World News – US – Intel stocks rise after Third Point urged chipmaker to consider strategic alternatives as market share deteriorates

Third Point, the hedge fund led by Dan Loeb, urges Intel’s board of directors to hire an investment advisor to examine « strategic alternatives » « after the chipmaker lost market share to TSMC, Samsung and AMD.

One of the considerations is the sale of « failed acquisitions », Loeb wrote on Tuesday in a letter to Intel’s board of directors. CNBC looked at a copy of the letter. Third Point, known for its activism, recently acquired a significant $ 1 billion stake in Intel, according to Reuters.

Intel shares rose about 5% after reports of the letter surfaced Tuesday. Despite Tuesday’s rally, Intel is down 18% in 2020 while AMD, Intel’s top U, is. S.. . Rival, has almost doubled in value and the S&P 500 is up 15%.

« The loss of manufacturing leadership and other missteps have enabled several semiconductor competitors to leverage TSMC and Samsung’s process technology and gain significant market share at the expense of Intel, » wrote Loeb. In the meantime, AMD has eaten up Intel’s stake in « core PC and data center CPU markets, » he added.

In a statement, Intel said it would work with Third Point on its ideas to increase shareholder value.

« Intel Corporation welcomes the contributions of all investors to increasing shareholder value. With that in mind, we look forward to speaking with Third Point LLC about their ideas on this goal, « said Intel.

Intel’s financial results last quarter were impacted by delays in 7-nanometer chips, allowing AMD to take a dramatic lead with its competitive chips. The processors are key to improving computing power and meeting the demands for faster speeds.

AMD signs contracts with TSMC in Taiwan, the largest contract foundry in the world and a company that also makes chips for Apple and Nvidia. Intel CEO Bob Swan Intel said in July that the company is open to outsourcing its manufacturing to keep up with the current generation of chips.

« Without an immediate change at Intel, we fear that US access to state-of-the-art semiconductor supplies will dwindle and force the U. S.. . Relying more on geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure and more, « he wrote.

Loeb added that Intel needs to be able to manufacture products for large companies like Amazon, Apple and Microsoft that develop their own chip designs and have them made abroad.

He said the company has more recommendations to privately give to Intel. Third Point has also filed with the Federal Trade Commission to purchase incremental shares and retain the option to recommend directors in 2021 « if we are unwilling to work together to address the concerns raised in this letter. « . « 

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Intel, Third Point Management, Daniel S. . Loeb, NASDAQ: INTC, Hedge Funds