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Intel searches (and searches) for a new CEO
INTEL answered many questions from Wall Street on Thursday, but not the one that has dogged the company for seven months: Who will become chief executive of the giant chipmaker?
The lengthy search, begun after Brian Krzanich was forced out in June for a past affair with a subordinate, illustrates the difficulty of finding a leader with the diverse skills needed to run one of Silicon Valley's most complex companies.
Intel, which hosted a conference call on Thursday to discuss the financial results of its most recent quarter, said that its directors were conducting the search with "a sense of urgency" but gave no timetable for a selection.
"I am convinced the board of directors will close on a new CEO in the near future," said Robert Swan, Intel's chief financial officer, who is also serving as acting chief executive.
Intel, which has 107,000 employees, sells the vast majority of processors that power personal computers as well as larger machines that run the Web. It turns silicon wafers into chips in some of the world's most sophisticated factories - sites that cost US$5-10 billion each - and employs an army of chemical engineers, physicists, system architects, chip designers and computer programmers.
The company, which turned 50 last year, has never drawn a top executive from outside its own ranks. Indeed, Intel was once known for signalling the promotion of an internal candidate to its top job years in advance.
That tradition broke down with Paul Otellini's surprise decision to resign in November 2012. Intel's board considered external candidates before settling the following May on Mr Krzanich, an Intel manufacturing specialist.
Several seasoned executives departed during his five-year tenure. Analysts now see only three obvious internal choices, none of whom has the broad experience of past Intel leaders.
Some promising external candidates have declined the opportunity. One is Patrick Gelsinger, a former Intel executive who is now the chief executive of the software company VMware, who went so far as to get a VMware tattoo after the search process began.
Others have been considered by Intel's board but rejected, according to five current and former Intel executives. These sources, who requested anonymity because they were not authorised to discuss the process, said that Intel directors seemed divided on what to do.
Inexperience with Intel's business could be a factor. Five of nine directors have joined the board since 2016, while three longtime members stepped down last May. An Intel spokeswoman declined to comment.
A new chief executive would take the helm at an unusual time for the industry pioneer. Intel has recently reported some of its strongest-ever financial results, with revenue for 2018 soaring 13 per cent to top US$70 billion. Mr Swan vowed rapid progress in entering new markets, while analysts have praised some forthcoming chips.
Yet Intel's fourth-quarter results were worse than analysts expected - as was its financial projection for 2019 - while the company faces long-term questions about maintaining its dominance. Last year, Intel gave up the lead in creating ever-tinier transistors on chips, the pattern observed by Intel co-founder Gordon Moore that drives down computing and data storage costs.
Intel has repeatedly missed deadlines to deliver its next production recipe for smaller circuitry. Taiwan Semiconductor Manufacturing Co, which manufactures chips designed by other companies, grabbed the lead in the Moore's Law race with chips that first appeared in Apple iPhones.
The delayed production process actually boosted Intel's bottom line last year by allowing the company to put off spending on new manufacturing equipment. But the technology stumble is eventually expected to aid other chip designers, a list that now includes Advanced Micro Devices, Nvidia and major customers such as Google and Amazon.
After missing the huge market for smartphone processors, Intel recently supplanted Qualcomm in supplying cellular modems for Apple iPhones. But those sales lose money, a problem underscored in trial testimony this month by Aicha Evans, a veteran Intel executive who resigned days later to lead the startup Zoox.
"For us, this is a very fragile business," said Ms Evans, a witness for the Federal Trade Commission in a case challenging Qualcomm business practices.
Whether to hang on with modems will be one key decision facing a new chief executive. But there are many other challenges, including processor supply problems that hurt PC sales in the latest quarter.
"Intel's numbers have been fantastic," said Stacy Rasgon, an analyst with Sanford C Bernstein. "But if you start delving below the surface, the structural issues are fairly apparent."
The internal candidates seen as favourites are Mr Swan, though he has said that he does not want the position; Venkata "Murthy" Renduchintala, who joined Intel from Qualcomm in 2015 and oversees most product development; and Navin Shenoy, a veteran executive vice-president whose unit supplies chips for computers used in data centres.
External candidates who have been considered for the chief executive post, according to the current and former Intel executives, include Renée James, a former Intel president now running a competing startup; Anand Chandrasekher, who once ran Intel's mobile device effort and later served a stint at Qualcomm; Sanjay Jha, a former Qualcomm executive who led Motorola; and Johny Srouji, Apple's senior vice-president of hardware technologies, whose name was reported earlier by Axios.
Ms James, Mr Chandrasekher and Mr Jha are no longer under consideration, the sources said. NYTIMES