New York (CNN Business)Intel has named Pat Gelsinger as its new chief executive officer, replacing Bob Swan after a rocky two-year run.

The chipmaker recruited Gelsinger from software firm VMWare, calling him a “highly respected CEO and industry veteran” in a release. Gelsinger, who has been VMWare’s CEO for about the past decade, will take the helm at Intel on February 15.Intel (INTC) shares rose nearly 8% following the news, while VMWare (VMW) shares slipped almost 8%. CNBC first reported the news.Swan was named Intel’s permanent CEO in January 2019 following the departure of its previous CEO Brian Krzanich, who was forced to resign in June 2018 because of a “past consensual relationship with an Intel employee.”Under Swan, the company has struggled, losing market share to competitors in key business segments and dealing with manufacturing delays.Read MoreAnd the leadership change comes after a letter to Intel from activist investor Dan Loeb of Third Point, calling on the company chairman to hire an investment adviser to explore “strategic alternatives” aimed at regaining market share from competitors. The suggestions in the letter included calls for the company to consider whether to continue making all of its chips in-house and divesting from “failed acquisitions.”In Wednesday’s release, Intel said its board “concluded that now is the right time to make this leadership change to draw on Pat’s technology and engineering expertise during this critical period of transformation at Intel,” adding that the change will “ensure strong execution” of the company’s new future.Chip challengesAmong Intel’s biggest challenges at the moment: The company has fallen behind competitors in producing the most advanced microprocessors. Intel in recent years struggled to move from a 14-nanometer to a 10-nanometer chip, and it said in July that its 7-nanometer chips (which some of its rivals already have) would also be delayed. Meanwhile, rivals Taiwan Semiconductor Manufacturing Company (TSM) and Samsung (SSNLF) continue to move ahead with developing even smaller, more powerful processors.As it grapples with the manufacturing difficulties, Intel also faces greater competition than it’s “ever had in the past” in its core business areas, said Alan Priestley, vice president analyst for Gartner. AMD (AMD) has stolen market share in the key PC and data center markets, and Nvidia (NVDA) has been investing heavily in the AI sector. Intel’s PC business also recently took a blow when Apple announced it will use its own processors, rather than Intel’s, in its new series of Macs. Such issues have meant Intel’s stock has also lagged behind competitors. The company’s shares are down nearly 4% from a year ago, despite the bump they received from the news Wednesday. AMD’s stock, by contrast, is up 87% over the past year, and TSMC’s has grown nearly 99%. “I hope that they’ll come out with a real clear strategy about how they’ll address the manufacturing issues, the competitive issues they face going forward,” Gartner’s Priestley said of Intel. He added that Gelsinger will need to address Intel’s loss of technology leadership and decide how much of its technology to continue manufacturing in-house. “Pat’s got to come out with a real clear strategy there,” Priestly said, “something that gives the industry confidence that they’re going to recover.”

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