Intel CEO Lip-Bu Tan has a long track record in the chip industry. Now he needs a big customer
Intel’s CEO Lip-Bu Tan speaks at the company’s Annual Manufacturing Technology Conference in San Jose, California, U.S. April 29, 2025.
Laure Andrillon | Reuters
When Lip-Bu Tan was named CEO of Intel a little over two months ago, he brought with him plenty of name recognition. Tan spent 12 years running Cadence Design Systems and before that was a prominent venture capitalist. He’s also held board seats at SoftBank and Hewlett Packard Enterprise.
“Lip-Bu’s Rolodex is like nobody else’s in the semiconductor industry,” Intel CFO David Zinsner said at a financial conference this month. Zinsner said Tan recently met with 22 potential customers and partners in a single day.
At age 65, Tan is going to need more than a vast database of contacts and four decades of operating and investing experience to turn around the company that put the silicon in Silicon Valley but is struggling to stay relevant in a market that’s increasingly centered around artificial intelligence.
Once the world’s largest chipmaker, Intel has lost 70% of its value since early 2020. It’s roughly flat since Tan was named as CEO on March 12.
Tan’s jam-packed schedule in large part reflects a need to change the industry’s perception of Intel. No longer the dominant player in semiconductors, Intel is trying to pivot into chip manufacturing, especially as the U.S. focuses on investing in onshoring critical technologies. Tan has been listening to customers to find out specific technical requirements they would need from Intel as a foundry, he’s said in public remarks.
Under Tan’s predecessor, Pat Gelsinger, Intel spent $90 billion between 2021 and 2024 on building the company’s foundry operations and unlocking additional U.S. government funding. Capital expenditures in 2025 are expected to reach $18 billion.
Investors, and eventually the board, lost trust in Gelsinger’s ability to generate much of a return on that investment, leading to his ouster late last year. In an industry where roadmaps and capital plans are measured in five-year increments, Tan is under pressure to start building confidence immediately.
“The foundry business, it operates at a different time scale,” said Alvin Nguyen, an analyst at Forrester. “It operates with a level of investment that is tough to stomach, and very few publicly traded companies can deal with it.”
Intel faces a plethora of other challenges that all predate Tan’s tenure. The company’s central processors, or CPUs, that for decades were the most expensive and important part in computers, have been supplanted by AI chips, primarily graphics processing units, or GPUs, from Nvidia. Meanwhile, Advanced Micro Devices has picked up substantial market share in CPUs and server chips, and Qualcomm has emerged as a big challenger as well.
Tan is working on an AI strategy under Sachin Katti, who was named chief technology officer in April after joining the company in 2021.
Tan was born in Malaysia and raised in Singapore. He moved to the U.S. in the 1970s and studied nuclear engineering at the Massachusetts Institute of Technology. He’s since touched just about every aspect of the chip industry.
Before joining Intel, he was CEO of Cadence, which makes electronic design automation, or EDA, software, widely used by engineers at fabless chip companies to design new processors. As a venture capitalist at Walden International, Tan invested in Semiconductor Manufacturing International Corporation, China’s national foundry, in 2001, and was on the board for over a decade.
He’s now betting on Intel, not just with his time but also his wallet. When he became CEO, he bought $25 million of shares, which he’ll have to hold in order to earn his full compensation over the next five years.
Tan has been keeping a fairly low profile since starting the gig in March. He’s yet to sit for a press interview, and Intel declined to make Tan available for this story. But in his two public speeches as CEO at Intel events, he’s laid out elements of his strategy.
“We need to do a better job — make it easier for all of you to use our technology,” Tan said at a foundry event earlier this month. “We will rapidly embrace industrial standards, EDA tools and best design practices.”
One big customer
The fastest way to change the trajectory would be to announce a big foundry customer. Locking in substantial orders would serve as both a vote of approval to other potential customers and a signal to Wall Street that all those expenses will soon start turning into revenue.
“One Nvidia, one Qualcomm, one Apple, one something of volume that really shows this meaningful commitment for the fab to build significant volume would really change the whole narrative,” said Daniel Newman, CEO of industry research firm The Futurum Group.
Tan’s second public appearance as CEO came in April at Intel’s Foundry Direct Connect event in San Jose, California, a few miles from the company’s headquarters. There he hinted at one of his key objectives: rebuilding confidence.
“This is a truly a service business, and that is built on the foundational principle of trust,” Tan said. “You have to be patient to earn your trust.”
