Arm Holdings approached Intel about buying the troubled chipmaker’s products unit but was told the business would not be for sale, according to a person with direct knowledge of the situation.
Representatives for Arm and Intel declined to comment.
Intel, once the world’s largest chipmaker, has become the subject of acquisition speculation as its business has deteriorated rapidly this year. The company released a disastrous earnings report last month, sending its shares into their worst plunge in decades, and is cutting 15,000 jobs to save money. The company also scaled back its factory expansion plans and discontinued its long-cherished dividend.
Intel is separating its chip products unit from its manufacturing operations as part of a turnaround effort. The move is aimed at attracting outside customers and investors, but also sets the stage for a company breakup — something Intel has already considered, Bloomberg reported last month.
Arm, majority-owned by SoftBank Group Corp., derives most of its revenue from selling smartphone chip designs. But CEO Rene Haas has been looking to expand its reach beyond the industry. That includes a push into personal computers and servers, where its chip designs are rivaling those of Intel. Although Intel no longer has the technological advantage it once had, the Santa Clara, California-based company still dominates these markets.
A merger with Intel would help Arm expand its reach and kickstart efforts to sell more of its own products. The company currently licenses technology and designs to customers, who then turn them into complete components. Its client list includes some of the biggest names in technology, such as Amazon, Qualcomm and Samsung Electronics.
Under Haas, the company has moved more toward offering fully formed products, which could put it in competition with licensees.
Cambridge, England-based Arm’s revenue is a fraction of Intel’s. But its valuation has soared since its initial public offering last year and now stands at more than $156 billion (roughly Rs. 1,305,862 crore). Investors see the company as a beneficiary of a boom in artificial intelligence spending, especially as it moves further into data center chips. Arm is also backed by Japan’s SoftBank, which owns 88% of the shares, which could give the company additional financial leverage.
In contrast, Intel’s market value has shrunk by more than half this year and is currently valued at $102.3 billion (approximately Rs. 8,56,344 crore). But the company has other options to consider. Apollo Global Management offered to invest in the company, Bloomberg reported this week. The company recently said it was willing to invest up to $5 billion, marking a vote of confidence in Chief Executive Pat Gelsinger.
Intel also plans to sell part of its stake in semiconductor maker Altera Corp. to private equity investors. The chipmaker acquired the business in 2015 and spun it off from Intel last year with the goal of taking it public. Speculation about a Qualcomm acquisition has boosted Intel’s stock price over the past week.
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