By Max A. Cherney and Jeffrey Dastin
SAN FRANCISCO, Dec 24 (Reuters) – It was a Thursday earlier than daybreak in Silicon Valley when Intel CEO Lip-Bu Tan discovered himself below assault by the president of the USA.
“The CEO of INTEL is extremely CONFLICTED and should resign, instantly,” U.S. President Donald Trump wrote on his Reality Social platform at 4:39 AM Pacific Time on August 7. Earlier than he was Intel CEO, Tan had been a prolific investor in corporations in China.
Trump and Tan had not met. Whereas know-how leaders from Nvidia, AMD, OpenAI, Amazon, Google and Palantir had all just lately traveled to see Trump, the pinnacle of America’s most storied chipmaker had not frolicked with the president since becoming a member of Intel in March.
Politics was not Tan’s prime precedence. It had been greater than 20 years since Tan, 66, had donated to a presidential election marketing campaign. Although he spoke with a handful of U.S. authorities leaders, together with Commerce Secretary Howard Lutnick in April, the Intel CEO didn’t fill the corporate’s prime coverage job in Washington for months after its prior holder, a Democrat, resigned.
Nearly instantly after Trump’s assault, Intel scrambled to lock down time with the president, two individuals with data of the state of affairs mentioned. That culminated in essentially the most pivotal, roughly 40-minute assembly of Tan’s decades-long profession.
Beforehand unreported particulars about Tan and Intel present how a man Trump had accused of supporting China’s pursuits got here away from the assembly with a dedication from the U.S. authorities to speculate billions of {dollars} for a virtually 10% stake within the firm.
The deal gave Intel a too-strategic-to-fail aura and opened doorways to potential companions who may wish to win the president’s favor. It additionally could pave the way in which for the federal government to take extra fairness stakes in companies the administration deems strategic, in what some traders beforehand described to Reuters as ushering in a brand new period of U.S. industrial coverage.
Intel’s share worth has risen round 80% since Tan’s appointment, outpacing the proportion positive factors of the S&P 500 and Nvidia in that point.
Reuters spoke with round 20 people who find themselves present and former Intel workers, authorities advisers, and Tan’s {industry} contacts. A few of them questioned whether or not Tan has the technical acumen to revive Intel’s lead in chip manufacturing and discover a profitable synthetic intelligence technique, at the same time as his abilities as a dealmaker served him nicely within the Oval Workplace and elsewhere.
Although Intel’s chips powered among the first mass-produced PCs, years of dysfunction had allowed international rivals resembling TSMC to eclipse Intel in high-end chip manufacturing.
In statements, an Intel spokesperson mentioned Tan wanted no persuading to interact with the Trump administration. Early on, he elevated authorities affairs, amongst different capabilities, to report back to him. Intel introduced in December {that a} Trump financial adviser would helm the unit.
“Lip-Bu Tan has an extended, and well-established historical past of engagement in Washington, each earlier than and after becoming a member of Intel,” the spokesperson mentioned. Intel declined to make Tan obtainable for an interview.
A White Home spokesperson mentioned President Trump was utilizing his government energy to get “the perfect discount for the American taxpayer” and safeguard U.S. safety.
“The Administration’s historic take care of Intel is one in all many initiatives to reshore semiconductor and different crucial manufacturing again to the USA,” the White Home spokesperson mentioned.
40 MINUTES IN THE OVAL OFFICE
Earlier than heading into the White Home, Tan referred to as on his personal allies who had solid relationships with the president, together with Microsoft CEO Satya Nadella and Nvidia CEO Jensen Huang, to vouch for him, mentioned two individuals aware of the discussions.
Tan “spoke, as he does typically, with confidantes who would have related perception and perspective forward of his assembly with President Trump,” the Intel spokesperson mentioned. Nvidia and Microsoft didn’t remark for this story.
Previous to the assembly, Tan strategized along with his advisors on find out how to persuade Trump he was an American patriot by discussing his private story and his dedication to the USA, the two individuals mentioned. He additionally ready to debate his China holdings, the individuals mentioned.
