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Following a nearly four-year stint as Intel's (INTC +3%) CEO, Pat Gelsinger retired today, sparking modest enthusiasm among investors. Mr. Gelsinger will be replaced by a pair of interim co-CEOs, David Zinsner and Michelle Johnston Holthaus. David Zinsner is the current CFO, and Michelle Holthaus was appointed to the newly formed position of CEO of Intel Products, a new segment comprising INTC's Client Computing Group (CCG), Data Center and AI Group (DCAI), and Network and Edge Group (NEX). The segment not included in this new division is Foundry, INTC's chip manufacturing arm, which the company plans to turn into an independent subsidiary. INTC announced that Foundry's leadership structure would not change.

Mr. Gelsinger was tapped to lead Intel halfway through January 2021, replacing former CEO Bob Swan, who was ousted in just two years due to struggling growth and INTC shares significantly underperforming the broader market. With Mr. Gelsinger's retirement, INTC is now on its third CEO in less than six years once it formally names a permanent replacement.

• The constant shakeup at the top reflects a company battling ongoing setbacks. In 2021, the Board was fed up with ongoing delays in manufacturing next-gen chips. In 2024, the story revolves around AI and how the U.S.-based chip maker was caught flat-footed last year after NVIDIA (NVDA) showcased the powerful demand for AI chips. INTC's primary rival, Advanced Micro (AMD), quickly re-tooled its chips to capitalize on surging AI-related spending from hyperscalers, leaving INTC in the dust as it plays catch-up.
• INTC is undergoing a substantial restructuring. In Q2 (Jun), the company announced it would suspend its dividend and reduce its headcount by 15%. While few gains have been realized by the $10 bln cost reduction plan as INTC wrote down equipment and recognized restructuring charges, the company noted last month that it has made meaningful progress on its ongoing cost-savings plan.
• M&A activity has picked up over the past few months. While Qualcomm's (QCOM) initial interest in taking over the company has reportedly lessened, Lattice Semiconductor (LSCC) has reportedly discussed tossing out a bid for INTC's Altera division, which manufactures telecom chips. Private equity firms have also expressed interest in acquiring Altera. At a time when INTC's financials are shaky, any injection of cash from a sale of assets would likely provide investors with a confidence boost.

The yet-to-be-determined incoming CEO will be taking on a massive turnaround effort. INTC's future remains highly uncertain as it separates its Foundry segment, deals with possible takeover interest, manages M&A offers, and tries to remain competitive in a rapidly evolving AI landscape. However, despite all the setbacks, a new CEO with the proper vision of what path INTC must take to reenergize growth may be the key to unlocking the company's full potential. In the meantime, competitors are not slowing down their AI-related R&D, making it critical that INTC moves relatively quickly in naming a CEO.