Mobileye shares spike after Intel says it has no plans to divest majority stake

Investing.com -- Shares in Mobileye (NASDAQ:MBLY ) surged in premarket US trading on Thursday after the Israeli autonomous driving firm's majority shareholder Intel (NASDAQ:INTC ) announced that it has no plans to divest its stake.

Bloomberg News had previously reported that Intel is mulling over options for its stake in Mobileye as part of a major strategy overhaul. The chipmaker may sell some of its 88% holding in Mobileye either on the public markets or to a third party, Bloomberg added, citing people familiar with the matter.

The report came as Mobileye, which provides the software and hardware for self-driving systems, has been hit by a downturn in production by automakers during a post-pandemic supply glut. The group lowered its financial forecasts in August, and is currently on track to post a third consecutive annual loss.

But in a statement, Intel said that it retains an "unwavering focus on value creation" through its interest in Mobileye and is "excited about the future of the business."

"We currently do not have any plans to divest a majority interest in the company," Intel added. "By providing Mobileye with separation and autonomy, we have enhanced its ability to capitalize on growth opportunities and accelerate its path to creating even greater value."

Santa Clara, California-based Intel also said it believes Mobileye is in a "unique role as a leader in the development and deployment of advanced driver assistance systems."

Earlier this week, Intel said it would temporarily halt construction on new plants in Germany and Poland. The firm has been pursuing a $10 billion cost-cutting plan that has included a drawdown in capital expenditures and a 15% slash to headcount -- or more than 15,000 workers.

However, in a separate announcement, Intel revealed that its chip production service had inked a partnership with tech giant Amazon (NASDAQ:AMZN ). The company added that it had secured an investment worth up to $3 billion from the Biden administration to build advanced semiconductors for the US military.

Source: Investing.com