Pat Gelsinger has entrusted his professional legacy to restoring intel's (INTC.O) glory in chip manufacturing, but this decision has placed a heavy burden on his successor that is not easy to remove.

Gelsinger spent nearly four years focusing intel's resources to transform its manufacturing operation into a commercial foundry, despite the company's weak financial situation and bleak customer outlook. This transformation has made it difficult for the company to untangle these efforts in the future. Although the board of directors initially supported the development of the foundry business into commercial manufacturing, withdrawing now would likely pose a threat to the usa government's significant investments.

Bernstein Research analyst Stacy Rasgon pointed out that divesting these factories would enter a political minefield, even though these factories currently feel like a heavy burden.

Rasgon wrote in a client report on Monday: "Abolishing these factories will be fraught with difficulties regarding product roadmaps, outsourcing strategies, the chip act, and political responses. There seems to be no simple answer, so anyone taking over this role will face a tough path."

Bank of America analyst Vivek Arya also pointed out in a report on Monday that the funds secured by Gelsinger through the chip act will prevent intel from fully divesting its foundry business.

"Specifically, intel must: (1) if the foundry business is spun off as a new legal entity, maintain at least 50.1% ownership of intel foundry, or (2) if the foundry business operates as a publicly traded company and intel is not its largest shareholder, cannot sell more than 35% of foundry equity to third parties." He wrote in the report.

It is currently unclear who would be willing to acquire intel's manufacturing plants. In recent months, as the financial situation of the foundry business deteriorated, intel has reportedly met with investment banks to explore options including divesting or selling off the loss-making business. However, intel's decision in September was to operate the foundry business as an independent subsidiary and establish its own board of directors. This decision may have resulted from failed attempts to divest the business or an assessment that the prospects for such sales are bleak.

Currently, the foundry business has become the biggest issue faced by intel's interim leadership and the future official successor to Gelsinger. So far, intel has appointed two interim CEOs - chief financial officer David Zinsner and senior product executive Michelle Johnston Holthaus, but both seem to lack extensive experience in chip manufacturing.

Complicating matters further, there are concerns that the company's foundry business is underperforming. Intel is transitioning to a new manufacturing process - 18A, but has yet to ship any products from this process. The company is also finding it difficult to attract major clients for its foundry business, with analysts projecting a loss of 13.8 billion dollars this year for this business. Its biggest trade is a multi-billion dollar collaboration with amazon.

Meanwhile, Gelsinger is focused on restoring the glory of the manufacturing business while also working to commercialize it, but intel has barely participated in the ai boom, and revenues from pc and datacenter chips have sharply declined.

Lascon wrote: "We might have originally hoped that Gelsinger could at least wait until the 18A process products were available (by then we could see its effects), but since he failed to do this, we have to question whether his departure is a sign that the health of the process roadmap will be negatively impacted."

Raymond James analyst Srini Pajjuri has similar concerns. "The key questions currently are: (1) Is the manufacturing roadmap still on track? (2) Will the company separate its products and foundry business?" he wrote in a report.

Years ago, intel lost its global leading position in manufacturing processes, being overtaken by taiwan semiconductor. Some critics claim that Gelsinger spent too much time in the early part of his term seeking funding from the us government, ultimately facilitating the us CHIPS Act to restore us semiconductor manufacturing.

Additionally, the new CEO must also repair the company's relationship with taiwan semiconductor. According to Reuters, while Gelsinger was urging us lawmakers to support more chip manufacturing, taiwan semiconductor stopped offering deep discounts to intel, which had previously used those discounts to manufacture its chips using taiwan semiconductor's advanced processes.

As intel's stock price rose by 1.5%, far below its intraday high, investors seem to realize that the company currently has no quick solutions. The next CEO will face a daunting task of pulling the company out of its difficulties.