Activist hedge fund advises Intel to outsource CPU manufacturing
Third Point fund, led by Daniel Loeb, demands strategy shake up …
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Activist hedge fund Third Point has taken a stake of nearly $1 billion in Intel and called on the chipmaker to consider shedding its manufacturing operations, throwing a core part of its strategy into question.
The firm with $15 billion in assets run by Daniel Loeb made a number of demands in a letter sent to Intel’s chairman Omar Ishrak on Tuesday and seen by the Financial Times.
In the letter, Mr Loeb said that Intel was “once the gold standard for innovative microprocessor manufacturing” but had fallen behind manufacturing competitors in East Asia such as TSMC and Samsung.
His intervention comes as Intel faces a critical decision over its future as a leading-edge manufacturer of semiconductors—a position it has held for decades, and the source of its dominance in the PC era.
Bob Swan, its chief executive, has indicated that he will decide early next year whether Intel should outsource a significant part of its most advanced manufacturing, or even get out of leading-edge production altogether, after a series of slips.
The company in July revealed it had hit a new hurdle in trying to move to the next generation of manufacturing technology, where the features on chips are reduced to a width of only 7 nanometres.
That compounded a series of missteps that helped cement the lead seized by TSMC, the Taiwanese chip company that manufacturers semiconductors on behalf of many of the world’s biggest chip designers, including Nvidia, Qualcomm and AMD.
Intel has lost some $60 billion in market value over the past year, Mr
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