TLDR
- President Trump called for Intel CEO Lip-Bu Tan to resign on Truth Social, citing conflicts of interest
- Senator Tom Cotton questioned Tan’s China connections in a letter to Intel’s board this week
- Tan’s VC firm Walden International has investments in 20 Chinese companies alongside government funds
- Intel stock dropped 3.4% Thursday but recovered with 0.9% premarket gains Friday
- Tan responded calling reports “misinformation” and emphasized his ethical standards over 40+ years
Intel stock tumbled Thursday after President Trump demanded the resignation of CEO Lip-Bu Tan in a social media post. The president wrote on Truth Social that Tan is “highly CONFLICTED and must resign, immediately.”
The call came one day after Republican Senator Tom Cotton raised national security concerns about Tan’s business ties to China. Cotton wrote to Intel’s board questioning the CEO’s connections to Chinese government entities.
Intel shares fell 3.4% on Thursday following Trump’s post. However, the stock recovered in premarket trading Friday, climbing 0.9% as investors processed the news.
Tan took over as Intel’s CEO in March after Pat Gelsinger’s troubled tenure. Wall Street had welcomed his appointment, sending shares up 15% on the announcement. Analysts viewed him as the company’s best hope for a turnaround.
The controversy centers on Tan’s venture capital firm, Walden International. A Reuters report in April revealed the firm has investments in 20 Chinese companies. These investments are made alongside Chinese government funds and state-owned enterprises.
Security Concerns Mount
Cotton’s letter highlighted Intel’s $8 billion grant from the CHIPS Act. The senator argued that Tan’s associations raise questions about Intel’s ability to handle taxpayer dollars responsibly.
“Intel is required to be a responsible steward of American taxpayer dollars,” Cotton wrote. He pointed to applicable security regulations the company must follow.
Tan has extensive experience in the semiconductor industry. He previously served as CEO of Cadence Design Systems and held board positions at 14 chip-related companies. His career spans over 40 years in the sector.
Late Thursday, Tan responded to the controversy in a letter to staff. He called reports about his career “misinformation” and defended his track record.
“I’ve built relationships around the world and across our diverse ecosystem,” Tan wrote. He emphasized operating within the highest legal and ethical standards throughout his career.
Intel issued its own statement following Trump’s comments. The company stressed its commitment to advancing US national and economic security interests. It highlighted investments aligned with the President’s America First agenda.
Stock Performance Lags Rivals
Bernstein analyst Stacy Rasgon defended Tan in a note to investors. He called him “a legend in the semi industry” whose global connections are well known.
Rasgon noted that unlike other tech CEOs, Tan hasn’t cultivated a personal relationship with Trump. This lack of connection could hurt him in dealing with the administration’s concerns.
Intel shares have gained just 1.8% this year. The performance lags behind competitors like AMD, Broadcom, and market leader Nvidia.
The company has struggled to keep pace in the AI chip race. In late July, Intel announced plans to cut its workforce by 15% to reduce costs.
Intel recently scrapped plans to make its 18A manufacturing process available to customers. Analysts had viewed this technology as crucial to the company’s turnaround efforts.
The company both designs and manufactures chips for itself and third-party customers. Its efforts to boost the manufacturing business have fallen short of expectations so far.
Intel confirmed it is engaging with the Trump administration on the matter. The company said it looks forward to continued dialogue with officials.
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