Reinventing Intel: Will Lip-Bu Tan's Biggest Contrarian Bet Succeed?
Is Spin-Off or Merger with A Mature-Node Chip Maker in His Cards?
Intel’s new CEO Lip-Bu Tan talked about rejuvenating the giant with a startup mindset, attracting top talent, and encouraging customers to be “brutally” honest with them at the Vision 2025 event. Many people may wonder, “Will Intel be as successful as one of his startup investments”?
Tan emphasized that Intel’s resurgence would focus on engineering excellence, customer-centricity, and software-led innovation. However, transforming Intel—a 58-year-old conglomerate with over 100,000 employees—poses significant challenges.
Undoubtedly, Intel is another contrarian semiconductor investment project that Lip-Bu is doubling down on. Having achieved 43 IPOs and 25 successful M&A among Walden’s 251 semiconductor-related investments as a venture capitalist, will he continue to do magic as Intel’s CEO?
Tan faces both optimism and skepticism as he embarks on the challenging task of revitalizing the semiconductor giant. While his appointment has sparked hope due to his proven track record as a leader and venture capitalist, industry experts highlight significant hurdles. “A big company, with a long history will inevitably have multiple factions, more than a few courtiers and lots of filtering between the coalface and the c-suite & Board of Directors,” wrote Woz Ahmed, a senior executive and advisor, on his Linkedin profile, arguing that Intel is not going to be a one-time course correction but may take the work of several CEOs (and their exec teams) to turn it around.
Tan’s outsider status—which would have been described in Taiwan as a “parachute trooper” (空降部隊)—offers both advantages and risks. Unlike long-serving Intel executives who may lack external semiconductor experience, Tan brings fresh perspectives unburdened by institutional inertia. His ability to view Intel’s challenges from an external vantage point could help him implement bold changes without legacy baggage.
Lip-Bu Tan has pledged to reform Intel’s culture by empowering engineers, fostering innovation, and leveraging his extensive network in emerging technologies. However, overcoming entrenched habits within a 58-year-old conglomerate will require patience, resilience, and strategic foresight. The road ahead is fraught with challenges but also ripe with opportunities for transformative growth.
What are the opportunities and challenges for Lip-Bu Tan as he embarks on his journey as Intel’s CEO?
Opportunities:
1. Any improvement can bring big rewards when Intel is at a comparative nadir in history: Tan told the audience how he turned Cadence around by taking customers’ brutal complaints and making improvements. Recognizing the past mistakes and picking up oneself is a good starting point. Forgetting what is behind and straining towards what is ahead to press on toward the goal.
2. Customers want to have an alternative to TSMC: It has always been so. Otherwise Samsung doesn’t even have a chance to get 8% of global market share in foundry. However, Intel has to improve its manufacturing capabilities and yields first to win customers’ trust.
3. Intel needs his talent as a venture capitalist and his connections: with his network of talent in AI, quantum computing, robotics, silicon photonics, special materials, etc., Intel may get the alliance to leapfrog in the “More than Moore” era.
Challenges:
Board of Directors' Patience:
Turning Intel around will require long-term investment and strategic patience. With Trump’s administration potentially retracting CHIPS Act subsidies and Intel Foundry Services (IFS) losing money quarterly, Tan must convince the Board to support his reforms despite short-term financial pressures.Cultural Shift:
Successfully adopting a service-oriented foundry model requires humility and flexibility—traits that have been key to TSMC’s success but may be challenging for Intel’s entrenched corporate culture. Engineers must adapt to being on-call and prioritize efficiency to maximize profits.Customer Trust:
Intel's dual role as a foundry service provider and product competitor could raise concerns among clients about potential conflicts of interest. Building trust will require transparent policies, clear separation between foundry services and product divisions, and assurances that customer interests are prioritized. Intel's move to establish Intel Foundry Services as an independent subsidiary within the company aims to address these concerns by providing greater transparency and reducing potential conflicts. However, some industry experts still think it is not enough. A spin-off of its foundry business could address this issue, but would require careful execution.Financial Constraints for Mergers:
Industry experts suggest merging with mature-node manufacturers like GlobalFoundries or UMC to complement Intel’s advanced technology capabilities. However, financial limitations make such mergers difficult in the near term.
However, it is important to note that Intel does not lack friends from Taiwan who do not hesitate to provide advice for it to regain its strengths.
When Nikkei Asia reported potential merger talks between GlobalFoundries and Taiwan’s United Microelectronics Corp (UMC), retired semiconductor executives, including former TSMC co-COO Shang-yi Chiang, voiced support for an alternative merger between Intel and UMC or GlobalFoundries.
Chiang proposed that rather than seeking a partnership with TSMC, Intel should merge with a leading mature-node chipmaker to strengthen its foothold in the foundry market.
During a press conference with Burn-Jeng Lin, Dean of the College of Semiconductor Research at National Tsing-Hua University, Chiang highlighted that Intel excels in cutting-edge technologies but lacks manufacturing efficiency. He identified UMC and GlobalFoundries as ideal candidates for such a merger, emphasizing that their strengths in mature processes could complement Intel’s technological advancements. “If such a merger is achieved, it would result in complementary technologies and enhanced competitiveness,” Chiang stated, calling it a "perfect match."
UMC and GF, currently ranking at the world’s fourth and fifth largest semiconductor foundries, remain profitable even though they gave up competing in the advanced node territory. A merger with either one of them will get Intel Foundry in the top 5 list.
However, financial constraints pose challenges for Intel to pursue a merger at this time. Adding to the difficulties, the Trump administration is reportedly considering withdrawing CHIPS Act subsidies. Despite these obstacles, Konrad Young—a retired TSMC R&D director and former advisor to Intel—expressed confidence in Lip-Bu Tan’s leadership. Young praised Tan as the ideal candidate to lead cultural reform at Intel, comparing him to Broadcom CEO Hock Tan for their shared tenacity as Malaysian Chinese leaders in the semiconductor industry. He suggested that Lip-Bu Tan could tap into the Taiwanese semiconductor talent diaspora—engineers who previously worked in China but are now distrusted there and denied opportunities in Taiwan—to bolster Intel’s foundry operations.
As Lip-Bu Tan navigates the complex landscape of transforming Intel, he faces both opportunities and challenges. With his background as a venture capitalist and his commitment to innovation, Tan has the potential to steer Intel towards a brighter future. However, overcoming entrenched corporate culture, financial constraints, and skepticism from industry experts will require strategic leadership and patience. The journey ahead is fraught with obstacles, but with the right vision and execution, Intel’s comeback is just a matter of time.
Related articles and podcasts about Intel by TechSoda & SemiVision
The Future of Technology According to Intel's New CEO Lip-Bu Tan
TSMC Faces Tough Choices Amid Rumors for Intel Collaboration
Intel’s Secret Weapon: The 18A Process and Its Bold Comeback
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