Intel Corporation (NASDAQ:INTC), the world’s largest chip-maker has not yet chosen its new CEO, with just two weeks in hand. The chip-maker had ample time four months ago, when Paul Otellini announced that he could retire from his post in May 2013.
The announcement of Otellini came as a surprise to the board as he was only 62 years old at the time of his resignation and was expected to be holding his post till he was at least 65 – Intel’s mandatory retirement age.
Sean Maloney, a senior VP, was in line to become the next CEO, but suffered a major stroke in 2010. However, he said that he has recovered from the stroke.
This situation is new and unfamiliar because Intel has a history of providing clear CEO succession path before major changes. In late January, Intel Corporation (NASDAQ:INTC) promoted eight vice presidents – this would have also provided a good opportunity to name the next CEO.
The Board of Intel Corporation (NASDAQ:INTC) said an outsider could probably be the next CEO, this is seen as a positive move by Intel Investors who are expecting some turnaround in the stock of Intel – which is performing sluggish under the reigning CEO. It is widely perceived that Intel is not able to handle competition from small chipmaker ARM Holdings plc (ADR) (NASDAQ:ARMH), whose chips are used popularly in mobile phones and tablets. Intel is also facing tough competition from industry leader Taiwan Semiconductor Manufacturing Company.
Intel Corporation (NASDAQ:INTC) could opt for contract manufacturing to gain the lost ground. But the internal culture of Intel does not allow chip designs from outside the company. This strategy will prove a failure if a customer wants Intel to build chips with ARM designs. Intel will have to follow this strategy if it wants to win Apple Inc. (NASDAQ:AAPL)’s chip contract. The profit margin is also less in the contract chip making business and thus Intel will have to work on how to keep the new competitors from taking away its shares.
Competitors, however, are making their moves and Intel will need a perfect strategy with hardly any loopholes. Looking at the problems of Intel, it is quite obvious why the chip-maker is taking this much time to appoint a new CEO.
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