Intel Corp.’s interim co-Chief Executive Officers, Dave Zinsner and Michelle Johnston Holthaus, addressed the potential separation of the company’s manufacturing and product development divisions at the Barclays technology conference in San Francisco. Zinsner stated that the decision regarding a formal split remains open and will ultimately be determined by Intel’s next permanent leader. This statement comes after the recent departure of former CEO Pat Gelsinger and amidst speculation of significant changes at the chipmaking giant.
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Operational Separation, Strategic Integration
While the two divisions currently operate with separate oversight and accounting, Gelsinger had consistently advocated for maintaining the synergy between manufacturing and design. Zinsner acknowledged this existing operational separation but emphasized that the question of a complete structural division remains unanswered.
Johnston Holthaus, also serving as interim co-CEO and recently appointed product CEO, highlighted the strategic advantage of Intel’s integrated model, emphasizing the benefits of in-house access to leading-edge production technology for product development. She questioned the practicality of a complete separation, suggesting that some level of integration remains essential. However, she ultimately deferred the final decision to the incoming CEO.
Addressing Performance and Financial Challenges
Beyond structural considerations, the interim leadership acknowledged Intel’s performance and financial challenges. They adopted a more cautious tone than their predecessor, emphasizing the need for a long-term perspective on recovery. While progress has been noted in the personal computer chip segment, the data center business faces ongoing headwinds. The executives also acknowledged challenges in Intel’s foundry business, which aims to manufacture chips for external clients.
Shifting Focus to Tangible Results
Zinsner signaled a shift in communication strategy, moving away from highlighting early indicators and focusing on delivering concrete achievements. This includes abandoning long-term deal value projections for the foundry business, which he deemed “meaningless.” Johnston Holthaus reinforced this commitment to long-term competitiveness, stating that Intel is prepared to accept short-term financial setbacks to ensure the development of more competitive products.
Competitive Landscape and Future Outlook
Johnston Holthaus candidly assessed the competitive landscape, acknowledging that Advanced Micro Devices Inc. has been more successful in meeting customer needs in the data center market. She outlined a key objective for 2025: halting Intel’s market share erosion. In the rapidly evolving field of artificial intelligence accelerator chips, dominated by Nvidia Corp., Johnston Holthaus admitted challenges with the usability of Intel’s Gaudi chip. The company is now prioritizing more versatile graphics processing units (GPUs) with a focus on rapid iteration and improvement to achieve competitiveness.
Conclusion: A Pivotal Moment for Intel
Intel stands at a critical juncture. The decision regarding the separation of its manufacturing and design divisions, coupled with the appointment of a new CEO, will significantly shape the company’s future trajectory. The interim leadership has set a tone of pragmatic realism, acknowledging challenges and emphasizing a long-term focus on rebuilding competitiveness. The next chapter for Intel promises to be one of transformation and renewed focus.
