Intel's CEO Pat Gelsinger's Troubled Tenure

By Max A. Cherney, Jeffrey Dastin, Dawn Chmielewski, Fanny Potkin, Stephen Nellis

Published by Reuters

Pat Gelsinger assumed the position of CEO at Intel three years ago, aiming to revive the company’s fortunes. However, his strategy faced significant setbacks, including a fallout with Taiwan's TSMC, which had previously offered Intel discounted semiconductor manufacturing.

Missteps with TSMC

Gelsinger’s comments regarding Taiwan's geopolitical instability offended TSMC, leading it to withdraw price discounts that Intel had enjoyed, thus impacting Intel's profitability as costs rose.

In response to inquiries, Intel stated that it maintains a healthy relationship with TSMC, highlighting the importance of their partnership. However, internal sources indicated that Gelsinger’s comments have made it harder for Intel to regain leverage over TSMC.

Manufacturing Challenges

Gelsinger inherited a struggling company unable to keep pace with competitors like AMD and Nvidia, especially in mobile and AI chips. His ambitious goals for Intel’s manufacturing and AI capabilities resulted in unmet expectations and lost contracts, demonstrating the disconnect between public optimism and internal performance.

Despite the challenges, the company has attempted to pursue a foundry model and has invested in revitalizing its manufacturing processes, notably its 18A technology, which is facing delays.

Fall in Revenues and Shares

Intel's revenue plummeted to $54 billion in 2023, down nearly a third since Gelsinger took charge, resulting in expected losses of $3.68 billion. Consequently, there has been speculation of takeover bids due to the declining share price.

US Government Support

Gelsinger’s vision aligns with the Biden Administration's push for domestic semiconductor production, and Intel has received significant funding under the CHIPS and Science Act to bolster U.S. manufacturing efforts.

The Path Forward

Since Gelsinger’s arrival, Intel has attempted to pivot into AI chip production, but faced challenges from Nvidia’s dominance in the GPU market, particularly following the debut of AI applications like ChatGPT. Intel has set ambitious revenue predictions that may not align with the company’s capabilities.

Gelsinger aims to combat setbacks through factory expansions valued at over $60 billion, with public confidence in the potential of their new technologies. His leadership emphasizes an aggressive turnaround plan, despite ongoing struggles. Gelsinger remains adamant about Intel reclaiming its status in semiconductor manufacturing by 2025.

Summary

Gelsinger’s three-year tenure at Intel is marked by strategic missteps, manufacturing challenges, and declining revenues, though he maintains a vision for future recovery and technological leadership.