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Chip giant Intel keeps having bad news!

On August 22, local time, Intel disclosed an announcement showing that semiconductor industry veteran Lip-Wu Chen has resigned from Intel's board of directors, and his resignation is effective immediately. Lip-Wu Chen joined Intel's board of directors in September 2022 to help Intel achieve semiconductor transformation and revitalization. Some analysts pointed out that Lip-Wu Chen's sudden departure is a disaster for Intel, which is in trouble.

At the same time, the market also heard that Intel's new chip factory in Germany might stagnate. Hit by the above two pieces of news, Intel's stock price plummeted by more than 6% on the 22nd, making the company's stock price fall by nearly 60% so far this year. Most of its peers in the chip industry have been boosted by artificial intelligence (AI), and their stock prices have performed well. The Philadelphia Semiconductor Index has risen by more than 20% this year.

Semiconductor "big shot" resigns

A document filed by well-known chip company Intel on Thursday (August 22) revealed that semiconductor industry veteran Lip-Bu Chen has resigned from Intel's board of directors.

Intel announced that Lip-Wu Chen notified the company's directors on August 19 that he would resign from the board of directors, and the decision was effective immediately. Lip-Wu Chen said that this was his personal decision and that he was too busy to do everything and needed to re-prioritize his work. Lip-Wu Chen said that he would continue to support Intel and its important work. The Intel board of directors thanked Lip-Wu Chen for his contributions during his tenure.

Lip-Wu Chen was elected to Intel's board of directors in September 2022 and was appointed a member of Intel's Merger and Acquisition Committee. According to media reports at the time, Lip-Wu Chen joined to help Intel achieve semiconductor transformation and revitalization.

When Chen Liwu joined the board, he praised Intel CEO Pat Gelsinger's bold leadership and said: "Intel is an iconic company with a long history. I am honored to join its board of directors. Under Pat Gelsinger's bold leadership, Intel is undergoing a tremendous transformation to take advantage of the huge opportunities in the future. I look forward to being part of this exciting journey."

In addition, Intel's former chairman of the board, Omar Ishrak, once pointed out that Lip-Bu Tan is a well-respected global leader in the semiconductor industry. His expertise in software, semiconductors and venture capital, deep industry relationships and rich experience as a board member of a listed company will bring more valuable perspectives to Intel's board of directors.

However, less than two years after joining the company's board of directors, Lip-Bu Chen announced his resignation, which made the outside world more worried about Intel's chip ambitions.

According to public information, Lip-Wu Chen is one of the outstanding figures in the semiconductor industry with more than 30 years of industry experience. He has won the Robert Noyce Award, the highest honor of the Semiconductor Industry Association. In 1987, he founded Walden International, a venture capital company that plays an important role in promoting the development of semiconductor innovation. In addition, Lip-Wu Chen played a transformative leadership role during his tenure as executive chairman and CEO of Cadence Design Systems, and was awarded the Dr. Morris Chang Outstanding Leadership Award by the Global Semiconductor Alliance.

Born on November 12, 1959, Lip-Bu Tan grew up in Singapore and graduated from Nanyang University with a bachelor's degree in physics. He later earned a master's degree in nuclear engineering from the Massachusetts Institute of Technology (MIT) and an MBA from the University of San Francisco. In 1987, he founded Walden International, a venture capital firm that plays an important role in promoting semiconductor innovation. He is known as the "Godfather of Chip Venture Capital" and was once named one of the world's top 50 venture capitalists by Forbes magazine. Lip-Bu Tan also served as executive chairman and CEO of Cadence, an electronic design automation (EDA) software vendor.

Intel faces many challenges

Intel is currently facing many challenges, and recently there have been reports that the semiconductor giant's progress in building two new chip manufacturing facilities in Germany may be stalled.

Intel previously planned to build a wafer manufacturing plant at the "Silicon Junction" base in Magdeburg, Germany. In June 2023, Intel announced that it would increase its investment in the project to approximately $33 billion and received approximately $11 billion in government subsidies to support construction. Intel expects the Magdeburg plant to be online and produce high-performance semiconductors as early as 2027.

However, media reports this week said that progress on Intel's new German factory faces high uncertainty. Given the high costs involved in building manufacturing facilities, it remains to be seen how the capital-intensive expansion of contract wafer fab services will fit into Intel's restructuring and cost-cutting plans. Some investors have expressed concerns that as Intel aims to significantly reduce costs, the company may choose not to move forward with these plans in Germany.

In early August, Intel released a disastrous quarterly report, causing its stock price to plummet 26% in a single day.

After the U.S. stock market closed on August 1, Eastern Time, Intel disclosed its financial report showing that its second-quarter revenue was $12.83 billion, down 1% year-on-year, while analysts expected $12.95 billion. The adjusted gross profit margin in the second quarter was 38.7% (45.1% in the first quarter), down 1.1 percentage points year-on-year, while analysts expected 43.6%. The performance guidance was even more surprising. Intel expects third-quarter revenue to be $12.5 billion to $13.5 billion, down 4.9% to 11.2% year-on-year, which is significantly lower than analysts' expectations of $14.38 billion (up about 1.3% year-on-year); the gross profit margin guidance also fell more than expected, with the third-quarter gross profit margin expected to be 38%, while analysts expected 45.5%.

At the same time as the performance exploded, Intel announced that it would "cut spending across the board", including laying off more than 15% of its employees, with a total of 15,000 layoffs. In a notice to employees, Intel CEO Pat Gelsinger said: "We plan to cut costs by $10 billion by 2025, including laying off about 15,000 employees, accounting for 15% of the total number of employees. Most of these measures will be completed by the end of this year." According to the media, according to the data listed by the industry tracking website Layoffs.fyi, Intel has created the largest single layoff scale.

Intel also announced a new measure: suspending dividends from the fourth quarter of this year. The media pointed out that Intel has been paying dividends since 1992, and this is the first time it has suspended dividends in the past 32 years. Intel said that the company recognizes the importance of prioritizing liquidity to support the investment required to implement its strategy. Intel reiterated that as cash flow continues to improve to a higher level, it will be committed to providing competitive dividends in the long term.

Then on August 2, Intel's stock price plummeted nearly 30% during the trading session, and finally closed down 26.06%, and then fell another 11% in the next three days. Since the beginning of 2024, Intel's stock price has fallen by 59.46%, and its market value has shrunk to US$85.9 billion.

Intel's stock performance is different from many of its peers in the semiconductor industry, which have been boosted by expectations for artificial intelligence (AI). Among them, the Philadelphia Semiconductor Index (SOX) has risen more than 21% this year, with leading stocks Nvidia soaring nearly 150%, TSMC rising more than 61%, Broadcom rising more than 46%, and Micron Technology rising more than 20%.