By Britney Nguyen
While Lip-Bu Tan has drawn the president’s ire for his links to China, a potential rethink of Intel’s U.S. manufacturing ambitions may raise even bigger stakes for the White House
Lip-Bu Tan is facing his biggest test since taking the reins as Intel CEO in March.
When Lip-Bu Tan was brought in to revive Intel Corp. back in March, he had at least one thing working in his favor: A presidential administration seemingly determined to support the last bastion of leading-edge U.S. chip making.
Instead, Tan and Intel (INTC) have run into more challenges – underscored this week as the company now finds itself in the political crosshairs. After U.S. Sen. Tom Cotton, an Arkansas Republican, publicly criticized Tan for his links to Chinese companies, President Donald Trump called for the “highly conflicted” Intel chief executive’s resignation.
“There is no other solution to this problem,” Trump said in a post on his Truth Social online platform Thursday.
See more: Trump calls for Intel’s CEO to go. Lawmakers have focused on his ties to China.
On the surface, Intel is the sort of company that might appeal to Trump. Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) (TW:2330) dominates the chip-making business, producing semiconductors for industry giants such as Nvidia Corp. (NVDA)
And while Intel has lost its competitive edge after a host of technological missteps over the years, the company is still a domestic U.S. chip manufacturer at a time when other chip designers have opted to outsource.
At least, for now.
Intel signaled in late July that it could give up chip manufacturing if it doesn’t find a significant external customer for its coming process node. That suggests the company is open to delaying or scaling back its already stalled Ohio manufacturing plant.
In January 2022, Intel said it was planning to build two leading-edge chip factories in Ohio that would be supported by an initial investment of $28 billion. The Ohio facilities were part of Intel’s plan to invest more than $100 billion to expand its chip-making footprint in the U.S., with other sites in Arizona, New Mexico and Oregon.
The Biden administration finalized Intel’s Chips and Science Act funding award of $7.86 billion in November, which was meant to support the $100 billion investment. The award is disbursed as recipients complete certain project milestones, such as construction and production. The company also received a separate $3 billion contract through the U.S. Defense Department’s Secure Enclave program.
While Intel currently represents a potential strategic asset in the trade war between the U.S. and China, management has now opened the door to becoming yet another company that handles all of its manufacturing work overseas.
What did Intel’s board know?
On Tuesday, Cotton sent a letter to Frank Yeary, the chair of Intel’s board, sharing concerns over “the security and integrity of Intel’s operations and its potential impact on U.S. national security.” Cotton said that Tan “controls dozens of Chinese companies and has a stake in hundreds of Chinese advanced-manufacturing and chip firms.” He added that at least eight of the companies are reportedly connected to China’s military.
One expert said it’s unlikely that Tan’s connections to Chinese companies was new to Intel’s board of directors, who named him to the post after a long search process.
“With a company as large, as important and as valuable as Intel, and for a company in so much trouble as Intel, to not engage in significant due diligence and fact finding about all the candidates that they might have been evaluating would just be shocking,” Jo-Ellen Pozner, an associate professor at Santa Clara University’s Leavey School of Business, told MarketWatch.
“I suspect, absent other information, that the search committee on the board was aware of all of this activity,” she added.
Given a detailed report from Reuters in April looking into Tan’s investments in Chinese companies, Pozner said it’s likely that his investments were known to Intel and its board when Tan was selected as CEO.
Intel’s board of directors, for its part, is standing by Tan – and emphasizing the company’s domestic manufacturing efforts.
In a statement shared with MarketWatch on Thursday, Intel said the company, its board of directors and Tan “are deeply committed to advancing U.S. national and economic security interests and are making significant investments aligned with the President’s America First agenda.”
“We are continuing to invest billions of dollars in domestic semiconductor R&D and manufacturing, including our new fab in Arizona that will run the most advanced manufacturing-process technology in the country, and are the only company investing in leading logic-process-node development in the U.S.,” Intel said, adding that it will continue engaging with the White House.
Spencer Stuart, the executive-search firm hired by Intel to aid in its search for former CEO Pat Gelsinger’s replacement, declined a request for comment from MarketWatch.
