Intel Divests Arm Holdings and Lowers Investments in Other Firms

Intel recently made some significant financial moves, deciding to sell its entire stake in Arm Holdings during the second quarter and netting around $147 million in the process. This move is part of a broader strategy to tighten their financial belt and recuperate some much-needed cash as they navigate through ongoing financial turbulence.

According to a recent SEC filing, Intel offloaded its 1.18 million shares in Arm Holdings at a time when they faced substantial financial hurdles. While the sale brought in $147 million, it wasn’t enough to offset the $120 million net loss from their equity investments for the quarter, a figure that’s a fraction of the larger $1.6 billion loss Intel contended with during this timeframe.

Besides parting ways with Arm, Intel also divested from ZeroFox, a player in the cybersecurity arena, and scaled back its involvement with Astera Labs. Astera is known for developing essential connectivity platforms used in enterprise tech. These actions fit neatly into Intel’s broader goal of slashing costs and shoring up their shaky financial standing amid market turmoil.

Now, despite Intel walking away from Arm, their past investment in the semiconductor behemoth was likely a strategic one. Arm Holdings wields significant influence in the industry, with its designs at the heart of most mobile devices—a clear area of interest for Intel. Not to mention, Intel and Arm are in cahoots, working on datacenter platforms that align with Intel’s 18A process tech. From Arm’s perspective, having Intel as a licensee and partner could be quite appealing and valuable.

Similarly, Intel’s stake in Astera Labs had strategic underpinnings. The aim was probably to ensure a reliable supply of technologies like smart retimers, smart cable modems, and CXL memory controllers—key components in datacenters where Intel hopes to flood the market with its CPUs.

Intel’s financial woes became glaringly apparent earlier this month after a dismal earnings report sent its stock plummeting by 33%, wiping out billions in market value. In response, Intel revealed plans to shed 15,000 jobs and implement other cost-cutting measures. They even suspended their dividend to preserve cash, underscoring their commitment to financial recovery. When it came to selling off Arm stock, the urgency for financial stability seemingly steered the decision-making process.