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| Pat Gelsinger (R) will succeed Bob Swan (L) as Intel CEO © FT montage, Bloomberg |
The company's shares were up more than 8 percent in morning
trading.
Intel, long the world leader in chip-making technology, has
lost its manufacturing edge in recent years and is now debating whether to
outsource some of it flagship central processor unit chips, or CPUs, slated for
release in 2023. Activist investor Third Point LLC last month sent Intel's
board a letter asking it to consider whether to keep its chip design and manufacturing
operations under one roof.
Gelsinger, a former Intel executive, has served as the CEO of
VMware since 2012. During that time, he successfully guided the company, whose
software helps companies squeeze more work out of data center servers, through
the transition from privately owned data centers to public cloud providers, in
part by striking a seminal deal with Amazon's Amazon Web Services.
Gelsinger joined Intel when he was 18, and the company
helped him attend Santa Clara University and Stanford University as he spent 30
years there. In a letter to Intel's employees, Gelsinger likened the move to
coming "home."
"Having begun my career at Intel and learned at the
feet of Grove, Noyce, and Moore, it's my privilege and honour to return in this
leadership capacity," Gelsinger said in a statement. "I have
tremendous regard for the company's rich history and powerful technologies that
have created the world's digital infrastructure."
Sources familiar with the matter told Reuters that Gelsinger
had turned down the top Intel job before, and it 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 rein in an outflow of engineers
to rival firms, though he stopped short of blaming Swan for the company's
troubles.
On January 4, Swan met with Third Point Chief Executive Dan
Loeb and Intel Chairman Omar Ishrak, according to a person familiar with the
matter. Loeb pushed Intel to find new executives and potential new board
members and held at least one followup meeting.
VMware said it was initiating a CEO search and that Zane
Rowe, the company's chief financial officer, would serve as its interim chief
after Gelsinger departs on February 12.
Intel on Wednesday also said that it expects to beat its
financial forecast for the fourth quarter of 2020 and that it has made
"strong progress" in addressing issues with its 7-nanometer chip
manufacturing technology.
"From a credibility standpoint, he's great - he's
probably the one at the top of most people's list for who they would want to
see," Stacy Rasgon, an analyst at Bernstein, said of Gelsinger's
appointment.
"He had a long career there and he's technical, so he
can address both the technical issues and cultural issues. The issue is, what's
the ship look like that he's going to be running? The next two or three years
are set in stone regardless of who is there."
Swan, a former chief financial officer from eBay, had served
as Intel's finance chief and was named its interim CEO when Brian Krzanich
resigned in June 2018. Swan was made permanent chief in early 2019 after an
extensive search failed to yield an external candidate.
© Reuters