Intel's Grim Lesson for Boeing: Sometimes Mr. Fix-It Is Too Late

One day, fickle investors are applauding business-school alumni for paying big dividends and slashing costs. The next, they're demanding that engineers take over to make up for lost innovation.

- Jon Sindreu

Be careful that they don't change their minds again.

This is what happened in early December when Pat Gelsinger unexpectedly retired as chief executive and director of Intel. The Pennsylvania-born engineer, who helped pioneer USB ports and Wi-Fi, had been appointed on Jan. 13, 2021, with a mandate to regain lost technological ground from Taiwan Semiconductor Manufacturing Co. and Advanced Micro Devices. The chip maker's shares rose almost 7% on the news.

On the day Gelsinger stepped down, they closed roughly flat. Investors weren't heartbroken to see him go.

Kelly Ortberg needs to take note: Earlier this year, he took charge of Boeing, the other big fallen angel of American manufacturing.

To be sure, the plane maker's problems don't have the exact same origin. Boeing got most of the big picture right, developing the lightweight 787 Dreamliner when Airbus was still entangled in making the A380 superjumbo. But it outsourced too much of its operations and skimped on quality control to disastrous effect.

By contrast, Intel has held on to the vertically integrated model of both designing and manufacturing chips. Its mistakes were product and production-related: Executives first missed the boat on Apple's iPhone and then on the graphics processor units that have become the cornerstone of the artificial-intelligence revolution. Intel also didn't transition quickly enough to smaller semiconductor nodes.