'Bitter Exit' Pat Gelsinger... Where Is Intel Heading? [AK Radio]

Sudden Resignation During Thanksgiving Holiday
Board Chairman Decides Amid Poor Performance
Large-Scale Foundry Investment Backfires Due to Lack of Design Technology Improvement
Possible Exclusion of Pro-Biden Semiconductor Policy Supporters Ahead of Trump Inauguration

Pat Gelsinger, CEO of Intel, the world's largest semiconductor company, abruptly resigned immediately after Thanksgiving. Gelsinger stepped down after three years since returning as CEO in 2021. Notably, this resignation announcement came right after the Thanksgiving holiday, the biggest shopping season in the United States, delivering a significant shock to the industry. Experts analyze that this resignation resulted from a combination of Intel's poor performance, failed investment strategies, and the political background ahead of the U.S. administration change.

Gelsinger hails from a small town in Pennsylvania and, despite his background as a community college graduate, established himself as a technical expert at Intel by designing the 386, 486, and Pentium CPUs. His hometown is known for its Amish community, a region famous for maintaining traditional lifestyles without cars or electricity. The fact that Gelsinger, with such a background, became the head of a global technology company was regarded by many as a symbol of the "American Dream."

Moreover, the fact that his hometown is in Pennsylvania, the same state as President Joe Biden's hometown, and that he is a community college graduate, positively influenced his relationship with the Biden administration. Especially, Jill Biden, the First Lady, being a community college professor, further strengthened their ties.

However, the foundry (semiconductor contract manufacturing) business expansion strategy pursued after his return as CEO in 2021 failed to deliver the expected results. Intel delayed investing in EUV equipment for about ten years, which significantly widened the technological gap with TSMC and Samsung Electronics. This was a major mistake based on Intel's judgment that its own technology was sufficient. Although Intel invested in the development of ASML's EUV equipment, it postponed purchasing the equipment itself, while competitors actively adopted this equipment to secure technological superiority, leaving Intel behind.

Gelsinger made large-scale investments to make up for this, but failed to close the technology gap. In particular, despite receiving subsidies through the U.S. government's CHIPS Act and making massive investments, tangible results were not achieved. The government subsidy, initially planned at $8.5 billion, was also cut down to $7.9 billion, causing difficulties.

Intel recently showed poor performance in its earnings report, causing its stock price to plummet. The stock price dropped by 50% compared to the previous year, and in October, it fell by 30% in just one day following the announcement of poor results. Consequently, Intel carried out large-scale restructuring, which conflicted with employment creation promises tied to the U.S. government's semiconductor subsidy support.

Recently, Intel's market position has been further squeezed as Elon Musk's AI company xAI purchased large quantities of NVIDIA GPUs. Gelsinger conveyed a hopeful message on his social media, stating that xAI uses Intel's server chips, but this turned out to be his final message.

Industry experts point out that Gelsinger's excessive focus on the unfamiliar foundry business rather than his expertise in CPU design was the cause of failure. Even CPUs outsourced to TSMC recently have not received favorable consumer reviews, with technical flaws such as overheating being highlighted. Especially in the gaming PC market, AMD's processors are overwhelmingly outperforming Intel.

This situation exemplifies Intel's identity confusion. Intel traditionally succeeded as an IDM (Integrated Device Manufacturer) model, handling both CPU design and manufacturing. However, the new strategy to strengthen the foundry business weakened its core competitiveness.

Additionally, the upcoming U.S. administration change is also analyzed to have influenced Gelsinger's resignation. His close ties with the Biden administration could become a burden under the next administration. Particularly, considering that Intel's board chairman is from Wall Street, it is highly likely that this decision took political risks into account.

Currently, Intel is struggling to select a suitable successor. In the past, Intel was famous for nurturing successors internally under strong leadership like Andy Grove, but recently many talents have moved to competitors such as Apple and Qualcomm, resulting in a shortage of internal candidates. Especially Apple, with its self-designed M-series processors, has achieved great success in the PC market, further threatening Intel's position.

Semiconductor industry insiders point out that Intel's current crisis holds significant implications for Korean semiconductor companies as well. Samsung Electronics is also making large-scale investments in the U.S. to strengthen its foundry business, and balancing this with its existing business has emerged as a critical challenge.

This incident serves as a lesson that even global technology companies can collapse rapidly if they fail to manage core competencies and maintain technological capabilities. In particular, AMD, under CEO Lisa Su's strategic management, has grown its corporate value to more than twice that of Intel. AMD separated its foundry business early and focused on design, a strategy that has been highly successful.

Given that Intel's board chairman is from Wall Street, there is speculation that Intel may undertake extreme restructuring such as corporate splits or sales in the future. The possibility of separating the foundry business is especially being discussed. However, considering Intel's scale and its role in the U.S. semiconductor industry, such changes are expected to be challenging.

Ultimately, Intel's new CEO will face the complex task of considering technological innovation, management efficiency, and political environmental changes. Since this issue goes beyond a single company and is directly linked to the future of the U.S. semiconductor industry, global attention is expected to focus on Intel's future moves.