Less than four years after taking the helm of Intel, Chief Executive Pat Gelsinger resigned from the company on Monday following pressure from the board. Mr Gelsinger reportedly left after the company’s directors, during a board meeting last week, felt his costly and ambitious plan to turn Intel around was not working and the progress of change was not fast enough.
The board told Mr Gelsinger he could retire or be removed, and he chose to step down, news agency Reuters report quoting source.
As per the report, Intel’s communications chief, Karen Kahn, is also planning to leave the company.
With Mr Gelsinger gone, Intel has handed control of the company to two lieutenants–CFO David Zinsner and former head of client computing Michelle Johnston Holthaus– as the faltering American chipmaking icon searches for a permanent replacement. The moves come less than a week after U.S. officials gave Intel $7.86 billion in subsidies.
Pat Gelsinger’s Time At Intel
Mr Gelsinger in 2021 inherited Intel rife with challenges that he compounded. Setting lofty ambitions for manufacturing and AI capabilities among major clients, Intel ultimately lost or cancelled contracts under his watch, and was unable to deliver the promised goods, according to a Reuters special report in October.
He made optimistic claims about prospective AI chip deals that exceeded Intel’s own estimates, leading the company to scrap a recent revenue forecast about a month ago. Under him, Intel, which was founded in 1968 and for decades formed the bedrock of Silicon Valley’s global dominance in chips, has withered to a market value more than 30 times smaller than Nvidia, the leader in artificial intelligence chips.
Under his watch, the company’s shares fell 0.5 per cent. The stock has reportedly lost over half of its value this year, and it was replaced last month by Nvidia on the blue-chip Dow Jones Industrial Average index. Other rivels including Advanced Micro Devices climbed 3.6 per cent and the PHLX Semiconductor Index rose 2.6 per cent.
The sixty-three-year-old’s departure comes well before the completion of his four-year roadmap to restore the company’s lead in making the fastest and smallest computer chips, a crown it lost to Taiwan Semiconductor Manufacturing Co, which makes chips for Intel rivals such as Nvidia.
What’s Next For Intel
Mr Gelsinger’s abrupt departure has opened doors for the troubled company to consider potential deal options, including scenarios that the former CEO rejected during his time running the chipmaker.
According to a report by Bloomberg, the company’s board has discussed a range of possibilities in recent months, such as private equity transactions and even a split of Intel’s factory and product-design businesses.
However, the former CEO was opposed to breaking up the company and instead focused on his plan to restore Intel’s technological edge and become a made-to-order manufacturer for outside clients. With Mr Gelsinger gone, there’s a chance to reset the conversation.
The report said that Morgan Stanley and Goldman Sachs Group Inc. have been helping Intel to explore its options, and may find a more receptive audience in new management.
The new management also gives the opportunity for suitors to take another look at the acquisition plans of some or all of the business. Bloomberg News has reported that Qualcomm Inc. had expressed some interest in a transaction before, though nothing got very far.