Investment Adviser Third Point Urges Intel to Consider Outsourcing Chip Manufacturing

[Tsing]

Image: Intel



Third Point, a major hedge fund and investment adviser based in New York, has penned a letter to Intel’s chairman in an attempt to convince the company to consider giving up on chip manufacturing and outsourcing production to rivals such as Samsung and TSMC. Third Point Chief Executive Daniel Loeb, whose company has a nearly $1 billion stake in Intel, pointed out various shortcomings in his letter to Intel Chairman Omar Ishrak, such as the fact that many of its best chip designers have already left after being “demoralized by the status quo.”



“Without immediate change at Intel, we fear that America’s access to leading-edge semiconductor supply will erode, forcing the U.S. to rely...

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[Armenius]

If the adviser is worried about a "geopolitically unstable East Asia," then why are they urging Intel to outsource chip manufacturing to geopolitically unstable East Asia? TSMC's 3nm, 5nm, and 7nm capacity have already been all bought up by other companies anyway. Samsung also doesn't have the capacity to take on Intel without years to build new fabs just for them. Global Foundries is American, but they have not been a top player in the industry for years.

 

[Brian_B]

Yeah - it’s one of those ideas that sounds great on paper, but when you get down to looking at how it would actually work in the real world, kinda falls flat on its face.

Right now I think Intels best bet may be to spin off their foundries then contract back with them - similar to how AMD did a couple decades ago. That said, I wouldn’t exactly say that went well for AMD, but if the alternative was slow suffocation into bankruptcy (or hostile takeover); maybe it’s the lesser of all evils.

 

[Denpepe]

Find this strange since intel just recently showed a vid where they showed they doubled their capacity in the last 3 years orso and they are still hard to buy at times, I don't see TSMC doubling (or more) their chip production to be able to meet intels demands or any other player for that matter.

Not sure this is possible, but maybe intel could license TSMC tech and then make their own with that tech?

 

[Grimlakin]

Intel could contract out to a company like Texas Instruments. They have several fabs and are constantly expanding and updating.

 

[Nanobot]

They need to ditch the C-suite members before addressing anything else. If your best chip designers won’t stay that’s a sign that leadership no longer has a clue what it’s doing or what direction to go in.

 

[Stoly]

To think a that not too long ago, the advice was for intel to open its foundry business to other customers. I recall back when intel 10nm was introduced (or was it 14nm?), it was rumored that nvidia was going to use intel's foundry.

 

[Stoly]

Intel could contract out to a company like Texas Instruments. They have several fabs and are constantly expanding and updating.

Isn't TI focused on military and aerospace now?

 

[Uvilla]

They need to ditch the C-suite members before addressing anything else. If your best chip designers won’t stay that’s a sign that leadership no longer has a clue what it’s doing or what direction to go in.

To think a that not too long ago, the advice was for intel to open its foundry business to other customers. I recall back when intel 10nm was introduced (or was it 14nm?), it was rumored that nvidia was going to use intel's foundry.

Both of these.
If anything it makes sense they invest MORE into manufacturing and open up their capacity.
This suggestion of outsourcing is nonsense, complete nonsense, it will make Intel basically a bigger AMD, but in some ways with LESS prospects.
Intel is slowly but surely being run into the ground, and it hasn't stopped.
TSMC is not without issues, their salaries are shameful and SMIC and 'big bad China' is having no issues poaching employees.
Say what you want about China, but the opportunity there is wide open in manufacturing silicon and making money.
Intel can take advantage, invest big, I mean really big, and they will dry up demand from smic and tsmc and samsung. I am sure of it.

 

[Grimlakin]

Both of these.
If anything it makes sense they invest MORE into manufacturing and open up their capacity.
This suggestion of outsourcing is nonsense, complete nonsense, it will make Intel basically a bigger AMD, but in some ways with LESS prospects.
Intel is slowly but surely being run into the ground, and it hasn't stopped.
TSMC is not without issues, their salaries are shameful and SMIC and 'big bad China' is having no issues poaching employees.
Say what you want about China, but the opportunity there is wide open in manufacturing silicon and making money.
Intel can take advantage, invest big, I mean really big, and they will dry up demand from smic and tsmc and samsung. I am sure of it.

Building manufacturing in China is basically saying.. "Hey China, please knock off these parts with exact replica's in stolen IP that we are unable to enforce any sort of stoppage on, thanks." It is such a known quantity in business today. As a company this is a huge loss generation utility for 2-3 years of cheaper high volume manufacturing.

 

[Uvilla]

Building manufacturing in China is basically saying.. "Hey China, please knock off these parts with exact replica's in stolen IP that we are unable to enforce any sort of stoppage on, thanks." It is such a known quantity in business today. As a company this is a huge loss generation utility for 2-3 years of cheaper high volume manufacturing.

Im assuming Intel will build in US, not China... What I mean about China is that its a factor for TSMC and Samsung, and not for Intel here in the US.
But... Because they are special in the head, sure they will go to India or some such, and say how great it is, and blah blah blah.
I didn't complete some thoughts in my post now I realize..

 

[Grimlakin]

Im assuming Intel will build in US, not China... What I mean about China is that its a factor for TSMC and Samsung, and not for Intel here in the US.
But... Because they are special in the head, sure they will go to India or some such, and say how great it is, and blah blah blah.
I didn't complete some thoughts in my post now I realize..

Ok yea I see what you mean now. They will outsource, talk about cost savings. Then bitch when they can't control production any more. Outsourcing production is like putting your critical infrastructure in the cloud. Sure it's great and flexible... but soon enough you realize the cloud is just your stuff running on someone else's computers.

Man Cloud... I am just sitting back waiting for the critical tipping point of a break spanning all clouds because someone made a human error.

 

[Stoly]

Intel needs to get its act together, they should be at least at 5nm by now and after all these years, they can't even get 10nm working reliably.

They used to be the leading foundry with everyone else at least one generation behind. Now Intel has to play catchup.

It seems like yesterday when "analysts" assured that AMD would never meet, much less beat intel if only because no one could stand up with intel on manufacturing process.

 

[Armenius]

Intel needs to get its act together, they should be at least at 5nm by now and after all these years, they can't even get 10nm working reliably.

They used to be the leading foundry with everyone else at least one generation behind. Now Intel has to play catchup.

It seems like yesterday when "analysts" assured that AMD would never meet, much less beat intel if only because no one could stand up with intel on manufacturing process.

I don't know how you can say that when Intel's current 10nm process is more dense than TSMC's 7nm. CPP on Intel 10nm is 54nm compared to 64nm on TSMC 7nm. MMP is similarly tighter on Intel at 36nm compared to 40nm on TSMC. Intel's 7nm is already shaping up to be 2.6x more dense than TSMC's 7nm and 1.4x more dense than TSMC's 5nm if they can actually produce it in volume.

 

[Stoly]

I don't know how you can say that when Intel's current 10nm process is more dense than TSMC's 7nm. CPP on Intel 10nm is 54nm compared to 64nm on TSMC 7nm. MMP is similarly tighter on Intel at 36nm compared to 40nm on TSMC. Intel's 7nm is already shaping up to be 2.6x more dense than TSMC's 7nm and 1.4x more dense than TSMC's 5nm if they can actually produce it in volume.

while manufacturing processes are not comparable, Intel is quite late already on its own roadmaps.
Intels 7nm can't come soon enough.

 

[Armenius]

while manufacturing processes are not comparable, Intel is quite late already on its own roadmaps.
Intels 7nm can't come soon enough.

I agree with that. I've lost track of all the excuses they have had for the lateness of 10nm and further pushing back of the rest of their roadmap.