Intel has announced the sudden retirement of its CEO, Pat Gelsinger, amid ongoing financial challenges. Gelsinger, who joined Intel as an 18-year-old in 1979, leaves the company in a transition state. As interim co-CEOs, David Zinsner, Chief Financial Officer, and Michelle Johnston Holthaus, who heads Intel’s Client Computing Group. The board of directors is now focused on finding a permanent successor, promising to work “diligently and expeditiously” during the process.
A tenure marked by ambition and obstacles
Gelsinger became Intel’s CEO in early 2021, a critical time for the company. Intel struggled to regain its position in the desktop market, where AMD had gained significant ground and competed with foreign chipmakers like TSMC. Under Gelsinger’s leadership, Intel launched its 12th-generation processors, a series that represented a significant leap forward in performance. Additionally, the company pursued an ambitious roadmap to boost its foundry capabilities, aiming to produce smaller, more efficient chips in U.S.-based plants.
Despite these efforts, Intel’s financial health has deteriorated. The company’s latest CPU designs, including the Lunar Lake and Arrow Lake chips, have been outsourced to TSMC for manufacturing. Even with these partnerships, Intel’s latest offerings struggle to compete with rival products.
The company recently reported a staggering US$16.6 billion loss in its latest earnings report. Meanwhile, competitors like Nvidia and AMD thrive, particularly in the booming AI hardware sector.
Challenges beyond the balance sheet
Intel’s difficulties extend beyond financial losses. Earlier this year, the company laid off 15,000 employees, equivalent to 15% of its workforce. Adding to the pressure, an August lawsuit filed by investors casts further uncertainty over Intel’s future.
A key part of the company’s recovery plan hinges on the 2022 U.S. CHIPS Act, which allocated nearly US$30 billion to Intel through direct funding and low-interest loans. Last week, Intel secured US$7.86 billion in funding under this programme, marking its first major financial boost from the initiative.
Much of this investment targets Intel’s foundry business, including developing its 18A node. Intel has also secured contracts with Microsoft and the U.S. Department of Defense, signalling potential growth in its manufacturing capabilities. However, setbacks persist. The company cancelled its 20A node and outsourced production of its Lunar Lake and Arrow Lake chips to TSMC. Reports suggest that the Biden administration has even encouraged Intel to consider selling its chip design business to competitors such as AMD.
Eyes on the future
The news of Gelsinger’s departure comes just before Intel unveils its next-generation Battlemage GPUs. These new graphics cards, designed for budget-conscious gamers, represent the second generation of Intel’s desktop GPU lineup. Whether these GPUs can spark renewed interest in Intel’s offerings remains to be seen.
As Intel navigates a challenging landscape, the departure of its CEO marks a pivotal moment for the tech giant. The company’s next steps will likely define its ability to compete in an industry undergoing rapid transformation.