During the second quarter, Intel made a significant financial move by selling off its entire shareholding in Arm Holdings, netting around $147 million. In a broader strategy to manage its finances better during a tough economic period, Intel also divested its stake in cybersecurity company ZeroFox and trimmed its investment in Astera Labs.
In a filing with the SEC, it was revealed that Intel parted with 1.18 million shares in Arm Holdings, despite the backdrop of significant financial losses. The sale yielded $147 million, yet Intel still reported a net loss of $120 million on its equity investments for the quarter. This was part of a more substantial loss amounting to $1.6 billion during this time frame.
Beyond Arm, Intel’s portfolio adjustments included fully exiting its investment in ZeroFox and cutting back its shares in Astera Labs. Known for delivering connectivity solutions for enterprise hardware, Astera Labs was part of Intel’s plan to curb expenses and shore up its financial footing, which has been tested by persistent market hurdles.
Intel’s previous investment in Arm likely stemmed from strategic motives. Arm Holdings plays a pivotal role in the semiconductor world with its designs at the heart of most mobile devices, an area Intel undoubtedly wants to stay close to. The two companies are working together on datacenter platforms optimized for Intel’s forthcoming 18A process technology. Moreover, Arm could perceive Intel as both a prospective licensee and a key ally for other firms licensing Arm’s designs.
The partnership with Astera Labs was also strategic, focused on ensuring a reliable supply of smart retimers, smart cable modems, and CXL memory controllers—critical components for datacenters. Intel is keen to boost its sales of datacenter CPUs and ensuring a reliable supply chain is essential for this goal.
Earlier this month, Intel’s financial woes were starkly highlighted when it released an earnings report that fell short of expectations, causing a dramatic 33% decline in its stock value, wiping out billions in market capitalization. In response to these challenges, the company announced plans to reduce its workforce by 15,000 and implement additional cost-saving measures. Furthermore, Intel has paused its dividend payments to conserve resources for its recovery. Selling its shares in Arm seems to have been driven by an urgent need for financial stability, prompting this decisive action.
