In an interesting turn of events, Intel decided to completely divest its stake in Arm Holdings during the second quarter, raking in about $147 million from the sale. Alongside this move, Intel offloaded its share in the cybersecurity company ZeroFox and trimmed down its holdings in Astera Labs. These decisions are part of Intel’s broader strategy to rein in costs and boost cash flow amidst some pretty tough financial times.
Diving into the details, Intel sold off 1.18 million shares in Arm Holdings—a move documented in a recent filing with the SEC. This sale happens at a point when Intel is grappling with considerable financial strain. Even though the transaction brought in $147 million, Intel still reported a whopping $120 million net loss on its equity investments for the quarter. This loss is just a slice of the larger $1.6 billion setback Intel experienced over the same period.
Apart from letting go of its stake in Arm, Intel also decided to exit its investment with ZeroFox and scale back its involvement with Astera Labs, a firm notable for building connectivity platforms for enterprise hardware. These steps align with Intel’s strategic approach to slash costs and stabilize its financial standing while navigating persistent market challenges.
Interestingly, despite stepping back from Arm, Intel’s earlier investment in the company likely had strategic motivations. Arm Holdings is a giant in the semiconductor world, with its designs powering the majority of mobile devices, which naturally piqued Intel’s interest. Furthermore, Intel and Arm are cooperating on datacenter platforms specifically designed for Intel’s 18A process technology. There’s also the possibility that Arm sees Intel as a valuable licensee of its technologies, given Intel’s potential to work synergistically with other companies leveraging Arm’s designs.
When it comes to Astera Labs, Intel’s investment seemingly aimed at ensuring a reliable supply of smart retimers, smart cable modems, and CXL memory controllers—essential components in datacenters. Intel’s vested interest in selling as many datacenter CPUs as possible might have driven this strategic involvement.
Earlier in the month, Intel’s financial woes were put on display with a less-than-stellar earnings report, causing its stock value to plummet by 33% and wiping billions off its market capitalization. In response, Intel plans to cut about 15,000 jobs and implement other cost-reduction measures. The company has also suspended its dividend payouts, underscoring the seriousness of its efforts to conserve cash and steer towards recovery. Regarding the Arm stock sell-off, the urgency for immediate financial relief seemingly outweighed other considerations, leading to this decisive action.
