back to article Cost of Gelsinger's ambition proves too much for Intel

Pat Gelsinger is out as Intel CEO, cutting short his nearly four-year crusade to revitalize the beleaguered chipmaker. Gelsinger's "retirement" as CEO and departure from the x86 behemoth's board of directors is immediate, having gone into effect on Sunday, though Intel didn't disclose the decision until today. The abruptness …

  1. IGotOut Silver badge

    Well the reason is obvious...

    ...he was looking at turning around the company with a timetable of 1 - 2 years.

    Late stage capitalism, with it's growth at all cost mindset, doesn't care for any numbers past the next quarter.

    Rule no.1.

    Turnover today.

    Tomorrow is someone else's problem.

    1. CowHorseFrog Silver badge

      Re: Well the reason is obvious...

      How can a blind dog turn around anything when he has no clue which way is forwards or backwards ?

  2. chivo243 Silver badge
    Trollface

    I hear Broadcom is hiring

    Ba dum tiss!

    1. hohumladida

      Re: I hear Broadcom is hiring

      Yeah, they need a VP for their VMWare division... wait a minute!

    2. 3arn0wl

      AheadComputing is hiring

      https://www.aheadcomputing.com/careers

      He could go and work with some of his former colleagues....

  3. BOFH in Training

    I dont know if the requirement to hold over 50% of foundry business if spun off has an expiry date.

    Not sure if the below USD 10 Billion from US Gov is worth it, considering it will probably lose that much within 2 quarters.

    1. Michael Strorm Silver badge

      10 billion here, 10 billion there...

      ...pretty soon it adds up to real money.

      1. chivo243 Silver badge

        Re: 10 billion here, 10 billion there...

        We call that walkin around money!

  4. Michael Hoffmann Silver badge
    Meh

    Shifting ever more production to TMSC

    Maybe some board members found that video of Gelsinger shooting his mouth off about TMSC, which resulted in the latter dropping the 40% discount Intel had been granted.

    Then did the maths on what that would cost Intel and screamed "you dense motherf*cker" before catapulting Gelsinger to spend more time with his family.

    1. Brewster's Angle Grinder Silver badge

      Re: Shifting ever more production to TMSC

      I've done a quick google. And he doesn't seem to have said anything other than what is prevailing wisdom now and then.I guess that's the downside of putting engineers in charge: they call it as they see it.

      1. hohumladida

        Re: Shifting ever more production to TMSC

        Saying it as one see's it is a good trait and lacking in most corporate double speak. However his statement was very poorly worded. Why even mention Taiwan? He made it sound like there was something wrong with a fab being in Taiwan (maybe there is a risk coming from up north). Steer clear of politics. Running his mouth like that when Intel does not even have their new nodes to stand on is extremely short sighted.

  5. JRStern Bronze badge

    Pretty good summary

    Pretty bad situation.

    Will we ever find out the real story?

    I mean, shouldn't stockholders get to hear it?

    1. Yet Another Anonymous coward Silver badge

      Re: Pretty good summary

      While he was CEO line went down.

      Want line to go up, so change CEO

      It's very much like changing the England manager everytime they lose on penalties

  6. O'Reg Inalsin

    Raptor Lawsuit

    Yesterday I read about the lawsuit and found out that those who bought assembled PCs with the affected 13/14 models are not entitled to a replace or refund - it had to purchased stand alone. I don't think Intel would have suffered nearly as much if they had just released the 13/14 models with the correct default settings even if they were a bit slow. Because tomorrow is another round.

    So it wasn't a tech problem as much as a management problem - pushing for great marketing results instead of pushing for a stable release. As much as I had hope and respect for Gelsinger, I do think the CEO taking responsibility for for that is about right (most CEOs don't!). His infectious enthusiasm went overboard and he failed to listen to the what engineers on the ground told him, rather than what he wanted to hear.

  7. Sceptic Tank Silver badge
    Devil

    $8bn investment / $16bn loss

    Everywhere the same: these companies start out with a vision to make great and useful products. Eventually the founders have to retire and that is when the toxic people take over and ruin everything. They have no interest in the business, only to make money for themselves. Pity really.

    1. Yet Another Anonymous coward Silver badge

      Re: $8bn investment / $16bn loss

      TSMC was a government undertaking run by an engineer hired by the government and paid a salary, without any share options

      They seem to be doing OK.

  8. 3arn0wl

    a totemic company

    Äpologies up front if this is not the forum, but I wanted to pose a generral political question, rather than make a tech observation...

    Which side wins if it's free-market-capitalism against the great America - built on the foundation of tech supremecy?

    Can Intel really be allowed to fail?

    And doesn't America need it's own foundries?

    Intel above any company, except perhaps Boeing (and NASA, which isn't on the same footing) is a symbol of America's tech supremecy. To lose it would be a damning statement of technological decline.

    1. Pascal Monett Silver badge

      Re: a totemic company

      Boeing ? That supremacy has already demonstrably disappeared. Boeing is doomed.

      Intel is not - yet. But foundries cost billions (aka real money) and take time to get returns from. Time that Gelsinger was not given.

