No PriorsRe-engineering the Semiconductor Supply Chain with Intel CEO Lip Bu Tan
EVERY SPOKEN WORD
45 min read · 8,694 words- 0:00 – 1:01
Cold Open
- LTLip Bu Tan
Nine of the ten company I invest, halfway they change their business plan-
- EGElad Gil
Mm.
- LTLip Bu Tan
-because market have changed.
- EGElad Gil
Yeah.
- LTLip Bu Tan
So I like to have entrepreneur as team, not just one person. I always believe 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 first step for me is to strengthen my balance sheets, focus on the products, and I really simplify the product, listen to customer, and then drive the next generation leadership products. And then right now the agentic AI and inference CPU become, you know, highly in demand. And so in some way I'm happy. Right now the demand is very high for my CPU. Secondly, very happy that Jensen Huang, my old time friend, uh, he also put five billion, uh, in investing and support me. His five billion become twenty-five billion now. If you look at it, ten years from now, what will be the winning company? The one that...
- SGSarah Guo
[upbeat music] Hi,
- 1:01 – 1:24
Lip Bu Tan Introduction
- SGSarah Guo
listeners. Welcome back to No Priors. Today, Elad and I are here with Lip-Bu Tan, the legendary investor from Walden, then CEO of Cadence, now CEO of Intel. We talk about his plan to transform Intel, having the US government as a major shareholder, how to be an amazing semiconductors investor, and whether or not we can make chips in the United States. Welcome, Lip Bu. Lip Bu, it's great to see you.
- 1:24 – 3:00
Why Lip Bu Took the Reins at Intel
- SGSarah Guo
We'll start with the obvious question. This is a really hard job to go be CEO of this incredibly important, um, American semis company. Why take the job at all?
- LTLip Bu Tan
It's a good question. I'm sixty-six, and people thought that, well, you should retire rather than take on this hardest job in the industry. And so couple reason. One is, um, this iconic company, and it's so important for the semiconductor ecosystem, and also so important for United States. And so I decided, you know, do one more [laughs] after Cadence.
- SGSarah Guo
A lot has happened in this past year. What has been the most surprising to you?
- LTLip Bu Tan
Well, the most surprising that I don't learn from my previous job or even training is one day m- early morning, President Trump asking me to resign, and, uh, conflict of interest, and there's no exceptions. And so I had to convince myself, first of all, you know, I don't need this job. I do it purely to save Intel. And so take that personal issue out of the way.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
Then I figure out what, what can I do to be helpful to Intel? And so good news is, uh, I have a meeting, you know, Thursday morning, and then Monday I have the meeting, and then he listened to me. My- I have a chance to explain myself. You know, born in Malaysia, grown up in Singapore, went to MIT, and I lived in US. I never lived outside country.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
And so something that I share, and then somehow he listened very well, and then, uh, he gave me the chance, and so I'm delighted.
- SGSarah Guo
And now you have the chance to do the work. Um, when
- 3:00 – 4:08
Fixing Culture
- SGSarah Guo
you said, you know, the j- the job is to save Intel, it's a really important company, what, what does that look like to you? What does Intel winning or thriving look like?
- LTLip Bu Tan
Yeah. I just passed fourteen months. A lot of thing happened in this fourteen months. So couple of thing. One is to change the culture and then, uh, clearly want to drive more accountability, and also in term 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, um, don't have that bureaucracy layer of layer of meeting. And so something that I change the accountability, listen to the customer, and the customer delighted. You know, someone like Lip Bu, 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. And being a engineer by training, I want to know what went wrong and what are the thing that we- 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 roadmap and the vision for the next five, ten years.
- 4:08 – 7:57
Intel’s 10-Year Vision
- EGElad Gil
What, what is your vision of where Intel should be in ten years?
