Intel Divests Arm Shares and Scales Back Investments in Various Companies

During the second quarter, Intel decided to let go of its entire stake in Arm Holdings, managing to rake in about $147 million. In addition to this, they also sold their shares in the cybersecurity outfit ZeroFox and scaled back their investment in Astera Labs. These moves are part of Intel’s broader strategy to get a handle on expenses and shore up cash as the company tackles considerable financial hurdles.

According to a recent SEC filing, Intel parted ways with its 1.18 million shares in Arm Holdings amidst grappling with heavy financial losses. Though the sale generated $147 million, it wasn’t enough to offset Intel’s reported $120 million net loss on equity investments for the quarter. This loss is a substantial piece of the $1.6 billion overall loss Intel faced in the same period.

Apart from unloading its Arm shares, Intel opted out of its ZeroFox investment and trimmed down its Astera Labs stake, which is a company recognized for creating connectivity solutions for enterprise hardware. Such actions align with Intel’s plan to pare down costs and stabilize its finances amid challenging market conditions.

Despite the sell-off, Intel’s initial investment in Arm likely had strategic motivations. Arm Holdings plays a pivotal role in the semiconductor sector, with its designs powering the majority of mobile devices. Naturally, Intel aimed to address this dynamic. Moreover, Intel and Arm are working together to develop datacenter platforms optimized for Intel’s 18A process technology. There’s also a chance that Arm perceives Intel as a potential licensee for its technologies and a valuable ally for other companies that license Arm’s designs.

Similarly, Intel’s investment in Astera Labs was strategically driven. The company possibly wanted to ensure a reliable supply of smart retimers, smart cable modems, and CXL memory controllers, which are extensively used in datacenters. Selling as many datacenter CPUs as possible remains a pressing priority for Intel.

Earlier this month, Intel’s financial woes were thrown into the spotlight with a lackluster earnings report that triggered a 33% decline in its stock, wiping out billions in market value. In response, Intel revealed plans to slash 15,000 jobs and implement various cost-cutting measures. The company also paused its dividend payouts, highlighting the urgency of its efforts to conserve cash and focus on recovery. The divestment of Arm stock underscores the pressing need for immediate financial stabilization, which seemingly took center stage in Intel’s decision-making.