*

Tan invested in over 600 Chinese firms, some linked to

China's

military

*

Investments raise concerns because of Intel's ( INTC ) role in US

national security

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Intel ( INTC ) says Tan disclosed potential conflicts of interest

before

becoming CEO

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Chinese databases list many Tan investments as current,

extent

of divestitures unclear

By Eduardo Baptista, Stephen Nellis and Max A. Cherney

BEIJING/SAN FRANCISCO, April 10 (Reuters) - Lip-Bu Tan,

the man chosen to lead Intel ( INTC ), the U.S.'s largest chip maker, has

invested in hundreds of Chinese tech firms, including at least

eight with links to the People's Liberation Army, according to a

Reuters review of Chinese and U.S. corporate filings.

The appointment last month of Tan, one of Silicon Valley's

longest-running investors in Chinese tech, as CEO of a company

that manufactures cutting-edge chips for the U.S. Department of

Defense raised questions among some investors about the extent

of his ongoing involvement with businesses in China.

Reuters' review found that Tan controls more than 40 Chinese

companies and funds as well as minority stakes in over 600 via

investment firms he manages or owns. In many instances, he

shares minority stake ownership with Chinese government

entities.

Several investors interviewed by Reuters expressed concern

that the scope of Tan's investments could complicate the task of

reviving Intel ( INTC ). Along with Taiwan Semiconductor Manufacturing Co ( TSM )

and Samsung Electronics Co ( SSNLF ), Intel ( INTC ) is one of three companies in

the world making the most advanced computer chips, and the only

one based in the U.S.

"The simple fact is that Mr. Tan is unqualified to serve as

the head of any company competing against China, let alone one

with actual intelligence and national security ramifications

like Intel ( INTC ) and its tremendous legacy connections to all areas of

America's intelligence and the defense ecosystem," said Andrew

King, a partner at venture capital firm Bastille Ventures. King

said neither he or his fund have investments in Intel ( INTC ).

But some see Tan's years of experience investing in startups

in China as key competencies to revive the flagging American

icon.

"He was at the top of my list and most investor's lists of

who they wanted," Bernstein analyst Stacey Rasgon said. "He's a

legend and he's been around forever."

Tan made his investments through Walden International, the

San Francisco venture capital firm he founded in 1987, as well

as two Hong Kong-based holding companies: Sakarya Limited and

Seine Limited. Tan was sole owner of Sakarya as of October 31,

according to a Shanghai Stock Exchange filing, and controls

Seine through Walden, according to Chinese corporate databases,

which are updated daily.

Tan remains the chairman of Walden International.

Intel ( INTC ) declined to comment on Tan's investments in China. A

spokesperson said Tan completed a director and officers

questionnaire that requires disclosure of any potential

conflicts of interest. "We handle any potential conflicts

appropriately and provide disclosures as required by SEC rules,"

the spokesperson said.

Walden did not return a request for comment. A source

familiar with the matter told Reuters that Tan had divested from

his positions in entities in China, without providing further

details. Chinese databases reviewed by Reuters list many of his

investments as current, and Reuters was unable to establish the

extent of his divestitures.

It is not illegal for U.S. citizens to hold stakes in

Chinese companies, even those with ties to the Chinese military,

unless those companies have been added to the U.S. Treasury's

Chinese Military-Industrial Complex Companies List, which

explicitly bans such investments.

Reuters found no evidence that Tan is currently invested

directly in any company on the U.S. Treasury's list.

The Commerce Department's Entity List prohibits U.S. firms

from exporting controlled technologies to companies but does not

bar investments in them. The Pentagon bans companies connected

to the Chinese military from the U.S. military supply chain.

Intel ( INTC ) has a $3 billion contract to make chips for the U.S.

Department of Defense and participates in two other Defense

Department efforts that focus on developing cutting-edge chips.

The Defense Department did not comment on Tan's investments.

Reuters presented its findings to the PLA through the

Chinese Embassy in Washington, which had no comment on the

findings, but spokesperson Liu Pengyu said: "We would like to

reiterate our firm opposition to the U.S. generalizing the

concept of national security, distorting and smearing China's

military-civilian integration development policy, and

undermining normal China-U.S. economic and trade cooperation."

WEB OF INVESTMENTS

Tan invested at least $200 million in hundreds of

Chinese advanced manufacturing and chip firms between March 2012

and December 2024, including in contractors and suppliers for

the People's Liberation Army, according to a review of Chinese

corporate databases cross-referenced with U.S. and analyst lists

of companies with connections to the Chinese military. (For a

complete list, see this FACTBOX.)

Reuters identified 20 investment funds and companies where

Walden is currently a joint owner along with Chinese government

funds or state-owned enterprises, according to Chinese corporate

records. The government funds are mostly from municipal

governments of Chinese tech hubs like Hangzhou, Hefei, and

Wuxi.

Walden has also invested in six Chinese tech firms alongside

leading PLA supplier China Electronics Corporation, which was

sanctioned by President Trump in 2020 as part of an executive

order that banned purchasing or investing in "Chinese military

companies." CEC did not respond to a Reuters request for

comment.

"In this political climate, (China ties) would be something

that responsible business leadership at a company like Intel ( INTC )

would at least have a serious conversation about how to try and

manage," said Santa Clara law school professor Stephen Diamond.

"It's obviously politically sensitive and the board would

certainly want to know about it."

Reuters sought comment from 11 out of 14 members of the

Intel ( INTC ) board who did not respond.

Some of Walden's investments were highlighted in a report

published by the U.S. House Select Committee on the Chinese

Communist Party in February 2024, which found the firm made at

least six other investments totaling $161 million in firms with

links to the Chinese military between 2001 and 2022.

As one of the earliest Silicon Valley venture capitalists to

invest in China, Lip-Bu Tan was a sought-after benefactor and

mentor in the booming tech scene of the early 2000's.

Tan was a seed investor in Semiconductor Manufacturing

International Corp, China's largest chip foundry, which is now

under sanctions by the U.S. government due to its close ties to

the Chinese military. Tan first invested in SMIC in 2001, a year

after it was founded, and served on its board until 2018. The

House committee's final report said Walden exited SMIC in

January 2021. SMIC did not respond to a Reuters request for

comment.

The most recent record of a divestment by Tan from a Chinese

entity that Reuters could identify was in January, when a Walden

fund exited Ningbo Lub All-Semi Micro Electronics Equipment

Company, which supplies chips for Chinese defense firms and

research institutes, according to Chinese corporate data.

All-Semi did not respond to a request for comment.