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For beleaguered chip maker Intel (INTC), hope and optimism has been hard to come by as NVIDIA (NVDA) and Advanced Micro Devices (AMD) have left it in the dust in the AI race, but there is finally good reason for INTC shareholders to feel more upbeat about the company's future. After yesterday's close, INTC announced that Lip-Bu Tan, the former CEO of Cadence Design Systems (CDNS), has been appointed as its new CEO, effective March 18. Mr. Tan succeeds David Zinsner and Michelle Johnston Holthhaus, both of whom stepped into co-CEO roles after the company ousted former CEO Pat Gelsinger last December.

Mr. Tan certainly has his work cut out for him. At the top of the list will be charting out a new path for the loss-generating Foundry business which was at the center of Mr. Gelsinger's IDM 2.0 strategy. Last September, INTC announced plans to spin-off the Foundry segment into an independent subsidiary. However, Mr. Tan, who served on INTC's Board in 2022-2024, has previously discussed the importance of strengthening the company's manufacturing capabilities, suggesting that he may be committed to building Foundry just as Gelsinger was.

• The good news is that Tan has a strong track record of using innovation and new technology to create competitive advantages and drive strong growth, building substantial shareholder value in the process. At CDNS, he pushed for AI/ML technologies to be integrated across the product line, positioning the company as a leader in applying next generation technologies for chip design. Under Tan's leadership, CDNS also shifted to a high-performance product portfolio, catering to advanced node semiconductor designs.
• These strategies resulted in robust growth and improving margins for CDNS. Over Tan's 12-year tenure as CEO there, revenue nearly doubled to $2.8 bln, and CDNS's operating margin improved from roughly flat to consistently above 20%. 
• Tan also has experience implementing and executing streamlining initiatives, which will continue to play a major role in INTC's turnaround. In 2012, he implemented a major organizational restructuring at CDNS, leading to better alignment of resources and higher operational efficiency.
• Perhaps Tan's success at CDNS is best illustrated by the stock's performance. When he took the helm at CDNS in 2009, the stock was trading at about $10-$12. By the time he stepped down in 2021, shares of CDNS were trading at around $150-$170, reflecting an approximate 15-fold increase.

There is no guarantee that Tan will enjoy the same level of success as INTC's CEO as he did as CDNS's CEO. However, given his impressive performance at CDNS, it's easy to see why the market is viewing his appointment so bullishly.