[News Figures] Semiconductor 'Veteran' Intel Director Resigns

Core Executive Lip Butan Opposes Workforce Reduction Plans in Foundry Business
Analysis of the Signal of the Giant Intel's Decline

The resignation of Lip-Bu Tan, former Intel director, highlights that Intel, once a giant in the semiconductor market, is facing its greatest crisis since its founding. Tan stepped down from his director position last month on the 22nd (local time), about two years after joining Intel in September 2022. His departure is seen as a signal of Intel’s declining dominance and has accelerated the company’s restructuring plans.

Former Intel Director with Lip Bu Tan. Photo by Intel

Known as a ‘veteran’ in the semiconductor industry, Tan previously served as CEO of Cadence Design Systems, one of the top three semiconductor design companies, and was also chairman of the U.S. venture capital firm Walden International. When he joined Intel’s board, he was regarded as a key figure who would bring crucial management and technical expertise to Intel’s foundry (semiconductor contract manufacturing) business. Additionally, Tan’s role as an outside director at Japan’s SoftBank and his proficiency in collaborating with major Japanese companies raised expectations that Intel would leverage him to foster cooperation across various sectors.

The series of moves led by Intel CEO Pat Gelsinger?reentering the foundry business in 2018 after withdrawing and recruiting Tan in 2022?demonstrates the strong trust Gelsinger placed in Tan.

However, due to Intel’s conservative ‘bureaucratic culture,’ conflicts reportedly began to arise between the company and Tan. According to U.S. media reports, Tan expressed concerns about the bloated workforce, risk-averse culture, and Intel’s lagging artificial intelligence (AI) strategy compared to competitors, but clashes occurred due to differences in opinion with CEO Gelsinger and the board. It is said that Tan felt deep frustration in this environment, which led to his decision to resign.

Tan also reportedly opposed Intel’s workforce reduction plans. He advocated for ‘personnel renewal’ by removing middle managers who were not involved in semiconductor manufacturing processes but focused solely on political issues. However, Intel finalized a plan to cut about 15% of its employees. Tan did not disclose specific reasons for his resignation but issued a statement saying, “My resignation is a personal decision based on the need to reprioritize various commitments, and I continue to support Intel’s important work.”

With Tan’s resignation, Intel’s foundry business is left without a captain and faces the risk of being stranded. Intel’s foundry suffered a severe situation in the second quarter, with operating losses increasing by 47% from $1.9 billion in the previous quarter to $2.8 billion. Revenue was only $4.3 billion. Intel is expected to announce a business restructuring plan at the board meeting in mid-month, with speculation that it may include splitting or selling the foundry business.

Additionally, Intel is reportedly considering the sale of its programmable chip division, which it had planned to spin off as an independent company and pursue an initial public offering (IPO). This suggests that Intel will undertake comprehensive revisions across its semiconductor-related businesses.

Reporter Kim Hyung-min