Intel CEO Pat Gelsinger has been forced to resign less than four years after taking over. He stepped down after the board of directors lost confidence in his plan to restructure the company. Under Gelsinger, Intel has fallen behind in the artificial intelligence or AI chip competition. Also, Intel has lost its top spot to big rivals like Nvidia. As the chip business was not successful, there was disagreement among the company's board members about him.
Gelsinger resigned on December 1 after a board meeting. Board members said at the meeting that Gelsinger's expensive and ambitious plans to put Intel at the top were not succeeding and that the plan was not moving fast enough.
The board asked Gelsinger to retire or face removal, Reuters said, citing sources. And he agreed to resign.
Gelsinger's resignation came before the end of his four-year term. His goal was to restore the company's leadership in making the world's fastest and smallest computer chips. The company lost this position to Semiconductor Manufacturing Company of Taiwan. The company makes chips for Intel's rivals such as Nvidia.
Intel was founded in 1968. The company has long been the cornerstone of Silicon Valley's chip industry. But under Gelsinger's leadership Intel's market value fell 30 times compared to Nvidia's. Nvidia now leads the artificial intelligence (AI) chip market.
Gelsinger announced plans to restructure the company in 2021. He wanted to bring Intel back to the forefront of chip manufacturing. However, the company lost several major contracts under him and failed to fulfill many promises.
Nvidia has already overtaken Intel in making AI chips. On the other hand, Intel has not been able to provide effective products for AI chip development.
Gelsinger said he and U.S. workers are helping to restructure Intel, saying its manufacturing plans are on track. But its benefits will not be known before next year. In 2025, the company has set a target of bringing out a flagship laptop chip of its own.
The company's share price fell 10.5 percent. Shares have more than halved in value this year. Nvidia outperformed Intel in the Dow Jones Industrial Average last month. In addition, rival company Advanced Micro Devices (AMD) shares rose 3.6 percent and the PHLX Semiconductor Index rose 2.6 percent.
The company appointed David Ginsner as chief financial officer and Michelle Johnston Holthaus as senior executive officer as interim co-chief executive. The board has also formed a separate committee to look for a new CEO.
“The company has made great strides to return to manufacturing competitiveness and build a world-class foundry,” Fank Yari, independent chairman of the board, said in a press release. But we know we still have a lot of work to do and are committed to regaining investor confidence.
Citing two people, Reuters reported that Karen Khan, head of Intel's communications department, is also planning to leave the company.
Gelsinger announced the company's turnaround plan in July 2021. The company was already in trouble due to several mistakes in the production process. He then went on a grand spending spree. He began construction of a new $20 billion factory in Ohio and increased the number of workers. As a result, the company's workforce reached 132, a figure Intel never had even when it was at the top of its chip business.
However, due to the corona epidemic, there was a big decline in the market of laptops and PCs. As a result, Intel's market value and shares fell the most in the company's history.
After the company's losses, Gelsinger planned layoffs and was forced to consider selling assets.
In addition, Gelsinger failed to create a viable AI chip to compete with Nvidia. As a result, Nvidia is on its way to becoming a 3 trillion dollar company. Because the company's chip is being used in services like ChatGPT.
The board said the new leadership will restore the company's viability and restore investor confidence. The expensive projects that Intel started under Gelsinger will be evaluated under the new leadership.
It remains to be seen what the future of Intel will look like with a new CEO after Gelsinger.
