Intel announced on the 2nd that CEO Pat Gelsinger will retire on December 1st, ending a career of more than 40 years at Intel. After the news was announced, Intel's stock price rose 3.83% in pre-market trading.
Intel immediately appointed David Zinsner and Michelle Johnston Holthaus as interim co-CEOs until a new CEO is selected. Zinsner has more than 25 years of experience in the semiconductor and technology fields, while Holthaus has served Intel for nearly 30 years and is responsible for multiple key business groups.
Gelsinger joined Intel in 1979 and returned as CEO in 2021, leading Intel to carry out multiple technological innovations. Gelsinger said that leading Intel has been the honor of his life and thanked his colleagues around the world for their support and efforts.
During the transition period, Zinsner and Holthaus will focus on strengthening the company's process and product leadership, promoting the improvement of foundry capabilities, and ensuring efficient and flexible operations.
Market value, stock price, revenue, and net profit have all declined. Intel's situation is not good, and market confidence has been significantly lost.
Intel, a leading company that once led global technological innovation and promoted changes in the semiconductor industry, has seen its market value evaporate by more than half since the beginning of 2024 since Gelsinger returned to Intel as CEO in 2021.
After the announcement of Intel's second quarter financial report in 2024, Intel's stock price plummeted 26% in a single day, and its market value fell below US$100 billion, the lowest level since 2013.
Not only the stock price, Intel's revenue also continued to decline. Revenue in the second quarter of 2024 was only US$12.83 billion, down 0.9% from the same quarter in 2023, and net profit margin also fell to 38.7% from 39.8% last year. Converted in accordance with U.S. GAAP, Intel's second-quarter net profit plummeted 85%, causing investors' confidence in Intel's future to plummet.
A CEO who was once highly anticipated, his revitalization strategy has been questioned by the outside world
Since Gelsinger took office, he has vigorously promoted the "IDM 2.0" strategy in an attempt to revitalize Intel's manufacturing business and enter the third-party foundry market. Although Gelsinger's return is highly anticipated by the outside world, in fact Intel's technological innovation speed has failed to keep up with the rapidly changing market needs.
In order to reduce its dependence on TSMC's foundry, Intel plans to increase the proportion of its own wafer manufacturing in 2026, but the transformation process is accompanied by high costs and risks. According to reports, Intel is accelerating mass production preparations for Intel 4 and Intel 3 technologies and plans to launch the updated Intel 18A process in 2025.
However, Intel's wafer foundry business has been losing money for consecutive years, with losses as high as US$2.8 billion in the second quarter of 2024, and is expected to continue to lose money in the short term.
Faced with severe financial pressure, Gelsinger launched a "cost reduction plan" with the goal of saving more than $10 billion by 2025.
Increase revenue and reduce expenditure: Intel expects to significantly lay off 15,000 employees
In order to reduce costs, Intel plans to cut capital expenditures by more than 20% to US$25 billion to US$27 billion in 2024, and further reduce them to US$20 billion to US$23 billion in 2025.
In addition, from 2023 to 2025, it is expected to lay off approximately 15,000 employees, accounting for approximately 10% of the company's global workforce, to further reduce operating expenses.
Cash flow pressure is high, Intel announces "suspension of dividends"
To further ease cash flow pressure, Intel will "suspend dividends." Since 1992, Intel has been paying stable dividends to shareholders. This suspension of dividends shows that Intel's current financial situation is not optimistic.
In addition to suspending dividends, Intel also plans to reduce the size of its global real estate and is expected to exit or reduce two-thirds of its global real estate investments to improve capital efficiency and concentrate resources on its core business.
Intel started later than others, can it still catch up?
In addition to its financial quagmire, Intel's difficulties in the field of technological innovation cannot be ignored. Although Intel has launched a series of new products in the AI and PC fields, including the next-generation AI PC processor "Lunar Lake" and the AI server chip "Gaudi 3", in these areas, Intel faces NVIDIA and others strong challenge from competitors.
Strong opponents should not be underestimated: NVIDIA and Super Differential occupy the AI and PC fields
NVIDIA's GPU technology leads the field of AI training and inference and has become a standard equipment for cloud computing and AI applications. Although Intel's AI server Gaudi 3 claims to have higher cost performance, whether it can be achieved in the market A breakthrough remains to be seen.
In addition, Intel's original leading position in the CPU field has gradually been eroded by AMD. AMD's Ryzen and EPYC processors have gained market recognition in terms of performance and energy efficiency, further intensifying Intel's pressure in the data center and consumer markets. In response to the challenge from AMD, Intel is actively promoting the development of a new generation of processors, hoping to regain market share through technological advancement.
The challenges facing Intel are more difficult than ever. Whether it is large-scale layoffs under financial pressure or competitive pressure in the field of technological innovation, Intel's road to recovery is full of uncertainty. Although its own wafer manufacturing plan in 2026 may bring about a turnaround, whether Intel can regain its leading position in semiconductors still needs to pass the test of time and the market.
Source: DIGITIMESASIA, Tech.co, Intel
