Author: Dean Takahashi / Source: VentureBeat
Intel named its acting CEO Bob Swan as its permanent chief executive today. By the end of the day, the company’s stock price fell nearly 1 percent, a decline of about $4 billion in market value.
Perhaps the stock market and industry observers were expecting the company to go outside to find a CEO who could address Intel’s numerous competitive challenges.
After the morning announcement, Intel’s stock price closed at $47.12 a share, down 0.88 percent, making the company’s valuation $215 billion. That’s not a serious drop in price, but it’s worth noting that investors did not view it as a positive.Swan, formerly chief financial officer, became acting CEO in June, after the previous CEO Brian Krzanich resigned under a cloud, after an investigation showed he had engaged in a “consensual relationship” with an employee some time ago. The relationship violated an internal “non-fraternization policy” that applies to all senior managers. Swan is now the seventh CEO in Intel’s 50 year history; predecessors have included industry legends Bob Noyce, Gordon Moore, Andy Grove, Craig Barrett, and Paul Otellini.
Intel is in a tough competitive spot when it comes to dealing with rivals like AMD, Nvidia, Apple, Samsung, TSMC, and Qualcomm. Those threats are coming from areas such as the datacenter, AI, automotive, internet of things, the PC, 5G, and mobile. At stake is leadership in the $450 billion semiconductor industry and the pole position in defining the future of computing.
Intel is eager to show it has recovered from a bad manufacturing misstep that caused it to fall off the regular cadence of manufacturing improvements. With the slowing of Moore’s law (the famous prediction in 1965 made by Intel chairman emeritus and former CEO Moore that the number of transistors on a chip will double every year), the design and architecture of processors will have to dramatically improve if the coming years are to bring the same pace of technological improvement as we’ve seen in the past 50 years. Intel’s recent slip has made people wonder if Moore’s law, limited by laws of physics for very small devices, is coming to an end.
Intel’s response so far is to remind everyone it is a company with $73 billion in revenues, a huge R&D budget, and the world’s most seasoned team of chip designers when it comes to creating everything from PC processors to artificial intelligence chips. In the most recent earnings announcement, Swan noted that Intel would once again spend $15 billion on capital investments in its factories, compared to a year ago, to ensure that it will have enough capacity to handle chip demand as it shifts to 10-nanometer manufacturing.
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