Intel CEO abruptly out as company falls behind in AI transition
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Former Intel CEO Pat Gelsinger. Photo: I-HWA CHENG/AFP via Getty Images
The CEO of Intel is leaving the company as it struggles to reinvent itself.
Why it matters: Investors fear Intel is falling behind in the AI chip wars against booming AI titans like Nvidia.
Driving the news: Pat Gelsinger abruptly retired as of Sunday after 40 years with the company and a nearly four-year stint as CEO, Intel said Monday.
- CFO David Zinsner and Michelle (MJ) Johnston Holthaus, who was appointed as CEO of Intel Products, were named as interim co-CEOs while the company searches for a permanent replacement.
- Intel's independent chair, Frank Yeary, will become interim executive chair during the transition.
Between the lines: Intel had ceded a dominant foothold in AI chip technology to Nvidia long before Gelsinger rejoined the company as CEO in 2021.
- But it was the board's lack of confidence in his plan to win back market share from its now much larger rival that drove it to seek a change last week, Bloomberg reported, citing people familiar with the matter.
The big picture: Intel's stock has dropped by half in 2024 as the company scrambles to boost its AI chip production capacity.
- In August it announced plans to cut 15% of its workforce, even as it seeks to bolster production after it landed billions in federal funding.
- And in a symbolic sign of its struggles, the company lost its spot last month in the 30-stock Dow Jones Industrial Average to the surging Nvidia.
What they're saying: "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 at the company and are committed to restoring investor confidence," Yeary said in a statement.
Zoom out: Gelsinger's exit comes amid questions not just around Intel's AI strategy, but also its grand plans for its manufacturing business.
- The company formed a subsidiary earlier this year to house its foundry business, which it recently expanded to make chips for outside customers — hoping to challenge contract chipmakers like Taiwan Semiconductor Manufacturing (TSMC).
- But Intel's manufacturing business might be better off as an independent entity, Raymond James analyst Srini Pajjuri wrote Monday in a research note.
What we're watching: Its future could involve "a change in strategy to be a trailing edge foundry, a potential sale, or a potential asset sale," according to Pajjuri.
- The foundry business "has been a big drag on its bottom line, with the company spending roughly $25 billion on it in each of the last two years," CNBC reported in September.
The bottom line: What Intel's new CEO decides about the foundry business could determine whether the company gets back on track.
Editor's note: This story was updated with additional information throughout.
