Daniel Loeb, chief executive of hedge fund Third Point LLC, wrote a letter to Intel president Omar Ishrak on Tuesday asking the chip maker to hire an investment adviser to explore “strategic alternatives” aimed at recovering the hedge fund. market share of competitors, in particular Taiwan Semiconductor Manufacturing Company and Samsung.
Letter suggestions – which include requests for the company to take it more seriously if it continues to manufacture all of its internal chips and disassociate itself from “failed acquisitions,” which could lead to major changes if Intel acts on them.
Intel said Tuesday in a statement welcoming the contribution of investors. “In that spirit, we look forward to engaging with Third Point LLC in their ideas to achieve this goal,” he said.
Intel has long been known for doing both chip design and production at home. But that approach has been called into question, as Intel has lagged behind with TSMC and Samsung in producing the most advanced microprocessors.
Intel in recent years struggled to move from a 14-nanometer chip to a 10-nanometer chip, and said in July that its 7-nanometer chips (which some of their rivals they already have) would also be delayed. Meanwhile, Intel’s competitors continue to move forward with the development of even smaller, more powerful processors.
Intel CEO Bob Swan began suggesting this year that the company could outsource some chip production, although analysts have had mixed opinions on what that move would look like. Intel’s challenges have been a big boost for TSMC.
“The loss of manufacturing leadership and other erroneous steps have allowed several semiconductor competitors to leverage the process technology capability of TSMC and Samsung and gain significant market share at the expense of Intel,” Loeb wrote in the letter. , which was shared publicly.
Third Point has a nearly $ 1 billion stake in Intel, according to a hedge fund spokesman. It is not currently among Intel’s top ten shareholders, according to CNN Business data, but Loeb said in the letter that the fund is seeking approval from the Federal Trade Commission to acquire additional shares and preserve the option to submit nominated to the board at Intel’s 2021 annual meeting “if we feel a reluctance to work together”.
Shares of Intel ended nearly 5% on Tuesday after the news of Loeb’s letter. Shares of the chip maker have fallen almost 19% this year, though the computer market received a boost from the shift to working from home during the pandemic.
Meanwhile, Intel’s competitors have had a solid year. AMD, which is eating away at Intel’s stake in PC and data center markets, has risen 85% since early 2020 (its share price also grew 150% last year). Nvidia, a leading producer of graphics chips for the growing gaming market, has risen 116% this year. And TSMC and Samsung stock prices have gained 76% and 42%, respectively.
Intel also received a blow recently when Apple announced that it will use its own processors, instead of Intel, in its new series of Macs.
“You need to be able to offer new standalone solutions to retain those customers instead of having them ship manufacturing,” Loeb said in his letter Tuesday. He added that if Intel falls too far behind semiconductor manufacturers in Asia, it could pose a threat to U.S. national security (some U.S. officials have raised similar concerns about national security issues if the United States falls too far). back in semiconductor manufacturing).
He also urged Intel to address its “human capital management problem,” saying many talented leaders and chip designers have left the company and those who remain are “demoralized by the status quo.”
Loeb did not delve into which of Intel’s acquisitions he considered “failed” bets. Among the recent purchases from chip makers: in 2015 it bought programmable chip firm Altera for $ 16.7 billion; In 2017, it bought self-driving vehicle firm Mobileye for $ 15 billion in 2017 and in May acquired digital mobility firm Moovit for $ 900 million. These last two agreements aimed to strengthen the company’s efforts in the autonomous technological space.
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