TECHnalysis chief analyst Bob O'Donnell tells TaiwanPlus how new Intel CEO Lip-Bu Tan can push the embattled U.S. semiconductor giant back to the top through foundry and industry expertise.
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00:00Bob, I want to start off asking, what do we know about Intel's new CEO, Lip Butan?
00:06So Lip Butan is a semiconductor industry veteran.
00:11So he has been on the board of Intel for several years, but one of his most prominent roles
00:16was he was the CEO of Cadence.
00:19Now Cadence is a company that creates tools that are used to design chips.
00:26So the beauty of that, and the reason why I think he's a really good match for Intel,
00:31is this means he understands both the chip manufacturing side, which of course being
00:36the foundry side of the business, as well as the chip design side, which is the product
00:42side of the business.
00:43So in my mind, what he brings to the job is A, a great deal of knowledge and understanding
00:50of Intel, B, a huge amount of industry experience and connections, and C, knowledge of the critical
00:59areas that Intel, I think, is going to continue to move forward in.
01:02So in my mind, this should get rid of some of the questions like, oh, are they going
01:07to sell off the foundry or what are they going to do?
01:09I think he's going to continue to focus on both of those things.
01:13One of the interesting things is that he was previously on the board of Intel, but he left
01:17last year over disagreements with the direction of the company.
01:21And now he's coming back as the CEO.
01:23So what does this say about the direction that Intel is heading?
01:28There's been a lot of debate about exactly what the board was trying to achieve.
01:34And then the conflicts, of course, that they ended up having with Gelsinger.
01:38So hard to know exactly for sure what the differences that Liput had back when he left.
01:48Clearly, he had a vision for the company that obviously drove him to feel the way he did.
01:55And so I think we're going to see him try and deploy that vision when we'll find out
02:01more details moving forward.
02:03But certainly, if you look at the initial comments he made in the press release, it
02:07suggests very strongly, like I said, that they're going to continue moving forward on
02:11the foundry side and they're going to continue on the product side, which I think they need
02:16to do.
02:17It's a long-term process.
02:21It's not going to happen overnight.
02:23And with this being a long-term process and him being a veteran of the chip industry,
02:28where do you think Intel is in three to five years?
02:32What are we talking about when we say Intel then?
02:34I think it means that Intel kind of returns to some of its former glory if they can execute
02:42properly.
02:43They're seen both as a process manufacturing leader as well as a product leader.
02:52And I think they've lost ground, unfortunately, on both sides.
02:56And of course, TSMC has been the big winner in terms of the process technology.
03:03But Intel's been really working hard.
03:06And I give Gelsinger a lot of credit, Gelsinger being the former CEO, in driving towards
03:11improving their process technology.
03:13Again, I think Intel lost their way on that.
03:16And yet that was a critical differentiator for them.
03:19And everybody ended up moving a lot of their business, of course, to TSMC.
03:23Not that Intel had much of an external foundry business, but for them to even be considered
03:29a reasonable alternative to TSMC, they needed to be as good as, if not a little better.
03:34Now, coming back to your original question, three to five years, at that point, we may
03:39see Intel build up the foundry business enough that they end up selling it off as an independent
03:45entity.
03:46That would not be a shock.
03:47There's been discussions about that.
03:49They're just not in a position to do that just yet.
03:51Reuters earlier reported that TSMC and other manufacturers would be interested in a joint
03:57venture with Intel.
04:00So with that in mind, then, what you just said about Intel's future, do you think that
04:05reported deal might still be on the table?
04:08Or are we looking at that as probably no longer an option?
04:12I'm guessing that's no longer an option.
04:14And I think that's part of the reason why the market reacted well, because all of a
04:20sudden, it gives more of a clear vision for Intel.
04:23There's been a lot of uncertainty around the company ever since, well, for several months,
04:29several quarters.
04:31Not just having Gelsinger leave, but also, frankly, their financial reports, because
04:37they had to write down the assets of the foundry dramatically.
04:41And that has a huge impact on their profitability, which in turn impacted their stock price.
04:46And it just raised a lot of questions in the industry.
04:50Intel was the stalwart of the largest semiconductor company in the world for a very, very long
04:56time.
04:57And it's been a real challenge to see them go through the challenges that they faced.
05:03But I believe that with this move, we're going to see discussions around JVs and other things
05:09go away.
05:10Still a lot of questions about what's going to happen with the CHIPS Act here in the US.
05:14And hopefully, that isn't impacted.
05:15But that's yet another factor that may come into play.
05:18And frankly, another factor that may have influenced Lipu to come back.
05:24All of these things are all going on simultaneously.