Latest / Elon Musk Podcast / How Intel's CEO Got Richer While Rescuing the Company

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How Intel's CEO Got Richer While Rescuing the Company · Elon Musk Podcast

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  Would help the show. Tremendously.
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  Thank you so much. Lip Bhutan is the CEO of Intel.
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  He's also the chairman of an AI chip startup called Revos.
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  This summer, he pitched Intel's board on buying that startup.
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  The board said no, I didn't expect that.
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  They told him he had a conflict of interest because he was
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  representing both sides of the deal.
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  Then Meta swooped in, a bidding war broke out, and Revos ended
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  up selling for roughly double its earlier valuation.
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  Ted's venture capital firm Walden Catalyst posted a
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  congratulations message about the successful outcome it
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  delivered to its investors. So is this a story about Aceo
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  using his company to enrich himself?
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  Or is this the messy reality of hiring a well connected deal
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  maker to rescue a sinking ship? This is one of at least three
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  instances where Intel has pursued deals that benefit 10
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  financially. According to people familiar
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  with the matter. Intel brought him in
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  specifically because of its investment network.
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  The same network that now creates conflicts going to walk
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  through the Revos bidding war, a second struggling startup called
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  Samba Nova where 10 also has ties, and the new policies Intel
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  has put in place to manage these situations.
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  We'll get right back into that after this break now.
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  Intel hired Lip Bhutan in March to turn around a company that
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  lost $19 billion last year. The board chose him because he
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  spent decades as a venture capitalist with stakes in
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  hundreds of chip and technology companies.
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  That web of relationships has already delivered results.
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  Tan helps clinch a $5 billion investment from NVIDIA and a $2
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  billion investment from SoftBank.
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  And Intel stock has roughly doubled since his appointment.
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  So here's the key point, though. Those same relationships create
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  a structural problem. Tan sits on both sides of the
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  potential deals. He owns stakes in companies that
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  Intel might want to buy or invest in.
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  And Intel's board knew this when they hired him.
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  They accepted that trade off. A spokesperson told Reuters that
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  the board believes Intel should fully leverage his vast network
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  to capture the new wave of industry opportunity.
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  Now inside this Revos situation. Tan is the chairman of Revos, a
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  start up building EI chips based on an open source design called
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  Risk V that's an alternative to the proprietary chip
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  architectures from companies like ARM and Intel.
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  Tan's venture firm, Walden Catalyst, is an investor.
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  When he pitched Intel on buying Revos over the summer, the board
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  rejected the proposal. They told him he had a conflict
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  and that he lacked an EI strategy to justify the
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  acquisition. Tan then asked one of his
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  lieutenants to pitch a new AI plan internally.
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  That led to partnership talks between Intel and Revos.
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  But Meta had been circling the start up for a while, and it
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  made an offer. Intel responded with its own
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  bid. Meta countered with a sweetened
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  package. The competition pushed the deal
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  value to around $4 billion, roughly double the $2 billion
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  valuation Revos had been seeking an earlier fundraising.
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  Now, Meta announced the acquisition in September.
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  The bidding war increased the payout for Riva shareholders,
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  including Tan. OK, keep going here.
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  Reuters could not determine exactly how much Tan profited
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  because of financials or private, but his venture firm
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  publicly celebrated the outcome. That blog post matters because
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  it shows the firm taking credit for a win that came partly from
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  Intel's participation in the bidding process.
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  Now there's a second start up in the story, too.
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  Salma Nova is an AI computing company that Tan has backed
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  since 2018 through his venture firm Walden International.
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  No relation to me, my name is Will Walden.
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  He became executive chairman in 2024 after the company struggled
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  to compete against NVIDIA. Salma Nova raised money at a $5
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  billion valuation in 2021, but the business did not grow as
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  expected. Customers preferred Nvidia's
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  chips, which work across a wider range of AI applications.
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  Samba Nova laid off about 15% of its staff earlier this year.
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  Now Tan pitched Intel on buying Samba Nova the summer, according
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  to three people familiar with the talks, and the logic was
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  that the acquisition could provide technology and talent to
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  help Intel enter the AI chip market.
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  Deal talks are ongoing, and Intel and Samba Nova have signed
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  a non binding term sheet. That means the company Tan
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  chairs might buy a company that Tan holds a leadership role in a
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  financial stake. So what do we know right now?
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  Intel has put policies in place to manage these conflicts.
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  Tent cannot attend or vote in board meetings or investment
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  committee meetings when he has a personal interest in the
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  outcome. And if he recuses himself from a
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  decision at Intel Capital, the investment arm authority goes to
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  the chief financial officer, David Zinsner.
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  That structure is supposed to create separation, but Zinsner
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  reports directly to Tan, which limits how much independence the
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  arrangement actually provides. Now hold out of this.
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  Tan took different direct control of Intel Capital shortly
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  after becoming CEO. He reversed an earlier plan to
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  spin off the investment unit. He reorganized it so that it
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  reports directly to him in the investment committee now
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  consists of just two people, Tan and Zinsner, the executive who
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  works for him. And since then, Intel Capital
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  has invested in several companies where Tan already has
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  a stake through his personal investment vehicles.
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  One example is Protein Techs, which announced a late stage
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  funding run in September. Intel Capital increases existing
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  position in the startup, which also counts Tan's firms as
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  investors. Some Intel employees have
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  reportedly felt pressure to pursue deals in Tan's portfolio
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  to win his support, and two corporate governance experts
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  consulted said this arrangement raises red flags numerous and
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  the conflicts are inherent in forging deals with their own
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  portfolio companies. One of those experts also
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  acknowledged the upside. You don't want to block good
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  investments just because your CEO is well connected.
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  But the experts said Tan should have dropped his portfolio
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  investments, place them in a blind trust or set up a special
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  committee of the board to evaluate deals where he was a
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  stakeholder. The Intel did not say whether
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  Tan had taken any of those steps.
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  Now here's where this goes. The Trump administration took a
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  9.9% stake in Intel this summer through a $8.9 billion
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  investment. That deal effectively made
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  American taxpayers shareholders in the company.
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  The investment came from CHIPS Act funding and the Department
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  of Defense's Secure Enclave program.
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  Intel is the only U.S. company capable of manufacturing
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  advanced chips on American soil, and the government wants to keep
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  it that way. The government's stake is
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  passive, no board seat. They don't have any governance
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  rights. But it adds another layer to the
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  stakes here. If Intel's CEO is pursuing deals
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  that benefit his personal portfolio, the public has a
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  financial interest and whether that behavior is appropriate.
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  And Tan does not see his deal making as conflicted, according
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  to people familiar with this thinking.
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  He believes his positions at these startups and at Intel make
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  him uniquely able to negotiate transactions that benefit all
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  parties. Intel's spokesperson said the
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  company has an unwavering commitment to the highest
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  standards of corporate governance, integrity and
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  accountability. This is a messy situation
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  without a clean answer. Intel needed someone with deep
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  history relationships to rescue the company.
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  They hired A venture capitalist with stakes and hundreds of
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  firms. Now they're navigating the
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  predictable conflicts that come with that choice.
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  Canada has delivered results. The stock is up.
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  The NVIDIA and SoftBank investments are real, but so are
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  the questions about whether Intel's board can adequately
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  supervise the CEO who controls the investment arm and whose
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  portfolio companies keep showing up in Intel deal flow.
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  The regulations require disclosure of related party
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  transactions, but Intel's next filing is not due until spring
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  of 2026. Until then, shareholders and
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  taxpayers are left trusting that the policies Intel put in place
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  are enough. Hey, thank you so much for
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  listening today. I really do appreciate your.
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