Chipmaker Intel said Wednesday it would replace chief executive officer Bob Swan with Pat Gelsinger, CEO of VMware Inc, starting February 15.
The company’s shares rose more than 8 percent in morning trading.
Intel, long the world leader in chip manufacturing technology, has lost its manufacturing lead in recent years and is now considering whether to outsource some of its flagship chips or CPUs for central processors, which will be released in 2023. Activist investor Third Point LLC last month the Intel board sent a letter asking it to consider keeping chip design and manufacturing under one roof.
Gelsinger, a former Intel executive, has been CEO of VMware since 2012. During this time, he led the company, whose software helps companies get more work out of data center servers, successfully by transitioning from private data centers to public data center cloud providers, including through an important contract with Amazon Amazon Web Services.
Gelsinger joined Intel when he was 18 and the company helped him attend Santa Clara University and Stanford University when he was there for 30 years. In a letter to Intel employees, Gelsinger compared moving with “home”.
“After starting my career at Intel and learning at the feet of Grove, Noyce and Moore, it is my privilege and honor to return to this leadership position,” Gelsinger said in a statement. “I have great respect for the company’s rich history and the powerful technologies that have created the world’s digital infrastructure.”
Sources familiar with the matter told Reuters that Gelsinger had previously turned down the top job at Intel and was not immediately clear what had changed his mind.
Third Point’s Dan Loeb had sent a letter to Intel’s board of directors late last month urging the company to curb the outflow of engineers to rival companies, despite no longer holding Swan responsible for the company’s problems.
On January 4, according to a person familiar with the matter, Swan met with Dan Loeb, chief executive of Third Point, and Omar Ishrak, chairman of Intel. Loeb urged Intel to find new leaders and potential new board members and held at least one follow-up meeting.
VMware announced that a CEO search has been initiated and that Zane Rowe, the company’s chief financial officer, will serve as interim chief executive after Gelsinger’s departure on February 12th.
Intel also said Wednesday that it expects to exceed its fourth quarter 2020 financial guidance and that it has made “strong strides” in solving problems with its 7-nanometer chip manufacturing technology.
“He’s great from a credibility standpoint – he’s probably high on the list of most people who want to see them,” said Stacy Rasgon, an analyst at Bernstein, of Gelsinger’s appointment.
“He’s had a long career there and he’s technical so he can tackle both technical and cultural issues. The problem is what the ship he’s going to be sailing like? The next two or three years are set in stone regardless of who is there. “
Swan, a former eBay CFO, was Intel’s chief financial officer and was appointed interim CEO when Brian Krzanich stepped down in June 2018. Swan was named permanent boss in early 2019 after an extensive search failed to reveal an outside candidate.
© Thomson Reuters 2020
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