Yesterday, Intel shocked everyone with the news of the resignation of CEO Pat Gelsinger. Of course, in the press release, Intel did not disclose the reasons for the departure of its head, limiting itself to gratitude for his work. However, the media have already found out more details about this extraordinary situation.
Image Source: Intel
The incident was the result of Gelsinger’s conflict with the board of directors of Intel, which doubted the success of his plan to revive the company. Bloomberg reported, citing people familiar with the situation who wished to remain anonymous, that the conflict flared up last week when Gelsinger met with the board of directors to discuss the company’s progress in regaining market position and closing the gap with Nvidia.
Apparently, it was not possible to reach an agreement. As a result, Gelsinger was given an ultimatum: either he would leave himself or be removed by the council. As you can see, he decided to announce the end of his career at Intel.
Intel investors, hungry for change, welcomed the CEO’s departure. The company’s shares rose 6% on the New York Stock Exchange on Monday, although they are still very far from recovering at least to the level at the beginning of this year – they have lost half of their value since January.
While the board of directors searches for Gelsinger’s replacement, the company will be run by two co-CEOs, CFO David Zinsner and Group Director of Client Solutions Michelle Johnston Holthaus. Frank Yeary has been appointed interim Chairman of the Board of Directors.
Finding a new CEO can be challenging. The next head of Intel will face the same problems that Gelsinger himself was brought in to solve, including the consequences of poor decisions by previous leaders. In addition, we will have to deal with the incompletely implemented plan of Gelsinger himself, who initiated a large-scale restructuring of the company in order to catch up with the backlog in technical processes and turn Intel into a leading contract chip manufacturer competing with TSMC and Samsung.
The next CEO will inherit a company in a difficult state. In the last quarter alone, Intel recorded losses of $17 billion, shares have fallen by half since the beginning of the year, and 15% of employees were laid off. The new head of Intel will also have to confront competitors with greater resources, catch up with them in the field of artificial intelligence, and at the same time prove that Intel can remain the innovative company that it once was.
At the moment, there are no clear candidates for the post of head of Intel. Before Gelsinger’s appointment to replace Bob Swan in 2021, there were rumors that AMD CEO Lisa Su might take over the post. Other candidates included Intel board member and former CFO Stacy Smith, who is now executive chairman of Kioxia Corp.
After the change of leadership, Intel intends to reconsider its business strategy and invest in new areas and technologies. The board of directors said in a press release that the new leadership will focus on “restoring investor confidence” and “returning processors to the spotlight.” In other words, if Gelsinger’s plan was focused on contract manufacturing, then the new management wants to return everything as it was before: first of all, develop processors, and relegate production development to the background. “We will build a small, simple and flexible Intel,” said Frank Yeary.