- LTLip Bu Tan
Yeah, I think couple of things. One, I always believe 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 starting to walk, and then finally you starting to run and 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.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
And, uh, the balance sheets really have horrible in some way. So I'm delighted, you know, US government become a big shareholder. Just I explained to President Trump, TSMC, when they started, they have the Tai- Taiwan government as a shareholder. If you look at Japan, you look at Singapore, this is a infrastructure US government get to provide the support. Secondly, very happy that Jensen Huang, my old time friend, uh, he also put five billion, uh, in investing and support me, and I'm glad I at least do some good work. His five billion become twenty-five billion now, and, uh, or more. And then the other part is SoftBank Masayoshi. Uh, I used to be at SoftBank board, and then he lent a hand to help me. So we strengthen the balance sheet and then, uh, focus on the products, and I really simplify the product, listen to the customer, and then drive the next generation leadership products. And then, um, in some ways very lucky. Uh, right now the agentic AI and inference CPU become, you know, highly in demand. And so, you know, 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 im- important. I talked to some of the AI model and the developer, and they said, "Well, in term of, uh, reinforced learning, uh, in term of the speed of orchestrating all the agents- And turning 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 couple of thing. You need to have all the right IP so that you can support the customer. Like for example, if it is a mobile related, you've got to have low power, uh, 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, you know, orders to have wafer to come, if the yield not good, they will be toast in term of revenue miss.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
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 thing 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 ask me, "Give me the whole rack." So there's a system that you have to build. And so I think s- those are the thing that I quietly building, uh, step by step and recruit some of the best talent I can find. By the way, all the re- recruitment, I do it myself, no search firm helping. And so I think sometime it's good to have a Rolodex that you know who to reach out to call for.
- EGElad Gil
Yeah. I mean, you've been in the business for so long and, you know, you, you've run, uh, Cadence for I think 12 years before this, and so-
- LTLip Bu Tan
13 years to date.
- EGElad Gil
13 years, sorry. Yeah, yeah. [laughs] So I think, uh-
- LTLip Bu Tan
And then two more years as executive chairman, so 15 years.
- EGElad Gil
Yeah, 15 years. Mm.
- LTLip Bu Tan
I signed up for three months. Three month, uh, so right now I'm being very careful. The moment you said, "Just do it for three months"-
- EGElad Gil
Uh, yeah. [laughs]
- LTLip Bu Tan
... it turned out to be 15 years. [laughs]
- EGElad Gil
[laughs] Yeah, well, uh, it seems like you have a lot of longevity ahead of you here as well. And so, um,
- 7:57 – 9:59
Working with Elon Musk on Terafab
- EGElad Gil
the other big initiative that, that has been sort of talked about is Terafab and working with Elon Musk on that. Can you tell us a bit more about how that came together and your involvement and how you all are collaborating?
- LTLip Bu Tan
Yeah, good. I mean, Elon Musk, I think we all agree, is one of the best, if not the best-
- EGElad Gil
Mm-hmm
- LTLip Bu Tan
... uh, entrepreneur in this century.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
He and I, we share the same view that, uh, semiconductor infrastructure actually is not catch up with the AI growth, and, uh, in term of you need the capacity, you need to have the productivity, and you have the dry efficiency. And so those are the thing that he and I, we share that there's some- something missing.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
And then secondly, it just delighted to work with him and, uh, he's very, I call it unconventional.
- EGElad Gil
Hmm.
- LTLip Bu Tan
And he basically question every step-
- EGElad Gil
Yeah
- LTLip Bu Tan
... and why this traditional way of doing things, and in some way it's very refreshing, and I like that. You know, I like people 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.
- EGElad Gil
Yeah. Could you actually explain what Terafab is for people who aren't familiar with it and sort of-
- LTLip Bu Tan
Yeah. Terafab, he decided he want to build his own fab.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
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 gonna collaborate together. And he's a very good team that I work with weekly, and it just refreshing to work with him.
- EGElad Gil
And he's talked about things like he wants you to be able to smoke inside the clean room and all these things that normally are considered very-
- LTLip Bu Tan
The burger.
- EGElad Gil
Yeah, yeah. [laughs]
- LTLip Bu Tan
You know, eating the burger.
- EGElad Gil
Yeah.
- LTLip Bu Tan
I think I don't go that far.
- EGElad Gil
Yeah.
- LTLip Bu Tan
Maybe some part of the clean room you can do that.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
But I think something that is open mind, and then we are also listen and see whether we can do that.
- EGElad Gil
Mm. Yeah, I mean, it's very exciting to see how you're morphing the business here in the US in terms of, um, incrementally building out the foundry business, in terms of collaborating with things like Terafab. If you think about the
- 9:59 – 15:34
Shifting Supply Chain for Semiconductors
- EGElad Gil
global AI and semiconductor supply chain, so say that you were to look at the changes that AI is driving on a macro basis country by country, and if I look at certain countries, when I look at the layoffs that are claimed from AI, for example, um, most of them I think are overstated right now.
- LTLip Bu Tan
Yes.