      I'm not sure that Gelsinger deserves this, whatever remarks he may have made about TSMC.

      I am sure that it is beyond stupid to build a foundry in a state that has no water - but hey, who am I to complain ?

      1. 3arn0wl

        Re: a totemic company

        By all the obits, Gelsinger does seem to be the personification of Intel and x86 - two things that the market appears to be turning away from enough to adversely affect the bottom line.

    2. O'Reg Inalsin

      Related

      For some reason the markets had no problem funding Uber's 40 billion loss for years to finally get the stage where they occasionally make profit that will never pay pack the initial investment. Why?

      1. Yet Another Anonymous coward Silver badge

        Re: Related

        Potential future value of Uber = the total value of all taxi/public transport/personal commuter cars (allegedly) and when they made autonomous work, with no ongoing costs.

        Potential future value of Intel = same as PowerPC / HP / IBM's CPU division. Costs for fabs to stay ahead of TSMC = $infinity

  9. lglethal Silver badge
    Mushroom

    I just did a very quick google search. Intel have 4.1 billion outstanding shares. AND a guaranteed $0.50 per share per year dividend. Thats more than $2 billion walking out the door, rain, hail or shine, every year. And they are wondering why Intel is having problems?

    Gelsinger was brought back to rescue the firm. His plan seems to have been to become a Foundry business. That's fine, there is potentially a massive market there. But it takes years to get that up and running, and costs real money. And that sounds like it was communicated at the time. And the Board and the Shareholders accepted that at the time. And now, when those plans are just a year or two away from actually beginning to bear fruit (or not of course - Capital Investment is often a gamble), they dump him because it's NOW too expensive??? Why didnt you think about that before you went and burnt through all that cash becoming a foundry business???

    Activist Shareholders are so often only looking for the quick buck - stripping a company, making the profit now, and then dumping the shares to some poor schmuck who has to deal with a now much weaker company then before. (I refuse to call them Activist Investors, because 99% have not invested in the firm itself, they've just bought pre-existing shares. An investor actually puts money into a company to make it stronger...).

    /End Rant...

    1. pimppetgaeghsr

      Now tally up how much they have forked out in dividends over the past 15 years. How much of that could have been spent on the cutting edge? GPUs, compute hyperscalers and a foundry service?

      1. Yet Another Anonymous coward Silver badge

        But Intel are a monopoly supplier of a commodity part that everyone has to buy with no competition, so paying a dividend is the normal way of things

        They are really just a silicon version of Standard oil.

    2. StrangerHereMyself Silver badge

      It's guaranteed only if Intel makes a profit. That's currently not the case and dividend has therefore been suspended.

      1. lglethal Silver badge
        Stop

        Actually if my reading of the situation is correct, Gelsinger proposed to cancel the Q4 dividend payout (the others for this year have been paid!). And that seems to have been one of the last straws that turned the investors against him and got him sacked.

        Nevermind that $2 billion being invested in the firm would make the firm stronger. The investors have yachts they need to pay for... /Sarcasm

  10. pimppetgaeghsr

    Doesn't really matter, from what people tell me in industry it's a shell of a company, most of the 10% talent that is critical to an organisation is all gone to Apple/Broadcom/NVIDIA/AMD and now it's a slow painful death as brown nosers, MBAs, accountants and whatever sorry individual remains squeezing the last bit of juice out of the decaying fruit. The upper management echelon thinks it's just a matter of getting the right man for the job to turn the company back to prosperity since they overvalue their own contributions and necessity but culturally the company is already dead, it's attempts at mobile, GPU, and now unable to stop making faulty CPUs prove it. Financially it will take a bit longer and a few bailouts, but it's done.

    1. Yet Another Anonymous coward Silver badge

      But they must have some American fab engineers from the glory days of the Pentium who can spearhead them leaping past TSMC and Samsung

      1. ForthIsNotDead

        I upvoted you, but nah. I doubt it. Those boys are likely headed for retirement and are just hanging in there for their retirement plans. As the other poster stated, most of the real talent has probably already headed for the exits to other companies. Intel has probably gotten too big, and there's just too much internal inertia to overcome for the big talented players that want to move quickly and innovate. It happens to most companies as they turn into giant behemoths. Try suggesting a new idea at IBM, or even ARM for that matter. They don't want to hear it.

        1. Yet Another Anonymous coward Silver badge

          But that's the thing about workers, they're just identical replaceable cogs in the machine

          You can make no domestic investment in fabs for 20years and then suddenly decide that with the stroke of a pen, and $$$bn in government handouts, you are going to be a world leader - and the workers will just magically appear

          1. Wang Cores

            I'm trying to get into that sort of work and it's *hilarious* what these operations think they should pay people.

            Sitting here trying to get a semiconductor manufacturing job with $16/hour as the absolute ceiling and getting rejected, meanwhile I'm pulling $21 now for board repair for a locker company.

            1. pimppetgaeghsr

              It's true. People don't realise Intel have fallen behind by several generations, not just lost their lead in the current gen. They are completely done. Just split out the fabs and let uncle sam prop it up and let products compete with AMD/NVIDIA through TSMC

        2. pimppetgaeghsr

          The best way to make a good idea at ARM is to take what customers/competitors already did 5 years ago and present it as your own idea, get 10 layers of committees to approve the idea in endless circles, have your manager make your case for promotion and once it's ready to implment move departments and start again once the promo comes through in april.

