In a blow to Intel‘s turnaround plans, CEO Pat Gelsinger has resigned from the big chip maker without a permanent successor in place.
Gelsinger spent more than 40 years at the company, rising through the ranks as an engineer. He seemed like the perfect CEO when he was appointed. But his tenure with marked with failed execution that he had vowed to fix. Intel’s stock was down 52% this year before the announcement. In trading today, Intel’s stock is up 3.31% to $24.84 a share.
Gelsinger is retiring effective immediately, and he will be replaced on an interim basis by David Zinsner and Michelle Johnston Holthaus as co-CEOs. Zinsner is the CFO of Intel, while Holthaus is the general manager of Intel’s client computing group.
Holthaus will also serve in the newly created job of CEO of Intel Products, which includes Intel’s consumer business as well as its data center, AI, network, and edge businesses.
Frank Yeary, an independent board member and chairman of the board of Intel, will become interim executive chair during the transition period. The board has formed a search committee and will work to find a permanent successor to Gelsinger.
“Leading Intel has been the honor of my lifetime – this group of people is among the best and the brightest in the business, and I’m honored to call each and every one a colleague,” said Gelsinger, in a statement. “Today is, of course, bittersweet as this company has been my life for the bulk of my working career. I can look back with pride at all that we have accomplished together. 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. I am forever grateful for the many colleagues around the world who I have worked with as part of the Intel family.”
Rich history
Gelsinger joined Intel in 1979 when he was 18 and he became the lead architect of Intel’s highly successful 80486 processor, which debuted in 1989. At age 32, he was named as a vice president — the youngest VP in the company’s storied history. He was named CTO in 2001 and often delivered keynote speeches at Intel’s developer forum. He seemed born to be CEO, but was passed over.
In 2009, he left Intel to join EMC as president, and he was appointed CEO of VMware in 2012. He rejoined Intel in 2021 after the chipmaker had run off course during the tenure of Brian Krzanich. CFO Bob Swan briefly replaced Krzanich and then Gelsinger took his place.
Intel was a vaunted chipmaker throughout its history, but it fell behind Taiwan’s TSMC in leading technology and Advanced Micro Devices made a comeback with its Zen designers for microprocessors.
While Intel held onto the leading market share position, AMD steadily grew its market share in key data center and high-end computing markets with its multi-generational success of its Zen architecture. Nvidia also took the lead in AI and graphics chips and Intel never caught up.
Upon coming back as CEO, Gelsinger had vowed to fix the manufacturing problems that arose during Krzanich’s tenure. He invested billions of dollars in chip manufacturing technology and was instrumental in getting Intel grants from the U.S. federal government in the wake of the passage of the Chips & Science Act. That money is earmarked for U.S. manufacturing plants, in the hopes of creating high-value manufacturing jobs and restoring the nation’s technology independence.
Gelsinger also chose to build so much capacity that Intel would manufacture chips for other companies, not just chips designed by Intel engineers. His leadership return was popular at first as it seemed like Intel had gotten away from its manufacturing roots during the growth of the electronics age.
In 1971, Intel launched the first commercially successful microprocessor, a chip with most of the components for computing processing on a single chip. It had just 2,300 transistors. But thanks to Moore’s Law (formulated by former Intel CEO Gordon Moore in 1965) and technological improvements, the number of components on a chip kept doubling every couple of years. Now Intel processors have more than 10 billion transistors.
But the renewed Intel Foundry business, as Gelsinger called it, was slow to prove its worth and get off the ground. In August, Intel said it would lay off more than 15% of its workforce, or less than 15,000 people. Intel is still a valuable company valued at $107.2 billion, but AMD has raced ahead under the leadership of CEO Lisa Su at $227.6 billion and Nvidia is valued at $3.395 trillion.
I did an interview with Gelsinger back in February and talked with him about the vast opportunity he saw to become the AI chipmaker to fuel the growth of the AI era of computing. He wanted to distinguish Intel with IDM 2.0, a strategy that refers to “integrated device manufacturer” where Intel both designs chips and makes them too. Most other chip makers can’t afford factories and have chosen to farm out the manufacturing to the likes of TSMC and Samsung.
Gelsinger told me, “To a great degree, Intel has been a manufacturer forever. I talked about IDM 1.0. As we announced our IDM 2.0 strategy a little over two years ago, it was really becoming a world-class fabless company and a world-class foundry. The unique ability we had to create more scale and efficiency by being a foundry for the industry. Obviously the AI surge created this moment in time where–what I call our advanced packaging is a capability that Intel has been a leader in forever. With that now, these advanced AI components need advanced packaging. It’s been a tail wind for our move into foundry.”
Interim successors
Zinsner has more than 25 years of financial and operational experience in semiconductors, manufacturing and the technology industry. He joined Intel in January 2022 from Micron Technology, where he was executive vice president and CFO. Zinsner served in a variety of other leadership roles earlier in his career, including president and chief operating officer at Affirmed Networks and senior vice president of finance and CFO at Analog Devices.
Holthaus is a proven general manager and leader who began her career with Intel nearly three decades ago. Prior to being named CEO of Intel Products, she was executive vice president and general manager of CCG. Holthaus has held a variety of management and leadership roles at Intel, including chief revenue officer and general manager of the Sales and Marketing Group, and lead of global CCG sales.
Zinsner and Holthaus said in a statement, “We are grateful for Pat’s commitment to Intel over these many years as well as his leadership. We will redouble our commitment to Intel Products and meeting customer needs. With our product and process leadership progressing, we will be focused on driving returns on foundry investments.”
Chairman’s statement
In a statement, the new chairman Yeary said, “On behalf of the board, I want to thank Pat for his many years of service and dedication to Intel across a long career in technology leadership. Pat spent his formative years at Intel, then returned at a critical time for the company in 2021. As a leader, Pat helped launch and revitalize process manufacturing by investing in state-of-the-art semiconductor manufacturing, while working tirelessly to drive innovation throughout the company.”
Yeary added, “While we have made significant progress in regaining manufacturing competitiveness and building the capabilities to be a world-class foundry, we know that we have much more work to do at the company and are committed to restoring investor confidence. As a board, we know first and foremost that we must put our product group at the center of all we do. Our customers demand this from us, and we will deliver for them. With MJ’s permanent elevation to CEO of Intel Products along with her interim co-CEO role of Intel, we are ensuring the product group will have the resources needed to deliver for our customers. Ultimately, returning to process leadership is central to product leadership, and we will remain focused on that mission while driving greater efficiency and improved profitability.”
Yeary concluded, “With Dave and MJ’s leadership, we will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimizing our operating expenses and capital. We are working to create a leaner, simpler, more agile Intel.”
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