Good morning. Intel Corporation’s CEO Pat Gelsinger retired from the company and stepped down from the board of directors, effective Dec. 1. The board gave him the option to retire or be removed, according to reports. The chipmaker, once the biggest in the world, has struggled for some time to keep up with artificial intelligence computing. And now its CFO is tasked with helping to keep the company afloat.
David Zinsner, EVP and CFO, and Michelle (MJ) Johnston Holthaus, CEO of Intel Products, will serve as interim co-chief executive officers while the board of directors searches for a new CEO. Zinsner joined Intel, a Fortune 500 company, as finance chief in January 2022. He has more than 25 years of financial and operational experience in semiconductors and manufacturing, including CFO roles at Micron Technology, Inc. and Analog Devices.
Zinsner will continue to perform his duties as CFO while serving as interim co-CEO, Intel confirmed in an email. Holthaus joined Intel in 1996 and has held a variety of leadership roles in sales and product marketing.
“With Dave and MJ’s leadership, we will continue to act with urgency on our priorities: simplifying and strengthening our product portfolio and advancing our manufacturing and foundry capabilities while optimizing our operating expenses and capital,” Frank Yeary, interim executive chair, said in a statement.
Intel was once dominant in its core business for central processing units. But rival AMD now has a significant market share. Then Intel failed to see the extent to which graphics chips would come to dominate the market for AI. Nvidia took the graphics processing unit used for video games and turned it into the powerhouse for training and running AI models, to dominate the new field.
Gelsinger, CEO since 2021, had a 40-plus-year career at Intel. He was betting the company on 18A, a new chipmaking process hoping it would be a viable alternative to Taiwan Semiconductor Manufacturing Co., (TSMC) the world’s leading contract manufacturer of chips, Fortune’s Jeremy Kahn recently reported.
Intel’s ‘delicate’ financial position
Almost three years after joining Intel as finance chief, Zinsner will now co-lead a company that is in significant trouble.
I asked Peter Cohan, associate professor of management practice at Babson College, for some insight. He thinks Zinsner was chosen as an interim co-CEO because Intel has to “keep its financial position from deteriorating so far that it becomes difficult for the board to hire a new CEO to turn around the company,” he told me.
In Q3, the company's net loss totaled $16.6 billion due to factors including restructuring charges and losses by the manufacturing unit. Intel shares plunged more than 60% during Gelsinger’s tenure. The company has fallen out of the industry’s top 10 companies by market capitalization, a list now led by Nvidia and TSMC, Fortune reported. S&P Dow Jones Indices announced on Nov. 1 that Nvidia will replace Intel in the Dow Jones Industrial Average.
Why did Intel go the route of interim co-CEOs? "Simply put, this arrangement is the board's way of saying that Intel's financial position is too delicate not to have a product and financial person share the job," Cohan said.
An interim co-CEO appointment “sends a clear message to shareholders that the board is covering its bases,” Scott W. Simmons, co-managing partner of the executive search firm Crist Kolder Associates, told me.
Zinsner is a four-time sitting CFO with deep roots in R&D-driven technology companies, Simmons said. “His knowledge and experience are invaluable and a perfect complement to Holthaus, whose role is to strengthen and advance the product portfolio and manufacturing capabilities,” he said.
It will take a lot of teamwork to turn Intel around.
Sheryl Estrada
sheryl.estrada@fortune.com
The following sections of CFO Daily were curated by Greg McKenna.
