High-stakes investor pressuring Intel to overhaul the manufacture and design operations
The past two years were not particularly great for Intel and it has now gotten to the point where investors are urging the Intel leadership to explore strategic alternatives that can ultimately help the chip maker to preserve its semiconductor production edge in the U.S. Because of the manufacturing issues with the 14 nm and 10 nm processors, Intel was forced to postpone quite a few product lineups and it eventually lost its rank as the United States’ highest-valued chip company in mid-2020. For the past few quarters, Intel has been trying to convince its investors that the situation is not completely out of control through optimistic financial reports, and, according to the Wall Street Journal, the upcoming Q4 2020 report scheduled for late January is supposed to be crucial for Intel’s future.
Wall Street Journal also reports that Third Point, one of the largest Intel investors, has recently addressed a letter to Intel’s Chairman Omar Ishrak, urging the chip maker to consider selling some of its unnecessary acquisitions and even splitting the design and manufacturing operations to streamline production. Third Point CEO Daniel Loeb points out that Intel essentially lost large long-time customers like Apple, Microsoft and Amazon, who are now developing in-house ARM-based chips through TSMC, and other customers may follow suit if Intel does not take the necessary steps to improve its strategies. On top of these woes, AMD is seeing increased market shares and Nvidia is looking to enter the processor market with the ARM acquisition.
Intel is expected to clarify its position regarding the production outsourcing in the January financial report. Since TSMC is already building a new foundry in Oregon, U.S., the Taiwanese company is most likely to be chosen as the outsourcing foundry. This could be a major turning point for Intel, comparable to the decision to exit the DRAM business in the 1980s.