Intel CEO Pat Gelsinger abruptly retires amid chipmaker’s bad year
Intel Chief Executive Officer Pat Gelsinger retired effective Dec. 1, the chipmaker announced the morning of Monday, Dec. 2. The hole filled by Gelsinger’s abrupt exit will be filled by internal interim co-CEOs, current Chief Financial Officer David Zinsner and Intel products CEO MJ Holthaus.
Gelsinger started with Intel in 1979. He was the tech giant’s first-ever chief technology officer in his initial tenure, which spanned 30 years. He took a 12-year hiatus from the chipmaker, during which time he served as president and chief operating officer of Dell EMC and CEO of VMWare. He returned to Intel as CEO in 2021 to help bring it back to prominence as the chip sector expanded.
“Pat helped launch and revitalize process manufacturing by investing in state-of-the-art semiconductor manufacturing, while working tirelessly to drive innovation throughout the company,” Intel Board Chair Frank Yeary said in a statement. “While we have made significant progress in regaining manufacturing competitiveness and building capabilities to be a world-class foundry, we know that we have much more work to do at the company and are committed to restoring investor confidence.”
Yeary will oversee the search for a permanent CEO to replace Gelsinger moving forward.
Gelsinger’s retirement comes a week after Intel finalized a nearly $8 billion CHIPS Act federal grant to fund factories in the U.S. However, that award was cut by more than $600 million after the company failed to meet initial promises and deadlines.
During Gelsinger’s four-year tenure as chief, Intel failed to regain major market share losses. The company also stalled out on significantly impacting artificial intelligence.
Intel’s stock fell nearly 50% since the start of 2024. Its tumultuous year was made worse when it reported a $16.6 billion loss in the third quarter, the largest in Intel’s history. The company has been in a downward spiral for years; its valuation has plummeted by hundreds of billions of dollars since 2000.
“Intel, just like Boeing, spent two generations prioritizing short-term shareholder value and not investing in R&D, and it’s paying the price right now,” leadership expert Gautam Mukunda told Straight Arrow News in August 2024.
“The United States must have a leading-edge fab, right?,” Mukunda said. “It must. It is strategically critical that it have that. At the moment it doesn’t because Intel has not been able to keep up with TSMC, has not come close to being able to keep up with that.”
President Joe Biden announced the award in Arizona in March as he addressed the impact of the CHIPS Act.
“We will enable advanced semiconductor manufacturing to make a comeback here in America after 40 years, it’s going to transform the semiconductor industry and create entirely new ecosystems,” Biden said.
Intel’s award was reduced by more than $600 million after it secured a $3 billion defense contract to make semiconductors for the military, according to the Commerce Department.
But Intel’s recent stumbles could further impact the deal. The once-great chipmaker’s stock has plummeted nearly 50% since the start of the year.
The contentious year was made worse after Intel reported a $16.6 billion loss in the third quarter, the largest in the company’s history. Intel has been trending downward for decades. Its valuation went from $500 billion in 2000 to just over $100 billion today.
The Commerce Department said the company extended its timelines beyond the government’s 2030 deadline. Intel plans to invest $90 billion in the U.S. before the end of the decade after previously promising to spend $100 billion in less time than that. It also reduced the estimated number of jobs it would create in Ohio by 3,500.
The government has finalized deals with six companies to invest more than $19 billion of the $39 billion in CHIPS funding. With less than two months left in Biden’s term, Commerce Secretary Gina Raimondo said more awards will be announced in the coming weeks.
President-elect Donald Trump criticized the legislation while campaigning for office.
“We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here, and they’re not going to give us the good companies anyway,” Trump told podcaster Joe Rogan prior to the election. “All you had to do was charge them tariffs.”
Push for CHIPS Act subsidies ramps up ahead of Trump taking office
The Biden administration is working to completeCHIPS and Science Act agreements with multiple companies like Intel and Samsung. The administration hopes to finish up the initiative before President-elect Donald Trump returns to the White House.
The act, which stands for creating helpful incentives to produce semiconductors, provides incentives for chipmakers to set up manufacturing in the United States.
The chips are an important component for several products including electronics, vehicles, medical devices and defense systems.
