Intel CEO Pat Gelsinger has "retired" after failing to successfully turn around the troubled chipmaker – which in August announced plans to slash 15,000 jobs. Intel’s share price has fallen from $60 to $24 since he joined.
Gelsinger's abrupt departure, effective December 1, rattled Intel's partners amid reports that he had been forced out by the board.
Gelsinger rejoined Intel in February 2021, with its board saying then he would “ensure strong execution of Intel’s strategy to build on its product leadership and take advantage of the significant opportunities ahead as it continues to transform from a CPU to a multi-architecture XPU company."
It’s been harder than the board thought, with Gelsinger making sweeping job cuts this year after Intel posted a painful $1.6 billion loss in August – and the “foundry” unit he established losing $7 billion in fiscal 2023.
(That Q2 was so dire that on an earnings call the very first question was “I'm just wondering, have the core issues been accurately diagnosed?”Gelsinger's believers will no doubt argue that he made made the tough and painful decisions needed to turn around the company long-term and will be vindicated in future.)
Gelsinger had warned in April this year that 2024 would be the “trough” as Intel tackles a “process technology deficit” after being “slow to adopt EUV”* and builds out the process technologies that will allow it to attract more foundry customers used to co-designing and working with TSMC.
At $25-$27 billion in 2024, Intel’s capex will be half that of Amazon’s and Microsoft’s – a sum that captures how much air has gone out of the chipmaker’s balloon as hyperscalers ramp up their own custom silicon efforts for CPUs and pivot to NVIDIA for all things GPU and AI workload.
Intel’s board chairman Frank Leary said today: “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... and are committed to restoring investor confidence."
Intel has named CFO David Zinsner and Michelle Johnston Holthaus, as interim co-CEOs while the board of directors searches for a new CEO.
Holthaus has been appointed to the newly created position of CEO of Intel Products, a group that spans its Client Computing Group (CCG), Data Center and AI Group (DCAI) and Network and Edge Group (NEX).
*EUV is extreme ultraviolet lithography; a cutting-edge technique for making chips that relies on light that doesn’t occur naturally on earth: It involves heating a droplet of tin to 400,000 degrees Celsius with a laser, collecting the unusual light that orbiting electrons produce using ultra-flat mirrors, then using it to stamp structures on the surface of specially coated silicon wafers; dear reader, do not try this at home.
