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by Jonnax
1997 days ago
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"Third Point encouraged Intel to consider separating its chip design and manufacturing divisions, and instead seek a joint venture in manufacturing. It was also urged to divest its failed acquisitions, such as the $16.7 billion purchase of programmable chip maker Altera in 2015." It's this a sound decision? It seems like it would be intel abandoning smaller nodes and sticking to 14nm whilst they go to Samsung or TSMC to manufacture their chips. It's losing their competitive advantage. Of course they've been struggling so far with 10nm. |
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I dont read that is what they are suggesting. Basically they want Intel Foundry and Intel Chip as separate business entity. Intel Chip will continue to use Intel Foundry while Intel Foundry will go full force and compete with TSMC. In investment terms, that is unlocking the potential in their stock price, which is trading at ~10 P/E while all other Tech stock are at 50+. ( Nvidia ~85, AMD ~125 )
Whether that is a sound stratergy depends on execution. There is one assumption that we could consider as truth, Intel will need higher unit volume to amortised the cost of leading edge R&D and lower per unit cost to stay competitive with TSMC. With this precondition, there is only two way around it, either open up your Fab and compete as suggested, or doing what Intel is doing now which is to massively expand their market with NPU, GPU, FPGA, Network Processor and all other reasonable margin product segments.
Credit where Credit's due, Intel's sales and marketing department have always been some of the best in the industry. All of the timely and intentional "leaks" as well as sales incentive and delaying tactics are working exceptionally well. But they dont change the fundamentals, and I am not sure if what they are doing now are radical enough to change course in the long term.