Intel’s future hangs in the balance following the abrupt resignation of CEO Pat Gelsinger on December 1. The years when Intel dominated the industry with its famous “Wintel” alliance with Microsoft are long gone, as Intel finds itself in full crisis-mode, trying to turn the chip-behemoth around amid increasing pressure on multiple fronts.
Tasked with reversing years of financial and strategic missteps, Gelsinger’s departure signals the semiconductor giant’s struggle to compete with industry leaders Nvidia and TSMC. As interim co-CEOs David Zinsner and Michelle Johnston Holthaus take the helm, Intel is under immense stress to redefine its trajectory amid a rapidly evolving market.
Leadership Shakeup Reflects Mounting Internal Pressure
Pat Gelsinger’s exit marks a dramatic shift in Intel’s leadership during a critical period for the company. His tenure, which began in February 2021, was initially seen as a beacon of hope, with Gelsinger pledging to restore Intel’s technological edge and manufacturing dominance. However, persistent delays in product rollouts and underwhelming results from major initiatives eroded confidence.
“Leading Intel has been the honor of my lifetime — this group of people is among the best and the brightest in the business, and I’m honored to call each and every one a colleague.” However, his tenure was cut short when the board, reportedly frustrated with the slow pace of his turnaround efforts, presented him with the option to retire or face removal.
In Gelsinger’s absence, Zinsner and Holthaus will share leadership responsibilities. Holthaus, a 30-year Intel veteran, also leads the newly created Intel Products division, which consolidates the company’s most critical operations, including client computing, data center, AI, and networking.
Frank Yeary, Intel’s independent board chair, has assumed the role of interim executive chair and emphasized the importance of moving quickly. “While we have made significant progress in regaining manufacturing competitiveness and building the capabilities to be a world-class foundry, we know that we have much more work to do at the company and are committed to restoring investor confidence,” Yeary said.
“Ultimately, returning to process leadership is central to product leadership, and we will remain focused on that mission while driving greater efficiency and improved profitability,” he hinted at the current problems at Intel.
Financial Decline Underscores Urgency for Change
Intel’s financial troubles have compounded its leadership crisis. The company reported a 14% revenue drop in 2023, with losses exceeding $7 billion. Once the dominant force in semiconductors, Intel now faces declining market share as competitors like Nvidia and TSMC outpace it in innovation and execution.
Intel’s removal from the Dow Jones Industrial Average in November—replaced by Nvidia—was a stark indicator of its challenges. Nvidia’s dominance in AI-driven semiconductor technology, bolstered by its GPUs tailored for machine learning workloads, has left Intel struggling to keep up. Meanwhile, TSMC continues to lead in advanced chip manufacturing, solidifying its role as a supplier for tech giants such as Apple and other companies.
Product Missteps: A Drag on Recovery
The company’s struggles are evident in its recent product missteps. Intel´s Gaudi AI accelerators, designed to compete with Nvidia in the rapidly growing AI market, have failed to gain traction due to performance gaps and limited software ecosystem support. Similarly, Intel’s Arrow Lake CPUs, launched as a flagship product for high-performance computing, received lukewarm reviews and fails to capture significant market share.
Related: DeepX DX-M1 AI Chip Hits 90% Yield with Samsung’s 5nm Technology
These shortcomings have raised questions about Intel’s ability to deliver on its promises. Interim co-CEO Zinsner acknowledged the challenges but expressed optimism about Intel’s upcoming product lines, including the Lunar Lake processors, which aim to combine power efficiency with advanced performance features.
Foundry Business: A Double-Edged Sword
Intel’s foundry division, a central pillar of Gelsinger’s turnaround plan, remains a work in progress. Established to compete with TSMC in manufacturing semiconductors for external clients, the division has yet to achieve profitability.
Interim co-CEO Zinsner outlined plans to improve margins by focusing on high-value wafers and reducing costs. He highlighted Lunar Lake processors as a potential driver of profitability.
The 18A advanced node manufacturing process, a critical component of Intel’s foundry ambitions, has shown progress after initial delays. This process represents Intel’s attempt to lead the industry in transistor miniaturization, enabling faster and more energy-efficient chips.
“There’s nothing fundamentally challenging on this node now,” said Naga Chandrasekaran, head of foundry manufacturing. “It is about going through the remaining yield challenges, defect density challenges.” Intel expects to deliver initial samples in early 2025 and ramp up production by the year’s end.
Related: Intel Gets $7.86 Billion U.S. CHIPS Act Grant for New Factories
Search for New Leadership
Intel’s board has formed a search committee to identify a permanent CEO, reportedly considering external candidates such as Lip-Bu Tan. Known for his success at Cadence Design Systems, Tan is seen as a strong contender but faces questions about his ability to manage a company of Intel’s size and complexity. No timeline for the selection process has been announced.
The next CEO will inherit a daunting set of challenges: revitalizing Intel’s product pipeline, addressing operational inefficiencies, and regaining the trust of investors and customers alike. Holthaus and Zinsner’s interim leadership is expected to provide stability during this period of uncertainty.
Related: Nvidia Q3 2024 Up To $35.1 billion, 94% Year-Over-Year: Jensen Huang Praises Blackwell Adoption
Navigating an Evolving Semiconductor Market
The semiconductor industry is undergoing a rapid transformation driven by AI applications, geopolitical tensions, and supply chain disruptions. Nvidia’s continued dominance in GPUs, coupled with TSMC’s unmatched manufacturing capabilities, has left Intel playing catch-up. Gelsinger’s strategy of reinvesting in manufacturing and expanding foundry services laid the groundwork for recovery, but execution delays have hindered progress.
Intel’s ability to navigate these challenges will determine its place in an increasingly competitive market. The company’s foundry ambitions, while promising, require significant operational and cultural shifts to succeed. As interim co-CEOs Zinsner and Holthaus guide the company through this transition, all eyes will be on Intel’s next moves, as the future currently looks grim.
