Pat Gelsinger Out at Intel
CNBC (MacRumors, Hacker News):
Intel ousted CEO Pat Gelsinger over the weekend, capping a tumultuous nearly four-year tenure at what was America’s leading semiconductor company before its stock price and market share collapsed.
The company announced Gelsinger’s resignation Monday morning, which a person familiar with the matter said came after a contentious board meeting last week over Gelsinger’s perceived failure to respond to Nvidia’s competitive edge and a lack of confidence in Gelsinger’s turnaround plans.
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Gelsinger set out an audacious plan when he arrived in 2021 to transform the languishing company into a chipmaking juggernaut. He sought to achieve parity with the two leading chipmakers, Samsung and Taiwan Semiconductor Manufacturing Co. He pursued big buildouts in the U.S. and around the world, a costly endeavor that weighed heavily on Intel’s free cash flow and increased the company’s debt load.
He also wooed government investment, positioning Intel as the single-largest beneficiary of the U.S. CHIPS and Science Act. Government money has begun to flow to Intel in recent weeks and will aid the company’s chip fabs in Arizona and Ohio.
Pat Gelsinger’s abrupt exit from Intel raises more questions than it answers, especially given the timing right after securing CHIPS Act funding. It feels like a classic case of boardroom drama, where the lack of a smooth transition hints at deeper issues—-perhaps a clash of visions or a failure to deliver on ambitious projects.
It seems likely that the board has cold feet about the foundry business, and a split may be forthcoming.
I’m concerned to see Pat Gelsinger ousted as Intel CEO. He wasn’t a firebrand visionary, and it wasn’t exactly going great, but he was deeply technical, and I don’t expect his replacement to equal him there. “Business harder” isn’t going to return Intel to greatness, only technical achievement will.
Previously:
- Intel Foundry
- Gordon Moore, RIP
- AMD vs. Intel
- Key M1 Mac Engineer Departs Apple for Intel
- Intel’s M1 Benchmarks
- Intel Problems
- Intel’s Disruption Is Now Complete
- Skylake QA Drove Apple Away
- Andy Grove, RIP
Update (2024-12-04): Charlie Demerjian (Hacker News):
Our views that Gelsinger did turn the ship are unchanged. Intel had a cultural problem, not a technical one and the one thing Pat did was change the culture for the better. There are green shoots of this popping up here and there if you know where to look with more coming every day. As we described yesterday, the problem is that technical changes happen over a three year timescale, finance looks at one year or less.
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Why was this mess allowed to not only fester but continue and grow? Because the internal incentive structure was so broken that it encouraged employees to lie for profit. Worse yet lies went unpunished. SemiAccurate has many emails, texts, and had conversations about meetings where this happened.
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As SemiAccurate keeps saying, Intel had a cultural problem, not a technical one. The technical problems were a symptom of the underlying culture and could not be fixed without a cultural sea change. Pat did that, or at least did most of it, and it was working. Sure he made some serious missteps and at times cheesed off many folk in the financial world, but he did the right things to fix the company. And he was just fired for it. I don’t have words that can express my disdain for the Intel board that will pass muster in a family publication such as SemiAccurate.
Gelsinger was a lifer who joined the company at age 18 and spent 30 years on the job, from 1979 to 2009, before returning to lead the company in 2021. Even some people who’ve left Intel as a result of Gelsinger’s layoffs tell me they believed he was the right person for the job. They believed in his strategy to regain silicon leadership, they liked that he was an engineer himself, and they liked that he was there to fix long-standing technology problems left (or ignored) by previous CEOs.
Remember the 486, Intel’s 1989 flagship CPU that was the first x86 chip with over a million transistors? Gelsinger was the lead architect. Later, he became Intel’s first CTO, helping push industry standard technologies like USB and Wi-Fi as well as Intel chip design.
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Over a decade ago, Intel spent billions investing in Dutch multinational ASML, which is today the most important company in chips. It’s the only firm in the world that manufactures machines capable of pulverizing a ball of tin, using high-power lasers, such that it emits an extremely tight wavelength of ultraviolet light to efficiently carve circuits into silicon wafers, a process known as EUV.
Intel initially believed in the tech, even carving out a $4.1 billion stake in the company, then decided not to order the pricey machines. But Taiwan’s TSMC did — and went on to become the undisputed leader in silicon manufacturing[…]
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His hunch: Intel’s board may want to split off its foundry business entirely, above and beyond the spinoff that Gelsinger already announced, turning Intel into a company that simply designs chips like its direct rivals.