- EGElad Gil
You know, most of the layoffs are actually just over-hiring during-
- LTLip Bu Tan
Correct
- EGElad Gil
... 2020-
- LTLip Bu Tan
COVID period
- EGElad Gil
... COVID period. But the first things I see be- actually being cut are outsourced firms, where you'd rather cut external headcount versus internal. So you're cutting external customer support. You're cutting external IT, and that has more of an impact I think for certain countries which have big BPOs, the Philippines, India, et cetera. And so they may be impacted in the short run by AI. And then if you ask how do companies participate in the future in a positive way in AI, you have to almost go country by country, right? Places with cheap energy will do data centers. Places with the ability to train models will train models, but that's probably only the US and one or two other places. Um, how do you think about the, the shift in global supply chain for the semiconductor industry? Should certain countries invest more? Like, should Israel be doing more given, uh, Mellanox and Nvidia and Intel presence there, and should they try to do more in semiconductors? Should other-- Should the Philippines move back to more of a manufacturing base? Like, how do you think about that on a global basis?
- LTLip Bu Tan
Yeah, good question. So I think clearly the AI is changing the whole landscape, and, uh, I think the impact will be bigger than internet, and, uh, it's more profound also. So I think the AI, you know, in- initially is able to help you to do things more efficiently, and then with a lot of agent helping you, uh, to do things that is now kind of mundane that yous need to do, but now they can give it to you faster. So in some way I think, uh, it can drive a lot of efficiency, even like semiconductor design, how much you can drive the efficiency in term of timing, uh, 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, you know, demand and growth, one is of course everybody knows 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 the thirdly is everybody know right now memory is the biggest 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 k- customer.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
So I think those will be the impact the industry growth.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
And then, uh, I think overall I felt that, you know, the company that most impacted is you are not embracing, uh, AI.
- EGElad Gil
Mm.
- LTLip Bu Tan
And because AI can help you to drive a lot of efficiency across all the different function of the enterprise. We should embrace-
- EGElad Gil
Mm-hmm
- LTLip Bu Tan
... 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, and I think that's tremendous.
- SGSarah Guo
A number of people would say the simplistic argument against Terafab, against Intel Foundry being competitive is really, uh, a question of, you know, there's, there's all the factors internal to the building, right? You describe, um, IP-
- LTLip Bu Tan
Mm-hmm
- SGSarah Guo
... and velocity of just-
- LTLip Bu Tan
Mm-hmm
- SGSarah Guo
... how you're doing business.
- LTLip Bu Tan
Yes.
- SGSarah Guo
Then there are external factors and, you know, Elad's talking about a number of them, but one of them is the, the cost of labor-
- LTLip Bu Tan
Mm-hmm
- SGSarah Guo
... and actually the, um, manufacturing capacity. You know, in investing in the Foundry business, you obviously believe there's a version where you can manufacture domestically, and Elon does too. Can you talk a little bit about that and, you know, how real that constraint is, the labor constraint?
- LTLip Bu Tan
Right. So I think, you know, the, when I decided whether should double down on Foundry or should I get out of the Foundry-
- SGSarah Guo
Mm-hmm
- LTLip Bu Tan
... and I come to the-
- SGSarah Guo
And there's a lot of voices saying get out.
- LTLip Bu Tan
A lot of voices-
- 15:34 – 18:30
Limits to Scaling and Packaging
- EGElad Gil
People have been talking for a long time about eventually, um, hitting a point of resolution where you can't really, uh, miniaturize things further. Like the line width just gets too small to, uh, be able to, uh, keep going. Uh, when do you think we actually hit that limit?
- LTLip Bu Tan
Good question. So I think I can see, you know, right now we have 18A, and then now to going to production of 14A, I can see 10 and 7. And so I think that path, I think we can get there, but gonna be more and more expensive-
- EGElad Gil
Yeah
- LTLip Bu Tan
... and more difficult to do. And that's why we need partners. We cannot just do it ourself alone. Partner with the subscript vendor, partner with equipment vendors so that make sure that we can really drive those yield and performance.
- EGElad Gil
Yeah.
- LTLip Bu Tan
And then the other part also very become the bottleneck is packaging.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
The advanced packaging. And so we all know about CoWoS by TSMC. Now we have a really good one called Emip-T that is a really s- next generation. I had to make sure that it become able to do in the production yield that meet the customer requirement. And now see more starting to run out of steam like you described.
- EGElad Gil
Yeah.
- LTLip Bu Tan
So right now I also look at some new material, so become going back to the material science or the chemical table.
