By
Godfrey Benjamin
April 18th, 2024
Intel shares advanced on the 29th of December following Third Point’s letter to the chipmaker.
Intel Corporation (NASDAQ: INTC) shares grew by 4.93% after fund management company Third Point persuaded the chipmaker to explore “strategic alternatives.” Third Point is urging the board of directors at Intel to employ an investment adviser after the semiconductor company lost market share to Advanced Micro Devices (AMD) (NASDAQ: AMD), Taiwan Semiconductor Manufacturing (TSMC) (NYSE: TSM), and Samsung Electronics Co Ltd (KRX: 005930).
Also, Reuters revealed that Third Point now has a $1 billion stake in Intel.
Intel Shares Boosted by Third Point Encouragement to Explore ‘Strategic Alternatives’
Intel shares advanced on the 29th of December following Third Point’s letter to the chipmaker. Despite pulling in gains as a result of the letter, Intel has lost 17.48% in its year-to-date record. According to the data by MarketWatch, Intel has been declining over the past year. The semiconductor company dipped 3.52% in the last three months and about 0.34% over the past month. However, the company is beginning to rebound as data showed that INTC is up nearly 7% in the last five days.
According to a CNBC report, Third Point’s founder Dan Loeb wrote the letter to Intel’s board of directors. In the letter, Loeb said:
“The loss of manufacturing leadership and other missteps have allowed several semiconductor competitors to leverage TSMC’s and Samsung’s process technology prowess and gain significant market share at Intel’s expense.”
He added that Intel had lost its market share of its “core PC and data center CPU markets” to AMD. Unlike Intel, Intel’s US rival AMD pulled in gains in its year-to-date record. AMD is up almost 98% since the beginning of the year.
Speaking on the loss of Intel’s market share to AMD, Loeb noted:
“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 geopolitically unstable East Asia to power everything from PCs to data centers to critical infrastructure and more.”
Loeb Advises Intel to Manufacture Products for Tech Companies
Furthermore, Loeb advised Intel to begin manufacturing products that can serve top companies like Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), and Amazon.com Inc (NASDAQ: AMZN). Notably, these tech giants are designing their own chips and have them manufactured overseas.
In addition, Intel commented on Third Point’s idea to increase shareholder value:
“Intel Corporation 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.”
Some months ago, reports revealed that Intel would be delaying the launch of its new 7- nanometer chips. Now, Intel is not expecting to launch the 7nm chips until 2022 and 2023. Following the announcement of the delay, Intel shares plunged 16% on the 24th of July.
On the other hand, AMD shares increased about 17% on Intel’s news to delay the launch of its 7 nanometer chips.