Activist hedge fund urges Intel to consider going fabless

Posted on Wednesday, December 30 2020 @ 11:03 CET by Thomas De Maesschalck
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Intel's shares closed 4.93 percent higher yesterday after activist hedge fund Third Point LLC urged the chip giant to explore strategic alternatives. Following Intel's massive struggles with not only the 10nm node, which is still barely used for high-volume production, and the company's confession that 7nm is delayed as well, Third Point is urging Intel to explore its options.

The hedge fund believes Intel's most urgent task at hand right now is to address its "human capital management issues." Third Point Chief Executive Daniel Loeb points out many Intel chip designers have been demoralized by the status quo and that large numbers are flocking to other chip makers.

Other than this, the big question is whether Intel should keep chip design and production under one roof, or became a fabless company like all of its competitors. Reuters offers some highlights from the letter over here.
Loeb asked Intel to retain an investment adviser to evaluate strategic alternatives, including whether it should remain an integrated device manufacturer and the potential divestment of failed acquisitions, 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 sources.
Third Point is believed to have an almost $1 billion stake in Intel.

Intel responded to Third Point's letter with the following statement:
“Intel 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.”

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