In the second quarter, Intel made the decision to part ways with its entire investment in Arm Holdings, pulling in roughly $147 million from the transaction. This move was part of a bigger picture strategy as the company navigates tough financial waters, aiming to cut costs and bolster cash reserves. As part of these efforts, Intel also sold its stake in the cybersecurity firm ZeroFox and trimmed its holdings in Astera Labs.
The revelation, detailed in a recent SEC filing, shows that Intel shed 1.18 million shares in Arm Holdings, a decision coinciding with the company’s significant financial challenges. While the firm managed to collect $147 million from this sale, it ultimately reported a $120 million net loss on its equity investments for the quarter. This was part of a broader $1.6 billion loss Intel endured during this time frame.
By relinquishing its shares in Arm, and dialing back its investment in Astera Labs—known for crafting connectivity solutions for enterprise hardware—Intel is aligning its operations with its cost-reduction strategy to stabilize its financial footing amid a turbulent market landscape.
Previously, Intel’s investment in Arm was likely influenced by strategic prospects. Arm Holdings holds a key position in the semiconductor sector, with its designs forming the backbone of most mobile devices. Intel naturally sees the value in tackling issues related to such technology. Furthermore, the two companies are working together on datacenter platforms catering to Intel’s 18A process technology, and there is potential for Intel to become a licensee of Arm’s innovations, which would be beneficial to other companies leveraging Arm’s designs.
Astera Labs was another strategic bet for Intel, probably aiming to ensure a steady flow of intelligent retimers, smart cable modems, and CXL memory controllers—key components in datacenters. Having a hand in supplying these would help Intel maximize its sales of datacenter CPUs.
These financial challenges came to light earlier this month when Intel’s earnings report didn’t meet expectations, causing a 33% nosedive in its stock value and wiping out billions in market capitalization. In response to these difficulties, Intel revealed plans to cut 15,000 jobs and introduce other spending cutbacks. Additionally, the suspension of its dividend underscores the seriousness of Intel’s measures to save cash and refocus on recovery. The urgency to stabilize financially likely drove the decision to divest from Arm’s stock swiftly.
