Pat Gelsinger has stepped down from his role as Intel Corp.’s Chief Executive Officer, the chipmaker announced today.

Gelsinger left the CEO post and his board seat on Sunday. Sources told Bloomberg that the executive’s departure followed a meeting with Intel’s other directors. The discussion, which focused on the company’s efforts to win back lost market share and catch up to Nvidia Corp., reportedly ended with the board giving Gelsinger the choice of retirement or removal.

Gelsinger started his Intel career in 1979. Over the subsequent decades, he oversaw the development of several processors and became the chipmaker’s chief technical officer. Gelsinger left in 2009, led virtualization giant VMware for nearly a decade and returned to Intel in 2021 as CEO.

The long-time enterprise technology executive will be succeeded by two other Intel insiders: MJ Holthaus and David Zinsner. They will serve as interim co-CEOs until a permanent replacement to Gelsinger is found.

In conjunction with the leadership change, Intel named Holthaus to the helm of its Intel Products business. The business includes the company’s core Data Center and AI Group, Network and Edge Group and Client Computing Group. Holthaus previously headed the latter unit, which makes chips for the consumer market.

Zinsner, in turn, is taking up the co-CEO role after previously serving as Intel’s Chief Financial Officer. He joined the company in 2022 from memory chip supplier Micron Technology Inc., where he had the same role.

Intel said that the rest of its leadership team will remain unchanged. At the board level, independent chair Frank Yeary will become interim executive chair.

The shakeup at Intel comes as the chipmaker faces multiple challenges. Over the past few years, the company lost market share to rivals in both the personal computer and server markets, its two main sources of revenue. Intel has also struggled to build sales momentum for its foundry business, which uses the chipmaker’s fabs to make processors for other organizations. 

“Pat stepping down presents an opportunity for Intel to finally face the hard truth: That without virtually unlimited capital its current strategy will bankrupt the company,” commented TheCUBE Research Chief Analyst Dave Vellante. “As David Floyer & I have said for years, it’s long past the time to spin Foundry.”

Under Gelsinger’s leadership, Intel launched a multibillion-dollar push to expand its U.S. fab network. In March 2021, the company announced plans to upgrade its Arizona chip manufacturing complex at a cost of up to $30 billion. Intel later committed $20 billion to two new fabs in Ohio and earlier this year announced a $36 billion initiative to expand its Oregon manufacturing site.

In parallel, the company launched an effort to revamp its chip manufacturing processes. Gelsinger tasked Intel’s engineers with deploying five new nodes in four years. The goal is to help the company catch up with rival Taiwan Semiconductor Manufacturing Co., which uses more advanced processes to make chips for customers. 

Last year, Gelsinger disclosed that the initiative is “on track.” More recently, Intel announced that its Intel 18A node, the planned culmination of the four-year manufacturing process upgrade, has reached several important technical milestones. But the development effort has also faced challenges: Broadcom Inc., a potentially important Intel 18A customer, reportedly determined that the process isn’t yet ready for mass production. 

Intel has struggled to balance its fab investments with financial performance. This past August, the company logged its biggest stock price drop in 50 years after posting quarterly results that missed expectations. In response, the Intel announced a cost-cutting plan that will see it lay off about 15% of its employees to save $10 billion annually.

“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,” Yeary stated. “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.”

Photo: Intel