Re-engineering the Semiconductor Supply Chain with Intel CEO Lip Bu Tan

Nine of the 10 company I invest, halfway they change their business plan because market have changed. Yeah. So I like to have entrepreneur as team, not just one person.

I always believed in when I was at Cadence and also at Intel is first of all you crawl and be humble, listen to customer. And then first step for me is to strengthen my balance sheet, focus on the products, and I really simplify the product, listen to the customer, and then drive the next generation leadership products. And then right now, the agentic AI and influence CPU become highly in demand.

And so in some way, I'm happy. Right now, the demand is very high for my CPU. Like I'm very happy that Jensen Huang, my all time friend, he also put 5,000,000,000 in investing and support me.

This 5,000,000,000 become 25,000,000,000 now. If you look at it ten years from now, what are we be the winning company?

and people thought, wow, you should retire rather than taking on this hardest job in the industry. And so a couple of reasons. One is this is an iconic company, and it's so important for the semiconductor ecosystem and also so important for United States.

And so I decided to do one more after Cadence. A lot has happened in this past year. What has been most surprising to you?

Well, the most surprising that I don't learn from my previous job or even training is one day early morning, President Trump asking me to resign, and conflict of interest, and there's no exceptions. And so I had to convince myself, first of all, I don't need this job. I do it purely to save Intel.

And so take that personal issue out of the way. Then I figure out, what can I do to be helpful to Intel? And so good news is I have a meeting, you know, Thursday morning, and then Monday, I have the meeting.

And then he listened to me like I have a chance to explain myself. And I was born in Malaysia, grown up in Singapore, went to MIT, and I live in US. I never lived outside country.

And so something that I share, and that somehow he listened very well. And then he gave me the chance, and so I'm delighted.

and then clearly want to drive more accountability. And also in terms of decision making, had to be faster. You know, I'm so used to startup culture, and you move fast in the speed of light and going to have that bureaucracy layer of layer of meeting.

And so something that I change accountability, listened to the customer, and the customer delighted. Someone like Lipo, so humble, willing to listen, and then address some of the problem that they face, and then try to delight the customer. And also the other part, from day one, I decided all the engineering report to me.

Being an engineer by training, I want to know what went wrong and what are the things that I need to correct, listen to the customer, and delight the customer, and then make sure that we have the right product, simplify our product line, and really have the road map and the vision for the next five, ten years. What is your vision of where Intel should be in ten years? Yeah, I think a couple of things.

One, I always believed in when I was at Cadence and also at Intel is, first of all, you crawl and then be humble, listen to customer. And then secondly, you're starting to walk. And then finally, you're starting to run-in sprint.

So that's kind of my culture of step by step doing it. And then first step for me is to strengthen my balance sheets. And the balance sheet is really horrible in some way, so I'm delighted.

You US government become a big shareholder. Just I explained to president Trump, TSMC, when they started, they have the Taiwan government as a shareholder. If you look at Japan, look at Singapore, this is the infrastructure US government get to provide the support.

Secondly, very happy that Jensen Huang, my all time friend, he also put $5,000,000,000 in investing and support me, and I'm glad I at least do some good work. His $5,000,000,000 become $25,000,000,000 now and or more. And then the other part is SoftBank Master.

I used to be at SoftBank Board, and then he lent a hand to help me. So we strengthened the balance sheet and then focused on the products. And I really simplified the product, listened to the customer, and then drive the next generation leadership products.

And then in some ways, very lucky. Right now, the AgenTeq AI and Influence CPU become highly in demand. And so versus one to eight in the training CPU to GPU, now I can see one to four, maybe one to one, and I'm delighted CPU become important.

I talked to some of the AI model and developer, and they said, well, in terms of reinforced learning, in terms of the speed of orchestrating all the agents, and turn up the CPU is actually is better. And so in some way, I'm happy. Right now, the demand is very high for my CPU.

So I think overall, build on the product, on the data center server side. Then the other part is our foundry business. And initially, this is a capital intensive business, and it's not easy.

