Latest report, Intel has announced that it has contacted Apple, a former partner of technology, to make a strategic investment. Intel's stock price rose more than 6% at the U.S. stock market closing, because Intel believed that investment from Apple would help boost its business development. However, a group of Intel's former board members made a completely different view on this potential lifeline. They believe that Apple's investment is not really what Intel needs. The company's real rescue is to implement privatization, which can solve the problem accurately.
Intel's stock price has risen nearly 60% in less than two months, driven by a large amount of investment from the U.S. government and the recent affordable investment from NVIDIA (NVIDIA), the leader in the AI market. However, while Intel is eager to gain strategic support from Apple, analysts and former directors generally expressed doubts about the long-term benefits of this type of inclusion. Even though the possible viewable investment from Apple is expected to bring good surface appearances in the short term, it is likely that it will not solve the problem of Intel's deeper levels.
The reason is that Apple is a powerful multinational company, but it is still a design company and does not have the ability to solve the core challenges of Intel's manufacturing. The fundamental dilemma faced by Intel is due to its inability to compete with NTEM in advanced chip manufacturing, which is a challenge that may be difficult to fight on a single capital investment. Moreover, the nature of this challenge has been seen in recent NVIDIA investment cases. NVIDIA's recent $5 billion investment has shortened the market situation, but has not exerted any real effect on solving Intel's long-term operating bottlenecks.
Therefore, it is generally recognized in the market that Intel needs more than just a partner or a check, it requires a thorough transformation. This transformation will not only come from another design company's fund injection. Unless Apple agrees to be the crystal foundry customer that Intel is desperately needed, its investment may not bring any results beyond the scope of short-term speculation. So, in a clear contrast to seeking investment strategies for other companies, Intel's four former directors believed that privatization could be the company's answer to the difficulties and could offer "reversal" advantages to this troubled chip manufacturer.
Former directors believed that privatization would allow Intel to erode the pressure on the public market to financially. Without this pressure beam reduction, the company will be able to reorganize its large groups and split its business into more focused and high-value units. These high-value units that test capabilities include the wafer foundry business, chip design department, server business, and Mobileye’s automatic driving technology part. And privatization of ownership will give Intel the ability to implement large-scale capital configurations. According to analysis, Intel may need up to $10 billion in investment to compete effectively with NT$. Therefore, privatization is expected to attract such huge funds.
In addition, this will also help Intel reverse the talent loss problem it faces. Because through a privatization structure, companies can provide competitive salary and equity uplifts to top talents, thereby attracting and retaining key technical personnel.
Overall, the former director believed that Intel could carry out a complex business spin-off under the privatization state, with the cooperation of the US government and the support of advanced technology companies. This large-scale and in-depth structural change will be untolerated in the open market. Therefore, the decisions facing Intel are not only a problem with the source of funds, but also a fundamental transformation problem in its operating model. We should choose the superficial phenomenon of short-term investment, or the long-term structural changes brought about by privatization, to meet fierce competition from rivals such as NTU and solve their deeply rooted manufacturing challenges. As a result, it will have a significant impact on the industry.