Intel CEO Robert Swan will speak at the Rakuten Optimism event in Yokohama, Japan, on July 31, 2019.
Tomohiro Ohsumi | Getty Images
Third Point, the hedge fund managed by Dan Loeb, is urging Intel’s board of directors to hire an investment advisor to examine “strategic options” after the chipmaker lost market share to TSMC, Samsung and AMD.
Considerations should include the removal of “failed property,” Loeb wrote in a letter to the Intel board on Tuesday. CNBC looked at a copy of the letter. Third Point, known for its activity, recently took a major stake in Intel worth $ 1 billion, according to Reuters.
Intel shares rose about 5% after reports of the letter surfaced Tuesday. Even with Tuesday’s rally, Intel is down 18% in 2020, while AMD, Intel’s main competitor US, has almost doubled in value and the S&P 500 has climbed 15%.
“The loss of manufacturing leadership and other messaging has allowed a number of semifinal competitors to leverage the capability of TSMC and Samsung’s process technology and gain a large share of the market at Intel’s expense,” Loeb wrote. At the same time, AMD has eaten away at Intel ‘s share of its “core CPU markets and CPU data center,” he said.
In a statement, Intel said it would work with Third Point on its ideas to increase shareholder value.
“Intel Corporation welcomes comments from all investors regarding the value of enhanced shareholders. In that spirit, we look forward to engaging with Third Point LLC on their views. attack that goal, “an Intel statement said.
Intel’s financial results were hurt in the recent quarter by a delay in 7-nanometer chips, allowing AMD to get off to a fantastic start with its competitive chips. Processors are critical in delivering better computing performance and meeting demands for faster speeds.
AMD contracts with Taiwan-based TSMC, the world’s largest contract furnace and company that also makes chips for Apple and Nvidia. Intel CEO Bob Swan said in July that the company was open to outsourcing manufacturing to keep up with the current generation of chips.
Loeb pointed out that Intel ‘s loss in manufacturing capacity raises national security concerns.
“Without Intel’s immediate change, we fear that America’s access to advanced semiconductor supplies will erode, forcing the U.S. to rely more on geopolitically unstable East Asia to power the world. -everything from PCs to data centers to critical infrastructure and more, “he wrote.
Loeb said Intel needs to be able to produce products that serve big companies such as Amazon, Apple and Microsoft, which are developing their own chip designs and making them overseas.
He said the company has more suggestions they would like to make to Intel privately. Third Point has also filed with the Federal Trade Commission to acquire increased shares and retain the option to recommend board members in 2021 “if we feel willing to work together to address the issues concerns we have raised in this letter. “
– Leslie Picker from CNBC contributed to this report.
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