Intel’s next chief executive officer will have manufacturing expertise as well as experience in the product side of the business, interim co-CEO David Zinsner said on Wednesday.

Reuters reported on Tuesday that Intel has started evaluating a handful of outsiders including former board member Lip-Bu Tan to take the reins of the struggling chipmaker, a day after the company announced the resignation of CEO Pat Gelsinger following impatience with the pace of a costly turnaround.

“I’m not in the process, but I’m guessing that the CEO will have … both some capability around foundry as well as on the product side,” Zinsner said at the UBS technology conference, adding that Intel’s core strategy remains intact.

Zinsner said there was no change to the forecast provided during the company’s previous earnings report in October when it expressed optimism about the future of its PC and server business.

The company also requires a significant cultural change to become a successful foundry player as well as in the semiconductor business, Intel’s head of foundry manufacturing and supply chain Naga Chandrasekaran said.

Intel’s shares have fallen more than 55% so far this year after it largely missed out on the artificial intelligence boom and trails behind industry heavyweight Nvidia. Intel lost its spot on the blue-chip Dow Jones Industrial Average index last month and was replaced by AI chip firm Nvidia.

Chandrasekaran said Intel’s progress on the 18A advanced node manufacturing process was going as expected and has met several milestones despite facing difficulties and technical problems.

“There’s nothing fundamentally challenging on this node now. It is about going through the remaining yield challenges, defect density challenges,” he said.

Intel plans to provide samples of chips made with the new node to customers in the first half of next year, and start to ramp the production at its Oregon plant in the second half, Chandrasekaran added.

Foundry Business

Intel’s foundry business, which was at the center of Gelsinger’s turnaround plan, will also start to see better margins by the next year, mostly influenced by its Lunar Lake processors, Zinsner said.

He said the foundry would see additional cost reductions and a mix of higher margin wafers which should improve their business.

Intel invested heavily in its manufacturing business over the past few years in the hopes of restoring its lead in making the fastest and smallest computer chips, a crown it lost to Taiwan Semiconductor Manufacturing Co which makes chips for Intel rivals such as Nvidia.

© Thomson Reuters 2024

Intel has started evaluating a handful of outsiders, including former board member Lip-Bu Tan, for the role of chief executive after the struggling American chipmaking icon ousted company veteran Pat Gelsinger, according to people familiar with the matter.

Tan, a well-respected semiconductor industry veteran who has long been seen as a contender for CEO at Intel, has been approached by Intel’s board in recent days to gauge his interest in taking up the job, the sources said, requesting anonymity as the discussions are confidential.

Intel’s board is mostly evaluating outsider candidates for the role and has also approached Marvell Technology CEO Matt Murphy, two of the sources said.

The deliberations on the CEO succession are at an early stage, the sources said, cautioning that Intel has not yet zeroed in on any candidate to replace Gelsinger who stepped down from his role on Monday after being given the choice to retire or be removed.

The move to replace Gelsinger – who took charge of Intel less than four years ago – came after the board decided that the pace of his costly plan to turn around Intel’s fortunes was not quick enough.

The board has formed a search committee for Gelsinger’s successor and is expected to make a final decision on his replacement in the coming months, the sources said. The company on Monday named Chief Financial Officer David Zinsner and senior executive Michelle Johnston Holthaus as interim co-CEOs.

Intel declined to comment. Representatives for Tan’s venture capital firm, Walden Catalyst, did not respond to a request for comment. On Marvell’s quarterly results call on Tuesday, Murphy said that as the chairman and CEO of the company he is “100% focused on Marvell.” Bloomberg previously reported that Intel was considering Murphy for CEO.

High-Profile CEO Hunt

The hunt for Intel’s next leader is one of the most closely-watched CEO successions in corporate America and comes at a pivotal time for the ailing chipmaker, which is enduring one of the bleakest periods in its five-decade history.

Gelsinger in 2021 inherited a company rife with challenges that he compounded. Setting lofty ambitions for manufacturing and AI capabilities among major clients, Intel ultimately lost or canceled contracts under Gelsinger’s watch, and was unable to deliver the promised goods, Reuters reported in October.

Intel’s revenue shriveled to $54 billion in 2023, down nearly one-third from the year Gelsinger took over. Analysts expect Intel to lose $3.68 billion this year, its first annual net loss since 1986. Its shares were down nearly 6% on Tuesday, off more than 60% from a peak hit in Gelsinger’s first months as CEO.

The crash in Intel’s share price has sparked takeover interest from suitors such as Qualcomm, Reuters has previously reported.

Murphy has served as CEO of Marvell since 2016. He previously worked at Maxim Integrated Products Inc, where he spent nearly 22 years in various roles.

Tan, the former CEO of chip-software company Cadence Design, joined Intel’s board two years ago as part of a plan to restore Intel’s place as the leading global chipmaker. The board expanded Tan’s responsibilities in October 2023, authorizing him to oversee manufacturing operations.

But Tan departed in August after clashing with Gelsinger on several aspects of Intel’s turnaround plan, including the size of the company’s workforce, its contract manufacturing strategy, and its work culture, Reuters has reported.

© Thomson Reuters 2024

Intel CEO Pat Gelsinger’s removal has put an abrupt end to his role in the struggling chipmaker’s turnaround efforts, leaving Wall Street with doubts whether his ambitious revival plan is headed for the chopping block.

A change at the top after a tumultuous year was cheered by investors as Intel shares rose as much as 6% following the news, before it closed down 0.5% on Monday.

The shares have slumped more than 50% this year as it loses out on an AI-fueled rally in chipmaking peers. Nvidia has become the second most-valuable company in 2024, while Intel’s market capitalization dropped below $100 billion (roughly Rs. 8,46,800 crore) for the first time in 30 years.

Intel struggled under Gelsinger as his plan to increase focus on its money-losing contract manufacturing business hurt cash flow.

Despite the spending spree, it failed to keep up with peers in an AI race and trailed Taiwan’s TSMC in chip manufacturing.

The company had also missed out on an investment in AI juggernaut OpenAI, while Gelsinger’s comments on Taiwan cost Intel its discounted chipmaking deal with TSMC.

Intel’s revenue shrank to $54 billion (roughly Rs. 4,57,240) in 2023, down nearly one-third from the year Gelsinger took over.

Wall Street’s earnings expectations for the company too have fallen sharply, giving the stock an elevated forward price-to-earnings ratio – a benchmark for valuing stocks.

© Thomson Reuters 2024
 

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)