Intel CPU Development 'Living Witness' Gelsinger Appointed New CEO
Declares Technology-Centered Management
Stock Price Soars 7%... Competitor AMD Stock Falls
[Asia Economy New York=Correspondent Baek Jong-min] The world's largest semiconductor company, Intel, has abruptly replaced its Chief Executive Officer (CEO). Intel, the world's number one semiconductor company, recently engulfed in a crisis due to shrinking market share, is aiming for a resurgence by replacing its CEO from a financial expert to a technical expert in this disciplinary personnel change. Following the CEO replacement news, Intel's stock price surged.
According to the Wall Street Journal (WSJ) on the 13th (local time), Intel announced that it dismissed CEO Bob Swan and appointed Pat Gelsinger, CEO of VMware, as the new CEO. This occurred after the activist investment fund Third Point purchased shares and demanded changes at Intel.
CEO Swan joined Intel in 2016 as Chief Financial Officer (CFO), served as interim CEO, and had been CEO since 2019. Since then, Intel has struggled after failing to introduce the 7-nanometer process for manufacturing CPUs for PCs. Intel has lagged behind its traditional competitor AMD and has been struggling against Nvidia, which expanded its domain into cloud computing and autonomous driving. Intel's crisis deepened further when Apple, a customer of Intel's laptop CPUs, announced it would use its own developed chips in its computers.
Recently, the activist hedge fund Third Point emerged as a major shareholder of Intel and sent a letter calling for management changes, including selling some businesses or outsourcing design and manufacturing to Samsung Electronics or Taiwan's TSMC, causing a stir.
Omar Ishrak, Chairman of Intel's Board, explained, "The Intel board judged that it was the right time to replace the CEO to leverage Gelsinger's expertise in technology and manufacturing." Daniel Loeb, Chairman of Third Point, also welcomed the change, saying, "Replacing CEO Swan is a welcome move for Intel shareholders."
New CEO Gelsinger was Intel's Chief Technology Officer (CTO) during its heyday in the mid-2000s. Before moving to data specialist EMC in 2009, he served as CTO and introduced the Core 2 Duo CPU, leading Intel's golden era. Intel's CPUs such as the 286, 386, 486, and Pentium were developed under his leadership. Concerns about Intel's weakening technological capabilities arose after Gelsinger's departure. This contrasted with competitor AMD's progress after appointing technology expert Lisa Su as CEO.
This CEO replacement is particularly notable as it comes at a time when Intel is expected to sign semiconductor foundry contracts with Samsung Electronics and Taiwan's TSMC. Bloomberg reported that Intel is considering outsourcing CPU production starting in 2023 to TSMC or Samsung Electronics. It is anticipated that the decision on outsourcing will be announced during the fourth-quarter earnings release scheduled for the 21st.
On the same day, Intel forecasted that its fourth-quarter results would exceed the outlook announced in October and expected strong annual sales. It also emphasized progress in developing new CPUs.
The stock market welcomed the news of Intel's CEO replacement. After the news broke, Intel's stock closed at $56.95, up 6.97% from the previous day on the New York Stock Exchange. In contrast, competitor AMD's stock fell 3.74%.
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