(Bloomberg) — Intel Corp.’s search for a new CEO will focus heavily on outsiders, with the chipmaker considering candidates such as Marvell Technology Inc. head Matt Murphy and former Cadence Design Systems Inc. CEO Lip-Bu Tan, according to people familiar with the situation.
The company has hired executive search firm Spencer Stuart to help find a new chief and is reviewing candidates, said the people, who asked not to be identified because the deliberations are private. This means, among other things, that we have to look far beyond the walls of Intel for talent: a break with tradition.
The sudden resignation of CEO Pat Gelsinger this week set in motion an urgent search for new leadership at a time when the chipmaker’s fortunes are shaky and its bench is depleted by years of management turnover. Gelsinger took over just three years ago and has since focused on a complex, expensive effort to turn around the troubled company.
That didn’t give him time to revive one of Intel’s other legacies: an executive training program that once produced leaders for the rest of the industry. For now, Chief Financial Officer David Zinsner and Executive Vice President Michelle Johnston Holthaus will serve as interim co-CEOs.
Marvell shares fell as much as 2.3% on Tuesday after Bloomberg News reported that Murphy was under treatment. Intel fell more than 5% as of 1:09 p.m. in New York, continuing the decline that began Monday.
All but one of the company’s leaders since its founding in 1968 have been homegrown, with the exception, Bob Swan, given the job as a stopgap measure when the board was forced to fire Brian Krzanich. That drama punctuated a series of carefully choreographed successes that contributed to the company’s fifty years of stability. Krzanich’s tenure also saw the departure of several Intel veterans.
As the board hunts for Gelsinger’s permanent replacement, analysts say, choosing from within could be difficult, in part because the earlier exodus means there are fewer strong internal candidates. On the other hand, there is little optimism that the company will be able to bring in an outside savior who can shake things up immediately.
“It can be challenging to find a replacement with the right experience and background, with the capacity to manage a complex organization like Intel and able to deal effectively with the multitude of headwinds,” KeyBanc wrote Capital Markets analyst John Vinh in a note Monday. .
Intel declined to comment on potential candidates for the CEO role. Marvell, Murphy and Tan did not immediately respond to requests for comment. Reuters previously reported that 65-year-old Tan, who served on Intel’s board until earlier this year, was considered for the job.
One way to balance the insider-outsider equation would be to hire a longtime Intel executive who left during the management tumult of recent years – like Gelsinger.
Such candidates include Stacy Smith, a former Intel executive who joined the company’s board of directors this year. The ex-Intel CFO, who also spent time in the company’s sales organization, left during Krzanich’s tenure in 2018 and was a previous candidate for the top job. A more recent departure is Gregory Bryant, who led Intel’s personal computing unit. He joined Analog Devices Inc. in 2022.
Also in this cohort is Renee James, CEO of Ampere Computing LLC, who founded a startup trying to rival Intel in server chips. She was president of Intel until she was sidelined by Krzanich. Kirk Skaugen, a former Lenovo Group Ltd. executive who left Intel in 2016, was in charge of Intel’s server chip unit when it dominated the industry.
Another potential recruiting pool: Intel’s largest customers, many of which have embarked on their own chip programs with varying degrees of success. Johny Srouji is the senior vice president of Apple Inc.’s successful internal chip division. The iPhone maker’s internal program started a trend that has been replicated elsewhere, most notably by Amazon.com Inc.’s AWS unit. Microsoft Corp., Alphabet Inc.’s Google and Meta Platforms Inc. have also built significant chip teams.
When Intel tried to bring Gelsinger back to the company about four years ago, it was reported that several other chip company leaders, including Marvell’s Murphy, were under consideration. Intel has now approached him for the latest search, the people said.
Despite a serious decline in its fortunes, Intel remains one of the most important companies in the technology industry. It remains among the largest chipmakers in terms of revenue, and more than 70% of the world’s personal computers and server machines run on its processors. The plan to build additional factories in the US is a cornerstone of the federal government’s push to produce more chips on American soil.
Whichever Intel chooses, the new CEO will need time to make up for the more than $20 billion in revenue it has lost to competitors in recent years.
“Besides the lack of a bench, a new outside CEO coming to Intel is a multi-year move that is a tall order in a cycle of innovation that is more intense than ever,” said Rosenblatt Securities analyst Hans Mosesmann.
Given the technical nature of the industry – chip design and manufacturing require a mix of electronics, chemistry and physics that is typically led by teams of PhDs – Intel may be reluctant to promote CFO Zinsner on a permanent basis. When CFO Swan was the company’s interim leader, analysts wondered whether he understood the technical side of the business well enough to make strategic decisions.
Gelsinger, who returned to Intel after a decade, spoke about his ties to the company’s past and his plan to restore its strengths. Now that may no longer be a selling point. The immediate need to win over Intel’s competitors and turn them into customers for its outsourced manufacturing operations could mean the long-term exclusion of Intel acolytes.
If the board is looking for the most directly transferable skills, Taiwan Semiconductor Manufacturing Co., Advanced Micro Devices Inc. and Nvidia Corp. are the most obvious talent pools. During the company’s latest CEO search, AMD’s Lisa Su was named the top choice by many analysts. But since then, the company she leads has risen to greater levels of success, taking over Intel’s market share and becoming the top contender to catch Nvidia in the artificial intelligence chip space. AMD is currently worth more than twice as much as Intel in terms of market capitalization.
Recruiting at Nvidia can also be difficult. Co-founder and CEO Jensen Huang has created a unique management structure that eschews a traditional hierarchy. Huang has dozens of direct reports in a horizontal structure, making it virtually impossible to determine which of them is best positioned to move up: at Nvidia or at another company like Intel.
Taiwan’s TSMC has now surpassed Intel in production capabilities and has made itself the leading producer of chips for other companies. It produces the most advanced chips in the world and works for Apple, AMD, Nvidia and many others. At the Hsinchu headquarters, Intel veteran Kevin Zhang and his fellow deputy co-Chief Operating Officer Cliff Hou are among the executives considered instrumental in driving TSMC’s meteoric rise. In the US, YL Wang, CEO of TSMC Arizona, recently scored a notable victory, allowing the plant to achieve better yields than the comparable facility domestically.
However, it is uncertain whether senior TSMC leaders would consider jettisoning the world’s top contract chipmaker to save a much less stable company. But former TSMC chairman Mark Liu, who spent some early years of his career at Intel and retired from the Taiwanese chipmaker earlier in 2024, could be someone who can sway Intel – even though he is older than an average US CEO. Liu turns 70 this year.
“We do not expect it will be easy for Intel to find a new leader with the qualifications to lead Intel out of this challenge,” Wolfe Research analyst Chris Caso wrote in a report. “Gelsinger came with a wealth of Intel experience, and there weren’t many viable candidates.”
–With help from Debby Wu.
(Updates with Marvell stock in fifth paragraph.)
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