Tuesday saw Intel stocks defying expectations to climb nearly 8% in a single day. This came after the news that the hedge fund Third Point has acquired a large stake in the chip maker and wanted Intel to explore a shift in strategy.
Early indications are that this could see Intel moving away from the manufacturing realm. Other manufacturers of semiconductors such as Nvidia and Advanced Micro Devices have been showing impressive momentum, while Intel has had to work harder to deliver real value for its shareholders.
Thankfully, Intel has managed to enjoy sales of nearly $75 million in 2020. This makes it Intel’s best ever year in terms of annual revenues, and the profit will eclipse that of many leading rivals such as Advanced Micro Devices.
It has been claimed that Third Point now owns approximately $1 billion in Intel stock. It remains to be seen whether this is enough to make Intel change its current strategy, but it provides enough of a talking point to encourage the brand to look at alternatives.
With other chip manufacturers catching up to and even overtaking the capabilities of Intel, it’s hard to see what the brand’s main selling point is now. But any company worth over $200 billion should have enough stability to overcome such issues, and investors are hoping that Intel bounces back in 2021.
A Difficult Year for Intel
Like most industries, the tech manufacturing market was hit hard by the Covid-19 pandemic. Many brands saw their value decimated overnight, but the majority of these firms have managed to gradually climb back to their pre-pandemic highs. A quick look at the NASDAQ shows that it has gained nearly 95% from its lowest point of 2020. This is a marked contrast to Intel that has only seen its value rise by just over 13% since the low it suffered in March.
Many people had placed their faith in the major tech firms since the pandemic struck, seeing technology has been an increasingly integral way to live in the new era. But while the PHLX Semiconductor Index gained by 50% in 2020, shares in Intel had somehow slipped by over 20%.
Much of this has been put down to a series of bad tactical errors. One of these occurred in summer where the decision was taken to hold off the implementation of a new nanometer manufacturing technique for over two years.
Apple and Microsoft Move Away From Intel
But it was the fact that Apple would be moving away from Intel to make its own self-designed chips that could hit the hardest. With Apple having the best value stock in 2020, the fortunes of these two tech companies couldn’t appear to be more different.
Intel’s fortunes were hit even harder when it emerged that Microsoft would also be producing its own chips for certain devices and cloud servers. Whether the recent bump in fortunes represented by the investment by Third Point can change Intel’s fortunes remains to be seen.