Intel Divests Arm Holdings, Cuts Back on Investments in Various Firms

During the second quarter, Intel decided to sell off its entire holding in Arm Holdings, pocketing around $147 million in the process. In addition to this, Intel offloaded its investment in cybersecurity firm ZeroFox and reduced its shares in Astera Labs, as part of a wider strategy to tighten the purse strings and replenish its cash reserves amid ongoing financial hurdles.

According to a recent SEC filing, Intel sold its 1.18 million shares in Arm Holdings just as the company finds itself grappling with hefty financial losses. Despite making $147 million from this move, Intel still reported a $120 million net loss on equity investments for the quarter. Unfortunately, this loss is just a slice of the hefty $1.6 billion hit Intel endured during this time.

Alongside cutting ties with Arm, Intel also decided to step away from its investment in ZeroFox and cut back its engagement with Astera Labs. Known for creating connectivity platforms for enterprise hardware, Astera Labs was another piece of Intel’s puzzle to trim costs and find its financial footing as it tackles persistent market challenges.

Now, Intel’s past involvement with Arm was likely rooted in strategic motives. Arm Holdings holds a major position in the semiconductor world, with its designs at the core of most mobile devices. It makes sense why Intel was interested. Not to mention, Intel and Arm are teaming up on datacenter platforms built for Intel’s 18A process technology. Arm could also see Intel as a promising licensee for its tech and a valuable ally for other firms licensing Arm’s designs.

When it came to Astera Labs, Intel’s investment was probably another calculated move, eyeing a reliable source of smart retimers, smart cable modems, and CXL memory controllers. These components are essential in datacenters—a market where Intel wants to sell as many CPUs as possible.

The extent of Intel’s financial troubles was underlined earlier this month with the release of a lackluster earnings report, which sent its stock tumbling by 33% and wiped out billions in market value. In response to these setbacks, Intel announced its intention to cut 15,000 jobs and undertake further cost-saving measures. The company even put a pause on its dividend payouts, highlighting the urgency to conserve cash and regain stability. The decision to sell off Arm’s stock appears to be a necessary step towards immediate financial stabilization in these challenging times.