Intel sold its 1.18 million share interest in British chipmaker Arm Holdings in the second quarter of 2024, according to a regulatory filing issued on Tuesday. The transaction, which would have produced around USD 146.7 million based on average stock prices between April and June, occurs as Intel faces considerable problems in preserving its relevance in the increasingly competitive semiconductor sector.
The sale of Arm shares is part of Intel's broader reorganisation drive under CEO Pat Gelsinger, which aims to refocus resources and enhance liquidity. Earlier this month, the company revealed intentions to eliminate more than 15 per cent of its workforce and suspend its dividend in response to lower demand for traditional data centre semiconductors and a significant market shift towards AI chips, where Intel has fallen behind competitors such as Nvidia.
Intel, headquartered in Santa Clara, California, has struggled to stay up with industry heavyweights like Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chip manufacturer. To reclaim its competitive advantage, Intel is focussing on developing sophisticated AI chips and growing it is for-hire manufacturing services, which has seen rising expenses and declining profit margins.
The decision to sell its investment in Arm is consistent with Gelsinger's strategic aims, which emphasise Intel's need to consolidate operations and improve financial stability. Cody Acree, an analyst at Benchmark Co, stated that the transaction looks to be consistent with Intel's restructuring strategy and Gelsinger's emphasis on improving liquidity and efficiency.
Intel reported USD 11.29 billion in cash and cash equivalents at the end of June, compared to nearly USD 32 billion in total current liabilities. The company's stock has been under considerable pressure this year, losing more than 59 per cent of its value. The decline was accelerated by a 26 per cent loss on 2 August, following the news of the dividend suspension.
When approached by Reuters, Intel and Arm Holdings declined to comment on the share transaction. Intel's shares stayed practically flat in extended trading on Tuesday, confirming the market's cautious outlook as the business faces continued issues.
