- Intel laid off 15% of its staff in August, but now it’s the CEO’s turn to be shown the door
- The chip company has struggled under Pat Gelsinger’s leadership these last few years
- The board of directors has formed a search committee to find a new CEO
Intel announced today that CEO Pat Gelsinger has retired from the company effective December 1, but Bloomberg is reporting that Gelsinger was given an option: retire or be fired.
Intel has named two senior executives, David Zinsner and Michelle Johnston Holthaus, as interim co-CEOs while the board of directors conducts a search for a permanent replacement for Gelsinger.
Zinsner is executive vice president and chief financial officer, and Holthaus has been appointed to the newly created position of CEO of Intel Products, a group that encompasses the company’s Client Computing Group, Data Center and AI Group, and Network and Edge Group. Frank Yeary, independent chair of the board of Intel, will become interim executive chair during the period of transition.
The board has formed a search committee to find a permanent successor to Gelsinger.
Today’s news comes after a rocky couple of years for Intel because the company, under Gelsinger’s leadership, failed to immediately respond to the artificial intelligence (AI) boom. It fell behind AMD and Nvidia in terms of launching its own AI accelerators.
Critics have been especially harsh in regard to Intel’s management of its Data Center business. The company in September did launch its Xeon 6 processors with Performance-cores and Gaudi 3 AI accelerators, which will help it get involved in generative AI.
In addition, Intel earlier this year launched its Intel Foundry business to design AI chips.
Still, in August Intel shocked investors during its Q2 2024 earnings report by not focusing on growth of the company, but rather saying that it would lay off 15% of its staff and conduct a $10 billion restructuring and cost-cutting program.
“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. As a board, we know first and foremost that we must put our product group at the center of all we do,” Yeary stated in today’s announcement.
AvidThink founder Roy Chua has previously told Fierce that Intel’s pain is mostly self-inflicted. “Their lateness in reaching milestone process nodes in past years, over-focusing on business and financial outcomes at the expense of technology investment, missteps on the mobile front, [and its] inability to build a significant software play” have all played a role in the company’s troubles, Chua said.
Analyst Jack Gold told Fierce in August that it will likely take Intel two or three years to fully recover from its current troubled position. “They have a lot of new products in the pipeline, but the biggest issue is they don’t have a good AI story right now,” Gold said.
Today, Yeary said: “We will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimizing our operating expenses and capital.”
Gelsinger’s career
Gelsinger started his career at Intel in 1979 and served as chief technology officer from 2001 to 2009. He then became CEO of VMware during its heyday. But he returned to Intel as CEO in February 2021. At the time, the company’s stock was trading at around $61 per share, but it’s been on a steady decline, and it’s now trading at around $25 per share.
The generative AI boom hit in November 2022 when ChatGPT entered the scene. But Intel has been slow to respond to the sea change.