Intel Divests Arm Holdings and Lowers Investments in Various Companies

In the second quarter, Intel decided to part ways with its stake in Arm Holdings, pulling in roughly $147 million. The company didn’t stop there; it also sold shares in the cybersecurity firm ZeroFox and trimmed its investment in Astera Labs. All these moves are part of Intel’s broader strategy to tighten financial belts and shore up cash reserves amid some serious financial storms.

The departure from Arm Holdings, detailed in a recent SEC filing, happened while Intel was grappling with considerable financial losses. Although the Arm stake sale brought in $147 million, Intel still reported a $120 million net loss on equity investments for the quarter. This was a component of a larger financial squeeze that culminated in a $1.6 billion loss for Intel during this time.

On top of the Arm sale, Intel pulled out of ZeroFox and lessened its stake in Astera Labs, known for its advanced connectivity platforms in enterprise-grade hardware. These actions are aligned with Intel’s intention to cut costs and stabilize their shaky financial footing in a challenging market environment.

Even with this divestment, Intel’s previous investment in Arm was likely strategically motivated. Arm Holdings holds a crucial position in the semiconductor world, providing designs for most mobile gadgets. It’s understandable why Intel would have an interest in this area. Intel and Arm are also working together on datacenter platforms centered around Intel’s 18A process technology. Plus, Arm could see Intel as a potential technology licensee and a key ally for other companies using Arm designs.

Intel’s involvement with Astera Labs was strategic too, likely aimed at ensuring a dependable supply of smart retimers, smart cable modems, and CXL memory controllers—critical components for datacenters. Intel is naturally eager to maximize their datacenter CPU sales.

Intel’s financial woes came into sharp focus earlier this month following a disheartening earnings report, which led to a stunning 33% tumble in its stock price, wiping out billions in market value. In response to these struggles, Intel laid out plans to cut 15,000 jobs and slash other expenses. They’ve also halted dividend payouts, underscoring the magnitude of their effort to conserve cash and focus on bouncing back. When it comes to offloading Arm stock, the necessity for immediate financial relief has likely become paramount, thus dictating their decision.