Many in the tech industry are worried Trump’s reelection will have an impact on the revitalization of the semiconductor industry. However, some chips experts say Trump likely won’t roll back the act, despite the negative things he’s said about it.
“That chip deal is so bad,” Trump said on an episode of “The Joe Rogan Experience.” “We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here.”
Both Democrats and Republicans supported Biden’s chips efforts in the U.S., so experts in the field say because of that support, it’s likely the policy would remain regardless of Trump being elected.
The Biden administration signed the bipartisan bill in 2022 committing $53 billion to boost U.S. competitiveness with China.
More than 20 companies are still in the process of negotiating, while others have wrapped up the contract process.
Chipmakers say they’re hoping to avoid renegotiating terms with a new administration.
The Trump campaign hasn’t commented on the CHIPS act since the election.
No quick fix for Intel as it weighs investment and buyout offers
Once a semiconductor powerhouse, Intel is falling from grace and now has two firms vying to catch it. San Diego-based Qualcomm is offering to acquire the company, the Wall Street Journal first reported, while asset management firm Apollo Global Management has offered an investment lifeline worth up to $5 billion, Bloomberg reports.
Intel has a market capitalization of around $96 billion as of Monday, Sept. 23. The company has been in the semiconductor game since the ’60s and despite the growing demand in the industry, Intel is falling behind its competitors.
Since the start of the year, Intel’s stock has plunged 53%. At the same time, NVIDIA is up 140%.
That performance may make it seem like Intel is currently at a discount, but analysts say a Qualcomm takeover would face significant regulatory issues, particularly in China.
What exactly is going on at Intel and how does it affect the billions of dollars the government promised the company through the CHIPS Act?
In August, Intel announced a $1.6 billion quarterly loss and plans to cut 15,000 workers. Five months prior, the Biden administration and Intel had announced $8.5 billion in direct funding from the CHIPS Act to support the company’s several semiconductor projects, saying the projects would create 10,000 company jobs, 20,000 construction jobs and 50,000 indirect jobs.
And a week ago, the company confirmed another $3 billion in CHIPS Act funding for military chips.
“Giving money to Intel is pretty much, in my opinion, throwing it down a hole,” said Edward Snyder, managing director of Charter Equity Research.
Straight Arrow News spoke with Snyder over the phone about how Intel fell so far behind rivals TSMC and Samsung.
“All companies that are rich and successful for a very long period of time run the risk of becoming ossified and arrogant, and that certainly happened with Intel,” he said. “And it wasn’t a problem when the industry was doing what it’s always been doing. But then when you get a change in the industry, it requires you to be nimble and aggressive and competitive. Those companies really run into problems.”
It’s a sentiment the company is certainly familiar with. Intel CEO Pat Gelsinger said as much after those disappointing quarterly earnings in August.
“We see quite a number of areas where I’ll just say we’re not a nimble, efficient company,” he said in an interview. “And as we look at it through this clean sheet lens, we’ve looked at every area, our GNA, our sales and marketing, our operational performance, as we look at our design teams, we haven’t been fully leveraging industry best practices and EDA and design practices.”
Gelsinger called the layoffs the most substantial restructuring of Intel in decades. He’s been CEO since 2021. He was chief technology officer during Intel’s heyday in the aughts and left the company in 2009.
“They’re scrambling and desperately trying to change,” Snyder said. “But the culture isn’t built for change. It’s built for, ‘Just keep doing what we’re doing,’ just crush everybody with their market share, so they’re incapable of reacting, [in] my opinion.”
When Gelsinger first took the reins, he told “60 Minutes’” Lesley Stahl they were coming for Taiwan-based TSMC’s market share.
“They’re ahead of you on the manufacturing side,” Stahl said. “Considerably ahead of you.”
“We believe it’s gonna take us a couple of years and we will be caught up,” Gelsinger replied.
A couple of years on, there’s still a marathon to go. TSMC has about 62% of the global foundry market share while Intel’s not on the map.
“Even if they could build it, how long is that going to take?” Snyder said. “And even if you could build it and it took three or four years, ‘Why would I change? I’m at TSMC, right? Everything’s going very well. Why would I go to Intel and risk my product?’”
Boeing: The perfect story of what’s wrong with America’s economy?
