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Intel CEO Lip-Bu Tan
On Monday, chip giant Intel's new CEO, Lip-Bu Tan -- who took over from outgoing CEO Pat Gelsinger only 15 days earlier -- laid out in broad terms his strategy to return the company to greatness.
Speaking at Intel Vision, the company's annual event for customers and partners in Las Vegas, Tan emphasized changing Intel's culture, promising to run the company "as a startup, on day one."
Tan said the culture needs changing because Intel has lost much of its engineering focus over the years. "Intel has lost some of this talent over the years," he said. "I want to re-group the talent and attract some of the new talent. "
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Recalling his affection for basketball and California's Golden State Warriors, Tan remarked, "I love the game, how they pass the ball to the teammate to receive it -- this is the kind of team I would like to build."
All of the culture remake, he said, is necessary to "Pull together strong teams to correct the past mistakes and start to earn your trust."
Tan put Intel's problems front and center. Without enumerating the mistakes in detail, it's well-known to investors and to the industry at large that Intel has lost an enormous amount of market share to AMD over the years and has ceded the artificial intelligence battle to Nvidia.
"It has been a tough period for quite a long time for Intel," observed Tan. "It was very hard for me to watch its struggle; I simply cannot stay on the sideline knowing that I could help turn things around."
Addressing the customers in the room, Tan remarked, "You deserve better, and we need to improve -- and we will." He asked the audience to "please be brutally honest with us. This is what I expect from you this week, and I believe harsh feedback is most valuable."
Tan identified some more specific goals. He said the company must strengthen its balance sheet, which has seen the crumbling of profit, leading to a revoking of its dividend payout.
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More substantively, Tan spoke of a need to refashion the "architecture" of Intel's chips. That is a term of art in the semiconductor world for the way a chip's transistors are oriented to solve a problem. Nvidia has blown past Intel's x86 with an architecture for its GPUs that has taken advantage of the AI era.
Intel needs to "accelerate development of [a] new compute architecture platform," he said, "to adopt AI and drive significant performance and power efficiency."
Tan said that creating a new architecture will require the company to "flip" how it approaches its hardware design.
The company's approach has classically been "from the inside-out," he observed. "We would design hardware and then figure out the software." Nowadays, he said, "we have to flip that around, going forward, to start with a problem you are trying to solve, the workloads involved, and then work backward from that" to chip design.
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Tan referred to that as a "software 2.0 mentality," informed by his years of investing in startup software companies. Before becoming a board member at Intel two years ago, a post he resigned shortly before Gelsinger's departure, Tan had a long period as a venture capitalist and as the chief executive of software maker Cadence Design Systems. He was brought in to fix Cadence when its sales were languishing, and he ended up staying 15 years at the company, he noted.
Cadence provided many lessons, he said, including hearing about how bad products were from customers and adapting.
"When I took over [at Cadence], I had one major customer review, and I asked them to grade our products," he recalled. "The executive said, none of the vendors will even dare to ask this question, but I said, I got to know how bad my product is."
The result, he recalled, was "a lot of Ds, a lot of Es, and many Fs." For Tan, who dropped out of a nuclear engineering PhD at MIT to go to Silicon Valley, "that was humiliating," he said. "As an academic I never got anything below B."
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However, the result of the frank feedback was that "Cadence went from low single-digit [revenue growth] to double-digit growth," he said.
In fixing what's broken at Intel, "My motto is very simple: Under-promise and over-deliver," he said. "That has been my trademark. I will not be satisfied until we delight all of you."
Tan emphasized the importance of Intel's vast manufacturing efforts and foundry and alluded to having a customer in hand for whom the company will manufacture chips for a fee, a business begun under Gelsinger. In that market, the company is going up against the global giant, Taiwan Semiconductor Manufacturing, which long ago sped past Intel in chip-making acumen and is eyeing investment in the US.
"Foundry is a services business," he noted. "It is built on a foundation of trust, that is very important." Tan's background running Cadence could be an asset, he indicated, because Cadence's tools had to work inside each chip-maker's unique design process. "I realize every foundry customer has a unique design method and style," he said. "I learned that from Cadence. This is something we need to learn and how to adapt to each customer."
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Alongside talk of change, Tan was reverent about Intel and its mission.
He noted that as a venture capitalist at Walden Catalyst Ventures and chairman of Walden International, he funded many chip startups at a time when other venture capitalists wouldn't even consider backing a chip maker. These included current high-flyers such as Credo Technology and Astera Labs, companies that are profiting enormously from the need for high bandwidth in AI systems.
Tan said Intel is "an iconic and essential company that is important to the industry and also to the United States."
At one point in his talk, Tan became rather emotional as he confessed the importance he attached to the task.
Tan, who is 66 years old, said, "Some of the people [were] asking me, Why take on this job now, at this stage in your career? The answer is very simple: I love this company."
You can watch the replay of Tan's entire speech on the Intel newsroom Web site.
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