A spokesman for the company, Paul Bergevin, said the decision for Otellini to retire at age 62 was entirely his and that the board, apparently surprised by the decision, accepted the CEO's resignation "with regret."
Otellini said it was time to "move on and transfer Intel's helm to a new generation of leadership."
The company had a standing tradition of announcing turnover in the top office well in advance and a six-month warning "breaks from the company tradition," The Wall Street Journal said.
Otellini had been expected to work another three years, until he turned 65, which is a mandatory retirement age for Intel, the world's largest producer of semiconductors when measured by revenue.
Intel was long considered tops in a technology landscape dominated by personal computers. With a sharp turn toward smaller devices, such as smart phones, the company has been struggling to keep up, the Journal said.
Otellini, with Intel for nearly 40 years, took the CEO position in 2005.
His leadership, while marked by "ups and downs," has given the company "a fighting chance" at succeeding in the new smart-phone market, said Patrick Moorhead, an industry analyst at Moor Insights & Strategy.