Intel Corporation (INTC) plummeted 5.01% on Tuesday amid the surprise departure of CEO Pat Gelsinger and mounting concerns over the company's ability to regain its footing in the intensely competitive semiconductor industry.
The decline occurred as Gelsinger, who had led an ambitious turnaround plan since taking the helm in 2021, stepped down following pressure from the board over the plan's sluggish progress. His exit highlights Intel's struggles to keep pace with rivals like Nvidia and AMD in the burgeoning artificial intelligence (AI) and advanced chip markets.
Under Gelsinger's leadership, Intel doubled down on its costly foundry business, seeking to become a major contract chipmaker. However, this endeavor failed to gain significant traction, accumulating losses of over $11 billion through the first three quarters of 2024. Meanwhile, the company's core CPU business lost substantial market share to competitors offering more advanced and AI-optimized chips.
With Gelsinger's departure and uncertainty surrounding the strategic direction under new leadership, investors grew increasingly concerned about Intel's ability to navigate the rapidly evolving tech landscape. The company's interim co-CEOs, David Zinsner and Michelle Johnston Holthaus, face the daunting task of restoring investor confidence while revamping Intel's operations and product roadmap.
While the board searches for a permanent CEO, industry analysts speculate that Intel may need to reconsider its foundry ambitions and potentially separate its chip design and manufacturing businesses. However, any major restructuring could be complicated by the company's commitment to retain majority ownership of its fabs to secure $7.9 billion in federal subsidies under the CHIPS Act.
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