In a shocking move, Intel CEO Pat Gelsinger has retired from his position as CEO as well as his seat on Intel’s board. The resignation is effective as of December 1, 2024. Intel is currently looking for a new CEO, and in the meantime, it has appointed David Zinser – Intel CFO and Michelle Johnston Holthaus – CEO of Intel Products as interim co-CEOs. Officially, Gelsinger retired. Unofficially, it’s likely he didn’t have a choice. The board needed to sacrifice somebody important to Wall Street.
It’s not hard to understand why. Intel lost a staggering $16.6 billion dollars in Q3 CY2024 alone, and its stock has declined 61% during Gelsinger’s tenure. But is this really a failure of Gelsinger’s strategy to turn Intel around by getting back to its roots in manufacturing and R&D? There is an argument to be made that Intel’s troubles were the direct result of decisions made far before his tenure. The products and services are the result of the failure of previous leadership. How can that be?
The business that Intel is in, designing and manufacturing semiconductors, is complex and exacting. The lead time is measured in years, not quarters. And that’s if Intel hadn’t lost focus, let its manufacturing and R&D functions lag. Gelsinger faced the challenge of not only having to reorganize, refocus, and rationalize Intel’s offerings, but also make up for lost time when it comes to manufacturing and new products for markets that Intel missed initially, such as AI accelerators. (Yes, I know Intel has them, technically. But they are not exactly top of the line or on time.) In the process, Intel was losing money and then lost more money.
Two groups of people who are disinclined to think in terms of years were the most vocal critics, i.e., Wall Street financial types and technologists who work in anything but silicon development and manufacturing. After all, results come out quarterly, and there is a new iPhone or Samsung Galaxy every year, right? After four years and relentless pressure from these two groups, the board finally cracked, jettisoning Gelsinger before his ideas could come to fruition.
It is unknown if Gelsinger’s plans were going to work out. But there was hope there for an engineering-led Intel to come back to prominence. But now, there is nothing but uncertainty.
Other than the creation of the Intel Products group, consisting of the Client Computing Group (CCG), Data Center and AI Group (DCAI), and Network and Edge Group (NEX), plus appointing Michelle Johnston Holthaus as CEO of the group, there does not seem to be a great deal of differentiation to Gelsinger’s plans yet. Interim executive director Frank Yeary said in the press release, “With Dave and MJ’s leadership, 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. We are working to create a leaner, simpler, more agile Intel.” To borrow from Dodgeball, “Bold strategy, Cotton.”
It would be charitable, even reasonable to say that plans will form when a new CEO comes on board. In the meantime, vultures circle at 2200 Mission College Boulevard in Santa Clara. It is a distinct possibility that Intel will get broken up and sold off in pieces. Perhaps just the Foundry division will be sold, although there will be large US national security concerns around any such sale. Perhaps the new CEO will be able to convince Wall Street and certain technologists that it just needs a few more years. Until there is a new CEO, or the Intel board indicates the direction it wants to take, we will not know the fate of one of the titans in information technology. At the end it may all be about the financial numbers – it may be too late to save Intel in the eyes of Wall Street.
Buckle up – it’s a bumpy ride from here.