Intel wafers are displayed on stage at the company’s Annual Manufacturing Technology Conference in San Jose, California, U.S. April 29, 2025.
Laure Andrillon | Reuters
At the event, populated largely by people from the insular world of chip design and manufacturing, Tan directly addressed foundry customers, discussing the company’s specific technologies in power and packaging that put it in position to take on Taiwan Semiconductor Manufacturing Company, the largest foundry in the world.
Outside the convention center, banners still hung promoting the Nvidia GTC conference, which had taken place the prior month and packed the building’s ballroom.
Tan mostly acted like an emcee, calling up the CEOs of chip design partners such as Synopsys, Cadence and Siemens, who took the stage to discuss using Intel’s technology.
A key issue for Intel to address is the broadening of its foundry, which was originally designed for its own chip design teams, meaning some of the tools and infrastructure were company-specific. Intel has given the name 18A to its chip technology that it hopes to start producing in volume this year.
“One thing about 18A was, it was developed initially as just something for Intel, and we intercepted it relatively early,” Zinsner said earlier this month. That allowed the company to develop process design kits, or PDKs, “for the industry, but it still was not from the ground up developed as a foundry node,” he said.
Zinsner said the company’s next chip generation, 14A, will be built for external customers. Analysts say that 18A may be Intel’s first foundry process that could beat TSMC’s rival process to market.
Tan also recognizes that TSMC has created an industry standard, so using the same tools and technology would allow companies to more simply bring over work from other foundries. He said Intel is making its PDK easier to use.
“My top priority is to make it easier for the ecosystem to do business with Intel,” he said.
One of the speakers at the event was Anirudh Devgan, who succeeded Tan as CEO of Cadence. Tan asked Devgan what AI chip companies need to see if they’re to build on Intel. Devgan said the most important consideration is the need to focus on what the customer wants rather than what Intel prefers.
“Intel Foundry, as you all know, is like the service business, so the customer comes first,” Devgan said. “I know Lip-Bu has very good instincts to understand what the customer wants.”
It’s a stark change in approach for a company that for decades was focused on selling its own chips and not on creating an ecosystem. In a podcast earlier this year, TSMC founder Morris Chang said that Intel, during its glory years, acted “like they were the only guy with microprocessors.”
If there was a disappointment at the Intel event, it was the lack of an announcement about a major new customer.
Zinsner previously said, in response to a question about how many customers Intel had signed up for its foundry, that the company first needs to “eat its own dogfood,” indicating that the 18A process would be primarily used by Intel itself.
Leaner company
While Tan looks outward for business development, he’s turning inward to try to fix corporate culture, flattening the organization, which grew fiercely in recent years as it staffed up to build the foundry unit.
Intel said on its April earnings call that job cuts will come this quarter, though the company didn’t provide a specific number. An Intel representative declined to comment on the matter. Intel announced in August, while Gelsinger was still in charge, that it was laying off 15,000 employees and would explore cuts in its portfolio.
Wall Street welcomes more belt tightening but warns that the company can’t cut its way to a successful revival.
Deutsche Bank’s Ross Seymour, who recommends holding the stock, wrote in a May note that, even with the “welcome and necessary cost-cutting actions,” the company’s “path to meaningful earnings/free cash flow generation remains cloudy and highly dependent on a turnaround” in the foundry business.
Equally important to Tan is getting rid of what he views as too much bureaucracy.
“It has been eye-opening for me to see how much time and energy is spent on internal administrative work that does not move our business forward,” Tan wrote, in a memo to employees in April.
He said Intel would have to learn how to do more with fewer people and that employees must be back in the office for at least four days a week by September.
“I’ve been surprised to learn that, in recent years, the most important KPI for many managers at Intel has been the size of their teams,” Tan wrote, referring to key performance indicators. “Going forward, this will not be the case.”
Tan also promoted several engineering leaders, giving him greater visibility into the organization. Zinsner said Tan has between 15 and 17 direct reports, because he wants to be closer to the “lowest” levels of the organization.
“He’s hearing the good, the bad, the ugly of what’s going on, so that he can help address those,” Zinsner said.
WATCH: Intel is dead money in its current strategic form, says Susquehanna Rolland
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Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
At Tesla, vehicle sales are slumping, profits are thinning and revenue from regulatory credit sales are poised to dry up due to Republican-led policy changes.
In the past, CEO Elon Musk’s futuristic promises have convinced investors to look past top and bottom line numbers.
