The stock plunged and the competitors overtook: the CEO of Intel is retiring after 4 years on the job

A shake-up at the American chip giant, which employs nearly 10,000 workers in Israel: CEO Intel Pat Gelsinger is ending his position after nearly four years in the position. Gelsinger will be replaced by two VPs who will fill his place together: CFO David Zinsner and Michelle Johnston Holthouse, who is also pictured for a new position in the company: CEO of “Intel Products”, probably as part of a possible split from the manufacturing division.

He came to heal the company after a management crisis

During his years as CEO, Intel’s stock fell by about 60% in total, while since the beginning of the year it has fallen by almost 50%. Gelsinger was appointed in early 2021 in order to heal the company, which was already suffering from a managerial and technological crisis, after a high turnover of managers. Gelsinger Marked as promising because he knows the company’s DNA well after serving as its VP of Technology in the past, and also presented a vision for upgrading the technology its, to strengthen its production arm and to cut personnel.

During the afternoon on Monday, Intel shares rose 4% in early trading after the announcement was made about an hour before trading opened in New York. The rest of the chip stocks reacted relatively indifferently: AMD shares, Intel’s direct competitor in the field of computer chips rose 1% in early trading, Nvidia shares rose 0.2%, as did Qualcomm shares, while TSMC shares, Intel’s competitor in chip production, rose 2.2% .

In the test of time, Gelsinger was unable to restore the confidence of investors in the company, which today trades at a value of only 103 billion dollars: the independent production arm of the company has not taken off, customers are embarrassed to come and problems in the field of production still plague its factories. Intel ran into a cash flow crisis and was required to raise external funding, and the development of many factories that were in the construction stages – such as in Germany, Poland, Israel and Malaysia – was frozen.

Managed a process of cutting 15 thousand people

Although the critical decisions in the field of artificial intelligence were made even before Gelsinger’s time – such as the purchase of the Israeli AI chip company Bana Labs for $2 billion in 2019 – during his time, Intel was unable to break Nvidia’s stable monopoly in the field of artificial intelligence processors. Furthermore, server processor activity has suffered declines for many quarters and has failed to gain stable market share, even relative to Intel’s smaller competitor, AMD. Intel’s total sales in the field of artificial intelligence will amount to only about 500 million dollars a year. For comparison, Nvidia’s total sales for the fiscal year 2024 is about 60 billion dollars.

Gelsinger managed a very long cutback process that included, according to the estimate, about 15 thousand people who accepted the voluntary retirement plans or were fired at the initiative of the company. More than 1,000 of them in Israel. Now, it is revealed that the senior is also retiring as part of the same cutback plan. He actually ended his career at the company at the beginning of the week on December 1, according to the company’s statement.

Gelsinger’s critics from within the ranks of Intel and beyond claimed that he was running the company conservatively. For example, when the investors pressed for a complete split between the development and production activities, Gelsinger presented a position that advocated a partial split, with the management of the new production division being subordinate to him.

“Tried to hold the stick at both ends”

According to the investors, potential key customers such as Nvidia or AMD will be willing to switch and produce at Intel, when they will be sure that it is not a company that wants to compete with them in the end. “Glesinger was an excellent CEO overall, but to initiate moves to change direction in a manufacturing company with equipment items and heavy expenses, it was probably too much,” Oral Levy, chief investment officer and partner at ANEK Capital, tells Globes. “He tried to hold the The stick is double-edged: talk about a split but don’t carry it out to the end. The customers didn’t come and the market didn’t see this move happening, and it was a shame because only a complete split could flood all the company’s departments with value, from chips for personal computers to graphics processors.” According to Levy, “In the new situation where Intel is locating a new CEO , the cards are basically reopened and new possibilities are in front of Intel: we may see new companies competing for the purchase of various parts of it, we may see new splits – maybe even the Mobileye. It is possible that the new CEO who will be appointed will arrive with a known agenda that supports a complete split between the various units, in a model similar to the split at AMD that gave birth to Global Foundries in the past.”

This is also particularly bad news for Intel Israel: as a long-time employee of Intel, who has worked for the company for 30 years, Gelsinger held positive views about Intel’s offices in Israel, which during his time as a young engineer had a particularly great influence on the international company. Gelsinger is also considered a devout Christian believer, who in the past even considered serving as a priest in the company. Meanwhile, he holds pro-Israel positions. Gelsinger took a controversial action when, just two days before the presidential election, he discovered that Joe Biden’s administration had not transferred the promised $8.5 billion grant to Intel, even though the grant had been delayed for many months. Biden, as we know, lost the election and the grant was sent to Intel only last week, in the lower amount of only 7.86 billion dollars.