Lip-Bu Tan aims to restore Intel's competitiveness amid historic performance slump

Intel, which is experiencing its worst performance slump in history, has appointed Lip Bu Tan (65), the former Cadence Design Systems Chief Executive Officer (CEO), to the long-vacant leadership position. The newly appointed CEO, regarded as a veteran in the semiconductor industry, expressed confidence that he will surely rebuild Intel.

On the 12th (local time), Intel announced in a statement that Tan will take over as CEO starting from the 18th and will rejoin the board of directors, which he left in August of last year. Tan was initially a key member of Intel's board but left the company due to differences in business views with former CEO Pat Gelsinger. Although Tan attempted to change Intel's business strategy and conservative bureaucratic culture, he faced significant internal opposition. Four months after Tan left the board, Gelsinger was removed by the board for failing to overcome underperformance.

Tan has taken on the significant task of reviving Intel's competitiveness, which once led the semiconductor industry. Although Intel dominated the global semiconductor market in the past focused on personal computer (PC) central processing units (CPUs), it has fallen behind competitors like NVIDIA as it has shown limitations in supplying high-performance hardware necessary for artificial intelligence (AI) operations. In the general server CPU market, which accounts for more than 70% of Intel's operating profit, it has been increasingly pressured by AMD, resulting in declining performance. Intel recorded a net loss of $18.8 billion (approximately 27.26 trillion won) last year, marking its first annual deficit since 1986. Since last year, Intel has been undergoing intense restructuring, including reducing its workforce by more than 15,000 employees.

Tan emphasized to employees that he is confident he can rebuild the company. In a memo sent to employees that day, he noted, "While it will not be easy, I joined because I firmly believe that Intel has the capability to win, and that it plays an essential role not only in the United States but also in the global technology ecosystem."

Tan stated that he will continue with the foundry business, which has been mired in losses. His predecessor, Gelsinger, had pursued large-scale investments since 2021, aiming to make Intel comparable to Taiwan's TSMC, the world's largest foundry. However, Intel's foundry business has recorded more than 7 to 14 trillion won in losses each year for the past three years. Nevertheless, Tan remarked, "We will strive to rebuild Intel as a world-class product corporation and establish a global-level foundry to provide greater satisfaction to our customers, which is something we must do to prepare for the future of Intel."

Born in Malaysia and raised in Singapore, he majored in physics at Nanyang Technological University and earned a master's degree in nuclear engineering from the Massachusetts Institute of Technology (MIT). After obtaining an MBA from the University of San Francisco and gaining experience in venture capital, he joined the board of Cadence, a U.S. semiconductor design software company, in 2004. He later became co-CEO in 2008 and sole CEO starting in 2009, leading the company for over a decade while establishing a duopoly in the semiconductor design software market with its competitor, Synopsys.

Frank Yeh, the chairman of Intel's board of directors, said, "Tan changed the culture based on customer-centric innovation, more than doubling Cadence's revenue during his tenure as CEO and expanding its operating profit margin, leading to a stock price increase of over 3200%. I believe he will demonstrate this successful experience at Intel as well."

The market reacted positively to the news of Tan's appointment as CEO. Intel's stock, which had fallen 54% over the past year, surged 11% in after-hours trading on that day. Intel's current market capitalization is $89.5 billion (approximately 130 trillion won), which does not place it among the 'top 10' corporations by market capitalization in the semiconductor industry. Stacey Rasgon, a researcher at the global investment research firm Bernstein, noted, "Selecting Tan was likely the optimal choice for Intel; if Tan fails to revive Intel, it would suggest that the company was beyond revival to begin with."