*Updated with Thursday share price
Intel appointed Lip-Bu Tan as its next CEO, sparking investor optimism for a company in turnaround mode. Tan will also rejoin his post on the board after he stepped down from the board in August prior to the departure of Pat Gelsinger as CEO in December.
Intel shares immediately shares rose more than 10% on the news, which broke just as markets closed Wednesday. Shortly after markets opened Thursday, Intel's stock price had climbed by nearly 16% to $23.98. *
Board Chairman Frank Yeary called Tan an “exceptional leader” with the kind of technology savvy that analysts and investors have said will be needed to bring Intel through months of dramatic change, including martialing a turnaround that has included layoffs of 15% of its work force.
Tan holds 20 years of semiconductor and software experience as well as deep familiarity with Intel’s businesses. He formerly served as CEO of Cadence Design Systems from 2009 to 2021. During that time, Cadence more than doubled its revenue and saw a stock price boom of 3,200%.
Mostly positive reax from industry analysts about Tan appointment
Longtime Intel analyst Jack Gold of J. Gold Associates said the Tan appointment is “welcome news for Intel.” He called Tan an industry veteran with “intrinsic understanding of the semiconductor industry” for both the product design side and chip manufacturing. “Intel Foundry needs help in making their tools more user friendly and accessible for potential customers,” Gold said.
“While I didn’t agree with the firing of Pat Gelsinger, at least his replacement seems capable of continuing Intel’s turnaround,” Gold added. “But we still need to be realistic. While Intel has made much progress, the turn around will still take one to two years to full materialize. Patience is required.”
Since Gelsinger’s departure in December, interim co-CEO’s have worked to keep Intel solid—David Zinsner and Michelle Johnston Holthaus. Zinsner remains CFO, while Johnston Holthaus remains CEO of Intel Products.
The appointment of Tan apparently indicates the board wants to keep Intel as a whole, instead of splitting it up and perhaps selling off the design side or the fab side. “If they wanted to split up the company, I believe they would have hired a financial-oriented person to do that rather than a technologist,” Gold said. “This is good news for those of us who think Intel’s future is brighter if products and manufacturing remain under the same Intel umbrella.”
Leonard Lee, executive analyst at NeXt Curve, said on LinkedIn that Tan's appointment raises questions about the fate of Intel Foundry. "The fate of Intel Foundry just became an interesting contemplation once again," he wrote. "There's lots of excitement with Lip-Bu taking the helm, but what is it that he can do to right the ship that he couldn't do on the board of Intel?"
IDC analyst Mario Morales said Tan is not only a technologist, but is "well regarded as an investor" with key roles in startups in semiconductors in recent years. "Intel's definitely going to be complex to turn around and it means the board decided on him when they could not find an easy solution for [what to do] with Intel Foundry Solutions," Morales said in an interview.
As Gold suggested, IFS will need Tan's insights in EDA and tools, based on his years at Cadence, for making chips, Morales said. But IFS "needs something big to get customers on board with Intel's process technology...Right now, customers are kicking the tires and Intel might need to see a few big customers to be the first to support its process" technology.
One unusual theme emerged in Tan's appointment regarding his relationship with Gelsinger. While many reports said the two men disagreed when Tan left the Intel board in August, it might have happened that Tan left because he disagreed with the board over the anticipated firing of Gelsinger, two analysts theorized.