Intel CEO Pat Gelsinger to Step Down Amid Crisis, Company Appoints Interim Co-CEOs

Intel’s long-serving chief executive, Pat Gelsinger, will step down from his role, marking a significant moment in the company’s ongoing crisis. The semiconductor giant, once a dominant force in the tech industry, has struggled to keep up with rivals such as Nvidia, which has captured the market for advanced AI chips.

Intel announced on Monday that Gelsinger, 63, will be replaced by the company’s chief financial officer, David Zinsner, and executive vice-president, Michelle Johnston Holthaus, who will serve as interim co-CEOs while the company searches for a permanent successor.

Gelsinger’s Departure Amid Struggling Strategy

Gelsinger’s departure comes after three years at the helm, during which he worked to execute a five-year plan aimed at revitalizing Intel and positioning it as a major competitor to Taiwan Semiconductor Manufacturing Company (TSMC). The strategy focused on building new factories in the US and Europe, improving manufacturing processes, and separating Intel’s chip design business from its manufacturing arm. However, despite his efforts, Intel has faced mounting challenges, including executive departures, thousands of layoffs, and a significant drop in share price.

In a statement, Gelsinger described his decision to step down as “bittersweet” and acknowledged that it had been “a challenging year for all of us” at Intel. Despite the setbacks, he expressed confidence that Intel’s efforts to align with current market dynamics would eventually pay off.

Intel’s Financial Struggles and Market Value Decline

Intel has been hit hard by a series of financial setbacks, with the company’s share price dropping more than 40% over the past year. The stock’s sharp decline has led to a market capitalization of just over $103.7 billion. In comparison, Nvidia, a leader in the AI chip sector, has seen its market cap skyrocket to $3.35 trillion, a more than 200% increase in the same period.

In an effort to regain its footing, Intel announced a restructuring plan in October, which included $18.7 billion in restructuring and asset impairment charges. This plan aimed to improve competitiveness and streamline operations, including a cost-cutting program designed to save $10 billion annually. Despite these efforts, Intel has continued to struggle in a rapidly evolving industry.

Retail and Market Reaction

Intel’s stock saw a slight uptick in pre-market trading following news of Gelsinger’s resignation, with shares rising by nearly 4%. Many investors have expressed hope that a leadership change will help turn the company around. However, the road ahead for Intel remains uncertain as the company faces increased pressure to compete with newer, more agile players in the chipmaking industry, particularly in the rapidly growing AI sector.

Changes at the Top and Board Dynamics

In addition to the leadership change, Intel also announced a reshuffling of its executive team. Michelle Johnston Holthaus will take on the newly created role of CEO of Intel Products, overseeing the company’s AI, data center, and client computing divisions. The moves come after heightened scrutiny of Gelsinger’s relationship with Intel’s board of directors, particularly following the resignation of Lip-Bu Tan in August. Tan had been responsible for overseeing Intel’s critical chip manufacturing strategy.

Frank Yeary, Intel’s independent board chair, will assume the role of interim executive chair while the company seeks a permanent replacement. Yeary reiterated the company’s commitment to regaining investor confidence, emphasizing that Intel must focus on its product group to meet the needs of its customers.

“We have made significant progress in regaining manufacturing competitiveness,” Yeary said, “but we know we have much more work to do. We must put our product group at the center of all we do.”

Looking Ahead

As Intel searches for a new permanent CEO, the company is under intense pressure to regain its competitive edge. With the semiconductor industry evolving rapidly, particularly in the fields of AI and data processing, Intel must adapt quickly to maintain its relevance in an increasingly crowded market.

The leadership change comes at a critical time for the company, and all eyes will be on the new interim executives as they attempt to steer Intel through its current crisis and into a new era of innovation and growth.