- EGElad Gil
I see.
- LTLip Bu Tan
So gallium nitride-
- EGElad Gil
Uh-huh
- LTLip Bu Tan
... silicon carbide, and the indium phosphide, so I invest in all three.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
And then looking at some of this new material, how can we really drive that? And in the time of packaging, I starting to invest into glass.
- EGElad Gil
Mm.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
Glass is a very good heat insulator.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
So we in, I in- invest a venture cycle 3DGS. Then I realize 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 announce a big program with Indian government to manufacturing in, in India, plus in US, in New Mexico. So I think this, uh, advanced packaging very important. I also starting to look at artificial diamond.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
And that's another very good, you know, insulator. So I also invest into, uh, you know, diamond foundry.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
And that's something is the next generation to look at. So new material, new subscript material, and new, you know, uh, design methodology to try that. So one thing good about being a engineers, you're always hitting the wall, then you find way to either jump over the wall or you work around the wall, and then the, to get to the better result, and that's what I'm being, uh, have been long time as a investor and a building semiconductor. From the EDA tool to design to manufacturing, it's kind of nice to have that experience. Now I can help find a way to make a small contribution to the industry.
- EGElad Gil
Yeah, no, it's very exciting, and one of the reasons I'm asking about it as well is, to your point, there's always some things that you can bend around, but there are also physical limits where once you hit seven angstroms or whatever the limitation is, you start to-
- LTLip Bu Tan
Find new, new material
- EGElad Gil
... run into-- Yeah, you need to find new materials or find other workarounds.
- LTLip Bu Tan
Yes.
- 18:30 – 20:33
Physical Limits to Engineering and Design
- EGElad Gil
Um, and then the interesting question is, uh, and we've been talking about this for a long time. I remember years ago people were talking about how we'd eventually hit this, hit a point where we ran out of space on this, um, is do you run into some sort of asymptote that actually normalizes performance across different foundries or not?
- LTLip Bu Tan
Yeah, good question. In term of like Moore's law is, you know, double, you know-
- EGElad Gil
Yeah
- LTLip Bu Tan
... and then the power and the cost, and then you can double the performance, but you cannot double down on the cost and, and area. So those are the thing you have to give, give way unless you find some new way of material-
- EGElad Gil
I was gonna ask the material side
- LTLip Bu Tan
... new way of design.
- EGElad Gil
Yeah.
- LTLip Bu Tan
And that become material science are 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 years ago, you know, I, I still investing in semiconductor, and actually most of the VC firm, some of them are very nice tier one venture fund, a good friend of mine. And initially the partners meeting, the whole partners in the room. Then after I'm talking about semiconductor, half make excuse-
- EGElad Gil
Yeah. [laughs]
- LTLip Bu Tan
... to run out the room.
- EGElad Gil
Yeah.
- LTLip Bu Tan
Then eventually the other half, they said to Lip Bu, "Do you have any software service?"
- EGElad Gil
Ah.
- LTLip Bu Tan
So then everyone 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 five point three trillion market cap company, and then Broadcom and, uh, TSMC is two trillion market cap company. And Lisa Su, my good friend at AMD, is almost eight hundred billion, and I'm close to six hundred billion. So in some ways kind of semiconductor become hot again, and it become essential because years, eight, years ago when I invest in semiconductor, no VC want to join me except, you know, some of the big corporation like Samsung, you know, Arm, and Softbank and others, and investing with me. And then now I starting to see a lot VC like to come investing in semi, so I'm very happy.
- EGElad Gil
Mm.
- 20:33 – 26:29
Challenges in Semiconductor Investing
- SGSarah Guo
Given the enormous interest in investing in this area that used to be considered too hard, right?
- LTLip Bu Tan
Yes.
- SGSarah Guo
Um, what do you think... I, I mean, you've been a venture investor with Walden for a very long time, as well as an operator. Uh, you know, the, the general fears, I, I'm just gonna list a, a bunch of them. Um, the, the general fears have been, uh, it's very capital intensive, um, and you should tell me what I'm missing. It's very unpredictable in terms of, you know, shipping a design that works, missing tape-out, um, and, uh, you need to understand the workload very well. I think there's a, there's another, which is just like it's, it's very high risk for the customer-
- LTLip Bu Tan
Yes
- SGSarah Guo
... to switch, right?
- LTLip Bu Tan
Mm-hmm.
