### Pat Gelsinger's Abrupt Retirement and Intel's Future Strategy

Intel's future hinges on collaboration rather than competition in manufacturing and technology.

### Surprising Departure: Pat Gelsinger's Abrupt Retirement and Intel's Future
* 😲 The unexpected announcement of Pat Gelsinger's retirement took many by surprise, especially given the **lack of a transition period**.
* 📉 The board's declining confidence, highlighted by the **resignation of the CEO of Cadence** over the summer, suggested ongoing **internal challenges**.
* 🏭 Gelsinger's ambitious plan to position Intel as a leading manufacturer ultimately failed, particularly against competitors like **TSMC**.
* 🔄 The restructuring announced in August resulted in **significant job losses** and a shift in focus **away from the foundry business**.
* 🤝 As the situation evolves, there are discussions around potential partnerships, with Qualcomm's interest in Intel raising questions about **future consolidation**.
* 💡 Intel's unique onshore manufacturing capabilities are seen as **valuable assets**, but the need for **collaboration with industry leaders** like TSMC and Nvidia is emphasized.
* 📉 The board's frustration stemmed from **missing the AI evolution** and falling short of financial targets, particularly in comparison to **Nvidia's massive revenue**.
* 🔄 Moving forward, Intel may need to adopt a **more collaborative approach**, focusing on **specialized manufacturing** while leveraging its existing strengths in the **PC chip market**.

First take on the announcement of Pat
Gelsinger retiring. Were you surprised?
I was very surprised by the abrupt news, like retiring today with no
transition period. So, a difficult, a difficult situation.
We knew the board was down since the

summer
time. The CEO of Cadence resigned from the
board over the summer. And it was like reflecting, like
difficult conversations. And so it probably looks like, you know,
that loss, the confidence of the board, or
I didn't get the report in both for

his strategy anymore and basically
probably decided to to leave abruptly.
So that was a surprise. Now that, you know, we are four years
into the turnaround, but direction wise,
let's double down on Intel's capabilities in manufacturing.
Let's make Intel like a leading

manufacturer.
Let's go to large and, you know, go big and, you know, leverage at the maximum,
the political support we'll have to do that.
So that was the plan. And the plan failed basically, because
Timothy's model cannot be competed

against.
I think it's something that, so we fought from the beginning.
So Intel being able to preserve manufacturing capabilities.
Yes. Intel being like a scalable, like, like a
large-scale competitor to TSMC is probably not, not possible for, like, scale
and graphics reasons.

And that's where things failed here in
August on that very bleak announcement of numbers that we had and a disastrous
sell-off in the shares was this restructuring.
It involved a lot of job losses, but it did involve also the sort of peeling
away of the foundry business to be able

to be managed sort of separately.
But alongside Intel. Does that stay or do we start to see
actual purchasing coming from? Well, with the reports previously of
Qualcomm being interested, even the chip design arm.
So that the situation is going to be

very, very fluid for quite some time for
sure. As you mentioned, last summer, you know,
the boat was said to be fighting off.
You know, activist activity showed about is
getting prepared to try to fight sort of activist moves.
The situation is, of course, very

complex.
On one hand, Intel has manufacturing capabilities.
Intel has manufacturing capabilities onshore
and owned by like a US controlled company.
So it's a very, very unique asset, extremely valuable in today's
geopolitical context. And I think Intel needs to continue to
be able to to build on that.

So, of course, that is a tempting,
tempting route, which is to say, okay, maybe Qualcomm and Intel could merge,
Qualcomm could buy out Intel, and try and trigger a consolidation of that
type. I don't see that as a good as a good
opportunity.

It's very difficult to generate
synergies between quite common Intel. The chips Qualcomm do are very different
from the Intel chips. Manufacturing is is a complex business.
So I'm not sure Bear, you know, that's an area that scares me more than
anything else.

You know, bad decisions typically can
arrive in a situation like that. What we're seeing, I think, is to be
like, okay, how can we make sure we create a sustainable US owned on US soil
manufacturing capability?

And if you do that, you have to admit
that you're not going to compete with TSMC.
You need to partner with TSMC, right? Maybe you need to find a very large
partner that is going to support you.

And of course the one that comes to mind
that has those maybe two to three Z's is Nvidia.
So you know what? I go intelligent partnering around
manufacturing with TSMC as a partner and NVIDIA.
Zavala would be a much more interesting

route to pursue from here.
There is ongoing breaking news around this story and pulling back, leading the
charge with how Pat Gelsinger was indeed forced out after the board grew
frustrated. The biggest frustration was that they
missed the AI evolution, jumping on and

being able to ensure that what they
produced, which is Gowdy, was able to compete.
I mean, they're likely to miss that $500 million target for this year when Nvidia
is busy making about $100 billion a year.

Yeah, I think it's the frustration came
from the lack of prudence of the initial plan going to be too large, assuming,
you know, demand would follow. As long as you can pull together that
liquidity, liquidity supply. And yes, the underlying causes
in

there ended up not being in the green
parts of the market. And namely it wasn't last summer was
particularly abrupt like to see legs are the complete failure of intense air
ships and the fact that they would not be at all in the market.
What India's actually carving out

carving out a fairly sustainable niche
positioning in that market. So that was part of it.
But I think that probably stuck too much to his initial plan.
It was like a very ambitious, very large scale plan and should have called for a
year or 18 months ago.

So what about, like, you know, changing
tack to smaller and more collaborative with other players in the market
because. Yeah yeah.
I mean much of this predated the PAC coming back in 2021.
That course was already kind of paved

and he didn't re-orientate quickly
enough. Where now in terms of leadership and in
terms of Intel's place in the ecosystem. Very quickly, please.
So I think Intel could be specialized in manufacturing in the US, well under U.S.
control and ownership and collaborate

with the rest of the industry instead of
instead of competing. I think that in like smaller scale
remaining, like keeping a position at the leading edge and leveraging the
products of Intel like PC chips and the services that are still very good
and in very high demand.

Intel's Gelsinger Retires

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Bloomberg Technology

Surprise at Pat Gelsinger's Retirement and Initial Reactions

Surprise at the abrupt nature of the retirement announcement, with no transition period.

Board issues had been apparent since summer, including the resignation of the Cadence CEO.

Initial four-year turnaround plan focused on Intel's manufacturing capabilities and political support.

Plan's failure attributed to inability to compete with Timothy's model.

Challenges in competing with TSMC on scale and graphics.

Consequences of the Failed Strategy and Restructuring

August announcement of bleak numbers and a disastrous sell-off.

Restructuring involved job losses and potential separation of the foundry business.

Reports of Qualcomm's interest in Intel's chip design arm.

Intel's unique onshore manufacturing capabilities and US ownership are valuable assets.

Analysis of Potential Mergers and Acquisitions

Discussion of a potential Qualcomm-Intel merger, deemed not a good opportunity due to lack of synergies.

Concerns about potential bad decisions in such a complex merger.

Focus on creating a sustainable US-owned manufacturing capability.

Proposed Alternative Strategies for Intel

Suggestion to partner with TSMC and potentially Nvidia for manufacturing.

Breaking news about Pat Gelsinger's forced departure due to board frustration.

Board's frustration stemmed from missing the AI evolution and the resulting inability of Intel's products to compete with Nvidia.

Lack of prudence in the initial plan, assuming demand would follow.

Failure to adapt to market changes, particularly in the AI sector.

Criticism of Gelsinger's adherence to his initial ambitious plan.

Shift towards smaller scale, collaboration with other players, and specialization in US manufacturing.

Focus on maintaining a leading edge in specific areas and leveraging existing successful products.