Intel bounces as CEO leaves
After a roughly $150 billion decline in value, the market cheers his exit.
Shares of Intel are up after chief executive Patrick Gelsinger’s retirement was announced, ending a nearly four-year run as top executive in which he conclusively turned around a decades-long decline at the once iconic US semiconductor maker.
A longtime Intel veteran — he began at the company in 1979, stayed for 40 years, and was Intel’s first chief technology officer before serving as CEO — Gelsinger’s strategic vision focused on doubling down on Intel’s traditional strength of manufacturing chips, a stark difference from other chip companies like Nvidia, which focuses on design and outsources production to chipmakers like Taiwan Semiconductor.
In the aftermath of the pandemic’s supply-chain disruptions, and the precarious position of Taiwan vis-à-vis China, Intel’s production focus seemed like a good bet. The company was one of the main beneficiaries of the Biden administration’s Chips Act, which resulted in more than $10 billion in grants, as well as $11 billion in loans and the expectation that it would claim billions more in tax breaks over the coming years, according to The New York Times.
But the company continues to bleed money. Last month it posted the biggest loss in its history, nearly $17 billion. And that followed the previous quarter’s numbers, which resulted in the worst day for the stock since 1974.
Importantly, the company also announced a 15% reduction in its workforce — not a great look when the US taxpayer is on the hook to pump billions into the company, and a potential killer when it comes to attracting top talent in the red-hot chip industry at the moment.