Boeing’s bright spot this year was the hiring of its new CEO, an engineer and aerospace chief named Kelly Ortberg, after years of finance men at the helm. But Ortberg’s arrival is clouded by the controversies hanging over Boeing, from hours-long hearings on safety issues to a fraud charge to the first worker strike in 16 years.
Let’s not forget the stranded astronauts at the International Space Station.
Boeing’s troubles started long before two 737 MAX planes crashed in less than five months between 2018 and 2019, killing 346 people. Several experts point to the 1997 merger between McDonnell Douglas and Boeing as the trigger.
Their focus was on making numbers, not making planes.
Gautam Mukunda, leadership expert
What followed was a series of leadership decisions that prioritized profits and quarterly earnings over planes, according to Gautam Mukunda, a leadership expert, Harvard fellow and author of “Indispensable: When Leaders Really Matter.”
“It is a story about a larger pathology in the American corporate sector that just devastated the American economy and turned it from an economy that was focused on making things to an economy that was focused on playing games with spreadsheets,” Mukunda said. “And that story is why Boeing is the perfect example of everything that’s gone wrong.”
There is no alternative but to fix Boeing.
Gautam Mukunda, leadership expert
In the video above, Mukunda delivers a master class on Boeing’s history and leadership decisions that have steered this American company to its current crossroads.
Is Ortberg the right guy to fix Boeing’s problems? Should the company move its headquarters back to the Seattle area? What are Boeing workers saying in private about the culture at Boeing? What companies are most at risk of following Boeing’s path? Mukunda answers these questions and more in this Straight Arrow News interview. Watch the video above.
Semiconductor companies under pressure to release more on safety risks
In a push to build more semiconductors in the United States, the Biden administration invested billions of dollars in new facilities. However, while the semiconductors may be vital to modern life, there are serious concerns over the health risks associated with the creation of these facilities, according to some environmental groups.
Environmentalists and labor unions are demanding more transparency when it comes to the chemicals going into and coming out of these computer chip factories.
In the past, chip factories have contained arsenic, chloroform and lead — chemicals that can destroy land and leak into groundwater. The industry claims that it has made strides since then and is working to limit pollution and change the chemicals used in chip manufacturing.
However, toxicologists argue that the substances involved in manufacturing change so often that it’s hard to determine the long-term effects of the factories on the environment around them before it’s too late. Some of the toxins previously associated with these factories are linked to cancers and miscarriages.
The semiconductor industry hopes to quell any concerns over safety and said that it will ensure hazardous materials on site pose no significant risk to nearby residents or workers.
Assessments from Intel and TSMC, who plan to build computer chip facilities in Arizona and Idaho, said that they will separate forever chemicals from other waste streams and use off-site disposal facilities.
Watchdog groups say that there is still uncertainty over where those chemicals will eventually go. In the past, forever chemicals have leaked into landfill sites and lingered in the air.
Prosecutors say Romanian businessman hired Hunter Biden to ‘influence’ US policy
With a month to go until Hunter Biden’s federal tax trial, prosecutors are making new allegations the president’s son accepted payments from a Romanian businessman to influence U.S. policy. And new details are emerging about the terror plot that resulted in the cancellation of Taylor Swift’s concerts in Austria. These stories and more highlight The Morning Rundown for Thursday, Aug. 8, 2024.
Prosecutors say Romanian businessman hired Hunter Biden to ‘influence’ U.S. policy
New details are coming out of Hunter Biden’s federal tax case. While the trial doesn’t begin until September, there’s a new court filing from the special counsel laying out a new allegation the prosecution plans to bring up.
Federal prosecutors allege the president’s son was compensated by a Romanian businessman who was trying to influence U.S. policy and end a local investigation of him in Romania.
According to the Wednesday, Aug. 7 filing, the special counsel intends to go after Hunter Biden’s foreign business dealings even more, including his association with Burisma — a Ukrainian natural gas company — and an energy company in China.
The prosecution said it evidence will show he “performed almost no work in exchange for millions of dollars” from these entities and will speak to Hunter Biden’s “state of mind” and “intent” during the years in question.
Hunter Biden’s team had requested certain evidence be omitted from trial, questioning its relevance to the federal tax charges, which include failing to pay taxes, failing to file, and filing a fraudulent form.