Not now.
Following another fairly dismal earnings report this week, Musk told analysts on the call that Tesla’s electric vehicles will soon become driverless, making money for owners while they sleep. He also said Tesla’s robotaxi service, which the company recently started testing in a limited capacity in Austin, Texas, will expand to other states, with a goal of being able to reach half the U.S. population by year-end, “assuming we have regulatory approvals.”
It didn’t matter.
Tesla shares plummeted 8% on Thursday as investors focused on the immediate challenges facing the company, including the rapid rise of lower-cost EV competitors, particularly in China, and a political backlash against Musk that harmed Tesla’s brand in the U.S. and Europe.
Automotive sales declined 16% year-over-year in the second quarter for the EV maker, with weak sales numbers continuing in Europe and California. Musk said there could be a “few rough quarters” ahead because of the EV credits expiring and President Donald Trump’s tariffs.
The stock bounced back some on Friday, gaining 3.5%, but still ended the week down and has now fallen 22% this year, the worst performance among tech’s megacaps. The Nasdaq rose 1% for the week and is up more than 9% in 2025, closing at a record on Friday.
“Look, we love robotaxis. And robots,” wrote analysts at Canaccord Genuity, who recommend buying Tesla’s stock, in a note after the earnings report. “Over time, Tesla is well positioned to benefit from these future-forward opportunities.”
The analysts, however, said that they’re focused on the profit and loss statement, writing: “But we love growth too, in the here and now. We need the P&L dynamics to turn.”
Analysts at Jefferies described the earnings update as “a bit dull.” And Goldman Sachs said Tesla’s robotaxi effort is “still small” with limited technical data points.
Tesla didn’t respond to a request for comment.
Musk, who has previously called himself “pathologically optimistic,” has been able to sway shareholders and send the stock soaring at times with promises of self-driving cars, humanoid robots and more affordable EVs.
But after a decade of missed self-imposed deadlines on autonomous driving, Wall Street is watching Tesla fall behind Alphabet’s Waymo in the U.S. and Baidu’s Apollo Go in China.
In Tesla’s shareholder deck, the company said the second quarter marked the start of its “transition from leading the electric vehicle and renewable energy industries to also becoming a leader in AI, robotics and related services.” The company didn’t offer any new guidance for growth or profits for the year ahead.
Regulatory hurdles
Business Insider reported on Friday that Tesla told staff its robotaxi service could launch in the San Francisco Bay Area as soon as this weekend.
But Tesla hasn’t applied for permits that would be required to run a driverless ridehailing service in California, CNBC confirmed. The company would first need authorizations from the state’s Department of Motor Vehicles and the California Public Utilities Commission (CPUC).
The CPUC told CNBC on Friday, that under existing permits, Tesla can only operate a human-driven chartered vehicle service, not carry passengers in robotaxis.
Waymo driverless vehicles wait at a traffic light in Santa Monica, California, on May 30, 2025.
Daniel Cole | Reuters
On the earnings call, Musk and other Tesla execs claimed the company was working on regulatory approvals to launch in Nevada, Arizona, Florida and other markets, in addition to San Francisco, but offered no details about what would be required.
Within Austin, the company said its robotaxi service had driven 7,000 miles, and that Tesla has been restricting its robotaxis’ to roads with a speed limit of 40 miles per hour. The Austin service involves a small fleet of about 10 to 20 Model Y vehicles equipped with the company’s latest self-driving systems.
The Tesla robotaxis rely on remote supervision by employees in a customer service center, and a human safety supervisor in the front passenger seat, ready to intervene if needed.
Compare that to what Alphabet said on its second-quarter earnings call the same day as Tesla’s results.
“The Waymo Driver has now autonomously driven over 100 million miles on public roads, and the team is testing across more than 10 cities this year, including New York and Philadelphia,” Alphabet said. Meanwhile, Waymo has become significant enough that Alphabet added a category to its Other Bets revenue description in its latest quarterly filing.
“Revenues from Other Bets are generated primarily from the sale of autonomous transportation services, healthcare-related services and internet services,” the filing said. The Other Bets segment remains relatively small, with revenue coming in at $373 million in the quarter.
Regardless of investor skepticism, Musk is more bullish than ever.
On Friday, the world’s richest person posted on his social network X that he thinks Tesla will someday be worth $20 trillion. On the earnings call earlier in the week, he said that when it comes to AI for cars and robots, “Tesla is actually much better than Google by far” and “much better than anyone at real world AI.”