Through the venture-capital firm he started in 1987, Walden International, Tan has invested in companies in both the U.S. and China – including a seed investment in Semiconductor Manufacturing International Corp. (HK:981), which was sanctioned by the U.S. in 2020 over national-security concerns, and which works closely with the sanctioned Chinese tech giant Huawei Technologies Co. Ltd.
In July 2023, the U.S. House of Representatives’ Select Committee on the Chinese Communist Party sent a letter to Tan to “express serious concern and to request information” on Walden’s investments in AI, semiconductor and quantum-computing firms that could be helping China’s People’s Liberation Army.
Cotton’s letter also expressed concern over Tan’s previous position as CEO of Cadence Design Systems Inc. (CDNS), which in July agreed to plead guilty to charges that it violated U.S. export controls by selling electronic-design-automation technology to China’s sanctioned National University of Defense Technology, which is led by China’s Central Military Commission. The sales occurred during Tan’s leadership; he was CEO of Cadence from 2009 to 2021, and remained as executive chair until 2023.
While the announcement of a criminal conviction occurred recently, the Justice Department’s investigation into Cadence is not new. A Securities and Exchange Commission filing from the company in December mentioned “ongoing investigations” by the Commerce and Justice Departments “regarding certain historical sales by Cadence to customers in China.” Cadence said in the filing that it had responded to subpoenas from the Commerce Department’s Bureau of Industry and Security that were received in February 2021, and from the Justice Department in November 2023, about its sales and business in China.
In a letter to Intel’s employees on Thursday, Tan addressed “misinformation” regarding his time at Walden and Cadence.
“Over 40+ years in the industry, I’ve built relationships around the world and across our diverse ecosystem – and I have always operated within the highest legal and ethical standards,” Tan said. “My reputation has been built on trust – on doing what I say I’ll do, and doing it the right way. This is the same way I am leading Intel.”
He emphasized that Intel is working with the Trump administration to “ensure they have the facts,” and that he shares Trump’s “commitment to advancing U.S. national and economic security.”
Trump’s problem with Intel
Bernstein analysts led by Stacy Rasgon pointed to a litany of possible irritants for Trump – from Tan’s China ties, to Intel’s hints at reducing its spending and potentially abandoning its pursuit of next-generation chip technology.
In a July 10-Q filing, Intel warned that without “a significant external customer and meet[ing] important customer milestones” for its coming 14A process node, “we face the prospect that it will not be economical to develop and manufacture” it or successor nodes. Bernstein said scrapping those nodes could make Intel a “fabless” company manufacturing no chips in the U.S. or abroad.
See more: Will Intel give up on chip manufacturing? Here’s how that could have big ripple effects.
Intel’s Ohio project has already slipped: The company now targets completion between 2030 and 2031 – much later than previous targets of 2025 and 2026, the Wall Street Journal reported. If manufacturing plans shrink further, that facility’s future could be in jeopardy.
What could come next for Tan – and Intel?
Tan reportedly supports the foundry business more than some other influential leaders at Intel. The Wall Street Journal reported Thursday that Tan thinks the foundry is essential – a view that’s caused conflict with Yeary, who the Journal noted has previously laid out plans for an exit from that part of the business. Intel’s struggles – its shares are down 43% over the past two years, versus a nearly equivalent gain for the S&P 500 SPX over the same period – hardly fits Washington’s narrative of Intel as a national champion.
“Trump likes winners,” Bernstein analysts wrote Thursday, adding that they “suspect he does not find the failure that has permeated Intel in recent years all that attractive.” Unlike some tech leaders, Tan hasn’t sought a personal connection with Trump to soften that view, the analysts added.
But some see a chance to turn the political pressure into opportunity. Hendi Susanto, a portfolio manager at Gabelli Funds, said Intel could position itself as a “national-security asset” and seek sovereign-level U.S. investment to rebuild domestic chip dominance – a potential “symbiotic relationship” between company and country, Susanto said.
Whether Tan keeps his job remains an open question. But Pozner, the Santa Clara University professor, warned against caving to political pressure, absent legal or regulatory breaches.
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