Shares of Intel rose 5% on Monday after the company announced that the 63-year-old Gelsinger, who began his career at the chipmaker in 1979, had retired from the chief executive position and also resigned from the board. The move amounted to a vote of no confidence from investors who had initially cheered Gelsinger’s turnaround plan, which included regaining market share from chip design companies like Nvidia and semiconductor makers like TSMC.

Intel failed to make headway on both fronts, missing out on the AI ​​boom and watching its shares plunge more than 60% during Gelsinger’s tenure.

“While we have made significant progress in restoring manufacturing competitiveness and building the capabilities to become a world-class foundry, we know we still have work to do within the company and are committed to restoring investor confidence,” said Intel CEO Frank Yeary, the Independent, said in a statement on Monday.

Intel, once the world’s largest chipmaker, has fallen out of the industry’s top 10 companies by market capitalization, a list now topped by Nvidia and TSMC. Competitor AMD, which has taken significant market share from Intel’s core business of manufacturing computer processors (CPUs), is in sixth place with a valuation of around $220 billion. This fall, Intel’s market cap fell below the $100 billion threshold for the first time since 2012.

This came after a disastrous earnings report in August sent the stock down more than 25%, its worst day since 1974. After significantly missing its second-quarter profit and revenue targets, the company announced the dividend it would pay had paid to shareholders for more than three decades.

In response, the company also announced that it would reduce its workforce by 15%, equivalent to about 15,000 jobs, as part of $10 billion in cost-saving measures. Later, Intel also announced that its foundry business, which competes with TSMC in semiconductor manufacturing, would become an independent subsidiary.

However, when Gelsinger was forced to scale back his ambitions, Nvidia went ahead and replaced Intel in the Dow Jones Industrial Average. Nvidia’s graphics processors, or GPUs, were originally designed for video games, but have since been at the heart of the AI ​​boom. CEO Jensen Huang has suggested that demand for the company’s next-generation Blackwell offering is significantly outpacing supply.

Meanwhile, the success of another longtime Silicon Valley company, (hotlink)Oracle,(/hotlink), underscores how far Intel has fallen. The software giant, founded in 1977, has delighted investors in recent years with the incredible growth of its cloud business, which has propelled shares to their best year on record, other than 1999, when their price roughly quadrupled. The company has once again become the market’s darling as investors look for secondary beneficiaries of the market’s AI rally.

Can CHIPS Act funding help turn things around?

Intel has now fallen victim to the classic innovator’s dilemma not once, but twice Fortune’s Jeremy Kahn recently said he missed the boat on AI after remaining complacent during the smartphone revolution.

Gelsinger believed there was time to catch up, especially as the U.S. invests heavily to bring chip and semiconductor production back to American shores. The company has a deal with Amazon to make a new advanced AI chip and last week secured a $7.9 billion grant under the Biden administration’s CHIPS and Science Act.

Still, there are concerns that Intel won’t find the money it needs to drive this transformation. Chipmaker Qualcomm has reportedly approached Intel about a possible acquisition, but interest is said to have waned as Qualcomm is no longer as keen on the idea of ​​taking on more than $50 billion in debt.

Chief Financial Officer David Zinsner and Michelle Johnston Holthaus, a longtime Intel executive who is taking on a new role as CEO of the company’s product group, will serve as co-CEOs while the board searches for a permanent replacement. It’s a prestigious position, but Gelsinger’s successor must be ready for the long, difficult road ahead.

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