By Don Clark, Tripp Mickle and Steve Lohr
Over the weekend, Intel CEO Patrick Gelsinger was given a choice by the company’s board of directors: Resign or be fired.
Intel’s board had concluded that Gelsinger had to depart after his plans to turn around the iconic semiconductor maker were not showing results quickly enough, said a person with knowledge of the matter, who was not authorized to speak publicly. Other challenges had piled up, with the company’s stock plunging more than 50% this year.
On Monday, Intel announced that Gelsinger had retired as of Sunday. The 63-year-old Intel veteran, who took the helm in 2021 after an 11-year absence from the company, also resigned from the board. He will be replaced for now by two executives, David Zinsner and Michelle Johnston Holthaus, the company said, adding that it would continue its search for a permanent CEO.
The abrupt change was the latest sign of the 56-year-old company’s fall from grace. Intel was one of the pioneers that gave Silicon Valley its name and for years was one of the world’s best-known tech names. But the company has been mired in recent years in innovation struggles and has ceded ground to rivals including Nvidia, the reigning maker of artificial intelligence chips.
“We have much more work to do at the company and are committed to restoring investor confidence,” Frank Yeary, who will serve as interim executive chair on Intel’s board, said in a statement.
Gelsinger said in the statement that the move was bittersweet. “It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics,” he added.
Bloomberg earlier reported some details of Gelsinger’s exit.
Intel’s struggles reached the point this year that Wall Street analysts began considering it a potential takeover candidate or a target for a breakup. The change also came amid signs that the company’s latest production process, a technology at the center of Gelsinger’s turnaround plan, might not restore Intel to a leadership position next year as he promised.
Intel, which makes chips that handle calculations in a majority of the world’s computers, lost its lead in developing manufacturing technology to Taiwan Semiconductor Manufacturing Co. toward the end of the last decade. It also missed out on supplying processors for mobile phones and, more recently, the booming market for AI applications.
Gelsinger embarked on an ambitious plan to introduce five new production processes in four years while remaking Intel as a manufacturer for other chip designers, as well as producing its own products. He also spent much of his time pushing the Biden administration and Congress to pass the CHIPS Act, which was designed to encourage more U.S. production of the foundational silicon components.
As part of that lobbying effort, Gelsinger committed to building new U.S. factories and promised that Intel would catch up to TSMC’s technology by 2025.
But Gelsinger also hired aggressively as Intel’s latest microprocessors ran into slower demand and stiff competition. Revenue plunged more than 30% from 2021 through 2023. In October, the company posted a $16.6 billion quarterly loss, the biggest in its history.
Along the way, Intel’s market valuation withered as Nvidia turned into one of the world’s most valuable companies.
Gelsinger, acknowledging that Intel’s costs and revenue were out of balance, announced 15,000 job cuts. After a board meeting in September, he announced further belt tightening, including delaying plans for a new factory in Germany.
Gelsinger said that month that he still had the board’s support. But Yeary’s statement suggested that the board was not satisfied with Intel’s focus on making its chips more competitive with offerings from Nvidia and rival Advanced Micro Devices.
“As a board, we know first and foremost that we must put our product group at the center of all we do,” Yeary wrote. “Our customers demand this from us, and we will deliver for them.”
Part of that effort will be elevating Holthaus, who rose through Intel’s sales and marketing ranks to be an executive vice president of its client computing group. She was named CEO of Intel products Monday.
Zinsner, who will help run Intel during a transition period, was hired in January 2022 as chief financial officer after a stint at Micron Technology.
Intel’s shares rose about 5% in premarket trading after the company announced Gelsinger’s exit, but ended Monday down less than 1%.
Gelsinger first joined Intel in 1979, eventually ascending to become the company’s chief technology officer during his initial 30-year stint at the chipmaker. That tenure coincided with the era when Intel grew into the dominant supplier of chips for personal computers and, later, the server systems that power the internet.
Gelsinger later left Intel, eventually leading the software maker VMware before rejoining Intel in early 2021. He vowed to restore the company’s engineering-led corporate culture that was instilled by Andy Grove, a onetime Intel chief who died in 2016.
But that culture had always bound Intel too closely to its lucrative franchise in chips for computers, making it difficult to move into new markets. Gelsinger’s style and some of his tactics also did not sit well with some Intel engineering leaders, who complained privately that he had lost touch with industry changes and put too much emphasis on building new factories rather than Intel’s products.
Analysts said they were more surprised by the timing of the announcement than by Gelsinger’s departure. The main question, they said, is what comes next.
“There don’t seem to be any easy answers here, so whoever winds up filling the slot looks in for a tough ride,” Stacy Rasgon, an analyst at Sanford C. Bernstein, wrote in a note Monday.
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