That's how you break your company. The guy was in charge of an overly ambitious plan that wasn't his, and expectedly couldn't deliver it within overly ambitious timeframes. He would likely still have a chance to recover the division, considering he's still the best person to do so.
Instead, the guy has to go despite having nothing to do with what went bad, and the company is essentially removing the best talent that led Intel into once becoming the manufacturing leader after the higher management failed him and broke that division apart instead. This is a textbook example of how you run your division into chaos and irrelevance, even with the greatest engineers still on board. If he wasn't forced to quit, I'm sure he did so himself after opposing such plan that was in the end still forced by the disconnected higher-ups.
Whoever said it's bringing the management closer to manufacturing, this is the kind of thinking that leads to such ideas. All it does is fragments the company, creating separate and disconnected talent pockets, kills the synergy effect and adds further ambiguity and walls between already overly ambiguous and disconnected management boards.