Intel announced that CEO Pat Gelsinger will retire and step down from the board of directors, effective immediately. Intel has appointed two interim leaders, CFO David Zinsner and Michelle Johnston Holthaus, as interim co-CEOs while the board begins a search for a new CEO. Speculation is rife that Gelsinger was forced out, especially in light of the company's poor performance in the stock market — Intel's stock price is down 61% since Gelsinger took over.
Gelsinger spent more than 40 years at Intel, returning in 2021 to lead the company after serving as the CEO of VMware. Intel's press release doesn't indicate Gelsinger's future plans. There have been many reports that Intel's board of directors is exploring a plan to split the company and spin off the foundry business. The press release says the board wishes to put the product group at the center of 'all we do,' which might indicate more restructuring. However, the company also said, "Returning to process leadership is central to product leadership, and we will remain focused on that mission."
Gelsinger presided over a tumultuous four years at Intel as the company struggled to regain its lost glory, both with its process node technology and finished products business. The company has recently undergone a series of extreme cost-cutting measures as it struggles to return to profitability, culminating in a restructuring and mass layoff of more than 15% of its workforce that will be concluded by the end of the year. Intel is still in the midst of laying off roughly 15,000 employees or more (potentially up to 17,475 based on recent Intel headcount numbers of 116,500). This ranks as the most severe layoff in Intel's 56-year history.
Gelsinger launched an audacious plan to turn around the struggling chipmaker, with plans to transform the company from a chipmaker that produces its own chips to a third-party foundry that produces processors for external customers. Those efforts have seen some success as the company embarked on its IDM 2.0 strategy. However, building an external foundry is a long-term process that requires intense capital investments that won't pay off for years — a strategy that the stock market often dislikes.
Intel's product division continued to have multiple setbacks under Gelsinger's tenure, with numerous product delays that continued to hamper the company's competitiveness as AMD began to take more market share and Arm chips began to chew into Intel's high-margin data center CPU business. Meanwhile, Intel has missed the AI wave almost entirely. It recently disclosed that its Gaudi 3 accelerators aren't selling well, instead pinning hopes on the next-gen products as its entry into the AI market.
Gelsinger did at least staunch the bleeding on the manufacturing side of the business as he launched a plan to deliver five nodes in four years to help rapidly regain its footing against rival fab TSMC. That roadmap remains largely intact, but the company's fortunes have now fallen almost entirely to the success of its yet-to-be-delivered 18A node. However, initial signs are good that this node will be successful, and the company recently released its PDK 1.0, which will allow external chipmakers to design chips using the node.
CFO David Zinsner and Michelle Johnston Holthaus will serve as co-CEOs while the board searches for a new CEO. Holthaus has long been the executive vice president and general manager of the company's Client Computing Group (CCG). She will now serve as co-CEO and the head of a newly-defined CEO of Intel Products role that includes CCG, the Data Center and AI Group (DCAI), and the Network and Edge Group (NEX). Frank Yeary, independent chair of the board of Intel, will serve as the interim executive chair during the transition. Perhaps in a sign that the company's process node roadmap remains intact, the Intel Foundry leadership structure will not be changed.
Gelsinger said, “Leading Intel has been the honor of my lifetime – this group of people is among the best and the brightest in the business, and I’m honored to call each and every one a colleague. Today is, of course, bittersweet as this company has been my life for the bulk of my working career. I can look back with pride at all that we have accomplished together. It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics. I am forever grateful for the many colleagues around the world who I have worked with as part of the Intel family.”
It remains unclear if Gelsinger is leaving due to being forced out or if his exit was precipitated by other personal factors. The language in the Intel press release indicates a quasi-restructuring with more focus on the product division, implying this is part of a change of plans at the chipmaker. Notably, Intel recently announced its succession plan for its top scientist and head of process technology development, Ann Kelleher, which some have taken as a sign of troubles with the Foundry roadmap. We'll update as soon as we learn more.