- SGSarah Guo
I, I think, you know, we've been involved in companies together where-
- LTLip Bu Tan
Yes
- SGSarah Guo
... you know, there's a design win, and then there's still the question of like scaling order volume. Um, uh, and then there's a cyclicality-
- LTLip Bu Tan
Yes
- SGSarah Guo
... right, of, you know, you, you build hard manufacturing capacity and demand may, may change or not in any, any given year. Um, w- what is your view on how a bunch of, you know, what makes it hard as an industry, uh, and then the, the secular demand growth from a bunch of different areas, right? So you have the, um, recognition of how important the, a, a more diverse supply chain is, and then you have this like explosive demand growth on the AI side. How do you... You're, you're still an investor, and then you're making the biggest bet ever, like go be CEO. How do you like think about these different risks and advise others about where to invest in this supply chain? I realize that's a very large question, but just given your, your history with it, I, I think there's a, there's a lot of like YOLO action of like, "There's a memory shortage. Buy memory stocks," um, a- as well as, you know, just a, a unwillingness to take on things that have a year timeline, like material science.
- LTLip Bu Tan
Good. You have quite a broad range of questions. Let me try to underst- ex- explain that. So first of all, I think, uh, you know, the venture capital startup is in my blood, and I really enjoy it. And, uh, so I think, uh, this is not try to brag about it, and so there's some good exit. You know, I still have IPO, you know, M&A, and this includes semiconductor. Just break down to semiconductor, I invest over the years, uh, , and is in US. So what I usually look at semiconductor-
- SGSarah Guo
Just to, just to be clear, that's incredible, right?
- LTLip Bu Tan
Thank you. Thank you. It's just enjoy building it. And, uh, but more important, I look at is, first of all, on the investment side, I always look at where is the bottleneck, what are you trying to solve? Uh, for example, I invest in company called, uh, Cradle Semiconductor, Astralar Lab. Is this interconnect become the bottleneck? So I decide to back, and also I back, uh, Celestia AI in the optical side.
- SGSarah Guo
Yeah.
- LTLip Bu Tan
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.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
And then the other part I looking at is, you know, okay, what are the, uh, 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 better design and better solution? So a couple of new startup actually go into the EDA related area-
- SGSarah Guo
Right
- LTLip Bu Tan
... to drive performance improvement.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
I think it's a goldmine to do that. And then the other part, you look at the new material. And we talk about, you know, this, uh, you know, indium phosphide. That's why I invest in Inphi, and then Marvell bought it. And then, uh, 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, you know, doing power management, and ADA just bought called Empower. And so again, this IVR, that's a very, very good area, and 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 drive 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 is very important from day one, you'd have to target the first customer.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
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 where do you get the talent. And then, yeah, you know, sometime 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 back quite a few, quite a significant amount my investment in Israel, and then because they have very disruptive, innovative entrepreneur, and they work really hard.
- SGSarah Guo
[laughs]
- LTLip Bu Tan
Even in this wartime, they still have conference call.
- SGSarah Guo
[laughs]
- LTLip Bu Tan
And sometimes they say, "Okay, there's a, there's a-
- SGSarah Guo
Yeah
- LTLip Bu Tan
... a warning. I have to go to underground, and then the internet may not be good. Maybe we just use voice." In some way, it's kind of fun. The kind of resilient entrepreneurship I really enjoy. So I think all in all, I felt that there's a lot opportunity, and especially in the AI.
- 26:29 – 28:02
Lessons from Cadence
- SGSarah Guo
to, uh, make certain parts of the design and test of, um, uh, of chips, uh, faster, cheaper, more creative with AI. Um, given your Cadence experience, like, where do you, what do you think is most fertile? Is there anything you think is already working?
- LTLip Bu Tan
Yeah, I think, you know, the, for almost 15 years with Cadence, and I'm so happy one of my highlight is able to find my successor, Anirudh, and I train him, and he become super great CEO. And then he really embracing the AI, you know, driving the agentic AI to drive more efficient. Uh, but there's good part, I think Synopsys, Sassine also tried to do that, and they have a investment from, you know, Nvidia, $2 billion, I think helping him to do a lot, and he acquire Ansys to move into the whole system, uh, 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, depend on what the entrepreneur vision. And then as long as I always have philosophy, if entrepreneur want to sell the company and this quicker way for exit, you don't have a lockup, you have, don't have to worry about quarter-to-quarter earning. And then some entrepreneur, they from day one, they want to go IPO. You know, for being a VC, I think three of you, with three of us, we all VC, we support the entrepreneur, their dream, and then help them to fulfill their dream.
