Intel CEO Robert Swan speaks at the Rakuten Optimism event in Yokohama, Japan, on July 31, 2019.
Tomohiro Ohsumi | Getty Images
Third Point, the hedge fund led by Dan Loeb, is asking Intel’s board of directors to hire an investment advisor to explore “strategic alternatives” after the chip maker lost market share to TSMC, Samsung and AMD.
Among the considerations should be to withdraw “failed acquisitions,” Loeb wrote in a letter to Intel’s board of directors on Tuesday. CNBC viewed a copy of the letter. The third point, known for its activism, recently took a significant stake in Intel worth $ 1 billion, according to Reuters.
Intel shares rose about 5% after reports of the letter appeared on Tuesday. Even with Tuesday’s rally, Intel fell 18% in 2020, while AMD, Intel’s main US rival, nearly doubled in value and the S&P 500 rose 15%.
“The loss of production leadership and other missteps have allowed several semiconductor competitors to capitalize on the technology capabilities of TSMC and Samsung processes and gain significant market share at Intel’s expense,” Loeb wrote. Meanwhile, AMD has consumed Intel’s share of “central computer and data center processing markets,” he added.
In a statement, Intel said it would work with Third Point on its ideas to increase shareholder value.
“Intel Corporation welcomes the contribution of all investors to the increased value of shareholders. In this spirit, we look forward to engaging with Third Point LLC on their ideas to this end,” Intel said in a statement.
Intel’s financial results were affected in the last quarter by delays in 7-nanometer chips, allowing AMD to get a dramatic lead with its competitive chips. Processors are essential to provide improved computing performance and to meet the requirements for higher speeds.
AMD is contracting with TSMC in Taiwan, the world’s largest contract foundry, and a company that also produces chips for Apple and Nvidia. Intel CEO Bob Swan Intel said in July that the company is open to outsourcing its production to keep up with the current generation of chips.
Loeb said the loss of manufacturing skills at Intel raises national security concerns.
“With no immediate changes to Intel, we fear that America’s access to cutting-edge semiconductor supplies will erode, forcing the United States to rely more on geopolitically unstable East Asia to power everything from PCs to centers. data, up to critical infrastructure and much more, ”he wrote. .
Loeb added that Intel must be able to produce products that serve massive companies such as Amazon, Apple and Microsoft, which are developing their own chip models and manufacturing them abroad.
He said the company has several recommendations that Intel would like to make privately. The third point was also submitted to the Federal Trade Commission to purchase additional shares and to retain the option of recommending board members in 2021 “if we feel reluctant to work together to address the concerns we have. I have raised in this letter. “
– CNIE’s Leslie Picker contributed to this report.
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