Daniel Loeb, chief executive of hedge fund Third Point LLC, wrote a letter to Intel’s Omar Ishrak on Tuesday urging the chipmaker to hire an investment adviser to explore ‘strategic alternatives’ aimed at to regain market share from competitors, especially Taiwan Semiconductor Manufacturing Company. and Samsung.
The suggestions in the letter – which includes requests to the company more seriously consider whether to continue to make all its chips internally and take off from ‘failed acquisitions’ – could lead to major changes if Intel responds.
Intel said in a statement on Tuesday that it welcomed investor input. “In spirit, we look forward to engaging with Third Point LLC about their ideas for the purpose,” he said.
Intel has long been known for doing both chip design and manufacturing in the house. But the approach has been called into question because Intel has lagged behind TSMC and Samsung in producing the most advanced microprocessors.
Intel has struggled over the past few years to move from a 14-nanometer chip to a 10-nanometer chip, and in July it released 7-nanometer chips (which some of its competitors already have) would be delayed. Meanwhile, Intel’s competitors continue to develop even smaller, more powerful processors.
Intel CEO Bob Swan began suggesting this year that the company could outsource some disk production, although analysts have differed on what exactly such a move would look like. Intel’s challenges have been a major boost for TSMC.
“The loss of manufacturing leadership and other flaws have enabled several semiconductor competitors to leverage TSMCs and Samsung’s process technology and gain significant market share at Intel’s expense,” Loeb wrote in the publicly shared letter.
According to a hedge fund spokesman, Third Point has a nearly $ 1 billion stake in Intel. According to CNN Business data, it is currently not among the top ten owners of Intel shares, but Loeb said in the letter that the fund is seeking the approval of the Federal Trade Commission to acquire additional shares and retain the option to submit . nominees from the board at Intel’s 2021 annual meeting “would we have a reluctance to work together.”
Intel’s share rose nearly 5% on Tuesday after news of Loeb’s letter. The disc maker’s shares fell this year almost 19%, although the computer market got a boost from the move to work from home during the pandemic.
Meanwhile, Intel competitors have had a good year. AMD, which is eating away at Intel’s share in the computer and data center markets, has risen 85% since the beginning of 2020 (its share price also rose by 150% last year). Nvidia, a leading producer of graphics chips for the growing gaming market, has risen 116% this year. And TSMC and Samsung’s share prices rose 76% and 42% respectively.
Intel also recently suffered a blow when Apple announced that it will use its own processors, rather than Intel’s, in its new range of Macs.
“You need to be able to offer new independent solutions to retain customers, rather than having their manufacturing shipped away,” Loeb said in a letter Tuesday. He added that if Intel were too far behind in semiconductor manufacturers in Asia, it could pose a threat to US national security (some US officials have raised similar concerns about national security issues if America falls too far behind in semiconductor manufacturing).
He also urged Intel to address its ‘human capital management issue’, saying many talented chip designers and leaders have left the company and the remaining ‘demoralized by the status quo’.
Loeb did not elaborate on which of Intel’s acquisitions he considered ‘failed’ bets. Among the recent purchases of the chipmakers: In 2015, he bought the programmable chip company Altera for $ 16.7 billion; In 2017, he bought self-driving car company Mobileye for $ 15 billion in 2017 and in May, it acquired digital mobility firm Moovit for $ 900 million. The latter two transactions were aimed at strengthening the company’s efforts in the self-managed technological space.
.Source
Related
