Intel announced CEO Pat Gelsinger has retired from the company, effective Dec. 1, and is also off the board of directors. The company noted he had served a 40-plus-year career, though his final two years as CEO have been filled with problems over chip rollouts and more.
In the last five months, the company began a $10 billion multi-year cost-cutting reduction plan with layoffs of 15,000 workers.
The company named David Zinsner, the current CFO, and Michelle Johnston Holthaus, executive vice president and general manager of Intel's Clent Computing Group, as intermin co-CEOs, while the board conducts a search for a new CEO. Holthaus was named to a new position as CEO of Intel Products, to oversee client computing, data center and AI and edge products. Intel Foundry leadership will remain the same.
No timeline for a full-time CEO was announced.
Independent board member Frank Yeary thanked Gelsinger for many years of service and his return at a “critical time for the company” in 2021. He noted Gelsinger’s launch and revitalization of the manufacturing process at Intel. He said Intel had “made significant progress in regaining manufacturing competitiveness and building the capabilities to be a world-class foundry” but also added, “We know that we have much more work to do at the company and are committed to restoring investor confidence.”
He said the product group, under Holthaus, “must [be] at the center of all we do.” And Yeary said the product group “will have the resources needed to deliver for our customers.” Both Zinsner and Holthaus said in a statement they will “redouble our commitment to Intel Products and meeting customer needs.” Meanwhile, they said they will be focused on driving returns on foundry investments that have reached into the billions.
Gelsinger said in a statement released by Intel that his departure is “bittersweet,” with his work at Intel forming the bulk of his working career. “I can look back with pride for all that we have accomplished together. It has a been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics.”
Gelsinger, 63, first began working at Intel in 1979 and later became its first CTO.
Much of the investor and analyst community were taken aback about Gelsinger's departure, even as some observers noted years of internal battles at the board of directors.
"As we don't have full information on Pat's departure, we're with speculation about what happened," said Patrick Moorhead, chief analyst at Moor Insights & Strategy. It appears the departure was "sudden and unplanned," he added, and gave potential scenarios for what might have happened, including there could have been a product or process slip on something important such as for the datacenter unit.
Or, it's conceivable the board wants to sell off the company and Pat didn't agree, Moorhead added, although he said that is unlikely. Another idea is there was a sudden loss of a major customer, and finally that the board wanted the company split between chip design and foundry and Gelsinger didn't want to stick around.
Jack Gold, principal analyst at J. Gold Associates, called the Gelsinger departure a "major realignment" for the company and an indication the board didn't like Gelsinger's style or substance of his leadership. The board also may have been upset that the turnaround plans were taking too long.
The new leadership as interim co-CEOs are qualified people, but Gold added, "Finding a new CEO won't be an easy task...This is an indication that the recovery may take longer than expected."
Gold said he suspects the board was contemplating a potential sale of Intel and that Gelsinger disagreed with that approach. "I'm not sure that Intel should sell or at least in its totality," he added. "I don't think Pat did a bad job of kicking some butt to get Intel out of its complacency and that was a good thing. But it's taken far longer to get the ship sailing in the right direction and after three years or so of trying, I think the board just wanted more success, so finally just said we need to change direction."
Several commentators noted that Gelsinger's health could have been a factor in the departure, but Intel and Gelsinger have not commented on his health.
Jim McGregor, lead analyst at Tirias Research, described the Gelsinger departure as unfortunate. "This leaves many things up in the air at a critical point for Intel," he said. "There is going to be some influence going forward from investors, customers and western governments, particularly the US."
Only a week ago, Intel won a $7.86 billion grant under the US CHIPS Act, which will be applied to four manufacturing projects in Arizona, New Mexico, Ohio and Oregon.
RELATED: Intel gets a reduced CHIPS grant, still a whopping $7.86B