(Bloomberg) – Intel Corp. ousted engineering director Murthy Renduchintala, the executive in charge of the company’s vast chip design and manufacturing organization, less than a week after saying it has lagged behind its rivals in production technology.
The executive will leave on August 3, and his organization will divide and be led by other leaders. Intel said it was making the changes “to accelerate product leadership and improve focus and accountability in executing process technology,” according to a company statement Monday.
Renduchintala’s departure marks an escalation of pressure on Intel’s leadership following a disastrous announcement last week that cut more than $ 40 billion from Intel’s market value and prompted multiple analysts to question the future of its manufacturing organization, which has been a cornerstone of the company’s semiconductor dominance. for decades. The Santa Clara, California-based chipmaker on July 23 said its plants had failed to keep up with the latest chip production technology, noting that the man tasked with solving persistent production problems had failed.
When then-CEO Brian Krzanich hired Renduchintala from rival Qualcomm Inc. in 2015, he was praised as someone with the expertise necessary to upgrade Intel’s design efforts. But the extensive recruitment of strangers by the two leaders led to an exodus of top Intel executives for a long time during Krzanich’s tenure. That became an obstacle when Krzanich was subsequently fired for an illicit employment relationship, leaving an absence of ready and qualified internal candidates to replace him.
After a seven-month search, Chief Financial Officer Bob Swan reluctantly took over as CEO, placing the company in the hands of another outside recruit. Renduchintala was one of the most overlooked for superior work.
Reorganizations and executive maneuvers for higher positions are part of corporate life. But throughout Intel’s more than 50-year history, the company has rarely sought leaders outside of its ranks and has maintained a focus on developing its own executives. Another pillar of the chipmaker’s success has been making its own products, offsetting the industry’s outsourcing trend. Intel has argued that chip manufacturing and design should be done together, avoiding the rivals’ approach of focusing only on design and letting third parties do the building. The company’s message was always clear: Intel has the most advanced plants, and that goes a long way toward creating the best processors.
Maintaining that innovative edge became Renduchintala’s job when Swan promoted him to the role of chief engineer, but any sense of progress regaining his lead was destroyed last week when the company said the latest technique to build the most advanced semiconductors it was one year late. That gives rivals the opportunity to entice computer makers with their own versions of the field that have been so successful for Intel in the past – their products are made with technology that is years ahead of the competition. The latest setback followed a multi-year delay in Intel’s efforts in the previous manufacturing process. The company’s shares fell 16% on Friday and fell 2% more on Monday.
In public appearances and interviews, Renduchintala is arrogant and exudes confidence, unafraid to dominate the conversation. He was not at last week’s earnings conference call, where Swan was forced to defend Intel’s position and earnings amid constant analyst questions about manufacturing delays and Intel’s plans to mitigate them. Swan offered contingency plans that would involve Intel outsourcing the production of its best products.
Such a suggestion was unthinkable for all of Swan’s predecessors, many of whom had argued that Intel plants were so valuable that their rivals could offer to use them for outsourcing.
Read more: Intel ‘Stunning Failure’ announces the end of the era for the US chip industry.
(Updates with details of executive changes in the fourth paragraph).
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