According to reports, Intel announced that CEO Pat Gelsinger officially retired on December 1st and has stepped down from the company’s board of directors.
Bloomberg revealed that last week, Gelsinger discussed progress on recapturing market share and closing the gap with NVIDIA with the board, and tensions between the two parties had “reached a boiling point.” Sources indicated that Gelsinger could choose to retire or be dismissed, ultimately announcing the end of his career at Intel.
This effectively means Gelsinger was “pushed out” by Intel’s board. Subsequently, Intel’s new leadership held an all-hands meeting to announce Gelsinger’s retirement, emphasizing it was his “personal decision.”
Ironically, just last month, Gelsinger stated he had “great energy and passion” and “still had the board’s support.”
In response to being “laid off,” Gelsinger expressed “mixed emotions” in a statement:
“Leading Intel has been the honor of a lifetime, and this group of people are among the finest and brightest in the industry – I’m honored to have called each of them colleagues. Today is certainly bittersweet, as this company has been my life for the majority of my career. I can look back with pride at all we’ve accomplished together. It’s been a challenging year for all of us as we’ve made difficult but necessary decisions to position Intel ahead of current market dynamics. I’m forever grateful to the many colleagues around the world who have been part of the Intel family and worked with me.”
Following the news of Gelsinger’s departure, Intel’s stock price rose. However, Intel’s stock has fallen 52% year-to-date and is down 60% since Gelsinger became CEO.
After Gelsinger’s departure, Chief Financial Officer (CFO) David Zinsner and Executive Vice President Michelle Johnston Holthaus were appointed as interim co-CEOs.
Additionally, Holthaus was named CEO of the newly established Intel Products Division, which encompasses the company’s Client Computing Group, Data Center and AI Group, and Network and Edge Group.
However, their appointments have been met with skepticism from Intel employees, who point out that neither possesses Gelsinger’s technical expertise.
Intel Board Independent Chair Frank D. Yeary will serve as interim executive chairman during the transition. Yeary stated that the focus should be on “restoring investor confidence” and that they “must place the products division at the center of all operations.”
Intel announced that the leadership structure of its chip design and manufacturing divisions would remain unchanged, and the board has formed a selection committee to search for Gelsinger’s successor. Analyst Hans Mosesmann noted that Intel has “no potential candidates” internally.
Looking at Intel’s history, Gelsinger’s career is quite remarkable. He made indelible contributions to the company but indeed faced numerous operational issues and strategic missteps recently.
In 1979, at just 18 years old, Gelsinger joined Intel, beginning his career. Ten years later, he became the chief architect of Intel’s 4th generation 80486 processor. At 32, he was named the company’s youngest vice president and became Intel’s Chief Technology Officer (CTO) in 2001.
Gelsinger left in 2009 but returned as CEO in 2021 due to “increasing pressure from activist investors demanding restructuring.” He launched an ambitious “five-year plan” to build large-scale chip manufacturing facilities in the US and abroad.
However, the company’s development after Gelsinger’s return wasn’t entirely smooth.
In early 2022, Intel’s PC chip revenue declined 25%, and they lost to AMD in the data center chip competition. The same year, Intel failed to secure chip supply agreements with Alphabet’s Waymo self-driving car division and lost the opportunity to supply chips for Sony’s next-generation PS.
In 2023, Intel’s 18A chip manufacturing process failed to meet reliability expectations, leading Apple and Qualcomm to abandon its use. Intel’s revenue reportedly shrunk to $54 billion, about one-third lower than when Gelsinger took office.
In October this year, Intel reported a quarterly loss of $16.6 billion, the largest in its 56-year history. Analysts predict the company will lose $3.68 billion this year, marking Intel’s first annual net loss since 1986.
To reverse the losses, Intel drastically cut dividends, suspended or delayed construction of multiple chip manufacturing facilities, and will lay off over 15% of its workforce, even considering selling its Mobileye autonomous driving division and enterprise network division.
According to Bloomberg’s analysis, one of Intel’s biggest challenges is the industry transformation driven by AI computing. Competitor NVIDIA has already established absolute dominance in this field, while Intel’s attempts to enter the market with new products have made little impact.
Wolfe Research analyst Chris Caso noted that “while Gelsinger was generally successful in advancing Intel’s process roadmap, given Intel’s lack of AI, we believe Intel lacks the scale to pursue leading manufacturing on its own.”
Regarding Intel’s future development, the new leadership stated in the employee meeting that the company’s goals remain unchanged: improving performance in products and crucial 18A chip technology while reducing costs and increasing efficiency.
Interim Executive Chairman Yeary stated the company’s “priorities” are simplifying and strengthening the product portfolio, enhancing wafer manufacturing and foundry capabilities, and optimizing operational and capital expenses. Yeary’s vision is to build a leaner, simpler, and more agile Intel.