Intel Corp chief executive officer Pat Gelsinger. — Bloomberg
NEW YORK: Intel Corp chief executive officer (CEO) Pat Gelsinger has been forced out after the board lost confidence in his plans to turn around the iconic chipmaker, adding to turmoil at one of the pioneers of the technology industry.
The clash came to a head last week when Gelsinger met with the board about the company’s progress on winning back market share and narrowing the gap with Nvidia Corp, according to people familiar with the matter.
He was given the option to retire or be removed, and chose to announce the end of his career at Intel, said the people, who asked not to be identified because the proceedings weren’t made public.
Intel chief financial officer David Zinsner and executive vice-president Michelle Johnston Holthaus are serving as interim co-CEOs while the board searches for Gelsinger’s replacement, the company said in a statement.
Frank Yeary, independent chairman of the board of Intel, will serve as interim executive chairman.
Gelsinger, 63, was once hailed as a savior of the chip giant. After taking the reins three years ago, he professed his love for the company and said he was determined to restore it to pre-eminence in the semiconductor industry.
The executive first began working at Intel when he was a teenager but left in 2009 and became CEO of VMware Inc.
Upon returning in 2021, he promised to regain the chipmaker’s lead in manufacturing, something it had lost to rivals like Taiwan Semiconductor Manufacturing Co.
Intel investors, eager to see changes at the company, initially applauded the CEO’s departure. The shares gained as much as 6% in New York on Monday, only to retreat later in the session.
They were down 0.5% to US$23.93 at the close in New York, bringing their year-to-date decline to 52%.
Gelsinger set out to take Intel beyond its traditional strength in personal computer and server processors by expanding into making chips for other companies, something it had never done before and putting it into direct competition with TSMC and Samsung Electronics Co.
As part of his revival strategy, Gelsinger laid out a costly plan to expand Intel’s factory network. That included building a massive new complex in Ohio, a project for which the company received federal aid from the Chips and Science Act.
Whoever replaces Gelsinger will face the same set of problems he was brought in to fix, including the fallout from poor decisions made by his predecessors.
What would have once been the most desirable job in the US$500bil chip industry has become a nearly untenable position.
The next CEO has to take on competitors with greater resources and catch up in artificial intelligence computing, all while showing that Intel can be the groundbreaking company it once was.
Finding someone to take that hot seat may not be easy. Before Gelsinger was appointed to replace CEO Bob Swan, there was speculation that a number of prominent executives were possible candidates.
Many on Wall Street proposed approaching Advanced Micro Devices Inc’s Lisa Su for the job.
Intel board member Stacy Smith, a former CFO at the company, also was a past candidate for the CEO role. He currently serves as executive chairman of Kioxia Corp.
Within Intel, there’s no bench of potential candidates, Hans Mosesmann, an analyst at Rosenblatt Securities, said in a note.
“A new outside CEO coming to Intel is a multiyear gig that is a tall order in a cycle of innovation that is more intense than ever,” he said.
Gelsinger said last month he had a “lot of energy and passion,” still had the support of the board and was making progress.
He expressed determination to keep the firm together in the face of reports that it was the subject of takeover bids. — Bloomberg
