In a strategic financial maneuver, Intel has divested its 1.18 million share stake in British chipmaker Arm Holdings, as revealed in a recent regulatory filing. This move comes as the California-based chip designer seeks to stabilize its finances amidst fierce industry competition.
The transaction, disclosed Tuesday, likely fetched Intel close to $147 million, gauging from Arm’s average stock price between April and June. As of the end of June, Intel reported cash and cash equivalents amounting to $11.3 billion against liabilities of approximately $32 billion.
Intel’s decision to sell its Arm holdings surfaces during a pivotal period for the company, characterized by a significant restructuring initiative led by CEO Pat Gelsinger. Described as “the most substantial restructuring of Intel since the memory microprocessor transition four decades ago,” this transformation underscores the urgency with which Intel is addressing its operational challenges.
Earlier this month, Intel announced a comprehensive $10 billion cost-cutting plan. This includes a workforce reduction of about 15,000 employees, the elimination of the fiscal fourth-quarter dividend, and scaled-back capital expenditures. These measures followed Intel’s disappointing quarterly results and tepid outlook, which triggered the steepest single-day stock price drop in Intel’s 50-year history—a plunge of 26%.
Intel, a dual player in chip design and manufacturing, is grappling with heightened competition in the semiconductor sector, fueled by the burgeoning AI market. Gelsinger noted that Intel’s recent setbacks were exacerbated by its accelerated production of Core Ultra PC chips, designed to manage AI workloads. Rivals such as AMD and Qualcomm have also been swiftly developing AI-optimized chips, spurred by Nvidia's market success.
Under Gelsinger’s leadership, Intel is not only focusing on advancing its AI capabilities but also on revitalizing its struggling chip foundry business. The aim is to reclaim market share ceded to Taiwan’s TSMC and South Korea’s Samsung in recent years.
Neither Intel nor Arm offered comments on the sale when approached by CNBC on Wednesday. Despite a nearly 60% decrease in stock value this year, Intel experienced a slight uptick in after-hours trading, according to LSEG data.
Arm’s shares have seen a robust performance since its IPO last September, surging nearly 65% year-to-date. This has notably benefited Japan’s SoftBank Group, which holds a majority stake in Arm. As the semiconductor landscape continues to evolve, Intel’s strategic decisions and financial recalibrations will be crucial in navigating the challenges ahead.