And you really need to have a couple of things. You need to have all the right IP so that you can support the customer. Like for example, if it is mobile related, you've got to have low power IP set that you need to have.

Without that, you cannot serve them. It's a service business. It's a trust business.

If people want to give you orders to have wafer to come, if the yield not good, they will be close in terms of revenue miss. So with that, I think it's very important to really focus on the yield, the defect density, the cycle time, and then make sure that you're really able to meet and serve the customer in high quality and reliable. And so those are the things that I really focus on it.

And eventually, you have to really move into a full stack. So not just a silicon, you need to have a software. And some of the customer asked me, give me the whole rack.

So there's a system that you have to build. And so I think those are the things that are quietly building step by step and recruit some of the best talent I can find. By the way, all the recruitment, I do it myself.

No search firm helping. And so I think sometimes it's good to have a rode deck that you know who to reach out to call for. Yeah.

I mean, you've been in the business for so long and, you know, you've you've run Cadence for, I think, twelve years before this. And so Thirteen years. Thirteen years.

Sorry. Oh, yeah. Sorry.

Didn't more years as executive chairman. So fifteen years. Fifteen years.

So I signed up for three months Three months. So right now, I'd be very careful. The moment you said, I'll just do it for three months, it turned out to be fifteen years.

is one of the best, if not the best, entrepreneur in this century. He and I, we share the same view that semiconductor infrastructure actually is not catch up with the AI growth. And in terms of you need the capacity, you need to have the productivity, and you have to drive efficiency.

And so those are the things that he and I, we share that there's something missing. And then secondly, it's just delighted to work with him and he's very, I call it unconventional. And he basically questioned every step and why this traditional way of doing things.

And in some ways, it's very refreshing. And I like that. You know, I like people who have different opinion, and let's work together, find what is the best route, and we both gonna learn a lot together.

And then I think clearly he have a vision that his robots and his car, you know, he need a lot of silicon. Yeah. Could you actually explain what TeraFab is for people who aren't familiar with it?

Yeah. TeraFab, he decided he want to build his own fab. And then meanwhile, we are delighted to work with him and then make sure that we can work together and enable him to be faster and quicker to the production and then using some of our technology and some of our process.

And that's something that we both kind of collaborate together.

Think I don't go that far. Maybe some part of the clean room, you can do that. But I think something that is an open mind, and then we'll also listen and see whether we can do that.

Yeah.

And I think the impact will be bigger than internet. And it's more profound also. So I think the AI initially is able to help you to do things more efficiently.

And then with a lot of agents helping you to do things that is not kind of mundane that you need to do, but now they can give it to you faster. So in some way, I think it can drive a lot of efficiency. Even the semiconductor design, how much you can drive the efficiency in term of timing, how quickly can you come out, and secondly, the cost.

And so I think those will be helping you to drive that. And then I think couple of bottlenecks for the AI demand and growth. One is, of course, everybody knows a power constraint.

Some country, the power, they just don't have that. It get impacted. And then secondly, a lot of people didn't realize the helium impact can be also quite significant for semiconductor.

And then thirdly, is everybody know right now memory is a bigger shortage, and everybody try to scramble for memory. And then even though you have to build a fab to capacity increase, it will take couple of years to do that. And same thing for CPU, GPU, and all this will be highly demanded.

And I think the also the pricing also go up because we have to pass the price, the cost to the customer. Mhmm. So I think those will be the impact, the industry growth.

Mhmm. And then I think overall, I felt that, you know, the company that most impacted is you are not embracing AI. And because AI can help you to drive a lot of efficiency across all the different function of the enterprise.

We should embrace and also find a way to better use the AI for your prediction, for your design, for your, you know, all the different part of the workload.

I decided whether I should double down on foundry or should I get out of foundry,

I finally decided this is very important for United States and also very important for the industry. And I'll give you the idea that we all live through these challenges of supply chain, and it's very important for any of the big company in semiconductor and really have to think about the supply chains. And you have to have a robust and resilient supply chain.

