Intel's Bob Swan to be replaced by VMware CEO Pat Gelsinger in shift that's delighted markets.
Gelsinger is a former Intel CTO, returning to the fold.
After just seven CEOs in 50 years, Intel is now getting its third in less than three, with the troubled chip giant hiring VMware executive Pat Gelsinger to replace Bob Swan -- effective February 15.
Swan was appointed CEO in January 2019 after a seven-month hunt for a new chief executive -- after outgoing CEO Brian Krzanich was ousted for a consensual relationship with an employee.
Long-term Intel CFO Swan's hiring disappointed markets. Gelsinger's has elated it, with Intel shares soaring on the news.
Gelsinger will face some immediate challenges, including decisions on how much production to outsource to third-party fabs like TSMC's or Samsung Electronics, and a resurgent rival in AMD.
Despite consistently robust earnings, Intel has struggled to make headware with its 7nm nodes, with Swan telling frustrated and increasingly vocal investors in July 2020 that the company had identified "a defect mode in our 7-nanometer process that resulted in yield degradation”.
(Frustration was evident on that call, which The Stack's team listened in on: “Wait a minute!” Bernstein Research’s Stacy Rasgon interrupted Intel’s CFO George Davis at one point, unsatisfied with the answer to his question, with an exasperated Deutsche Bank’s Ross Seymore adding: “Investors are frustrated with how long this execution on manufacturing has happened” ).
Last month it emerged that activist hedge fund Third Point LLC was pushing Intel to review its strategic approach. The fund's Daniel Loeb reportedly wrote to Intel Chairman Omar Ishrak calling for immediate action. The NYC-based fund has amassed a nearly $1 billion stake in Intel, according to Reuters, which first reported that letter.
New Intel CEO Gelsinger faces a number of strategic challenges
"Today’s announcement is unrelated to Intel’s 2020 financial performance" Intel drove home in a statement today: "Intel expects its fourth-quarter 2020 revenue and EPS to exceed its prior guidance provided on Oct. 22, 2020. In addition, the company has made strong progress on its 7nm process technology and plans on providing an update when it reports its full fourth-quarter and full-year 2020 results on January 21".
Omar Ishrak, independent chairman of the Intel board. “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. The board is confident that Pat, together with the rest of the leadership team, will ensure strong execution of Intel’s strategy to build on its product leadership and take advantage of the significant opportunities ahead as it continues to transform from a CPU to a multi-architecture XPU company."
The new Intel CEO Pat Gelsinger is himself a 30-year veteran of the chip giant. He has served as the CEO of VMware since 2012, where he almost tripling the company’s annual revenues. He was earlier Intel's first chief technology officer and the architect of the original 80486 processor.
