Activist Investor Dan Loeb Enters the Chip Wars

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R2 Semiconductor, a small computer chip design company, has been racking up victories in a potentially major patent battle against Intel over the past few months — a dispute that could force Intel to stop selling several chip lines in Europe.

One of the biggest names in hedge funds is behind R2’s legal battle, DealBook first reported: Dan Loeb’s activist hedge fund Third Point, the company’s majority owner, is controlling the lawsuit, which includes Amazon Web Two new lawsuits are also included against Services and Fujitsu. Was not reported earlier.

Context: R2 sued Intel as well as two customers, Hewlett Packard Enterprise and Dell, in Germany, alleging the chip maker infringed patents related to voltage regulation in semiconductors. (Intel is compensating Apache and Dell.)

In February a regional court issued an injunction against the sale of at least some Intel chips. And on March 8, a high court rejected Intel’s attempt to block the decision. Meanwhile, litigation over the patent in Britain is set to begin next month.

Intel says the R2 patent applies to older generations of its chips. But R2 and Third Point told DealBook that this may also apply to the current generation of Intel chips.

The third point has made the fight possible. The company first invested in R2 15 years ago and eventually acquired a 75 percent stake. It is not only paying R2’s legal costs, but also plans to freeze the $79 million amount to be held in escrow while the court battle continues in Germany.

Loeb’s company could reap a windfall if R2 wins royalty payments from Intel. But the financier told DealBook he’s also trying to help R2 founder Dave Fisher: He compared R2 to companies like Arm that earn royalties for their cutting-edge designs. “That opportunity was taken from Dave,” Loeb said. “We plan to fix it.”

Intel is not giving up. It dismissed R2 as “a shell company whose only business is litigation” and noted that a separate R2 patent had been invalidated in the US.

Loeb told DealBook: “You wouldn’t be a very good patent troll if you spent 15 years of your life developing a patent, giving up weekends, working day and night to develop something, in the hope that it It gets stolen, and then think you’re going to get sued over it.”

Intel, Dell and Fujitsu did not respond to requests for comment. Amazon Web Services and Apache declined to comment.

what next? Germany’s patent court will make a final decision on the validity of the R2 claim in October. A victory there could lead to a ban on affected Intel chips in Germany — just as the chipmaker is in the process of spending about $33 billion to build a new plant there.

R2 and Third Point also suggested that they could make claims in 38 other members of the European Patent Convention.

It is being said that Apple is in talks to work together with Google on Artificial Intelligence. According to Bloomberg, the two are discussing a licensing deal that would mean Google’s Gemini models would offer new features on the iPhone; The two already have a lucrative exploration deal in place. In other AI news: Elon Musk’s xAI releases raw computer code behind its Grok chatbot; And the Department of Homeland Security is the first federal agency to incorporate generative AI across multiple divisions through partnerships with OpenAI, Anthropic, and Meta.

China has recorded better than expected manufacturing growth. Beijing said on Monday that industrial output in January and February rose 7 percent compared with the same period a year earlier. Analysts said the data showed the country’s struggling economy is stabilising, even as consumer demand remains weak, as the government tries to achieve an ambitious 5 per cent annual growth target.

It’s a big week for central banks. The Bank of Japan, the Fed and the Bank of England are ready to take interest rate policy decisions. The drama will begin in Tokyo on Tuesday, as investors anticipate the BOJ will raise rates for the first time since 2007. Meanwhile, the Fed is expected to keep rates steady on Wednesday but will signal whether a cut is likely in June. ,

Supporters and opponents of a bill to ban TikTok in the US have come out in force, putting their cases before a possible Senate vote. One thing that’s missing: any sign that America’s allies are going to follow suit, especially in Europe, which has historically hit Big Tech hard.

The difference shows that many do not think TikTok or China pose a similar threat, and also reveals a more comprehensive approach to regulating social media that may worry the app’s US rivals.

Many countries have imposed limited TikTok bans. The European Union and others have banned state employees from using the app on government devices. Canada said last week it had launched a national security review of TikTok’s expansion plans there. But governments have generally not asked the public to avoid it.

Europe does not view TikTok as a security threat. That means there is less political will to rein it in, said Max Schrems, an Austrian lawyer who has criticized American social networks over their handling of user data. One reason: the app’s relatively small reach. He said most of the user data flows to American tech companies. “TikTok is really great for teens, and that’s what it’s all about,” Schrems tells DealBook, adding that Europeans are more likely to use WhatsApp or Instagram.

