A major American tech firm is on the brink after its CEO was forced out following a mass layoff of 15 per cent of his company’s staff.
Pat Gelsinger, former CEO of Intel, resigned after less than four years in the role, having taken it on in February 2021.
During his tenure, Intel’s stock fell by 61 per cent, culminating in a massive restructuring effort which began in August that aimed to slash $10billion in costs and ‘fundamentally change the way we operate’, Gelsinger said at the time.
He will be replaced on an interim basis by David Zinsner, Intel’s chief financial officer, and Michelle Johnston Holthaus, general manager of Intel’s client computing group, as the company searches for a new leader.
The interim CEOs will now have to play catch-up to other chip manufacturers like Taiwan‘s TSMC.
Once the biggest computer chip manufacturer in the world, it missed the mark in 2022 when it failed to invest in chips that can power AI datacentres.
Instead, Nvidia, once a minor competitor, bet big on AI and is now worth $3.4trillion – 33 times as much as Intel.
Despite being on the back foot, Intel does have the backing of the federal government, which under Joe Biden has been keen to aggressively grow America’s chip manufacturing sector in an attempt to wrestle back control from Asia.
Workers are seen in front of a ‘High NA EUV’ lithography system at an Intel facility in Hillsboro, Oregon, U.S. in this handout image obtained by Reuters on April 19, 2024
Intel CEO Pat Gelsinger delivers a speech at Taipei Nangang Exhibition Center during Computex 2024, in Taipei on June 4, 2024
Last week, Intel announced that while an $8.5billion grant it was handed under the CHIPS Act, the law authorizing $280billion in funding for semiconductors, would be reduced to $7.86billion, it would be made up for by a separate $3billion grant from the government to produce chips for defense purposes.
Intel’s major C-suite shakeup comes after Meta slashed a large number of jobs from Instagram, WhatsApp and Reality Labs.
A Meta spokesperson told Reuters in a statement that a few of its teams were making changes to align with their long-term strategic goals and location strategy.
‘This includes moving some teams to different locations, and moving some employees to different roles. In situations like these when a role is eliminated, we work hard to find other opportunities for impacted employees,’ the spokesperson said.
The Verge report did not specify the exact number of job cuts but mentioned that they were small. Meta also did not comment on the numbers.
Meta has slashed around 21,000 jobs since November 2022 to keep costs low with CEO Mark Zuckerberg calling 2023 the ‘Year of Efficiency’.
Meta shares have jumped more than 60% this year, and are currently at an all-time high, after he cancelled several low-priority projects in an attempt to boost growth and allay investors’ fears that he spent far too much money on the metaverse, the failed attempt to build a virtual world for its VR headsets.
In its most recent second quarter results, Meta beat market expectations for revenue and issued a rosy sales forecast for the third quarter, signalling that robust digital-ad spending on its social media platforms can cover the cost of its artificial-intelligence investments.
