Chip Industry Honors Ex-Cadence CEO and VC Lip-Bu Tan

The Semiconductor Industry Association awarded top honors to Lip-Bu Tan, the former CEO of Cadence Design Systems and the founder of the venture capital firm Walden International.

Tan was CEO of Cadence, a maker of chip design tools and simulation software, for 13 years. And in 1987 he founded Walden International. At the time, no one wanted to invest in semiconductor companies because making chips was getting so expensive.

Over the years, he invested in 85 semiconductor companies. Of these, 26 were acquired and 19 floated on the stock exchange. Hardly anyone has such an investment record. One of those companies, Credo technologypreviously went public in mid-February, raising $230 million valued at $1.6 billion.

Tan was there with his wife, two children and their grandchildren when he accepted the award. Intel CEOs Pat Gelsinger, Microsoft’s Satya Nadella, Nvidia’s Jensen Huang and Marvell’s Matt Murphy sang his praises, and Tan said it was humiliating. He recalled the time he took over Cadence, hoping it would be a three-month gig. He had to apologize to clients and investors who had felt cheated by the former Cadence leader. And he answered emails about solving Cadence, sometimes getting as many as 300 a day from his own employees.

Tan stayed with Cadence for 13 years and oversaw its market value change from less than $1 billion when he took over to $45 billion when he retired in 2021. And as an investor, Tan made it to Forbes’ Midas list.

“Great Renaissance leaders were so skilled in so many dimensions,” Gelsinger said when presenting the prize. “Lip-Bu Tan is such a person. But even though they were not loved, Lip-Bu Tan is loved by everyone and knows everyone. I couldn’t think of anyone more deserving of the Robert N. Noyce Award than my friend Lip-Bu Tan.

The Walden company was named after Henry David Thoreau’s book Walden because Tan believed in similar things, such as self-reliance, said Marvell CEO Matt Murphy.

Tan said he was honored and humbled. He noted that he did not complete his PhD in nuclear engineering at MIT because Three Mile Island changed his career path. Chips weren’t popular either, but he doubled and tripled on them, he said. He said he was given a few “CEO for Dummies” books when he first became CEO of Cadence, and he read them all.

He said he remains fascinated by technologies such as quantum computing, hyperscale servers, massive data processing and advanced packaging. He believes they all have the potential to change the lives of people on this planet.

And he quoted Noyce, the co-founder of Intel, who famously said, “Don’t let history hold you back. Get out and do something great.

“Semiconductors have become very strategic for the country and very important for the whole world,” Tan said in an interview with me this summer. “President Biden has brought up chip wafers and this chip act is very important to the country and the world.”

In our interview, Tan said he was concerned about climate change and excited about investing in AI and other technologies. Even when Credo went public, he saw hard times even in July when we spoke.

Turning to the chip industry cycle, he noted that the bull run in semiconductors has been going on for quite some time. Now that smartphones have reached a huge installed base, sales may slow down and there may be weakness in the chip end market. He said he can slow down the market in 2022 or 2023. But he believes it could recover by 2024.

“I think the next two years will be challenging,” Tan said, thanks to issues such as inflation and supply chain issues. “The other part is the geopolitical risk. This has to do with energy and political tensions.”

And in the long run, he fears that chip design progress could also slow as the chip industry reaches the limits of Moore’s Law, the prediction that chip capacity would double every few years. Good relationships with partners in electronic design automation and foundries have become critical. Credo is a close partner for contract chip manufacturer TSMC.

“It’s harder to add achievements,” he said. “As far as Credo is concerned, there is no need to push the advanced production technology. They have a huge advantage in design. Now that Moore’s Law is slowing down, you need to make chiplets and pack them smartly, which is why Credo saw the chiplet as the right way to go.”