Intel’s CEO is stepping down as the stalwart American chipmaker struggles to keep up with the artificial intelligence revolution.
The company announced that Pat Gelsinger, who has led Intel since 2021 and spent more than 30 years in various roles at the chipmaker, is leaving the company, effective Sunday.
“While we have made significant progress in regaining competitiveness in manufacturing and building our capabilities to become a world-class foundry, we recognize that we still have much work to do. “We are committed to restoring investor confidence,” said Frank, Chairman of Intel’s Board of Directors. Yeary said in a news release.
Intel, once the standard-bearer for U.S. computer chip manufacturing, has struggled in recent years to keep up with the shift to AI computing. Intel, which had largely missed the smartphone boom of the 2010s, couldn’t afford to make another mistake by not anticipating the next major technology trend.
But that largely misses the point, and the consequences have been disastrous.
As the AI boom began to take off in 2022, the big tech giants began leveraging rival chipmaker Nvidia to handle many of their AI computer processing needs.
That’s because Nvidia’s graphics processing unit (GPU) chips can better handle the intense computing power needs of AI processes. Nvidia’s GPUs can perform calculations more efficiently thanks to their “parallel processing power,” but regular computer processing units (CPUs, the kind of chips that Intel has long specialized in) write files to files. It is more suitable for simple computing tasks such as disk.
As a result, demand for Nvidia’s chips has proven to be virtually insatiable.
Intel stock has fallen 61% since Gelsinger took over, while Nvidia stock has soared more than 820% in the same period.
During this time, the S&P 500 index rose 54%.
Nvidia’s valuation is now over $3 trillion, while Intel’s market cap is about $100 billion, about 1/30th of Nvidia’s.
In Intel’s latest earnings report, Gelsinger said the company was in the midst of its most significant restructuring since its founding in 1968 and launched a campaign to turn around the company.
The Biden administration has sought to support Intel through CHIPS Act funding, but announced last month it would cut its planned investment by $600 million compared to the amount announced in March. Some of that was due to Intel’s announcement of a $3 billion Pentagon contract, but the Commerce Department noted that schedules for some projects have been extended beyond a 2030 government deadline.
