Intel has sold its stake in chip designing firm Arm as it reels from losses

Aug. 14, 2024, 10:56 a.m.

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Intel has recently divested its stake in chip design firm Arm Holdings Plc as it faces significant financial challenges. The company, a long-standing leader in the semiconductor industry, is now grappling with substantial losses and taking drastic measures to regain stability.

In the second quarter, Intel unloaded its 1.18 million shares in Arm Holdings, a move that likely yielded around $147 million, considering the average stock price of $124.34 at the time. This sale is part of Intel's larger strategy to cut costs and simplify its operations as it navigates a difficult period.

Advertisement To cut costs and stabilize its operations, Intel is eliminating 15,000 jobs and has made the difficult decision to suspend its dividend payments.

Intel's recent earnings report paints a grim picture of its financial situation, marking one of the worst performances in the company's 56-year history. This disappointing result led to a significant decline in its stock price, with shares plummeting by nearly a third.

Despite receiving a substantial sum from the sale of Arm shares, Intel reported a net loss of $120 million on its equity investments during the quarter, highlighting the severity of its current financial difficulties.

Intel’s decline is particularly noteworthy given its past dominance in the chip-making industry. The company has traditionally produced the majority of its own chips using in-house designs. However, it has been losing ground to competitors, many of whom use designs licensed from Arm.

Arm, which is majority-owned by Japan's SoftBank Group Corp., has become a central force in the semiconductor industry, providing chip designs and blueprints widely used by companies across the sector, including Intel.

The sale of Intel’s stake in Arm comes after Arm’s successful initial public offering last year, which was the largest IPO of 2023. Despite Intel’s struggles, Arm continues to thrive as a critical provider of technology to the broader semiconductor market.

Advertisement As Intel works to turn its business around, the sale of its Arm holdings represents a small but significant step in its efforts to raise cash and refocus on its core operations. However, the company’s challenges are far from over, and it remains to be seen how effective its cost-cutting measures will be in restoring its former position in the industry.