Intel sells its Arm stake, reduces stakes in other companies

Intel divested its entire stake in Arm Holdings in the second quarter, raising about $147 million. At the same time, Intel sold its stake in cybersecurity firm ZeroFox and reduced its stake in Astera Labs, all as part of a broader effort to manage costs and recover cash amid serious financial challenges.

The sale of 1.18 million shares of Intel’s Arm Holdings, which was disclosed in a recent SEC filing, comes as the company grapples with significant financial losses. Despite the $147 million generated from the sale, Intel reported a net loss of $120 million on its capital investments for the quarter, part of a larger loss of $1.6 billion that Intel faced during the period.

In addition to selling its Arm stake, Intel also exited its ZeroFox investment and reduced its stake in Astera Labs, a company known for developing connectivity platforms for enterprise hardware. The moves are consistent with Intel’s strategy to reduce costs and stabilize its financial position in the face of ongoing market challenges.

Despite the sell-off, Intel’s previous investment in Arm was likely driven by strategic considerations. Arm Holdings is a major force in the semiconductor industry, with its designs powering most mobile devices, and Intel would obviously want to get involved. Intel and Arm are also working together on data center platforms tailored to Intel’s 18A process technology. Additionally, Arm may view Intel as a potential licensee of its technologies and a valuable partner for other companies that license Arm designs.

Intel’s investment in Astera Labs was also strategic, as the company likely wanted to secure a steady supply of its intelligent retimers, intelligent cable modems, and CXL memory controllers, which are heavily used in data centers, and Intel is certainly interested in selling as many processors to data centers as possible.

Intel’s financial problems were highlighted earlier this month when the company posted a disappointing earnings report, leading to a 33% drop in stock value, wiping out billions of dollars in market capitalization. To combat the difficulties, Intel announced plans to lay off 15,000 employees and implement other cost cuts. The company also suspended its dividend, signaling the depth of its cash-saving efforts and focus on recovery. When it comes to selling Arm stock, the need for immediate financial stabilization likely took precedence, leading to the decision.