Arm rejected by Intel after wanting to buy Chipmaker’s product unit
Arm Holdings came closer Intel about potentially acquiring the ailing chipmaker’s product division, only to be told the company isn’t for sale, according to a person with direct knowledge of the matter.
In the high-level investigation, Arm has shown no interest in Intel’s manufacturing operations, said the person, who asked not to be identified because the discussions were private. Intel has two main units: a product group that sells chips for personal computers, servers and networking equipment, and another that operates its factories.
Representatives for Arm and Intel declined to comment.
Intel, once the world’s largest chipmaker, has become the target of takeover speculation since the rapid deterioration of its business this year. The company released a disastrous earnings report last month – sending its shares to their worst price in decades – and is cutting 15,000 jobs to save money. The company is also scaling back factory expansion plans and ending its long-cherished dividend.
As part of its turnaround efforts, Intel is separating its chip product division from its manufacturing operations. The move is aimed at attracting external customers and investors, but also lays the groundwork for breaking up the company – something Intel has been considering, Bloomberg reported last month.
Arm, majority owned by SoftBank Group Corp., makes much of its revenue from selling chip designs for smartphones. But Chief Executive Officer Rene Haas has tried to expand his reach beyond that sector. That included a push into personal computers and servers, where chip designs compete against Intel’s. While Intel no longer has the technological edge it once had, the Santa Clara, California-based company remains dominant in those markets.
The combination with Intel would expand Arm’s reach and spark a move toward selling more of its own products. The company currently licenses technology and designs to customers, who then convert them into complete components. Its customer list includes the biggest names in technology, such as Amazon.com, Qualcomm and Samsung Electronics.
Under Haas, the company has moved more toward offering fully-formed products, potentially putting it in competition with its licensees.
Arm, based in Cambridge, England, has only a fraction of Intel’s revenue. But its valuation has soared since an IPO last year and now stands at over $156 billion (approximately Rs. 13,05,862 crore). Investors see the company as a beneficiary of the boom in AI spending, especially as the company continues to move into data center chips. Arm also has the backing of Japan’s SoftBank, which owns an 88 percent stake, potentially giving the company additional financial strength.
Intel, on the other hand, has lost more than half of its value this year and has a current market capitalization of $102.3 billion (approximately Rs. 8,56,344 crore). But the company has other options to consider. Apollo Global Management Inc. offered to invest in the company, Bloomberg reported this week. The company indicated in recent days that it would be willing to commit as much as $5 billion, which represented a vote of confidence for CEO Pat Gelsinger.
Intel also plans to sell part of its stake in semiconductor maker Altera Corp. to sell to private equity investors. That company, which the chipmaker bought in 2015, was separated from Intel’s operations last year with the aim of taking it public. And speculation about a Qualcomm takeover has boosted Intel shares over the past week.
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(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
