Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How Intel Lost Its Boardroom Mojo
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- Lucas: Let me start with a number that still surprises me. In early 2021, Intel's board had eighteen directors. Exactly zero of them had spent a significant portion of their career in semiconductor manufacturing. The company was building chips and the people overseeing its strategy had never built one. Luna: Wait — zero? Even the former CEOs and the people who served on the tech committee? Lucas: Zero. There were former bank CEOs, former pharma executives, a lot of financial expertise. But nobody who had lived inside a fab. And that's not an outlier for the time — it's a symptom of a broader governance problem that cost Intel billions. Luna: So the board that fired Bob Swan and brought back Pat Gelsinger — they were essentially outsiders. How did that even work? Lucas: That's the fascinating part. The board actually fired Swan because of execution failures — delays on the seven-nanometer node, losing the process lead to TSMC. But the board itself didn't have the technical chops to evaluate whether Swan's strategy was sound in the first place. They were making a bet on a turnaround without understanding the underlying technology. Luna: So they fired the CEO for problems they couldn't have diagnosed independently. That's a pretty damning picture of board oversight. Lucas: Exactly. And it gets worse. Activist investor Dan Loeb at Third Point LLC had been pressuring the board since 2020 to consider breaking up the company — separating chip design from manufacturing. The board initially resisted that idea. But within months of bringing Gelsinger back, they announced exactly that kind of restructuring. It looked like the board had been reacting, not leading. Luna: Right — so the board's strategy was basically 'whatever the activist says, but six months later.' That doesn't inspire confidence. Lucas: No, it doesn't. And here's where it ties back to board composition. A 2024 study from the Harvard Law School Forum on Corporate Governance looked at boards in the semiconductor industry specifically. It found that companies with at least two directors who had deep operational experience in chip manufacturing had significantly better total shareholder returns over a five-year period. Intel was a glaring counterexample. Luna: Did Intel's board change after Gelsinger came in? I know they added some new directors. Lucas: They did. By the end of 2023, the board had shrunk from eighteen to twelve members. They added a former ASML executive and a former Micron Technology veteran. So somebody realized the problem. But it took an activist campaign, a CEO firing, and years of market underperformance to get there. Luna: I want to push back a little. Isn't there a risk that a board full of industry insiders becomes too cozy with management? Isn't independence supposed to be the whole point? Lucas: It's a fair concern. The governance pendulum swung hard after Enron toward independent directors, and for good reason. But the balance has tipped too far in some cases. You don't want groupthink, but you also don't want a board that can't tell the difference between a five-year roadmap and wishful thinking. Independence without expertise is just ignorance. Luna: Ignorance is a strong word. But I take your point. What about Intel's recent performance? Has the boardroom overhaul actually delivered results? Lucas: Mixed. Intel's foundry business — the manufacturing arm they're now trying to spin out — has been a massive capital drain. They've secured some government funding through the CHIPS Act, but they're still years away from being competitive with TSMC on the leading edge. The stock has been volatile. The board's job now is to decide whether to stay the course or pivot again. Luna: And does the current board have the expertise to make that call? Or are they still relying on Gelsinger's vision? Lucas: That's the billion-dollar question. Gelsinger is a brilliant engineer, but he's also a CEO with a lot of personal credibility on the line. A truly strong board would be able to challenge him — to ask the hard questions about capital allocation, timeline realism, and competitive positioning. I'm not sure they're there yet. Luna: So what's the takeaway for other boards? Not just in tech, but across industries? Lucas: I think the core lesson is that board composition isn't just a checkbox exercise. You need a mix of skills, but you absolutely need people who understand the company's core business at a granular level. If your company makes semiconductors, someone on the board should have run a fab. If you're a pharmaceutical company, you need someone who's led a clinical trial. It sounds obvious, but Intel shows how easy it is to drift away from that. Luna: It also shows how expensive it is to fix after the fact. The market cap loss, the activist distraction, the strategic whiplash. Lucas: Exactly. And that's the part that doesn't show up in the board evaluation form. The cost of not having the right people in the room when the big decisions are being made. Luna: Alright, Lucas — final thought. If you were an investor and you saw a board with zero industry expertise, what would you do? Lucas: I'd ask the most pointed question I could at the next annual meeting: 'Name one board member who can independently evaluate the CEO's strategy.' If they can't answer, you have your answer.