During the second quarter, Intel made the move to sell off its entire stake in Arm Holdings, pulling in about $147 million in the process. Alongside this, the company also let go of its investment in the cybersecurity firm ZeroFox and reduced its holdings in Astera Labs. These actions are part of a broader initiative by Intel to streamline costs and generate cash in light of tough financial hurdles.
According to a recent SEC filing, Intel parted ways with its 1.18 million shares in Arm Holdings at a time when it’s encountering significant financial headwinds. The $147 million raised from these sales didn’t cover the full extent of their losses, as Intel recorded a $120 million net loss just from its equity investments for the quarter. This was a portion of a larger $1.6 billion overall loss for the period.
Besides Arm, Intel also cut ties with ZeroFox and scaled back its involvement with Astera Labs—an enterprise hardware connectivity platform developer. These steps align with Intel’s goals to cut expenses and stabilize its financial footing amidst relentless market challenges.
Historically, Intel’s investment in Arm was likely grounded in strategic reasons. Arm Holdings is a key player in the semiconductor industry, with its designs powering a vast majority of mobile devices, which undoubtedly appeals to Intel. The two companies are also working together on datacenter platforms designed for Intel’s 18A process technology. Moreover, Arm may view Intel as not only a potential customer for its technology but also a beneficial ally for other companies purchasing Arm’s designs.
The investment in Astera Labs also had strategic intent. Intel was likely aiming to secure a consistent supply of smart retimers, smart cable modems, and CXL memory controllers—important components used extensively in datacenters. This is vital to Intel’s interest in boosting sales of its datacenter CPUs.
Earlier this month, Intel’s financial difficulties were in the spotlight with a disappointing earnings report, causing a dramatic 33% plunge in its stock value and wiping out billions in market capitalization. In response, the company announced plans to slash 15,000 jobs and enact other cost-cutting measures. Suspending its dividend was another significant step, underlining the urgency of conserving cash and focusing on recovery efforts. When it comes to selling off the Arm shares, the immediate need to stabilize finances seems to have taken priority, influencing this decision.
