CEO of Intel Corp. Pat Gelsinger, hired in 2021 to lead an ambitious turnaround of the iconic chipmaker, will leave the job after the turnaround failed and the company only fell further behind rivals.
Intel Chief Financial Officer David Zinsner and Michelle Johnston Holthaus, who is taking on the new role of CEO of the company’s product group, are serving as interim co-CEOs while the board of directors searches for Gelsinger’s replacement, the company said in a statement. Frank Yeary, Intel’s independent chairman, will serve as interim executive chairman.
When the 63-year-old Gelsinger brought that three years ago he led Intel, he was hailed as the savior of chip pioneers. The CEO started working at the company when he was a teenager, but left in 2009 to become CEO of VMware Inc. After returning to Intel, he vowed to restore the chipmaker’s technological edge — something it had lost to rivals such as Taiwan Semiconductor Manufacturing Co.
But Gelsinger went further, intending to turn Intel into a custom chip maker for other companies, an area in which TSMC and Samsung Electronics Co. already excelled. As part of his revival strategy, Gelsinger outlined an expensive plan to expand Intel’s factory network. That included building a massive new complex in Ohio — a project for which the company received federal aid from the Chip and Science Act.
Read more: Intel is spending $28 billion to make Ohio the global chip capital
Gelsinger got a curveball in the form of Nvidia Corp., which has turned its graphics chips into a key component for data centers. Nvidia’s processors have proven particularly adept at developing artificial intelligence models, and cloud computing companies have begun to direct their budgets toward these components. Although Intel has its own so-called AI accelerator — the Gaudi line — remains far behind Nvidia.
“We know we have a lot more work to do at the company and are committed to restoring investor confidence,” Yeary said in a company statement. “As a management, we know first of all that we have to put our product group at the center of everything we do. Our customers demand it from us, and we will deliver.”
Intel’s turmoil also represents a setback for the Biden administration’s ambitions to rebuild the U.S. semiconductor industry. President Joe Biden visited Chandler, Arizona, in March to announce that Intel would receive the largest award from the Chip Act, which awarded a total of $39 billion in grants — plus billions more in loans and tax breaks — to encourage domestic production of critical electronic components. .
Intel’s challenges came into focus during disastrous earnings report August 1, when the company announced a surprise loss forecast and dire sales. Intel also suspended its dividend, which it had paid since 1992.
To bring costs under control, Intel said it would cut more than 15% of its workforce, which numbers about 110,000.
The next day, Intel shares fell the most since at least 1982, and have lost more than half their value so far in 2024.
In her newly created role as executive director of Intel products, Holthaus will oversee the company’s client computing, data center and AI, and networking and edge groups. Holthaus began her career at Intel nearly three decades ago, previously serving as executive vice president and general manager of client computing.
