In the second quarter, Intel decided to part ways with its entire investment in Arm Holdings, pulling in around $147 million from the sale. Alongside this, Intel also sold off its stake in the cybersecurity firm ZeroFox and scaled back its involvement with Astera Labs. These actions are part of Intel’s strategy to manage expenses and generate cash amidst serious financial difficulties.
According to a recent SEC filing, Intel’s sale of 1.18 million shares in Arm Holdings coincides with the company’s struggle against major financial setbacks. Despite the $147 million raised, the company reported a $120 million net loss on equity investments for the quarter. This loss contributes to the broader $1.6 billion deficit Intel experienced during this time.
Apart from Arm, Intel also eliminated its stake in ZeroFox and lessened its participation in Astera Labs, a company specializing in connectivity platforms for enterprise hardware. These moves align with Intel’s broader plan to cut costs and stabilize its financial standing amid persistent market challenges.
Even though Intel pulled out of Arm, the initial investment was likely driven by strategic reasons. Arm Holdings is a powerhouse in the semiconductor industry, with its designs present in most mobile devices, making it an attractive prospect for Intel. The partnership between Intel and Arm extends to datacenter platforms leveraging Intel’s 18A process technology, and Arm sees Intel as a potential licensee for its groundbreaking technologies and as a valued partner for other companies licensing Arm’s designs.
Regarding Astera Labs, Intel’s investment appears to have been strategic: the company aimed to ensure a steady supply of smart retimers, smart cable modems, and CXL memory controllers—key components for datacenters. Moreover, Intel has an interest in increasing sales of its datacenter CPUs, which means securing these supplies is crucial.
Earlier this month, Intel’s financial troubles were made apparent when it released a disappointing earnings report, which triggered a 33% drop in stock value, wiping out billions in market capitalization. To address these challenges, Intel announced plans to cut 15,000 jobs and undertake other cost-cutting measures. The suspension of the company’s dividend also underscores the seriousness of its efforts to preserve cash and focus on recovery. Selling its stake in Arm appears to be part of this urgent push for financial stabilization, driven by the pressing need for immediate improvement.
