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Was he pushed out or did he resign? Either way, on December 1, 2024, Pat Gelsinger, who had been the CEO of Intel (NASDAQ: INTC) since 2021, resigned. This occurs as Intel finds it difficult to maintain its competitiveness in the rapidly evolving tech sector.
Frank Yeary, the head of Intel’s board, said the company has made progress but still has more to do and the company is committed to winning back the confidence of investors.
Falling Behind in AI
Over the last few years, AI (artificial intelligence) has become a big deal in technology. Intel has had a hard time keeping up with other companies, like Nvidia (NASDAQ: NVDA), which is now a leader in AI chips. Nvidia’s special chips, called GPUs, are better for handling the heavy computing power AI needs. Intel’s CPUs, the type of chip it focuses on, aren’t as good for AI tasks.
Because of this, Nvidia’s business has taken off. Its stock has gone up over 820% since 2021, while Intel’s stock has dropped by 61%. Nvidia is now worth $3 trillion, while Intel is only worth $100 billion.
Gelsinger’s Plan to Save Intel
When Gelsinger became CEO, he started some big projects to help Intel catch up. He focused on building new factories to make better chips, spending over $100 billion on plants in places like Arizona and Ohio. Additionally, Gelsinger launched Intel’s Foundry initiative, aiming to transform Intel into a leading global chip manufacturer for other companies, directly competing with Taiwan Semiconductor Manufacturing Company (TWSE: 2330). The U.S. government supported these plans by giving Intel money through the CHIPS Act.
Even with these efforts, Intel faced problems. It lost $16.6 billion in the latest quarter, and its revenues have been falling. The government also reduced the amount of money it planned to give Intel because some projects were delayed.
Intel’s struggles aren’t just about competition. People who know the company say its teams don’t always work well together. Different departments often compete with each other instead of cooperating. This makes it harder for Intel to make great products. Intel needs to fix how it works on the inside, have its teams start to work together and stop the internal fighting.
New Leaders Step In
After Gelsinger’s retirement, Intel named two temporary leaders: David Zinsner, the company’s finance boss, and Michelle Holthaus, who runs Intel’s product group. These two will share the job of leading the company while Intel looks for a new CEO.
Frank Yeary said the company will keep focusing on improving its products and cutting costs as it is working hard to make Intel better.
What’s Next for Intel?
Many experts think fixing Intel won’t be easy. Some even wonder if anyone can solve the company’s problems. Gelsinger was well-known for understanding how to make chips, so his leaving raises big questions about the company’s future. If he couldn’t fix the problems, who can?
People have been discussing what might happen to Intel in the future. After Intel’s CEO Pat Gelsinger suddenly stepped down, some investors and companies have shown interest in the company. Qualcomm (NASDAQ: QCOM) has looked into buying parts of Intel, but taking over the whole company seems unlikely because of complicated regulations. Private equity firms like Apollo Global Management (NYSE: APO) are also said to be thinking about investing in Intel or setting up joint ventures. These ideas show that others see potential in Intel, but they also make it clear that the company’s future is still uncertain.
Experts say Intel needs to make big changes, like improving teamwork and coming up with new ideas for its products. If it doesn’t, the company could keep losing ground to rivals like Nvidia. Intel is going through a tough time. The company’s leadership change shows how serious its challenges are. To succeed again, Intel will need to work better as a team, build better products, and regain people’s trust. Whether it can do that remains to be seen.
FIGURE 1: Intel’s Market Data and 1-Year Stock Chart