  11. ivorb

    From the article: "His appointment was heralded as a turning point for Intel with many lauding the decision to put a proper engineer rather than a bean counter at the helm.". Sadly, that approach has been reversed with two bean-counters (Both Mr Zinsner and Ms Holthaus have degrees in finance, etc).

    As others have stated, technology (especially at this end) requires long-term vision to deliver rather than the 'fast buck to make the quarter') mentality that the stock-market gauges a company by.

    AMD was in the doldrums for over a decade (Athlon was released in 1999 and Zen in 2017) after and it took Dr Su and her team some 3 years to bring the change - with a lot of outsourced technology (GloFlo and then TSMC fab processes, assembly of the 'chiplets' the permitted Zen to scale from low-core-count Ryzen to mega core Threadripper and Epyc design with just a handful of unique die). Intel has started down a similar road and also implemented the mix of P-cores and E-cores to balance performance and efficiency.

    Not saying they have the right approach but it is probably good for the world not to be totally at the mercy of TSMC and international politics especially with Taiwan's big neighbour. Yes there are other fab companies (Jazz, GloFlo, TI, Tower, ADI, Denso, Canon, Samsung etc) but they are non-CPU (controllers, memory, power, etc etc). The UK is a history lesson of what happens when the the only 'economy' is dictated by the banks and the stock market - a pure service economy. Remember Ferranti, Marconi, GEC etc etc?

    Yes I'm glad that AMD is doing well for now, and they have given Intel some healthy competition; however it's not good if the pendulum swings too far.

    1. Peter2

      Remember Ferranti?

      Didn't they buy an American defence company (International Signal and Control) to expand, and then discover that it was a front/slush fund for illegal arms sales on behalf of the US government that was basically worthless? It made the Autonomy scandal look quite mild.

  12. CowHorseFrog Silver badge

    Why cant the title simply call him an idiot ?

  13. StrangerHereMyself Silver badge

    Unacceptable

    I don't believe the U.S. government will accept Intel becoming fully dependent on TSMC considering the imminent invasion of the island by China. Doing so would put the U.S. economy at great risk if this were to occur.

    Intel will be forced to continue operating its foundry, funded by the U.S. government if need be.

    1. Snake Silver badge

      Re: Unacceptable China risks

      I said the same thing about nVidia 5 months ago. Everyone is starting to depend upon TSMC but their position seems a bit perilous from here; China increasing pressure on the island will then have a huge ripple effect across the entire tech ecosystem when everyone places their eggs in one basket.

      1. StrangerHereMyself Silver badge

        Re: Unacceptable China risks

        Taiwan will be pressured to transfer most of its technology to its U.S. fabs, including the smallest nodes. In case of an (imminent) invasion and evacuation of the most key people involved in the production of the smallest nodes to the U.S. will occur so they can startup the production there.

        1. Anonymous Coward
          Anonymous Coward

          Re: Unacceptable China risks

          >evacuation of the most key people involved in the production of the smallest nodes to the U.S.

          So long as they are rich and white

    2. Valeyard

      Re: Unacceptable

      TSMC is Taiwan's bargaining chip. "come near us and we're flooding the place with seawater or blowing it sky-high!"

      putting all of our eggs in that basket is evermore crazy

  14. Anonymous Coward
    Anonymous Coward

    When he was COO at EMC, people would say he was very smart. But I never saw him do anything smart. He was 0/5 on making decisions at critical inflection points at EMC and at VMware. He consistently surrounded himself with the worst kind of senior executives. The anecdotes ad up to a giant "emperor has no clothes" experience.

    His legacy will be riding down the slope at EMC, then VMware, then Intel.

    As a person, he is a great guy. I wish him well.

    1. StrangerHereMyself Silver badge

      He was the lead-designer for the 80486, so he can't be entirely stupid.

      Personally I believe his strategy for turning Intel around was sound. It's just that the planets didn't align. The cash flow went down-hill faster than anticipated. He didn't want to alter course so the board fired him.

      1. CowHorseFrog Silver badge

        There are many people with titles, that doesnt mean they actually did the work.

        Biden for example is the leader of the USA, that doesnt mean he designed everything...

        Manager types often give themselves titles they havent actually earnt, thinking of Prince Harry and all his medals, we all know he didnt earn them in anyway.

      2. Yet Another Anonymous coward Silver badge

        It's just a question of emphasis. The leads on the 486 were nice, having decent sturdy pins and a motherboard ZIF socket was nice compared to the modern 'look at them the wrong way and the pins bend" packages. A good design choice by the lead designer

  15. MCPicoli

    We must not forget the $100B+ elephant in the room: Stock buybacks.

    The board decided it was wise to drain the company of more than USD $100B in the last decades by doing stock buybacks, all of which could (should?) be invested into research, product development, production, even marketing.

    Sincerely I do not feel any pity of Intel and its investors. They made their bed and now they're laying in it.

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