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Intel CEO Lip-Bu Tan is at odds with the firm's chairman Frank Yeary when it comes to the future of the firm's chip manufacturing business, reports the Wall Street Journal. Tan, who took over the helm at Intel earlier this year, started his tenure right at the time when the market was rife with rumors of either a spinoff of its manufacturing business or an investment or a joint venture with the Taiwan Semiconductor Manufacturing Company (TSMC). As per the Journal, the spinoff was being pushed by Intel chairman Frank Yeary, who continues to be at odds with Tan regarding the future of Intel's manufacturing business.
Intel CEO Lip-Bu Tan Saved The Firm's Manufacturing Business, Says Report
The Intel CEO was thrown into a fresh controversy recently when President Trump demanded that he leave his job at Intel due to connections with Chinese firms. On this front, the Journal's report outlines that Tan's previous tenure as the CEO of Cadence Design Systems and his venture capital firm's investments in China are the reasons behind the president's consternation. The now-Intel CEO successfully transformed Cadence during his time at the firm, and to complicate matters for him, Cadence recently pleaded guilty to having provided China with restricted chip design software.
The Journal reports that as soon as Tan took over as Intel's CEO, he and Intel president Frank Yeary disagreed about the future of the firm's chip manufacturing business. While Yeary wanted to spin off the chip-making business due to high cash burn, Tan insisted that not only is the business key to Intel's viability as a chip manufacturing company, but it is also important to ensure America does not become fully reliant on foreign companies for its semiconductor procurement.
According to the Journal, Tan's efforts to improve Intel's balance sheet, which features $50 billion in long and short-term debt with $43 billion in current assets, were also met with resistance. While the Intel CEO had planned to start a multibillion-dollar capital raise in July to improve the balance sheet and to invest in chip fabrication, his efforts were slowed down and pushed to 2026.
Intel's latest earnings report was yet another disaster as the stock lost more than 8% after the report. During the conference call, Tan didn't hold back as he remarked that "the capacity investment we made over the last several years were well ahead of demand and were unwise and excessive," which led to the firm's factory footprint to "become needlessly fragmented." Tan also asserted that he would evaluate internal and external customer feedback and volume commitments before allocating capital expenditure to the next generation 14A chip manufacturing process.
Intel's shares have lost 2.2% year-to-date as they have reversed all gains made since Tan's appointment. The shares are down by 12.6% since the earnings report, as investors remain unconvinced about any short-term benefits from the firm's turnaround plans.
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