He’s charged with three felonies and six misdemeanors in the tax case. The president’s youngest son is accused of failing to pay more than a million dollars in taxes between 2016 and 2019. Prosecutors allege he used the funds to live lavishly, including spending millions on drugs, escorts and luxury cars. Hunter Biden has pleaded not guilty in the case.
This is separate from Hunter Biden’s federal gun case where he was convicted in June of lying about his illegal drug use while filling out a form to purchase a gun. He has not been sentenced yet in that case.
Biden ‘not confident’ in peaceful transfer of power if Trump loses election
We’re getting a preview of President Joe Biden’s one-on-one interview with CBS News. While the full interview will air on Sunday, Aug. 11, there’s a clip that is getting a lot of attention Thursday morning, Aug. 8.
CBS News reporter Robert Costa asked the president if he’s confident there will be a peaceful transfer of power in January.
“If Trump loses, I’m not confident at all,” Biden said. “He means what he says, he means it, all the stuff about if we lose there will be a bloodbath.”
He added, “You can’t love your country only when you win.”
Trump’s “bloodbath” comments came during a rally in March. The former president has said he was referring to a “bloodbath” in the economy and auto industry if he loses the 2024 election.
Three months later, Trump was asked during the presidential debate on June 27 whether he would accept the 2024 election results. He said as long as it’s a “fair and legal” election, he’ll accept whatever the results are come November.
Taylor Swift shows in Austria canceled over foiled terror plot
Three of Taylor Swift’s concerts set for Vienna, Austria have been canceled after authorities say they foiled a terror attack planned for that leg of her Eras Tour. Austrian police said they’ve arrested two suspects who they say are ISIS sympathizers and became “radicalized by the internet.”
Police chemical substances and technical devices were found at the home of a 19-year-old suspect and are being evaluated. Authorities also said they’ve made “further detentions” but didn’t give any more details.
The concert’s promoter said all tickets for the canceled shows will be automatically refunded within the next 10 business days.
Family of French explorer killed in Titan catastrophe files $50M lawsuit
The family of French explorer Paul Henri Nargeolet who died when the Titan submersible imploded during a deep dive to the wreckage of the Titanic is suing for more than $50 million. They said the crew of five people on board experienced “terror and mental anguish” before the disaster and accuse OceanGate, the sub’s operator, of gross negligence.
After the June 2023 incident when the vessel imploded due to catastrophic pressure loss, it was revealed that industry experts had raised serious safety concerns about the project years earlier.
The lawsuit also alleges OceanGate failed to disclose the Titan’s flaws and purposely concealed any issues from French explorer Paul Henri Nargeolet. It also saysNargeolet — who had taken part in 37 dives to the Titanic wreckage, more than anyone else in the world — would not have taken the voyage if he’d known about the Titan’s issues.
The implosion killed four other people, including OceanGate’s CEO. This is the first lawsuit to be filed in connection with the disaster.
Intel shareholders sue after stock plunges over job and dividend cuts
Intel’s shareholders are suing a chip maker. Intel said the company hid problems with its manufacturing business ahead of announced layoffs and poor earnings.
The lawsuit accuses Intel, its CEO, and CFO of making false and misleading statements that “artificially inflated” the company’s stock price prior to announcing a loss of more than a billion dollars between April and June of 2024.
American Quincy Hall comes from behind to win men’s 400-meter final
Team USA won more medals on day 12 of the Paris Olympics on Wednesday, Aug. 7. The team picked up three more gold medals.
Team USA now tops the charts with 27 gold medals and 94 medals overall.
On Wednesday, the U.S. won wrestling, women’s cycling, and in track and field — even though it looked like sprinter Quincy Hall was out of the running with just seconds to go in the race.
Hall pulled off an amazing comeback with just a quarter of the 400-meter final to go. He fell into fourth place as the runners rounded the last bend but then picked up the pace and passed his competition to cross the finish line first.
Korea semiconductor company SK Hynix gets $450 million in CHIPS Act grant
The U.S. will officially host five of the world’s largest semiconductor manufacturers after dolling out tens of billions of dollars in grant money. The Biden administration announced Tuesday, Aug. 6, it’s awarding hundreds of millions in grants to South Korea’s SK Hynix for its new facility in West Lafayette, Indiana.
