Intel names Lip-Bu Tan as CEO amid deepening crisis
Intel shares surged in extending trading after the struggling chip giant turned to a veteran with strong industry ties.
Intel has appointed semiconductor industry veteran Lip-Bu Tan as its new chief executive officer, effective March 18, as the company fights to regain its footing amid intensifying competition and internal upheaval. The move comes just over two months after the abrupt ousting of Pat Gelsinger, signaling a shift in Intel’s approach as it attempts to execute a long-promised turnaround. Intel shares surged in extending trading following the announcement.
Tan, who previously served on Intel’s board before stepping down last year, has been seen as a contender for the role. In December, Intel’s board approached him about taking over leadership, according to sources cited by Reuters. His appointment reflects both the urgency of Intel’s challenges and its search for a leader capable of reviving its once-dominant position in the chip industry. Tan formerly served as CEO of Cadence Design Systems from 2009 to 2021, where he drove the company's transformation centered on customer-centric innovation.
A Boardroom Battle Over Intel’s Future
Tan’s return to Intel’s top position comes after reported clashes with the board and previous leadership over the company’s bloated workforce, bureaucratic culture, and lackluster artificial intelligence strategy. Last August, sources revealed that Tan had grown increasingly frustrated with Intel’s reluctance to take bold steps in cutting costs and streamlining operations. His departure from the board was attributed to personal reasons, but insiders suggest it was driven by deeper disagreements over the company’s direction.
Intel has faced criticism for lagging behind competitors like Nvidia and AMD in the AI-driven semiconductor race. The company’s missed opportunity in 2018 to acquire a significant stake in OpenAI, combined with its repeated failures to produce a blockbuster AI chip, has left it struggling to capitalize on the AI boom. Meanwhile, Nvidia’s meteoric rise to a $3-trillion market cap has underscored just how much ground Intel must recover.
Workforce and Bureaucracy Concerns
One of Tan’s primary concerns has reportedly been Intel’s workforce size and management inefficiencies. Under Gelsinger, Intel’s headcount swelled by at least 20,000 employees, despite the company’s financial struggles. The firm announced layoffs affecting more than 15% of its workforce last August, marking the second round of significant cuts in two years. However, Tan believed these reductions were insufficient and that Intel needed to target middle management layers that were stifling innovation and slowing decision-making.
Intel’s workforce remains larger than the combined headcount of Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC), raising concerns about inefficiency. Some former Intel executives have argued that the company’s culture has shifted away from the “only the paranoid survive” ethos championed by its legendary co-founder Andy Grove.
Tan was reportedly frustrated with the board’s reluctance to adopt his recommendations on making the manufacturing business more customer-centric and efficient. While Intel continues to expand its factory footprint in the U.S. and Europe, it has yet to announce major clients that would validate its foundry strategy.
Earlier Wednesday, Reuters reported that TSMC has pitched U.S. chip designers Nvidia, Advanced Micro Devices, and Broadcom on taking stakes in a joint venture that would operate Intel’s factories.
Under the proposal, the Taiwanese chipmaking giant would manage Intel’s foundry division, which manufactures custom-designed chips for customers, but it would not own more than 50%, the sources said. Qualcomm has also been approached by TSMC, according to one of the sources and a separate source.
Reuters contributed to this report
