Struggling chipmaker Intel on Monday announced the retirement of its chief executive Pat Gelsinger, as the company faces challenges in regaining its edge in semiconductor manufacturing and addressing concerns over profitability.
Mr Gelsinger has also stepped down from the board of directors, effective from December 1, Intel said in a statement.
The company based in Santa Clara, California has made David Zinsner, its executive vice president and chief financial officer, and Michelle Holthaus, now chief executive of Intel Products, as interim co-chief executives until it finds a permanent replacement.
Frank Yeary, Intel’s independent chairman of the board, has been appointed interim executive chairman to oversee the leadership transition.
Mr Gelsinger’s tenure in the top post, which began in February 2021, was marked by efforts to restore Intel's manufacturing leadership and expand its foundry business. However, despite progress, Intel continues to trail behind rivals such as Taiwan Semiconductor Manufacturing Company, Samsung and Nvidia in advanced chip production and has struggled to meet investor expectations.
“Today is, of course, bittersweet as this company has been my life for the bulk of my working career,” Mr Gelsinger said. “It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics.”
Mr Gelsinger began his career in 1979 at Intel and became its first chief technology officer in 2001. He also served as chief executive of US cloud company VMware for almost nine years.
New leadership aims to streamline company
Mr Yeary said Intel is working to create a “leaner, simpler, more agile” business.
Under the new leadership, the company will “act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimising our operating expenses and capital”, he said.
former chief executive of Intel
“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 centre of all we do. Our customers demand this from us and we will deliver for them."
News of Mr Gelsinger’s departure came almost a week after the US Department of Commerce awarded Intel up to $7.86 billion in direct funding through the Chips and Science Act to advance the company’s commercial semiconductor manufacturing and advanced packaging projects in Arizona, New Mexico, Ohio and Oregon.
Once part of Four Horsemen
Following the news, Intel jumped 3.2 per cent to trade at $24.80 a share at 7.30pm UAE time on Monday, raising the company's market value to $106.96 billion. The stock has dropped more than 48 per cent since the start of the year.
The company was part of dot-com era's Four Horsemen, the term referred to four major technology companies – Intel, Cisco, Microsoft and Dell. They were considered leading players in the tech industry during the dot-com boom of the late 1990s and early 2000s.
Intel’s market cap reached its peak at about $500 billion in the 2000 but this was followed by a significant decline in the stock market, known as the dot-com crash, during which the shares of many tech companies plummeted.
After that sell-off, Intel's stock market value never returned to its peak.
In the quarter ended on September 28, Intel reported a net loss of more than $16 billion from a profit of $310 million in the same period last year. Revenue dropped 6.2 per cent yearly to more than $13.3 billion.
On August 2, the company lost about $25 billion in market value and reported a 26 per cent drop in stock price in what marked its worst sell-off since 2000.
It was driven by weaker-than-expected profit in the June quarter, the suspension of dividend payments and plans to cut jobs to fund the overhaul of its chip manufacturing division – all part of Intel's $10 billion cost-reduction plan.
