Highlights
- Intel CEO retires after 40 years with the company.
- CFO David Zinsner and Products CEO Michelle Johnston Holthaus will serve as co-CEOs for now.
- Independent Board Chair Frank Yeary as interim executive chair.
- Intel recently faced many obstacles including competition from Nvidia, tech delays and financial losses.
Intel CEO Pat Gelsinger retired from his position on December 1 marking the end of his 40-year career at the company.
Gelsinger announced his decision in a post on X (formerly Twitter), describing the move as a pivotal moment in his professional journey.
Leading Intel has been the honor of my lifetime. I am forever grateful for the many colleagues around the world who I have worked with as part of the Intel family and can look back with pride at all that we have accomplished together. Thank you all!
— Pat Gelsinger (@PGelsinger) December 2, 2024
According to a recent Bloomberg report, Gelsinger’s retirement announcement came amid the company’s ongoing difficulties including its inability to compete with Nvidia and losing significant market share. Gelsinger reportedly was given a choice of either stepping down or being removed from his role.
Gelsinger rejoined Intel as CEO in February 2021 and was immediately tasked with revitalising the company. However, his tenure encountered significant obstacles.
Intel lagged behind competitors like Nvidia in capitalising on the AI chip surge. The company faced delays in new technologies and stability issues with CPUs undermined Intel’s reputation.
The recently launched Core Ultra 9 200S-series processors received lukewarm feedback with Intel VP Robert Hallock acknowledging a disappointing launch.
Moreover, Intel was notably absent as Microsoft partnered with other companies for its AI PC launch.
In September, Gelsinger announced plans to spin off Intel’s chipmaking business and suspend factory construction projects in Poland and Germany due to delays in developing Intel’s next-generation 18A chipmaking process.
Despite receiving nearly $8 billion in U.S. government funding under the CHIPS and Science Act for factories in states like Arizona and Ohio, Intel reported a $7 billion operating loss in its chipmaking division for 2023.
In response, the company initiated layoffs impacting over 15,000 employees, aiming to save $10 billion.
Reflecting on his time at Intel, Gelsinger stated in a press release, “Leading Intel has been the honour of my lifetime… 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.”
Meanwhile, there are rumours of a Qualcomm acquisition surfacing for some time now. Although, Qualcomm CEO Cristiano Amon dismissed the speculation, saying, “We have not identified any large acquisition that is necessary.”
Following Gelsinger’s departure, Intel CFO David Zinsner and Intel Products CEO Michelle Johnston Holthaus will serve as co-CEOs during the search for a permanent replacement. The Independent Board Chair Frank Yeary will take on the role of interim executive chair.
If the new CEO goes ahead with a bigger change , these are deal ideas that Intel could revisit:
1. Splitting Factory and Product Divisions
This would involve completely separating Intel’s factory business from the more profitable unit that develops products.
Under Gelsinger’s leadership, Intel was increasing its manufacturing operations to become a foundry, a maker of components for outside customers, to compete with Taiwan Semiconductor Manufacturing Co. (TSMC), a pioneer in the foundry approach.
Intel only has a few big clients for its foundry operations, and production of high-end chips isn’t large enough to make the division profitable.
Though Intel might be able to find a suitor for its product division, the foundry operation would be a difficult sell.
The largest US chip foundry, GlobalFoundries Inc., has its own issues, as it lacks the funds and exposure to run the type of manufacturing Intel’s factories were designed for.
Furthermore, it’s unclear if a new Intel CEO or the rest of the board would be ready to dismantle a company that once ruled the chip industry.
This move could also complicate Intel’s ability to secure $7.9 billion in federal grants under the US Chips and Science Act, which is aimed at revitalizing domestic chip production.
2. Lure a Suitor Like Qualcomm
Bloomberg has reported that Qualcomm considered an Intel acquisition, but its interest has waned as of last week.
Qualcomm might consider buying parts of Intel, like the product business.
Qualcomm, like many in the chip industry, doesn’t manufacture its own semiconductors.
It designs chips and relies on partners like TSMC for production.
Because of this, it is unlikely Qualcomm would be interested in Intel’s factory operations.
Broadcom Inc. also previously assessed the possibility of pursuing an Intel deal but didn’t move forward with talks.
Any significant chip merger would face regulatory hurdles around the world — something both Qualcomm and Broadcom are well aware of.
Broadcom’s previous attempt to acquire Qualcomm was blocked by President Donald Trump in 2018.
3. Selling Altera
Intel’s Altera unit, acquired in 2015 for about $17 billion, makes chips that can be reprogrammed for different uses after manufacture.
Intel has held negotiations about selling a portion of the business to financial investors, potentially paving the way for an initial public offering (IPO) for the unit.
Buyout firms like Francisco Partners, Bain Capital, and Silver Lake Management have been considering offers to invest in Altera.
Recently, Bloomberg reported that Lattice Semiconductor Corp. was exploring an offer for all of Altera.
Lattice is working with advisers and seeking a private equity backer to explore a potential bid.
The idea of unloading Altera could gain fresh momentum under a new Intel CEO.
4. An Apollo Investment
Apollo made an offer to invest multibillion dollars into Intel earlier this year.
The New York-based firm indicated it would be willing to make an equity-like investment of up to $5 billion, but negotiations didn’t result in an announcement.
Apollo has an existing relationship with Intel and agreed in June to buy a stake in a venture controlling an Intel chip plant in Ireland for $11 billion, making it more likely that the two partners will engage in further talks.
5. A Mobileye Transaction
Intel acquired Mobileye, a maker of self-driving technology, in 2017.
Though Mobileye went public in 2022, Intel still owns the majority of the company.
Intel said in September it’s not currently planning to divest its majority stake in Mobileye.
However, Bloomberg reported earlier in the month that Intel is contemplating options for its 88% holding.
Intel could offload some of its stake in the public market or through a sale to a third party.
In any case, this could be a less-than-ideal investment for Intel, which paid about $15 billion for Mobileye, and the company currently has a market value of $14.1 billion.
Let me know if you need any further adjustments!
FAQs
Q1. When is Pat Gelsinger set to retire from Intel?
Answer. Intel’s CEO Pat Gelsinger retired from his position on December 1, 2024, marking the end of his 40-year career at the company.
Q2. Who will lead Intel after Gelsinger’s retirement?
Answer. Following Gelsinger’s departure, Intel CFO David Zinsner and Intel Products CEO Michelle Johnston Holthaus will serve as co-CEOs during the search for a permanent replacement. Independent Board Chair Frank Yeary will take on the role of interim executive chair.
Q3. What challenges did Intel face under Gelsinger’s tenure?
Answer. Intel faced significant obstacles including lagging behind competitors like Nvidia in AI chip development, delays in new technologies, stability issues with CPUs, and substantial financial losses, leading to layoffs and project suspensions.
Q4. When was Pat Gelsinger made CEO of Intel?
Answer. Gelsinger rejoined Intel as CEO in February 2021.
Read More: Intel Confirms Stability Issues with 13th and 14th Gen CPUs Fully Resolved
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