After a search for a new chief executive officer that lasted more than three months, Intel Corp. has decided Lip-Bu Tan is the best choice to salvage the company’s future. He’ll take up the most difficult job in the chip business, Bloomberg News reported on Wednesday evening. I think you could take it a step further — this may well be the toughest gig in US tech, full stop.
In a letter, Tan told his new subordinates that they were “in many ways” the “founders” of “The New Intel” — some motivational speaking to give the endeavor the feeling of a fresh start. What exactly the “new” Intel will look like is not yet clear. Tan wrote of his belief that Intel should lead at both product design and manufacture, a hint — in my reading at least — that keeping the company intact, rather than splitting off its foundry business, would be the way forward.
The reality for Tan and his team is that the “New Intel” could end being the “Last Intel” as we know it. It’s final-throw-of-the-dice time. If Tan can’t execute Intel’s embattled turnaround plan, it seems unlikely anybody else will get the chance.
Failure would mean that Intel, a former jewel in the American tech crown, would almost certainly be picked apart. Intel Foundry — a manufacturing arm to make chips for other companies in addition to its own — has piqued the interest of outside investors, namely Taiwan Semiconductor Manufacturing Co., the company most to blame for Intel’s downturn (other than perhaps Intel itself). Reuters reported on Wednesday that the Taiwanese colossus had been seeking allies to join a bid to buy and operate Intel’s fabrication plants.
It’s unclear whether TSMC’s recent announcement of a $100 billion US investment, trumpeted by President Donald Trump earlier this month, has made a move for Intel Foundry less likely. Even if so, others would most likely be interested — rumors of other deals for different parts of the company, or all of it, regularly surface.
Some rightly question whether selling Intel Foundry to TSMC would further weaken the US’ standing in cutting-edge chips, given TSMC would be expected to keep its most innovative research and manufacturing processes within Taiwan. Under this arrangement, US talent would ebb away. The better alternative — for competition in semiconductors and for the US’ position in this critically important industry — is to double down on a plan to keep Intel in one piece, slugging it out like a battered Rocky Balboa. That means keeping its own product design business under the same roof as its manufacturing.
Concerns have been raised that companies might be reluctant to use Intel plants to make their chips because of competition concerns, but that seems overstated. In recent months, it has been announced that Nvidia Corp., Broadcom Inc. and Amazon.com Inc. are checking out Intel’s manufacturing capabilities. Although it’s still early days, Bloomberg Intelligence analysts suggest the interest indicates those companies have some confidence in progress made on 18A — Intel’s next generation of chip manufacturing and a milestone on which the company’s future seems to rest.
Investors appeared cheered by Tan’s selection. Intel shares rose more than 11% in after-hours trading following the announcement.
But there is no time for further delay. Tan is familiar with Intel. He’s a 30-year industry veteran who previously served on the company’s board. He said that “Intel will be an engineering-focused company” and will take “calculated risks to disrupt and leapfrog.” He wants to find Intel’s “winning culture” again. At this stage in Intel’s turbulent but proud history, if he can’t do it, no one else is likely to get a shot.
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