Intel Rallies Morgan Stanley as CEO Gelsinger Battles to Restore Profitability Amid Investor Pressure

Intel has recently engaged advisors, including Morgan Stanley, to fend off activist investors, according to sources familiar with the matter. CEO Pat Gelsinger is striving to steer the troubled chipmaker back to profitability.
Although Intel has faced pressure from activist investors before, there is no new formal activist campaign at this time. Moreover, it remains unclear whether any activist investors have approached Intel's board. Morgan Stanley's prior engagements with Intel include assisting in the 2022 spinoff of Mobileye.
Sources, who requested anonymity due to confidentiality, have indicated Morgan Stanley's current involvement. Both Intel and Morgan Stanley representatives declined to comment.
Last year, Intel lost its position as the largest U.S. chipmaker to NVIDIA, whose market capitalization has soared beyond $3 trillion, approximately 35 times that of Intel. The company now trails behind AMD, Broadcom, Qualcomm, and Texas Instruments.
Earlier this month, Intel announced it would lay off about 15% of its workforce, equating to 15,000 jobs, as part of a $10 billion cost-cutting initiative. The company also reported quarterly results that fell short of Wall Street expectations and stated it would not pay a dividend for the fourth quarter.
Among Intel's most significant recent challenges is the shift by major cloud providers and large language model developers to NVIDIA's GPUs for intensive workloads, leaving Intel behind in the AI race. Intel had previously missed out on most of the smartphone boom.
In 2020, before Gelsinger became CEO, Dan Loeb's Third Point acquired a substantial stake in Intel, pressing the company to explore other strategic options to address market share declines. Intel’s board is currently led by Frank Yeary, a renowned investment banker who served as Executive Chairman at Camberview prior to its acquisition in 2018.
This week, Intel's board experienced some turbulence with semiconductor industry veteran Lip-Bu Tan announcing on Thursday he would step down after a two-year tenure. Tan cited personal reasons and the need to prioritize various commitments while expressing continued support for the company and its significant initiatives.