- 28:02 – 32:03
Scaling and Investment Decisions
- EGElad Gil
Yeah. If you look at the different areas that you mentioned in terms of future either product development or impact of AI on the semiconductor industry, there's companies like Periodic doing materials. There's ClearPoint folks working at, on the EDA side and, uh, design and other aspects, and sort of throughout the chain, there's manufacturing. Um, do you think the either Intel or a future semiconductor company 10 years from now looks radically different from today given AI? And if so, how?
- LTLip Bu Tan
Yeah, I think so. I think first of all, uh, 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. You know, I usually like to go in very early, put a team together. It's kind of fun to do that. I think you sh- you also do that. And then secondly, you try to find the right investor that can co-partner with you. Uh, it's not just the, whatever the brand name firm. I usually go for the individual, and if we're the individual that really knowledgeable in this space, you can... The most important to find a partner through difficult time and good time. A lot of time, people are very enjoyable working with you is a good time. When the company into trouble, they just walk away. I like to have partner that really work through. A lot of successful company, they have multiple time almost bankrup-
- EGElad Gil
Mm.
- SGSarah Guo
Mm-hmm
- LTLip Bu Tan
... then eventually take off. So I think it's bot- 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 couple of friend, they 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 the 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 ne- next frontier to work on.
- EGElad Gil
Uh-huh.
- LTLip Bu Tan
And then frankly speaking, I look back Nine of the ten company I invest, halfway they change their business plan-
- EGElad Gil
Mm.
- LTLip Bu Tan
-because market have changed.
- EGElad Gil
Yeah.
- LTLip Bu Tan
So I like to have entrepreneur as team, not just one person. Secondly, open mind, you know, willing to listen and listen to, you know, getting coaching from us.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
And then eventually they formulate their own plan. It's not just do what I 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, it's the right decision. That's kind of fun of doing startup, you know.
- EGElad Gil
Yeah, that's pretty cool.
- LTLip Bu Tan
They can 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-
- EGElad Gil
Mm.
- LTLip Bu Tan
-and also find the right partner, and also able to scale the company. And so in some way, I'm back to my point about full stack. So in a way, you need to have a full stack solution.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
And, uh, so it can be big company, they re- you know, transform themself to be m- looking at big platform.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
Like Jensen, I admire him.
- EGElad Gil
Yeah.
- LTLip Bu Tan
You know, he focus on CUDA, he focus on illegal. 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 very more elegant way. They change the game, and then it start up, move fast, you know, speed of light. You can really become a dominant player. And hopefully Intel can play that role because we have the XPU-
- EGElad Gil
Mm.
- LTLip Bu Tan
-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. I think that's where I'm going.
- 32:03 – 34:31
Rethinking Teams in AI Era
- EGElad Gil
Yeah, that makes a lot of sense, and I guess part of the question I was, I was wondering is where you're going, and then the other part is does it fundamentally change how you work? Because when I look in the software world, I think there's a very big shift happening right now in terms of who you hire, in terms of who you think you want on board, in terms of people managing multiple agents. And so, you know, many people now that I know are hiring people more in their 30s, 40s, 50s because they're used to managing teams-
- LTLip Bu Tan
Yes
- EGElad Gil
... and I think that transfers directly over to managing agents in terms of understanding the complexity of what to set up and the QA and everything else. And I wonder in the context of the physical world or in the context of a fab, how you think about shifts in terms of either team structure or capabilities or how AI layers on. And so I just wasn't sure if there's, if it's a natural slow evolution or if there's areas where there's a radical shift where it's like, oh, for materials now we should just use these three AI models plus some chemistry or whatever it is. So that's why I was a little bit curious about-
- LTLip Bu Tan
Good question
- EGElad Gil
... how you think about the future world there.
- LTLip Bu Tan
Good question. I think, you know, the, as I back to that crawl, walk and run.
- EGElad Gil
Mm.
- LTLip Bu Tan
So I think crawl, you basically try to... I recruit some of the best talent in the semiconductor industry, and then now I starting to look at what are the software talent I need to bring on board and, uh, in order to build a full stack. And now I starting to look at, you know, my average age of my team in the 40, late 40, 50.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
I need to bring in some new talent, and then so they're understanding the workload, understanding the frontier model, open source-
- EGElad Gil
Mm-hmm
- LTLip Bu Tan
... uh, that is important. So find out that my son become my teacher now.
