Beleaguered Intel has few good options as investor demands break-up

Activist investor Daniel Loeb wants Intel to consider a break-up of its chip manufacturing operations from its chip design and development business as the company has failed to stay at the cutting edge of manufacturing technology in recent years.

Intel snail

Stephen Nellis for Reuters:

Intel also famously missed the mobile revolution, opening the door for chips based on designs from Arm Ltd to dominate the smartphone market. And now, customers such as Apple… have started designing their own chips, to be manufactured by TSMC or other foundries.

Loeb’s Third Point LLC sent a letter to Intel’s board asking it to retain an investment adviser to evaluate strategic alternatives, including whether it should remain an integrated device manufacturer.

Sources familiar with the matter told Reuters that Third Point has amassed a $1 billion stake in Intel and wants it to consider separating chip design and manufacturing. That could include a joint venture in manufacturing, according to sources.

A joint venture involving collaboration with TSMC or Samsung is likely the most viable option, said Linley Gwennap, principal analyst at The Linley Group.

MacDailyNews Take: There are precious few high-end chip fabs that would even be interested in quality state-of-the-art chip-making facilities, much less Intel’s outmoded facilities. Apple’s break-up with Intel is a glaring sign that the future for Intel isn’t promising. Missing the mobile chip revolution may have been a fatal mistake for Intel.

The price for Intel’s poisonous hubris has come due.

iPhone, killer.MacDailyNews, March 12, 2018

[Intel’s decision to pass on Apple’s iPhone] has to be close to the top of the list of Biggest Business Mistakes in History. — MacDailyNews, May 17, 2013


  1. This is shortsighted. Intel is the only US fab. “partnering” means basically abdicating the ability to make any chips domestically.

    Here is what intel should do… what all companies have been doing to the US forever. Wait and “borrow” the tech back from TMSC.

    The reality is fab scale reduction has an absolute stop of 0.5nm. Why? 5nm is basically 10 atoms wide. You cant have less than 1 atom lithograph trace. So that means .5nm is the absolute physical limit.

    Realistically 1-1.5nm is likely the real limit. We’re not far from that as 3nm (ie 6 atoms wide) is coming in a year or so.

    Anyway, the point being is intel can just wait and copy the tech as the pioneers at TMSC drive this down and start hitting a wall. Sure that means a few years of sucking wind, but they can weather this. And then leap frog. A bit like non US countries were behind the US in telephony (landline) for decades and then early in cellular they leap frogged the US by investing in developments we pioneered in the US.

    Turn about is fair play. This article is dumb. Anyone advocating intel dump their (admittedly far behind fab) is being very short sighted. Outsourcing critical chip development to other countries is a big mistake for the country.

    The real smart play is for intel to bring this up to the govt. with outstretched hand for corporate welfare to invest in a major upgrade of their fab and have the US foot the bill. A guy like musk would have done this by now.

    1. It’s not just about fab scale. Sure Intel have not done well in that arena. It is more about the design of chips and especially about the evolution of SoC.
      Intel are stuck in the X86 era and cannot get out of it. To some degree since most commercially used PCs are X86-based, Intel has guaranteed income for years.
      That makes them very resistant to change. They missed the mobile chip market and as a result now lack skill in SoC design and production.
      RISC when it first came out was touted as killing X86 based chips but 25+ years on there is still plenty of routine business for the legacy design.
      The use of ARM chips in PCs and particularly the phenomena performance of the M1 SoC in Apple’s new Macs may finally spell the doom for X86. Now RISC designs offer power, energy savings, cost and thermal advantages over Intel’s offerings. Windows may be slow to adapt but surely companies like Samsung will venture into the Windows on ARM market in a bigger way once Apple as usual shows the success for this approach.

      1. Spot on fella that last point is one I have been making for a while Arm on Windows has been slow there was no impetus to use it but Apples efforts will make it. Oth I expect inevitable and vital for competitors to jump on board or be left in the dust Microsoft will see this too, Wintel is a dead man walking.

        Equally zombie is showing the sort of hubris that got Intel into this mess, it’s a presumption that US tech is inevitably better it just needs the investment and focus, well let’s just. He k that out telephony of course originates from a Canadian based Scot, wireless from a UK based Italian. A great deal of the ‘great’ American miracle post war was exploitation of German and British foundation technology so it’s not only foreigners who exploit others efforts to leapfrog. Now it’s the Asian power houses that are doing the same so there is no evidence to suggest that US conglomerate erases like Intel can simply wait and copy others efforts again while living on Govt handouts, after all there is not the post war catastrophe and national bankruptcy that most of the competitors were left in during the 40s/50s/60s while a massively industrially war tooled and untouched US took full advantage. That simply is NOT a scenario that can be repeated. It’s the economy and businesses that must become far more nimble, clever, innovative and creative to compete long term. Apple has seen this, even Microsoft has seen it but Intel looks terminally damaged to me and in no position to try to exploit others.

        1. Dude shove your hubris. It’s important for the US not be dependent on fab to other countries. I made it clear that foreign fabs are in fact SUPERIOR to the US fabs. In other words TMSC kills intel on fab.

          Just as it’s important for apple not to put all its fabrication/production eggs in one hostile communist production basket, it’s also important for countries to not be overly reliant on other countries for strategically important production of things like chips.

          Diversification and non-hostile sourcing is business school 101 level stuff.

      2. Well that’s part of it. But things would be way way better for intel if they could fab down to 7 and 5nm. Their design is old and stinky, but there is a lot you can do with it when the fab goes well. Proof of that is its dominance for the last 20 years.

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