Intel's CEO Hunt: Outsiders in the Spotlight

Intel's search for a new CEO is underway following the abrupt departure of Pat Gelsinger, and the company is reportedly prioritizing external candidates, according to Bloomberg. The chipmaker has enlisted Spencer Stuart, an executive search firm, to assist in the process, focusing its search beyond Intel's internal ranks.

The unexpected ouster of Gelsinger, who had been at the helm for only three years, creates an urgent need for new leadership at a time when Intel is facing challenges and has experienced significant management turnover in recent years. This turnover has depleted Intel's internal talent pool, making it difficult to find a suitable replacement from within the company.

"This week’s sudden ouster of CEO Pat Gelsinger set off an urgent search for new leadership at a time when the chipmaker’s fortunes are shaky and its bench has been depleted by years of management turnover," Bloomberg reports.

Among the external candidates reportedly under consideration are Matt Murphy, CEO of Marvell Technology Inc., and Lip-Bu Tan, former CEO of Cadence Design Systems Inc. News of Murphy's potential candidacy caused Marvell's shares to dip, while Intel's stock price continued its decline following Gelsinger's departure.

Intel's history of promoting from within is being disrupted by this search. With the exception of Bob Swan, who served as an interim CEO, all previous Intel leaders have been internally promoted. This current search highlights the challenges of finding a suitable internal candidate given the significant management changes in recent years.

Analysts express concerns about the difficulty of finding an external CEO with the necessary experience and skills to navigate Intel's complex challenges. "It may be challenging to find a replacement with the right experience and background, with the capacity to manage a complex organization such as Intel and able to effectively deal with the multitude of headwinds," wrote KeyBanc Capital Markets analyst John Vinh in a note.

While some former Intel executives who left during previous periods of management upheaval, such as Stacy Smith and Gregory Bryant, are considered potential candidates, others believe that the need to quickly win over competitors and establish Intel's outsourced manufacturing business might favor an external candidate.

The search is also reportedly considering candidates from Intel's major customers, who have been increasingly investing in their own internal chip programs. These include leaders from companies like Apple, Amazon, Microsoft, Google, and Meta. However, recruiting from these companies might prove difficult given their own internal talent needs and success.

Despite Intel's recent struggles, the company remains a major player in the technology industry, retaining a significant market share in personal computers and server machines. The company's plans for expanding manufacturing capacity in the US are also a crucial element of the government's efforts to boost domestic chip production. The new CEO will face the considerable task of reversing more than $20 billion in lost revenue over the past couple of years.

"In addition to no bench, a new outside CEO coming to Intel is a multiyear gig that is a tall order in a cycle of innovation that is more intense than ever," said Rosenblatt Securities analyst Hans Mosesmann, to Bloomberg.