(Reuters) – Activist hedge fund Third Point LLC is pressuring Intel Corp to explore strategic alternatives, including whether to remain an integrated device manufacturer, according to a letter sent to the chip maker’s president on Tuesday. analyzed by Reuters.
Third Point CEO Daniel Loeb wrote to Intel President Omar Ishrak, calling for immediate action to boost the company’s position as a major supplier of processor chips for PCs and data centers. The New York-based fund has accumulated a nearly $ 1 billion stake in Intel, according to people familiar with the matter.
Loeb said in the letter that Intel’s most urgent task was to solve its “human capital management problem” as many of its talented chip designers fled, “demoralized by the status quo”.
Intel lost its pole position in microprocessor manufacturing to Taiwan Semiconductor Manufacturing Co and to South Korea’s Samsung Electronics Co Ltd, Loeb wrote in the letter.
Intel is also losing market share in the PC and data center markets to Advanced Micro Devices Inc, added Loeb. NVIDIA Corp. is dominating the computer models used in artificial intelligence applications, while Intel has been largely absent in this nascent market, according to the letter.
“Without an immediate change at Intel, we fear that America’s access to the supply of cutting-edge semiconductors will erode, forcing the United States to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers, infrastructure criticism and more, ”Loeb wrote.
Intel did not immediately respond to a request for comment.
Loeb asked Intel to hire an investment advisor to evaluate strategic alternatives, according to the letter. Third Point believes Intel should consider separating its chip design from the semiconductor plant’s manufacturing operations, according to the sources. This could include a joint venture in the industry, according to the sources.
Intel customers like Apple Inc, Microsoft Corp and Amazon.com Inc are developing their own internal silicon solutions and submitting these designs to be manufactured in East Asia, Loeb wrote. He suggested that Intel should offer new solutions to retain these customers, rather than sending them away.
Third Point, which has $ 15 billion in assets under management, has experience in encouraging companies to seek business, including at Prudential Plc, Yum! Brands Inc, Dow Chemical and United Technologies.
Reporting by Svea Herbst-Bayliss in Boston; Editing by Greg Roumeliotis