As we previewed in December, Bob Swan will step down from Intel’s CEO on February 15th and will be replaced by Pat gelsinger, current CEO of VMWare.
Intel is going through a difficult situation that Swan has not been able to lift, but whose main problem already existed before taking office in January 2019 after serving as interim CEO for seven months.
Different groups of investors such as the hedge fund Third Point had urged the Intel Board of Directors to “explore strategic alternatives” and “get rid of failed acquisitions” but not before criticizing the company for what they considered the “loss of leadership in chip manufacturing«.
Critics have pointed to the fact that Intel’s CEO did not have a technical profile, having previously served as CFO. Pat Gelsinger is the oppositeAs the current CEO of VMWare previously worked at Intel and was in fact its first CTO.
The retirement of Bob Swan – a full-blown forced resignation – has done Intel good. The company rose 10% on the stock market while VMware shares fell by half, 5%. In a separate announcement, Intel has stated that it expects fourth-quarter 2020 revenue and profit to exceed 2019 records and has “made great progress” in developing next-generation 7-nanometer chips.
Goodbye Bob Swan: Pat Gelsinger has a job ahead of him
Intel lost the world’s top semiconductor revenue spot to Samsung in 2018. It was the first time it had happened in decades and a serious warning of what was to come and that it predated Swan’s appointment: serious problems in the transition to 10-nanometer manufacturing processes.
The result has been repeated delays in the supply of CPUs for PCs that led Intel to contract, also for the first time in its history, the manufacture of processors for PCs by external suppliers such as Samsung itself. Historically, Intel’s Client Computing Group (CCG) had always relied on the company’s in-house manufacturing. As resources in those factories became limited, CCG began looking to other resources such as the TSMC foundry to manufacture the chipsets used in Intel-based motherboards and also to Samsung for CPUs.
Loss of market share
Beware AMD. While Bob Swan had no answers to those problems (although we repeat they came from further back) Lisa Su, the CEO of AMD, was pushing various strategies to get closer to Intel. Long in the shadow of Intel’s dominance, AMD today has become a serious challenge for the chip giant since the launch of Zen architecture.
AMD processors (especially those for desktop computers) have gained a foothold in both the retail segment and the complicated OEM channel that Intel has been dominating completely for the past three decades. We have been seeing it with data from retail sales where AMD was gaining share month by month in all regions until the last quarter when the bombshell hit: The share of AMD processors for desktops outperformed Intel for the first time in 15 years.
This week at CES, AMD unveiled the new Ryzen 5000 Mobile and Ryzen 5000HX based on Zen 3 we are seeing many teams with AMDmore than ever in an OEM notebook segment typically dominated by Intel. Another example of the good shape of AMD and the increase in sales of its CPUs.
And in the middle of Apple … The Cupertino giant announced a real bombshell in November: Apple silicon. A program that will be developed over the next two years and with which the most influential firm in the world’s technology will replace Intel’s x86 architecture with ARM’s in its Mac computers.
This strategic move, not expected is less important and in fact may have a great significance in the technology industry and serious consequences for Intel, in addition to the chips themselves that it stops selling to Apple because it is believed that other manufacturers will follow in their footsteps in betting on ARM.
As for Intel, the bet on Pat Gelsinger is positive knowing the background of the former chief technology officer. The company hopes to definitively solve production problems with Fab 42. Considered one of the most advanced semiconductor factories on the planet, is located in Chandler, Arizona, and will create more than 10,000 jobs in an investment that exceeds 7,000 million dollars. The giant hopes with it to advance to 7 nanometer technological manufacturing processes and definitively solve its production problems. We’ll see if it’s not late.