Tag: Arm Holdings

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Intel sells stake in UK chip designer Arm

Circuit board microchip

Intel has divested its 1.18 million share stake in the British chip company Arm Holdings, according to a regulatory filing.

Intel is undergoing significant restructuring and cost-cutting to address competitive challenges in the semiconductor industry.

The recent transaction, disclosed on Tuesday 13th August 2024, is believed to have earned Intel approximately $147 million, based on Arm’s average share price between April and June 2024.

This move away from Arm occurs during a challenging financial phase for Intel, as it embarks on what CEO Pat Gelsinger reportedly describes as “the most extensive restructuring of Intel since the memory microprocessor transition four decades ago.”

In early August, Intel announced a cost-reduction plan designed to save $10 billion. This includes the layoff of about 15,000 employees, the elimination of the fiscal fourth-quarter dividend, and a reduction in capital expenditures.

At the same time, Intel disclosed quarterly figures that fell short of expectations and provided conservative guidance for the upcoming quarter.

This announcement precipitated the steepest single-day decline in Intel’s stock value in half a century, plummeting 26%.

Intel one year chart as of 15th August 2024

Intel one year chart as of 15th August 2024
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Arm issues light earnings guidance but latest results exceed expectations

Arm Holdings

Arm results exceeded expectations, but earnings guidance disappointed.

The chip-design company has ceased disclosing the quarterly shipment numbers of its chips.

Arm’s shares dropped over 13% in after-hours trading on Wednesday following the chip-architecture firm’s announcement of modest earnings projections for the current quarter and the entire fiscal year.

Shareholders report

Total revenue was a record $939 million, up 39% year-on-year

Royalty revenues were up and amounted to $467 million, this represents a 17% increase.

Licence and other revenue was $472 million, up 72% year-on-year.

Arm’s revenue increased by 39% year-on-year for the quarter ending 30th June 2024, as reported in a shareholder update. The net income reached $223 million, a significant rise from the previous year’s $105 million.

Arm has kept its full year forecast unchanged, projecting revenues between $3.8 billion and $4.1 billion.

For the upcoming fiscal Q2, Arm anticipates revenues ranging from $780 million to $830 million. This projection suggests no mid-range growth, contrasting with some analysts’ expectations of $804.1 million in revenue.

Arm Holdings one day share price mid-day 1st August 2024

Arm Holdings one day share price mid-day 1st August 2024
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Is this German chipmaker about to gain more traction in the AI race

Ai microchip

While Nvidia continues to dominate the AI chip market headlines, Infineon, a German semiconductor company, is also making waves.

Infineon is capitalizing on the AI surge, aiming to generate billions in revenue through the sale of premium chips.

As AI applications proliferate, encompassing data centre servers and integrated chipsets for PCs and mobile devices, the demand for AI chips is skyrocketing. This trend has only one direction, and that is up.

Infineon is certainly one to watch – it may just become the next major player in the industry.

Others to watch: ARM Holdings, AMD and Intel

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Arm Holdings share price drops

AI

UK chip designer Arm’s shares fell on Thursday 9th May 2024, subdued by revenue forecasts despite a strong sales quarter fueled by demand for AI applications.

Arm announced a 47% increase in fiscal Q4 revenue to $928 million on Wednesday.

This surge was propelled by its licensing business, which saw a 60% increase to $414 million for the quarter, attributed to several high-value licencing deals for AI chips.

Additionally, Arm’s royalty revenues rose 37% to $514 million year-over-year, thanks to the growing adoption of its new Armv9-based chips, which offer higher margins.

However, Arm’s revenue projection for 2025, estimated between $3.8 billion and $4.1 billion, did not meet investor expectations, with analysts anticipating $3.99 billion for the year.

What is Arm?

Contrary to chipmakers like Nvidia, which manufacture and market their own products, Arm creates the ‘architectures’ that form the foundation of chips.

These designs are then licenced to various chip manufacturers, including Qualcomm and Nvidia, with Arm earning royalties on each unit sold.

Originally founded in Cambridge, England, in 1990, Arm was an independent company listed in London until 2016, when it was acquired by Japanese tech investor SoftBank for $32 billion.

In September 2023, SoftBank listed Arm on the Nasdaq. Since its initial public offering, Arm’s share value has more than doubled, driven by the explosive demand for chips that power advanced generative AI applications, such as ChatGPT.

But this recent revenue forecast had a negative effect on its share price

Arm Holdings one year chart to 9th May 2024

The recent revenue forecast had a negative effect on its share price