Dan Loeb Enters the Chip Wars

Dan Loeb is best known for taking on corporate boards, but the hedge fund mogul is now deep in a patent fight against Intel.Credit…Brendan McDermid/Reuters

A different kind of battle for Third Point

A small computer chip design company, R2 Semiconductor, has been notching wins in a potentially big patent fight against Intel over the past few months — a dispute that could force Intel to stop selling several chip lines in Europe.

Behind R2’s legal war is one of the biggest names in hedge funds, DealBook is first to report: Dan Loeb’s activist hedge fund Third Point, the company’s majority owner, is bankrolling the lawsuits, including two new ones against Amazon Web Services and Fujitsu that haven’t been previously reported.

The context: R2 sued Intel, as well as two customers, Hewlett Packard Enterprise and Dell, in Germany, alleging that the chipmaker had infringed on a patent dealing with voltage regulation in semiconductors. (Intel is indemnifying H.P.E. and Dell.)

A regional court in February issued injunctions against the sale of at least some Intel chips. And on March 8, a higher court rejected Intel’s effort to halt the decision. Meanwhile, a trial in Britain over the patent is set to begin next month.

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

Third Point has made the fight possible. The firm first invested in R2 15 years ago, eventually amassing a 75 percent stake. Not only has it been paying for R2’s legal costs, but it also plans to put up the $79 million required to be held in escrow while the court fights in Germany continue.

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