- EGElad Gil
Mm. [laughs]
- LTLip Bu Tan
So e- every time he invite me to go to his house, we're playing the grandkids.
- EGElad Gil
Mm-hmm.
- LTLip Bu Tan
I starting to tap on him on all the AI machine learning. He's more plugin than me. So I learn 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'm transform it to become AI ni- uh, uh, AI enable, uh, using some of our design and also across all the engine, uh, all the organization embracing AI. And then so they become, uh, less, less, uh, depend on the spreadsheet and labor to do that. And you're gonna combine the two talent plus the s- best AI tool that I can use, not only for my organization, not only for my sales, and then now I starting to look at not just marketing and now the design-
- EGElad Gil
Mm
- LTLip Bu Tan
... and then to embrace that.
- EGElad Gil
Mm.
- 34:31 – 37:25
Industrial Policy and Funding
- SGSarah Guo
Uh, I think a lot of investors, um, you know, at, at, at least for me, the last few years since I started a firm, it, it's been very educational thinking about the different capital sources for more capital-intensive companies. Uh, I did a lot of software before, and, um, and so your need to have smart friends with a very different stance and balance sheet was less if you're like, "Ah, I need $150 million before this thing gets to, you know, some critical mass." Um, and, and, and so you've lived that for a very long time, and then you have the unique experience of, um, working with the government as a large stakeholder. How do you think, uh, this sort of industrial policy, it's led to huge successes like TSMC, right? The most important companies in the world. Um, it's also been a bit frowned upon in American business culture for a long time. Like, how do you think that should change now, or where is it relevant?
- LTLip Bu Tan
It's a good question. So I think, you know, clearly, you know, for capital-intensive, uh, business and, uh, infrastructure play, uh, you need to access the capital. And then in some way, I think for our early day venture capital investment, you know, now starting become very capital-intensive.
- SGSarah Guo
Yes.
- LTLip Bu Tan
And some of the venture firm willing to put one billion into some company-
- SGSarah Guo
Mm-hmm
- LTLip Bu Tan
... is very unheard of in the VC business. Now it's happening.
- SGSarah Guo
Yeah.
- LTLip Bu Tan
And so in some way you just have to be, you know, I like this kind of bell curve. Either you go in very early and then because it's starting to do the series A is over one billion valuations.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
And so you have to go in- Pre-money, uh, pre-seed to go into that kind of, uh, twenty, thirty billion valuation is very rare right now. [chuckles]
- SGSarah Guo
Yeah.
- LTLip Bu Tan
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, uh, early stage to join when-- join me to investing. I delight them because they are very less sensitive of whether I have to own twenty percent of the company.
- SGSarah Guo
Yeah.
- LTLip Bu Tan
There's not too many twenty percent 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. Uh, you know, there are some big fund they're doing that, and they're really the funding organized is basically support the infrastructure.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
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, uh, become very important. And also, as a public company, I also purposely want to focus on some of the investor-
- SGSarah Guo
Mm-hmm
- LTLip Bu Tan
... 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
- 37:25 – 41:10
What Investors Misunderstand About Intel
- LTLip Bu Tan
capital allocation, you know, whether you're going to, you know, buy back your shares. Those are good question, but meanwhile, I also had to build the business.
- SGSarah Guo
Yeah.
- LTLip Bu Tan
And so I think it's kind of that balance is important.
- SGSarah Guo
Do you think there is something that investors, like, most misunderstand about Intel at this moment?
- LTLip Bu Tan
Quite a few thing. First of all, I think, um, you know, as back to this, uh, crawl, run, and walk.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
Last four month I crawl, and then but the 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 bu-market share, but we really need to really build more co-- 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, uh, we have to be humble looking at building the building block, like I mentioned earlier, the IP, the yield, the defect density, and the cycle time to make it more efficient and more reliable. It's a trust business. People want to trust you before they give you the wafer to count on you. So those are the thing will take longer time, but I think by two thousand thirty, two thousand thirty-two, thirty-one, thirty-two, I think I will starting to surface up. People may not understand how big potential I can be in term of product. You know, the 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 not right now, in the past, you basically provide the server, provide the PC for human.
- SGSarah Guo
Mm.
