Shares of chipmaker Qorvo (QRVO 13.14%) rallied 13.4% on Friday, as of 1:55 p.m. ET.
Qorvo soared on the news that an activist investor had taken a sizable stake in the company. Given that the stock is down about 29% in the last year and activist involvement could lead to shareholder-friendly moves, Qorvo rallied on the news.
Starboard takes 7.7% of Qorvo
In a filing today, Qorvo disclosed activist investing firm Starboard Value Partners had taken a 7.29 million share stake in the company, good for about $500 million and accounting for 7.7% of Qorvo’s total shares outstanding.
Qorvo specializes in radio frequency chips that go into smartphones and tablets under its advanced cellular segment. Its largest customer is Apple, which makes up over one-third of Qorvo’s revenue. Qorvo also produces chips in two other segments: connectivity and sensors (CSG) and high performance analog (HPA). The CSG segment serves both the consumer and Industrial Internet of Things connectivity markets, while HPA centers on aerospace, defense, and cellular infrastructure markets. Qorvo also sells its own in-house foundry services to U.S. government defense and aerospace customers.
Qorvo has slipped 29% over the past year coming into today, due to tepid smartphone sales as Chinese customers have turned to lower-cost Android phones amid economic headwinds, along with a severe downturn in industrial chips.
Starboard has had past success in semis
Starboard has had an interesting history with semiconductor companies. It actually invested in Nvidia back in 2013, but unfortunately sold after a quick gain in 2014. But Starboard has made more consequential contributions to current AI darling Marvell Technology, in which it invested in 2016, and On Semiconductor, in which it invested in 2020. Starboard installed CEOs Matt Murphy at Marvell and Hassan El-Khoury at On, both of whom are still serving. Each stock has also seen significant upside since their respective appointments.
Could Starboard engineer another turnaround at Qorvo? It’s possible for sure. Qorvo isn’t quite as well positioned as these other chip companies are today, but then again, it’s possible Starboard has either a strategy shift or leadership change in mind. Investors in the chip sector should monitor this story closely.
Billy Duberstein and/or his clients have positions in Apple and ON Semiconductor. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool recommends Marvell Technology, ON Semiconductor, and Qorvo. The Motley Fool has a disclosure policy.