CORRECTION: The Waymo Driver has now autonomously driven over 100 million miles on public roads, according to Alphabet. A previous version misstated the number of miles.
WATCH: Tough quarter for Tesla
A vehicle Tesla is using for robotaxi testing purposes on Oltorf Street in Austin, Texas, US, on Sunday, June 22, 2025.
Tim Goessman | Bloomberg | Getty Images
In an earnings call this week, Tesla CEO Elon Musk teased an expansion of his company’s fledgling robotaxi service to the San Francisco Bay Area and other U.S. markets.
But California regulators are making clear that Tesla is not authorized to carry passengers on public roads in autonomous vehicles and would require a human driver in control at all times.
“Tesla is not allowed to test or transport the public (paid or unpaid) in an AV with or without a driver,” the California Public Utilities Commission told CNBC in an email on Friday. “Tesla is allowed to transport the public (paid or unpaid) in a non-AV, which, of course, would have a driver.”
In other words, Tesla’s service in the state will have to be more taxi than robot.
Tesla has what’s known in California as a charter-party carrier permit, which allows it to run a private car service with human drivers, similar to limousine companies or sightseeing services.
The commission said it received a notification from Tesla on Thursday that the company plans to “extend operations” under its permit to “offer service to friends and family of employees and to select members of the public,” across much of the Bay Area.
But under Tesla’s permit, that service can only be with non-AVs, the CPUC said.
The California Department of Motor Vehicles told CNBC that Tesla has had a “drivered testing permit” since 2014, allowing the company to operate AVs with a safety driver present, but not to collect fees. The safety drivers must be Tesla employees, contractors or designees of the manufacturer under that permit, the DMV said.
In Austin, Texas, Tesla is currently testing out a robotaxi service, using its Model Y SUVs equipped with the company’s latest automated driving software and hardware. The limited service operates during daylight hours and in good weather, on roads with a speed limit of 40 miles per hour.
Robotaxis in Austin are remotely supervised by Tesla employees, and include a human safety supervisor in the front passenger seat. The service is now limited to invited users, who agree to the terms of Tesla’s “early access program.”
On Friday, Business Insider, citing an internal Tesla memo, reported that Tesla told staff it planned to expand its robotaxi service to the San Francisco Bay Area this weekend. Tesla didn’t respond to a request for comment on that report.
In a separate matter in California, the DMV has accused Tesla of misleading consumers about the capabilities of its driver assistance systems, previously marketed under the names Autopilot and Full Self-Driving (or FSD).
Tesla now calls its premium driver assistance features, “FSD Supervised.” In owners manuals, Tesla says Autopilot and FSD Supervised are “hands on” systems, requiring a driver at the wheel, ready to steer or brake at all times.
But in user-generated videos shared by Tesla on X, the company shows customers using FSD hands-free while engaged in other tasks. The DMV is arguing that Tesla’s license to sell vehicles in California should be suspended, with arguments ongoing through Friday at the state’s Office of Administrative Hearings in Oakland.
Under California state law, autonomous taxi services are regulated at the state level. Some city and county officials said on Friday that they were out of the loop regarding a potential Tesla service in the state.
Stephanie Moulton-Peters, a member of the Marin County Board of Supervisors, said in a phone interview that she had not heard from Tesla about its plans. She urged the company to be more transparent.
“I certainly expect they will tell us and I think it’s a good business practice to do that,” she said.
Moulton-Peters said she was undecided on robotaxis generally and wasn’t sure how Marin County, located north of San Francisco, would react to Tesla’s service.
“The news of change coming always has mixed results in the community,” she said.
Brian Colbert, another member of the Marin County Board of Supervisors, said in an interview that he’s open to the idea of Tesla’s service being a good thing but that he was disappointed in the lack of communication.
“They should have done a better job about informing the community about the launch,” he said.
Alphabet’s Waymo, which is far ahead of Tesla in the robotaxi market, obtained a number of permits from the DMV and CPUC before starting its driverless ride-hailing service in the state.
Waymo was granted a CPUC driverless deployment permit in 2023, allowing it to charge for rides in the state. The company has been seeking amendments to both its DMV and CPUC driverless deployment permits as it expands its service territory in the state.
— NBC’s David Ingram reported from San Francisco.
WATCH: Waymo testing self-driving cars with human drivers in New York and Philadelphia
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