Intel, which is experiencing the worst performance decline in history, has appointed Lip-Bu Tan (65), former Chief Executive Officer (CEO) of Cadence Design Systems, to the top position that had been vacant for three months. While previous CEO Pat Gelsinger, a legendary engineer, had elevated Intel's design and manufacturing technology, which had been stagnant for a long time, it is expected that CEO Tan will leverage the expertise of the world's largest electronic design automation (EDA) company to exhibit environmentally friendly leadership. In particular, industry observers believe he will strengthen Intel's competitiveness and market influence in the foundry sector.
Intel announced on the 12th (local time) that Tan will assume the role of CEO starting on the 18th and will rejoin the board of directors from which he had left in August of last year. Tan, originally a core member of Intel's board, had departed the company due to differences in business perspectives with former CEO Gelsinger. Although Tan aimed to reform Intel's business strategy and conservative bureaucratic culture, he faced significant internal resistance. Gelsinger was dismissed by the board in December of last year, four months after Tan left the board, due to failure to overcome performance declines.
Tan has taken on the significant responsibility of reviving Intel’s competitiveness, which once led the semiconductor industry. Intel dominated the global semiconductor market in the past centered on personal computer (PC) central processing units (CPUs), but has fallen behind competitors like Nvidia as it has shown limitations in supplying the high-performance hardware needed for artificial intelligence (AI) operations. In the general server CPU market, which accounts for more than 70% of Intel’s operating profit, the company has increasingly lagged behind AMD, leading to worsened 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 over 15,000 employees.
◇ Why was CEO Tan, who clashed with Gelsinger, chosen by the board?
Notably, CEO Tan is a former CEO of Cadence, which is regarded as one of the two pillars in the global EDA industry. EDA is a company that develops software tools for simulating all processes of semiconductor design and manufacturing, and it is often referred to as a 'super giver' within the industry. Given the nature of EDA companies, which require close collaboration with fabless, integrated device manufacturers (IDM), and foundries throughout the design to the final manufacturing mass production process, there is a high potential for forming strong partnerships.
The conflicts that occurred last year between former CEO Gelsinger and incoming CEO Tan regarding foundry operations are also related to this. Industry insiders speculate that while Gelsinger focused on enhancing Intel's degraded process technology, CEO Tan placed more emphasis on harmony with the ecosystem. In particular, it is known that CEO Tan adopted a more customer-friendly approach regarding Intel's foundry business, which the company has been struggling with.
CEO Tan is regarded as someone who established strong partnerships with numerous large clients while leading Cadence. Frank Yeary, chairman of the Intel board, noted that "Tan transformed the company culture based on customer-centric innovation during his tenure as Cadence CEO, more than doubled revenue, expanded operating margins, and led to a stock price increase of over 3,200%,” and he expressed confidence that Tan would demonstrate similar success at Intel.
He is also the first Asian CEO in Intel's history. Born in Malaysia and raised in Singapore, he majored in physics at Nanyang University and obtained a master's degree in nuclear engineering from the Massachusetts Institute of Technology (MIT). He later completed an MBA at the University of San Francisco and built a career in venture capital before joining the board of Cadence, an American semiconductor design software company, in 2004. Subsequently, he served as co-CEO in 2008 and as sole CEO from 2009, leading the company for over a decade and establishing a duopoly in the semiconductor design software market with competitor Synopsys.
◇ CEO Tan: “I will grow Intel’s foundry to a world-class level”
Tan stated that he will continue the struggling foundry business of Intel. His predecessor, Gelsinger, had been making large-scale investments since 2021, aiming to make Intel a company comparable to Taiwan's TSMC, the world's largest foundry. However, Intel's foundry business has reported losses exceeding 7 to 14 trillion won annually for the past three years. Tan plans to strengthen the Intel foundry model. He remarked, "I will work to rebuild Intel as a world-class product company and establish a world-class foundry to provide greater satisfaction to our customers,” adding, "This is something we must do to prepare for the future and rebuild Intel."
Tan emphasized to employees that he is confident in rebuilding the company. In a memo sent to staff, he stated, "It will not be easy, but I joined because I firmly believe that Intel has the capability to win," and noted, "Intel plays an essential role not only in the U.S. but also in the global technology ecosystem."
The market greeted the news of Tan's appointment as CEO with enthusiasm. Intel's stock, which had declined by 54% over the past year, surged 11% in after-hours trading. Currently, Intel’s market capitalization stands at $89.5 billion (approximately 130 trillion won), which does not place it among the top ten companies based on market capitalization in the semiconductor industry. Stacy Rasgon, an analyst at Bernstein Research, remarked, "Bringing in Tan was likely the optimal choice for Intel,” and added, "If Tan cannot revive Intel, it would mean that it is a company that could not be saved in the first place."
Bob O’Donnell, chief analyst at Technalysis Research, stated, “Tan is an excellent fit for Intel,” adding, “He has a deep understanding of semiconductor manufacturing and design and possesses a very extensive network in the industry.” Anshul Sag, a researcher from Moore Insights, noted, “Tan has stability and rich experience,” suggesting that his recruitment indicates a strong possibility that Intel could continue its foundry business and product development while maintaining its current direction.