Intel has changed its CEO again. Although there is no sign of it, it was to be expected. They have changed CEOs three times in the past six years, but the situation is getting worse, and the crisis is getting deeper and deeper. What can be used to save this iconic Silicon Valley chip giant? Maybe they need to find their own Su Zifeng.

Give the veteran a decent chance

On Sunday Western Time, Intel's board of directors suddenly announced the retirement of CEO Pat Gelsinger (Pat Gelsinger); 63-year-old Kissinger resigned as CEO and withdrew from the Intel board of directors, with immediate effect.

Intel CFO David Zinsner (David Zinsner) and product leader Johnston Holthaus (Johnston Holthaus) will co-serve as interim CEOs, waiting for the board of directors to find a new CEO candidate. At the same time, Hollhouse has also been appointed as the newly created position of CEO of Intel Products. Intel shares surged 6% on Monday after Kissinger left school.

In the Intel board announcement, it was mentioned that Kissinger is a “retirement” (Retirement). This is clearly a euphemistic and decent statement. Kissinger is 63 years old. Although he is considered an old man, CEOs in the semiconductor industry are generally over half a hundred years old. The older Nvidia CEO Huang Renxun, TSMC CEO Wei Zhejia, and Broadcom CEO Chen Fuyang are still at the peak of their careers.

Moreover, if a CEO retires normally, the board of directors will also select a successor in advance and set a transition period to help the company smoothly hand over the job without immediately dismissing the CEO position like Intel. Company executives act as CEO, waiting for a turbulent period of time to select a new CEO.

Also, Kissinger also visited Musk Tesla and xAI's data center in Memphis, Tennessee last week to try to sell Intel's CPUs in the AI data center field. There was no sign of retiring at all. Although Nvidia's GPUs are the strategic weapon for AI data centers, data centers still need CPUs, and Intel needs to compete with AMD for this part of the business.

It's clear that Kissinger was fired by Intel's board of directors. Although it hasn't been four years since he took office, and hasn't even reached the time point he set for a reversal of performance, the Intel board of directors has lost patience and completely lost confidence in Intel's performance and future prospects for reversal under his administration.

As early as last month, it was rumored that Intel's board of directors had hired Morgan Stanley as a strategic advisor to discuss and develop defensive measures to deal with possible aggressive investors. They had sought Morgan Stanley four years ago, but in the end, they were still pressured by institutional investors to replace CEO Bob Swan (Bob Swan) and bring back Kissinger to lead the company from VWare.

According to people familiar with the matter, the Intel board of directors gave Kissinger a decent chance: either choose to leave the job himself or get officially fired. In the end, Kissinger chose to leave decently, and Intel's board of directors also gave this veteran who had been with the company for more than 40 years a “retirement” farewell.

Of course, Intel's board of directors didn't lose out to Kissinger. Even though Intel's performance was a mess this year, the board of directors gave Kissinger enough bonuses. He will leave the company with a total cancellation fee of 12 million dollars, which includes an 18-month base salary of 1.9 million dollars, a 1.5 times performance bonus totaling 5.1 million dollars, and an 11-month annual bonus.

　I fell to the bottom and completely lost patience

In 2021, the demoralized Intel invited back Kissinger, who had been with Intel for 30 years, hoping that he could re-inject the long-lost engineer culture into Intel, bring back technological confidence to the chip giant that started with technology, and help Intel return to the peak of the industry. Kissinger used to be the CTO of Intel and the main architect of the legendary 80486 processor, and has a great reputation both inside and outside the company.

At the beginning, in order to take Kissinger back from VMware to Intel, Intel's board of directors was also full of sincerity. According to Intel's documents submitted to the US Securities and Exchange Commission (SEC), Kissinger's total salary in 2021 was 0.1786 billion US dollars, of which about 79% was stock awards; total compensation for 2022 and 2023 was 11.61 million and 16.86 million US dollars, respectively. Even though Intel's revenue in fiscal year 2023 fell 14% and profit fell 79%, Kissinger received a 45% salary increase.

After Kissinger's return, he proposed an IDM 2.0 transformation strategy for Intel. He ambitiously plans to invest a total of 100 billion US dollars over the next ten years to build 8 chip factories in the US, Germany, Ireland, etc., adopt the industry's latest process technology, revive Intel's technical advantage in the chip field, and become the second-largest chip foundry in the world after TSMC by 2030.

However, the idea is beautiful; the reality is too cruel. In the three years that Kissinger led Intel to actively transform foundries, Intel's core business continued to decline, and even deteriorate. In fiscal year 2023, Intel fell 30% in the 2020 fiscal year before Mr. Singer took office, a sufficient reduction of 23.7 billion US dollars, and net profit fell 80%.

