Intel Sells Arm Holdings Stake – Two Weeks After Quarterly Earnings Report

Key Takeaways

• Intel has offloaded its stake in Arm Holdings.
• The sale comes as Intel is undergoing a major restructuring to cut costs.
• Arm is increasingly going after Intel’s home turf in a competitive semiconductor market.

Intel has sold its stake in the UK-based chip designer Arm Holdings for an estimated $147 million. 

The move comes after Intel reported disappointing Q2 numbers amid a rapidly evolving global semiconductor market. 

Intel Drops Arm Stake 

Intel first declared its investment in the UK chip designer in September 2023. According to Stuart Pann, Senior Vice President and General Manager of Intel Foundry Services, the investment was strategically important given how important the Arm architecture has become in the modern semiconductor space.

“80% of [Taiwan Semiconductor Manufacturing Company] wafers have an Arm processor in them,” Pann explained in an interview with Tom’s Hardware. 

“The fact that our organization […] is embracing Arm at this level, investing in Arm, doing partnerships with Arm should give you a signpost that we are absolutely serious about playing this business. Because if you are not working with Arm, you cannot be a foundries provider.” 

So what changed?

The divestment from Arm, disclosed in an SEC filing  on Tuesday, Aug. 13, comes amid a broader restructuring of the business as Intel management looks to cut costs and boost profitability.

As Pann noted, Intel can hardly ignore Arm. But the UK-based company doesn’t just supply Intel with chip designs, it is also a direct competitor in the CPU market. Although Arm’s main strength is in mobile chips, it is increasingly vying for a slice of the desktop CPU market that has traditionally been Intel’s territory

Intel vs. Arm CPU Wars

The competition between Intel and Arm provides important context to their complex relationship.

In the early smartphone era, Intel opted not to take out an ARM architecture license and instead spent billions of dollars developing its own mobile processors from scratch. But in the end, the alternative ARM-based design favored by Apple, Samsung, and Qualcomm (who all paid Arm for the right to engineer their cores) won.

Today, there is an Arm processor in every mobile device in the world.

Having already dominated the mobile chip market, Arm’s first major victory in the desktop space came with the launch of the Apple M1 in 2020. Combining the features of a CPU and a GPU, Apple’s ARM-based architecture severed a 14-year-long relationship with Intel and foreshadowed a wave of computers that ditch Intel for Arm.

ARM-based personal computing received a further boost with the launch of Windows on Arm  this year. Whereas Windows computers traditionally required an x86/x64 processor, which is Intel’s strength, the new framework means ARM chips built by the likes of AMD and Nvidia will be able to power the operating system just as well.

Intel Responds to Competition by Cutting Costs

Intel’s Q2 2024 financial results  highlighted its efforts to streamline the business.

Planned actions include “structural and operating realignment” across the company, headcount reductions, and cost reductions of more than $10 billion in 2025.

CEO Pat Gelsinger emphasized that cost-saving initiatives are critical to supporting Intel’s investment in future technologies, including its IDM 2.0 strategy and advancements in AI and data center solutions. By managing costs effectively, Intel aims to sustain long-term profitability and maintain its competitiveness in the semiconductor industry.

Intel Struggling in Chip Race

Despite the cost-efficiency plan, Intel stock dropped on the reported earnings, which were lower than many investors hoped. Ditching its Arm stake may also prove to be short-sighted, given that the firm is making inroads into Intels’ traditional territory.

While Intel’s Q2 revenues dropped by 1% year-over-year, Arm’s were up 39%  in the same period.

CEO Rene Haas said  that the company plans to capture 50% or more of the Windows-based personal computer market within five years.

Haas’ strategy is certainly ambitious. But then again, Arm already poached 100% of the Apple Mac market from Intel much faster.

About the Author

James Morales

Although his background is in crypto and FinTech news, these days, James likes to roam across CCN’s editorial breadth, focusing mostly on digital technology. Having always been fascinated by the latest innovations, he uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.

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