“These are the only companies in the world capable of producing leading-edge chips at scale,” Commerce Secretary Gina Raimonda said of the five companies establishing production on U.S. soil.
The Commerce Department now says it has dished out more than $30 billion of the $39 billion set aside as part of the bipartisan CHIPS Act.
Meanwhile, defense contractor BAE Systems received the first CHIPS Act grant totaling $35 million to quadruple the manufacturing of chips used in F-15 and F-35 fighter jets.
The bottom line
Semiconductors are crucial to the artificial intelligence boom the tech sector is facing today, and only about 10% of chips are made in the United States. That’s down from roughly 37% in 1990.
The Semiconductor Industry Association said the increased investment from the government and private sector will triple U.S. capacity by 2032. However, that will still only account for 14% of global manufacturing.
Gershkovich, Whelan return to US in 24-person prisoner swap with Russia
It was an emotional reunion as Americans Evan Gershkovich and Paul Whelan returned home after the largest prisoner exchange between Russia and the U.S. since the Cold War. And former President Donald Trump’s running mate, Sen. JD Vance, R-Ohio, visits the U.S.-Mexico border in Arizona. These stories and more highlight The Morning Rundown for Friday, August 2, 2024.
Gershkovich, Whelan return to US in 24-person prisoner swap with Russia
Wall Street Journal reporter Evan Gershkovich, former U.S. Marine Paul Whelan and several other Americans who were wrongfully being detained by Russia are back on American soil. President Joe Biden and Vice President Kamala Harris joined loved ones in greeting them off the plane at Joint Base Andrews in Maryland late Thursday night, Aug. 1.
It was an emotional reunion as these high-profile American prisoners returned home as part of a major prisoner exchange between the U.S. and Russia. President Biden said negotiations had been going on for months and involved seven countries and two dozen prisoners.
This handout image was provided by a third-party organization and may not adhere to Getty Images’ editorial policy. In this handout photo provided by the U.S. government, Wall Street Journal Reporter Evan Gershkovich, Radio Free Europe journalist Alsu Kurmasheva and former U.S. Marine Paul Whelan pose with an American flag in the airport lounge on Aug. 1, 2024 in Ankara, Turkey. Gershkovich, Kurmasheva, Whelan and others were involved in a multinational prisoner swap with Russia. Source: Getty Images
Paul Whelan served five years in captivity and Evan Gershkovich had been detained for 491 days. In exchange for their freedom, Russia is getting back eight of its own, including two spies being released by Slovenia and a convicted murderer held in Germany.
Some foreign policy experts say prisoner swaps could give U.S. adversaries incentive to take more Americans on false pretenses and treat them as bargaining chips. The president responded to reporters questions, saying, “My job is to make sure, number one, they don’t get them and if they do, we get them back.”
After the National Electoral Council declared Maduro the winner, thousands of opposition supporters took to the streets in protest, which turned deadly. At least 11 people have reportedly been killed. Hundreds of protesters have also been arrested since then in what has become a volatile week in the nation — with still many questions left unanswered about the future of Venezuela’s ruling party.
JD Vance tours southern border in Arizona
Former President Donald Trump’s running mate Sen. J.D. Vance, R-Ohio, toured the border in Arizona on Thursday, Aug. 1, and met with border patrol, who say southern Arizona is at the “epicenter of smuggling fentanyl.” While there, Vance laid out what would be some of the border security measures the Trump administration would put in place immediately should Trump win the 2024 election.
Those measures include reimplementing deportations and other Trump-era immigration polices such as “Remain in Mexico” and continuing construction on the border wall.
Vance now heads to Atlanta where he and Trump will share the stage at a rally on Saturday, Aug. 3.
As for likely Democratic nominee Vice President Kamala Harris, she has started to secure delegates to officially become the Party’s nominee.
Her campaign has a busy week ahead, expecting to secure her spot at the top of the Democratic ticket as early as Monday, Aug. 5. Soon after, she’s expected to announce who her running mate will be before holding a joint rally in Philadelphia on Tuesday, Aug. 6.
