Pat Gelsinger, the CEO of Intel, announced his resignation on December 1, 2024, leaving the company at a critical juncture in its bid to regain dominance in the semiconductor industry. Gelsinger, who took the reins in 2021, had been leading an ambitious plan to reclaim Intel’s leadership in chip manufacturing—an endeavor now left unfinished.
The announcement came just days after U.S. officials awarded Intel $7.86 billion in subsidies to support its turnaround efforts. With the tech giant’s future uncertain, the resignation once again highlights the high stakes Intel faces as it navigates a rapidly changing and competitive landscape.
The news marks the end of a turbulent chapter for Intel, which had been under Gelsinger’s leadership as he sought to reverse its declining market position. While the temporary appointment of David Zinsner and Michelle Johnston Holthaus as co-CEOs has brought some stability, the company faces a daunting search for a permanent leader at a time when its core business is at a crossroads.
Intel’s troubles have not emerged overnight. Despite Gelsinger’s ambitious vision to transform Intel into a key player in contract chip manufacturing—a business model known as the “foundry” model—results have been lackluster.
The company’s attempt to diversify into the foundry business has yet to produce the volume of contracts needed to ensure profitability.
While Intel has managed to secure some clients, including Microsoft and Amazon, these partnerships have not been enough to fill the gap left by declining PC sales and a sluggish transition into AI chip production.
“Intel’s failure to field an effective AI chip competitor to Nvidia, especially as Nvidia surged in value, has been a significant blow to investor confidence,” said Hans Mosesmann, an analyst at Rosenblatt Securities.
Nvidia’s dominance in the AI sector—fueled by the booming demand for powerful chips in artificial intelligence applications like ChatGPT—has placed immense pressure on Intel, once the king of the chip industry.
A Costly turnaround strategy
Gelsinger’s four-year turnaround plan, announced in July 2021, involved a massive $20 billion investment in new manufacturing plants in Ohio and an aggressive hiring spree.
However, this spending spree coincided with a global slowdown in demand for laptops and PCs, exacerbating Intel’s financial challenges. The company’s gross margins have taken a hit, and layoffs and restructuring have followed as Intel struggles to adapt to a post-pandemic market environment. The company’s decision to prioritize new manufacturing capacity at a time when its core markets were shrinking has raised questions about the strategy’s long-term viability.
The timing of Gelsinger’s resignation, just days after the company received $7.86 billion in U.S. subsidies under the CHIPS Act, adds an additional layer of complexity. These funds were granted to support domestic semiconductor manufacturing, a critical issue for national security and economic competitiveness. Intel’s ability to meet the expectations tied to these funds will be an ongoing challenge for the incoming leadership team.
Internally, Gelsinger’s strategy had begun to generate tension within Intel’s board of directors. Lip-Bu Tan, a board member with a background in turning around struggling firms, departed following disagreements over the company’s direction. These internal rifts reflect the broader anxiety within Intel about the pace of its recovery and the effectiveness of Gelsinger’s plans.
Intel’s shift toward becoming a “foundry”—a model in which companies manufacture chips for others—was a bold move, but analysts like Mosesmann argue that it lacked the innovation and execution needed to compete with Nvidia’s industry-leading chips. The lack of compelling products in AI and other high-growth areas has made it difficult for Intel to regain its once-dominant position in the semiconductor market.
Looking ahead, the future of Intel remains uncertain. The company’s leadership transition is occurring at a time when the semiconductor industry is undergoing rapid change. New players like Nvidia, which has grown into one of the world’s most valuable companies, are capitalizing on the AI boom, while Intel’s legacy in traditional computing and data center chips continues to erode.
As the board initiates a search for a permanent CEO, the company faces a pivotal moment. Will Intel be able to regain its technological edge, or will it be relegated to a supporting role in the shadow of more agile competitors? The success of Intel’s next CEO will depend not only on restoring investor confidence but also on whether the company can make meaningful progress in the high-stakes battle for dominance in the AI-driven chip market.
In the meantime, analysts will be watching closely to see whether Intel’s interim leadership can stabilize the company and keep the focus on its manufacturing goals. For Gelsinger, who first joined Intel in 1979 and later led VMware, his departure marks the end of a chapter in the company’s storied history. But it also signals the beginning of an uncertain new era for one of the world’s most recognized tech giants.
