Slimming Intel sells off part of its Mobileye stake, as layoffs begin

Intel is divesting part of its holding in its Jerusalem-headquartered autonomous driving subsidiary Mobileye, as the faltering US chipmaker cuts costs and implements its latest round of layoffs, including at its Israel manufacturing plant in Kiryat Gat in the south of the country.

Mobileye announced late on Tuesday that Intel will sell 45 million shares, currently worth about $900 million, in the firm, which develops technology for autonomous car systems.

Goldman Sachs and Bank of America, the underwriters of the share offering, have a 30-day option to sell an additional 6.5 million shares of Mobileye. Following the sale, Intel’s 88 percent stake in Mobileye is expected to shrink to about 80%. In addition, Mobileye has agreed to repurchase $100 million worth of shares from Intel.

The sell-off comes less than a decade after Intel was heralded for its $15 billion purchase of the Israeli company, as the chipmaker struggles to stay afloat against rivals lapping it on AI-driven business.

Share prices for Mobileye on Nasdaq dived over 5 percent on the news as trading opened Wednesday morning, shaving $350 million off its $14.35 billion valuation. Intel was down nearly 2 percent.

At the time, Intel’s 2017 Mobileye acquisition marked the largest exit for an Israeli tech company.

The semiconductor giant has been present in Israel since 1974, when it started its first operations with a handful of employees. Since then, it has grown into the country’s largest private sector employer in the local high-tech sector.

In April, Intel announced a wave of layoffs expected to lead to a reduction of 20% of its global workforce as the chipmaker seeks to become “a leaner, faster and more efficient company.”

As part of global streamlining measures, Intel initiated a round of layoffs this week, summoning as many as 200 employees for pre-dismissal hearings at its manufacturing plant in Kiryat Gat, according to Hebrew daily Calcalist. Overall, several hundred positions at its R&D centers across the country are expected to be affected.

In June last year, the chipmaker halted the expansion of a major factory project in Israel, which was planned to pour an extra $15 billion toward the expansion of its chip manufacturing plant in Kiryat Gat.

The tech giant in 2024 already cut around 15,000 jobs, or about 15% of its global workforce, including in Israel, ending 2024 with 108,900 employees, down from 124,800 the previous year. Intel said it does not disclose details about which divisions or locations are affected by global layoffs.

Before the recent wave of layoffs and other measures, the chipmaker employed almost 12,000 employees at its three R&D centers — in Haifa, Petah Tikva and Jerusalem — as well as at its manufacturing plant in Kiryat Gat.

As a result of streamlining and downsizing processes over the past two years, including job cuts and the closure of operations, Intel now has 9,350 employees in Israel.

Intel reported a loss of $800 million on revenue of $12.7 billion in the first three months of this year.

One of Silicon Valley’s most iconic companies, its fortunes have been eclipsed by Asian powerhouses TSMC and Samsung, which dominate the made-to-order semiconductor business.

The company was also caught by surprise with the emergence of Nvidia as the world’s preeminent AI chip provider. Nvidia on Wednesday flirted with becoming the first-ever company valued at $4 trillion.

Intel’s niche has been in chips used in traditional computing processes, being eclipsed by the AI revolution.