Activist investor Dan Loeb urges Intel to explore deal options

Activist hedge fund Third Point is pushing Intel to explore strategic alternatives, including whether it should remain an integrated device manufacturer, according to a letter it sent to the chipmaker’s chairman on Tuesday that was reviewed by Reuters.

Third Point CEO Daniel Loeb wrote to Intel chairman Omar Ishrak calling for immediate action to boost the company’s position as a major provider of processor chips for PCs and data centers. The New York-based fund has amassed 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 addressing its “human capital management issue”, as many of its talented chip designers have fled, “demoralized by the status quo.”

Intel has lost its pole position in microprocessor manufacturing to Taiwan Semiconductor Manufacturing and South Korea’s Samsung Electronics, Loeb wrote in the letter.

Intel is also losing market share in its core PC and data center markets to Advanced Micro Devices, Loeb added. NVIDIA is dominating computational models used in artificial intelligence applications, while Intel has been largely absent in this nascent market, according to the letter.

“Without immediate change at Intel, we fear that America’s access to leading-edge semiconductor supply will erode, forcing the U.S. to rely more heavily on a geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure and more,” Loeb wrote.

Intel did not immediately respond to a request for comment.

Loeb asked Intel to retain an investment advisor to evaluate strategic alternatives, according to the letter. Third Point believes that Intel should consider separating its chip design from its semiconductor fabrication plant manufacturing operations, according to the sources. This could include a joint venture in manufacturing, according to the sources.

Intel customers, such as Apple, Microsoft and Amazon, are developing their own in-house silicon solutions and sending those designs to be manufactured in East Asia, Loeb wrote. He suggested Intel must offer new solutions to retain these customers rather than have them send their manufacturing away.

Third Point, which has $15 billion in assets under management, has experience in pushing companies to pursue deals, including at Prudential, Yum! Brands, Dow Chemical and United Technologies.

All countries
136,122,804
Total confirmed cases
Updated on April 11, 2021 10:15 am
Italy
3,754,077
Total confirmed cases
Updated on April 11, 2021 10:15 am
Spain
3,347,512
Total confirmed cases
Updated on April 11, 2021 10:15 am
Iran
2,070,141
Total confirmed cases
Updated on April 11, 2021 10:15 am
Germany
2,992,803
Total confirmed cases
Updated on April 11, 2021 10:15 am

Latest Updates

Without Backpackers to Pick Them, Crops Rot by the Ton in Australia

SHEPPARTON, Australia — Peter Hall ran a hand over the Gala apples sitting in a wooden crate on his orchard in southeastern Australia, lamenting...

U.S. Will Have Enough COVID-19 Vaccines for All Adults by End of May, Biden Says

You have reached your limit of 4 free articles. Get unlimited access to TIME.com.99¢ for the first month Subscribe Now You have...

Biden Vows Enough Vaccine ‘for Every Adult American’ by End of May

But Johnson & Johnson and its partners fell behind in their manufacturing. The company was supposed to deliver its first 37 million doses by...

Popular Articles

Without Backpackers to Pick Them, Crops Rot by the Ton in Australia

SHEPPARTON, Australia — Peter Hall ran a hand over the Gala apples sitting in a wooden crate on his orchard in southeastern Australia, lamenting...

U.S. Will Have Enough COVID-19 Vaccines for All Adults by End of May, Biden Says

You have reached your limit of 4 free articles. Get unlimited access to TIME.com.99¢ for the first month Subscribe Now You have...

Biden Vows Enough Vaccine ‘for Every Adult American’ by End of May

But Johnson & Johnson and its partners fell behind in their manufacturing. The company was supposed to deliver its first 37 million doses by...

Twitch gamer Sodapoppin quits fake GTA jobs because they’re too hard

Sometimes being a fake fast-food restaurant manager can be as taxing as being a real one. This is especially true when you also have pretend...

Sarkozy says could take corruption appeal to European human rights court

France's former president Nicolas Sarkozy said Tuesday that he might consider taking his appeal against a corruption conviction to the European Court of...

Where Biden’s Foreign Policy Is Taking the U.S.

One day before the administration announced its decision on Saudi Arabia, Biden gave the first major indication of his presidency that he would be...

Interviews