EU data-protection and market rules cover the scope of social media Instead of individual apps. Regulators are already using them: Last month, the Block launched an investigation focused on TikTok’s addictive algorithms. “There are definitely things that differentiate TikTok from others, but still, many of the risks being discussed about TikTok are similar to those on other platforms,” Julian Joersch, a tech policy expert at the think tank Stiftung Neue Verantwortung, told DealBook. also apply.” (Some in the US are pushing for a similar comprehensive approach.)

Europe is also divided on China – A far cry from Washington, where there is bipartisan consensus that China is a threat. EU countries that have strong trade relations with China are keen to maintain relations. “This makes it very difficult for Brussels to reach the consensus needed to take tough measures isolating China or leading Chinese companies,” Max von Thun of the Open Markets Institute, a competition policy think tank, told DealBook.

This could change if the bill becomes law.

Donald Trump is ahead of President Biden in many surveys, but he is badly behind in terms of cash. The Biden campaign revealed on Sunday that it has $155 million in cash, which the Trump camp and the Republican National Committee probably have less than.

It adds urgency to the former president’s fundraising efforts, which also include courting deep-pocketed supporters, The Times reports.

Trump’s legal battle is taking a toll on his campaign. He is using his campaign to raise money for his defense in a half-dozen battles in federal and state courts. The costs are rising: He recently posted $91.6 million bond in the E. Jean Carroll defamation case, and he must post $450 million bond in a New York civil fraud case against his businesses.

In a sign of the campaign’s financial constraints, millions more have been sought from at least two donors who have given Trump seven-figure pledges.

The former president is hitting out at potential donors, Including private dinner at Mar-a-Lago in Florida. He has also created a new joint fundraising account with the RNC (which is now co-led by his daughter-in-law) and state parties to raise significant sums.

One potential point of leverage: The 2017 tax cuts he signed into law are set to expire in 2025, and Biden has said he will not extend them for the country’s highest earners.

Those he has spoken to recently include: Larry Ellison, co-founder of Oracle; Pepe Fanjul, sugar magnate; John Paulson, hedge fund manager; Steve Wynn, casino mogul; New York Jets owner Woody Johnson; TikTok’s parent company includes billionaire investor Jeff Yass; And Elon Musk (though he has said he won’t give in to Biden or Trump).

  • In other election news: Robert Kennedy Jr. is likely to choose Nicole Shanahan, an entrepreneur who starred in a Super Bowl ad promoting his independent presidential run (and the former wife of Google co-founder Sergey Brin). Had paid for. And Trump’s economic advisers have reportedly presented him with three candidates for Fed chairman: Kevin Wersh, Kevin Hassett and Arthur Laffer.

In response to Andrew’s question last week, DealBook readers had a lot to say about the debate over whether increasing capital requirements for banks could avert the next crisis. Here is a sample of the responses:

  • Sanford M. Brown, a financial services lawyer, is concerned that higher capital requirements could affect hiring: “As banking becomes less attractive to investors, it will become less attractive to employees, and I’m not sure we “One of the most important is that the drivers of the American economy will be less attractive to the best and brightest people our country has to offer.”

  • Carter Dougherty, communications director for Americans for Financial Reform (and former reporter for The Times), is less concerned: “With executive compensation tied to bank stock prices, you realize this is an incredibly self-interested case. “Which creates a bank lobby against more equity/capital: it drives down banker compensation.”

  • Wall Street analyst Chris Kotowski says the debate ignores important nuances: “You need to look at dozens of different ratios and risks to get a handle on asset quality, liquidity and market risk, but capital is a It gets limited to the same number, and that’s why both politicians and regulators always like to pull the ‘C’ lever. They can say, ‘Hey, it used to be 6% now it’s 12%. Look, We have done something.


  • Joann’s, the troubled arts-and-crafts retailer, filed for bankruptcy protection; The chain will be owned by its creditors after reorganizing its debt. (Bloomberg)

  • As Nelson Peltz presses on with his activist campaign against Disney, his investment firm has reportedly faced stress over investors’ withdrawal requests and the growing role of his son Matt. (NYT, WSJ)


best among the rest

  • “ESPN Boss Jimmy Pitaro’s Chaotic Race to Remake the Sports Giant” (WSJ)

  • Abu Dhabi’s latest efforts to become a global center for finance include promising access to top-rated schools for businessmen’s children and helping hedge fund executives join exclusive country clubs. (Bloomberg)

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