Intel Corporation (NASDAQ: INTC) Faces Challenges After CEO Resignation

Intel Corporation could achieve short-term gains by exiting its foundry business, according to Citi analysts. However, the resignation of CEO Pat Gelsinger poses long-term risks for the company’s value.

Citi analysts believe it would be beneficial for Intel shareholders if the company stops its attempts to be a merchant foundry and sells the unit, as Gelsinger was a key supporter of this struggling division.

On Monday, Intel announced that Gelsinger will resign, with David Zinsner and Michelle Holthaus serving as interim co-CEOs. Following the news, Intel’s shares, which have halved in value in 2024, experienced a slight decline.

Intel has struggled compared to competitors like TSMC and NVIDIA in the development of advanced silicon, particularly as interest in artificial intelligence has surged. The firm failed to take advantage of the increasing demand for AI-related chips.

Gelsinger's resignation comes almost four years into his tenure, reflecting the board's declining confidence in his turnaround strategy. Recently, he proposed spinning off the foundry business, which has been losing money. However, a government subsidy of $7.86 billion restricts Intel from selling a significant stake in its foundry.

Citi analysts believe that Intel has limited chances of succeeding in the foundry market and that divesting the unit could lead to improved margins. The firm currently maintains a Neutral rating on Intel’s stock with a price target of $22.00.