Intel rejected Arm’s approach to buy the product unit – Investing.com reports

Investing.com — Arm Holdings Plc (NASDAQ: ) approached Intel Corp (NASDAQ: ). to explore the possibility of acquiring its struggling products division, but Intel responded that the unit is not for sale, Bloomberg News reported Friday, citing a source with direct knowledge of the matter.

The source, who requested anonymity because of the confidential nature of the discussions, said Arm has no interest in Intel’s manufacturing operations.

Intel is divided into two key divisions: a product group that develops chips for PCs, servers and networking equipment, and a second division that manages its factories.

Once the world’s largest chipmaker, Intel has faced takeover speculation after a sharp decline in its business performance this year.

The company recently reported disappointing earnings, leading to its steepest share price decline in decades.

Along with cutting 15,000 jobs to cut costs, scaling back factory expansion and suspending its long-standing dividend.

As part of its restructuring efforts, Intel is separating its chip products division from its manufacturing operations.

The move is designed to attract outside customers and investors, but it also paves the way for a potential split of the company, according to a Bloomberg report last month.

Arm, majority owned by SoftBank Group Corp. (TYO:) of Japan, generates most of its revenue from licensing chip designs for smartphones.

However, CEO Rene Haas has worked to expand Arm’s presence beyond that market, particularly in the PC and server sectors, where it competes directly with Intel.

Although Intel has lost some of its technological edge, it still dominates these markets.

A potential partnership with Intel would expand Arm’s market reach and spur its evolution toward selling more complete products.

Arm currently licenses its designs to other companies, which then build the final components. Arm’s customers include major technology companies such as Amazon (NASDAQ: ), Qualcomm (NASDAQ: ) and Samsung (KS: ).

Under Haas’ leadership, Arm has shifted toward offering more fully developed products that could bring it into competition with its current licensees.

Despite its smaller size, Arm’s market value grew following its IPO last year to more than $156 billion.

Investors see the company as a key player in the growing AI market, especially as it increases its focus on data center chips. With an 88 percent stake held by SoftBank, Arm also has considerable financial backing, the report said.

Instead, Intel has seen its market capitalization drop by more than half this year, now sitting at $102.3 billion. However, Intel has other options.

Apollo Global Management (NYSE:) Inc. recently offered to invest up to $5 billion in the company, signaling support for CEO Pat Gelsinger, the report said.

In addition, Intel plans to sell part of its stake in Altera Corp., a semiconductor firm it bought in 2015, to private equity investors.

Intel spun off Altera from its operations last year with the intention of taking it public. Recent speculation about the Qualcomm acquisition also provided a boost to Intel’s stock price, the report added.