Tan has made some 600 investments in China, some linked to the nation’s navy, in keeping with Reuters reporting. These connections to China are what finally landed him within the crosshairs of the president. Two of Tan’s funding corporations — Walden Worldwide and Walden Catalyst — didn’t reply requests for remark. A 3rd, Celesta Capital, mentioned it had made one China funding that it exited in 2020.
His dealmaking acumen, Celesta Capital mentioned, is a key cause Tan “is so nicely suited to guide Intel’s present second.”
Simply two cupboard members joined the assembly between Trump and Tan within the Oval Workplace: Lutnick and Treasury Secretary Scott Bessent, one of many individuals mentioned. Trump questioned the Intel CEO about how he deliberate to show the corporate round, the individual mentioned.
Tan had already instructed Lutnick in a previous assembly that he didn’t need billions in handouts that the U.S. owed Intel as a part of the CHIPS Act, the Commerce Secretary mentioned in a video on X in August. Neither Lutnick nor Tan mentioned why. The grant cash had been provided to corporations below the 2022 CHIPS Act in change for reviving home manufacturing so the U.S. may scale back its reliance on international semiconductor manufacturing.
The administration of former President Joe Biden had introduced dozens of those awards to varied chip-related corporations.
So when Trump proposed that the U.S. obtain fairness in change for giving Intel extra CHIPS Act cash – an concept that two sources mentioned Lutnick had talked about for weeks with authorities employees – Tan struck a deal. Intel declined to touch upon the specifics of the personal dialog, however Lutnick later mentioned within the video that fairness made the change “truthful.”
The deal gave Intel a $5.7 billion money infusion and arrange the U.S. authorities to be its largest shareholder. After the preliminary assembly, Tan pledged to “make Intel nice once more” within the video that Lutnick posted on social media, with the caption, “The Artwork of the Deal: Intel.”
Inside weeks of his White Home coup, Tan finalized a partnership with Nvidia, securing $5 billion from its CEO Huang who referred to as Tan his “long-time pal.” In contrast to Intel, identified for manufacturing chips referred to as central processing models, Nvidia designs the world’s prime chips for AI.
Trump celebrated the deal on social media, posting an AI-generated picture of himself gazing a chart of Intel’s inventory and exhibiting how the worth of the U.S. stake had risen by 50% after Nvidia’s funding.
INTEL’S VENTURE CAPITALIST CEO
Born in Malaysia to a Chinese language-language journalist and a instructor, Tan began out within the exhausting sciences and had plans to change into a nuclear engineer, however he finally went to enterprise college and in or round 1983 obtained his first job in enterprise capital in California.
Throughout his profession, Tan established himself as a person with a golden contact with startups that efficiently have been offered to different corporations or went public. He amassed an estimated private fortune nicely above $500 million.
Tan’s dealmaking savvy helps Intel solely to a degree, three individuals with data of the corporate mentioned. As an illustration, Tan’s bid to purchase SambaNova was the topic of inner debate given how the startup makes application-specific AI chips whereas the market favored general-purpose ones.
Moreover, these individuals mentioned, chipmaking requires extra engineering experience than a typical tech enterprise. Factories that make superior chips depend on instruments so exact they may pinpoint a U.S. quarter-dollar coin as distant because the moon. A few of its most profitable executives, like Nvidia’s Huang, are electrical engineers by coaching.
Nonetheless, some Wall Avenue analysts say Tan is a wonderful selection for Intel CEO, with many years of chip-industry expertise and a observe file of delivering returns to shareholders.
“Lip-Bu is deeply concerned in technical choices, together with product roadmaps,” the Intel spokesperson mentioned. “These are technical, hands-on modifications that spotlight the depth of his technical management.”
Tan was additionally “keenly conscious” of Intel’s challenges when he took the CEO job, the Intel spokesperson mentioned, as a result of he had served on its board from 2022 till 2024.
However as soon as inside Intel – which had round 100,000 employees when he joined – the complexity of the chip producer was in contrast to something Tan had confronted as a CEO earlier than, mentioned two of the sources, who labored at Intel.
The corporate was bleeding money to construct factories for chip manufacturing, an effort begun below his predecessor Pat Gelsinger, and it wanted an estimated $20 billion or extra to have a shot at profitable prospects.
