Intel Sells Stake in Arm Holdings Amid Workforce Cuts

In a significant move amid ongoing restructuring, Intel sold its 1.18 million share stake in British chip firm Arm Holdings during the second quarter of 2024. According to a regulatory filing dismissed on Tuesday, the sale likely generated around $146.7 million based on the average stock price of Arm between April and June, as calculated by Reuters.

Intel Workforce Reductions and Strategic Shifts:

Earlier this month, Intel announced it would cut over 15% of its workforce and suspend its dividend. This was in response to declining demand for traditional data center semiconductors and increased competition in the AI chip sector. Intel has struggled to keep pace with rivals like Nvidia, which has gained a significant lead in AI chip development.

The company now focuses on developing advanced AI chips and expanding its for-hire manufacturing capabilities. It aims to regain the technological edge lost to Taiwan’s TSMC, the world’s largest contract chipmaker.

Impact on Financials and Market Position:

Intel’s restructuring efforts under CEO Pat Gelsinger have increased costs and put pressure on profit margins, necessitating cost-cutting measures like the recent sale of its Arm Holdings shares. As noted by Benchmark Co analyst Cody Acree, this move aligns with Gelsinger’s strategy to improve liquidity and operational efficiency.

As of the end of June, Intel held $11.29 billion in cash and cash equivalents, with total current liabilities of around $32 billion. The company’s stock has declined steeply, losing over 59% of its value this year. The stock slumped further by 26% on August 2nd after Intel suspended its dividend. Following the Arm stake sale announcement, Intel’s stock remained nearly flat in extended trading on Tuesday.

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