Intel Monday announced CEO Pat Gelsinger has resigned after a difficult stint at the company. The once-dominant chipmaker\u2019s stock cratered as it missed the AI boom and was surpassed by most of its rivals. Gelsinger took over as Intel\u2019s chief executive in February 2021, returning to the company at which he worked for decades, including as chief technology officer. He had left Intel for a stint as CEO of software giant VMWare.<\/p>\n
At Intel, Gelsinger was tasked with turning around the iconic American tech giant that was struggling against unprecedented competition, production delays and the departure of top talent. But during his tenure, the company\u2019s prospects continued to decline, as it became clear the company had fallen behind on another major technology wave and despite billions of dollars in US government spending to support its domestic chip manufacturing.<\/p>\n
Intel\u2019s (INTC) stock plunged 61% during Gelsinger\u2019s tenure. The stock rose 3% in early trading.<\/p>\n
The company announced in August that it would lay off 15% of its staff as part of an effort to slash $10 billion in costs and \u201cfundamentally change the way we operate,\u201d as Gelsinger said at the time.<\/p>\n
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Intel once had a stranglehold on the world\u2019s computer chip market, with Intel chips inside PCs and Macs. But the mobile computing wave of the past two decades caught the company off-guard, leaving it to fall behind rivals. In recent years, Intel was caught on its back foot by the AI wave. The year after Gelsinger took over as CEO, OpenAI introduced ChatGPT, which took the world by storm. The rest is history: Nvidia, which was once a tiny Intel competitor, is now the second-most-valuable company in the world after it bet big on chips that can power the massive datacenters that power AI. Nvidia\u2019s $3.4 trillion market value is 33 times bigger than Intel\u2019s $104 billion value. Nvidia\u2019s stock has surged nearly 720% over the past two years, as the company became the talk of the tech world and one of the most valuable public companies in the world. Intel\u2019s struggles have raised questions about a potential takeover by a rival like Qualcomm, a possibility that may be more practical under the incoming Trump administration, which is expected to be less aggressive in pursuing antitrust concerns.<\/p>\n
A company in transition<\/p>\n
Gelsinger stepped down as CEO and resigned from Intel\u2019s board effective December 1, the company said Monday. He will be replaced by interim co-CEOs David Zinsner, Intel\u2019s chief financial officer, and Michelle (MJ) Johnston Holthaus, general manager of Intel\u2019s client computing group, as the company conducts a search for a permanent new CEO. Holthaus has also been named to the newly-created CEO of Intel products, which will oversee, among other things, its data center and AI product efforts.<\/p>\n
\u201cWhile 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 at the company and are committed to restoring investor confidence,\u201d Frank Yeary, Intel\u2019s independent board chair, who has been named interim executive chair following Gelsinger\u2019s exit, said in a statement.<\/p>\n
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\u201cWith Dave and MJ\u2019s leadership, we will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimizing our operating expenses and capital. We are working to create a leaner, simpler, more agile Intel,\u201d Yeary said.<\/p>\n
Intel\u2019s new co-CEOs will oversee a risky and expensive bid to transition the company\u2019s business model to manufacture processors for competitors like Apple, putting it into more direct competition with chipmaking giant TSMC. That effort has been central to a push by the Biden administration to revitalize chip manufacturing on American soil. But even that has been dogged by delays.<\/p>\n
Intel last week announced that the $8.5 billion grant it had been awarded by the Biden administration in March under the CHIPS Act to support the construction and expansion of its US manufacturing facilities was being cut to $7.86 billion, after Intel delayed its timeline for investing in and opening some new plants. The company said the reduced award reflected a separate, $3 billion award from the government to produce chips for US defense\u00a0efforts.<\/p>\n
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