Intel is in the midst of difficult efforts to expand its reach beyond chips for PCs and servers and into new growth areas, and will soon be doing so under the direction of a new CEO. And according to reports, the new top executive could come from the outside, which would be a first for the giant chip maker.
Current CEO Paul Otellini, who has been with Intel for some four decades and its top executive for the last seven-plus, announced in November 2012 that he would retire in May, a move that kicked off a search for his replacement by the company’s board of directors.
At a conference in December 2012, Otellini said he expected Intel to stick to tradition and find his successor from within the company.
"It's not up to me, but I think that's the most likely outcome," Otellini said at the time. "I'm very comfortable with the internal candidates. … In this environment, why take the risk and take the time [of hiring an outside executive]? So my sense is that they will stay inside."
However, that could change. In February, Bloomberg reported that Intel’s board had hired an outside firm, Spencer Stuart and Associates, to help find the next CEO and that the group was considering candidates from outside the company. A spokerperson for Intel told the news site that “the board will be equally looking at internal and external candidates. … A board would not be fulfilling its responsibilities if it did not see insight on talent available inside and outside the company.”
Some of the internal candidates whose names have cropped up in news stories have been CFO Stacy Smith, Chief Operating Officer Brian Krzanich, and Renee James, executive vice president and general manager of Intel’s Software and Services Group. Business Insider, citing unnamed people “familiar with the matter,” reported March 8 that the board also is considering former Motorola CEO Sanjay Jha and Pat Gelsinger, a former longtime Intel executive who currently is CEO of virtualization technology giant VMware.
Bringing in a CEO from the outside would be seen as a signal from the directors that they want a fresh take on where Intel is headed. The company’s x86 processors dominate the traditional PC and server markets, but Intel has yet to make a lot of headway into the booming market for mobile devices like smartphones and tablets, the bulk of which currently run on low-power chips designed by ARM and made by such vendors as Qualcomm and Samsung Electronics.
Intel is driving up the performance and power efficiency of its chips, and is pushing its Atom platform into the mobile device space with some success. However, the company has yet to make a significant dent in the market.
Intel, like other tech vendors with strong ties to the contracting PC space, is looking to expand into growth areas as such as mobile and cloud, and that could be where an outsider could help. Jha, Motorola’s CEO before it was bought last year by Google, has extensive experience in the mobile device space. Meanwhile, Gelsinger—though he had spent most of his working like at Intel—has been at storage giant EMC and, later, its subsidiary, VMware, for the past few years, and both companies are making significant inroads in such areas as cloud computing, data center solutions and services.
Intel also is growing its foundry business of making chips for other vendors, most recently signing up Altera. The company also is rumored to have talked with Apple about possibly making ARM-designed chips for the device maker’s popular iPhones and iPads, though some analysts have argued that such a deal is unlikely in the short term.
The foundry business is another way for Intel to expand its business reach, and enables it to leverage its massive manufacturing capabilities at a time when demand for its own PC chips is being impacted by the slowing sales of PCs.
Intel’s board of directors reportedly is hoping to make a decision on a new CEO by the time of its annual shareholder meeting May 16.