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Intel has declined an offer from the UK’s Arm Holdings to the former’s product division.
Arm, the world’s largest reference design firm for mobile chips and the creator of the ARM architecture, reached out to Intel. The company reacted to the speculation of it seeking a potential buyer started floating in the industry, Bloomberg reported.
Arm was reported to be specifically interested in Intel’s product division that sells consumer-oriented products, specifically chips for PCs and laptops, along with enterprise products such as processors for servers and data centers. Its other arm includes the foundry business, where Intel manufactures custom chips for clients including Microsoft, Broadcom, and Mediatek.
Intel has notably been anguished with poor finances over the last few months with quarterly earnings falling behind projections and plunging share prices. Last month, it also announced plans to cut 15,000 jobs, which make up for 15% of its workforce, in a bid to cut costs. The announcement emerged as counterintuitive and led to one of the worst dips in Intel’s share prices in the past 50 years. Besides cutting its workforce, Intel recently also sold 1.18 million shares in Arm, amounting to $150 million roughly.
Earlier this month, and US-based chipmaker Qualcomm reportedly expressed interest in buying Intel’s chip design business, and later extended an offer for a complete takeover. Intel likely denied that offer as well. However, Intel is planning to spin off its foundry business into an independent entity.
Intense competition from AMD in the x86 chip space and reduced demand from PC makers as they begin pivoting to more power-efficient ARM-based mobile chips are viewed as reasons behind the chipmaker’s decline. Leading this transition from x86 to ARM are Apple, which switched to its own M-series silicon for Macs, and Qualcomm, which has been aggressively pumping its Snapdragon X Elite and X Plus line of chips to the market.
Why Intel Isn’t Entertaining Buyers
Despite challenges, Intel appears headstrong and has been launching newer chips into the market. Earlier this month, it announced the Core Ultra 200 series aka Lunar Lake chips armed for AI applications and far superior battery life compared to previous generation. Then, a few days ago it announced new Xeon 6 and improved Gaudi 3 AI accelerator chips for data centers. Later this year, Intel is expected to refresh its lineup of PC and gaming laptop chips under the Arrow Lake moniker with a bolstered neural unit for better AI performance.
While Intel’s perseverance and belief in consumer business could be viewed as a potential reason for its hesitation to sell parts of the business, the real reason may have to do with the federal government’s multi-billion dollar grants. Back in March, the Biden administration promised an $20 billion in grants and loans under the Chips and Science Act to help Intel set up four new manufacturing facilities in Ohio, New Mexico, and Oregon, as well as expand its existing plant in Arizona. Intel has promised to spend a total of $100 billion on the ambitious project.
Earlier today, it was also reported that the US government is in the final stages of seeding an $8.5 billion grant to Intel and may deliver the funds before the upcoming elections. The remaining out of $20 billion is meant to be a loan and could arrive later. Any potential merger or takeover could throw a wrench in the relief fund’s arrival, and may even set off an anticompetitive investigation if Qualcomm ends up buying a large share in Intel.
