Staunch Israel supporter Pat Gelsinger steps down as Intel CEO

Pat Gelsinger is stepping down as CEO of microchip giant Intel, which employs nearly 10,000 people in Israel, after four years in the job. Gelsinger will be replaced by two vice presidents who will jointly run the company as interim CEOs until a permanent replacement is found: CFO David Zinsner and Michael Johnston Holthaus, general manager of the Customer Computing Group, who will also be named to the new CEO position. for Intel products, possibly as part of a potential spin-off.

Intel’s stock price rose more than 4% after Gelsinger’s departure was announced.

During Gelsinger’s tenure as CEO, Intel’s stock price fell by 60%. It has decreased by about 50% this year. Gelsinger was appointed in early 2021 to rehabilitate the company, which was suffering from an administrative and technological crisis, with a high turnover rate of senior managers. His appointment was considered promising due to his intimate knowledge of the company, having previously served as CTO. He presented a vision for developing Intel’s technology, strengthening its production arm, and reducing the workforce.

Gelsinger has not succeeded in restoring investor confidence in Intel, which currently has a market value of $103 billion. The independent production arm never took off, customers were reluctant to come in, and production problems still bedeviled its factories. Intel faced cash flow difficulties, was forced to raise external financing and halt construction of several new factories in Germany, Poland, Israel and Malaysia.

15,000 layoffs

Although crucial decisions about artificial intelligence (AI) were made before Gelsinger took over as CEO — such as the $2 billion acquisition of Israeli company Habana Labs in 2019 — Intel during his tenure was unable to break Nvidia’s established monopoly on AI processors. . . Furthermore, its server processor business has declined over several quarters and its market share has not stabilized, even relative to smaller rival AMD. Total sales of Intel’s artificial intelligence processors will reach only $500 million this year, while Nvidia’s total sales will reach about $60 billion.

Gelsinger presided over a lengthy retrenchment program, in which some 15,000 people are estimated to have accepted voluntary retirement or been laid off from their jobs, more than 1,000 of them in Israel. And now the CEO himself is on his way, having completed his term yesterday, according to the company’s announcement.

Gelsinger’s critics inside and outside Intel argued that he was running the company conservatively. For example, while investors pushed for a complete separation of the development and production sides of the company, Gelsinger opted for a partial split, with management of the production division reporting to him.

Investors say major customers like Nvidia and AMD will be ready to produce at Intel’s factories when they are sure they are not dealing with a company that ultimately seeks to compete with them. “Overall, Gelsinger has been an excellent CEO, but creating a change in direction at a production company with heavy equipment inventory and spending was apparently too much for him,” Uriel Levy, co-founder and chief investment officer at ANEK Capital, told Globes. . “He tried to hold the stick at both ends: to talk about the split, but not to implement it to the end. The clients did not come, the market did not see the move taking shape, and that was unfortunate.” Because only a split could have unlocked value across the company, from chips to personal computers to graphics processors.

“In the new situation where Intel is looking for a new CEO, everything has reopened, and new possibilities have emerged. We may see companies competing to buy parts of the company, we may see new subsidiaries, perhaps even a new CEO who may come in with an agenda.” It supports complete division between different units, in a model similar to that of AMD, which led to the birth of Global Foundries.

Gelsinger’s departure does not appear to be good news for Intel Israel. As someone who had worked at the company for 30 years in total, Gelsinger had positive views of Intel’s operations in Israel, which, when he was a young engineer, had a great deal of influence on the global company. Gelsinger is also a devout Christian and therefore has a pro-Israel stance.

It sparked controversy when it was revealed just two days before the US presidential elections that the Joe Biden administration had not transferred a promised grant worth $8.5 billion to the company. Biden lost the election, and Intel received the grant last week, but for a smaller amount of $7.86 billion.

Published by Globes, Israel Business News – en.globes.co.il – on December 2, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.