By Asa Fitch
Intel Corp.'s incoming Chief Executive Pat Gelsinger once
described himself as the chip giant's "chief geek" -- a role he
might need to resume as he seeks to revive the company's prospects
and rebuild its technological prowess.
The 59-year-old is both an obvious choice to lead America's most
iconic semiconductor company -- he spent 30 years there earlier in
his career -- and a somewhat unorthodox appointment for a modern
chief executive who wrote a book on work-life balance and developed
a points system to help himself avoid staying late at the
office.
Intel on Wednesday named the
Pennsylvania-farm-boy-turned-engineer to succeed ousted CEO Bob
Swan next month. The appointment marks a turning point for Intel as
it battles market-share losses and weighs its strategic direction,
including whether to remain both a designer and maker of chips when
most rivals have specialized in one or the other.
Mr. Gelsinger brings the kind of engineering background common
at Intel, one of Silicon Valley's pillars. Mr. Swan, a former
financial chief, was only the second CEO in the company's 52-year
history not to have a technical background. He remains in his role
until Feb. 15.
François Piednoël, a former Intel engineer who has criticized
the company's technical decisions and whose career at the chip
maker overlapped with Mr. Gelsinger's, called the new chief a good
listener who understood technical problems and made informed
decisions. "He is very good at building his confidence by seeking
the experts' opinions," he said.
Mr. Gelsinger rejoins Intel after eight years at the helm of
VMware Inc., a maker of business software, where he roughly doubled
sales. The company's software tools are a key ingredient in the
growth of cloud computing, where customers do their digital work on
remote servers -- most of which contain Intel processors.
At VMware, Mr. Gelsinger didn't shy away from difficult,
company-altering decisions like the ones he could soon face at
Intel. He abandoned the software company's cloud-computing business
and opted to profit through partnerships, including with industry
leader Amazon.com Inc.
The Intel he rejoins is much larger than the one he left, but
also a bit diminished. While its sales have doubled in the
intervening time, Intel last year lost the title of America's most
valuable chip maker to graphics chip maker Nvidia Corp. Intel
shares fell 17% last year, while Nvidia's more than doubled as
demand surged for videogames and other devices where it has an
edge.
Intel's biggest struggles recently have been technological, with
repeated delays in rolling out new, more advanced chip technology
that have led it to lose out to manufacturing rivals in Asia.
Taiwan Semiconductor Manufacturing Co. and South Korea's Samsung
Electronics Co. have become top producers of the most advanced
chips. Intel has said it is considering outsourcing production of
its leading chips, a sharp break from precedent in what could be
Mr. Gelsinger's first big decision.
Growing up, Mr. Gelsinger loved to tinker with TVs, radios and
other electronics and was a top student, according to a cousin,
Ernest Gelsinger. An 18-year-old Gelsinger joined Intel in 1979. He
rose up the ranks to become the company's youngest-ever vice
president at 30 and its first chief technology officer in 2001 --
effectively making him responsible for upholding Moore's Law, which
is named after one of Intel's founders and posits that the number
of transistors on a chip doubles roughly every two years.
Friends and associates describe Mr. Gelsinger as an analytical,
driven and meticulous leader. Early in his career, during which he
received engineering degrees from Santa Clara University and
Stanford University, his smarts and confidence sometimes rubbed
people the wrong way, though he softened those edges while at
VMware, said David Yoffie, a longtime former Intel board member who
has known Mr. Gelsinger since the 1990s.
"He's learned how to be much more personable in those kinds of
situations where in the past he might have been a little bit
brusque," he said.
In his three decades at Intel, Mr. Gelsinger played a key role
in designing some of its most successful and lucrative chips,
including the 386 and 486 processors that were the computational
workhorses inside the personal-computer boom of the 1980s and
1990s. He helped pioneer USB ports and Wi-Fi, both of which are
ubiquitous. Intel was seen as the standard-setter in chip
technology. Now rivals such as Nvidia are more prized, and Apple
Inc., after years of using Intel chips to power its laptops, dumped
the company last year in favor of its own design.
Since leaving, Mr. Gelsinger was twice rumored to be an Intel
CEO candidate when the job fell vacant, and both times said he
didn't want to come back. Intel said Thursday that the new CEO
would receive a $1.75 million signing bonus and have a base salary
of $1.25 million. He is also eligible for a performance-linked
bonus that could top $3 million, as well as stock incentives. Mr.
Gelsinger said in a memo to employees that he was excited about the
technological opportunity.
Mr. Gelsinger's return next month comes as chips have seen
supercharged demand as the pandemic accelerates spending on digital
tools and the chips that power them.
"To come back 'home' to Intel in the role of CEO during what is
such a critical time for innovation, as we see the digitization of
everything accelerating, will be the greatest honor of my career,"
he wrote in an email Wednesday to Intel employees. Intel and VMware
didn't make Mr. Gelsinger available for an interview.
The task before him is likely to test Mr. Gelsinger's emphasis
on work-life balance. In his 2008 book "The Juggling Act: Bringing
Balance to Your Faith, Family and Work," Mr. Gelsinger described
how he uses a points system to sort out how much he is home. He
awarded himself two points for getting home before 5 p.m. but only
one for returning by 6:15 p.m.
Mr. Gelsinger also has to contend with competitors that are
bulking up. Nvidia plans to buy Arm Holdings, the British
chip-design company, in what would be the industry's biggest deal
if it goes through. Longtime rival Advanced Micro Devices Inc. has
said it plans to buy rival chip maker Xilinx Inc. in an all-stock
deal valued at $35 billion.
Meanwhile, Intel is under pressure to slim down. Daniel Loeb,
activist investor Third Point's chief executive, has criticized
Intel's "failed acquisitions" and urged the company to consider
divestitures. Mr. Loeb on Wednesday cheered Mr. Swan's departure to
make way for Mr. Gelsinger.
The new CEO also faces turmoil in Intel's engineering ranks.
Development problems with its new chip-making technology
precipitated the departure of chief engineer Venkata "Murthy"
Renduchintala last year and the appointment of new manufacturing
and technology executives. The company also lost star chip designer
Jim Keller, who left last June after two years.
Mr. Gelsinger has long turned to his faith to help confront
business challenges. In his book, he said that a mentor, the fabled
former Intel chief Andy Grove, encouraged him to read The Wall
Street Journal. Mr. Gelsinger followed the advice. But when he
noticed he sometimes read the Journal before picking up the Bible,
he changed course. "I committed to never reading the Journal before
finishing my daily devotional time; I'll read God's Bible before
reading the businessman's bible," he wrote.
Mr. Gelsinger delivered a Zoom lecture in June for Workforce
Ministries, a group devoted to promoting Christianity in the
workplace. He said he has tried to apply lessons from Christian
teachings to his leadership at VMware, overseeing employees like a
pastor oversees congregants.
"Being a Christian CEO of a public company is an extraordinary
experience and an opportunity that is one of the highest of my
career as I look down on my church of 32,000 employees," he said.
His flock at Intel will be more than three times that size.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
January 14, 2021 18:32 ET (23:32 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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