Intel’s latest CEO puts 'great man theory' to test
Silicon Valley investors love to romanticize iconoclasts and visionaries who bend technology and markets to their iron will. Intel’s 
INTC latest CEO, Lip-Bu Tan, will put this “great man theory” to the test when he takes charge of the $110 billion chipmaker on Tuesday. Odds are he will fall short.
Former boss Pat Gelsinger, who stepped down in December, cut jobs, tried to expand semiconductor production for other companies, and improved manufacturing performance. Tan mostly promises the same direction, but with more vigorous movement. He is dissatisfied with the company’s bloated middle management, Reuters reported on Monday, citing two people familiar with Tan’s thinking.
The thing is, Intel has already laid off a large number of workers. It ended last year with about 16,000 fewer employees than it started with. Attempting to improve manufacturing and luring new clients is also nothing new. Manufacturing advanced semiconductors is incredibly capital intensive. A cutting-edge plant can cost $20 billion, and that figure rises with each generation of new technology.
Gelsinger promised in 2021 that Intel would produce chips which within a few years equaled or exceeded the performance of semiconductors from rivals like Taiwan Semiconductor Manufacturing 
2330. Intel had lost its manufacturing edge and missed out on the smartphone revolution. The goal of the strategy was to defray hefty investment costs by profitably producing chips for other companies.
That’s still the plan. Big customers like Apple 
AAPL do not want to be entirely dependent on TSMC for cutting-edge chips. A credible U.S.-based rival might lower prices through competition and lessen geopolitical risk by increasing domestic production. Both Broadcom 
AVGO and Nvidia 
NVDA are testing out Intel’s plants.
Perhaps Tan will have more success. His experience leading Cadence Design Systems CDNS, which makes software used to design semiconductors, could prove invaluable. He not only knows people throughout the industry but also has an appreciation for outsourcing problems and processes that Intel can lack.
For all of Silicon Valley’s obsession with great men, though, the idea is neither new nor foolproof. Russian author Leo Tolstoy mocked major historical figures like Napoleon as “history’s slaves”. The legendary investor Warren Buffett observed that when good managers take on bad businesses, the reputation of the latter typically survives.
Intel shares have risen by 25% since it announced Tan’s appointment. But semiconductor manufacturing remains an industry where margins depend on scale. Intel is set to shell out about $20 billion annually on capital expenditure in the next few years, according to analysts polled by LSEG. That’s half as much as TSMC. It’s hard to see how any one person, now matter how great, can influence those odds.
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CONTEXT NEWS
Intel said on March 12 it had appointed Lip-Bu Tan as chief executive officer effective March 18. He will also rejoin the semiconductor firm’s board of directors. Tan had formerly been a board member until he resigned in August 2024. He is the former chief executive of Cadence Design Systems, a company that makes software to automate the design of semiconductors and electronic systems.
Predecessor Pat Gelsinger stepped down on December 1.
Intel’s stock traded at around $26 a share on the morning of March 17. The shares have risen nearly 30% since the start of the year.
