Intel CEO Pat Gelsinger Steps Down, Capping Year of Financial Struggles

Intel has announced that CEO Pat Gelsinger has retired, effective immediately, just under four years after being appointed to the role. Gelsinger had originally worked at Intel from 1979 till 2009, first as an engineer who played a key role in architecting early microprocessors such as the 80386, eventually rising to the rank of CTO. He rejoined the company as CEO in January 2021 after a stint at EMC, at a time when Intel needed a strategy to reinvigorate its struggling chip foundry units. He was the company’s third CEO in four years.

Intel, the dominant PC CPU manufacturer, has faced multiple challenges in recent years including repeated delays with transitioning from 14nm to 10nm and then to 7nm production nodes, the resurgence of AMD as a competitor in the consumer and datacentre markets, the rise of Nvidia as a leader in the AI industry, and most recently fresh challenges from Qualcomm in the consumer laptop space. 

Although Gelsinger’s appointment was well received by the industry, and his direction appeared at first to have been exactly what Intel needed, plans to capitalise on the company’s foundry infrastructure and manufacturing expertise have not borne fruit quickly enough. Intel has in the past few years pivoted to using competitor TSMC’s foundries to fabricate several of its own processors, and has recently faced calls from analysts and some investors to split and divest itself of the foundry business entirely. 

Under Gelsinger, Intel has embarked on an ambitious plan called IDM 2.0 (Integrated Device Manufacturing), which involved a $20 billion investment to expand its Arizona chip fabrication facilities and develop new ones in Ohio as well as in Germany. He has championed Intel’s position as a national security asset for the USA and allied countries, controversially suggesting that TSMC’s location in Taiwan put it at risk of geopolitical instability. Gelsinger managed to secure contracts with the US Department of Defense and just this month finalised a $7.9 billion grant and tax breaks under President Joe Biden’s CHIPS Act to fund domestic semiconductor manufacturing expansion. 

Although Intel’s own chip design and manufacturing businesses have become independent enough to allow for modular “chiplet” construction using parts fabricated at different facilities, efforts to become a major foundry services provider to other American and European companies, competing with Taiwan’s TSMC, have not yet paid off.

In August 2024, Intel announced a massive round of layoffs affecting as many as 15,000 employees, approximately 15 percent of its total workforce, as part of a new plan to cut costs by $10 billion by the end of 2025. The company was dropped from the Dow Jones Industrial Average index in November, replaced by competitor Nvidia which is now a $3 trillion company. Intel posted a $16.6 billion loss in Q3 2024, its largest ever. Multiple reports have suggested that Intel’s board has been considering acquisition offers, with rival Qualcomm said to have recently been seriously considering making an offer for its chip design business. 

Gelsinger’s sudden departure comes as the company’s stock value has sunk by nearly half this year. He will be replaced by CFO David Zinsner and product chief Michelle Johnston Holthaus while the board searches for a permanent replacement.