Intel Has Sold Its Stock in Arm After a Big Rally for the Chip-design Stock

Intel Corp. recently disclosed that it has sold its stake in the chip designer Arm Holdings PLC, according to a filing made public. Intel, which had previously held about 1.8 million shares of Arm earlier this year, reported that it no longer held any position in the company as of the end of the June quarter, as indicated in its latest 13-F filing. Companies with significant public holdings are required to update their positions quarterly, and Intel's update was released late Tuesday morning.

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The filing did not specify when Intel sold off its shares in Arm. At the end of the June quarter, Intel's stake in Arm was valued at approximately $147 million.

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Arm Holdings, originally acquired by SoftBank Group Corp. in 2016, returned to the public market in September of last year. Intel's position in Arm first appeared in the company's 13-F filing for the September 2023 quarter. In its prospectus, Arm mentioned Intel as one of several major technology companies that produce Arm-based chips.

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Intel has declined to comment on the details of the sale.

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Since its reappearance in the public markets, Arm's shares have seen significant appreciation, rising 146% from their initial public offering (IPO) price of $51. The stock recently traded just below $125, although it remained above this level throughout June, reaching a peak of $186.46 in July.

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On the other hand, Intel's shares have been underperforming. Currently, Intel ranks as the second worst-performing stock in the S&P 500 for 2024, closely followed by Warner Bros. Discovery Inc. In an effort to address its financial challenges, Intel recently announced a plan to cut $10 billion in costs over the next year. This plan includes suspending its dividend and implementing layoffs that could affect 15% of its workforce.

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Despite divesting from Arm, Intel maintained other significant investments. As of the end of the June quarter, the company still held a position in Astera Labs Inc., valued at $357 million, and in Joby Aviation Inc., worth $144 million. Additionally, Intel had a couple of smaller positions in other companies as of the same period.

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Intel's decision to sell its stake in Arm could be seen as part of a broader strategy to refocus its resources amid ongoing challenges. Arm, after its successful return to the public market, has demonstrated strong performance, which may have provided Intel with an opportune moment to capitalize on its investment. However, Intel's own struggles in the stock market, alongside its aggressive cost-cutting measures, highlight the pressures the company is facing in a competitive and rapidly evolving technology landscape.

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Intel's underperformance in the S&P 500 and its recent financial decisions suggest a company in the midst of significant restructuring. The suspension of dividends and the planned layoffs are indicative of Intel's efforts to stabilize its financial position and realign its strategy for the future. The company’s continued investments in other sectors, such as Astera Labs and Joby Aviation, reflect its ongoing commitment to innovation and diversification, even as it navigates these challenging times.

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Arm Holdings, meanwhile, continues to be a strong player in the semiconductor industry, with its shares showing robust growth since the IPO. The company’s success in the market is a testament to its strong position within the industry, particularly as the demand for advanced chips remains high. Arm’s ability to attract major technology companies like Intel as stakeholders underscores its importance in the tech ecosystem.

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The broader context of Intel's sale of Arm shares may also be tied to its need to generate liquidity or reallocate capital as part of its ongoing restructuring efforts. As Intel works to cut costs and streamline operations, shedding non-core investments could be a strategic move to focus on its core business areas. The sale might also reflect Intel’s assessment of where it can generate the most value in the short term, especially given the pressures it faces in the highly competitive semiconductor market.

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Looking ahead, Intel's financial health and strategic direction will likely continue to be closely watched by investors, particularly as the company implements its cost-cutting measures and navigates the challenges of maintaining its market position. The company’s ability to balance short-term financial stability with long-term innovation will be crucial in determining its future success. Meanwhile, Arm Holdings’ strong market performance positions it as a key player in the semiconductor industry, with potential for continued growth as the demand for advanced chip technology rises.

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