Key Points
- Intel sold its 1.18 million share stake in Arm Holdings, raising approximately $146.7 million.
- The sale aligns with Intel’s broader restructuring efforts, which include cutting 15% of its workforce and suspending its dividend.
- Intel focuses on developing advanced AI chips and expanding its for-hire manufacturing business to regain its competitive edge.
- The company deals with increased costs and pressured profit margins, leading to aggressive cost-cutting measures.
Intel Corporation (INTC.O), undergoing significant restructuring and cost-cutting measures, has sold its 1.18 million share stake in British chip company Arm Holdings during the second quarter of this year, according to a regulatory filing made public on Tuesday. Based on the average price of Arm’s stock between April and June, the sale would have generated approximately $146.7 million for Intel.
This move comes as Intel grapples with declining relevance in the competitive semiconductor industry. Earlier this month, the company announced plans to cut more than 15% of its workforce and suspend its dividend payments as it faces reduced spending on traditional data center semiconductors. The shift in the industry towards artificial intelligence (AI) chips, where Intel lags behind competitors like Nvidia (NVDA.O), has added further pressure on the company.
Intel’s strategic focus now is developing advanced AI chips and expanding its manufacturing capabilities for other companies. This shift is part of an effort to regain the technological leadership it has lost to Taiwan’s TSMC (2330. TW), the world’s largest contract chipmaker. However, the drive to bolster its foundry business under CEO Pat Gelsinger has increased operational costs, which strained profit margins and necessitated aggressive cost-cutting strategies.
“This looks to be consistent with the restructuring plan and the renewed focus on liquidity and efficiency that Gelsinger laid out from the last conference call,” said Cody Acree, an analyst at Benchmark Co. The Arm Holdings shares’ sale appears to align with Intel’s broader strategy of streamlining operations and improving financial flexibility.
As of the end of June, Intel reported having cash and cash equivalents of $11.29 billion, with total current liabilities amounting to approximately $32 billion. The company’s financial struggles have been reflected in its stock performance, with Intel’s shares losing more than 59% of their value this year. The stock took a particularly sharp hit on August 2, dropping 26% following the announcement of the dividend suspension. On Tuesday, Intel’s stock remained nearly flat in extended trading.
Intel’s restructuring efforts are part of a broader attempt to reposition itself in the rapidly evolving semiconductor market, with a renewed emphasis on AI and contract manufacturing as key components of its future growth strategy.
