Intel's CEO, under attack from Trump, is already at odds with his board

Mint

2 days ago

Intel Chief Executive Lip-Bu Tan was already at odds with some board members before President Trump jumped into the fray.
Tan and some Intel directors have disagreed in his first months in the role about questions as central as whether the company should stay in the manufacturing business or exit it entirely, according to people familiar with the matter. Recent efforts by Tan to raise new capital and acquire an artificial-intelligence company have been stalled by people on the board, they said.
On Thursday, the internal tensions were heightened when Trump unexpectedly called for Tan's ouster, claiming he is 'conflicted" by business ties to China.
Intel so far is standing by Tan. The company issued a statement Thursday that said the company, the board and Tan are all 'deeply committed to advancing U.S. national and economic security interests and making significant investments aligned with the President's America First agenda."
Intel reigned for decades as the world's most valuable semiconductor company, but its failure to foresee the rise of AI helped cut its market value in half since the beginning of last year.
The day Intel named Tan CEO in March, the company's shares rose over 13%. Tan, a former Intel director, had pulled off a turnaround at Cadence Design Systems during a long run helming the software company.
The honeymoon period didn't last long. Almost immediately, Tan and Intel board chairman Frank Yeary disagreed about whether Intel should remain in the business of making chips for itself and its clients or exit manufacturing, the people said.
The segment that includes Intel's chip factories, which last year supplied around a third of Intel's revenue, has been a money loser. But some view it as politically important because it helps secure the U.S.'s semiconductor supply chain.
Yeary, a former investment banker, had drawn up a plan for Intel to exit from the foundry business entirely earlier this year when acting as interim executive chair. Yeary's proposal involved spinning out the business and having other companies such as Nvidia and Amazon take stakes in it, the people said. Yeary also explored brokering a sale of the business to Taiwan's TSMC, the people said, but that effort went nowhere.
Tan, on the other hand, has argued that Intel's foundry business is integral to its success and needed to ensure the U.S. doesn't become reliant on foreign semiconductor companies such as TSMC and Samsung, the people said. (While TSMC and Samsung have committed to building more plants in the U.S., critics say their research and development efforts are still centralized elsewhere.)
More recently, Intel had lined up a handful of Wall Street investment banks to facilitate a multibillion-dollar capital raise, with the aim of using the money to invest in its fabrication plants and bolster the company's balance sheet, the people said.
Management hoped to kick off the efforts around the company's most recent quarterly earnings report in late July. But some board members, including Yeary, wanted to move on a slower timeline than Tan and pushed it back, possibly to 2026, the people said.
Intel had also been exploring a potential acquisition of an AI business, the people said. Proponents of the deal, including Tan, saw it as an opportunity for the company to catch up to rivals such as Nvidia and AMD, which are much further ahead in AI. But the board took its time deliberating the potential deal, and another publicly traded technology company appears poised to buy the target instead, the people said.
Intel has also recently pursued strategic partnerships that fizzled out, the people added.
Tan feels his hands have been tied by the board to fix the company, the people said. Intel is buying time by reining in spending. It announced a 15% cut to its workforce with earnings last month and scrapped plans to spend tens of billions of dollars on new chip facilities in Europe. Intel also said it would further slow the pace of construction on an Ohio project.
'There are no more blank checks," Tan wrote in a recent memo to staff. 'Every investment must make economic sense."
Trump's attack on Tan took him and the company by surprise after he had recently been making inroads with the administration.
Intel was a big winner in former President Joe Biden's CHIPS Act, which doled out billions in grants to help strengthen the U.S.'s semiconductor capabilities. But Trump has instead focused on tariffs to incentivize domestic manufacturing and Commerce Secretary Howard Lutnick has said Trump is reworking some of the CHIPS Act deals.
Tan had a roughly hourlong meeting with Lutnick in April to discuss his plans to turn the company around, one of the people familiar with the matter said. The two recently spoke again by phone and had discussed meeting again later this month. Lutnick had indicated to the CEO that the administration would support Intel if it had realistic plans to land big customers such as Apple, the person said.
Then Trump on Thursday morning posted that Tan needed to resign because he is 'highly conflicted" and 'there is no other solution to this problem."
His concerns appear to be tied to a recent development involving Cadence Design, the company Tan led until 2021, and his venture-capital firm's investments in Chinese companies. Cadence last week agreed to plead guilty and pay more than $140 million to resolve Justice Department charges for selling its chip-design products to a Chinese military university.
U.S. Sen. Tom Cotton (R., Ark.) had earlier this week sent a letter to Yeary, the Intel board chair, questioning him about Tan's ties to Chinese firms. Sen. Bernie Moreno of Ohio, where Intel has delayed plans to build new facilities, joined in Thursday, calling for Tan to resign.
Intel said in its statement Thursday that it looked forward to 'continued engagement" with the administration.
Another challenge for Tan is the fact that his predecessor, Pat Gelsinger, had been forging a relationship with Vice President JD Vance before he stepped down, a person familiar with the matter said.
Gelsinger departed from Intel right as Trump and Vance won the 2024 election, three months after Tan abruptly exited the Intel board over disagreements with how Gelsinger and other board members were running the business, according to people familiar with the matter. One former Intel board member believes Gelsinger's relationship with Vance could have given Intel a valuable line to the White House to turn around its fortunes.
Write to Lauren Thomas at [e-mail]