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Intel replaces CEO after successive manufacturing failures

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Facebook ShareTwitter ShareBy Following a string of unprecedented technical setbacks, Intel said Wednesday that VMware chief executive Pat Gelsinger will step into the top job in place of current Intel CEO Bob Swan. Gelsinger was one of Intel’s top Oregon executives before leaving the company in 2009, after 30 years with the chipmaker.Intel has endured a succession of manufacturing failures, with three consecutive generations of chip technology suffering years of delays. The chipmaker is facing a self-imposed deadline just eight days away to decide , currently developed and produced in Hillsboro, to rival manufacturers in Asia.CNBC Intel said the stunning development was unrelated to its financial performance, and the chipmaker said its fourth-quarter results exceeded the forecasts it issued in October. Swan will step down February 15 after two difficult years at Intel’s helm.“Pat is a proven technology leader with a distinguished track record of innovation, talent development, and a deep knowledge of Intel,” Intel Chairman Omar Ishrak said in a statement Wednesday. “He will continue a values-based cultural leadership approach with a hyper focus on operational execution.”Intel’s shares jumped 7% on the news to $56.95, the stock’s highest close since July. The company didn’t immediately disclose Gelsinger’s compensation package. VMware valued his pay at more than $43 million last year, nearly all of it in stock awards.“I am thrilled and humbled to be returning to Intel as CEO,” Gelsinger, 59, wrote in a memo to Intel employees Wednesday. He was Intel’s first chief technology officer.Intel’s technical challenges have been accompanied by upheaval in its executive ranks. The company after the board uncovered what it called “a past consensual relationship with an Intel employee” in violation of corporate policy.After a seven-month search, Intel promoted Swan from chief financial officer to CEO in January 2019. A finance professional who was relatively new to the company, Swan lacked the technical background Intel has traditionally sought in its leaders and didn’t have deep roots in the insular organization.Less than two years later, Intel is moving on again.Bernstein Research analyst Stacy Rasgon, who is frequently skeptical of Intel’s prospects, called Gelsinger “a good captain” but asked “how is the ship?” Rasgon said it will take several years for Gelsinger to overcome Intel’s technical problems and win back market share lost to competitors.“In the near term, we think he will likely need to reset expectations markedly,” Rasgon wrote in a note to clients.Gelsinger had been a candidate to lead Intel in both 2013, when the company hired Krzanich, and again in 2018. Both times Gelsinger publicly .Pat GelsingerEducation: Degrees from Lincoln Technical Institute, Santa Clara University and Stanford UniversityCareer: 30 years at Intel, where he served as the company’s first CTO, before joining VMware parent EMC in 2009. Named VMware’s CEO in 2012.Age: 59Family: Married with four children“There was clearly some level of discussions – way too many friends on the board,” . “I was very happy where I am.”It’s not clear what changed for Gelsinger, but Intel’s need for strong technical leadership has never been more apparent.The company’s vaunted manufacturing technology . Intel’s research factories in Hillsboro have suffered setbacks with its 14-nanometer, 10nm and now 7nm generations of production technology -- problems that predated Swan becoming CEO.Persistent defects delayed the introduction of each new class of microprocessor, enabling rivals ARM Holdings, Taiwan Semiconductor Manufacturing Co. and AMD to catch up – and, in some cases, surpass – Intel’s most advanced technology.Last year, Apple began using its own chips in its Mac computers. And rival technologies threaten Intel’s dominance in the highly lucrative data center market, too.Facing the prospect that its own manufacturing technology may not be able to keep up anymore, Intel said in October that it would decide by January whether to begin outsourcing its most advanced production to contract manufacturers overseas. TSMC and Samsung are evidently the two options.It’s a humiliating prospect that might permanently erode Intel’s leadership position in the chip industry and compromise its profit margins. in developing and producing each new generation of Intel chip technology, which the company then replicates at its factories around the world.Intel did not say Wednesday if it plans to stick to its deadline to make a decision on outsourcing when it announces quarterly financial results on January 21.“After careful consideration, the board concluded that now is the right time to make this leadership change to draw on Pat’s technology and engineering expertise during this critical period of transformation at Intel,” Chairman Ishrak said in Wednesday’s announcement.“Chip problems take years to address and while Swan accomplished a lot, it wasn’t enough,” said Patrick Moorhead of Moor Insights Strategy. “I am not foreseeing any major strategic changes with Gelsinger, but I do expect him to focus on the company’s engineering culture and get it back to an execution culture.”In a note to employees Wednesday, Swan portrayed his departure as amicable. He said he sought to rebuild Intel’s culture and lead its expansion into new markets, including artificial intelligence and advanced wireless technology.“I believe we’re now at the right juncture to make this transition,” Swan wrote. He said he will join all all-company meeting Thursday morning with Gelsinger and Ishrak to discuss the shakeup with employees.Intel is Oregon’s largest corporate employer, with more than 21,000 people working at its factories and campuses in Washington County. Gelsinger lived in Oregon for many years, even after leaving Intel, but has lived in California since becoming VMware’s CEO in 2012.In Wednesday’s announcement, Gelsinger cited Intel’s technical heritage as a reason to return.“I have tremendous regard for the company’s rich history and powerful technologies that have created the world’s digital infrastructure,” he said. “I believe Intel has significant potential to continue to reshape the future of technology and look forward to working with the incredibly talented global Intel team to accelerate innovation and create value for our customers and shareholders.”-- Mike Rogoway | | twitter: | 503-294-7699Note to readers: if you purchase something through one of our affiliate links we may earn a commission.Registration on or use of this site constitutes acceptance of our , , and (each updated 1/1/21).© 2021 Advance Local Media LLC. All rights reserved (). 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Facebook ShareTwitter ShareBy Following a string of unprecedented technical setbacks, Intel said Wednesday that VMware chief executive Pat Gelsinger will step into the top job in place of current Intel CEO Bob Swan. Gelsinger was one of Intel’s top Oregon executives before leaving the company in 2009, after 30 years with the chipmaker.Intel has endured a succession of manufacturing failures, with three consecutive generations of chip technology suffering years of delays. The chipmaker is facing a self-imposed deadline just eight days away to decide , currently developed and produced in...

Intel replaces CEO after successive manufacturing failures

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