Intel’s leadership shake-up signals shift as technology industry realigns around AI

The news: The abrupt departure of Intel CEO Pat Gelsinger this week after abysmal earnings reports and disappointing sales raises questions about the company’s four-year turnaround plan and its prospects for the future.

• Reuters reported that Intel’s board determined Gelsinger’s plan to turn the company around was too costly and would take too much time. 
• Intel announced executive vice presidents David Zinsner and Michelle Johnston Holthaus would be interim co-CEOs, indicating that there was no succession plan.

Gelsinger’s ousting is the latest indicator that the tech industry is undergoing a dramatic realignment around AI. Companies like Nvidia and OpenAI have stepped into leadership positions while long-standing PC and server hardware giants like Intel are left to adapt or perish.

So far this year: Faced with the monumental growth of competitors like TSMC and Nvidia, Intel cut 15,000 jobs and slashed its R&D and marketing budgets in August with the hopes of pivoting to AI-capable hardware.

Its shares this year plunged to their lowest level since 2013, while its foundry division reported a $2.8 billion operating loss in October, per Yahoo.

What’s next for Intel? With Gelsinger gone, the company could be open to pursue splitting up or selling off its foundry division or divesting underperforming businesses.

It will likely be in a holding pattern while it deliberates on a new successor, potentially delaying various initiatives, including a bid to offer AI solutions. 

The leadership vacuum might reignite takeover bids, like Qualcomm’s interest to merge with Intel in September. 

• Qualcomm’s value is double that of Intel’s at $188 billion, but Intel has more than 100,000 employees compared with Qualcomm’s 50,000, which could complicate any merger aspirations.
• Apple and Samsung are also potential buyers of Intel, per Tom’s Guide. 

Key takeaway: Intel could continue restructuring while focusing on its profitability through AI PC and server hardware design. The company secured $7.86 billion in funding from the CHIPS Act, but this only adds more pressure to return to profitability.

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