Intel cutting 15% of workforce
Chip maker Intel is cutting 15% of its workforce, which is at least 15,000 jobs, in an effort to compete with its more successful rivals. In a memo to staff Thursday, Aug. 1, Intel’s CEO said the company plans to save $10 billion in 2025 alone.
Intel is also suspending its stock dividend as part of its cost-cutting plan.
The company reported a loss of $1.6 billion from April through June of 2024 (Q2), and it forecast third-quarter (Q3) revenues will be well below expectations. That news sent company shares tumbling, setting the chipmaker up to lose more than $24 billion in market value.
Judge overturns $4.7B NFL Sunday Ticket verdict
A federal judge has overturned a nearly $5 billion verdict in an NFL “Sunday Ticket” case. The class-action lawsuit was brought by subscribers who alleged the NFL violated anti-trust laws by overcharging to watch out-of-market games on its paid subscription service.
Upon appeal, a U.S. district judge ruled two witnesses’ testimonies should have been left out and said the jury’s verdict was “clearly not supported by evidence and must be vacated.”
Simone Biles, Katie Ledecky win more medals to make Olympics history
Team USA picked up more Olympic gold Thursday, Aug. 1, bringing its total to nine so far at the Paris games. Thursday marked historic wins in fencing and rowing, as well as swimmer Kate Douglass earning her first gold medal.
Even more history was made by two of the biggest stars on Team USA: Simone Biles and Katie Ledecky.
Biles won her sixth gold medal — and ninth medal overall — in the individual all-around competition for a second time, reclaiming her 2016 title. Biles, who is already the most decorated American gymnast in Olympics history, is the first American to win the event more than once and the first gymnast to win it non-consecutively.
Biles wasn’t alone in representing the U.S on the medal stand. Her teammate Suni Lee took home the bronze.
U.S. swimmer Katie Ledecky’s team earned the silver in the 4×200 meter freestyle, giving Ledecky her 13th medal. That’s the most by any female U.S. Olympian in the history of the games.
And they’re not done yet. Both Biles and Ledecky still have chances to add more medals to their historic totals in the days ahead.
Samsung, Intel, TSMC battle for $39B in CHIPS Act taxpayer pie
With $39 billion in manufacturing grants up for grabs, the race is on to get a piece of the CHIPS and Science Act. During a speech Thursday, Commerce Secretary Gina Raimondo said the department will be launching the first applications for the funding starting Tuesday.
“Folks, the stakes couldn’t be higher, could not be higher, which is why we have to win,” she said, likening the semiconductor investment and innovation she hopes it spurs to President John F. Kennedy’s space race. “This is so much more than incentivizing the creation of a few new semiconductor fabs around the country.”
But practically, her plan this decade is to get two new clusters of chip manufacturing built in the U.S. It seems likely one of those clusters will be in Arizona, where companies like Intel and Taiwan’s TSMC have pledged tens of billions in new projects.
The sophisticated semiconductor industry is largely dominated by Taiwan, and China is heavily investing in new industry growth. Semiconductors are used in all types of technology, from powering cars to hospital technologies.
Raimondo acknowledged in her speech Thursday that there’s keen interest in finding out how the government plans to divvy up the taxpayer funds secured through the CHIPS Act, but didn’t go into more detail about which companies will benefit.
While the semiconductor industry pulled together to push the historic taxpayer investment, it’s now starting to splinter as the Biden administration prepares to dish out grants. According to a New York Times article, a public relations firm accused Intel “of angling to win subsidies under the CHIPS and Science Act for new factories in Ohio and Arizona that would sit empty.” The firm would not divulge its client.
Meanwhile, Intel, which has hosted President Joe Biden at its Ohio site, has publicly questioned how much taxpayer money should go to companies like TSMC with offshore headquarters over American companies like Intel, which is headquartered in California.
“I expect there will be many disappointed companies who feel that they should have a certain amount of money. The reality is the return on our investment here is the achievement of our national security goal,” Raimondo told reporters on Wednesday.
She said her goal is that the more than $50 billion in total federal semiconductor investment will translate to an additional $500 billion or more in private sector investment. But critics point out that with so much taxpayer money on the line, the pressure is on to make sure the funds are properly used.
