US hedge fund “Stop semiconductor production behind Samsung”… Intel’s crisis

Samsung Electronics and Intel logo. [중앙포토]

Since the mid-1990s, Intel, which has overwhelmed the computer market with advanced technology along with the slogan’Intel Inside’, is in crisis from both inside and outside. Apple launched a new PC’Mac’ equipped with its own designed chip’M1′ last month to raise pride, and this time it was attacked by an activist fund (hedge fund).

According to Reuters, on the 29th (local time), the American hedge fund Third Point sent a letter to Intel’s board of directors, urging them to “find a strategic alternative to rebound, including whether to do both semiconductor design and mass production.” It is a suggestion to abandon the current status of a comprehensive semiconductor company (IDM) and focus only on semiconductor design like rivals Qualcomm and AMD. Third Point has recently secured Intel shares worth 1 billion dollars (about 1.1 trillion won).

Intel, which has’self-designed, self-produced’ the central processing unit (CPU), which is the brain of a computer, recently lost its technological leadership position to rival AMD. This is because AMD is concentrating only on CPU design and entrusting mass production to TSMC of Taiwan, a company specializing in consignment production (foundry). Intel mainly produces CPUs in a 14-nanometer (nm·1 billionth of a meter) process, while AMD’s latest CPU’Ryzen’ is mass-produced through TSMC’s 7-nano process.

In this letter, Third Point said, “Intel was once an innovative microprocessor company, but Gold has a significant technological gap with its East Asian competitors such as Taiwan TSMC and Korea Samsung Electronics.” “If Tel does not seek immediate changes, the US will “We have no choice but to rely on’geopolitically unstable’ East Asian companies for semiconductor supply.”

Currently, Intel’s latest microprocessor is 10nm, but TSMC and Samsung Electronics are currently competing with each other for the 5nm process. The higher the level of microprocessing, the smaller the semiconductor can be, so the power consumption of the semiconductor decreases, and thus the amount of heat generated decreases.

If Intel gives up its own production, only Samsung Electronics will remain in effect as a general semiconductor company. Intel CEO Bob Swan recently announced, “We will make a decision to outsource semiconductor production by early next year.”

However, Samsung, like Intel, has both a semiconductor design and a foundry, so it can be attacked by hedge funds at any time. This is because Samsung Electronics is currently designing and mass-producing system semiconductors at the same time, which is disadvantageous in terms of resource concentration. For customers like Qualcomm and Apple, there is also anxiety that their design drawings may be leaked. TSMC, Taiwan, the world’s number one semiconductor foundry that Samsung is currently pursuing, has its motto, “Do not compete with customers.”

Reporter Kim Young-min [email protected]