Intel CEO Pat Gelsinger's Exit Creates Room For Fresh Deal Discussions

The board has explored various options in recent months, including private equity deals and even the possibility of splitting Intel's manufacturing and product design operations

The sudden departure of Intel CEO Pat Gelsinger expected present a new opportunity for the struggling company to explore potential deal options, including those he previously dismissed during his tenure leading the chipmaker.

The board has explored various options in recent months, including private equity deals and even the possibility of splitting Intel's manufacturing and product design operations. However, Gelsinger opposed the idea of breaking up the company, focusing instead on his strategy to restore Intel's technological leadership and transform it into a contract manufacturer for external clients.

With Gelsinger's departure this week—following pressure from the board—a chance now exists to reevaluate the company’s direction. Morgan Stanley and Goldman Sachs Group have been advising Intel on its options and may find a more open-minded audience with new leadership.

This shift also presents an opportunity for potential buyers to reassess acquiring all or part of Intel's business. Qualcomm had previously shown some interest in a transaction, although discussions did not progress, as reported by Bloomberg.

“This leadership change increases the probability of divestitures. Gelsinger was firmly against breaking up the company, but the prolonged and expensive turnaround has tested shareholder patience, potentially forcing Intel to reconsider," Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada said in a note Monday.

Meanwhile, in September, Intel's board considered several options, including the possibility of breaking up the company, following a dismal earnings report the previous month. The report revealed a surprising loss and a bleak sales forecast.

However, Intel opted for less drastic measures, such as halting the construction of plants in Poland and Germany. The company also announced plans to cut approximately 15,000 jobs and suspend its long-standing dividend, all in an effort to conserve cash and support Gelsinger’s turnaround strategy.