Intel has sold its stake in chip designing firm Arm as it reels from losses

Intel has recently sold its stake in chip design firm Arm Holdings Plc as it faces significant financial challenges. The company, which has been a dominant player in the semiconductor industry for decades, is now grappling with substantial losses and is taking drastic measures to regain stability.

During the second quarter, Intel offloaded its 1.18 million shares in Arm Holdings, a move that likely brought in around $147 million, given the average stock price of $124.34 at the time. This sale is part of Intel’s broader strategy to cut costs and streamline its operations as it navigates a difficult period.

The company is in the process of slashing 15,000 jobs and has also made the tough decision to suspend its dividend, all in an effort to reduce expenses and stabilize the business.

Intel’s financial struggles have been starkly highlighted by its recent earnings report, one of the worst in the company’s 56-year history. This disappointing performance caused a significant drop in its stock value, with the shares losing nearly a third of their value.

Despite the infusion of cash from the sale of Arm shares, Intel reported a net loss of $120 million on its equity investments for the quarter, underscoring the depth of its current financial woes.

Intel’s decline is particularly noteworthy given its past dominance in the chip-making industry. The company has traditionally produced the majority of its own chips using in-house designs. However, it has been losing ground to competitors, many of whom use designs licensed from Arm.

Arm, which is majority-owned by Japan’s SoftBank Group Corp., has become a central player in the semiconductor industry, providing chip designs and blueprints that are widely used by companies across the sector, including Intel.

The sale of Intel’s stake in Arm comes after Arm’s successful initial public offering last year, which was the largest IPO of 2023. Despite Intel’s struggles, Arm continues to thrive as a critical provider of technology to the broader semiconductor market.

As Intel works to turn its business around, the sale of its Arm holdings represents a small but significant step in its efforts to raise cash and refocus on its core operations. However, the company’s challenges are far from over, and it remains to be seen how effective its cost-cutting measures will be in restoring its former position in the industry.