Intel Divests Arm Holdings, Trims Investments in Various Companies

In the second quarter, Intel decided to sell off its entire stake in Arm Holdings, netting about $147 million in the process. Alongside this sale, Intel also unloaded its share in ZeroFox, a cybersecurity firm, and trimmed down its investment in Astera Labs. These moves highlight Intel’s effort to tighten its belt and get some much-needed cash flow as it navigates a tough financial landscape.

The sale of Intel’s 1.18 million shares in Arm, detailed in a recent SEC filing, happened amidst ongoing financial difficulties for the company. Even though they raised $147 million from the sale, Intel still ended up with a $120 million net loss on its equity investments for the quarter, contributing to a hefty $1.6 billion loss they encountered during this timeframe.

Beyond the Arm shares, Intel also pulled out of ZeroFox and lessened its stake in Astera Labs. Known for their enterprise connectivity solutions, Astera Labs plays a crucial role in Intel’s bid to cut costs and stabilize finances amid market pressures.

Despite stepping away from Arm, Intel initially jumped into this investment for strategic reasons. Arm Holdings plays a pivotal role in the semiconductor sector, especially in the realm of mobile devices. It’s easy to see why Intel would want to be involved with such a significant player. On top of this, Intel and Arm have been working together on data center platforms that use Intel’s 18A process technology. It’s conceivable that Arm also sees Intel as a key partner in licensing opportunities for its designs with other companies.

Similarly, Intel’s foray into Astera Labs wasn’t without purpose. They likely aimed to ensure a reliable flow of essential technologies like smart retimers, smart cable modems, and CXL memory controllers, all of which are crucial for data centers. Intel’s focus on selling more CPUs for data centers is probably a driving force behind this investment.

Earlier this month, Intel’s financial woes became more apparent after a lackluster earnings report sent its stock plummeting by 33%, wiping out billions in market value. In response, Intel laid out plans to slash 15,000 jobs and cut costs elsewhere. They’ve also halted their dividend payments, underscoring the drastic measures being taken to preserve cash and set the stage for a recovery. The decision to sell off Arm stock, in particular, seems like a move born out of necessity for immediate financial stability.