Intel Corp has ousted chief engineering officer Murthy Renduchintala, the executive in charge of the company’s vast chip design and manufacturing organization, less than a week after saying that it had fallen further behind its rivals in production technology.
Renduchintala is to leave the company on Monday next week, and his responsibilities are to be split between other executives, the company said.
Intel said it was making the changes “to accelerate product leadership and improve focus and accountability in process technology execution,” a company statement said on Monday.
Renduchintala’s departure marks an escalation of the pressure on Intel’s leadership following a disastrous announcement last week that knocked more than US$40 billion off its market capitalization and caused 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 that its plants had failed to keep up with the most advanced production technology, signaling that the man tasked with fixing persistent production issues had failed.
When then-Intel chief executive Brian Krzanich hired Renduchintala from rival Qualcomm Inc in 2015, he was lauded as someone with the experience needed to upgrade Intel’s design efforts, but the pair’s extensive recruitment of outsiders led to an exodus of longtime Intel senior executives during Krzanich’s tenure.
That became a hindrance when Krzanich was subsequently dismissed for an illicit workplace relationship, leaving an absence of internal candidates ready and qualified to replace him.
After a seven-month search, Intel chief financial officer Bob Swan reluctantly took over as chief executive, placing the company in the hands of another outside recruit.
Renduchintala was one of those passed over for the top job.
Executive reshuffles and maneuvering for higher positions are part of corporate life, but throughout Intel’s more than 50-year history, the company has seldom looked outside its own ranks for leaders and has maintained an approach of developing its own executives.
Another pillar of the chipmaker’s success has been to manufacture its own products, bucking the industry trend of outsourcing.
The company’s message was always clear: Intel has the most advanced plants and that goes a long way toward making the best processors.
Maintaining that innovative advantage became Renduchintala’s job when Swan promoted him to the chief engineering role, but any sense of the company regaining its edge was destroyed last week when the company said that the latest technique for building the most advanced semiconductors was a year behind schedule.
That gives its rivals the opportunity to appeal to computer makers with their own versions of the pitch that has 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 multiyear delay in Intel’s efforts on the previous manufacturing process.
Intel shares slumped 16 percent on Friday last week and fell another 2 percent on Monday.
In public appearances and interviews, Renduchintala had been garrulous and exuded confidence, unafraid to dominate the conversation, but he was not on last week’s earnings conference call, where Swan was forced to defend Intel’s position and earnings amid constant questions from analysts about the manufacturing delays, and the company’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 under all of Swan’s predecessors, many of whom had argued that Intel’s plants were so valuable they could be offered its rivals for outsourcing.
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