PORTLAND, Ore. — Monday's surprise retirement of Intel CEO Pat Gelsinger is the latest in a series of signs of headwinds for the industry giant, which is facing an increasingly challenging business landscape as rival semiconductor chip makers like Nvidia continue to gain ground.
Gelsinger spent most of his 45-year career at Intel, and his departure comes amid rumors that the company is eyeing a significant structural transformation, potentially even splitting up into multiple parts by spinning off its chip manufacturing operations.
Intel has a heavy presence in the Portland area and is one of Oregon's largest employers. KGW's Pat Dooris sat down with The Oregonian's business reporter Mike Rogoway to get his take on what Intel might be planning and what it could mean for Oregon.
The big corporate split, if it happens, would most likely be between Intel's chip design wing and its Foundry operations, the latter of which refers to contract semiconductor manufacturing. Gelsinger's departure may have been prompted in part by that plan, Rogoway said.
"They may have wanted to do things like continue separating the company into two parts that perhaps he wasn't excited about," he said. "He was more or less an Intel lifer, and he may not have been excited about overseeing the dismantling of that business."
It also likely wasn't a voluntary retirement, he added. Gelsinger took over as Intel CEO in 2021 and embarked on an ambitious turnaround plan for the company, pledging to spend big on new factories, but the company's revenues have been declining too fast even as the investments added to Intel's immediate costs.
"It just put him in an impossible squeeze," Rogoway said. "In the fullness of time, given enough time, perhaps that revenue could come back and his strategy could play out. Intel just didn't, the board evidently didn't feel they had that time."
The company took the unusual step of naming two interim CEOs to take over for Gelsinger — CFO David Zinsner and Intel Products CEO Michelle Johnson — which Rogoway said could be read as a further signal of the plan to split things up.
"It certainly seems like they're in the process of separating the business," he said. "You know, how quickly that will move and how formal the separation will be, it's hard to say, but it definitely seems like it's going that way."
Oregon can still count on being a key part of Intel's hypothetical post-breakup future, Rogoway added. The company operates a big design group in the Portland area, including its advanced D1X research factory in Hillsboro. But that doesn't mean the state has nothing to worry about, because a "diminished, separated business" in place of a once-great company could still be bad news for Oregon.
"What's coming is two companies, and perhaps less great, but we'll see," he said.