Pat Gelsinger left Intel Corp. more than a decade ago, when it was clear that he would not become CEO after 30 years with the company. On Wednesday, he finally landed his dream job, but faces a big task to bring the chip giant back to the company. glory days he was a part of.
Gelsinger leaves his position as CEO of VMWare Inc. VMW, -6.60% to take over from his former employer at perhaps the most critical juncture in Intel INTC’s long and storied history. Its once industry leading manufacturing has lagged behind, an activist investor demands change, and is the subject of numerous shareholder lawsuits. More from Therese: How did Intel lose its Silicon Valley crown? Gelsinger began his career at Intel at age 18, and during his 30-year tenure, he said in a note to employees, “he was honored to be mentored at the feet of” Intel co-founders Bob Noyce, Gordon Moore and Andy. Grove. He eventually became the company’s first CTO in 2000 and held other executive positions, only to leave in 2009 to go to EMC Corp., now part of Dell Technologies Inc. DELL, -7.51% “It’s the highest return on a prodigal son since Steve Jobs returned to Apple AAPL, + 1.73%, “Nathan Brookwood, analyst at Insight64, told MarketWatch. He was also the architect of the company’s 80486 processor, also known as the 486, for PCs. He has engineering credentials and, most recently, experience as a leader of an enterprise software company in the cloud computing market. That market, more than Gelsinger’s PC market of past, is Intel’s fastest growing area right now, and where its next big battles will start, as graphics chip maker Nvidia Corp. NVDA, + 0.55% has left. clear with your purchase plans. from processor designer, ARM Holdings of Softbank Group Corp. 9984, + 2.82%. “He’s a ‘perfect storm’ CEO of Intel,” Robert Enderle, principal analyst at Enderle Group, told MarketWatch. “He has sufficient knowledge of Intel and what makes it successful and what Intel needs right now, due to his EMC / VMware experience.” As Intel has lagged behind in its manufacturing process technology, the company has been debating whether or not to outsource some of its manufacturing to the leading contract manufacturer, Taiwan Semiconductor Manufacturing Corp. TSM, -2.43%. Change is expected to be slow, but overall, Gelsinger is seen as having strong hopes of returning the company to its leadership position. “We couldn’t think of a better candidate to be the CEO of Intel,” Raymond James analyst Chris Caso said in a note to clients. That sentiment was widespread, driving a rise of nearly 8% for Intel shares on Wednesday. When Gelsinger left Intel in 2009 for EMC Corp., Intel had made a succession of executive changes as part of its well-planned CEO succession moves, and analysts said at the time that it was clear that Gelsinger was not in the running to eventually. be appointed CEO. Brian Krzanich was appointed CEO in 2013, but his tenure, however, was far from stellar, and it was under his reins that the company began to experience significant manufacturing delays. He left amid a storm of controversy over a past relationship with another Intel employee, and was eventually replaced by then-CFO Bob Swan. Starting in 2019: By electing Bob Swan, Intel has put the grain counters in charge of Silicon Valley’s most famous technology company. At the time, the Gelsinger name emerged as the perfect candidate to return to Intel, having Been out of the company for a while, one that would. they also combine insider knowledge from the past, but said he was not interested in the job then. Gelsinger now comes at the right time. Intel needed Swan to clean up the mess Krzanich created, and now it needs Gelsinger to set a new path. “[Krzanich] broke so many things, Intel went from having a two-year technology edge to three years behind, ”Enderle said. He said the situation is similar to the one the United States is going through right now, in the transition to President-elect Biden, a former vice president and senator “who understands how the country works.” “Gelsinger is like a top-tier racing driver, and Bob Swan was like the mechanic,” he said. “They needed Swan to fix the pipes, to get the company back up and running and a senior driver to fix the rest.” See also: Biden inherits a tech Cold War with China after Trump escalated the battle. He added that Krzanich also killed Intel. Developer Forum, (IDF), a developer conference created by Gelsinger in his time there that was valuable both in gaining insight and building a relationship with industry developers, a concept that Nvidia has used to build support around its CUDA platform. When he was at Intel, Gelsinger was often called “the boy wonder”, due to his rise through the ranks at a young age, where he impressed former Intel CEO, tough and famously paranoid, Andy Grove. Gelsinger’s ties to Grove and sincere appreciation for his leadership should help improve morale at Intel, which has struggled with Swan, its first CEO who did not come from the Intel family. Now the big question is what Gelsinger will do with Intel’s manufacturing situation. Having been an old-school Intel executive, Gelsinger is likely to lean toward expanding his current hybrid approach, keeping most of Intel’s manufacturing in-house, but perhaps outsourcing more. But he will also have new ideas for changes, having been away from the giant for so many years. Caso put it bluntly. “Gelsinger will not bring a magic bullet to work with him on February 15,” he wrote. “We consider Intel to be on a ‘fiery platform’, analogous to Nokia’s position a decade ago. If Intel decides to outsource entirely, they will never own the transistor dominance again, making it difficult to maintain their dominant stake and margin structure. Read: Regulating Big Tech will be tough, and California is proving it Brookwood of Insight64 said another of Gelsginer’s important tasks will be to stop the company’s engineering talent drain. “If Gelsinger can stop the loss of tech talent and restore people’s confidence that Intel can once again be a technology leader, I think that’s all for the better,” he said. No matter what Gelsinger does, he likely has more support from Intel’s board and employees than Swan. “Coming ‘home’ to Intel in the role of CEO during such a critical time for innovation as we see the digitization of everything accelerate will be the greatest honor of my career,” Gelsinger said in his email. With his long history at Intel and his engineering credentials, employees will know that Gelsinger means it. After his own previous love-hate relationship with the chip giant, Gelsinger appears to be the leader who can get Intel out of the mess it currently resides in.