when Pat Gelsinger he came back IntelThere was hope that one of Silicon Valley’s most famous brands would return to its former glory. Two and a half years later, Gelsinger has disappeared and the famous chipmaker is hemorrhaging cash and facing an uncertain future.
Intel shares rose 5% on Monday after the company announced The 63-year-old Gelsinger, who began his career in the chip industry in 1979, retired as CEO and also stepped down from the board of directors. The move was a vote of no confidence from investors who had initially cheered on Gelsinger. turnaround planincluding regaining market share for chip design companies Nvidia and semiconductor manufacturers such as TSMC.
Intel failed to thrive on either front, missing out on the AI boom and seeing its stock plunge more than 60% during Gelsinger’s tenure.
“While we have made significant progress in regaining manufacturing competitiveness and building our capabilities to be a world-class foundry, we know we have much more work to do in the company and are committed to restoring investor confidence,” independent Frank Yeary. The chairman of the board of Intel, said a statement monday
Once the world’s largest chipmaker, Intel has fallen out of the industry top 10 companies by market capitalization, a list currently headed by Nvidia and TSMC. competitor AMDIntel, which has taken a large share of the market from its core business of making computer processing units or CPUs, is ranked sixth with a valuation of around $220 billion. This fall, Intel’s market cap fell below the $100 billion threshold for the first time since 2012.
That happened after a disaster earnings report stocks fell more than 25% in August, the worst day since 1974. Q2the company announced that it would suspend the dividend paid to shareholders for three decades.
In response, the company also said it would cut its workforce by 15%, roughly 15,000 jobs, as part of $10 billion in cost-saving measures. Later, Intel too revealed its foundry business, which competes with TSMC in semiconductor manufacturing, would become an independent subsidiary.
As Gelsinger was forced to scale back his ambitions, however, Nvidia before plowing and replace at Intel Dow Jones Industrial Average. Nvidia’s graphics processing units, or GPUs, were originally developed for video games, but have since been at the heart of the AI boom. It has CEO Jensen Huang expressed demand in fact, the company’s next-generation Blackwell offering significantly exceeds the offer.
Meanwhile, the success of another longtime Silicon Valley backer, (hotlink)Oracle,(/hotlink) he emphasizes How far Intel has fallen. The software giant, which was founded in 1977, has kept investors excited in recent years with the explosive growth of its cloud business, which has seen its shares post their best year since 1999, when they roughly quadrupled in price. The company has emerged as a market darling as investors look for secondary beneficiaries of the market’s AI rally.
Can funding from the CHIPS Act help spur a turnaround?
Intel, on the other hand, has fallen victim to the classic innovator’s dilemma not once but twice, of luck Jeremy Kahn recently explainMissing the IA boat after enjoying the smartphone revolution.
Gelsinger believed it was time to catch up, especially since the US had invested heavily in bringing chip and semiconductor production back to American shores. The company has an agreement Amazon To make a new advanced AI chip and finished A $7.9 billion grant last week as part of the Biden administration’s CHIPS and Science Act.
However, there are concerns that Intel will not find the money it needs to fuel this transformation. The chip maker Qualcomm has as reported Intel was approached about a potential acquisition, but interest is said to have cooled as Qualcomm became less enamored with the idea of taking on more than $50 billion in debt.
CFO David Zinsner and Michelle Johnston Holthaus, a longtime Intel executive who is taking a new role as the company’s chief product officer, will serve as co-CEOs while the board searches for a permanent replacement. It’s a prestigious position, but Gelsinger’s successor will have to be prepared for a long and difficult road ahead.
