Intel: Tumult in the Board of Directors
Lip-Bu Tan leaves Intel's Board of Directors, allegedly because of the company's direction. Meanwhile, Intel wants to protect itself from aggressive investors.
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Things are getting rough in Intel's management team, US media report. It is obvious that not everything is rosy, because an important and renowned member of the Board of Directors is hanging up his boots: Lip-Bu Tan.
In a statement to the US Securities and Exchange Commission (SEC), Intel quotes Tan: "I am grateful for the opportunity to serve on the Intel Board of Directors. This is a personal decision based on the need to reprioritize various commitments, and I continue to support the company and its important work."
So far, so diplomatic. According to the news agency Reuters, however, Tan is said to disagree with Intel CEO Pat Gelsinger's company direction. Tan joined Intel's Board of Directors in August 2022 and, according to sources close to the company, was supposed to oversee the restructuring towards a chip contract manufacturer (Intel Foundry).
He was CEO of Cadence – from 2008 to 2021, an important company in chip development that offers design tools (Electronic Design Automation, EDA) and also works closely with industry giants such as the chip contract manufacturer TSMC. Tan should therefore have a lot of know-how in chip production.
Allegedly a lot of frustration
According to Reuters, Tan was frustrated that his recommendations to make Intel Foundry more customer-centric and reduce unnecessary bureaucracy were ignored. He is also said to have had different ideas about the latest wave of redundancies: According to this, he mainly wanted to reduce the middle management level, which contributed little to Intel's engineering plans. The redundancies affect more than 15,000 of a total of around 117,000 jobs.
Meanwhile, Intel CEO Gelsinger is facing difficult times: In the last quarter, the company made a net loss of 1.61 billion US dollars and expects to remain in the red in the current quarter. Many billions of dollars are currently being invested in the company's own semiconductor plants, with the aim of having an industry-leading production process again by the end of 2025 with 18A. The first major wave of customers is expected from 2026 – until then, the lean period is likely to continue. No specific customers for chips from the Intel Foundry are yet known.
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Pressure from dissatisfied investors
Intel has suspended dividend payments for the time being, which investors generally do not like. According to a CNBC report, Intel is currently working with consulting firms such as Morgan Stanley to protect itself from "activist" investors.
Major shareholders can exert pressure on the Board of Directors to rethink the company's direction or, in the worst case, appoint a new CEO. At the end of 2020, the shareholder Third Point urged the outsourcing of processor production – of which TSMC is now responsible for a large part. On the one hand, this improves the performance of the CPUs, but on the other hand, Intel's own semiconductor plants are no longer working at full capacity, which costs a lot of money.
(mma)