You cannot just depend on one or two player in different geographical. And so I think more and more people are going to realize making in The United States is critical. And then the most advanced process, like for example, we have the, you know, 14A is like 1.

4 nanometer, and we are already starting to plan for one nanometer and 0.7 nanometer. It's getting smaller and smaller.

So in a way, it's much like our hair, so thin. So it's a lot of complexity. It's not that easy to do.

And every step, if you make a mistake that you just go down, you know, go down the drain. So in some way, you have to be really precise in that manufacturing. So in some way, this has become more and more going to be the bottleneck.

So we felt that we have a lot of respect for TSMC. We are a great partner. And then more important, we both need to have more capacity to serve the customer.

And so I think we decided by the bullet, longer term, I think, is critical. And then that's where I can create more value for the industry.

When do you think we actually hit that limit? Good question. So I think I can see, right now we have 18A, and then now going to production of 14A, I can see ten and seven.

And so I think that path, I think we can get there, but couldn't it be more and more expensive and more difficult to do, and that's why we need partners. We cannot just do it ourselves alone, partner with a subscript vendor, partner with equipment vendors so that make sure that we can really drive those yield and performance. Yeah.

And then the other part also really become the bottleneck is packaging, the advanced packaging. And so we all know about cohort by TSMC. Now we have a really good one called EMIP tea that is really next generation.

I had to make sure that you become able to do in the production yield that meet the customer requirement. And now CMOS starting to run out of steam like you described. So right now, I also look at some new materials, so it become, going back to the material size or the chemical table.

So gallium nitride, silicon carbide, and indium phosphide. So I invest in all three, and then looking at some of this new material, how can we really drive that? And then in terms of packaging, I starting to invest into glass.

Glass is a very good heat insulator. So I invest a venture site called 3DGS, then I realized that Intel, we have like 1,000 pattern on the module. So how the, you know, subscript and the module put it together, and then we just announced a big program with Indian government to manufacturing in in India, plus in US and New Mexico.

So I think this advanced packaging, very important. I also starting to look at artificial diamond, and that's another very good insulator. So I also invest into diamond foundry, and that's something is a next generation to look at.

So new material, new subscript material, and new design methodology to drive that. So one thing good about being an engineer is you're always hitting the wall, then you find a way to either jump over the wall or you work around the wall, and then to get to the better result. And that's what I have been long time as an investor and building semiconductor from the EDA tool to design to manufacturing.

It's kind of nice to have that experience.

and then the power and the cost. And then you can double the performance, but you cannot double down on the cost area. So those are the things you have to give way unless you find some new way of material, new way of design, that become material science, I starting to hire more people in the material science.

So that is kind of innovation in our area. How can we do that? And I still remember eighteen years ago, and I I still investing in semiconductor.

And, actually, most of the VC firm, some of them are very nice tier one venture firm, a good friend of mine. And I initially the partners meeting, the whole partners in the room. Then after I talking about semiconductor, half make excuse to run out the room.

Then eventually, the other half, they said, available, do you have any software service? So then they even left with only two sympathetically listen to me. So it's kind of the history have changed.

And now semiconductor, if you look at it, Jensen is a 5,300,000,000,000 market cap company, and then Broadcom and TSMC is 2,000,000,000,000 market cap company, and Lisa Su, my good friend at AMD, is almost $800,000,000,000 and I'm close to $600,000,000,000 So in some ways, kind of semiconductor become hot again, and it become essential because fifteen years, twenty years ago, when I invest in semiconductor, no VC want to join me except some of the big corporations like Samsung, ARM and SoftBank and others, and investing with me. And then now I'm starting to see a lot of VC like to come investing in semi, so I'm very happy.

Good. You have quite a broad range of questions. Let me try to explain that.

So first of all, I think the venture capital startup is in my blood, and I really enjoy it. And so I think this is not time to brag about it. And so there's some good exit.

I still have 159 IPO, 126 ms and A, and that includes semiconductor. Just break down to semiconductor, I invest over the years February is in US. So what I usually look at some macro Just to be clear, that's incredible.

