Pat Gelsinger, CEO of Intel, resigns after a disastrous tenure

Intel Monday announced CEO Pat Gelsinger has resigned after a difficult stint at the company. The once-dominant chipmaker’s stock cratered as it missed the AI boom and was surpassed by most of its rivals.

Gelsinger took over as Intel’s chief executive in February 2021, returning to the company at which he worked for decades, including as chief technology officer. He had left Intel for a stint as CEO of software giant VMWare.

At Intel, Gelsinger was tasked with turning around the iconic American tech giant that was struggling against unprecedented competition, production delays and the departure of top talent. But during his tenure, the company’s prospects continued to decline, as it became clear the company had fallen behind on another major technology wave and despite billions of dollars in US government spending to support its domestic chip manufacturing.

Intel’s (INTC) stock plunged 61% during Gelsinger’s tenure. The stock rose 3% in early trading on Monday, before dipping more than 1% by midday.

The company announced in August that it would lay off 15% of its staff as part of an effort to slash $10 billion in costs and “fundamentally change the way we operate,” as Gelsinger said at the time.

Intel once had a stranglehold on the world’s computer chip market, with Intel chips inside PCs and Macs. But the mobile computing wave of the past two decades caught the company off-guard, leaving it to fall behind rivals. In recent years, Intel was caught on its back foot by the AI wave.

The year after Gelsinger took over as CEO, OpenAI introduced ChatGPT, which took the world by storm. The rest is history: Nvidia, which was once a tiny Intel competitor, is now the second-most-valuable company in the world after it bet big on chips that can power the massive datacenters that power AI. Nvidia’s $3.4 trillion market value is 33 times bigger than Intel’s $104 billion value.

Nvidia’s stock has surged nearly 720% over the past two years, as the company became the talk of the tech world and one of the most valuable public companies in the world.

Intel’s struggles have raised questions about a potential takeover by a rival like Qualcomm, a possibility that may be more practical under the incoming Trump administration, which is expected to be less aggressive in pursuing antitrust concerns.

Gelsinger stepped down as CEO and resigned from Intel’s board effective December 1, the company said Monday. He will be replaced by interim co-CEOs David Zinsner, Intel’s chief financial officer, and Michelle (MJ) Johnston Holthaus, general manager of Intel’s client computing group, as the company conducts a search for a permanent new CEO. Holthaus has also been named to the newly-created CEO of Intel products, which will oversee, among other things, its data center and AI product efforts.

“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,” Frank Yeary, Intel’s independent board chair, who has been named interim executive chair following Gelsinger’s exit, said in a statement.

“With Dave and MJ’s leadership, we will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimizing our operating expenses and capital. We are working to create a leaner, simpler, more agile Intel,” Yeary said.

Intel’s new co-CEOs will oversee a risky and expensive bid to transition the company’s business model to manufacture processors for competitors like Apple, putting it into more direct competition with chipmaking giant TSMC. That effort has been central to a push by the Biden administration to revitalize chip manufacturing on American soil. But even that has been dogged by delays.

Intel last week announced that the $8.5 billion grant it had been awarded by the Biden administration in March under the CHIPS Act to support the construction and expansion of its US manufacturing facilities was being cut to $7.86 billion, after Intel delayed its timeline for investing in and opening some new plants. The company said the reduced award reflected a separate, $3 billion award from the government to produce chips for US defense efforts.

This story has been updated with additional details and context.