Intel has divested its 1.18 million share stake in British chip firm Arm Holdings.
This move comes as the California-based chip designer looks to shore up its balance sheet amid intense competition in the semiconductor industry.
Financial Impact of the Sale
The sale, disclosed on Tuesday, likely raised nearly $147 million for Intel, based on Arm’s average stock price between April and June. According to its latest financial statements, Intel reported cash and cash equivalents of $11.3 billion and liabilities of approximately $32 billion as of the end of June.
Strategic Divestment Amid Restructuring
This divestment from Arm occurs during a tumultuous financial period for Intel, which is undergoing what CEO Pat Gelsinger has described as “the most substantial restructuring of Intel since the memory microprocessor transition four decades ago.”
At the start of August, Intel announced a $10 billion cost-reduction plan, which includes cutting around 15,000 employees, eliminating its fiscal fourth-quarter dividend, and reducing capital expenditures.
Intel’s financial struggles were highlighted by worse-than-expected quarterly results and light guidance for the current period, leading to the largest single-day drop in Intel’s stock price in 50 years, a 26 percent decline. The company has been struggling to keep pace with other semiconductor competitors amid the AI boom.
Gelsinger noted that the company’s latest losses were compounded by its decision to accelerate the production of its Core Ultra PC chips, designed to handle AI workloads. Competitors like AMD and Qualcomm have also been racing to roll out more AI-focused chips, chasing Nvidia's success.
Efforts to Revitalize Chip Foundry Business
Under Gelsinger’s leadership, Intel is also attempting to revitalize its struggling chip foundry business and regain market share lost to Taiwan’s TSMC and South Korea’s Samsung in recent years. Despite these efforts, the company has faced significant challenges in maintaining its competitive edge.
Market Reactions and Future Prospects
Intel and Arm declined to comment on Wednesday's sale. Despite the ongoing challenges, Intel's stock saw a slight uptick in after-hours trading. Arm’s shares have been performing well since its IPO last September, up nearly 65 percent year-to-date. Japan’s SoftBank Group, which holds a majority stake in Arm, has benefited significantly from the rise in the company’s share price.