Thank you. Thank you. I just enjoy building it.

But more important, I will look at this, first of all, on the investment side, I always look at where is the bottleneck? What are you trying to solve? For example, I invest in a company called Cradle Semiconductor, Australia Lab.

Is this interconnect become the bottleneck? So I decided to back and also back Celestial AI in the optical side. And then because speed become more important in the interconnect, in the cluster, so I think optical become very important.

Look at Jensen. He invest in almost every company is photonic related. And then the other part I'm looking at is, okay, what are the solution that need?

Like, for example, we talk about design and then the complexity and also the cost. Can you find some using AI machine learning to drive a better design and better solution. So a couple of new startup actually go into the EDA related area to drive performance improvement.

I think it's a gold mine to do that. And then the other part, you look at the new material. We talk about this indium phosphide.

That's why I invested in INFI, and then Val bought it. And then you invest into some of the new material, the gallium nitride and the silicon carbide, and then some of the companies starting to being acquired, include one of them doing power management, and ADI is a sport called mPower. And so again, this IVR, that's a very, very good area in power management become bottleneck now in term of converting from 40 volt down to one volt.

And then those in term of that conversion, you lost a lot of power. And how you do it through the power improvement? So I think power, thermal, those become the bottleneck.

So I think I always look at from what is the problem we try to solve? Is it real? Is customer crying for it?

And then I starting to invest. The next thing is look at it's very important from day one, you'd have to target the first customer. And usually, I like the customer is hyperscale.

They have the scale. If they like what you have, they're willing to pay millions of dollars next few years, and even giving some warrant is worth it because you have a big one customer you can scale. So I always look at some of the formula, how do you do that, and then where do you get the talent?

And then, yeah, you know, sometimes it's very important to find the talent. That's why I'm really interested in US, and then Silicon Valley, and then some Austin, and then the other part is Israel. A lot of talent.

So I backed quite a few, quite a significant amount of my investment in Israel. And then because they have very disruptive, innovative entrepreneur, They work really hard. Even in this war time, they still have conference call.

And sometimes they say, okay, there's a warning. I have to go to underground. And then the internet may not be good.

Maybe we just use voice. In some ways, it's kind of fun. They're kind of resilient entrepreneurship I really enjoy.

So I think all in all, I felt that there's a lot of opportunity, and especially in the AI. And right now, beside the agentic AI, now you're looking at physical AI. It makes a mixed big frontier.

And then you had to really look at a full stack. That's why I'm still involved with a lot of this frontier model that we very familiar and some of the investment I've made because I really like open source frontier, you know, technology for physical AI. I think that's a gold mine.

Yeah. I think, you know, for almost fifteen years with Cadence, and I'm so happy. One of my highlight is able to find my successor, Underwood, and I train him, and he becomes super great CEO.

And then he really embracing the AI, driving the agentic AI to drive more efficient. But there's a good part, I think synopsis. Sachin also tried to do that, and they have an investment from Nvidia, 2,000,000,000, I think helping him to do a lot.

And he acquired Ansys to move into the whole system design. So I think all in all, they all do the best thing they can, but also some opportunity for startup to do some of the more disruptive. And then eventually, they can either go public or being acquired by both of them or Siemens to acquire them.

So I think there's opportunity for all, depending on what the entrepreneurial vision. And then as long as I always have philosophy. If entrepreneur want to sell the company, and there's quicker way for exit, you don't have to lock up.

You don't have to worry about quarter to quarter earning.

back to, Sarah, your question about capital intensive and a little bit unpredictable and cyclical. So you have to kind of put that into factor into your decision making investment. And I usually like to go in very early, put a team together.

It's kind of fun to do that. I think you also do that. And then secondly, you try to find the right investor that can co partner with you.

It's not just whatever the brand name firm. I usually go for the individual. And then who are the individual that really knowledgeable in this space, you can The most important to find a partner to difficult time and good time.

A lot of the time people are very enjoyable working with you is a good time. When the company don't trouble, they just walk away. I like to have partner that really work through a lot of successful company.

