Intel has announced the resignation of its chief executive, Pat Gelsinger. Having initially joined the chipmaker in 1979, Gelsinger will leave Intel on 1 December. His resignation follows a board meeting where concerns were raised about the slow progress of the firm’s turnaround strategy following several years of mounting losses, with Intel posting a $16.6bn loss alone in October.
The company has appointed executive vice president and chief financial officer David Zinsner, along with newly named Intel Products CEO Michelle Johnston Holthaus, as interim co-chief executive officers. Intel board’s independent chair Frank Yeary will assume the role of interim executive chair during the leadership transition. The board has initiated a search for a permanent CEO to steer the company forward.
“We have much more work to do at the company,” said Yeary, “and are committed to restoring investor confidence.”
Board’s confidence wanes in turnaround plan
Gelsinger was offered the choice to retire or face removal following mounting dissatisfaction within the boardroom, reported Reuters, citing a source close to the matter. The departure of the chip industry veteran comes less than four years after he assumed leadership of Intel in 2021 after a stint at VMware, taking the helm of a company already grappling with a loss of technological and market dominance.
Gelsinger’s tenure was defined by a multi-year plan to restore Intel’s position as a leader in advanced chip manufacturing. However, the board’s frustration grew over delays and underwhelming results. Intel has struggled to preserve its technological edge over rivals like Taiwan Semiconductor Manufacturing Company (TSMC) and Nvidia, the latter now valued at over 30 times Intel’s market capitalisation.
Gelsinger’s turnaround strategy, announced in July 2021, involved significant capital investments, including a $20bn project to build new manufacturing facilities in Ohio and a push into contract chip production. Intel also underwent significant restructuring during his tenure, cutting 15% of its workforce – equivalent to 15,000 jobs – amid declining PC and laptop sales and mounting competition from Advanced Micro Devices (AMD) and Nvidia. The company also faced internal tensions, with reports of discord among board members regarding Gelsinger’s strategic direction. Lip-Bu Tan, a board member, resigned earlier this year, citing disagreements over the turnaround approach.
Over the past year, the company has seen its stock value decline significantly, losing more than half its value. While shares dipped 0.5% following Gelsinger’s resignation, rivals like AMD gained 3.6%, contributing to a 2.6% rise in the PHLX Semiconductor Index. Intel was also recently replaced by Nvidia on the Dow Jones Industrial Average, a symbolic shift highlighting the dominance of AI-focused competitors.
Even so, Intel recently surpassed market expectations with an optimistic Q4 2024 forecast, projecting revenues between $13.3bn and $14.3bn. The company attributed this anticipated growth largely to improved performance in its PC and server divisions.
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