Ex-Intel board members have an idea for reviving the company
What's the story
Former Intel board members Charlene Barshefsky, Reed Hundt, James Plummer, and David Yoffie have called for a major overhaul of the company. They stated that CEO Lip-Bu Tan's fate should be determined by shareholders and the board. Additionally, they proposed spinning off Intel's manufacturing unit into a separate entity to help regain its market dominance in US chipmaking industry.
Official stance
What did Tan say?
In light of a resignation demand by US President Donald Trump, Tan defended his position by saying he has always adhered to the highest legal and ethical standards. He also clarified that Intel is in touch with the Trump administration. "We are engaging with the Administration to address the matters that have been raised and ensure they have the facts," Tan said.
Allegations
Why Trump demands Tan's resignation
Trump's demand for Tan's resignation came after Senator Tim Cotton raised concerns over the CEO's alleged connections with Chinese companies. The senator also highlighted a recent criminal case against Cadence Design, Tan's former company. In his letter to Intel Chairman Frank Yeary, Cotton asked if the board was aware of subpoenas received by Cadence while Tan was its CEO and what steps had been taken to address this issue.
Impact
Tan already struggling to turn around Intel
Tan is already struggling to turn around the struggling chipmaker. Trump's demand for his resignation over his Chinese connections could further distract him from that task. Ryuta Makino, an analyst at Gabelli Funds, which owns over 200,000 shares in Intel, said, "It is distracting." Tan may now have to reassure Trump that he remains the right person to revive the storied American chipmaker.
Business strategy
Scaling back Intel's ambitions to rival TSMC
Tan has scaled back Intel's ambitions to rival Taiwanese chipmaker TSMC's contract manufacturing capabilities. He recently announced plans to slow down construction work on new factories in Ohio and build them only when there is demand for Intel's chips. This move could further strain relations with Trump, who supports expanding domestic manufacturing, while companies like Apple and NVIDIA have committed billions of dollars to such efforts.
Past scrutiny
More on Tan
Tan, a chip industry veteran, took over as Intel's CEO about six months ago. He was earlier the CEO of chip-design software maker Cadence Design from 2008 to December 2021. Under his leadership, Cadence agreed to plead guilty and pay over $140 million for selling goods to a Chinese military university, believed to be involved in simulating nuclear blasts. The sales were made during his tenure at Cadence.