Intel Outside

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What's going on?

Intel has a lot to process right now: reports over the weekend suggested the tech giant wants to outsource some of its chipmaking production to rivals Samsung and TSMC.

What does this mean?

The chipmaking industry can be split into two halves: the half that designs the chips – which includes American heavyweights Nvidia and Qualcomm – and the half that makes the chips, like TSMC. Intel, for its part, figured it could keep both plates spinning at once, but, uh, it might’ve gotten a bit ahead of itself: the company’s struggled to stay at the cutting edge of microchip technology, and it’s seen its grip on the market start to slip. Things came to a head last year when the company revealed its newest technology was six months behind schedule – and now, it seems, Intel’s finally admitted it can’t handle this alone.

Why should I care?

Zooming in: Everyone loves a quitter.

The news might be too little, too late in one activist investor’s not-so-humble opinion: the firm reckons Intel’s been too slow in outsourcing its manufacturing, and it’s now suggesting that selling the chip manufacturing business altogether could help revive Intel’s fortunes. And investors seem to think the hedge fund is onto something: Intel’s shares have outperformed the tech-focused Nasdaq index by around 5% since news of the activist’s involvement broke two weeks ago.

For markets: Samsmug.

Samsung’s shares hit an all-time high on the news, and its shareholders had been feeling pretty positive to begin with: the South Korean conglomerate’s stock has risen 60% since September. And with its latest smartphone hitting the shelves this week, things could be about to get even better…

Originally posted as part of the Finimize daily email.

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