“Intel, now pushed by Samsung Electronics… Shake the production sector and find alternatives”

Input 2020.12.30 08:42 | Revision 2020.12.30 08:43

On the 29th (local time), the US activist hedge fund Third Point demanded a major structural reform from the semiconductor company Intel. Specifically, it ordered hiring investment advisors to shake off the production sector and explore strategic alternatives. With anticipation for innovation, Intel’s share price ended at $49.39 on the day, a surge of $2.32 (4.93%) from the previous trading day.

According to the Financial Times (FT), Daniel Lob, Chief Executive Officer of Thirdpoint, sent a letter to Intel’s chairman Omar Isirak that day, saying, “Intel was once the standard for manufacturing innovative microprocessors, but now it is competing in East Asia such as Taiwanese TSMC and Korea Samsung Electronics. There is a remarkable technology gap with companies,” he pointed out.

Intel is lagging behind its competitors to the point that it can’t actually produce semiconductors on the market. A typical example is the 7-nanometer (nm) class semiconductor produced by rival AMD. The evaporated market cap alone reached $60 billion this year, as Intel announced that it will delay the development of this semiconductor by half a year from the previous plan. Intel CEO Bob Swan has announced that he will make a decision on whether to outsource semiconductor production by early next year.

The market share of computing devices used in artificial intelligence (AI) apps has long been in the hands of rival NVIDIA. Microsoft (MS) and Apple, longtime customers of Intel, abandoned their reliance on Intel and started developing their own chips.

Rob said he was concerned that if Intel collapsed, it could pose a crisis for US national security. If Intel doesn’t look for immediate change, the US will have to rely on “geographically unstable” East Asian companies for the roots of all its core infrastructure. “Intel should hire investment advisors to start thinking about future alternatives,” Rob said, advising him to consider disposing of the failed acquisition.

He also stressed that the issue of Intel’s manpower outflow is a problem that needs to be addressed. “The best semiconductor design people are leaving the company, and the morale of the rest is falling,” he said.

Third Point is a hedge fund with an asset of 15 billion dollars, and is praised for successfully leading the reforms of companies such as Prudential, Yeom Brands, Dow Chemical, and United Technologies.