- LTLip Bu Tan
Now it's starting to have another different dimension. It's millions of agent. They need to comp-- access the compute. They access into the, 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 in-- the agentic AI and also the physical AI. So that's kind of where I'm going, and the AI is just the beginning. You know, you have the training that Jensen own and the, the edge and also in, uh, in term of agentic AI with agents and also physical AI I think is the jumbo. Everybody have a chance. So I think that's part that I want to go for it. And so I think hopefully, uh, the investor will know even though in fourteen month, you know, we make six time return to the shareholder, it's just a beginning. We still have a lot of room to go, and-
- SGSarah Guo
There's venture returns from here.
- LTLip Bu Tan
Yeah, so, you know, I always look for 10X.
- SGSarah Guo
Yeah.
- LTLip Bu Tan
You know, being a venture at heart, you want to look for 10X. You know, at Cadence, when I stepped down as a CEO, I think we make about close to seventy-six time, you know, starting from in-interim CEO, two dollar forty-two cent. And then when I retire as executive chairman, about eighty-five time return to the shareholder. So it hard to do that at Intel because the base is bigger.
- SGSarah Guo
Mm-hmm. [chuckles]
- LTLip Bu Tan
So I kind of said, "Okay, let's do it at 10X," you know, and then, and the five year, 10 years, if we can do 10X, I think it's a good return, uh, being a venture capital at heart. That's kind of my goal. [chuckles]
- SGSarah Guo
S-so there's a godspeed on this very, very large mission from this, um, from this huge base already.
- 41:10 – 44:59
Where Compute Will Live
- SGSarah Guo
Um, there's an embedded belief in what you described about where the workload is, right?
- LTLip Bu Tan
Yes.
- SGSarah Guo
Where I think some would say, like, we're just gonna be- build bigger and bigger data centers, and a gigawatt is the beginning and then, uh, uh, but the, the centralization and the efficiency from running even the inference compute in a centralized way i-is the, is the dominant way versus thinking about the edge, thinking about the client. Um, do you think that there's, like, an equilibrium state that you believe in of where the compute is, or, or is it just w-we will find out from the workload? How do you think about that?
- LTLip Bu Tan
Yeah. I think that's a very good question. You know, the, right now there's a massive build-up in term of the AI, you know, the... I think it's the right thing to do. I don't see there's gonna anything to slow it down, uh, because the workload is increasing a lot. And then I think the question mark is how can-
- SGSarah Guo
And we are supply constrained.
- LTLip Bu Tan
We are supply constrained.
- SGSarah Guo
Yeah.
- LTLip Bu Tan
So I think anything slow down is the supply constraint. But I think the other part is, uh- I always look at all this infrastructure build-up. 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.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
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 the Netflix, and then some of them is kind of go sideway and disappeared 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 is very crowded. So if it's too crowded, you know, maybe one or two may survive. The other may be just consolidate. So I think this, uh, industry go through that big growth and then- then starting to consolidate, maybe eventually one or two become the real winner. So I think that's kind of, uh, we've watched the movie before, so it's not surprise to me. But focus on application, like Netflix is application.
- SGSarah Guo
Mm-hmm.
- LTLip Bu Tan
You know, Amazon is a real application. That to me, they're winning.
- SGSarah Guo
But you're assuming that some of these applications, they will be better served by client or edge compute-
- LTLip Bu Tan
Yes, that's right
- SGSarah Guo
... than the, than, than only by the data center.
- LTLip Bu Tan
On- only... Exactly.
- SGSarah Guo
Okay.
- LTLip Bu Tan
Exactly.
- SGSarah Guo
Yeah. Uh, I mean, I- I will say as a, I'm an investor in a number of companies that, uh, you know, they're- they're doing robotics, they're doing defense, uh, and so the compute on the device is a very important choice-
- LTLip Bu Tan
Yes
- SGSarah Guo
... in terms of our... A- and what we assume around it.
- LTLip Bu Tan
Yes.
- SGSarah Guo
Like let's say if a robot in the home eventually, like what you assume is in the home and in connectivity around it, um, determines what you're able to do.
- LTLip Bu Tan
Yes.
- SGSarah Guo
Right. Um, and I- I think that that's been kind of... it was kind of forgotten for a little bit in the, in the SaaS era.
- LTLip Bu Tan
Mm-hmm. Yes, yes. So I think I'm more, my investment thesis is find a problem that is really need to solve-
- SGSarah Guo
Mm-hmm
- LTLip Bu Tan
... 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? And if it's really big, you believe in it, double, triple down.
- SGSarah Guo
But you're including betting on applications w- that have not yet been broadly deployed. Okay.
- EGElad Gil
It's amazing. Well, thank you so much for joining us today. It was a pleasure.
Episode duration: 44:59
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