Reuters
- Intel soared 8% on Tuesday after activist hedge fund Third Point sent a letter to the chipmaker urging it to explore strategic alternatives, according to Reuters.
- Third Point, run by Daniel Loeb, has amassed a nearly $1 billion stake in Intel, Reuters said, citing people familiar with the matter.
- “Without immediate change at Intel, we fear that America’s access to leading-edge semiconductor supply will erode, forcing the US to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure,” the letter said.
- Watch Intel trade live here.
Intel surged as much as 8% on Tuesday after activist hedge fund Third Point sent a letter to the chipmaker urging it to explore strategic alternatives, according to Reuters.
Third Point, run by billionaire investor Daniel Loeb, has amassed a nearly $1 billion stake in Intel, Reuters reported, citing people familiar with the matter.
According to the letter, which was reviewed by Reuters, Third Point is calling for immediate action from Intel Chairman Omar Ishrak to boost the company’s position as a major provider of processor chips for PCs and data centers.
“Without immediate change at Intel, we fear that America’s access to leading-edge semiconductor supply will erode, forcing the US to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure and more,” the letter said.
Third Point believes a possible course of action for Intel would include the company separating its chip design from its semiconductor manufacturing operations, and could include a joint venture in manufacturing, Reuters reported.
In recent years, Intel has been losing market share to Advanced Micro Devices, and has lost key customers like Apple as companies develop their own chips in house and outsource the manufacturing to East Asia.
According to Loeb, Intel has lost its pole position in microprocessor manufacturing to Taiwan Semiconductor Manufacturing Co and Samsung Electronics.
Another avenue for a turnaround in Intel includes the company addressing its "human capital management issue," given that many of its chip designers have fled in recent years, "demoralized by the status quo," the letter said, according to Reuters.
In a statement, Intel responded to Third Point's letter and said, "Intel Corporation welcomes input from all investors regarding enhanced shareholder value. In that spirit, we look forward to engaging with Third Point LLC on their ideas towards that goal."
