Intel Sells Stake In British Chip Designer ARM

Intel’s continues this week to carry out its company-wide restructuring amid its stalled turnaround plan, by offloading its stake in ARM Holdings.

Intel sold its 1.18 million share stake in the British chip firm, according to a regulatory filing, as the US chip giant seeks to bolster its balance sheet.

Earlier this month Intel had shocked Wall Street when it posted a net loss for Q2, coupled with a revenue decline and weak forecast for Q3 below analyst expectations.

Intel’s struggles

Intel’s second quarter results also revealed that the chip giant only had cash and cash equivalents of $11.3 billion, but faced total liabilities of about $32 billion at the end of June.

Reuters noted that Intel selling its 1.18 million shares in ARM likely raised it approximately $147 million, based on ARM’s average stock price between April and June.

Intel CEO Pat Gelsinger had admitted earlier this month in a memo to staff that the firm’s “costs are too high, our margins are too low”, and he confirmed the firm would axe 15,000 jobs, after the 5 percent job losses in 2023, as well as a previous round of job cuts in October 2022.

Gelsinger also signalled an ongoing struggle to turn around Intel’s fortunes, which involve creating a foundry business, but also carrying on with heavy investments in new plants and R&D.

Gelsinger had implemented the turnaround plan (called IDM 2.0) in March 2021, and it is designed to regain the company’s competitive edge, and help it focus on revitalising its manufacturing capabilities (including manufacturing chips for other companies).

However industry observers believe it will take years to realise the plan to turn around Intel’s foundry business, and many expect TSMC to maintain its foundry lead in the coming years.

Share price

Gelsinger’s confirmation of the problems at Intel, coupled with weak forecasts and the suspension of dividend payments to investors, had triggered the largest single day drop in Intel’s stock price in 50 years, after it plummeted 26 percent on 2 August.

This caused Intel’s market value to sink more than $32 billion in a single day.

Intel’s stock has lost more than 59 percent of its value so far this year.

Last week shareholders sued Intel, alleging the chipmaker fraudulently concealed problems that led it to post weak Q2 results, slash jobs and suspend its dividend payment.