(Bloomberg) — Intel Corp.’s search for a new chief executive will focus on outsiders, with the chipmaker citing Marvell Technology Inc. Chief Matt Murphy and former Cadence Design Systems Inc. CEO Matt Murphy. Candidates such as CEO Lip-Bu Tan will be considered. According to people familiar with the situation.
The company has hired executive search firm Spencer Stuart to help find a new CEO and is evaluating candidates, said the people, who spoke on condition of anonymity because deliberations are private. This includes finding talent beyond Intel’s walls. In other words, it means breaking tradition.
The sudden departure of CEO Pat Gelsinger this week sets off an urgent search for new leadership at a time when the chipmaker’s fortunes have faltered and its bench is depleted after years of management turnover. Since taking the reins just three years ago, Gelsinger has focused on a complex and expensive effort to turn around the struggling company.
That didn’t give him time to resurrect one of Intel’s other legacies: the executive training programs that once supplied the rest of the industry’s leaders. Currently, Chief Financial Officer (CFO) David Zinsner and Vice President Michelle Johnston Holthaus are serving as interim co-CEOs.
Marvell shares fell as much as 2.3% on Tuesday after Bloomberg News reported that Murphy was under consideration. Intel continued its downward trend since Monday, falling more than 5% as of 1:09 p.m. in the New York market.
Since its founding in 1968, all but one of the company’s leaders have grown domestically, the exception being Bob Swan, who took over as a stopgap measure when the board was forced to fire Brian Krzanich. The drama broke the carefully choreographed soap opera that had contributed to the company’s 50 years of stability. Krzanich’s tenure also saw the departure of numerous Intel veterans.
As the board searches for a permanent replacement for Gelsinger, it may be difficult to choose from within, analysts say. In part, this is because early departures mean 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 immediately shake things up.
“It may be difficult to find a replacement with the right experience and background, with the ability to manage a complex organization like Intel and deal effectively with numerous headwinds,” John Vinh, an analyst at KeyBanc Capital Markets, wrote 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 Tan, 65, who served on Intel’s board of directors until earlier this year, was vying for the position.
One way to balance the insider-outsider equation would be to hire former Intel executives, like Gelsinger, who left during management turmoil in recent years.
Those candidates include Stacy Smith, a former Intel executive who joined the company’s board of directors this year. The former Intel CFO, who also worked in the company’s sales organization, left during Krzanich’s tenure in 2018 and was previously a candidate for the top position. The most recent to leave is Gregory Bryant, who ran Intel’s personal computer division. He joined Analog Devices Inc. in 2022.
Also in the group is Ampere Computing LLC CEO Renee James, who founded a startup seeking to compete with Intel in server chips. She served as president of Intel until Krzanich stepped down. Kirk Schaugen, a former Lenovo Group executive who left Intel in 2016, was in charge of Intel’s server chip division when Intel dominated the industry.
Another potential recruiting pool: Intel’s largest customers, many of whom have launched their own chip programs with varying degrees of success. Johny Srouji is senior vice president of Apple Inc.’s successful internal chip division. The iPhone maker’s in-house 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 formed significant chip teams.
When Intel tried to bring Gelsinger back to the company about four years ago, several other chip company leaders were reported to be under consideration, including Marvell’s Murphy. Intel has now approached him for the latest search, the people said.
Despite its severe decline in fortunes, Intel still remains one of the most important companies in the technology industry. The company remains one of the largest chip manufacturers by revenue, and more than 70% of the world’s personal computers and server systems run on its processors. The plan to build additional factories in the United States is a cornerstone of the federal government’s push to produce more chips on American soil.
Whoever Intel chooses, the new CEO will need time to make up for the more than $20 billion in revenue it has lost to competitors over the past few years.
“Besides being without an executive, the addition of a new external CEO to Intel represents several years of work in a more intense innovation cycle than ever before,” said Hans Mosesmann, analyst at Rosenblatt Securities.
Given the technical nature of the industry (chip design and manufacturing typically requires a mix of electronics, chemistry and physics led by teams of PhDs), Intel may be reluctant to permanently promote CFO Zinsner. When CFO Swan was the company’s interim leader, analysts questioned whether he understood the technical aspects of the business well enough to make strategic decisions.
Gelsinger, who returned to Intel after a decade, spoke about his connection to the company’s past and his plans to restore its strength. Now, that may no longer be a selling point. Intel’s immediate need to win over its competitors and turn them into customers for its outsourced manufacturing business may involve cutting out long-term Intel followers.
If your board is looking for the most immediately transferable technology, look no further than Taiwan Semiconductor Manufacturing Co., Advanced Micro Devices Inc. and Nvidia Corp. would be the most obvious talent pool. In the company’s last CEO search, AMD’s Lisa Su was cited as the favorite choice by many analysts. But since then, her company has achieved greater success, taking market share from Intel and emerging as a top contender to overtake Nvidia in artificial intelligence chips. AMD is currently worth more than twice as much as Intel by market capitalization.
Recruiting at Nvidia can also be difficult. Co-founder and CEO Jensen Huang has created a unique management structure that eschews traditional hierarchies. Huang has dozens of direct reports in a flat structure, making it nearly impossible to identify which of them are best positioned to advance to the next level at other companies like Nvidia or Intel.
Meanwhile, Taiwan’s TSMC has surpassed Intel in manufacturing capabilities and established itself as the leader in chip production for other companies. They manufacture some of the world’s most advanced chips, working for Apple, AMD, Nvidia and many others. The Hsinchu headquarters includes Intel veteran Kevin Zhang and his fellow co-chief operating officer Cliff Hou, who are considered instrumental in driving TSMC’s remarkable growth. In the US, TSMC Arizona CEO YL Wang recently scored a notable win, helping the plant achieve better production than similar facilities in the country.
But it’s unclear whether TSMC’s senior leaders would consider scrapping the world’s leading contract chipmaker to save a much less stable company. But former TSMC Chairman Mark Liu, who spent the early years of his career at Intel and retired from the Taiwanese chipmaker in early 2024, may be someone Intel can tempt, despite being older than the average American CEO. Mr. Ryu turned 70 this year.
“We anticipate that it will not be easy for Intel to find a new leader qualified to lead Intel through this challenge,” Chris Caso, an analyst at Wolfe Research, wrote in the report. “Gelsinger had a lot of Intel experience, but there weren’t many viable candidates.”
–With assistance from Debby Wu.
(Update on Marvell stock in 5th paragraph)
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