Stumbling on the smartphone, Intel CEO Paul Otellini will retire next year

In a surprise move, Intel CEO Paul Otellini announced today that he plans to step down next May.

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Otellini is only the fifth CEO in Intel’s 45-year history, and as a 40-year employee, the now-departing CEO has been a part of the company from essentially the beginning.

“After almost four decades with the company and eight years as CEO, it’s time to move on and transfer Intel’s helm to a new generation of leadership,” Otellini said in a statement this morning.

But while the trend for Intel CEOs is to retire at 65, Otellini is 62, making his announcement a surprise to those both inside and outside Intel.

Otellini’s early departure comes amidst Intel’s ongoing struggles in the mobile space. While the company has made headway in the form of the Intel-equipped Motorola Razr i, the big issue that will face Intel’s next CEO is figuring out how to make a dent in the mobile market before Intel gets completely squeezed out of it. After all, it’s telling that the iPad, one the most important devices of the past decade, isn’t running on an Intel chip.

Intel says it plans to look both inside and outside the company for Otellini’s successor. One possibile, but unlikely, choice is Sean Maloney, the 30-year Intel veteran who was widely believed to be next up for Intel’s CEO spot before he left the company in September.

In terms of highlights,  Otellini oversaw Apple’s transition to Intel chips (though there are rumors that Apple is looking to split), the rise of the Ultrabook, and, in 2006, the largest layoff round in Intel’s history. 10,500 employees were laid off, representing a tenth of Intel’s workforce.

On the numbers side, Otellini saw Intel’s annual revenue climb from $38.8 billion to $54 billion. More recently, Intel has been hit by sagging sales in the PC market, which helped cut its profits by 14 percent during the third quarter.