Otellini to Replace Barrett as Intel's CEO

SAN FRANCISCO – Intel Corp. (INTC) on Thursday said President Paul Otellini (search), a marketing expert, would replace Craig Barrett as chief executive, at a time when the No. 1 microchip maker looks for markets beyond personal computers and for new technologies to speed up PCs.

Otellini, 54, becomes the fifth CEO at Intel, whose microprocessors power more than 80 percent of the world's personal computers, and is the first chief executive with a marketing rather than an engineering background.

Barrett, 65, will take over as chairman, replacing Andy Grove (search), the previous CEO, Intel said in a statement, confirming a previously telegraphed succession plan. Intel CEOs are required to resign at 65.

Intel shares were up 15 cents at $23.01 on the Nasdaq. The stock has fallen 28 percent this year.

The announcement comes in a year when the computer chip maker has suffered from production missteps uncharacteristic for a company that prides itself on manufacturing prowess.

For instance, Intel recently canceled plans to introduce its fastest chip ever. The company has begun to focus on increasing power by multiplying the number of processors on a microchip rather than souping up the speed of individual processors.

"We're shifting from an environment of thinking how many chips are in a computer to how many computers are on a chip," Otellini said. "You've seen us make a fairly significant change in our product road map."

The changes take effect on May 18, the date of Intel's next annual shareholder meeting, and Grove, 68, will no longer be an Intel director. He will assume the role of senior advisor to the board and senior management, the company said.

"From my perspective it's the best of both worlds," Otellini said, referring to Barrett's and Grove's continuing roles at the 36-year-old company.

Otellini, who oversaw the introduction of Intel's Pentium chip in 1993, has been president and chief operating officer since 2002.

Twenty-five years ago, Otellini, a San Francisco native, made his name at Intel as the marketing manager of its line of microprocessors for the first IBM personal computers.

For all its dominance, however, Intel has had setbacks this year. Last month, Intel scrapped a plan to enter the digital television chip business with a novel technology known as liquid crystal on silicon, or LCoS.

Early in 2004, Otellini had promised the technology would help it "revolutionize" the television market.

Also in October, Intel canceled plans to introduce its top- speed desktop computer chip, which handles computer calculations at more than 4 billion cycles per second.

Intel is also facing stiff competition from long-time rival Advanced Micro Devices Inc. (AMD), which has a jump on delivering advanced "64-bit" chips that multiply the calculating power of business computers.

Otellini, who joined Intel in 1974, is known for the slogan "Innovate and integrate," signaling the company wants to expand from producing microprocessors to making new groups of chips used in finished computers, game machines, mobile telephones and other consumer electronics.

Barrett, who also joined Intel in 1974 and became CEO in 1998, is credited with building it into the high-tech industry's unparalleled manufacturing powerhouse.

A former Stanford University professor, Barrett was known for formulating Intel's "copy exactly" strategy, meaning every chip-making plant is a mirror reflection of every other one. He also spearheaded Intel's ventures down less-successful roads, particularly Web hosting, as well as a push into communications chips, where the company has spent billions of dollars on acquisitions and has, to date, lost money.