They have multiple time almost bankrupt that eventually take off. So I think it's important to find a partner willing to do that. And then the other part is look at what are the strategic investor that can help you either in manufacturing or memory connectivity or various way to add value to the company.

And also have a couple of friends that are in the growth stage and also in the hedge fund, and I really enjoy them because they have a different perspective. They know about the public market. They can guide the company entrepreneur where not to go.

And so those can be very helpful. So I think all in all, I think it's just fun to do that, and then just realize is that engineering for startup is like problem solving. Each step of the way, you have to find people to help you to solve the problem.

And then if you trigger that, then great, next frontier to work on. And then frankly speaking, I look back, nine of the 10 company I invest, halfway, they change their business plan because market have changed. Yeah.

So I like to have entrepreneur as team, not just one person. Secondly, open mind. Willing to listen and listen to getting coaching from us.

And then eventually they formulate their own plan. It's not just do what they want, it's more they figure out, the best thing is you give them enough feedback, they draw their own conclusion that you exactly what you like and all different, that you can embrace is the right decision. That's kind of fun of doing startup.

They get much faster. So back to your question, if you look at it ten years from now, what will be the winning company? This is just my personal view.

The one that articulate and laser focus on one niche area and also find the right partner and also able to scale the company. And so in some way, and back to my point about full stack, so in the way you need to have a full stack solution. And so it can be a big company, they transform themselves to be looking at big platform, like Jensen, I admire him.

You know, he focused on CUDA. He focused on Illipro. I want to be a platform company.

And he did it. And so in some way, you can do that. Or startup company like Anthropic, OpenAI, they find a way to do it in a bit more elegant way.

They change the game, and then it startup move fast, speed of light, you can really become a dominant player. And hopefully Intel can play the role because we have the XPU, and we have the advanced packaging, and we have Foundry. If you put that all together, can build some of the purpose built silicon for different workload.

how you think about the future world there. Good question. I think, you know, as I back to that crawl, walk, and run.

So I think crawl, you basically try to I recruit some of the best talent in the semiconductor industry. And then now I'm starting to look at what are the software talent I need to bring on board and in order to build a full stack. And now I'm starting to look at, you know, my average age of my team in the 40 40, 50.

I need to bring in some new talent. And then so they're understanding the workload, understanding the frontier model, open source. Mhmm.

That is important. So for now, then my son become my teacher now. Mhmm.

Every time he invite me to go to his house, we're playing to grandkids. Mhmm. I starting to tap on him on all the AI machine learning.

He's more plug in than me. So I learned a lot and then try to understand investing and then bring some of the talent to come in. So we are changing Intel.

Used to be a very old legacy spreadsheet company. Now I transform it to become AI nine AI enabled using some of our design and also across all the engine all the organization embracing AI. And then so they become less less depend on the spreadsheet and label to do that, and you're gonna combine the two talent plus the best AI tool that I can use, not only for my organization, not only for my sales.

So I think, clearly, for capital intensive business and infrastructure play, you need to access the capital. And then in some way, I think for our early day venture capital investment, now starting become very capital intensive. And some of the venture firm willing to put $1,000,000,000 into some company is very unheard of in the VC business.

Now it's happening. And so in some way, you just have to be I like this kind of bell curve. Either you go in very early, and then because you're starting to do the series A, it's over 1,000,000,000 valuations.

And so you had to go in pre money, pre seed to go into that kind of $2,030,000,000,000 valuation. It's very rare right now. So you just have to do that and pick the right one.

And then the other part is able to find capital to scale, and that's why some of this mutual fund, they also like to move into the pre market early stage to join me to investing. I delight them because they are very less sensitive of whether I had to own 20% of the There's not too many 20% to give, so you have to find the right investor to come in. And then in term of the capital intensive, like AI in a factory and also the foundry, and then you really need to tap either government funding or some sovereign fund, and also some very big capital.

There are some big fund that are doing that, and they're really The fund they've organized is basically support the infrastructure. And we like to tap into some of them and then to make sure that they can scale our operation. So I think in overall, government sovereign fund become very important.

