Intel CEO Pat Gelsinger delivers a speech at Taipei Nangang Exhibition Center during Computex 2024, in Taipei on June 4, 2024.
I-Hwa Cheng | AFP | Getty Images
Intel announced Monday that CEO Pat Gelsinger retired from the corporate effective Dec. 1, capping a tumultuous nearly four-year tenure at what was once America’s leading semiconductor company but which saw its stock price and market share collapse in that point.
Intel CFO David Zinsner and Intel products CEO MJ Holthaus were named interim co-CEOs. Longtime board member Frank Yeary will function interim executive chair. Shares of Intel were up nearly 4% Monday morning.
“We’re working to create a leaner, simpler, more agile Intel,” Yeary said.
Yeary, Intel’s longest-serving board member, will now need to preside over one more CEO search process. Gelsinger, 63, had an illustrious profession at Intel, rising to develop into the corporate’s first chief technical officer on the turn of the century, before he took a senior role at EMC. Gelsinger returned to the corporate from VMware, where he was chief executive, to stabilize Intel in 2021, succeeding then-CEO Bob Swan.
“It has been a difficult yr for all of us as we’ve made tough but essential decisions to position Intel for the present market dynamics,” Gelsinger said in a press release.
Gelsinger set out an audacious plan when he arrived in 2021 to rework the languishing company right into a chipmaking juggernaut. He sought to attain parity with the 2 leading chipmakers, Samsung and Taiwan Semiconductor Manufacturing Co. He pursued big buildouts within the U.S. and world wide, a costly endeavor that weighed heavily on Intel’s free money flow and increased the corporate’s debt load.
He also wooed government investment, positioning Intel because the single-largest beneficiary of the U.S. CHIPS and Science Act. Government money has begun to flow to Intel in recent weeks and can aid the corporate’s chip fabs in Arizona and Ohio. Gelsinger’s retirement comes every week after Intel and the CHIPS and Science Act office finalized a $7.86 billion grant.
Gelsinger also moved to position the corporate as vital to U.S. national security. He won a multibillion-dollar contract with the Department of Defense to construct secure chips, and in meetings with analysts and prospective customers stressed that Intel was a trusted partner of the U.S. government.
But all that was not enough to assuage investors, who increasingly began to see Intel’s aggressive spending as a folly.
Troubled tenure
US President Joe Biden holds a wafer of chips as he tours the Intel Ocotillo Campus in Chandler, Arizona, on March 20, 2024.
Brendan Smialowski | AFP | Getty Images
Investors became increasingly leery of Intel’s prospects, especially as the synthetic intelligence wave buoyed rival Nvidia and left Intel within the dust. The corporate’s market cap is lower than half of what it was in 2021, and briefly crossed beneath $100 billion earlier this yr. The corporate’s stock has fallen 52% yr so far.
In August, Intel reported disappointing quarterly results, sparking the sharpest sell-off in 50 years, and said it could lay off greater than 15% of its workforce as a part of a $10 billion cost reduction plan. CNBC reported that Intel had engaged advisors to defend itself against activist investors.
There isn’t any indication yet that an activist has taken a large position in the corporate’s stock, nor any sign that overtures have been made to Intel’s board. It is not clear what agenda an activist would pursue at the corporate.
Intel revealed plans in September to show the corporate’s foundry business into an independent subsidiary, a move that might enable outside funding options. That very same month, Qualcomm made overtures a few possible takeover.
Gelsinger’s successor, at any time when found, will assume command of an organization that’s smaller and more challenged than ever before. Most of the problems Gelsinger faced were inherited: to not pursue a chipmaking mandate for Apple’s mobile devices and passing on an acquisition of Nvidia were just two of the reportedly conscious decisions that Intel’s prior leadership made that left the corporate at a competitive drawback.
Those decisions were made by Intel’s board and past CEOs. But Gelsinger’s weekend ouster raises fresh questions on the corporate’s governance. Lip-Bu Tan stepped off Intel’s board earlier this yr, leaving the corporate with none directors who had semiconductor expertise. Quite a few reports have emerged within the weeks since detailing a dysfunctional corporate acquisition strategy and boardroom rancor.
— CNBC’s Jordan Novet contributed reporting.
