By Asa Fitch

Intel Corp. is shaking up its technology team and said its chief engineering officer was leaving the company days after the semiconductor maker surprised investors by disclosing delays on its newest processor design.

The executive, Venkata "Murthy" Renduchintala, had played a leading role in the company's bid to scale down the size of its transistors and compete with the likes of Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. Intel said Mr. Renduchintala, who joined the company in 2015 from Qualcomm Inc., would leave Aug. 3.

Intel has stumbled with development of some of its newest processors. Two years ago, it encountered delays in bringing its 10-nanometer technology to market. On Thursday, Intel shares plummeted after it said that its move to 7-nanometer chips was delayed by a year from its initial schedule. Chips that use smaller transistors can run more efficiently and use up less physical space.

Intel shares are down around 18% since last week's disclosure. Long the largest U.S. semiconductor company by value, Intel has now ceded that title to rival Nvidia Corp.

The company's struggles come as Advanced Micro Devices Inc. has been winning market share. The smaller rival has won investor enthusiasm with a series of new chips that match or best those of Intel on many performance benchmarks. Shares of AMD, which is due to report quarterly earnings on Tuesday, have risen around 16% since Intel disclosed its latest product development setback.

Intel also said on Monday it was splitting its technology group into several teams reporting directly to Chief Executive Bob Swan. Ann Kelleher, a longtime Intel executive who oversees its manufacturing operations, will lead the technology development division, succeeding Mike Mayberry, who is retiring at the end of the year, the company said. She will be in charge of overseeing the development of an even smaller chip design.

Intel said its manufacturing and operations are to be led by Keyvan Esfarjani, who previously oversaw some of the company's memory manufacturing. It also appointed an interim leader for its design engineering division, while keeping in place the leadership of its chip architecture and software strategy and its supply-chain operations.

Under Mr. Renduchintala, Intel had hoped to iron out chip design and manufacturing issues that had plagued it in the past. Mr. Renduchintala said in a presentation to investors last year that the company had learned lessons from designing 14- and 10-nanometer chips and was prioritizing the schedule for their 7-nanometer successors.

Mr. Renduchintala couldn't immediately be reached for comment.

The changes, Intel said, are intended to "accelerate product leadership and improve focus and accountability in process technology execution."

The move follows the departure in June of another high-ranking Intel engineer, Jim Keller, who left citing unspecified personal reasons. Mr. Keller is a star chip architect -- a designer of the structure of chips that plays a major role in how well they perform. Before his two-year stint at Intel, he had worked at Apple Inc., Tesla Inc. and AMD.

Intel's latest product development woes come as the Santa Clara, Calif.-based company benefited from the shift to widespread remote working during the coronavirus pandemic that has fueled demand for its chips powering the computers and online services people now increasingly rely on. The company posted second-quarter earnings on Thursday that exceeded Wall Street forecasts, though its shares sank because of the technological delays.

Amid those issues, the company said it was looking at outsourcing the manufacturing of some of its core products, further transforming a U.S. tech icon whose prowess has long centered around its own factories.

Write to Asa Fitch at asa.fitch@wsj.com