Intel Corp. has decided to replace CEO Bob Swan with industry veteran and VMware CEO Pat Gelsinger, less than one month after activist investor Third Point Partners urged the chipmaker to retain an investment advisor to explore strategic alternatives.
Intel announced on Wednesday that Gelsinger will take the helm from Swan on Feb. 15. Gelsinger started his career at Intel and worked at the company for 30 years. Gelsinger will also join the Intel board upon assuming the CEO role.
“Pat is a proven technology leader with a distinguished track record of innovation, talent development, and a deep knowledge of Intel,” Chair Omar Ishrak said in a statement. “He will continue a values-based cultural leadership approach with a hyper focus on operational execution.”
An Activist’s Influence
News of Gelsinger’s appointment comes weeks after activist Third Point demanded Intel work to boost its position as a major provider of processor chips for PCs and data centers after losing its market share to rivals. The shareholder noted that customers like Apple, Microsoft, and Amazon are starting to develop their own in-house silicon solutions and sending those designs to be manufactured in East Asia. The activist suggested Intel separate its chip design from its semiconductor fabrication plant manufacturing operations.
Moreover, Third Point said Intel must control its “human capital management issue,” as many of the company’s talented chip designers and leaders have left the company, while those who remain are becoming “demoralized by the status quo.”
At the time, Intel said it "welcomes input from all investors regarding enhanced shareholder value," adding that it looks forward to engaging with Third Point on their ideas toward that goal.
Third Point CEO Dan Loeb applauded the CEO change Wednesday. “Swan is a class act and did the right thing for all stake holders stepping aside for Gelsinger,” he said on Twitter.
Intel’s announcement of its CEO transition comes ahead of its fourth quarter earnings report, expected next week. Intel said Wednesday that it expects its fourth-quarter 2020 revenue and EPS to exceed its prior guidance provided in October. Intel also said it expects to post record sales for 2020, boosted by demand for PCs and cloud computing during the pandemic.
Intel shares fell around 17% last year when the stock of many of its competitors, including Micron, Automated Micro Devices, and NVIDIA, soared. Shares in Intel jumped 8% in morning trading Wednesday, while shares in VMware fell nearly 7%.