* Chairman Barrett retiring after 35 years with company
* Director Jane Shaw taking over
* Share price up over 2 percent as Nasdaq rises (adds analyst comment, updates share price)
SAN FRANCISCO, Jan 23 (Reuters) - Intel Corp (INTC.O) Chairman Craig Barrett, the courtly former academic credited with building the company into the world's foremost chip maker, will retire in May after 35 years at the company.
Barrett, who turned Intel into one of the technology sector's powerhouses and a global household name, is leaving just when the company is slashing jobs, mothballing factories and struggling to sustain growth with IT spending crumbling.
The cost-cutting measures at Intel, which remains the world's top maker of microprocessors used in personal computers, ahead of Advanced Micro Devices AMD.N, underscore the threat to a technology industry undergoing potentially one of its worst-ever crises. [ID:nN21497938]
"When you look at the overall tenure there's a lot to be proud of and a lot was accomplished," said Caris & Co analyst Betsy Van Hees.
"It's definitely a loss that he's stepping down."
Intel, like much of the technology sector, is feeling the pain of the global slowdown and cratering demand for PCs. It just announced plans to cut up to 6,000 jobs, and posted a 23 percent decline in revenue in its most recent quarter.
Companies from Microsoft Corp (MSFT.O) to Seagate Technology (STX.O) are laying off thousands to try to offset dwindling corporate and consumer spending.
Van Hees reckons Intel is managing itself well amid the crisis, but thinks it's poised to report its first loss in over two decades in the first quarter.
Independent director Jane Shaw takes Barrett's place as nonexecutive chairman. Shaw, who like Barrett is 69, will be Intel's first chairman recruited from outside the company's executive ranks since Arthur Rock, an Intel co-founder and venture capitalist.
Barrett served as chief executive from 1998 through 2005, until current CEO Paul Otellini took over. As chairman, Barrett assumed the mantle of Intel's elder statesmen in talks with foreign governments.
Barrett joined the Santa Clara, California-based company in 1974 as a technology development manager. A former Stanford University professor, Barrett was known for formulating Intel's "copy exactly" strategy, meaning every chip-making plant was the mirror image of every other one.
Intel would not say what Barrett planned to do upon retirement, but the executive is involved in international educational projects and chairs the U.N. Global Alliance for Information and Communications Technology and Development.
His wife Barbara recently completed a stint as U.S. ambassador to Finland.
"Technology can be used in tremendous ways to impact people's lives on the ground," Barrett told an audience during his keynote address at the Consumer Electronics Show in Las Vegas this month.
Wedbush Morgan analyst Patrick Wang did not see Barrett's departure as too significant for the company.
"This isn't going to be meaningful in terms of impacting Intel's operations or execution any time in the near future."
He said Shaw, who has been on Intel's board since 1993, knew the company well and she was not expected to be too involved in the company's day-to-day operations.
Shaw retired in 2005 as chairman and CEO of Aerogen Inc, which developed drug-device aerosol products. She also sits on the board of McKesson Corp. She holds a Ph.D in physiology from Birmingham University in England.
Shares of Intel climbed as much as 4.4 percent as better-than-expected earnings from Google Inc on Thursday fueled tech-sector gains.