By Max A. Cherney, Stephen Nellis
(Reuters) -Struggling U.S. chipmaker Intel on Wednesday named former board member and chip industry veteran Lip-Bu Tan as its CEO effective on March 18, more than three months after it ousted company veteran Pat Gelsinger.
Tan, a longtime technology investor with more than 20 years of industry experience, had been seen as a CEO contender. He was approached by Intel’s board in December, Reuters had reported, to gauge his interest in taking up the job.
Intel shares surged 12% in extended trading, and analysts welcomed the move that they said was likely to bring some stability to the chipmaker. The company’s stock had declined 60% in 2024.
Tan is a “really great fit,” said Bob O’Donnell, chief analyst at TECHnalysis Research. “He … knows the ins and outs of both chip manufacturing and chip designs … and is very well-connected.”
Tan formerly served as CEO of Intel supplier and chip-design software Cadence Design Systems from 2009 to 2021.
Intel is undergoing a historic transition as it attempts to emerge from one of its bleakest periods.
While struggling to cash in on a boom in investment in advanced AI chips that has fired up the fortunes of market leader Nvidia and other chipmakers, the company is spending heavily to become a contract manufacturer of chips for other companies, leading some investors to worry about pressure on its cash flows.
“Together, we will work hard to restore Intel’s position as a world-class products company, establish ourselves as a world-class foundry and delight our customers like never before,” Tan said in a letter to Intel employees on Wednesday, likely signaling he was looking to keep the chip design and manufacturing operations together.
Reuters reported on Tuesday that Intel rival TSMC has approached some of Intel’s biggest potential manufacturing customers about forming a joint venture to operate Intel’s factories.
Tan left Intel’s board last year over disagreements on how to turn around the company. He grew frustrated by the company’s large workforce, its approach to contract manufacturing and Intel’s risk-averse and bureaucratic culture, Reuters previously reported.
Tan will rejoin the board, Intel said.
Tan “brings stability and experience to a role that needs someone of his caliber, which is why I believe the company will likely stay the course with his appointment and continue to develop foundry and product,” said Anshel Sag, principal analyst at Moor Insights & Strategy.
(Reporting by Stephen Nellis and Max A. Cherney in San Francisco, Bhanvi Satija and Kritika Lamba in Bengaluru and Juby Babu in Mexico CityEditing by Arun Koyyur, Sayantani Ghosh and Matthew Lewis)
