US President Donald Trump on Thursday demanded the immediate resignation of new Intel CEO Lip-Bu Tan, calling him "highly conflicted" due to his ties to Chinese firms and raising doubts about plans to turn around the struggling American chip icon.

"The CEO of INTEL is highly CONFLICTED and must resign, immediately. There is no other solution to this problem," Trump said in a post on his Truth Social platform.

Intel shares closed down 3 percent on Thursday.

Trump's demand came a day after Senator Tom Cotton said he had written to Intel questioning ties between Tan and Chinese firms.

The Malaysia-born tech industry veteran took the helm at struggling Intel in March.

Trump's intervention marked a rare instance of a US president publicly calling for a CEO's ouster and sparked debate among investors.

"It would be setting a very unfortunate precedent. You don't want American presidents dictating who runs companies, but certainly his opinion has merit and weight," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

David Wagner, head of equity and portfolio manager at Intel shareholder Aptus Capital Advisors, said while "many investors likely believe that President Trump has his hand in too many cookie jars, it's just another signal that he's very serious about trying to bring business back to the US"

"Intel, The Board of Directors, and Lip-Bu Tan are deeply committed to advancing US national and economic security interests and are making significant investments aligned with the President's America First agenda," the company said in a statement.

"We look forward to our continued engagement with the Administration." (Agencies)