### Intel's Leadership Change and Future Direction Challenges

Intel's leadership shakeup raises questions about its future direction amid ongoing operational challenges.

### Intel's Leadership Shakeup: Pat Gelsinger's Immediate Retirement and Future Implications
* 📉 Pat Gelsinger has retired from Intel effective immediately, leading to a **rise of over 4% in the company's stock** amidst uncertainty regarding succession plans.
* 🔄 Mandeep Singh from Bloomberg Intelligence notes that Gelsinger's turnaround strategy did not unfold as **anticipated**, prompting the need for **two interim CEOs** to lead the company.
* 🤔 The challenge lies in whether Intel will focus on being a **chip design company** or a **foundry**, as Gelsinger's attempts to manage both sides proved **too ambitious**.
* 💼 Intel's operational struggles, including multiple rounds of layoffs, have left investors questioning the company's **medium-term turnaround prospects**, particularly with an upcoming **PC upgrade cycle**.
* 📊 Despite losing market share in the data center sector, Intel remains dominant in the PC market, making **participation in the upgrade cycle crucial for its success**.
* 💰 The immediate leadership change raises questions about the **billions in government funding** Intel is set to receive, but Singh believes funding will continue due to the government's interest in **maintaining U.S. manufacturing**.
* 🏭 If Intel's foundry business is divested, it could still **secure funding similar to what other manufacturers, like TSMC, have received**, while the healthy PC business may **sustain itself independently**.

INTEL AS WE'VE BEEN TALKING ABOUT JUMPING ON THE NEWS PAT GELSINGER IS RETIRING. NOW UP MORE THAN 4%. WE WILL CONTINUE ON THAT STORY RIGHT NOW JOINING US TO TALK MORE ABOUT IT IS MANDEEP SINGH OF BLOOMBERG INTELLIGENCE.

PAT GELSINGER RETIRES EFFECTIVE IMMEDIATELY, THE COMPANY HAS I GUESS NO SUCCESSION PLAN SO THEY PUT IN TWO INTERIM CEOS. WHY? MANDEEP: LOOK, THE TURNAROUND DIDN'T PLAY OUT THE WAY HE EXPECTED OR THE STRATEGY HE LAID

OUT AND IN THIS CASE THEY ARE PROBABLY GOING TO LOOK FOR SOMEBODY EXTERNALLY TO COME IN AND PAT CAME FROM OUTSIDE BUT CLEARLY HE TRIED TO TAKE TOO MUCH ON IN TERMS OF TURNING AROUND BOTH THE DESIGN SIDE AND THE FOUNDRY SIDE AND IN THIS

CASE MY BET WOULD BE ANYONE COMING IN IS GOING TO PICK A SIDE. IS INTEL GOING TO BE A CHIP DESIGN COMPANY OR A FOUNDRY COMPANY. TURNING AROUND THE SHIP AS IS ALL THE PARTS IS VERY HARD.

IT DEFINED -- THE FACT THAT NOT ONLY TO THE NAME INTERIM CEO HE IS STEPPING DOWN IMMINENTLY, WASN'T NECESSARY TO HAVE THE LEADERSHIP IN THE MIDDLE OF WHAT IS ALREADY A DRASTIC TURNAROUND

STORY. MANDEEP: LOOK AT WHAT'S HAPPENED OPERATIONALLY WITH INTEL. THEY HAD A COUPLE OF ROUNDS OF LAYOFFS AND THE DIRECTION THAT PAT HAD LAID OUT NOT PICKING THE SIDE HAS MADE IT VERY HARD FOR INVESTORS TO GAUGE IS THIS

COMPANY GOING TO TURNAROUND EVEN IN THE MEDIUM-TERM BECAUSE EVERYBODY ANTICIPATES A BIG PC UPGRADE CYCLE EVEN THOUGH INTEL IS LOSING SHARE OF THE DATA CENTER SIDE THE PC SIDE INTEL IS

STILL DOMINATING AND THEY ARE THE INCUMBENT PLAYERS SO NOT PARTICIPATING IN A RATE CYCLE WOULD BE A VERY BIG DEAL FOR A COMPANY LIKE INTEL AND I'M GUESSING THE BOARDS DID NOT HAVE

ENOUGH CONFIDENCE IN PAT'S STRATEGY SO. MATT: NOT EVEN ENOUGH CONFIDENCE TO LEAVE THEM THERE FOR A MONTH WHILE THEY FIND A NEW CEO TO REPLACE HIM FULL-TIME. THEY HAD TO HAVE HIM OUT INSTANTLY.

WHAT DOES THIS MEAN FOR THE BILLIONS OF DOLLARS OF GOVERNMENT FUNDING INTEL IS EARMARKED TO GET. THEY WILL STILL KEEP GETTING IT BECAUSE WHEN YOU LOOK AT THE PRESIDENT -- PRECEDENT WE HAVE FOR AND

THEY INVESTED IN A FOUNDRY BUSINESS IN THE GLOBAL FOUNDRIES AND BECAME A DESIGN COMPANY. I EXPECT SOMETHING SIMILAR TO HAPPEN WITH INTEL BECAUSE THE GOVERNMENT WANTS TO MANUFACTURING TO STAY IN THE U.S.

SO IF THE FOUNDRY BUSINESS WERE TO BE DIVESTED THEN THEY WOULD CONTINUE TO GET FUNDING BECAUSE AS A MANUFACTURER LIKE TSMC. MATT: THE FOUNDRIES THEY DIVEST WOULD GET THE FUNDING.

MANDEEP: ON THE CHIP DESIGN SIDE THE PC BUSINESS IS STILL VERY HEALTHY. IT WILL GENERATE ITS OWN FREE CASH FLOW SO THAT MAY SUSTAIN ON ITS OWN. SO IT COMES DOWN TO WHETHER FOUNDRY GETS DIVESTED OR NOT, AND I THINK FOR THE

Intel Replaces Gelsinger With Two Interim Co-CEOs

Welcome to the Bloomberg Technology YouTube channel. Subscribe for original series and mini-docs on game-changing technologies, profiles on innovators, live conversations with experts, and breaking technology news & analysis from Bloomberg TV.

Bloomberg Technology

Pat Gelsinger's Retirement and Intel's Leadership Change

Pat Gelsinger retired immediately, leaving Intel without a succession plan and appointing two interim CEOs.

Gelsinger's turnaround strategy failed to meet expectations, likely prompting a search for an external CEO.

The new CEO will likely focus on either chip design or foundry operations, as managing both proved too challenging.

The immediate nature of Gelsinger's departure highlights the board's lack of confidence in his leadership and strategy.

Operational Challenges and Investor Confidence

Intel faced layoffs and strategic uncertainty, making it difficult for investors to assess the company's medium-term prospects.

Intel's dominance in the PC market contrasts with its loss of data center market share, raising concerns about its participation in future upgrade cycles.

The board lacked confidence in Gelsinger's strategy, leading to his immediate removal.

The immediate replacement suggests a critical situation requiring immediate action.

Impact of Government Funding and Potential Divestiture

The impact of Gelsinger's departure on Intel's billions of dollars in government funding is discussed.

A potential divestiture of the foundry business is considered, mirroring past government investments in foundry businesses.

If the foundry business is divested, it is suggested that the funding might still be allocated to the divested entity.

The health of the PC business could sustain the chip design side independently of the foundry business.