Intel Corp (NASDAQ:INTC) has reportedly narrowed its search for a new CEO. The list of potential candidates has now been whittled down to a few prominent figures, including former board member Lip-Bu Tan, Reuters cites familiar sources.
The struggling American chipmaker expelled CEO Pat Gelsinger on Monday after he failed to impress the board with his turnaround efforts since taking charge less than four years ago.
Intel could not gain market share compared to Nvidia Corp (NASDAQ:NVDA) and Taiwan Semiconductor Manufacturing Co (NYSE:TSM). The stock is down over 52% year-to-date.
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Recently, Intel contacted Tan, who was once seen as a contender for the CEO role. Intel’s board is also considering other candidates. The chipmaker also created a search committee to find a successor.
Tan was an Intel director from September 2022 to August 2024, and his departure marked his clash with Gelsinger on Intel’s turnaround plan.
Tan is known for the turnaround plan as CEO of Cadence Design Systems Inc (NASDAQ:CDNS).
Wall Street analysts re-rated Intel following the CEO’s expulsion.
Truist Securities analyst William Stein reiterated a Hold rating on Intel with a price target of $26.
While Intel’s underperformance during Gelsinger’s tenure as CEO was worse than that of the previous four CEOs, the chipmaker did not outperform the SOX under any of them, and only under Brian Krzanich’s leadership did the stock beat the S&P 500.
Stein credited Gelsinger with making some significant changes at the company, which failed to move the needle for the company.
Stein held that Intel’s decades-long manufacturing superiority led to it missing out on massive technological shifts, including a shift to mobile devices and AI-centric computing.
According to the analyst, Intel’s loss of manufacturing superiority to Taiwan Semiconductor in ~2017 exposed Intel’s less-than-perfect semiconductor design choices.
Therefore, Stein suggested selling the whole company or a part of it. His other suggestions included splitting the manufacturing business from the products business, significant downsizing, and aggressive asset monetization.
Benchmark analyst Cody Acree maintained a Hold rating on Intel.
Intel has named two senior leaders, David Zinsner and Michelle Johnston Holthaus, interim co-CEOs while the board searches for a new CEO, the analyst noted.
The company tapped CFO Zinsner and Holthaus, who had been general manager of Intel’s Client Computing Group, as CEO of Intel Products. Chair Frank Yeary will become interim executive chair during the transition period. Intel noted that its Foundry leadership structure remains unchanged.
Acree has been skeptical of Intel’s ability to successfully manage so many simultaneous objectives, including re-establishing its technology leadership in processor design and manufacturing and developing a new GPU solution to compete with Nvidia.
The analyst noted that the largest of these issues continues to be Intel’s trailing manufacturing capability versus Taiwan Semiconductor and Intel’s need to include the AI accelerator opportunity.
Acree flagged the current focus on the potential separation of Intel’s Products and Foundry business, which would deprive shareholders of the significant progress the company has made in both halves of the business.
Still, the separation of the foundry business may be the only option that calms the Street, although it would likely entail Intel foregoing the $7.8 billion of CHIPS Act funding, as the analyst stated.
Therefore, Acree does not expect a management change to pose a material fundamental catalyst anytime soon, given the size and complexities of Intel’s intertwined issues.
Price Action: INTC stock is down 5.62% at $22.59 at last check Tuesday.
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