At the same time, Kissinger's IDM 2.0 transformation strategy did not work. Over the past few years, Intel has invested tens of billions of dollars to build chip factories, but has so far failed to generate actual revenue. Even under ideal circumstances, it would not be possible to have customers until at least 2025, and at least until 2027 to actually balance profits and losses. The chip foundry business lost more than 7 billion US dollars last year.

Entering 2024, Intel's situation was even worse. In the second quarter of this year, Intel lost 1.6 billion dollars. Kissinger announced a 15% global layoff and a cost cut of 10 billion US dollars. After the earnings report was released, Intel's stock price plummeted 25%, the biggest drop in the company's history.

What makes Intel even more ashamed is that they were kicked out of the Dow Jones Index constituent stock this month and replaced by Nvidia, the new flagship of the semiconductor industry. Indeed, today Intel can no longer represent the semiconductor industry.

Since this year, Intel's stock price has plummeted by 53%. Currently, the market capitalization is only 97 billion US dollars, which is only half that of Qualcomm and AMD, and they haven't even designed the Arm High chip. As Nvidia's market capitalization soared by more than 3.4 trillion dollars, founder and CEO Hwang In-hoon, who holds 3.5% of the shares, also surpassed 100 billion US dollars in assets, which is even higher than Intel's market capitalization.

Ironically, Intel proposed to buy Nvidia for 2 billion dollars in 2005, but the Intel board of directors at the time thought there was no need to rashly buy a small GPU company, so Intel's then-CEO Paul Otellini (Paul Otellini) abandoned the acquisition plan and instead invested in the development of Intel's own graphics processor. The project leader at the time was Kissinger.

Now that time has changed, Nvidia has taken advantage of the AI era to become the number one stock in the chip industry, while the former giant Intel has become an immortal, and has even become an acquisition target. According to authoritative media reports, Qualcomm has already approached Intel to acquire its PC chip design business, but the deal faced severe anti-monopoly approval barriers, and Qualcomm had to retreat due to difficulties.

Although Kissinger has always tried to appease investors, and Intel's chip foundry will eventually be successful, it is clear that Intel's board of directors has lost patience and no longer believes in Kissinger's business reversal plans. In order to boost stock prices, Intel needs to change its CEO and choose a reversal strategy.

　Three CEOs were fired in six years

Kissinger has been leading Intel for less than four years, and the results he handed over are certainly disappointing. But he is already the third CEO that Intel has fired in just six years. Moreover, every time, Intel's board of directors abruptly dismissed the CEO position without a successor.

In Intel's 56-year history, there have been only eight CEOs in total. But in the past six years alone, they replaced three CEOs. Although every CEO leaves school for their own reasons, they all have the same root cause behind it: Intel is facing a serious technical and business crisis.

In June 2018, Intel's board of directors suddenly announced the departure of then-CEO Brian Krzanich (Brian Krzanich) for violating company policies. The Intel investigation found that Kozaki had a close relationship with a female employee of the company. Although the relationship was mutually enjoyable and there was no sexual harassment, it still violated the moral code of “prohibiting close contact between executives and subordinates.”

Kozek worked for Intel for 36 years and assumed the position of CEO in 2013. Although his predecessor, Alderning, retired voluntarily and was not suddenly fired, outsiders generally believe that Alderning did not keep up with market trends, causing Intel to miss out on the trend of the mobile era and basically did not gain a share in the smartphone market.

It is worth mentioning that Alderning once refused to develop a processor for the iPhone. Because he wasn't sure how much market space Apple smartphones could gain, and the price offered by Apple was too low to bring financial returns to Intel. Many years later, Audening confessed that he made a serious mistake and completely ceded the smartphone industry to the Arm lineup of chip manufacturers.

Kozek's heavy responsibility after taking office was transformation. After he took office, he tried to lead Intel's transformation from a PC-centered company to a data-centered enterprise and expand into emerging fields such as autonomous driving and artificial intelligence. During his five years in office, he invested over 70 billion dollars to complete many strategic acquisitions such as MobilEye and Altera in an attempt to strategize the future of Intel.

However, the strategic layout of these cutting-edge technologies did not bring significant returns to Intel, and Mobileye and Altera did not develop smoothly after entering the Intel camp. At the same time, Intel made the most fatal mistake in the core chip business: it did not follow up on extreme ultraviolet lithography (EUV) technology in a timely manner, causing the chip manufacturing process to completely lag behind TSMC and Samsung.

This mistake is the root cause of the continued decline in Intel's core business over the past decade. Intel continues to be delayed at many nodes such as 10 nm, 7 nm, and 5 nm. It can only watch as technology rivals such as AMD and Qualcomm surpass themselves with process advantages and continue to encroach on their market share. Intel was only able to hand over its flagship chip to TSMC for OEM work.

