Intel names Lip Bu Tan as new CEO with mandate to break up design and foundry businesses
Mar 14, 2025
Key Points
- Intel appoints Lip Bu Tan, former Cadence CEO, to lead turnaround with a mandate to potentially split design and foundry businesses, driving a 14% stock surge.
- Tan's strategy mirrors his Cadence playbook: refocus engineering culture, cut costs, and explore outside funding for the foundry unit separate from chip design.
- Tan's deep ties to Chinese semiconductor investors through Walden International create political risk as Intel seeks U.S. government backing under potential CHIPS Act cuts.
Summary
Intel has appointed Lip Bu Tan, a veteran semiconductor investor and former CEO of Cadence Design Systems, as its new chief executive officer. Shares rose more than 14% at close. Tan, 65, takes over a company that has lost two-thirds of its stock value over four years while missing the AI boom. Pat Gelsinger was pushed out three months ago.
Tan's mandate is to refocus Intel as an engineering-first company, cut costs aggressively, and decide whether to split its design and foundry businesses. People close to the company say he has roughly one year to demonstrate progress.
Design versus foundry
Analysts and board members have long advocated separating chip design from manufacturing. Nvidia follows this model, focusing on design and architecture while outsourcing fabrication to TSMC. That focus lets Nvidia command enormous margins through software lock-in—CUDA, NVLink, and the broader ecosystem mean that AI researchers and foundation-model teams choose Nvidia hardware almost by default. Intel's integrated model has constrained flexibility and forced the company to shoulder the enormous fixed costs of owning fabs.
A full sale of Intel or parts of it to competitors appears off the table for now. Early-stage discussions with Broadcom, Qualcomm, Global Foundries, and TSMC have stalled, according to bankers. The company is instead exploring outside financial backing, including from customers, to fund the foundry business separately.
Tan's track record
When Tan took the helm at Cadence in 2009, the company was in turmoil. He refocused the business, pushed services to the cloud, landed major customers including Apple, and delivered a 3,000% return in share price over his 13-year tenure. He has publicly described building what he calls a "one-team culture" to eliminate silos, an approach he frames through basketball. Born in Malaysia and raised in Singapore, Tan aspired to be a professional player until his mother told him to get a real job.
China exposure
Tan is founder and chairman of Walden International, one of the first Silicon Valley venture firms to systematically invest across Asia. He was an early investor in SMIC, which the Commerce Department blacklisted in 2020 for alleged ties to the Chinese military. Walden sold its last stake in 2021. A 2023 House select committee report highlighted hundreds of millions of dollars in Walden investments tied to Chinese entities involved in military activities or human rights abuses.
One Chinese media outlet headlined the news as "Intel hires the CEO with the best knowledge of China's chip industry." The irony is sharp: Intel is America's great semiconductor champion, and Tan brings deep relationships with a strategic adversary. The steelman argument is that he is a U.S. loyalist positioning himself to understand and compete against the Chinese semiconductor threat. The concern is more straightforward.
Policy environment
Tan's timing is complicated. President Trump has signaled willingness to unwind the CHIPS Act, which had earmarked over $50 billion for semiconductor investment. Intel was slated to receive up to $8 billion contingent on building new factories. Those facilities have already faced delays. TSMC, by contrast, is building U.S. fabs ahead of schedule.
Tan has declared that generative AI is bigger than the invention of the web and has spent recent years investing in AI startups globally. Whether he will pursue acquisitions of AI-chip design startups remains an open question. Companies like Etched and Cerebras have raised capital quickly, secured TSMC foundry time, and become strong chip designers. Some see these as acquisition targets that could provide Intel new product lines in inference and specialized AI workloads.