In interviews with CRN on Monday, executives from U.S. solutions providers that partner with Intel expressed concern about the company’s future in light of Pat Gelsinger’s sudden exit and said it needs to focus on its traditional CPUs and nascent Goudy accelerator chips. Should focus on businesses.
Intel Channel Partners said the sudden departure of CEO Pat Gelsinger raises questions about the company’s current strategy, which has placed additional emphasis on expanding its manufacturing capabilities on top of its chip design business.
In interviews with CRN on Monday, executives at U.S. solutions providers that partner with Intel expressed concerns about the company’s future. Gelsinger’s exit And said it should focus on its traditional business, which includes Core CPUs for PCs and Xeon CPUs for servers, in addition to its new Goudy product line for AI servers.
[Related: Intel: Partners Will Play ‘Massive Role’ In 2025 Gaudi 3 AI Chip Rollout]
Eric Stromquist, president of Beaverton, Ore.-based Chrome device maker CTL, said Gelsinger’s sudden retirement, which the company announced Monday morning, has created uncertainty about Intel’s current strategy as the chipmaker veteran tries to build and champion it. How integral I was. ,
“Obviously this is not good news, because that was the pat strategy,” he said.
multiple reports including one bloombergsaid Intel’s board of directors gave Gelsinger the option of resigning or being fired after losing confidence in its turnaround plan, in which the company spent tens of millions of dollars expanding its manufacturing footprint as well as its advanced chip-manufacturing capabilities. Billions of dollars spent. ,
One ray of hope for Stromquist comes from the news that Michelle Johnston Holthaus, an experienced sales and channel executive who most recently led Intel’s Client Computing Group, will serve in the newly created role as CEO of Intel Products, Which includes client business. Data Center & AI Group and Network & Edge Group.
Holthaus was also named interim co-CEO along with Intel CFO David Zinsner.
“Michelle is an experienced leader. I have known her for a long time, so I think she is a good manager of the Intel business, [and] He is a good choice to co-lead the company. but obviously [Gelsinger’s sudden exit] Is anyone saying that the previous strategy is in doubt,” Stromqvist said.
In Intel’s announcement about Gelsinger’s retirement, longtime Intel board director Frank Yeary, who now serves as its interim executive chairman, said the chip maker needed to “reinvigorate our product group in everything we do.” Should be kept at its center.”
“Our customers demand it from us and we will deliver,” he said in a statement. He said Intel will continue to advance its manufacturing and foundry capabilities.
According to Stromquist, Intel should now focus on “getting back to the basics of working with them.” [partners] And coming up with great solutions.”
“Perhaps Intel’s historic go-to-market business needs to be questioned. I don’t know. But I always encourage them to do what they do best, which is build a great channel, create great products and the business will take care of itself,” he said.
Gelsinger was credited with righting ‘a very big ship’
An official at a US Intel distribution partner said that even in the absence of news reports explaining why Gelsinger retired on Sunday, the timing and nature of the exit announcement made it likely that the CEO’s departure was not voluntary.
“Normally, when someone retires from Intel, it’s a very long process,” said the distribution executive, who spoke on the condition of anonymity to speak candidly. “They announce they are retiring. They usually stay for a transition period and do all those types of things over a very long and drawn-out period, not just ‘I’m retiring, and today is my last day.'”
Intel’s board of directors is now looking for a permanent successor to Gelsinger, with the distribution executive saying he expects whoever takes over will make executing on Intel’s chip road map a big priority.
He said Gelsinger, who worked at Intel for 30 years before his three-year tenure as Intel CEO, should get a lot of credit for what he can do to improve Intel’s situation. , which was in a shaky state before the arrival of the company stalwart. Above.
“I think Pat did a lot of things to steer a very big ship in the right direction. I don’t think there is anyone [U.S.] The Chips Act Without Pat Gelsinger. I don’t think the focus on American semiconductor manufacturing can be maintained without them,” he said.
Like Stromquist, the distribution executive was pleased to see Holthaus take advanced leadership roles within the company.
“She is someone who knows Intel very well. She knows all the business of the channel very well. She knows all of Intel’s business areas, so I think she has a really good, broad understanding of Intel’s different customer bases, which is important for us as a distributor,” he said.
Partner: Gelsinger was ‘scapegoat’ for Wall Street
Randy Copeland, president and CEO of Richmond, Virginia-based Velocity Micro, said that while he did not find the news of Gelsinger’s sudden exit surprising, he did not think it was “the wisest decision” given how much change Intel has made. over the past three years to execute on Gelsinger’s expensive and ambitious IDM 2.0 strategy.
“They’re going to have a new CEO with a brand new vision and a brand new road map, and I think that’s going to put them in some more trouble. Pat’s plan was extremely aggressive, but they’ve been in it so far, now I’m worried about what’s going to happen next. Are they going to turn around again and go in the other direction? I feel like they’re not accomplishing anything,” he said.
