Activist investor asks Intel to seek “strategic alternatives” against AMD, TSMC and Apple Silicon

Activist Intel investor sent letter ask the company to explore important “strategic alternatives”, according to Reuters. The letter shows this investment fund’s concern over the position of the Santa Clara, California-based company. And also because of the threats posed by AMD and TSMC, as well as the abandonment of important customers like Apple, Microsoft and Amazon.

Four big problems for Intel

Third Point LLC is a New York-based investment fund which has around $ 1 billion invested in Intel. Intel Corporation has a market capitalization of around $ 200 billion, so this investor owns 0.5% of the total. Still, that may be enough to mobilize other investors and force changes at the chipmaker.

Para Third Point, existen four big problems at Intel who want to see corrected:

1. Intel has to face to the problem of human capitalbecause many of its chip designers have left the company, “demoralized by the status quo.”
2. Intel lost its leadership in the manufacture of microprocessors to TSMC and Samsung.
3. Intel too lost market share in key markets such as PC and data centers.
4. Intel is absent from markets such as the artificial intelligence application in which NVIDIA is immersed.

Without an immediate turnaround at Intel, we fear that US access to an advanced semiconductor supply could erode, forcing the US to rely on an unstable Asian region to provide both PCs and data centers or critical infrastructure.

This investment fund made it clear: Intel must take the helm of a ship that is now adrift, before it crashes into the rocks. To do this, you have ideas that you also outline in your letter.

“Strategic alternatives” to define the right path for Intel

For Third Point, Intel wasted too many opportunities. The pandemic has benefited the sale of PCs through telecommuting, but Intel hasn’t been able to take advantage of the push that other segments have seen as well. One of the culprits identified is the inability to keep up with the customization demands that many customers demand on their chips.

Therefore, Third Point points to subcontracting of transformer manufacturing. Until now, Intel has designed and manufactured its own chips, giving it a competitive edge in the industry for decades. As part of this scheme, the alliance with Microsoft was forged, known as “Wintel”, which has reign for many years. Until the arrival of the iPhone.

Thanks to the Apple terminal, a new era has begun in which mobile processors are built exactly the opposite of what Intel is doing. If the silicon giant designs and manufactures them itself, mobile chips are designed by one company and manufactured by another. This is how Apple was able to focus on creating the best team of chip engineers in the world, by outsourcing the manufacturing to companies like TSMC or Samsung.

This is precisely the path they want to see at Third Point. Or at least, that this possibility be explored. Because after Intel’s continued hurdles in making 10nm chips, he has shown that there is something wrong with his model.