Grove Steps Aside As Intel’s Chief Primary Architect Of Company’s Rise To Prominence Hands Reins To Craig Barrett

Andrew Grove, a Hungarian immigrant and Holocaust survivor who rose to become a leading luminary of the digital age, is relinquishing his job as chief executive of Intel Corp.

Grove, Time magazine’s “Man of the Year” in 1997, will be succeeded by Craig Barrett, 58, the chip maker’s president and chief operating officer and another key architect of its rise to dominance. Grove, 61, will stay on as chairman to focus on broader strategic issues, the company said Thursday.

The company took pains to describe the executive succession as part of an orderly transition - unrelated to Grove’s recent battle with prostate cancer or to the company’s recent slack financial performance. Barrett replaced Grove as president last year - a step that led to widespread speculation he would succeed Grove in the top job.

But the transition comes as Intel faces some of its toughest challenges in the three decades since Grove helped create the world’s biggest chip maker and lead it to $25 billion in revenue last year.

Barrett is viewed as less forceful and driven than Grove, but his credentials as a manufacturing expert could help Intel regain some of the momentum it lost in recent years, analysts said.

Grove’s aggressive drive and reputation as a brilliant design engineer proved crucial to Intel’s development of progressively more powerful computer chips, which set the pace for technology and today are the brains in more than 85 percent of the world’s personal computers.

Intel’s board voted at a regular meeting Wednesday to replace Grove after he approached company directors about stepping down, Grove said in a telephone interview. Barrett will take over on May 20.

“My feeling was I was ready and Craig was ready and we were ready,” he said. “This is a continuation of what we did a year ago.”

The succession comes after Grove’s narrow escape from prostate cancer in 1996. Grove says the disease is in remission and that he is in excellent health after surgery two years ago.

Grove, who became chief executive 11 years ago, recently presided over six straight quarters of flat revenue growth and a warning early this month that its computer chip sales were falling below expectations.

Intel’s results have been eroded in part because some rivals have been more successful in selling cheaper chips used in the hottest part of the PC market - machines costing $1,000 and less. Intel also has lost ground in chips used in consumer electronics devices, such as set-top boxes for televisions.

Barrett, a process engineer, was behind Intel’s massive construction of multibillion-dollar factories for churning out silicon microprocessors. That manufacturing expertise could prove helpful as Intel competes in a world where inexpensive computer chips increasingly are more important than ever-more powerful ones.

“The emphasis for the company is changing, and for that reason Barrett is the right guy at the right time,” said Andrew Peck, an analyst with Cowen & Co., in Boston.

Still, the company’s recent problems were seen as a blip on an otherwise remarkable career for Grove.

“Although there may be minor issues, the guy has done an incredible job,” Peck said. “He had the great good fortune of controlling a monopoly during the explosion of the computer industry, but he still deserves a lot of credit.”

Grove arrived in America a penniless refugee in 1956 and went to work for Intel in 1968. He was named president in 1979 and chief executive in 1987. In 1997, he also became Intel’s chairman.

Barrett joined Intel in 1974 and was named a vice president in 1984. He became chief operating officer in 1993.