There’s been a lot of weird happening in the tech and telecom space, but something happened on Thursday that struck a cord amidst the chaos: President Donald Trump demanded the CEO of U.S. chip giant Intel resign immediately.
The demand, made on social media as nearly all of Trump’s statements are these days, was exceedingly vague. The president stated only that Intel CEO Lip-Bu Tan is “highly conflicted” and that “there is no other solution” than his resignation.
Though Trump played his cards close to the vest, Senator Tom Cotton (R-AR) had no such qualms about putting things out in the open. In a letter to Intel’s board, Cotton alleged Tan has ties to China which put the “security and integrity of Intel’s operations” at risk. Specifically, he cited Tan’s ownership interest in a number of Chinese companies.
You can read in detail about how Tan and Intel responded here. In short, Tan noted the U.S. has been his home for over 40 years and he is committed to national security.
Putting aside some unpleasant overtones (which, frankly, is more generous than he deserves), Cotton’s allegations display an ignorance of how the modern-day technology ecosystem works.
As analyst Jack Gold put it, “Any CEO with ties to international VCs will have contacts with Chinese companies, especially if you are in tech.” He went on to note that plenty of other companies, including Nvidia and Qualcomm have operations in China. So, it makes no sense to single out Tan and Intel.
The conclusion? Cotton’s excuses are BS, and it’s a verdict reached not just by Gold and myself but also other analysts including Moor Insights and Strategy Founder Patrick Moorhead.
“The big question for me was, what’s the *real* issue Trump/Cotton have? This seems like a smoke screen for something else,” Moorhead wrote on LinkedIn.
What the dispute might really be about
So, what might this all really be about? Intel didn’t respond to my questions about what may have sparked all of this. But I have a few educated guesses.
Tariffs – It’s possible that Tan and Trump had some kind of discussion and disagreement about tariffs.
Trump is implementing steep tariffs on imported semiconductors. While Intel should be exempt thanks to a loophole for companies that have made a commitment to manufacture in the U.S., it’s possible that the company is worried about other tariffs on materials and components and that may have sparked bad blood.
Manufacturing – It’s also possible that Trump is trying to get Intel to make some sort of big manufacturing commitment, akin to what Apple’s Tim Cook just did (Cook, by the way, took the announcement as an opportunity to “gift” Trump an Apple statue with a 24 karat gold base).
The big problem with that is that Intel just announced a pull back on plans to build new manufacturing facilities in Germany and Poland and said it would slow construction at its highly-anticipated Ohio plant.
It doesn’t exactly seem like it’s in a position to make some huge commitment just to make Trump look good.
- Playing to the base – Then again, maybe all of this is truly about nothing other than creating another rallying point for Trump’s base. The President has long played the “America first” and Chinese threat cards and it’s possible Tan is just the latest fodder being fed to the wolves.
The bottom line
No matter what the reason, these unsubstantiated attacks are not something Intel needs right now.
As Moorhead noted, Intel’s foundry is the only “U.S.-headquartered leading edge foundry” and they already have enough problems they’re trying to work through. Trump – who is ostensibly about putting “America first” – is in practice threatening the stability of a key domestic technology company. And Intel is a weird target given Trump has been pushing U.S. dominance in chipmaking and AI.
Moorhead pointed out that what Trump likely wants is some kind of “deal” that makes him look good and suggested Intel could reframe existing investments as new to essentially satisfy Trump’s ego. But that’s…not the point.
The point is tech companies shouldn’t have to and shouldn’t be willing to (LOOKING AT YOU, TIM COOK) grovel to Trump just to be able to function. Doing so is disgusting and decidedly un-American.
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