Intel Dumps CEO Pat Gelsinger as Chipmaker's Turnaround Lags Behind Expectations

Intel’s board of directors has forced out CEO Pat Gelsinger due to frustrations over the slow pace of the company’s turnaround efforts.

Bloomberg reports that Intel CEO Pat Gelsinger has been ousted from his position after the board lost confidence in his plans to revitalize the iconic chipmaker. The decision came to light following a meeting last week between Gelsinger and the board, where they discussed the company’s progress in regaining market share and closing the gap with rival Nvidia.

According to sources familiar with the matter, Gelsinger was presented with two options: retire or be removed. He ultimately chose to announce the end of his tenure at Intel. The company has appointed Chief Financial Officer David Zinsner and Executive Vice President Michelle Johnston Holthaus as interim co-CEOs while the board searches for Gelsinger’s permanent replacement.

Gelsinger, 63, had been hailed as a potential savior when he returned to Intel in 2021, nearly 12 years after leaving the company. He pledged to restore Intel to its former glory as a leader in the semiconductor industry, particularly in manufacturing – an area where it had fallen behind competitors like Taiwan Semiconductor Manufacturing Co. (TSMC).

As part of his turnaround strategy, Gelsinger launched an ambitious plan to expand Intel’s factory network, including the construction of a massive new complex in Ohio. This project received federal aid from the Chips and Science Act. However, despite these efforts, the board grew increasingly concerned about the lack of products capable of winning in the market, feeling that this crucial aspect had been neglected in the push to transform Intel into a made-to-order chip manufacturer.

The shake-up at Intel comes amid a rapidly evolving industry landscape, with the rise of AI computing posing significant challenges. Nvidia, once a niche rival struggling in Intel’s shadow, has now become the world’s most valuable publicly traded company, dominating the AI chip market and capturing tens of billions of dollars that would have previously gone to Intel.

Gelsinger’s departure could pave the way for more dramatic strategic shifts at Intel. Some analysts, such as Chris Caso of Wolfe Research, believe that this move opens the door for a new strategy, arguing that Intel may not have the scale to pursue leading-edge manufacturing on its own given its absence from the AI market.

The change in leadership also represents a setback for the Biden administration’s ambitions to rebuild the domestic semiconductor industry. Gelsinger had been a strong supporter of the Chips Act and pledged to build massive new factories in the US. The government had recently signed a final agreement to provide Intel with almost $7.9 billion in federal grants, the largest direct subsidy from the program.