The US activist hedge fund called for semiconductor maker Intel to shake off the semiconductor production sector as a means of structural reform, saying, “Samsung and Taiwan TSMC have been pushed out.”
According to the Financial Times and Reuters news agency on the 29th (local time), Daniel Rob, chief executive officer of Third Point, a hedge fund in New York, USA, sent a letter to the board of directors on the same day that contained Intel’s structural reform.
Third Point is an activist hedge fund that seeks an investment strategy that raises corporate value by buying corporate stocks to secure voting rights and then demanding improvements in governance structure and dividend expansion. Previously, he had a history of inducing restructuring by pressing Prudential and Dow Chemical.
Thirdpoint currently holds a $1 billion stake in Intel.
In a letter, Rob noted, “Intel’s loss of manufacturing leadership and the crisis has allowed some semiconductor competitors to leverage TSMC and Samsung’s process technology to gain significant market share at the expense of Intel.” In addition, in the PC processor market, AMD, which competes directly with Intel, has eroded the PC and data center CPU (central processing unit) market share, which is the core of Intel.
In fact, Intel is already showing a significant technological gap with other competitors in production so that it still cannot produce 7-nanometer (nm) class semiconductors, which are the next generation semiconductors that AMD is producing through TSMC.
In July, it announced that it would delay the development of 7-nanometer semiconductors by half a year from the previous plan, giving a gloomy prospect that semiconductors already on the market could be produced after 2022. Because of this, Intel’s market capitalization of $60 billion has disappeared this year alone.
One of these reasons, Rob said, cited the moral hazard of management and the outflow of manpower. In spite of the company’s crisis, executives took incentives and pointed out that Intel’s best semiconductor design staff left the company one by one.
Rob said that Intel’s loss of competitiveness could lead to a national security crisis.
“Without immediate change from Intel, the US’s access to state-of-the-art semiconductor supplies is weakening, and the US is forced to rely more on geopolitically unstable East Asia to run everything from PCs to data centers and critical infrastructure. There won’t be.”
At the same time, he emphasized that Intel hired investment advisors to explore strategic alternatives and to shake off the semiconductor production sector.
“At one time, the international standard for manufacturing innovative microprocessors,” said Rob, but now it has lagged behind East Asian competitors such as Taiwan’s TSMC and South Korea’s Samsung Electronics.