For Copeland, the board should have been better prepared to face any challenges that came with Gelsinger’s turnaround plan, including the revival of the company’s contract manufacturing business under the Intel Foundry name.
“This was a very long-term plan, and I think before the board approved it, they should have thought about what would happen next. [few] The years were going to look like that, because they were obviously deep in the middle of it,” he said.
While Copeland said Intel is “still years away from catching up” with Taiwanese foundry giant TSMC, he believes a bet on contract manufacturing could still work.
He said, “If they can come up with a real US-based competitor in a few years, I’m pretty confident that Intel is going to be a formidable company.”
Despite feeling uncertain about Intel’s future, Copeland does not think the company faces any existential threat, even though he does not think its problems will end with Gelsinger.
Copeland said, “I don’t think they’re going to completely explode or anything, but I do think they’re using Pat as a scapegoat for a company-wide strategy that’s not going as fast. “As much as Wall Street wants.”
Partner sees conflict with Goudy, Xeon chips
Burnsville, Minn. Dominic Denninger, vice president of engineering at Nor-Tech, Inc., said he was surprised to hear the news about Gelsinger.
“I thought he had only partially completed the work, but apparently there was disagreement on the board. When there’s not integration, it’s not good,” he said.
While Intel has made progress in expanding its manufacturing footprint, introducing advanced chipmaking nodes at accelerated speeds and naming some major customers for Intel Foundry, those projects have yet to boost its financial position. Is.
“I think it’s taken longer than anyone anticipated,” Denninger said.
The Nor-Tech executive said Intel has also struggled to introduce a formative accelerator chip that can rival Nvidia’s GPUs in AI computing. While Intel’s new Goudy 3 chip has received support from several large server vendors, including Dell Technologies and Hewlett Packard Enterprise, Gelsinger said in October that the Goudy product line is expected being less of its modest $500 million revenue target for 2024.
“If you go back [and look at] several attempts to go after that [market]Just none of them have been successful,” Denninger said.
One bright spot for Denninger is Intel’s recent launch Xeon 6 Server ProcessorBut still, he said, those products have received a slow response among their customers, many of whom are in the high-performance computing sector.
“Previous generations of Zions have been very reliable [with] Pretty good performance. And all the reports I’m seeing on the Zeon 6 are good. “We are not calling a lot of people here to test them,” he said.
To Danninger, Gelsinger’s sudden exit suggests that big changes are about to happen.
“They’re going to have to make some big changes in strategy and think seriously about some things here and there that’s probably a lot of consolidation within corporate intel,” he said.
Partners see potential for AI sales growth with CEO shakeup
Two solution provider executives said they hope Gelsinger’s sudden exit could allow the chip maker to place more emphasis on growing AI sales with enterprises.
“I think this could strengthen Intel’s position in the enterprise AI solutions market,” said Patrick Shelley, CTO of Montvale, NJ-based PKA Technologies, which is ranked No. 438 in CRN’s 2024 list. Solution Provider 500 List,
In September, Intel outline your strategy Around Gaudi 3, which is based on the idea that enterprises will look for Gaudi chips for AI systems that are more cost-effective than Nvidia GPU-based systems for running small AI models.
“Intel is already doing some really innovative things in the AI market, especially with Gaudi 3, which is a very cost-competitive AI solution for the enterprise. We believe this is going to make AI more affordable for customers, especially in SLED (State Local and Education). I see this sparking more innovation for Intel in the enterprise AI market, Shelley said.
Bob Venero, CEO of Fort Lauderdale, Florida-based Future Tech Enterprise, No. 76 on CRN’s 2024 SP500, said he’s confident Intel will remain a major player in the AI era, especially when it comes to PCs. market.
“I see Intel continuing to grow its AI business, especially as the PC remains an important part of the ecosystem that is connected to AI,” he said. “The only way you access AI systems is through your PC and the best way to run a PC is on Intel chips. Pat’s retirement won’t change that. “It just means there is going to be a new CEO who will lead Intel into the AI future.”
Venero said he would like to see Intel double down on product innovation with major OEMs like HP Inc., Dell and Lenovo.
“Those are the companies that are driving the major investments in R&D around the PC product set,” he said. “This is where Intel needs to invest in differentiated products that can help advance the journey in AI and beyond.”
Even after the changing of the guard, Intel remains one of the strongest technology product companies in the business, according to Venero.
“Look at the long line of x86 products that have driven decades of productivity and growth for the channel. Neither channel would be possible without Intel. Think about who is running all the PCs, servers, and chipsets on storage platforms: It’s Intel, Intel, Intel. There are other players out there but no one has the depth and breadth of the product line that Intel offers.”
Venero said he expected the new leadership and Gelsinger’s eventual replacement to remain strong supporters of the channel.
“Intel has always been a channel-first company,” he said. “The new executives clearly know the value of the channel. I doubt they will make any major changes as it relates to supporting their channel partners.”
Additional reporting by Steven Burke.