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Apr 12, 2001
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Activist hedge fund Third Point LLC is pushing for a major shakeup at Intel in response to threats from Apple, Microsoft, Amazon, AMD, TSMC, and Samsung (via Reuters).

intel-logo.jpg


Intel's in-house manufacturing capabilities have struggled to provide the chips its clients want in recent years, with many of its offerings lagging behind its rivals in terms of speed and power consumption. While 2020 has afforded Intel a boost in the form of surging laptop sales, the company has failed to capitalize on demand more broadly for semiconductors and is facing the loss of major clients such as Apple, who have begun to transition from Intel chips to custom silicon.

In a letter to Intel's chairman, Omar Ishrak, seen by Reuters, Third Point calls for "immediate action" to restructure and explore alternative business strategies. Firstly, Third Point requests that Intel urgently addresses its "human capital management issue." Many of Intel's talented chip designers have reportedly fled the company due to being "demoralized with the status quo," which has stifled innovation.

The letter explicitly highlighted that Intel has lost its prime position in microprocessor manufacturing to TSMC and Samsung Electronics, and is losing key market share in its core PC and data center markets to AMD. The company is also accused of being largely absent in the emerging market of artificial intelligence. "Without immediate change at Intel," the letter cautioned, "we fear that America's access to leading-edge semiconductor supply will erode."

Third Point encouraged Intel to consider separating its chip design and manufacturing divisions, and instead seek a joint venture in manufacturing. It was also urged to divest its failed acquisitions, such as the $16.7 billion purchase of programmable chip maker Altera in 2015.

Following Apple, Intel customers Microsoft and Amazon are expected to cease using its chips, resorting to their own custom silicon instead. Third Point expressed concern that the custom silicon designed by these companies is sent to be manufactured by companies in East Asia. As such, it suggests that Intel must offer new solutions to retain its major clients as customers rather than have them send their manufacturing away.

Splitting up design and manufacturing operations could help Intel address some of the threats it is facing. Tapping external vendors to manufacture its most advanced processors, a step Intel executives are said to be extremely resistant toward, could help to lower costs. Furthermore, opening up Intel's own manufacturing capability to make non-Intel processors could allow it to produce the custom silicon chips increasingly wanted by its major clients.

Intel has reportedly been slow to respond to investors' concerns. The letter threatened that if Third Point senses "a reluctance to work together to address the concerns," it will submit nominees for election to Intel's board at its next annual meeting. Third Point is said to hold a $1 billion stake in Intel, affording it a position where it can push for change at the company.

A statement from Intel responded to the intervention, saying "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."

Article Link: Intel Urged to Take 'Immediate Action' Amid Threats From Apple Silicon and AMD
 

CWallace

macrumors G3
Aug 17, 2007
8,735
5,376
Seattle, WA
Third Point encouraged Intel to consider separating its chip design and manufacturing divisions, and instead seek a joint venture in manufacturing.

The issue with Intel is indeed the chip design - they just don't scale down which is why they remain "stuck" on 14nm for their most powerful chips and they are having such a problem getting to 10nm, much less anything smaller.

Just as Core replaced Netburst when the latter hit the wall, so now has Core hit the wall and Intel needs to find an entirely new x86 architecture to replace it - one that can scale down to sub-10nm.
 
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CWallace

macrumors G3
Aug 17, 2007
8,735
5,376
Seattle, WA
Apple should go ahead and buy off Intel's foundry, like they bought off their 5G division.

Apple could use the manufacturing capacity without being overly reliant on TSMC.

The problem is Intel's foundries are barely at 10nm. Apple would need to invest billions, if not tens of billions, to get them to sub-10nm and Apple would be dependent on hoping Intel's fab engineers could do it.

Much better to spend a few scores of millions to help TSMC get their new processes into production by agreeing to be "first mover" and buying chips while TSMC are ramping up production and yields are low and then getting exclusive access to that process for a time.
 
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jonnysods

macrumors 604
Sep 20, 2006
7,116
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There & Back Again
I think it goes to show you how static Intel have been that they are reacting now, not a year ago when the rumour mill about Apple making in house processors began to churn. I've been a big fan of Intel for many years, until the last 2, when the only fan I'm noticing is on my MacBook Pro running all the time.
 

Spock

macrumors 68020
Jan 6, 2002
2,392
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Vulcan
Intel isn’t going anywhere as long as windows machines keep using it.
That’s the problem, Windows users will be looking for alternatives. AMD has started to catch on with gamers and the bargain builders market and with nvidia purchasing ARM and Microsoft looking into expanding Windows for ARM Intel won’t stand a chance. And honestly, AMD may not be far behind.
 

I7guy

macrumors Penryn
Nov 30, 2013
26,547
14,887
Gotta be in it to win it
Intel's fabs are a critical asset so divesting them would be a mistake, IMO.

The issue with Intel is indeed the chip design - they just don't scale down which is why they remain "stuck" on 14nm for their most powerful chips and they are having such a problem getting to 10nm, much less anything smaller.

Just as Core replaced Netburst when the latter hit the wall, so now has Core hit the wall and Intel needs to find an entirely new x86 architecture to replace it - one that can scale down to sub-10nm.
And why some of the newer Ryzen designs are like hockey-pucks. I think the issue backward compatibility, intel can't start over like Apple did. Intel can't say, no more 32/16 bit apps. (I still decided a 10900K won out against a Ryzen in my own new build)
 
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