Due to being plagued by losses, American chip giant Intel is undergoing large-scale layoffs and cutting expenses to turn the situation around. According to the latest report, the company also sold its stake in chip technology manufacturer Arm Holdings in the second quarter.
Intel reported in a regulatory filing on Tuesday that it no longer holds the 1.18 million shares it held three months ago. Based on the average price of Arm stock during the same period ($124.34), this sale will raise approximately $147 million for Intel.
Intel is striving to regain a foothold in this once dominant industry. Earlier this month, the company released one of its worst performance reports in its 56 year history, causing its stock price to drop by nearly one-third and evaporating over $30 billion in market value overnight.
The above financial report shows that Intel's Q2 performance data fell short of expectations and provided disappointing guidance for the third quarter, due to reduced spending on traditional data center chips and market focus on artificial intelligence chips, where Intel lags behind its competitors.
As of the end of June, Intel's cash and cash equivalents were $11.29 billion, and its total current liabilities were approximately $32 billion.
To get back on track, Intel has announced that it will lay off over 15% of its workforce as part of a $10 billion cost cutting plan. The company also announced that it will suspend dividends starting from the fourth quarter of 2024 and reduce annual capital expenditures by more than 20%. It is worth noting that Intel has been continuously paying dividends since 1992, marking the first time in 32 years that dividends have been suspended.
However, it is worth noting that although the sale of Arm shares may have brought in unexpected funds, the company reported a net loss of $120 million on its equity investments during this period.
Arm is now licensing chip designs and blueprints to the entire semiconductor industry, including Intel. Previously, most of Intel's chips were produced based on internal design. But these products have fallen behind their competitors, and many of them are using Arm's products.
After being acquired by SoftBank Group in 2016, Arm went public again in September last year and conducted its largest initial public offering (IPO) of the year. Currently, the majority of its shares are held by SoftBank Group of Japan. Since Arm's relisting, its stock price has been hot, rising about 147% from its initial public offering price of $51.
It is reported that Intel's shareholding was first disclosed in the company's 13-F report for the September 2023 quarter. Arm mentioned Intel in its prospectus and pointed out that the company is one of many large technology companies that have launched the use of Arm chips.