Intel CEO Pat Gelsinger retires amid financial struggles, comeback plan
“Today is, of course, bittersweet as this company has been my life for the bulk of my working career,” said Gelsinger
Intel announced on Monday that its CEO of nearly four years, Pat Gelsinger, retired the day before, an unexpected development as the semiconductor giant attempts to bounce back from financial struggles and execute on Gelsinger’s ambitious comeback plan.
The California-based company said its board of directors has named two interim co-CEOs to lead the chipmaker while it searches for Gelsinger’s permanent replacement: CFO David Zinsner and client computing group (CCG) general manager Michelle Johnston Holthaus.
Holthaus, who was previously head of Intel’s sales and marketing group, will also serve in the newly created role as CEO of Intel Products, a group that consists of the company’s CCG, datacenter and AI group and network and edge group.
In addition, Intel said that Frank Yeary, independent chair of Intel’s board, will become interim executive chair during the company’s leadership position.
“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,” said Yeary.
“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 revitalise process manufacturing by investing in state-of-the-art semiconductor manufacturing, while working tirelessly to drive innovation throughout the company,” he added.
“Leading Intel has been the honour of my lifetime – this group of people is among the best and the brightest in the business, and I’m honoured to call each and every one a colleague,” said the now-former CEO.
“Today is, of course, bittersweet as this company has been my life for the bulk of my working career,” he continued.
“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,” he added.
Intel’s stock price was up by more than two per cent in early trading Monday.
Gelsinger retired from the company less than a week after Intel announced that it will receive up to nearly $8bn (£6.33bn) in funding to subsidise new chip manufacturing sites in the US as part of the federal government's US CHIPS and Science Act.
While the subsidies marked a victory for Gelsinger, it was less than the $8.5bn Intel was originally expecting, and the funding was rewarded after the company in August said that it would cut the jobs of 15,000 employees - or 15 per cent of its workforce - and more than $10bn in costs in response to worsening financial conditions.
Investors responded well in late October to Intel’s third-quarter earnings update, where it exceeded expectations thanks to improvements being made at a “measured pace.”
This has all been happening as Intel attempts to enact Gelsinger’s comeback plan, which involves a major expansion of the company’s chip manufacturing capacity and capabilities in the West as well as the revitalisation of its contract manufacturing business.
Bob Venero, CEO of Future Tech Enterprise, called Gelsinger’s departure “bittersweet” given that it did not end in the much-hoped-for turnaround for the chip behemoth.
“Pat is one of the great leaders in our business,” said Venero, whose company has been an Intel partner for 28 years.
“Pat accomplished some great things at Intel, but he entered the picture at a time when Intel faced global economic and supply chain challenges. There were some missteps, but you course-correct and move forward.
“Pat has always been tenacious leader who was a big supporter of the channel.”
An Intel vet who returned to save the company
Intel appointed Gelsinger to replace Bob Swan as Intel’s CEO in January 2021 as the company was attempting to regain technology leadership and recover from manufacturing struggles that resulted in product delays.
At the time, it marked a grand return for Gelsinger, who started his career at Intel and held several top executive roles, including as its first chief technology officer, until he left the company in 2009.
He then went to serve as president and COO of EMC, now owned by Dell Technologies, and afterwards as CEO of VMware, now owned by Broadcom, for eight years.
A little more than a month after Gelsinger became Intel’s CEO, he revealed his ambitious comeback plan, which involved a new strategy called IDM 2.0.
An evolution of Intel’s integrated device manufacturing model where it fabricates the chips it designs, IDM 2.0 envisioned the company becoming a major contract chip manufacturer that could take on Asian foundry giants TSMC and Samsung.
This meant Intel would not only have to significantly expand its manufacturing capacity. It would also have to catch up with TSMC and Samsung in advanced chip-making capabilities and then leapfrog them, as Gelsinger set out to do.
“I am confident that we can be the world’s leading semiconductor company in a landscape of tremendous change and set a course for a new era of innovation and technological leadership,” he wrote to employees in February 2021.
Intel suffers amid rising competition from AMD, Nvidia
However, Intel’s financial performance has suffered at times under Gelsinger's leadership, including in recent quarters, in part because of rising competition in the CPU market from AMD as well as companies designing arm-based chips such as AWS, Ampere Computing and Apple.
Intel has also faced significant competitive pressure from Nvidia, which made early bets on the promise of accelerated computing with investments and acquisitions that allowed it to build out a comprehensive and integrated stack of chips, systems, software and services just in time to massively benefit from the generative AI revolution.
According to a recent CRN analysis, Nvidia could finish its current fiscal year with $128.6bn in revenue, which would be 64 per cent higher than the combined full-year revenues that have been forecasted by Intel and AMD.
This article originally appeared on CRN UK sister website CRN.