Third Point said Intel should consider outsourcing its manufacturing operations to keep pace with its competitors.
Intel shares rose sharply on Tuesday after a major chip company said it was willing to work with the hedge fund on changes in its business to increase shareholder numbers.
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The market action came after Intel admitted receiving a letter from Third Point, led by activist Daniel Loeb. Intel increased 4.9 percent to close to $ 49.39 (approximately Rs. 3,600).
"Intel Corporation welcomes the views of all investors regarding the improved share price," said a California company.
"In that spirit, we look forward to meeting the Third Point with their views on that purpose."
Third Point's letter said Intel should consider outsourcing its manufacturing operations to compete with competitors in the industry such as Taiwan-based TSMC and South Korea's largest company Samsung, among others.
"We recommend that the board retain a trusted investment adviser to explore other strategic options, including whether Intel should remain the manufacturer of the integrated device and the separation of certain failed acquisitions," the letter said.
While Intel continues to be one of the world's leading chip companies, it lags behind its rivals in the fast-growing segment of mobile devices, and its chips are being phased out by Apple, which is building its own microprocessors for its Mac computers.