Tan referred to as on prime executives in his community and requested how they did issues, one of many sources mentioned. He likewise referred to as on large prospects – cloud suppliers like Amazon and Google – and requested what they wished, mentioned two individuals aware of the matter.
Tan shook up Intel’s administration staff, just like when he led the chip design firm Cadence. There, he had labored with a deputy to draft a listing of executives to fireside, an individual aware of his Cadence days mentioned. Cadence declined to remark.
Tan is slicing deeper nonetheless: shedding round 15% of Intel workers per securities filings, a lot of them managers.
He bypassed center managers to have technical expertise temporary him straight, two of the individuals mentioned. Tan named Intel engineering veteran Pushkar Ranade as his chief of employees and in December elevated him to interim chief know-how officer.
Regardless of the depth of his activity at Intel, Tan has break up his time along with his myriad different commitments, which embrace his funding corporations. When evaluating potential offers for Intel’s enterprise arm, Tan would additionally ask his funding corporations for his or her opinion, one of many former Intel workers mentioned.
An alleged battle of curiosity along with his enterprise portfolio prompted Intel’s board to push again on Tan over an acquisition this yr, Reuters reported this month.
His Intel employment requires that he spend “such time as is critical” to carry out his duties as CEO, a change from the prior Intel chief’s contract that had required “full enterprise efforts and time to Intel.”
Celesta Capital mentioned Tan’s time dedication to the agency is now minimal, and its staff has obtained no request to overview offers for Intel Capital. Walden Worldwide and Walden Catalyst didn’t reply requests for remark.
Intel mentioned Tan is working day by day on reworking the corporate and “acted decisively” to flatten its construction, including he is a “extremely engaged CEO” who’s “serving to to revive velocity, accountability, and create an engineering-centric, customer-focused tradition.”
A ‘LIFELINE’ FOR INTEL
To this point, the U.S. funding has been a catalyst for Intel. Its Company Vice President John Pitzer mentioned in a September interview that President Trump had simply hosted prime know-how CEOs for dinner to debate AI, and that their corporations have been potential Intel prospects.
The deal was a “lifeline” for Intel, mentioned know-how lobbyist and Chamber of Progress CEO Adam Kovacevich. With out it, Intel may have been out a CEO if it had succumbed to Trump’s stress, he mentioned.
The identical week because the White Home deal, Intel introduced a $2 billion funding from Masayoshi Son’s SoftBank, the place Tan as soon as was a board member.
Lutnick, who beforehand had no vested curiosity in cellphone calls to his workplace from enterprise or authorities leaders about Intel’s manufacturing, now has an incentive to leap at them, mentioned one of many sources, who’s aware of the administration. Lutnick has indicated that Individuals have pores and skin within the sport for Intel to land a foundry deal that would bolster U.S. chip manufacturing, the individual mentioned.
Overseas chip producers working within the U.S. are involved that authorities officers will tip the scales for purchasers to fabricate with Intel as a substitute of with them, in keeping with two sources aware of these worries.
A Commerce Division official mentioned the U.S. stake provides Intel a shot at success however not a leg up, and Intel just isn’t “too strategic to fail.” The official mentioned additional that Secretary Lutnick talks to all events fairly than prioritizing requires Intel’s sake.
Whereas Intel is choosing up steam on the offers entrance, its manufacturing unit has struggled to supply high quality in-house chips.
Nvidia just lately examined out whether or not it might manufacture its chips utilizing Intel’s manufacturing course of identified as 18A however stopped shifting ahead, two individuals aware of the matter mentioned. Nvidia didn’t reply a request for remark.
An Intel spokesperson mentioned the corporate’s 18A manufacturing applied sciences that make superior chips are “progressing nicely,” and it “continues to see robust curiosity” for its next-generation manufacturing course of, referred to as 14A, which is anticipated to produce chips which might be extra highly effective and environment friendly.
Intel shares fell 3.6% earlier than paring losses after Reuters printed this report.
Nvidia made no dedication to manufacture with Intel in September when investing $5 billion within the chipmaker. “Proper now we’re centered on collaborations,” Tan instructed reporters whereas saying the take care of Nvidia’s Huang.
(Reporting by Max A. Cherney and Jeffrey Dastin in San Francisco; modifying by Kenneth Li and Michael Learmonth)
