() – Intel announced Monday that its CEO, Pat Gelsinger, has resigned after a difficult time at the company. Shares of the once-dominant chipmaker plummeted as it failed to take advantage of the artificial intelligence boom and was overtaken by most of its rivals.
Gelsinger took over as CEO of Intel in February 2021, returning to the company where he worked for decades, including as Chief Technology Officer. He had left Intel to take a position as CEO of software giant VMWare.
At Intel, Gelsinger was responsible for moving the iconic American technology giant forward, which was struggling with unprecedented competition, production delays, and the departure of top talent. But during his tenure, the company’s prospects continued to decline, as it became clear that the company had been left behind in another major technology wave and despite billions of dollars of US government spending to support chip manufacturing in the country.
Intel shares fell 61% during Gelsinger’s tenure. Shares rose 3% in early trading.
The company announced in August that it would lay off 15% of its staff as part of an effort to cut $10 billion in costs and “fundamentally change the way we operate,” Gelsinger said at the time.
Intel once had a stranglehold on the global computer chip market, with Intel chips in PCs and Macs. But the wave of mobile computing over the past two decades caught the company off guard, leaving it lagging behind its rivals. In recent years, Intel has been caught off guard by the wave of artificial intelligence.
The year after Gelsinger took over as CEO, OpenAI introduced ChatGPT, which took the world by storm. The rest is history: Nvidia, once a small competitor to Intel, is now the second most valuable company in the world after betting heavily on chips that can power the huge data centers that fuel artificial intelligence. Nvidia’s market value of $3.4 trillion is 33 times greater than Intel’s $104 billion value.
Nvidia shares have risen nearly 720% over the past two years as the company has become the center of attention of the tech world and one of the most valuable public companies in the world.
Intel’s problems have raised questions about a possible acquisition by a rival like Qualcomm, a possibility that may be more practical under the incoming Trump administration, which is expected to be less aggressive in pursuing antitrust solutions.
Gelsinger resigned as CEO and resigned from his position on Intel’s board of directors effective December 1, the company announced Monday. He will be replaced by interim co-CEOs David Zinsner, Intel’s chief financial officer, and Michelle (MJ) Johnston Holthaus, general manager of Intel’s Client Computing Group, while the company conducts a search for a new permanent CEO. Holthaus has also been named CEO of the newly created Intel Products, who will oversee, among other things, its efforts in data centers and artificial intelligence products.
“While we have made significant progress in restoring manufacturing competitiveness and building the capabilities to be a world-class foundry, we know we have much more work to do at the company and we are committed to restoring customer confidence. investors,” Frank Yeary, independent chairman of Intel’s board of directors, who has been named interim CEO following Gelsinger’s departure, said in a statement.
“With Dave and MJ’s leadership, we will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and improving our manufacturing and foundry capabilities, while optimizing our operating and capital expenditures. “We are working to create a more efficient, simpler and more agile Intel,” said Yeary.
Intel’s new co-CEOs will oversee a risky and expensive bid to transition the company’s business model to making processors for competitors like Apple, which would put it in more direct competition with chipmaking giant TSMC. That effort has been critical to the Biden administration’s push to revitalize chip manufacturing on U.S. soil. But even that has been hit by delays.
Last week, Intel announced that the $8.5 billion grant it had been awarded by the Biden administration in March under the CHIPS Act to support the construction and expansion of its U.S. manufacturing facilities would be reduced to $7.86 billion. , after Intel delayed its schedule to invest in some new plants and open them. The company said the reduced grant reflected a separate $3 billion grant from the government to produce chips for U.S. defense efforts.
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