Pat Gelsinger resigns amid struggles to restore chipmaking dominance as interim leadership takes over
Intel’s Chief Executive, Pat Gelsinger, resigned on December 1, less than four years after taking on the role. Following his departure, the company is now being managed by two interim co-CEOs: Chief Financial Officer David Zinsner and senior executive Michelle Johnston Holthaus.
This leadership change comes amid Intel’s ongoing efforts to regain its position as a leading chip manufacturer, a title it lost to Taiwan Semiconductor Manufacturing Co., which produces chips for Nvidia and other competitors.
Gelsinger’s exit comes ahead of the completion of an ambitious four-year plan to restore Intel’s dominance in producing the fastest and smallest computer chips. However, Gelsinger assured investors and U.S. officials—who are subsidizing the company’s turnaround—that his manufacturing plans remain on track. Key results are expected next year when Intel aims to reintroduce a flagship laptop chip into its factories.
In early trading, Intel shares rose by 3.7 percent, although they have declined by more than half over the course of this year. This slump resulted in Intel’s removal from the Dow Jones Industrial Average index last month, where it was replaced by Nvidia.
Intel management has established a search committee to find a permanent replacement following Gelsinger’s resignation. Frank Yeary, the independent chair of the Intel board, highlighted the progress made under Gelsinger’s leadership, particularly in restoring the company’s manufacturing competitiveness and enhancing its foundry capabilities. However, significant efforts are still needed to rebuild investor confidence.
Gelsinger’s turnaround strategy, initiated in July 2021, involved substantial investments, including the construction of new factories such as a $20 billion facility in Ohio and the hiring of up to 132,000 employees. This investment came at a time when contracts in the laptop and PC market were declining post-pandemic, which significantly impacted Intel’s gross margins and share price. Due to these financial pressures, there was growing interest in acquiring the company, leading Gelsinger to consider layoffs and asset sales to enhance the company’s financial situation.
Despite these efforts, Gelsinger was unable to present a competitive AI chip to rival companies, especially Nvidia, which has now grown into a $3 trillion enterprise largely due to its dominance in services like ChatGPT. Analysts, including Hans Mosesmann from Rosenblatt Securities, criticized Gelsinger’s leadership, describing it as “under-productized” and lacking “innovation.”
Gelsinger’s approach also involved Intel’s entry into the contract manufacturing sector, known as the “foundry” model. While Intel announced some foundry customers, including Microsoft and Amazon, neither was considered large enough to generate the volume of chips necessary for Intel’s new factories to be profitable.
This move didn’t deliver any tangible progress, and rising tensions within the board led to Lip-Bu Tan’s eventual departure. He sided with Gelsinger because of company strategy.
