Arm Holdings approached Intel about potentially buying the ailing chipmaker’s product division, only to be told that the business isn’t for sale, according to a person with direct knowledge of the matter.

In the high-level inquiry, Arm didn’t express interest in Intel’s manufacturing operations, said the person, who asked not to be identified because the discussions were private. Intel has two main units: a product group that sells chips for personal computers, servers and networking equipment, and another that operates its factories.

Representatives for Arm and Intel declined to comment.

Intel, once the world’s largest chipmaker, has become the target of takeover speculation since a rapid deterioration of its business this year. The company delivered a disastrous earnings report last month — sending its shares on their worst rout in decades — and is slashing 15,000 jobs to save money. It’s also scaling back factory expansion plans and halting its long-cherished dividend.

As part of its turnaround efforts, Intel is separating the chip product division from its manufacturing operations. The move is aimed at attracting outside customers and investors, but it also lays the groundwork for the company to be split up — something Intel has considered, Bloomberg reported last month.

Arm, which is majority-owned by SoftBank Group Corp., makes much of its revenue selling chip designs for smartphones. But Chief Executive Officer Rene Haas has sought to broaden its reach outside of that industry. That’s included a push into personal computers and servers, where its chip designs are going up against Intel’s. Though Intel doesn’t have the technological edge it once held, the Santa Clara, California-based company remains dominant in those markets. 

Combining with Intel would help Arm’s reach and kick-start a move toward selling more of its own products. The company currently licenses technology and designs to customers, who then turn them into complete components. Its client list includes the biggest names in technology, such as Amazon.com, Qualcomm, and Samsung Electronics.

Under Haas, the company has moved more in the direction of offering fully formed products — potentially putting it in competition with its licensees.

Arm, based in Cambridge, England, only has a fraction of the revenue of Intel. But its valuation has soared since an initial public offering last year and now stands at more than $156 billion (roughly Rs. 13,05,862 crore). Investors see the company as a beneficiary of the AI spending boom, especially as it moves further into data center chips. Arm also has the backing of Japan’s SoftBank, which owns an 88 percent stake, potentially giving the company additional financial clout.

Intel, in contrast, has lost more than half its value this year and has a current market capitalization of $102.3 billion (roughly Rs. 8,56,344 crore). But the company has other options to consider. Apollo Global Management Inc. offered to make an investment in the company, Bloomberg reported this week. The firm indicated in recent days that it would be willing to put in as much as $5 billion, marking a vote of confidence for CEO Pat Gelsinger.

Intel also plans to sell part of its stake in semiconductor maker Altera Corp. to private equity investors. That business, which the chipmaker bought in 2015, was separated from Intel’s operations last year with the goal of taking it public. And speculation of a Qualcomm takeover boosted Intel shares in the past week.

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