Intel’s CEO Pat Gelsinger, who took the helm in 2021 with high hopes of rejuvenating the iconic chipmaker, is stepping down. His ambitious efforts to restore Intel’s dominance in the semiconductor industry have fallen short, leaving the company lagging behind competitors like Taiwan Semiconductor Manufacturing Company (TSMC) and Nvidia.
Interim Leadership as Intel Searches for a New CEO
In the wake of Gelsinger’s departure, Intel’s Chief Financial Officer, David Zinsner, and Michelle Johnston Holthaus, who will serve as CEO of Intel’s product group, are stepping in as interim co-CEOs. Frank Yeary, independent chair of Intel’s board, will act as interim executive chair during the leadership transition.
The board has emphasised its focus on prioritising Intel’s product development. Yeary stated, “We must put our product group at the centre of all we do. Our customers demand this from us, and we will deliver.”
A Return That Fell Short
Gelsinger, who first joined Intel as a teenager before leaving in 2009 to lead VMware Inc., returned in 2021 with promises to reinvigorate the company’s technological edge. He aimed to make Intel a leader not only in chip design but also in manufacturing for other tech firms, directly competing with industry giants like TSMC and Samsung Electronics.
To achieve this, Gelsinger launched an ambitious plan to expand Intel’s manufacturing network, including the construction of a massive facility in Ohio. This effort secured federal funding under the US Chips and Science Act, part of President Joe Biden’s broader strategy to bolster the domestic semiconductor industry.
Facing Tough Competition
Despite Gelsinger’s efforts, Intel struggled to keep pace with rapid industry changes, particularly the rise of Nvidia. Nvidia’s graphics chips have become crucial in developing AI models, dominating the data center market. Intel’s AI accelerator, the Gaudi line, failed to match Nvidia’s offerings, leaving Intel playing catch-up in the lucrative AI space.
The company’s woes were highlighted in a disastrous earnings report in August 2024, which revealed unexpected losses, a gloomy sales forecast, and the suspension of its long-standing dividend. To cut costs, Intel announced it would lay off more than 15% of its workforce—around 16,500 jobs—further underscoring the severity of its challenges.
Fallout for the US Semiconductor Industry
Intel’s struggles are a blow to the Biden administration’s goal of revitalising the US semiconductor industry. The company was a major beneficiary of the Chips Act, which allocated R774 billion ($39
R716.47 billion) in grants and additional funding to encourage domestic production of electronic components. Intel’s decline complicates these efforts, especially given its pivotal role in US semiconductor manufacturing.
A New Direction with Michelle Johnston Holthaus
Michelle Johnston Holthaus will oversee Intel’s client computing, data center, AI, and network and edge groups as CEO of Intel Products. Holthaus, a nearly 30-year Intel veteran, previously served as executive vice president and general manager of client computing, giving her deep insights into the company’s core operations.
Moving Forward
As Intel seeks Gelsinger’s successor, the company faces mounting pressure to regain investor confidence and re-establish its position in the semiconductor industry. With its stock plummeting and fierce competition in AI and data centers, Intel’s next CEO will inherit significant challenges in a rapidly evolving market.
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