Intel considers outsiders for CEO, including Marvell chief

(Bloomberg) — Intel Corp’s search for a new chief executive will focus largely on outsiders, with the chipmaker considering candidates such as Marvell Technology Inc. chief Matt Murphy and former Cadence Design Systems Inc. CEO Lip-Bu Tan people. According to people familiar with the matter.

The company has hired executive search firm Spencer Stuart to help find a new CEO and is evaluating candidates, people familiar with the matter said. The person spoke on condition of anonymity because the deliberations are private. This includes looking beyond Intel’s walls to find talent—breaking with tradition.

The sudden ouster of CEO Pat Gelsinger this week triggered an urgent search for new leadership at a time when the chipmaker’s fate hangs in the balance and its bench is reeling from years of management turnover. And exhausted. Gelsinger took over just three years ago and has since focused on a complex and expensive effort to turn around the troubled company.

That didn’t give him time to revive one of Intel’s other legacies — an executive training program that once provided leaders for other parts of the industry. Currently, Chief Financial Officer David Zinsner and Executive Vice President Michelle Johnston Holthaus serve as interim co-CEOs.

Marvell shares fell 2.3% on Tuesday after Bloomberg reported that Murphy was under consideration. Intel shares were down more than 5% as of 1:09 p.m. in New York, extending a downward trend that began on Monday.

Since its founding in 1968, all but one of the company’s leaders have been homegrown, with the exception of Bob Swan, who was forced to oust Brian Koza after the board Brian Krzanich was offered the position as a stopgap measure. The farce upended a series of carefully crafted succession plans that had contributed to the company’s fifty years of stability. During Krzanich’s tenure, a number of Intel veterans also left.

Analysts say it may be difficult to choose from within as the board searches for Kissinger’s permanent successor, in part because an earlier departure means there are fewer strong internal candidates. On the other hand, there is less optimism that the company can bring in an outside savior who can immediately turn things around.

“It may be challenging to find a replacement with the right experience and background, the ability to manage a complex organization like Intel, and the ability to effectively navigate the numerous headwinds,” KeyBanc Capital Markets analyst John Vinh wrote in a note on Monday.

Intel declined to comment on potential candidates for the CEO position. Marvell, Murphy and Tan did not immediately respond to requests for comment. Reuters previously reported that Tan, 65, who had served on Intel’s board earlier this year, was vying for the position.

One way to balance the internal and external balance is to hire an old Intel executive who left during a period of management turmoil in recent years — like Gelsinger.

The candidates include Stacy Smith, a former Intel executive who joined the company’s board of directors this year. The former Intel CFO, who also worked in the company’s sales department, left in 2018 during Krzanich’s tenure and was an applicant for the top job. The most recent departure was Gregory Bryant, head of Intel’s PC division. He joined Analog Devices Inc. in 2022.

Also in that group is Ampere Computing LLC CEO Renee James, who founded a startup to try to compete with Intel in server chips. She served as president of Intel until Krzanich stepped down. Kirk Skaugen, a former Lenovo Group executive who left Intel in 2016, was in charge of the server chip division when Intel dominated the industry.

Another potential hiring pool: Intel’s largest customers, many of which have begun implementing their own chip plans with varying degrees of success. Johny Srouji is senior vice president of Apple’s successful internal chip division. The iPhone maker’s internal plans set a trend that has been replicated elsewhere, notably Amazon.com Inc’s AWS unit. Microsoft Corp., Alphabet Inc.’s Google and Meta Platforms Inc. have also built significant chip teams.

When Intel tried to bring Gelsinger back to the company about four years ago, a number of other chip company leaders, including Marvell’s Murphy, were reportedly among those considering it. Intel has now contacted him about its latest search, people familiar with the matter said.

Despite its severe decline in fortunes, Intel remains one of the most important companies in the technology industry. It remains one of the largest chipmakers by revenue, with its processors running more than 70% of the world’s PC and server machines. Its plans to build more factories in the United States are the cornerstone of the federal government’s push to produce more chips on American soil.

Regardless of who Intel chooses, the new CEO will need time to make up for the more than $20 billion in revenue lost to rivals over the past few years.

“In addition to not having a replacement, coming to Intel with a new outside CEO is a multi-year effort, which is something that’s not happening at Intel,” said Hans Mosesmann, an analyst at Rosenblatt Securities. It’s a tall order in a more intense innovation cycle than ever before.”

Given the technical nature of the industry — chip design and manufacturing requires a blend of electrical engineering, chemistry and physics, often led by teams of Ph.D.s — Intel may be reluctant to permanently promote CFO Zinsner. When CFO Swan took over as interim leader of the company, analysts questioned whether he understood the technology side of the business well enough to make strategic decisions.

Gelsinger, who returned to Intel after a decade away, discussed his ties to the company’s past and plans to restore its strength. Now, that may not be a selling point anymore. The top priority is winning over Intel’s rivals and turning them into customers for its outsourced manufacturing business, which may require excluding Intel’s long-term followers.

If boards are looking for the most directly transferable skills, TSMC, Advanced Micro Devices and Nvidia would be the most obvious talent pools. AMD’s Lisa Su was considered the favorite by many analysts during the company’s last CEO search. But since then, the company she has run has been more successful, taking market share away from Intel and becoming the biggest competitor in catching up with Nvidia in artificial intelligence chips. Currently, AMD’s market capitalization is more than twice that of Intel.

Hiring from Nvidia can also be difficult. Co-founder and CEO Jensen Huang created a unique management structure that eschews traditional hierarchy. Huang had dozens of direct reports in a horizontal structure, making it nearly impossible to determine which of them was best suited for promotion—at Nvidia or at another company like Intel.

Meanwhile, Taiwan’s TSMC has surpassed Intel in manufacturing capabilities to become the leading producer of chips for other companies. It produces the most advanced chips in the world, working for Apple, AMD, Nvidia and many other companies. At the Hsinchu headquarters, executives credited with being instrumental in TSMC’s meteoric rise include Intel veteran Kevin Chang and his colleague, deputy co-chief operating officer Cliff Hou. In the U.S., TSMC Arizona CEO YL Wang recently scored a notable win, helping the factory achieve higher output than similar factories domestically.

However, it’s uncertain whether TSMC’s senior leaders would consider abandoning the world’s best contract chipmaker to save an unstable company. But former TSMC Chairman Mark Liu, who spent the early part of his career at Intel and retired from the Taiwanese chipmaker in early 2024, may be the one Intel can take on despite being older than the average U.S. CEO. Attract people. Liu is 70 years old this year.

“We don’t expect Intel to find a new leader qualified to lead Intel out of this challenge,” Wolfe Research analyst Chris Caso wrote in a note. Easy.” “Gelsinger has extensive Intel experience, but there are not many viable candidates.”

—With help from Debbie Wu.

(Update on Marvell shares in fifth paragraph.)

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