The letter, as harsh as it is critical, has been a bomb among those in California, as the written words range from a change or strategic action to strengthen the company’s position, such as a critique of the exodus brains or investments. that Intel is suffering.
Intel is a drifting giant: TSMC, NVIDIA, AMD and Samsung overtake it
They remain competitive, it is true, but the advantage is diminishing in all sectors. TSMC is closing the gap in the density of transistors per square millimeter and already offers a higher production rate although not leading in the first section, NVIDIA has the GPU and AI sector taken by the arm for 3 years and Intel does not compete with its FPGA.
AMD and its Ryzen is a story we’ve told many times before and Samsung has produced and produced with EUV even in its NAND Flash chips. In short, Intel is a drifting giant, aimless, with such a fragile roadmap that even investors are asking for answers and responsibilities, but above all for firm actions that set the course.
To understand the letter and its demands, you must first know that Third point owns a fund with a stake in Intel of nearly $ 1 billion, so it’s no surprise that after the letter was released, Intel shares rose by 6.1% yesterday, showing the weight of the firm in those of Santa Clara.
Talent theft, sale of their Fabs and outsourcing of production
The letter addresses three key issues: a human capital management issue, an Fab market share issue, and production delays that should be reviewed.
Starting with the first of them, the firm claims that Intel has lost a slew of very talented chip designers claiming they fled demoralized by the status quo imposed by Swan. This resulted in delays and problems on the 10nm and the new 7nm, leaving the company at the mercy of TSMC and Samsung.
The second is a bit related to the first, since it refers to Intel’s Fabs, as it is doubtful that the company should continue to be an integrated device maker. In turn, this opens up the possibility of separating chip design from semiconductor manufacturing plants, i.e., Intel abandons its Fabs and creates a joint venture for manufacturing and is simply limited to the chip design.
The reasons are mostly geopolitical, as they claim that Intel is at the forefront of semiconductors or will force the United States to rely more on Asia for data centers, critical infrastructure and more.
All this leads to the third point. We now know that Jim Keller left Intel not for personal reasons, but because of a dispute with Swan over whether to further outsource his production outside of his Fabs. The 10nm and 7nm delays mean that the ability for its competitors to use a large network of suppliers means they have higher speed when producing chips and most importantly at lower cost.
Is Third Point right about all of this? Should Intel follow in AMD’s footsteps in part by forming a semiconductor joint venture and focusing only on design?