging to combine internally produced base tiles with TSMC-made compute tiles, maintaining product competitiveness during the transition.
It requires grit and determination to redesign operations and retrain manufacturing capabilities. Once the entire operation and discipline are restored, the learning curve for producing advanced chips can be significantly reduced.
Who would be a better partner for Intel in this effort? GlobalFoundries or UMC, which is already cooperating with Intel on developing 12nm process. Though, they also have issues that need to be overcome.
As TSMC will be accelerating expansions of its capacities in the United States and Taiwan for advanced chips, recruiting TSMC to be a minor stakeholder for Intel Foundry would not be in the best interest of Intel. Why? If TSMC becomes a stakeholder, they would be able to know what Intel is doing for a comeback. Competition is good for free markets. Before Intel can recover its competitiveness in manufacturing, it needs to relearn its skills and avoid taking unnecessary risks.
Lip-Bu Tan faces significant challenges as he takes over at Intel on March 18. Whether through a foundry spin-off or internal restructuring, his leadership will be critical in navigating Intel’s path forward. As industry observers watch closely, one thing is clear: Tan’s tenure marks a pivotal moment for the iconic chipmaker.
First I've seen of this, Kudos.