After three years as CEO – and decades before that in the lower ranks – Pat Gelsinger has been forced out of his role at Intel.
The board of the company, which is floundering in the face of competition from the likes of NVIDIA, gave the computing veteran the choice between resigning and retiring or getting fired.
Intel is in the process of slashing 15,000 workers with thousands more planned, leaving employees fearful that their fate might be similar to that of their soon-to-be former CEO.
Board Rebellion
The news of Gelsinger’s imminent departure came after the CEO met with his board, who made it clear that they had lost faith in him and didn’t think he was the person to turn the company’s fortunes around.
Bloomberg reports that his focus on turning Intel into a made-to-order chip manufacturer – making chips for other companies – was criticized.
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He had planned to expand the company’s factory network in order to facilitate this, including building a huge new facility in Ohio.
Government Aid
Intel received almost $7.9 billion in federal grants to build chip manufacturing factories in the country. The money came via the 2022 Chips and Science Act, which set aside $39 billion in grants, $75 billion in loans and loan guarantees, and 25% tax credits for American chipmaking.
However, the fate of this program is itself as precarious as Intel’s. It has already caught the attention of President-elect Donald Trump who called the program “so bad.”
Politics aside, the board felt that this direction had been at the detriment of creating new products that could win market share. In particular, Intel is flagging behind NVIDIA in AI computing and simply doesn’t have the resources of its rivals.
Shares Rise… Then Slump
The news of the CEO’s departure saw Intel’s shares rise 6% in New York on Monday. However, they then retreated, marking a year-to-date decline of more than half. Investors have clocked that whoever replaces Gelsinger long-term has a gargantuan mountain to climb.
In the interim before a new CEO is appointed, the company said in a statement that Intel’s Chief Financial Officer David Zinsner and Executive Vice President Michelle Johnston Holthaus will serve as interim co-CEOs.
“We know that we have much more work to do at the company and are committed to restoring investor confidence. As a board, we know first and foremost that we must put our product group at the center of all we do. Our customers demand this from us, and we will deliver for them.” – Frank Yeary, independent chair of the board of Intel
Yeary will serve as interim executive chair.