And also as a public company, I also purposely want to focus on some of the investor that are more long term growth oriented and so that they can help me to grow the business. And then rather than short term asking capital location, you know, where do you gonna, you know, buy back your shares? Those are good question.

But meanwhile, I also had to build the business. Yeah. And so I think it's kind of that balance is important.

about Intel at this moment? Quite a few things. First of all, think back to this crawl, run, and walk, last four months I crawled, but people are starting to recognize that potential of it.

And so the other part is very important. We need to really get the best product out, either PC client, we still have a market share, but we really need to really build more perform better performance. So that's why I'm quietly building up the CPU architect, GPU architect, and the software architect so that we can leapfrog.

Just like I look at Intel, I want to be a multiple of startup culture so that we move fast and we can leapfrog using better technology. And then the other part is beside the product, there are some new energy coming in, like in agentic AI, the physical AI. There's a lot of area that we can invest.

Market is huge. That's on the product side. And the foundry side, we are very distant from TSMC and then in term of their performance.

So there's we have to be humble looking at building the building block that I mentioned earlier, the IP, the yield, the defect density, and the cycle time to make it more efficient and more reliable. Is a trust business. People want to trust you before they give you the wafer to count on you.

So those are the things will take longer time. But I think by 2030, 2032, 3132, I think I was starting to surface up. People may not understand how big potential I can be in terms of product, you know, on a PC client.

That's our bread and butter. And we move up to the edge and move into the physical AI and agentic AI. And because right now, in the past, you basically provide the server, provide the PC for human.

Now you're starting to have another different dimension. It's millions of agent. They need to come access the compute.

They access into the software stack. So I think that part, I think we have a chance to really play. The game is not over yet.

We can play on the injected AI and also the physical AI. So that's kind of where I'm going. And the AI is just the beginning.

You have the training that Jensen owned in the edge and also in terms of agentic AI with agents and also physical AI, I think is the jumble. Everybody have a chance. So I think that's part that I want to go for it.

And so I think hopefully the investor will know, even though in fourteen months, we make six time return to the shareholder, it's just a beginning. We still have a lot of room to go. There's venture returns from here.

Yeah, so I always look for 10x. Being a venture at heart, you want to look for 10x. And at Cadence, when I stepped down as a CEO, I think we make about close to 76 times, and starting from interim CEO, $2.

42. And then when I retire as executive chairman, about 85 time return to the shareholder. So it's hard to do that at Intel because the base is bigger.

So I kind of said, okay, let's do it at 10 x. You know? And then five year, ten years, if we can do 10x, think it's a good return being a venture capital at heart.

That's kind of my goal.

You know, right now, there's a massive buildup in terms of the AI. I think it's the right thing to do. I don't see there's anything to slow it down because the workload is increasing a lot.

And then I think the question mark is how- And we are supply constrained. We are supply constrained. So I think anything slowed down is the supply constraint.

But I think the other part is I always look at all this infrastructure build out. At the end, you have to look at what is the solution, what is the application you want to drive? And I'm more focused on application.

So if you can identify the application that is humongous or add up a few application to become meaningful, and you focus on that, it's not everybody built gonna be winning. And so some gonna be winning big time and some gonna lose over time or some go sideway. So, you know, just like Internet, you can see some of them turn out to be very big, like Amazon, like Netflix, and then some of them is kind of go sideways and disappear or being acquired.

And so I think to me, it's the same approach. Then they really focus on what application they try to serve, and that application, how big is that, and whether it's sustainable or not, or it's very crowded. So if it's too crowded, maybe one or two may survive, the other may be just consolidate.

So I think this industry go through that big growth and then starting to consolidate. Maybe eventually one or two become the real winner. So I think that's kind of we've watched the movie before, so it's not a surprise to me.

But focus on application, like Netflix is application. Amazon is a real application.

yes. So I think my investment thesis is find a problem that is really need to solve. And secondly, who will be the player that you can partner with?

And then thirdly, look at the application. How big is that application? Is that sustainable?