After more than three years at the helm, Intel’s charismatic and ambitious chief Pat Gelsinger has stepped down and the faltering American semiconductor icon is starting to look for his replacement. It’s not a coincidence that this year Intel will announce its first annual loss since 1986; analysts expect Intel to lose $3.68 billion in 2024.
Intel is a semiconductor industry pioneer with luminaries like Robert Noyce, Gordon Moore, and Andy Grove in its fold. While the case for Craig Barrett, who took over reins from Grove in 1998, hangs in balance, the downfall at Intel’s top spot began with Paul Otellini, who was widely known to refuse Apple to supply chips for iPhones due to a perceived lack of volume.
The downward trend at Intel’s corner office continued under Brian Krzanich and Bob Swan, and then Gelsinger came along with a big bang. Gelsinger, who joined Intel in 1979 at the age of 18 with an associate’s degree from Lincoln Tech, was the lead architect of Intel’s fourth-generation 80486 processor launched in 1989. He also became Intel’s youngest vice president at the age of 32.
Gelsinger continued to rise through the ranks and became the Santa Clara, California-based chipmaker’s first chief technology officer (CTO) in 2001. That’s also when his career’s first anticlimax began. So, restless Gelsinger chose the path of upward mobility by leaving Intel in 2009 and becoming EMC’s president and CFO.
Figure 1 Gelsinger (second from right) is seen with the 386 processor development team. Source: Intel
In 2012, he got the top job at VMware, and after nine years at this cloud computing firm, he returned to then troubled Intel as the turnaround CEO. After the Intel board ousted Bob Swan, who had a finance background, Gelsinger came on board with great expectations. He was being hailed as the engineer CEO taking the reins of an American icon with engineering roots. However, in retrospect, that proved easier said than done.
Intel’s foundry business, the linchpin of Gelsinger’s turnaround plan, is now the elephant in the room, and there is no viable remedy in sight. Besides the semiconductor contract manufacturing business that he envisioned to turn the corner at Intel, other critical areas relate more to execution than vision.
Below is a brief snapshot of the debacles that happened under Gelsinger’s watch:
- Intel, the CPU company by its heritage, has been losing market share in PC and data center processors to competitor AMD. Moreover, x86 rival Arm is making inroads in the highly lucrative server and data center markets.
- Intel seems to have missed the AI wave, and its Gaudi AI accelerators haven’t been selling well.
- While Gelsinger spent a lot of time rubbing shoulders with politicians, his inept remarks about Taiwan’s precarious relations with China offended TSMC, leading Intel to lose massive discounts from the mega-fab for the manufacturing of its processors.
- Intel is also known to have failed in sealing chip supply deals with Sony for the PlayStation console and Waymo for self-driving vehicles.
- In 2023, Intel had to cancel its bid to acquire Israel-based fab Tower Semiconductor for $5.4 billion due to regulatory issues. As a result, it was forced to pay $353 million as the termination fee.
Now, back to the elephant in the room: Intel’s foundry business currently in transition to become an independent subsidiary due to shareholder pressure. It’s probably the straw that broke the camel’s back. Chip contract manufacturing is a long-term business with massive capital investment, and time isn’t apparently on Intel’s side.
More specifically, Intel’s much-publicized 18A process node has announced only a single tape-out while large potential customers such as Apple and Qualcomm are reported to have passed on 18A for technical reasons. The trade media is abuzz about reliability issues facing 18A, and Intel’s isn’t expected to manufacture chips in volume on this node until 2026.
Figure 2 Gelsinger’s departure marks his 45 years of work in the tech industry. Source: Intel
While technology and trade media outlets have seen Gelsinger’s ouster with an element of surprise, we at EDN saw it coming much earlier. Our story “Intel: Gelsinger’s foundry gamble enters crunch,” published on 4 November 2024, offered a blueprint of this inevitable ouster announced on 2 December 2024.
We also think that Intel’s problems aren’t unsolvable. Gelsinger’s successor must avoid grand plans and focus on perseverance, innovation, and execution. Lisa Su did that at Intel’s archrival AMD during the past few years.
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