After Koseqi was fired, CFO Si Ruibo held the temporary CEO position until January of the following year when he became the official CEO. His rise broke with Intel's tradition of succession and was the first CEO in Intel's history to have a non-technical background. Not surprisingly, Sribo was unable to reverse Intel's technical backwardness.

In his two and a half years as CEO, Intel continued to face multiple challenges, including multiple delays in 10nm process technology, market share being encroached upon by competitors, loss of Apple's cellphone's baseband chip business, and Apple's gradual abandonment of Intel processors in the Mac product line.

Perhaps from a financial background, Si Ruibo also made a fatal mistake: he refused to invest in OpenAI. When OpenAI transformed into a limited profit organization and began external financing, it actively sought investment from Intel. Intel only needs 1 billion dollars to obtain 15% of OpenAI's shares, and can continue to subscribe 15% if Intel CPUs are offered at a low price.

However, Si Ruibo believes that generative AI cannot be commercialized in the short term, and that this investment may be difficult to bring actual returns, and ultimately rejected OpenAI's request. Now that OpenAI's valuation is close to 160 billion dollars, Intel is once again missing out on a wave of technology.

This series of negative effects caused Intel's stock price to continue to be sluggish, and the Intel board of directors was pressured by active investors such as The Third Point, and eventually forced to replace Si Ruibo, and invited back Kissinger, who was the former head of Intel's technology, hoping to re-inject the engineer culture into Intel and regain technical confidence in the chip field.

Judging by the results, Kissinger also failed. During his tenure, Intel's performance and stock price continued to plummet, and the IDM 2.0 strategy to transform chip foundries failed to convince the capital market. Both the capital markets and Intel's board of directors have clearly lost confidence and patience.

　Intel needs a Su Zifeng

Intel's business reversal and strategic transformation are undoubtedly the most noteworthy challenges in the technology industry. This chip giant, which pioneered the PC era and reached the pinnacle of the industry, has successively missed many technological waves such as mobile devices, chip processes, and artificial intelligence over the past 10 years. It completely lags behind its competitors in terms of technology, and eventually fell into its current trough.

Now that Kissinger is out of class, who can save Intel and get this iconic Silicon Valley company back on track? Where will Intel's chip foundry business go in the future? This business has already invested 60 billion dollars, and it will even continue to invest tens of billions of dollars to actually generate revenue.

Also, Intel was unable to sell its chip foundry business because it received $8 billion in grants and $10 billion in low-interest loans from the US government. It may also be difficult to find the next company to take over such a heavy business.

Today's Intel needs its own Su Zifeng. This year coincides with the 10th anniversary of Su Zifeng as AMD's CEO. Over the past ten years, she turned AMD from a “dying company” on the verge of bankruptcy with a market capitalization of only 2 billion dollars to a chip giant with a market capitalization of more than 230 billion dollars, staging Jobs' magical experience of coming back to life.

What did Su Zifeng rely on to reverse AMD? Based on technology, play steady and steady. After taking office, Su Zifeng first stabilized AMD's revenue in the gaming sector and helped the company get out of financial trouble. What followed was her core move to rebuild AMD: restructure the core architecture and lead AMD from a “cheap alternative” to a real market competitor. The Ryzen series brought AMD back to the desktop processor market.

At a time when Intel continues to jump tickets due to process issues, AMD can always rely on TSMC's technical advantages to continuously launch 7nm and 5nm chips. In the end, it surpassed Intel in terms of performance and energy efficiency. It is no longer the catcher behind Intel, but an opponent that can fully compete with Intel.

At the same time, in the face of technological trends in the generative AI era, AMD is also more responsive than Intel. They not only continued to improve EPYC processor performance, but also launched their own AI accelerator products, hoping to fully compete with Nvidia. Although Nvidia's CUDA ecosystem is still unshakable, AMD has also begun to continue to gain market share, and has made up for its own business shortcomings through strategic acquisitions such as Xilinx and ZT System.

Under Su Zifeng's ten-year leadership, AMD has grown from 20% market share in 2014 to 29% today, and accounts for 24% of the data center market. Although AMD's revenue is still lower than Intel's, the capital market gave a completely different forecast: AMD's market capitalization reached 230 billion US dollars, more than double that of Intel.

Su Zifeng's salary last year was as high as 30.5 million US dollars, nearly double that of Kissinger. Among them, rewards for stocks and options were as high as 27.79 million US dollars. Judging from the results she handed over, “Mom Su” was worth every cent of her salary.

Over the past 10 years, Intel has continuously misjudged technology trends, continuously missed many opportunities, and eventually fell into a trough of decline. Perhaps it just confirms the famous quote of their legendary CEO Andy Grove (Andy Grove): “Success breeds complacency; complacency breeds complacency; complacency breeds failure; only paranoid people can survive” (Success breeds complacency). Complacency failure. (Only the Paranoid Survive)