Arm Holdings, a British semiconductor company, recently approached Intel with an acquisition proposal aimed at acquiring a portion of Intel’s underperforming chip design and development division.

According to a Bloomberg report, Arm expressed interest in acquiring Intel’s chip division, excluding its manufacturing operations. However, Intel informed Arm that this part of its business was not available for sale. Both companies opted not to comment further on the situation.

In the previous month, Intel announced plans to eliminate approximately 15,000 positions to revitalize its manufacturing sector. The tech giant intends to pivot its focus towards artificial intelligence (AI) processors and establish a chip contract manufacturing business. Once a leader in semiconductor production, Intel has faced increased competition from TSMC of Taiwan and has fallen behind Nvidia and AMD in AI chip development.

This year, Intel’s stock has lost half of its value. Following the announcement of its cost-cutting strategy, shares plunged, compounded by forecasts indicating that quarterly revenue would fall short of expectations. The company also made headlines by suspending its dividend amidst these challenges. In August, Intel’s market capitalization dipped below $100 billion for the first time since 2012.

These ongoing struggles have heightened speculation about potential acquisition interest in Intel. Qualcomm, another chip industry competitor, reportedly reached out to Intel this month regarding a possible acquisition.

Intel has been working to separate its chip product division from its manufacturing segment, a move that Bloomberg indicates is designed to attract external clients and investors while paving the way for possible company restructuring.

Arm Holdings, primarily owned by Japan’s SoftBank and headquartered in Cambridge, was founded in 1990 as a joint venture between Acorn and Apple. SoftBank acquired Arm for £24 billion in 2016, and the company went public on the Nasdaq last September.

Arm specializes in licensing technology and designs to notable clients, including Amazon, Qualcomm, and Samsung. The company is positioned to benefit from the increasing investments in AI technology, particularly as it expands into the data center chip market.

Rene Haas, Arm’s CEO, commented in July, “As the energy needs of AI continue to rise, the demand for the high-performance, power-efficient Arm compute platform grows accordingly.”

Intel, valued at $102 billion, recently sold its stake of 1.2 million shares in Arm during the second quarter, generating approximately $147 million based on the average stock price in that period. Arm’s current valuation stands at $156 billion.

As the only American company that designs and manufactures advanced chips, Intel is faced with calls from some investors to streamline its operations. However, CEO Peter Gelsinger continues to pursue both avenues. The company has also benefitted from the Biden administration’s Chips and Science Act, which was enacted two years ago to offer various incentives for chip manufacturing in the U.S.

This month, Intel reported securing up to $3 billion from the U.S. government to aid in producing advanced military chips. Additionally, Intel disclosed a multi-billion dollar deal to supply AI chips for Amazon, utilizing its new 18A manufacturing technology.

Furthermore, Microsoft has partnered with Intel to utilize its foundry services for developing custom computer chips.

As of lunchtime trading in Wall Street, shares of Arm Holdings saw a decline, dropping by $3.37 or 2.3%, reaching $145.79, while Intel’s stock remained relatively stable at $23.90.