Paul Otellini is stepping down from the top job at Intel, leaving no clear successor in place for the first time as the world’s biggest chipmaker struggles to find its way in the fast-growing smartphones and tablets markets.
The unexpected news was announced on Monday by a company previously known for careful planning of its leadership transitions. Mr Otellini, 62, is only the company’s fifth chief executive in its 44-year history and could have stayed on until he was 65.
His decision to step down was a personal one after nearly 40 years at the company, according to people close to Intel. “The board accepted his decision with regret,” Intel said.
While he has maintained Intel’s domination of the PC world over his eight years in charge and the company’s processors feature in four out of every five machines made, the PC market is expected to shrink this year and the company has failed to make significant inroads in new mobile markets. Its stock market capitalisation was overtaken this month for the first time by leading wireless chipmaker Qualcomm, although it has around three times the revenues of its San Diego-based rival.
Intel shares are down 16 per cent this year, but were virtually unchanged in New York on Monday.
“Otellini is from the generation when the PC was dominant,” said Ken Dulaney, an analyst at Gartner. “What they need now is a technology visionary, someone who sees the new markets and is from a younger generation.”
Mr Otellini has driven an effort to reduce the power demands of Intel’s processors so they can better compete in the mobile phone market, but only a handful of smartphones have featured its chips to date. He has also sought to prop up the PC market with a new category of thin “Ultrabook” laptops, yet high prices have kept sales low.
Intel said Mr Otellini would step down in May, and that the search for a successor would include outsiders. That breaks with Intel tradition, in which the company’s bosses have always anointed their own successors before departing.
People close to the company said the change reflected the greater pressure on companies to show they were following good corporate governance practices.
Brian Krzanich, chief operating officer and head of manufacturing, is seen by analysts as the favourite internal candidate. Picking an outsider would mark a break with the past and could represent a risk, some analysts said. “This is a company with a very deep-rooted internal culture and few executives have come from outside and succeeded,” said Ambrish Srivastava, an analyst at BMO Capital Markets.
Mr Krzanich was promoted to chief operating officer in January, a role occupied by Craig Barrett, Mr Otellini’s predecessor, before he took the top job. Intel said on Monday Mr Krzanich was also being elevated to executive vice-president, the most senior role below the chief executive.
Intel also promoted two other executives to the position of executive vice-presidents: Renee James, head of Intel’s software business; and Stacy Smith, chief financial officer. The others are Dadi Perlmutter, head of the Intel Architecture group, and Arvind Sodhani, head of Intel Capital.
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