Intel is exploring the sale of its Network and Edge (NEX) business, marking the latest step in a broader effort to reshape the company under new CEO Lip-Bu Tan.
The NEX division, once positioned as a pillar of Intel’s growth beyond its traditional markets, is now under review as Tan steers the company back toward its foundational strengths: PC and data center chips, reported Reuters, citing multiple sources familiar with internal discussions.
The move signals a clear departure from the diversification strategy pursued by former CEO Pat Gelsinger.
According to the report, Intel has begun early-stage conversations with external parties about a potential divestment. While no formal process has been launched and no advisers appointed, internal evaluations have begun, including interviews with investment banks.
Intel did not respond to a request for comment on the sale plan.
Why NEX no longer fits
The decision to review the NEX unit stems from a sharper focus Tan is bringing to Intel’s operating model. At an event in Taipei this week marking Intel’s 40th year in Taiwan, Tan made it clear that the company is returning to its core mission: defending and expanding its leadership in PC and server processors.
“That’s something we’re going to expand and build on,” Tan said, according to the report, pointing to Intel’s commanding 68% share of the PC chip market and 55% share in data centers.
By contrast, the NEX unit — responsible for silicon and software that power telecom gear, 5G infrastructure, and edge computing — has struggled to deliver the kind of strategic advantage Intel needs. According to the report, Tan and his team view it as non-essential to Intel’s turnaround plans.
The report described the telecom side of the business as increasingly disconnected from Intel’s long-term objectives, while also pointing to fierce competition from companies like Broadcom that dominate key portions of the networking silicon market and leave little room for Intel to gain a meaningful share.
Financial weight, strategic doubts
Despite generating $5.8 billion in revenue in 2024, the NEX business was folded into Intel’s broader Data Center and Client Computing groups earlier this year. The move was seen internally as a signal that NEX had lost its independent strategic relevance and also reflects Tan’s ruthless prioritization.
To some in the industry, the review comes as little surprise. Over the past year, Intel has already shed non-core assets. In April, it sold a majority stake in Altera, its FPGA business, to private equity firm Silver Lake for $4.46 billion, shelving earlier plans for a public listing. This followed the 2022 spinoff of Mobileye, its autonomous driving arm.
With a $19 billion loss in 2024 and revenue falling to $53.1 billion, the chipmaker also aims to streamline management, cut $10 billion in costs, and bet on AI chips and foundry services, competing with Nvidia, AMD, and TSMC.
The broader message from Tan is clear: Intel will focus on businesses where it has historical dominance and market scale. Everything else is up for evaluation.
What this means for customers
For enterprise and telecom customers — particularly those who have built infrastructure on Intel’s FlexRAN platform or its edge AI hardware — the uncertainty around NEX’s future could be problematic.
Intel’s networking and edge portfolio supports cloud-native 5G deployments, virtualized RAN (vRAN) infrastructure, and a range of AI-at-the-edge applications. Its chips and reference designs are embedded in systems from major vendors like Nokia, Ericsson, and Rakuten.
A sale or restructuring of NEX could introduce disruptions in product support, roadmap continuity, and long-term vendor alignment. Customers may face the prospect of requalifying products, migrating to alternate platforms, or dealing with a new owner whose commitment to open infrastructure may differ from Intel’s.
Moreover, Intel’s integration of silicon and software — long a selling point for its enterprise customers — could lose cohesion if these assets are separated or transferred to another firm.
Industry implications
For the wider industry, Intel’s possible exit from the networking and edge space reflects a broader recalibration underway in the semiconductor sector. The company’s struggles to keep pace with rivals in AI and high-performance compute — particularly Nvidia and AMD — have forced leadership to make hard choices about where to compete and where to pull back.
NEX was once seen as a bridge to new growth areas, especially as computing moved from centralized data centers to the network edge. But with that vision now taking a back seat, others in the ecosystem—such as Qualcomm, Marvell, and Ampere—may step in to fill the void.
Although Intel has yet to make a final decision on NEX, the internal tone, as per the report, suggests that change is coming. Whether that results in an outright sale, a partial divestment, or a strategic partnership, the business is unlikely to remain in its current form for long.
For now, enterprise customers and partners would do well to prepare for a transition and start asking hard questions about continuity, support, and future innovation.
Source:: Network World