A significant development with potential repercussions throughout the technology sector has occurred: Intel has declared that Pat Gelsinger, currently the CEO of VMware, will assume the role of Intel’s CEO, succeeding interim CEO Bob Swan, starting February 15th. The central question is what motivated him to transition from his current position to lead a chip manufacturer facing challenges.

Fundamentally, he possesses an extensive background with Intel, having collaborated with prominent figures in the history of the chip industry prior to joining VMware in 2009. Returning to his origins and attempting to revitalize the company likely presents a compelling opportunity for him.

“I began my journey with Intel at the age of 18, immediately after completing my studies at Lincoln Technical Institute. Throughout my subsequent 30 years with Intel, I was privileged to receive guidance from industry pioneers such as Grove, Noyce, and Moore,” Gelsinger expressed in a blog post announcing his appointment.

Undoubtedly, Intel acknowledged that Gelsinger’s background and substantial executive experience would be valuable assets as the company strives to maintain its competitive edge in an increasingly dynamic chip industry. “Pat is a highly accomplished technology leader with a proven history of innovation, cultivating talent, and possessing a thorough understanding of Intel. He will uphold a values-driven leadership style with a strong emphasis on effective implementation,” stated Omar Ishrak, independent chairman of the Intel board, in an official release.

However, Gelsinger is inheriting a complex situation. As noted by my colleague Danny Crichton in his recent analysis of the chip industry, Intel currently lags behind its rivals, and closing this gap will be a considerable undertaking:

Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy, shares this perspective, indicating that Swan faced a difficult task, inheriting a long-standing set of issues. While Gelsinger will encounter similar obstacles, Moorhead believes he can re-establish the company’s focus. “I don’t anticipate any radical strategic shifts under Gelsinger’s leadership, but I do expect him to prioritize the company’s engineering culture and restore a culture centered on execution,” Moorhead explained.

This announcement follows a year of substantial consolidation within the chip industry, with over $100 billion exchanged in four major transactions, including Nvidia’s acquisition of ARM for $40 billion, the $35 billion AMD-Xilink agreement, Analog’s purchase of Maxim for $21 billion, and Marvell’s acquisition of Inphi for $10 billion, alongside Intel’s sale of its memory division to SK Hynix for $9 billion.

Regarding VMware, the company must now identify a new CEO. According to Moorhead, Sanjay Poonen, the current COO, would be a logical candidate; however, Zane Rowe, the CFO, will serve as interim CEO for the time being, rather than Poonen. In fact, the company intends to consider candidates from outside the organization. The official announcement confirms, “VMware’s Board of Directors is initiating a global executive search process to name a permanent CEO…”

Holger Mueller, an analyst at Constellation Research, suggests that Michael Dell will ultimately decide on the new CEO, but he posits that Gelsinger’s opportunities for advancement within Dell were limited, prompting his departure.

“VMware possesses a strong team, but Michael Dell will need to select a CEO capable of driving innovation in software and preserving VMware’s distinctive identity within the Dell portfolio. Dell relies on the substantial profits from this business to facilitate its own recovery,” he commented.

The stock market has reacted favorably to the news for Intel, with the company’s stock increasing by 7.26%, while VMware’s stock has experienced a comparable decline of 7.72% as of this report.