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Pat Gelsinger has abruptly stepped down as Intel chief executive, ending a nearly four-year run during which he failed to halt the Silicon Valley icon’s slide into turmoil.
California-based Intel said on Monday that the 63-year-old would be replaced by chief financial officer David Zinsner and executive vice-president Michelle Johnston Holthaus, who will be interim CEOs until a permanent appointment is made.
Gelsinger described the decision as “bittersweet”, adding that it had been “a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics”.
He had come under intense pressure as investors lost faith in his vision for turning around the business by reinventing it as a client-facing chip manufacturing business.
Only five years ago Intel was the world’s most valuable chipmaker, but it has lost almost half its value so far in 2024, with its market capitalisation at one point falling below $100bn. By contrast, shares in Nvidia, which has cornered the market for cutting-edge artificial intelligence chips, have risen more than 200 per cent over the same period, reaching a market cap of $3.35tn.
Intel’s board put pressure on Gelsinger last year over concerns that the company was falling behind in the race to design leading AI chips, as Nvidia pulled ahead and rival AMD positioned itself as the main challenger.
Lip-Bu Tan, the former chief executive of chip design software company Cadence, resigned from the board in August. He had been charged with overseeing its crucial chip manufacturing strategy.
Frank Yeary, who was the independent chair of Intel’s board, will become interim executive chair as it looks for a new chief. “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,” he said on Monday.
He added: “As a board, we know first and foremost that we must put our product group at the centre of all we do.”
Intel shares initially rose on Monday following the announcement but later reversed course, falling about 1 per cent.
After being appointed chief executive in 2021, Gelsinger had laid out a five-year plan to turn Intel into a chip manufacturing powerhouse to rival Taiwan Semiconductor Manufacturing Company. However, his plan to start building chips for other companies has struggled to attract customers that could help offset the huge investments needed to rebuild Intel’s leading-edge manufacturing capabilities.
Under Gelsinger, the group committed to multibillion-dollar investment in factories in the US and Europe. Last week the US government finalised a $7.9bn grant for the company under the 2022 Chips Act, to help it build new plants in Arizona, New Mexico, Ohio and Oregon.
But a €30bn factory project in Germany was put on hold earlier this year as the company imposed sweeping cuts to restore investor confidence.
Intel has been seeking to catch up with the most advanced manufacturing processes, and has separated its chip design business from its manufacturing arm.
That strategy had come under increasing pressure, however, with the company rocked by the departures of executives, thousands of lay-offs and a plunging share price.
Bernstein analyst Stacy Rasgon said in a note on Monday that Gelsinger’s departure could pave the way for further restructuring and asset sales under Zinsner, who has led Intel’s cost-cutting efforts in recent months. Gelsinger’s exit could also position the company to sell off its foundry business and focus on designing chips, Citi analysts said.
In October, Intel announced $18.7bn in restructuring and asset impairment charges in its latest effort to rebuild its competitiveness.
The charges included $2.8bn of expenses tied to a previously announced reorganisation and cost-cutting programme designed to reduce spending by $10bn a year. It also included $15.9bn of impairment charges on equipment and goodwill writedowns.
As part of the changes announced on Monday, Johnston Holthaus will take a newly created position as chief executive of Intel Products, a unit that encompasses its AI, data centre and client computing groups.