How did Intel get here? Some of the cultural problems may be deep in the DNA. Bryan and Adam have some ideas for what happens next, and who might be the next CEO.
They are anti-Gelsinger.
Update (2024-12-06): See also Gelsinger’s oral history with the Computer History Museum (parts 1 and 2) and the Acquired and Sharp Tech podcasts.
Update (2024-12-09): Alex Heath (via Hacker News):
I wanted to hear what [Rene] Haas thought should happen to his longtime frenemy. There were reports that he approached Intel about buying a big chunk of the company before Gelsinger was ousted. At the same time, Arm is also rumored to be eyeing an expansion into building its own chips and not just licensing its designs.
Haas and I touched on all that and more in an exclusive interview earlier today, which will air in full on a future episode of Decoder.
Doug O’Laughlin (via Hacker News):
Pat wanted to pursue the big, bold IFS bet, with 100s of thousands of wafers, when the reality is just getting 10s of thousands of wafers is a massive problem as is. Pat has a bit of an optimistic naivety that comes into play, and I am sure it was likely frustrating. But the reality is he’s the single best candidate for the company.
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This begs the question—what the hell was the board doing? Today, I will talk about Pat Gelsinger, the Intel board, and an example of when boards and short-termism fail. Yes, maybe splitting up the company would result in a better result for shareholders, but it would be much worse for America.
I would liken firing Pat in the final hour of 18A to quitting the final round of chemotherapy in cancer treatment. Instead of seeing the long and painful process through, I think the board will let Intel die and be sold for parts. It’s the correct answer to maximize relatively short-term shareholder value, but it's a nearsighted move that the Intel board specializes in.
Bryan Cantrill (Mastodon, Hacker News):
The host CPU discussion ended up confirming our beliefs (befitting our writing-intensive culture at Oxide we wrote up our findings in RFD 12 Host CPU Evaluation), and the NIC discussion similarly was a dead end. The switching silicon discussion, however, was interesting: Tofino was TSMC-fabbed (the only Intel part at the time fabbed outside of Intel) and we found the programmable nature of it via P4 to be really compelling.
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"Go PC" was an embodiment of the arrogance that I feared came from the top; how could anyone think that Intel’s biggest problem in 2021 was competing against… the Mac?!
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Skepticism of Gelsinger’s plan for Intel aside, we at Oxide anxiously watched Tofino. At Intel, the team itself believed it was safe under Gelsinger, and things did indeed seem okay for a while. Fast-forward two years to 2023, and we got an urgent request for a call from the executive leading the Tofino effort. Fearing the worst, we were honestly somewhat relieved to learn that Tofino hadn’t been killed outright — but all future development of the part had been cancelled.
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In the end, for all of the decisions that we made at Oxide — out of all of the companies and parts that we bet on, out of all the partners that we had sent RFD 68 Partnership as Shared Values to — only one had walked away from us, and it was the largest and best capitalized partner, who had repeatedly told us that they would not do exactly what they in fact did. How can Intel ever expected to be trusted when they treat partners this way?
See also: ksec and Ben Thompson.
5 Comments RSS · Twitter · Mastodon
Some "financial" person called Frank Yeary, whose experience is managing money, engineered the ouster because he says he wants to simplify Intel, and fire a whole bunch of people.
But many of the engineers are surprised and unhappy. Not a good sign.
Apparently Gelsinger had "weekly videos in which he explained his decisions - not based on a financial assessment, but with a technical justification that was understandable to many." Apparently this was a great improvement over the previous "feeling of working for a financial company" returning to being "a tech company". With a finance guy running it again, it will probably switch back.
As an engineer... I'm not too pleased about this. They need to make it the sort of place someone like Jim Keller would like to work for.
@OUG to add a couple of details, Frank Geary is the chairman of Intel’s board and works as the manager of an investment company at the same time. Sounds like they fired the wrong guy :(
It took Lisa Su, probably the most effective CEO of any major company at the moment, a full decade to turn around AMD. Firing Gelsinger after four years is just dumb. I have no idea if he made the right choices (I think not, but then again, I'm not the CEO of anything, so what do I know), but firing him now seems just insane.
@Plume exactly! And it’s a manufacturing company as well! If anything we will start seeing the effects of his work soon. Also firing him without a replacement is such a bad idea. Nothing screams “we didn’t think this through” as 2 iterim CEOs. It wouldn’t inspire any confidence if I was an investor.
