when Pat Gelsinger came back to IntelExpectations ran high that he would restore one of Silicon Valley’s most iconic brands to its former glory. Only two and a half years later, Gelsinger is gone And the storied chipmaker is hurting for cash and faces an uncertain future.
Shares of Intel rose 5% on Monday after the company announced Gelsinger, 63, who began his career at the chipmaker in 1979, retired as chief executive and also resigned from the board of directors. The move amounted to a vote of no confidence from investors who had initially praised Gelsinger. Change planIncluding taking back market share from chip design companies nvidia and semiconductor manufacturers such as TSMC.
Intel failed to make headway on either front, missing out on the AI boom, and seeing its shares fall more than 60% during Gelsinger’s tenure.
“While we have made significant progress in regaining manufacturing competitiveness and building capabilities to become a world-class foundry, we know we have much more work to do in the company and are committed to restoring investor confidence,” Frank Yeary, Independent. Intel’s board chairman, A statement monday
Once the world’s largest chipmaker, Intel has dropped out of the industry Top 10 Companies by market capitalization, a list now led by Nvidia and TSMC. competitor AMDwhich has taken considerable market share from Intel’s core business of making computer processing units, or CPUs, comes in sixth with a value of about $220 billion. This fall, Intel’s market cap fell below the $100 billion threshold for the first time since 2012.
It happened after a disaster Earnings report That sent the stock tumbling more than 25% in August, its worst day since 1974. Q2The company announced that it would suspend the dividend it had paid to shareholders for more than three decades.
In response, the company also said it would cut its workforce by 15%, translating into about 15,000 jobs, as part of $10 billion in cost-saving measures. Later, Intel too revealed Its foundry business, which competes with TSMC in manufacturing semiconductors, will become an independent subsidiary.
As Gelsinger was forced to reduce his ambitions, however, Nvidia Forward plowing And Changed In Intel Dow Jones Industrial Average. Nvidia’s graphic processing units, or GPUs, were originally developed for video games but have since been at the center of the AI boom. CEO Jensen Huang has Indicated demand Blackwell’s offering for the company’s next generation dramatically exceeds supply.
Meanwhile, the success of another longtime Silicon Valley stalwart, [hotlink]oracle,[/hotlink] underscore How far Intel has fallen. The software giant, which was founded in 1977, has excited investors in recent years with the impressive growth of its cloud business, which has powered shares to their best year on record since 1999, when Their value had nearly quadrupled. The company has re-emerged as the market’s darling as investors look for secondary beneficiaries of the market’s AI rally.
Can CHIPS Act funding help spur a change?
Intel, meanwhile, has fallen victim to the classic innovator’s dilemma not once but twice, as of fate Jeremy Kahn recently explainedMissed the boat on AI after becoming complacent during the smartphone revolution.
Gelsinger believed that there is a time to catch up, especially as the US has invested heavily to bring chip and semiconductor production back to US shores. There is an agreement with the company Amazon To create a new advanced AI chip and Finalized $7.9 billion in grants last week as part of the Biden administration’s Chips and Science Act.
Still, there are concerns that Intel won’t have enough cash to power the transition. Fellow chipmaker Qualcomm have Allegedly Intel has been approached about a potential takeover, but interest is said to have cooled as Qualcomm has become less enamored with the idea of assuming more than $50 billion in debt.
Chief Financial Officer David Zinsser and Michelle Johnston Holthaus, a longtime Intel executive taking on a new role as CEO of the company’s product group, will serve as co-CEOs as the board searches for a permanent replacement. It’s a prestigious position, but Gelsinger’s successor will need to be prepared for a long, difficult road ahead.
